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VIETNAM


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 35,110 32,700 31,200 56
         
GNI per capita
 US $ 430 410 390 167
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km)
329,560

Population
79,939,000

Capital
Hanoi

Currency
dong

President
Tran Duc Luong

 

 

Background:
France occupied all of Vietnam by 1884. Independence was declared after World War II, but the French continued to rule until 1954 when they were defeated by communist forces under Ho Chi MINH, who took control of the north. US economic and military aid to South Vietnam grew through the 1960s in an attempt to bolster the government, but US armed forces were withdrawn following a cease-fire agreement in 1973. Two years later North Vietnamese forces overran the south. Economic reconstruction of the reunited country has proven difficult as aging Communist Party leaders have only grudgingly initiated reforms necessary for a free market.
One of the most important recent political events to happen in Vietnam in 2002 was the election held in May 2002 of the country's new National Assembly (NA), the highest legislative body, for the 2002-2007 term. 498 individuals were elected as parliament members, including 118 permanent members, who will work on NA committees during their term, unlike the majority of members, who usually operate in local areas and only attend regular meetings of the NA when they are arranged.
The NA has decided on the new government cabinet, whose working term will also extend from 2002 to 2007. Prime Minister Phan Van Khai was re-elected and the number of deputy prime ministers cut to three for the next five years from four in the previous term. 
Minister of Trade Vu Khoan, was elected deputy PM in charge of trade and foreign affairs, replacing Nguyen Manh Cam. Khoan is respected for his contribution in signing a landmark trade deal between Vietnam and its former enemy the United States.
Deputy PMs Nguyen Tan Dzung and Pham Gia Khiem continue in their posts for the next five-year term.
The NA approved the setting up of 26 ministries and ministerial committees, up from 23 in the previous term. The new formation aims to help ministries to focus more on their responsibilities and to work more effectively. Stagnation, overlapping functions and the bulky structure of the government's administrative bodies was one of the major causes of the ineffectiveness of government in its previous terms.
Fourteen new ministers and committee heads or 50% of the government's cabinet have been appointed for this new term, including ministers of police, justice, trade, transport, construction, industry, planning and investment, home affairs, science and technology, natural resources and environment, post and telecommunication, state inspectorate, ethnic minority people, and population, family and children. Two newly-created ministries included the Ministry for Natural Resources and Environment and Ministry of Post and Telecommunication.
The government firmly pledged to implement changes to provide a more favourable and equal environment to support private enterprises during the term of the 11th National Assembly, in addition to imposing tougher conditions for state owned enterprises (SOEs). In practice, the new-found commitment to the private sector remains to be tested. The government has, however, moved ahead with economic reforms related to its pursuit of World Trade Organization (WTO) membership, and its commitments under the bilateral trade agreement with the US.
In an effort to ease the public's increasing discontent with corruption and other social ills, the Communist Party general secretary, Nong Duc Manh, promised to pursue a tough campaign to crack down on corruption and wrong-doings of party members. Manh has also attempted to breathe new life into the economic renovation (doi moi) process, but the pace and progress of economic reform is unlikely to quicken significantly in 2002-03. 

The Communist Party:
The Communist Party, easily the most powerful organization in Vietnam with around two million members, has set targets to consolidate control and leadership in grassroots groups. The Party says it will clarify the responsibilities of commune authorities and other social organizations, make them work under local Party organizations' management, and to consult citizens regarding their decisions. 
For many years, Party organizations have had little effect on people since the tasks and responsibilities of Party organizations and local governments have not been clearly defined. 
In urban areas, local Party organizations just assemble some retired Party members for impractical gossip sessions and rarely admit new Party members, because most Party members are drawn from their offices' organizations. 
In rural areas, Party members are also commune authorities, so they have unchallenged power to decide on local issues, which is the root of increasing corruption and abuse of power, illustrated by the mounting number of complaints and criticisms. 
The Party only has groups in State-owned enterprises and administrative offices. While private and foreign invested enterprises keep expanding and increasing their contribution to the economy, the Party has not yet set up organizations in those sectors because it still prevents Party members from operating businesses. The NA's final announcement, however, did not make it clear if the Party would admit business people into its organization in a bid to increase its influence in the private sector. 
However, not wanting to evade the increasingly important role of private businesses, the party this year made an historical decision allowing businessmen to be members and will permit current members to operate private enterprises. Party members can run private enterprises if they do not violate laws and have the support of their staff and neighbours. They can maintain their Party membership if they wish. The Politburo, the country's political elite, hopes that Party members working in the production sectors will be excellent businessmen who can make legal fortunes and encourage other people to make fortunes but do not explain how these objectives may be realised. 
In the Party's previous regulations, Party members could not practice labour exploitation, because it is contradictory to old Russian socialist theory, which the Party adopted as a bible. But the Party never clarified what "labour exploitation" was, resulting in an implicit understanding that Party members could not run private businesses that employ workers. 
In fact, no Party members are directors of private companies and few are working in private companies. The permission to do so came along with the Party's resolutions on boosting the private sector's role in the economy and on improving the Party's leadership in grassroots organizations. 
The Party now has to admit the existence and increasing role of the private sector. Despite much discrimination and repression, the private sector now contributes around 60% of GDP. The Party also realizes that it has lost control, along with its image and prestige at the grassroots level, in rejecting the private sector, the largest and fastest emerging part of society.  

