Final group assignment, presentation, dr. dash, 25,11,2010 (0524)

25/11/2010 1
BUILD BRIGHT
UNIVERSITYGROUP ASSIGNMENT
“Analyze the Economic and Non-
Economic factor of Environment in VN”
How far the Environment is Supportive to foreign
Investors?

25/11/2010 2
Table of ContentsTable of Contents
I- Introduction
II- Objectives of the Paper
III- Methodology of the Paper
IV- Discussion of the Topic
1-Discuss about Economic Factor of Environment in Vietnam
1-A-Economic Growth
1-B-Exchange Rate
1-C-Inflation
1-D-Unemployment
1-E-Balance of Payment
2-Discuss about Non-Economic Factor of Environment in Vietnam
2-A-Political
2-B-Social Cultural
2-C-Legal
2-D-Technological
2-E-Geographical
3- Discuss about Challenge and Supportive Factor to Foreign Investors
3-A- Challenge to Foreign Investors
3-B- Supportive Factor to Foreign Investors
V- Conclusion and Recommendations
VI- References:
“Analyze the Economic and Non-Economic factor of Environment in VN”

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* Vietnam is now among the fastest-
growing economies in Asia.
* 2009, Vietnam still recorded GDP
growth of 6.20%.
* Long term investors maintain that
Vietnam's long term prospects are
good, providing that the government
sticks to its reform plans, overcomes
skills and infrastructure challenges,
and tackles corruption.
I- Introduction

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II- Objectives of Paper:
The objective of this paper is to find out and discuss
about the economic and non-economic factor of
environment in Vietnam and to find out also the
challenge and supportive factor to foreign investors.
III- Research Methodology:
Base on this research paper on discuss about the
economic and non-economic factor of environment
in Vietnam and to find out the challenge and
supportive factor to foreign investors, we will use
only secondary data by doing research and collect
data from Prof. (Dr.) T.R. Dash's material, some
books and internet websites. The study is relatively
descriptive and explanatory in nature.

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IV- Discussion of the Topic:
1- ECONOMIC FACTOR

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 Vietnam joined member of WTO in January 2007.
 Vietnam is one of the best performing economies in the world
over the last decade .
 Real GDP has on average grown by 7.3 percent per year
during 1995-2005 and per capita income by 6.2 percent per
year.
 A New Socio-Economic Development Plan for 2006-2010 was
approved by the National Assembly in June 2006.
 The SEDP aims at rapid development, carefully balanced
between its four pillars of economic, social, environmental
development, and improved governance and institutions.
1-A-Economic Growth:
1- ECONOMIC FACTOR

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 Growth performance was solid in 2007. Economic growth
accelerated slightly, to 8.5 percent, making 2007 the third
consecutive year above the 8-percent benchmark.
GDP growth rate of Vietnam from 2006 to 2010
6.5% (Est.)2010
6.20%2009
7.50%2008
8.50%2007
8.20%2006
GDP Real GrowthYear
1-A- Economic Growth (Continued)
1- ECONOMIC FACTOR

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GDP (purchasing power parity): GDP - per capital (PPP):
- $256.90 billion (2009 est.) - $2,900 (2009 est.)
* Rank: 42 * Rank: 167
- $ 243.90 billion (2008 est.) - $ 2,800 (2800 est.)
- $ 229.50 billion (2007 est.) - $ 2,700 (2007 est.)
GNI Per Capita 2009 and PPP GDP - composition by sector:
- $2,850 - Agriculture: 21.3%
- Rank: 160 - Industry: 40%
- Services: 38.7% (2009 est.)
REMARK:
ECONOMIC FACTOR OF ENVIRONMENT IN VIETNAM
Economic Growth (Continued)

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- Vietnam is a two-currency country.
- Both Vietnamese dong and US dollars are legal tender in
the country. But most of the places like market, hospital,
small restaurant,…. are preferred DONG rather than USD.
- The urgent government’s meeting on November 3
evening ended at 9 pm. Several measures were put
forward to deal with the uncertainties on the foreign market
and prevent high inflation.
Exchange Rate on November 15, 2010
-1 USD = 21000 Dong
- 1 Riel = 5.181 Dong
1-B-Exchange Rate

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1-C-Inflation
- Inflation is a general and sustained increase
in prices.
- It is quoted as a percentage annual figure.
- Vietnamese inflation slowed for a second
month in May 2010, giving policy makers
room to spur growth by boosting credit and
encouraging market interest rates to fall.
- According to figures from the General Statistics
Office in Hanoi, consumer prices climbed 9.05%
in May from a year earlier.
- The inflation rate in April was 9.23 percent.
Prices rose 0.27 percent in May from the
previous month.

