Vietnam, things to know about the market

Vietnam is experiencing its economic miracle by embracing market economy, boosting the role of private sector and opening up to globalisation.

The route to prosperity began in 1986 with the implementation of the economic reforms called “Doi Moi”, whilst maintaining a centralized socialist policy, the country has lifted millions of people out of poverty.

The EU-Vietnam Trade Agreement (in force on 1 August 2020) and an Investment Protection Agreement (to be ratified by EU members) will increase trade opportunities on both sides through:

  • Removing 99% of all tariffs over a 10-year period
  • Reducing regulatory barriers and overlapping red tape
  • Opening up services and public procurement markets
  • Promoting and protecting EU investments in manufacturing

With regard to foreign trade, Vietnam was the 19th largest exporting economy in 2019, with a total of 318 billion according International Trade Centre.

Behind India (18) with $323 billion and followed by Switzerland (20) with $314 Billion. The countries within its geographical area of influence like Singapore, Thailand and Malaysia were placed in positions 15th, 24th and 25th respectively.

Key takeaways

GDP per capita $2,715 (2019)

Population 96.46 million inhabitants

GDP Growth, 7 % (2019)

Trade to GDP ratio, 210 % of GDP

Export to Import ratio, 117% of GDP

Trade balance, surplus $47.15 billion (2019)

Foreign Direct Investment (FDI), $15.5 billion (2018)

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Foreign Trade

During the period 2009-2019, exports increased at an average annual rate of 19%, from $57.09 billion in 2009 to $318.25 billion in 2019.

Imports reached 271.1 billion in 2019 and the trade balance surplus stood at 47.15 billion.

In 2019, the top 5 Vietnamese exports with 39% out of the total, were:

  • 21% Telephone sets, incl. telephones for cellular networks or for other wireless networks
  • 8% Electronic integrated circuits
  • 4% Footwear with outer soles of rubber, plastics, leather or composition leather and uppers
  • 3% Parts suitable for use solely or principally with transmission and reception apparatus
  • 3% Commodities not elsewhere specified goods

The following 5 product groups represent 23% out of total Vietnamese imports during 2019.

  • 11% Electronic integrated circuits
  • 7% Telephone sets, incl. telephones for cellular networks or for other wireless networks
  • 3% Petroleum oils and oils obtained from bituminous minerals (excluding crude)
  • 2% Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices
  • 1% Parts suitable for use solely or principally with transmission and reception apparatus

Exports of services rose by an average annual rate of 11% in the period 2009-2018, from $5.7 to $14.8 billion.

During the period 2014-2018, Foreign Direct Investment (FDI) received by Vietnam reached the average annual figure of $12.6 billion.

Its main trading partners are China, which represents 22% of exchanges, followed by Korea with 14% of exchanges and the United States with 13% of exchanges.

Regarding bilateral agreements, Vietnam has 13 existing regional trade treaties (at the date of this publication).


Economic factors

During the period 2009-2019, GDP increased at an average annual rate of 6, 2%. The inflation rate was 2, 8% and the unemployment rate was 2, 01%.

GDP per capita in 2019 was $2,715.

In the “Doing Business Survey edition 2020”, Vietnam ranks #70 (12 positions above the 2017 edition), reflecting an improvement in getting credit and the Tax payments system.


Social and technological

The population reached 96.46 million inhabitants. The urban population is 37%. The biggest urban areas are: Ho Chi Minh City (8.24 million), Hanoi (7.37 million) and Hai Phong (1.94 million).

The Gini index, a statistical measure of income inequality, scored 0, 357 in 2018.

Regarding the Human Development Index (HDI), report published in 2019 by the United Nations, Vietnam ranked #118 out of 189 countries.

70% out of total population uses internet. The number of broadband subscriptions is 14 per 100 inhabitants.

In 2017, exports of technological products (medium high tech products), represented 51% out of the total of exported manufactured products.


Political and legal

The current president of the government is Mr. Nguyen Phu TRONG (since 23 October 2018). The next elections are foreseen for spring 2021.

The Legal system is based on civil law (the civil code of 2005 reflects a European-style civil law). The type of government is a communist state.

Vietnam is currently increasing its integration in global supply chains and improving its business practices. Moreover, the country may benefit from the current China-US trade conflict. Some business opportunities are in the following sectors:

  • Construction and infrastructure
  • Information and communication
  • Textile and electronic components
  • Electricity and Renewable energy

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Data from 2019, other years are stated.

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Photo by Andreea Popa on Unsplash

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