Politics:
The political scene in Vietnam is expected to remain stable in the period 2004-2005 with little change in the leadership of the Communist party and the government, of the current ruling triumvirate, only the Prime Minister, Pha Van Khai is affected by speculation over personnel change in the near future. The party chief Nong Duc Manh and the president Tran Duc Luong are likely to remain firmly in place. Mr. Khai has served since 1997 and has avoided any serious criticism. However, as he is 70 year-old and nearing retirement, he could step down in a possible mid-term reshuffle (between party congresses) in early 2004. Mr. Khai could still see out his full term however, partly because he appears to be keen to stay on, but more importantly because there is no obvious successor. One potential replacement is the first deputy prime minister with responsibility for economic and internal affairs, Nguyen Tan Dung. However, his recent performance has been regarded as disappointing. Another possible successor is Truong Tan Sang who heads the party's economic commission and headed the Ho Chi Minh city people's committee from 1996 to 1999. However, he may not yet be close enough to the centre of power and could instead be made a deputy prime minister and groomed to succeed to the premiership at a later date. 
Despite the likely secrecy that will surround any leadership changes, such moves will be undertaken with a minimum of fuss and fanfare and will herald little significant change in policy direction. 
There is little risk that Mr. Manh will not serve his full term in office. His determination to clamp down hard on official corruption is being fairly well received by the public, although there is some cynicism as to whether the most serious high-ranking offenders will be dealt with. However, several prominent government figures received prison sentences earlier this year for their part in the widely publicised scandal surrounding a Ho Chi Minh city gangster.
Relatively senior officials have thus been put on notice that contrary to what they might once have thought, they are not beyond the reach of law. But the age-old underlying cause of official corruption, a bureaucratic administration in which salaries are low and opportunities for bribery are widespread- also needs to be addressed. 
The process of dealing with corruption still remains high on the official agenda. The justice system has not been running smoothly, owing to corruption and a shortage of lawyers. A "cyber dissident" has had his sentence reduced, but the government harsh crackdown on dissidents continues. 
The extent of corruption in Vietnam is reflected in its poor performance in regional ranking. The Hong Kong based Political and Economic Risk Consultancy has been polling business people since 1995 on their perceptions of corruption. The most recent regional survey, carried out this year, ranks Vietnam as the third most corrupt country with a score of 8.83, the most corrupt countries were considered to be Indonesia (9.33) and India (9.30), China was not far behind Vietnam with a score of 8.33. 
The government has sent out firm messages on religious freedom. The US and the EU have been critical of Vietnam's recent human rights record. However, the country strongly rejected that accusation. The government has moved to prevent future demonstrations over land expropriation.

Economic policy:
The slow pace of reform remains a major risk to high economic growth. The private sector has continued to boom, but its development has been hampered. The pace of privatization of state owned enterprises has been slow.
The government has tried to create a more investor-friendly environment, primarily in response to demands from foreign investors. The US and the EU have been supportive of Vietnam's bid to join the World Trade Organisation but have called for greater protection of intellectual property rights. Tariff levels have fallen in accordance with commitments to the ASEAN (Association of South East Asia Nations) free trade area (AFTA).
Real GDP has grown by close to 7 percent so far this year. It is unlikely that Vietnam will be able to push its economic growth rate above 8 percent as planned in the next two years if the government does not speed up its economic reforms. The Prime Minister Phan Van Khai has acknowledged that there are problems that need to be surmounted. Although GDP growth is high, it is of poor quality because of the unduly high investment rate that is needed to achieve such rates. The trade deficit has widened rapidly, budget revenue is unstable and the administrative system is bulky and obstructive.
Industrial output, especially in the private sector has been driving the economy. Consumer price inflation has fallen below 3 percent and the dong has depreciated slowly against the US dollar. Rice exports have been robust despite problems in Iraq, a major export market. Sales of locally made cars have boomed in recent months ahead of tax increases. The US textile quota regime has constrained domestic production. The tourism sector has been picking up. 