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Inflation rate (consumer prices):
7% (2009 est.)
country comparison to the world: 168
Inflation (Continued)
72009
23.1152008
8.3492007
7.5032006
8.3942005
7.8952004
3.3032003
4.0792002
InflationYear

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1-D-Unemployment
-The rate of unemployment can have a major effect
on the economy.
-The more people who are out of work, the less money
that is circulated into the economy through the purchase
of goods and services.
-Vietnam becomes an export based developing country
once it joined ASEAN Free Trade Area (AFTA) in 2001.
-Exporting labor to wealthier parts of the world has long
been something in which Vietnam has lagged behind its
Asian neighbors, but the government hopes to change
that soon.

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 Last year, Vietnam exported nearly 22,000 workers,
who sent home some US$220 million.
 Most of workers were sent to countries like Japan,
Taiwan, South Korea and Libya.
 Employed in construction, industry, sea transport, seafood
processing, health care and agriculture.
Vietnam government is trying best to open up labor services to
private business in the country.
Unemployment (Continued)

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April 2009 est.616.50 %2010
2008 est.584.70 %2009
2007 est.534.30 %2008
2006 est.142.00 %2007
2005 est.212.40 %2006
2004 est.121.90 %2005
2003 est.1356.10 %2004
2002 est.3425.00 %2003
Date of
Information
RankUnemployment rate
Year
Remark:
6.5% (April 2009 est.)
- country comparison to the world: 61
Unemployment (Continued)

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1-E-Balance of Payment
- 2010 Socio-Economic Report recently announced by
Ministry of Planning and Investment, Vietnam balance
of payment in 2010 may run a deficit of $4 billion.
- Lecturer of Fulbright Economics Teaching Programme
said a powerful solution is needed in order to solve the
deficit problem of the total balance of payment

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Balance of Payment (Continued)
14.01417.5252010
56.58468.832009
Export (Billion US$)Import (Billion US$)Year
* From Jan to Mar

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2-A-Political In VN
-Form of Government:The Communist state.
-Legal system: based on communist legal theory and French
civil law system
-Political parties and leaders: Monopoly party - Communist
Party of Vietnam (CPV) (Nong Duc Manh, general secretary)
-Political Ideology: Though formally Marxist-Leninist, Moved
towards market reforms in the economy and has permitted a
growing private sector. the party retains a monopoly on power.
2-Non-Economic factor of Environment in VN

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-Role of government:
Planning is a key characteristic of centralized, economic
development guidelines for all its regions.
The first phase, from 1976-1980, incorporated Second
Five-Year Plan (1976-80) the First Five Year Plan
(1960-65) applied to North Vietnam only.
The second phase, called "socialist industrialization,"
was divided into two stages: from 1981-1990 and
from 1991-2005.
The third phase, covering the years 2006-2010, was to
be time allotted to "perfect" the transition.

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-Political Stability In VN
The smooth change in leadership reflects the country's recent
track record.
efficiently resolving socio-economic issues, strengthening
national defense, security, expanding foreign relations,
actively participating in international integration.
New Prime Minister Nguyen Tan Dung: marks the most
dramatic transfer of mantle to a younger leader. Mr. Dung
received over 92% of the N.A, fight against corruption.
his new post rich experience of managing not only
security issues but also economic affairs.

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2-B-Social Cultural
-Language: Vietnamese, for business: English.
French, Russian, Chinese, Japanese,
German, South Korean.
-Education
In 2003 Vietnam’s literacy rate was 94%.
-Attitudes:
Behaviors in the workplace
Traditional Vietnamese organizations operate
strict hierarchies. Individuals have defined
roles, report to an immediate superior who
will direct his or her work

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2-B-Social Cultural
-Behavior in society
correct deference must be paid to the
representatives of authority. Police officers,
bureaucrats, public officials, should be given an
appropriate gratuity for services rendered.
-Social groups
• Changes in lifestyle for different social groups
• Subject to ruler
• Son to father
• Wife to husband
• Younger brother to elder brother
• Mutual respect between friends

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2-C- Legal
Is based on communist legal theory,
French civil law. In 1981 major reforms
were made to the judicial and legal
system.
Vietnamese legal thought with regard to
the treatment of criminals is the result
of three major influences: classic
Confucianism, the Napoleonic Code,
and Marxism-Leninism.

