Economic Overview
The war in Vietnam halted the countries economic growth. But since the end of the war Vietnam’s diverse economy has began a rapid growth, it has maintained a consistent GDP growth of above 7%. Vietnamese exports to the US have been a vital market for improving Vietnams economy, the trade was initiated by the US-Vietnam Bilateral Trade agreement. Vietnam is also planning to become a member of the WTO (World Trade Organisation), this will help Vietnam secure market access for the main exports from thee country. Joining the WTO will also help to sustain the increasing level of economic growth. Vietnam has not yet achieved member status, but has been granted observer status. Being a WTO observer allows international governments, who have not yet been granted member status, to follow discussions or matters of interest. ‘source WTO’
Vietnam is the UK’s 86th largest export market. UK exports to Vietnam increased by 4.6% to £105.2million and imports to the UK increased by 17.7% to £714.5million.
Opportunities
The Vietnamese market is a rapidly growing market with a large demand for capital goods and a growing demand for domestic and consumer goods.
- Agriculture
- Construction and Sport & Leisure infrastructure
- Creative and Media
- Education, skills and leisure
- Engineering
- Financial services, export finance and aid policy
- Oil and gas
- Power
- Transport.
GDP: US $50.9billion
GDP per Capita: US $612
GDP growth: 8.4%
Inflation: 8.3%
Top ten UK exports to Vietnam
- Medical and Pharmaceutical products £4,333
- Chemical materials and products £3,207
- Leather products £2,967
- Specialised industry machine £2,656
- Telecommunications and sound recording £2,370
- Professional, scientific and control instruments £2,223
- General industry machinery and equipment £2,162
- Power generating machinery and equipment £2,066
- Textile yarn and fabrics £1,504
- Non-ferrous metals £1,471
Top ten UK imports from Vietnam
Export partners: US 20%, Japan 13.6%, China 9%, Australia 7%, Germany 5.9%, Singapore 4.8%, UK 4.6%
Import partners: China 13.7%, Taiwan 11.3%, South Korea 10.8%, Japan 10.5%, Singapore 10.5%, Thailand 6.2%, Hong Kong 4%
UK relations and investment
The UK has a large diplomatic representation in Vietnam, which helps to develop the international links and relations. The bilateral relations have developed sufficiently to encompass a wide range of issues concerning growing trade and investment, cooperation against terrorism, and high level political contacts. Official visits between the two countries have become more frequent and successful. Recent visits to the UK in 2004 were made by Mr Le Van Bang, Vice Minister for Foreign Affairs and Mr Tran Duc Luang, State President. Also recent visits have been made to Vietnam by Rt. Hon. John Prescott, MP, Deputy Prime Minister and Mr Mike O’Brian, MP, Foreign Office and Trade Minister.
The UK diplomatic institutes in Hanoi have been present for nearly 60years and the establishment of full diplomatic relations in 1973 saw the Consulate-General in Hanoi upgraded to an Embassy; there is also UK representation in Ho Chi Minh City.
International relations
Vietnam has found it difficult to develop international relations, especially solid trade links. Years of detachment from international relations has driven Vietnam, since the 1990’s, to begin seeking and reforming international bonds with its neighbours in Southeast Asia. To help this process of instigating new international links, and also re-establish Vietnam as a progressing nation, Vietnam joined the ASEAN in 1995. Other members of the ASEAN are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, and Thailand. Vietnam enjoys positive relations will fellow ASEAN members Laos and Cambodia, but has had turbulent relations with China. The political relations between the two countries have been unstable in recent years, border disagreements and sovereignty over the Spratley Islands still leads to relation breakdowns.
Assistance
Although Vietnam’s economy is developing rapidly it still remains one of the world’s poorest countries; Vietnam’s GDP per head remains around US $630. Two thirds of the population are still dependent on agricultural trade to maintain a stable income; this proportion of the population still dependent on agriculture equates to Vietnam’s economy still being largely agriculturally based. The Vietnamese government is aware of the widespread poverty throughout its nation, and the need for a healthy economy to tackle the problem. The proportions of its population still living in poverty has been reduced to 20% in 2004, however remote ethnic minorities are still difficult to reach.
The UK are aware of the difficulties faced by Vietnam and have been working to help reach Millennium development goals (MDG). The DFID are providing Vietnam with assistance to work on four key areas, to promote the effective use of public finances, to strengthen government efforts to improve key areas in the Vietnamese society, to support economic growth and transition, and to promote Vietnam’s international development. Four sectors of society that DFID wishes to influence and effect are Poverty and Hunger, Primary Education, HIV and AIDS, and Global Partnership.
DFID provided £20million to aid a Poverty Reduction Support Credit (PRSC) scheme initiated by the World Bank that directly supports the governments own poverty reduction schemes. The DFID also supports a government programme known as programme 135. The programme is active in a number of substantial areas over 49 provinces across the country. Its aims are to:
- Reduce the amount of poor households to less than 25% in 2005.
- Increase the amount of children who should be attending school to more than 70%
- Provide clean water
- Develop a road scheme to adjoin the areas
- Create a rural market infrastructure
DFID also aids institutes such as, Asian Development Bank that is funding schemes in poor regions to help improve food security, community capacity and local services.
For more information on DFID funds and assistance http://www.dfid.gov.uk/countries/asia/vietnam.asp
Human Rights
Vietnam was pinpointed by the Foreign & Commonwealth Office as a country to be recognised as a concern regarding their Human Rights policies and practises. The majority of Vietnamese citizens enjoy an improved environment in comparison to Vietnam’s previous historic state. But restrictions are still in place over freedom of expression and freedom of religion. The number of executions is still a cause for concern as Vietnam has one of the highest rates of execution in the world. Official figures are not disclosed but are thought to be around 100 per year, there are thoughts to limit the use of executions but there are no immediate plans to abolish it. Tight restrictions are placed on Vietnamese media and the internet. A number of people have been imprisoned for expressing views that are unwelcome to the government. The UK regularly raises their concern about Vietnam’s human rights policies with the country via EU-Vietnam human rights dialogue meetings.