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Update No: 025 - (05/01/04)

At the end of 2003 Vietnam reported a record GDP growth rate of 7.24%, the second highest rate worldwide just after China, despite the bad impact of SARS, the Iraqi War and natural disasters. However, the World Bank expected recently that the country's full-year growth will be only 7%, saying that Vietnam has not applied the precise calculation. 
In 2003, Vietnam witnessed fertilizer and petrol "fever", and an upsurge in medicine, automobile and gold prices. 
This acceleration to VND605.5 trillion ($38.8 billion), compare with the 7.04% growth of the previous year.
Total industrial production was VND303.99 trillion ($19.42 billion) in 2003, up 16% against the previous year, according to the government's official estimations.
The foreign-invested sector still recorded the highest increase of 16.4% in total value to VND10.56 trillion ($677 million). The private sector reported industrial production of VND7.56 trillion ($484.55 million) and the State-run sector VND10.25 trillion ($657 million), up 17.9% and 13% on the year, respectively.
However, it was the private sector that lead in 2003 with the industrial growth rate of 18.7%, followed by the foreign-invested sector with an increase of 18.3%, and the State-run sector with a rise of 12.4%.
The 12-month figures reveal that the production of key commodities was at an unprecedented height. The output of diesel engines recorded the highest growth of 75.7% to 55,678 units, followed by sanitary ceramic wares up 49.3% to 3.42 million units, knitwear up 38.6% to 72.21 million units, assembled automobiles up 38.4% to 40,883 units, complete garments up 37.3% to 618.6 million units, electrical fans up 36.1% to 716,700 units, television up 30.8% to 2.099 million sets and cement up 14.1% to 23.28 million tons. 
Among 61 cities and provinces nationwide, Vinh Phuc province represented the highest annual increase of 26.6%, followed by Hanoi 24%, Ha Tay province 20%, Hai Duong province 19.3% and Haiphong City 17.7%
The agriculture, forestry and fisheries sectors reported a growth rate of 3.2% with total production value reaching VND131.9 trillion ($8.45 billion) in the year, accounting for 21.8% of the total. The service sector saw a 6.57% increase with total value of VND231.46 trillion ($14.8 billion), representing 38.23% of GDP.
The country licensed 620 foreign direct investment (FDI) projects with total registered investment capital of $1.55 billion, up by 13.8% against 2002. 
Ambitious targets have been set to boost economic growth by at least 8.2% in the next two years to meet the average annual economic growth of 7.5% targeted for the 2001-05 period.
The consumer price index (CPI) was estimated to rise by 0.8% in December against November, and 3% as over the same month last year, due to a sharp increase in the price of food, foodstuffs, beverages and other services, according to the General Statistics Office (GSO).
Services and consumer goods registered the highest increase with 1.7% in December against November; followed by food, 1.1%. Drinks-tobacco, garments-footwear, housing-construction material, home appliances posted rises ranging from 0.4-0.6%. Meanwhile, pharmaceutical products, transport means and post services rose from 0.1-0.2%.
The rise of consumer goods, food and foodstuff prices in December was attributed to buying in for the forthcoming traditional Lunar New Year festival, which will fall on January 21st-24th. However, according to the GSO, food and foodstuff prices in 2003 rose only 2.8% on-year, much lower than an increase of 5.7% in 2002.
"There will be no big changes in the price of goods on the domestic market despite the increasing demand in the year-end months," a market observer said, attributing this to stable supplies.
Meanwhile, the domestic gold bullion price went up 5.1% in December against the previous month, a year-on-year rise of 26.6% as the world gold price rose sharply in 2003 while Vietnam has to import 95% of total gold for local consumption.
The Vietnamese dong depreciated by 0.5% against the US dollar in December, in contrast to the depreciation of the greenback against most other strong currencies, leading to an on-year depreciation against 2002 of 2.2%.
Vietnam is expected to earn a total export revenue of $19.843 billion and to have spent $24.995 billion on imports in 2003, leaving a trade deficit of $5.1 billion for the year. Exports in December alone brought in $1.67 billion, up 0.72% from the previous month.
Among key exports, the four biggest earners; crude oil, garments and textiles, footwear and fisheries brought home $11.82 billion, accounting for almost 60% of the country's total export revenues. These products also recorded high growth of 16%, 35%, 20% and 12% on year, respectively. 
Other goods also posted high growth such as electronics and PCs (up 37%), coffee (up 41.7%), rubber (up 43.1%), cashew (up 36.1%), wooden products (up 35%), electric wiring and cables (up 60%), and bicycles and spare-parts (up 35%).
Four major commodities that experienced a decline in export turnover in 2003 were vegetables and fruit, tea, peanuts and pepper. 
Vietnamese products are now present in 220 countries worldwide, including 10 markets with revenues reaching $500 million per annum each.
Regarding import spending, automobile parts cost the country 66% more compared to last year. Other commodities that record high import growths are machinery and equipment (up 51.4%), fertilizers (up 35.5%), milk and dairy products (up 23.3%), paper (23%), clinker (19.6%), and steel ingots (11.4%).
Experts attribute high import growth, which lead to a trade deficit of around $5 billion in 2003, to the purchase of facilities for the 22nd SEA Games, an aircraft purchase and the construction of large modern power plants.
According to customs officials, Vietnam will collect a total of VND40,000-40,500 billion ($2.56-2.6 billion) worth of import-export taxes in 2003, up from the target of VND38,500 billion ($2.47 billion ) set by the government.
Now the target is to earn a total of $24.9 billion from exporting goods and services while spending $28.85 billion on imports in 2004, and to attempt to cap the trade deficit at $4.3 billion for the year. The government also hopes to collect VND46,000 billion ($2.95 billion) of import-export taxes in the year. 