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2- Non-Economic Environment (Cont.)
Implementation of the digital mapping
technology, including digital aero-
triangulation and digital mapping.
Implementation of DGPS techniques to
promote hydrographic survey and
cadastral mapping. For this purpose, the
first permanent GPS station for MSK
DGPS technology was established in Hai
Phong and its control station in Hanoi.
2-D. Technology

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Using GPS-controlled aerial photography to
secure timely high quality air photos for map
production and other users, including the
implementation of a GPS-navigation system
for photo flight and a GPS system for the
determination of the coordinates of the photo
projection center.
Upgrading the existing geodetic network
using precise GPS-measurement techniques.
2-D. Technology (Cont.)

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 There are four geographic sections in Vietnam, ranging
from rugged mountains to marshy fertile flatlands.
 Vietnam's "S" shape takes it from China, in the north,
the Gulf of Thailand in the south.
 In the north, there are mountains that extend up to
3.143 m at Fan Si Pan, the highest point in Vietnam;
the east and southeast consists of the Red River Delta,
an alluvial plain; south of this Delta is the Truong Son
(Annam Highlands) which is considered to be the
backbone of Vietnam.
 A plateau (Central Highlands) also occupies this area
and can be found between Cambodia and the South
China sea.
 The Mekong Delta is located in the southernmost
portion of Vietnam and makes up a fertile, marshy
flatland that goes from the Central Highlands (north of
it) south to the mangrove swamps on the Ca Mau
peninsula.
2-E. Geographical

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 The Red River and the Mekong River are navigable in their
entirety and are considered to be the two major rivers in
Vietnam. To help prevent flooding in their deltas, a system of
dikes and canals has been erected. This has helped improve
farming in the Mekong Delta due to salt water flooding from
the South China Sea, especially during the long, wet monsoon
season.
 The average temperature in the north is about 81 degrees F
(27 degrees C) and in the south a nice 70 degrees F (21
degrees C) and is generally humid.
 Two monsoons control the weather, one is considered to be a
dry monsoon which occurs mainly in the north from about
October/November to March.
 The other brings wet, warm weather to the entire country,
with the exception of the mountainous areas, from April/May
to October.
 July and August are considered to be the hottest and most
humid months.
2-E. Geographical (Cont.)

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3- Discuss about Challenge and Supportive Factor
to Foreign Investors:
There are 10 first factors to be considered by investors
when choosing the location for investment:
1) Customers approach
2) A stabilized social and political environment
3) Easy commercial condition
4) Reliability and quality of infrastructure
5) The capacity to hire qualified staff
6) The capacity to hire managers
7) Level of corruption
8) Cost of labor
9) Crime
10)The capacity to hire technical staff
________________________
(Source: MYGA, survey on direct foreign investment, January 2002)
“Analyze the Economic and Non-Economic factor of Environment in VN”“Analyze the Economic and Non-Economic factor of Environment in VN”

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3-A- Challenge to Foreign Investors in
Vietnam:
 Completing the structural reform
agenda, including the implementation
of WTO commitments and the banking
reform roadmap;
 Establishing an efficient regulatory
framework for infrastructure while
expanding the capacity to fill the
supply gap in energy, transport and
water;
 Protecting the environment and
better managing natural resources;
3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.)

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3-A- Challenge to Foreign Investors in Vietnam
(Cont.)
 Establishing a public administration
based on principles of efficiency,
accountability and transparency,
 Setting up social security systems
that would provide for health care
financing, pensions for retirees and
support for temporary unemployed;
and improving the quality of education
throughout the system; and
 Implementing the Anti-Corruption
Law and regulations effectively.
______________
Source: The World Bank,
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAP

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3-B- Supportive Factor to Foreign Investors in Vietnam:
To perfect its investment environment, Vietnam
will focus on improving the quality of its
human resources, upgrading infrastructure
and ensure transparency and consistency of
investment policies.
Vietnam integrated itself to the region and the world:
Asia Pacific Economic Cooperation (APEC)
-Member since 1998
WTO (World Trade Organization),
-Became a WTO member in 2006,
ASEAN Free Trade Agreement (AFTA)
-Cutting tariffs to join the AFTA- complete by early 2006
Ayeyawady-Chao Phraya-Mekong Economic
Cooperation Strategy ACMECS(Thailand):
-Vietnam admitted to ACMECS as an official member in 2005

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3-B- Supportive Factor to Foreign Investors in Vietnam:
Changes in Political and Legal Framework:
Constitution 1992:
private sector granted equal treatment with state sector.
Trade liberalization:
 Bilateral Trade Agreement with USA;
 AFTA implementation from 2003-06;
 targeting accession to WTO in 2006.
Macroeconomic Stability Maintained:
 GDP Growth 7.2% in 2003; 7.69% in 2004; 7.5%e in 2005.
 Industrial Output increased by 16.1% in 2003; 16% in 2004 and
16% in 2005.
 Reasonable interest rates and modest devaluation of VND in spite of
CPI of 9.5% in 2004.

