Official Name: Socialist Republic of Vietnam
Internet Domain: .vn
International Dialing Code: +84
Table of Contents
|Location and Size||Credit and Collections|
|Legal System||Business Climate|
|Comparative Economic Indicators||Other Sources of Information|
Vietnam is located in Southeastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and the South China Sea. Adjacent countries include China, Laos, and Cambodia. Vietnam’s total land area is 310,070 sq. km., making the country slightly larger than New Mexico in the United States.
The Vietnamese government is a communist state.
- Executive: chief of state: President Nguyen Minh TRIET (since 27 June 2006); Vice President Nguyen Thi DOAN (since 25 July 2007); head of government: Prime Minister Nguyen Tan DUNG (since 27 June 2006); Permanent Deputy Prime Minister Nguyen Sinh HUNG (since 28 June 2006) and four Deputy Prime Ministers; cabinet appointed by the president
- Legislative: unicameral National Assembly (493 seats) elected by popular vote to serve five-year terms
- Judicial: Supreme People's Court (chief justice is elected by the National Assembly on the recommendation of the president for a five-year term)
Vietnam’s legal system is based on communist legal theory and the French civil law system. Vietnam has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)
There is evidence that court judgments on business-related issues are often ignored when the affected party can use informal channels of influence (such as bribes) to prevent the enforcement of the judgment. According to KPMG and the Economist Intelligence Unit, the legal system is loaded with conflict and overlap, which in many instances provides opportunities for corruption. Heritage Foundation 2010 further states that due to widespread corruption in the judiciary, contracts are weakly enforced.
Vietnam is a densely populated, developing country that in the last 30 years has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally planned economy.
From 1975 to 1985, following the reunification of North and South Vietnam, the country experienced a period of economic stagnation. Since that time, however, market reforms have been introduced that opened up the country for foreign investment and have dramatically improved Vietnam's business climate.
Vietnam has become one of the fastest-growing economies in the world. From 2004 to 2007, GDP grew over 8% annually, slowing slightly to 6.2% in 2008 and to 5.3% in 2009.
As a result of expansionary financial and monetary policies, economic growth remained satisfactory in 2009. Private consumption, however, suffered from the growth of unemployment, the drop in remittances, and the slowdown of FDI.
After increasing sharply in 2009 due to the economic slowdown and the stimulus plan, the fiscal deficit is expected remain substantial in 2010. Public debt will likely grow and, since half of it is denominated in foreign currency, it will be vulnerable to exchange rate risk. This, in turn, will cause the sovereign default risk to increase.
Leading Markets (2008): US 18.9%, Japan 13.6%, China 7.2%, Australia 6.7%, Singapore 4.2%
Leading Exports-commodities: crude oil, marine products, rice, coffee, rubber, tea, garments, shoes
Leading Suppliers (2008): China 22.4%, Singapore 13.4%, Taiwan 12%, South Korea 10.1%, Thailand 7%
Leading Imports-commodities: machinery and equipment, petroleum products, fertilizer, steel products, raw cotton, grain, cement, motorcycles
Top Industries: food processing, garments, shoes, machine building; mining, coal, steel; cement, chemical fertilizer, glass, tires, oil, paper
Top Agricultural Products: paddy rice, coffee, rubber, cotton, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas; poultry; fish, seafood
|Population growth rate* (%)||1.1||1.8||0.5||2.3||0.6||1.0|
|Unemployment rate (%)||6.5||3.5||4.3||2.5||1.5||9.3|
|Population below poverty line (%)||12.3||31.0||2.8||26.0||9.6||12.0|
|GDP** (USD billions)||258.1||28.1||7,789.0||15.1||538.6||14,260.0|
|GDP real growth rate (%)||5.3||-0.9||8.7||6.4||-2.8||-2.4|
|GDP per capita** (USD)||2,900.0||1,900.0||6,600.0||2,100.0||8,100.0||46,400.0|
|Public debt (% of GDP)||53.7||????||16.9||????||45.9||52.9|
|Foreign debt (% of GDP)||31.1||29.1||8.1||53.9||26.5||-11.1|
|Exports (USD billions)||57.0||3.6||1,204.0||1.1||154.2||1,046.0|
|Imports (USD billions)||65.1||5.4||954.3||2.0||119.0||1,563.0|
|Exchange rates (per USD)
|Exchange rates (per EUR)
* July, 2010 estimates
** PPP – Purchasing Power Parity
Vietnam's legal system, including its dispute and claims settlement mechanisms, remains underdeveloped and ineffective. Negotiation between the concerned parties is the most common and preferred means of dispute resolution.