Serious fight against corruption, facilitating the investors are major tasks for 2004. 
Government seems to be taking the corruption problem seriously. Prime Minister Phan Van Khai in a recent year-end meeting with ministries and provinces urged leaders to focus on administrative reform and fighting corruption to be amongst the key tasks set for next year.
At a government conference to discuss ways to realize assignments for next year, Khai said "readjusting the administrative machinery together with preventing and fighting corruption is the break-through needed for the years to come."
He warned that although recording sound achievements in 2003 as well as during the last three years, the country is expected to face more difficulties over the next two years.
Ministries and provinces should work towards a faster integration into the global economy and a breakthrough in administrative reform and fighting corruption and improve efficiency in order to ensure an economic growth rate of more than 8%.
Other tasks for 2004 are to improve the investment environment and to remove barriers in taxes and customs procedures to make it easier for enterprises, especially small- and medium-sized ones, to operate more effectively. Measures will be taken to renew financial and banking operations, prevent losses in tax collection, reorganize the tax collecting system, and strictly control budget spending.
PM Khai noted economic development should not be separate from cultural and social matters, elaborating the government's main measures to accelerate cultural and social activities and promote assistance to the poor in the coming period. 
The communist party in the years to come, will facilitate various activities to nurse the ethnic minorities who are considered to be very sensitive to political demonstrations. 
The government looks for smooth bilateral relations with the US in the 2004. Last year, there were some serious trade and political disputes between the two countries. 

Religion
Vietnam's Foreign Ministry spokesperson in late December 2003 rejected a report from the US State Department on religious freedom in Vietnam, saying it contains biased judgments on the local religious situation.
"The report contains biased remarks on the religious situation in Vietnam based on erroneous information that we have repeatedly rejected. It runs against the growing relations between Vietnam and the US", said the spokesman Le Dung.
The spokesman emphasized that the freedom of belief and non-belief are inscribed in Vietnam's Constitution and guaranteed in reality. 
"In Vietnam, nobody is arrested, detained or kept under house arrest for religious reasons. Nevertheless, like other countries in the world, Vietnam cannot accept any acts or actions in violation of the law or abusing religion for political purpose and personal ambitions."
Existing differences in the relations between the two countries should be solved through negotiations, he added.
In November 2003, the US House of Representatives and the European Parliament also passed religious resolutions saying that Vietnam had repressed religion in general and Buddhism in particular. Vietnam has rejected accusations of religious repression on numerous occasions. 
Around 30% of Vietnam's population, or 24 million people, practice the six officially recognized religions, including Buddhism, Protestantism, Hoa Hao, Caodaism, Catholicism, and Islam. 

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AUTOMOBILES

Cars to become much more expensive in Vietnam 


Vietnam's auto makers are bracing for a gloomy 2004 as they plan further vehicle price increases to counter impending tax increases that have left the industry predicting heavy losses.
The Vietnam Automobile Manufacturers Association, which is made up of 11 foreign-invested companies, believes sales will plunge between 30 and 40 per cent as a result of the new tax regime.
The AFP news agency said from 1st January, special consumption tax will rise from its current five per cent to 24 per cent on cars with five seats or less, with similar gains for larger vehicles.
The SCT rates are scheduled to increase annually until 2007, when cars will be taxed at 80 per cent and other sized vehicles at between 25 and 50 per cent.

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AVIATION

Vietnam Airlines expects high growth in 2004

Vietnam's civil aviation flag carrier, Vietnam Airlines, targets the growth rate of between 20-22% and revenue growth of 32% for 2004, said Nguyen Ngoc Minh, Deputy General Director of Vietnam Airlines.
Vietnam Airlines also sets the goal to carry five million passengers in the year, up 25% from the estimated figure for 2003.
The national carrier is planning several new air routes next year, including Hanoi-Frankfurt in January 2004, Hanoi-Osaka in April 2004, and routes from Ho Chi Minh City to India and Frankfurt some time this year. 
New domestic flights on the table are to link Ho Chi Minh City with Ca Mau in March and with Can Tho in the second quarter of the year. Direct flights between Hanoi and Can Tho, and between Danang and Can Tho will also begin at the end of 2004.
Vietnam Airlines will also receive two Boeing 777s and four Airbus 321s. 