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3-B- Supportive Factor to Foreign Investors in
Vietnam (Cont.):
Improved Investment Climate:
Development of about 110 Export Processing Zones,
Industrial Zones, High Tech Zones.
 About 5,110 foreign-direct investment projects
(75% wholly-foreign owned, 25% joint ventures) with a
total approved capital of around USD 46bn
 In 2003, the monopoly in the telecom sector started
to phase out; internet telephony was allowed; four more
mobile phone operators entered the market.
Infrastructure Projects:
 Increasing capacity and efficiency of currently 16
operational and 9 new airports.
 Expanding the number of deep sea ports.
 Up-grading highways
 Improving internet-access, telephone and mobile
phone availability and reduce cost.
Telecommunication
Transportation

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3-B- Supportive Factor to Foreign Investors in
Vietnam (Cont.):
Competitive Quality of Workforce:
 Over 50% populations are below 25 years old,
60% less than 30 years old
 Working-age Population accounts 59.3% of total
Population (46.7m People)
 Literacy Rate about 94% in 2003
 Special Focus on IT-Training in schools
fuelling software industry development
 Vietnamese workers have proven to be skilful,
reliable and highly trainable.
 Freedom to repatriate profit after completing
all stipulated obligation with Government (tax
rate is 0%).
 Import Tax Exemption for commodity
(goods/luggage) to create fix asset.
 Land rental fee reduction

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V-Conclusions and Recommendations
 Vietnam is among fastest growing economy in the
region and the world with many business opportunities,
from both quantitative and qualitative aspect.
 Government supports the open door policy, building up
the infrastructure and improve in competitiveness.
 Vietnam has witnessed fundamental changes during 13
years of comprehensive reform towards market and the
world economy.
 With further strengthening policies on development of
enterprises, abolishment of monopoly of state owned
enterprises, development of production factor
markets, macroeconomic stabilization, acceleration of
integration process, and modernization of public sector,
Vietnam will gain higher benefit from opportunities in
the globalization as well as minimize possible costs and
reach the projected goals.

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VI- References:
A-Books:
1- International Business Environment (Handouts) - Dr. T. R. Dash, BBU, August, 2010
2- International Business: The Challenge of Global Competition- Donald A. Ball, Wendell, Paul, J. Michael and
Michael S. Minor, McGraw-Hill/Irwin, New York, 2004
3-Vietnam's economic development: Opportunities and challenges towards the integration tendency Prof.,Dr.
Nguyen Thi Ngoc Huyen and Prof.,Dr. Bui Anh Tuan, National Economics University, Hanoi, Vietnam
B-Websites:
1- Investment and Trade Promotion Center,
http://www.itpc.gov.vn/investors/news/2010/10/2010-10-28.342326/MISNews_view/?set_language=en
2- MUTRAP, http://www.mutrap.org.vn/en/Lists/Posts/Post.aspx?List
=04b7f557-7dc2-4103-91f3-a38d33dc893d&ID=178
3- VOANEWS.VN,
http://english.vovnews.vn/Home/Vietnam-an-attractive-destination-for-foreign-investors/20063/36897.vov
4- Service Industry Promotion Center, http://www.taiwanbiztour.com/global/Content.aspx?id=36
5-The World Bank,
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/VIETNAMEXTN/0,,menuPK:387575~pag
6- http://www.haivenu-vietnam.com/vietnam-culture-attitudes.htm
7- http://www.indexmundi.com/vietnam/unemployment_rate.html
8- http://www.indexmundi.com/vietnam/inflation_rate_(consumer_prices).html
9-http://www.businessweek.com/news/2010-08-31/vietnam-s-2010-economic-growth
10-http://web.worldbank.org/
11-http://www.vietnewsonline.vn/News/Business/6242/Vietnam-sees-2010-GDP-growth-at-65-7.htm

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