Vietnam is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Foreign and domestic arbitral awards are legally enforceable in Vietnam.
Under the 2005 Civil Code, all contracts are “civil contracts” subject to uniform rules that apply to all contractual relations, including those with foreign businesses. In foreign civil contracts, parties are allowed to choose foreign laws as reference for their contractual agreement, if the application of the law does not violate the basic principles of Vietnamese law.
Coface Country Rating: B -- Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable.
Coface Business Climate Rating: C -- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
Ducroire/Delcredere Political Risk: 3 – slightly low (1=low; 7=high)
Ducroire/Delcredere Commercial Risk: C – high (A=low; B=medium; C=high)
The Communist Party continues to exercise complete control over political, economic, and social life in Vietnam, and the government still holds a tight rein over major sectors of the economy through large state-owned economic groups and enterprises and much of the banking system.
Vietnam is in a phase of transition from a centrally planned economy to a 'market economy with socialist orientation'. The government has plans to reform key sectors and partially privatize state-owned enterprises, but implementation has been gradual and the state sector still accounts for approximately 36% of GDP.
Vietnam joined the WTO in January 2007. WTO membership has provided Vietnam with an anchor to the global market and reinforced the domestic economic reform process. Vietnam's commitments in the WTO increase market access for exports of foreign goods and services into Vietnam, and establish greater transparency in regulatory trade practices. It also creates a more level playing field between Vietnamese and foreign companies.
Transparency of Regulatory System: In recent years, Vietnam has improved its process for making and publicizing laws, particularly major national laws and regulations. Substantial foreign assistance continues to be provided to assist Vietnam’s efforts to establish a legal structure compatible with international standards.
Intellectual Property Rights: Vietnam has joined the Paris Convention on Industrial Property and the Berne Convention on Copyright, and has worked to meet its commitments under these international treaties. Although Vietnam has made progress in establishing a legal framework for IPR protection, various forms of infringement and piracy of intellectual property continues to be widespread.
Enforcement of administrative orders and court decisions on IPR issues remains inconsistent and weak. In addition, the system of administrative enforcement is complex and rights holders have raised concerns regarding inconsistent coordination among enforcement agencies.
Conversion and Transfer Policies: Foreign businesses are permitted to remit profits in hard currency. All currency transactions between residents and non-residents of Vietnam are conducted freely.
Economic Freedom: Vietnam’s economic freedom score is 55.3, making its economy the 128th freest according to the 2019 Heritage Index of Economic Freedom. Vietnam is ranked 30th out of 42 countries in the Asia–Pacific region, and its overall score is lower than the world and regional averages.
Corruption: Corruption is rampant throughout Vietnam and permeates the activities of the many state companies that still dominate the economy's strategic sectors. In order to attract foreign investment, the government is attempting to combat corruption, and the legal framework for doing so is now in place. However, even though Vietnam has one of the most comprehensive anti-corruption laws in Asia, implementation and lack of independent anti-corruption agencies still pose a major weakness in reducing corruption.
Political Violence: There have been no recent incidents of violence against investors in Vietnam.
For more detailed information on these topics, visit the 2018 Investment Climate Statement - Vietnam, via the U.S. Department of State.
As with many other Asian nations, the concept of face is extremely important to the Vietnamese.
Face is a quality that reflects a person's (or company’s) reputation, dignity, and prestige. Foreigners may unintentionally cause a loss of face. It is important, therefore, that they are consistently aware of their words and actions. Understanding how face is lost, saved, or given is critical to forming business relationships.
More information on Business Protocol in Vietnam visit: Kwintessential
Doing Business, Vietnam - World Bank Group
Embassy of the Socialist Republic of Vietnam in the United States
Embassy of the United States in Hanoi
This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Vietnam. For further information, contact [email protected].
This report represents a compilation of information from a wide variety of reputable sources.
Comparative Economic Indicators: CIA World Factbook
Exchange Rates: OANDA.com The Currency Site.