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FINANCIAL NEWS

Ministry unveils tax reform plans to 2010

The Finance Ministry has submitted to the government a tax reform scheme until 2010, which an official said aims to boost revenues for the State budget on the one hand and rationalize financial obligations on the other hand.
Nguyen Van Ninh, head of the General Department of Taxation under the ministry, said the scheme if approved would overhaul the current tax regime via which State budget income will increase substantially. "It expects to help the department post 10% annual growth in collecting taxes and fees," Ninh said.
"Between now and 2005, we'll try to make total tax revenue equal to 20-21% of gross domestic product, and to 2l-22% from 2006 to 2010," he said.
Regarding the value added tax, there will be only one rate at 10% for all taxpayers. However, the new VAT law will affect more subjects. Ninh said VAT revenue would supposedly make up 30% of the total tax revenue to offset shortfalls in import duties.
The corporate income tax rate will decline to 25% in 2010 from the current 28%, and likely down to 20% later.
To further discourage the consumption of luxurious goods and services, special consumption tax will be increased, and there will be neither exemptions nor reductions concerning this tax.
Ninh said the tax would be levied on alcohols stronger than 40%, playing cards, joss products, discotheques, karaoke shops, legal gambling activities and others.
By 2005, import tariffs will still be used to protect production of certain important goods like steel, cement, engines and firming machines. However, this protection must assure the rate of no more than 20% to meet the World Trade Organization's requirements. 

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FOOD & DRINK

Vietnam to Apply Import Quotas on Seven Agro Products

Vietnam will in 2004 impose import quotas on seven groups of agro products, namely eggs, corn, uncondensed milk material, condensed milk material, salt, tobacco and cotton. 
Specifically, the country is set to import 22,379 tons of tobacco and 200,000 tons of salt in 2004. However, no specific quotas for other products have been available. 
It will grant quotas to a small number of eligible traders, and ban the buying, selling and transfer of the quotas.
Vietnam is estimated to record salt output of one million tons in 2003, and plans to increase it to 1.54 million tons in 2005 and 2.5 million tons in 2010. 

Vietnam exports 4.2mn tons of rice in 2003

The year 2003 was a successful one for Vietnamese rice exports despite an unstable world market, as the country expected to export around 4.2 million tons in 2003, up 400,000 tons against 2002 and only 300,000 tons less than the record level in 1999. 
Vietnam would regain its status of the world's second largest exporter after Thailand, with Southeast Asia accounting for 34% of Vietnam's rice exports (Indonesia and the Philippines being the two biggest importers), Africa takes 21%, the Middle East 16% and the Americas 10%.
The boom in the country's rice exports were attributed to increasing rice output in the Mekong Delta, its largest rice growing area, which were unaffected by harsh weather and floods while stable domestic rice prices helped local farmers to expand their cultivation areas.
Thanks to its prices and early finish of the floods, local farmers in the Mekong Delta increased the area of the autumn-winter rice crop, which was previously not the main crop, resulting in total rice output of 2 million tons for the crop, the highest level so far.
In 2003, the country's total paddy output was estimated at 34.7 million tons, up 600,000 tons against 2002, increasing rice exports while still ensuring national food security. Domestic prices in the Mekong Delta also increased, from VND1.6 million ($103) to above VND2 million ($129) a ton and around VND2.1-2.3 million ($126-148) per ton of high quality rice.
In addition, the increasing Vietnamese rice export prices were also due to its higher quality, narrowing the gap between Vietnamese and foreign competitors. Vietnamese rice for export was traded at $185-190 a ton on average, only $5-10 lower than Thai rice compared with $20-30 per ton lower previously.
Another success of Vietnamese rice exports in 2003 was the ability to keep and stabilize the traditional markets while expanding new potential ones, especially the African market. Local rice exporters for the first time directly exported around 700,000 tons of rice to the continent in 2003 with the three main markets being Nigeria, Algeria and the Republic of Congo, bringing more opportunities in the future. 
The Trade Ministry has signed contracts to export 150,000 tons of rice to Brazil, which has major potential, bringing the total to 700,000 tons of rice export contracts in 2004. 
Vietnam's rice farming sector has undergone a major transformation in the past decade, from a net importer of rice before 1989 to become the world's second biggest exporter 10 years later. 

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FOREIGN ECONOMIC RELATIONS

Vietnam eyes annual export growth of 12% or more in 2004-05

Vietnam has set a target of posting an annual export growth of no less than 12% over the next two years, according to a scheme on export market expansion for the 2004-05 period newly approved by the government.
Under the scheme, the average export growth for the Asian, European, and Oceania markets is set at 12% per year, and for the North American, African and Latin American markets, 15-17% per year.
The scheme seeks to boost trade with the US, the EU, Japan, China, South Korea, ASEAN countries, Russia, the Middle East, Africa, and Latin America.
The scheme also requires government agencies, especially ministries, to conduct regular forecasts on overseas markets on a quarterly, bi-annual and annual basis.
Associations and businesses, meanwhile, are encouraged to conduct market research and make forecasts based on annual national trade promotion programs, as well as the specific business strategies for each industry. Each business association is requested to keep a close watch on export markets to anticipate problems that may arise.
To sharpen the competitiveness of Vietnam's export goods, relevant authorities have adjusted polices concerning finance, credit, investment charges and fees with a view to increasing long-term investment in capacity improvement and production expansion as well as boosting negotiations on market access, to accelerate Vietnam's global economic integration process.
Experts, however, are concerned that Vietnam will be unable to achieve the target of 16% for annual export growth in the 2001-05 period since the country's total export turnover rose only 10.42% per year between 2001 and so far in 2003. The increase is much lower than the 19.63% growth recorded in the 1990s.
They also warn of Vietnam's heavy reliance on natural resources as it has failed to reduce the proportion of earnings from exporting these resources in the country's total export revenues each year. The ratio of mineral exports still stands as high as 28%, compared to the target to reduce this figure to 19.63% in 2000 and 9.3% in 2005. 

VN, India need to promote trade 

Experts are promoting India as a major trading partner, though some serious barriers remain before Vietnamese businesses will be able to take advantage of the country's untapped potential, vneconomy.com reported.
Official numbers for 2003 have yet to be released, but the deputy director of the Viet Nam Trade Promotion Agency, Do Thang Hai, said the trade turnover between the two countries would not be much higher than the US$375 million it reached in 2002.
The number was very small compared to the US$4.7 billion worth of trade with Japan and US$3.26 billion with China it achieved during the same period, according to statistics from the Ministry of Trade.
The Vietnamese commercial councillor in India, Nguyen Van Tri, said there were a lot of reasons why Vietnamese enterprises neglected India.
The two countries exported similar goods such as textiles, shoes, fine art and electronics, he said. And of course there was the problem of competition. "Vietnamese enterprises always suffer a loss when faced with fierce competition from countries who export goods to India."
Still the news is not all bad. About 70 Indian companies, mostly pharmaceutical, chemical or agricultural enterprises, have opened offices in Vietnam. Many Indian enterprises have also come to the country to take part in exhibitions and fairs.
Tri also said the two countries had set a target to reach US$500 million worth of turnover a year. According to statistics from the Ministry of Trade, turnover in trade between Vietnam and India was US$375 million in 2002.
To reach that goal, the Vietnam Chamber of Commerce and Industry (VCCI) and the Embassy of India in Ha Noi have opened a website to facilitate the exchange of market information between the two countries.
In order to help Vietnam enter the World Trade Organisation (WTO), India has sent an expert delegation to the country to use its own experience to help Vietnam integrate as smoothly as possible.
Meanwhile, VCCI in co-ordination with the Embassy of Vietnam in India has sent a delegation of Vietnamese entrepreneurs to take part in the Kolkata Industrial Fair and attend a seminar of Indian enterprises in Mumbai.
"The visit is aimed to boost trade co-operation between the two sides following General Secretary Nong Duc Manh's visit to India in May this year," Tri said. 

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FOREIGN INVESTMENT

Fresh FDI projects worth $1.55bn in 2003:

The Vietnamese government licensed 620 foreign direct investment (FDI) projects in 2003 with a total registered investment capital of $1.55 billion, decreasing 13.2% in terms of number of projects, but rising by 13.8% in value against 2002, according to latest report form the Ministry of Planning and Investment (MPI).
Singapore remains the biggest investor in Vietnam, followed by Taiwan and Japan. However, the exact figures were not announced.
FDI into the industrial and construction sectors accounted for 70% of total licensed projects and 68.7% of value, with major projects being a $40-million plant producing CDs, VCDs and DVDs, a $40-million beverage company by San Miguel and a $105-million steel plant by Australia's BHP.
The investment environment in Vietnam has become more attractive with 345 projects raising their chartered capital with total additional investment of $1.1 billion, higher than raised capital in 2002, bringing total FDI in 2003 to $2.65 billion, compared with the target of $2.6 billion.
Projects pouring more capital into Vietnam in 2003 included Hung Nghiep Formosa with additional $211.9 million, Tainan Fiber Co. $25 million, Bayer Vietnam $18 million and Phu My 3 Power Plant with $37 million. The Cai Lan Vegetable Oil Co., battery maker Le Long Vietnam and Taiwanese motorbike maker VMEP also raised their chartered capitals by $20 million, $15 million and $16 million, respectively.
The MPI also reported that there have been a series of foreign investors registering to invest in Vietnam in the coming time with total committed capital of nearly $1 billion and they are waiting for licenses. 
Of these, US Winvest Investment LLC will invest $300 million in building a tourism resort near Lam Tuyen Lake in Da Lat City. Germany's Grabowski No. 1 recently asked the government for a license for the construction of a wind-powered energy plant in Binh Dinh province, with an investment of 220 million euros. 
Meanwhile, international organizations pledged $2.834 billion for Vietnam in ODA next year, an increase of 15% compared to that of last year, reflecting continued support for Vietnam's renovation policies and socio-economic development programs.

Overseas Vietnamese Invest $540 Million in 74 Projects

Overseas Vietnamese, or Viet Kieu, have invested a total $540 million in 74 projects in the country in 2003, according to the government's Committee for Overseas Vietnamese. 
In 2003 alone, Viet Kieu received licenses for nine projects with a combined registered capital of $32 million, the committee said.
In 2003, total remittances sent home by Viet Kieu were valued at $2.7 billion, a 20% increase compared with the last year.
So far Overseas Vietnamese have invested VND2.7 trillion to set up 1,200 firms which are operating in accordance to the country's Law on Domestic Investment. In 2003, they invested VND1.25 trillion to set up 200 new firms.

Southern economic hub takes lead in FDI attraction 

The southern key economic zone has been taking the lead in the attraction of foreign direct investment (FDI) in the year to date, with $1.96 billion pledged.
Ministry of Planning and Investment figures show FDI approvals nationwide have totalled $2.7 billion-plus in 2003.
The zone encompasses Dong Nai, Ho Chi Minh City, Binh Duong, Ba Ria-Vung Tau, Long An, Tay Ninh and Binh Phuoc.
For the first time, Dong Nai has outpaced Ho Chi Minh City in FDI approvals, with $740 million committed, of which $450 million is extra capital pledged by existing foreign-invested companies.
This is attributable to the $210 million pledged by Taiwan's Nghiep Hung Formosa Co.
Tran Minh Phuc, director of the Dong Nai Service of Planning and Investment, said the year 2003's FDI pledged capital reached a record high since 2001 and beat the $450 million target.
Ho Chi Minh has dropped to the second position in the zone, with $508 million committed by foreign visitors by December 18th.
The city is still considered to be one of the zone's most attractive destinations for FDI although its target of hiring $700 million in FDl is unattainable, according to the ministry.
Binh Duong province has come third in the zone, with $400million pledged in 124 new and 91 operational projects. The capital committed by 124 new projects is put at $236.5 million, compared to 153 projects worth nearly $300 million licensed in 2002.
Ba Ria-Vung Tau province has been an attractive destination for investors involved in heavy industry. The province is reported to have lured 19 projects involved in various fields, with total registered capital of $217 million, compared to 16 projects valued at $44 million approved in 2002. 
Long An is one of the three new provinces which the Government has added to the southern focal economic zone. The other two are Tay Ninh and Binh Phuoc.
Seventeen FDI projects have been licensed into Long An and three other to raise capital. New FDI commitments are put at $83 million. In 2002, the province licensed 12 projects capitalized at $90 million.
Tay Ninh has seen FDI capital down. Thirteen new projects have pledged a total investment of $23 million, compared to the $41 million for 12 projects in 2002.
Binh Phuoc has received no new FDI project in the year to date. Provincial officials said it was difficult to lure FDI as the province is far from Ho Chi Minh city.
The southern focal economic zone has seen most FDI capital pledges channelled into industrial parks (IP). Nearly $600 million of the total $740 million of Dong Nai has gone to IPs in 2003. Tay Ninh province has 11 projects licensed into IPs with total registered capital of $19.2 million, compared to the total pledged $23.1 million.
Most of the localities in the zone have achieved high FDI capital in 2003 thanks to the capital increase by existing investors.
Foreign investment has mainly been poured into industry, appeal footwear, services, and industrial park in infrastructure development.

Vietnam continues ban on purchasing foreign property 

The Vietnamese Government will still not allow private citizens to send money abroad to buy real estate, said a central bank senior official, responding to a recent advertisement by a Vietnamese company that offered to sell US real estate to Vietnamese nationals.
"Under the current foreign exchange regulations, there is no provision that allows private citizens to send money out of the country to buy property," said the central bank's Ho Chi Minh City branch director Tran Ngoc Minh.
The regulations only stipulate that the central bank may consider and permit the transfer of foreign currency out of Vietnam in a few circumstances. Those include enterprises licensed to invest in overseas projects in compliance with the provisions of the Overseas Investment Law.
Private persons are only allowed to transfer money out of Vietnam to study, work, or have medical treatment; or for immigration as authorized by the host country.
Ho Chi Minh City's Phuong Nam Investment, Informatics and Construction Consulting Shareholding Company (SEI) took out the ad in Saigon Giai Phong (Saigon Liberation) newspaper on December 7 to promote land for sale in an estate called "Diamond Star" in Houston, Texas.
The advertisement said the infrastructure for the project had been completed and that work on the first 10 houses would begin within the month. "This is a chance for locals to own property in the US," the advertisement read.
The advertisement said Vietnamese investors could sign a contract with the company's partner, the US-backed Southern Corporation. Payment would be made in Vietnam in four stages, 10% when the contract was signed and 30% for each subsequent payment through an account at the Saigon Commercial Joint Stock Bank (SCB).
An executive from the SCB confirmed that the "Diamond Star" project owner had opened an account at his bank for prospective buyers of property in the US, with payment to be made in Vietnamese dong.

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INDUSTRY

Electronics sales up, exports down 

The Viet Nam Electronics and Informatic Corporation, which makes brands like Viettronics, recorded domestic sales of VND217 billion (US$14 million) last year, a year-on-year increase of 10 per cent, the company said. It attributed the growth to an increase in domestic demand for high-tech electronic goods, vneconomy.com reported.
However, the company's exports declined 15 per cent to US$18.6 million in the period. Attributing the fall to weak demand in the region, company chief, Nguyen Thinh, said on the other hand, the corporation faced tough competition at home from foreign-invested electronics makers, whose sales grew 25 per cent this year.
However, despite losing a 3 per cent market share in the television segment to its foreign rivals, of the 900,000 TVs sold in the country in 2003, the corporation had a 15 per cent share. 

Vietnam to focus on developing four major industries in next 10 years

Vietnam will centre on developing mechanical engineering, electronics-computer, garment-textile, and agriculture-forestry-seafood processing in the coming decade, the industry minister said.
"These four major industries are given an investment focus as their products hold great potential for sales growth on the local and foreign markets," Hoang Trung Hai explained.
For mechanical engineering, Vietnam will boost the production of electrical equipment, agricultural machinery, ships, locomotives and freight and passenger carriages, and automobiles.
Hai said that given the growing local demand for equipment and machinery, the mechanical engineering sector was holding strong-growth potential although its competitiveness was not yet high.
Vietnam spends some $3 billion a year importing machinery and equipment from other countries. The figure is forecast to grow in the coming years.
Hai said the country could build a strong electronics and computer industry based on the current number of skilled workers and experts. The forthcoming focus is to make computers, telecommunications equipment, household electronic goods and electronic components.
Textile-garment, seafood, forestry and farm produce are now among the country's major export earners. World import spending on garments and textiles is estimated at $166 billions year.
Vietnam is forecast to fetch $3.6 billion from garments and textile exports in 2003, some 2% of the world market's size. Hai said future investment would go to making high-quality fashion clothes for exact and producing materials reduce the reliance of the sector on imports.
Vietnamese seafood, espy and agro-products can compete nationally and internationally, and investment in these sectors will ensure stable supply.
Petrochemicals will be added to the list of the country's major industries stronger investment after 2010. 

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TOURISM

International arrivals expected at 2.8mn in 2004

The hospitality industry in Vietnam targets to serve a total of 2.7-2.8 million international arrivals and 14-14.5 million local vacationers this year, according to a recent national tourism meeting in Hanoi
The conference, held by the Vietnam National Administration of Tourism (VNAT), the country's tourism authority, agreed that the tourism sector would have to be active in promotion programs right from the beginning of 2004 to meet the goals.
The VNAT said it planned to open two tourism promotion agencies in the two potential markets of France and Japan, besides organizing 15 road shows and attending 11 international tourism fairs abroad to polish the image of Vietnam and local tourism destinations in the year. 
It will also focus promotion activities in the markets of Northeastern countries, Australia and North America, deputy head Nguyen Phu Duc told the meeting.
The VNAT, meanwhile, also announced several big tourism events at home, including a festival to celebrate the Dien Bien Phu Victory over the French colonists in April and Festival Hue 2004 in June, and the Central Heritage Road program.
Attending the meeting, Deputy Prime Minister Vu Khoan, meanwhile, asked the tourism industry to improve its services, including the skills of tour guides.
"We are expecting an influx of Japanese tourists as they will be exempted from visas. However, the lack of guides fluent in Japanese language could be a major obstacle," he said. At present, only 5% of local tour guides can speak Japanese.
The VNAT estimates some 2.2 million foreign visitors in Vietnam in 2003, down 400,000 or 15.4% from 2002, mainly due to the SARS scare in the early period of the year. The number of local tourists is put at 13 million while total tourism revenue is expected to reach VND20 trillion ($1.28 million), down 13% on year.
Vietnam now has a total of 1,930 travel firms, including 250 firms authorized to offer overseas tours. The country also boasts 3,761 accommodation bases offering 83,239 rooms for tourists, including 150 three-star to five-star hotels with 16,335 rooms

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