VNM Pestel

Country Profile Series
Vietnam
In-depth PESTLE insights
PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

REFERENCE CODE: ML00002-033
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OVERVIEW
Catalyst
This profile analyzes the political, economic, social, technological, legal and environmental (PESTLE) structure in
Vietnam. Each of the PESTLE factors is explored in terms of four parameters: current strengths, current challenges,
future prospects and future risks.
Summary
Key findings
The Communist Party of Vietnam has adopted a pragmatic approach; however, territorial dispute with
China shows no sign of reconciliation
The ruling Communist Party of Vietnam (CPV) has not recently faced any serious threats to its power, and this situation
is expected to remain the same over the coming years. The elections to the National Assembly were held in May 2007,
and the cabinet was instated in July 2007. Nong Duc Manh was re-elected as general secretary. The CPV held its
congress in January 2011, with Nguyen Phu Trong replacing Nong Duc Manh as the new general secretary; the latter
retired after 10 years in the post. The new general secretary of the CPV has said that tackling the country's economic
problems is a priority. For the duration of his second term as prime minister from 2011-16, Nguyen Tan Dung plans to
support greater economic liberalization and continue to appease hardliners by strictly following CPV policies. The party
aims to achieve reasonable economic growth with increasing prosperity for the people, which is likely to ameliorate the
demand for political and social freedoms.
China's claim over the Paracel and the Spratly islands is challenged by Vietnam on grounds that China had never
claimed sovereignty over the islands before the 1940s and Vietnam has documents supporting its claim that Vietnamese
ruled the two islands since the 17th century. In May 2014, tensions between the countries escalated when Vietnam
accused Chinese energy company, China National Offshore Oil Corporation (CNOOC), of illegally drilling in its waters.
With China showing no sign of reconciliation and taking its dispute with Vietnam over the deployment of the oil rig in the
contested waters to the United Nations, the issue is likely to escalate in the medium term.
Vietnam is strengthening its economic ties with Japan and Russia, but doubts over privatization of the
SOEs remain
In January 2013, Prime Minister Dung and his Japanese counterpart Shinzo Abe vowed to strengthen their strategic
partnership. Japan agreed to support Vietnam in achieving its industrialization and modernization goals by 2020. Total
merchandise trade between the two countries was around $23.4 billion in 2013 according to data by Vietnam Customs.
During a visit by former Russian Prime Minister Dmitry Medvedev in December 2012, both countries agreed to deepen
their energy co-operation. Vietnam and Russia have also begun talks on a free trade agreement (FTA) and as of June
2014 the fifth round of negotiations has been completed. Improved economic ties are likely to increase Vietnam's exports
and help the country in maintaining a current account surplus.

The poor performance of state-owned enterprises (SOEs) in the mid-1980s compelled the government to embark upon
the policy of restructuring the public sector and opted for the privatization process as an important strategy. Privatization
through equitization involves the process of changing corporate ownership of former SOEs with the purpose for
mobilizing capital from private investors in order to increase its financial resources, allowing employees to be
shareholders and increasing investment in new technology. In 2013, over 400 SOEs were almost on the verge of
bankruptcy, which forced the government to undertake quick and at times expensive restructurings. The entire process of
restructuring has been slow.
The country has a young society, but the government continues to suppress freedom
According to MarketLine estimates, as of 2013, 24.59% of the population is in the 0-14 age group, 69.82% of the
population belongs to the 15-64 age group, and just 5.59% of the population is in the 65+ age group. Vietnam had a
median age of 29 years in 2013. While many developed nations are faced with the problem of an aging population and
rising social expenditure, Vietnam's demographic structure works in its favor, as there are regular additions to its labor
force.
According to Human Rights Watch, Vietnam continues to suppress the freedom of expression, peaceful assembly and
association. The government's persecution of those who expose official corruption, question government policies or voice
their opinion for multi-party rule is still persistent. Harassment and intimidation of activists continues with full support of
the government. This includes arbitrary arrests, torture, denying access to legal counsel and prosecution by courts that
lack independence. Excessive force was used by the police in 2013 in response to rising protests over police brutality,
land confiscation and evictions. The country gained a seat in the United Nations Human Rights Council (UNHRC) for the
2014-16 term, which seems ironic against the denial of basic rights to its citizens.
Vietnam's e-commerce sector is emerging; however, poor performance on patents is a dampener
According to the Ministry of Industry and Trade, in 2013, the estimated e-commerce sales per online buyer amounted to
approximately $120. Revenue from online shopping amounted to $2.2 billion, which is an increase of over 300% from
$700m in 2012. With majority of the buyers being either manager/office staff (41%) or students (37%), the sector has
scope to improvise and expand their customer base. With the e-commerce market expected to generate revenues of $4
billion in 2015, obstacles like worse product quality than advertised, dispute over price, unprofessional shipping, etc.
should be addressed.
The number of patents a country registers is considered a significant indicator of its scientific and technological
development. It not only reflects the actual effectiveness of theoretical research but also the potential for application
research. Vietnam was granted only six patents between 2006 and 2010, with none being registered in 2011 by the US
Patent and Trademark Office. In 2013, the number of patents granted was only five. This will continue to be a challenge
for the economy and the government has to take steps to improve the situation.

Vietnam signed a law to curb money laundering, but high tax compliance costs may act as a deterrent
Vietnam was a favored destination for money launderers for a number of years, but that is set to change as the Law on
Prevention and Combat of Money Laundering, ratified by the National Assembly, was implemented from January 1,
2013. The new law provides a broader definition of money laundering activity and covers a wider range of individuals and
organizations. If properly implemented, the law is likely to reduce the amount of money laundering in the country.
Taxes play a crucial role in the economy. However, it is very important to choose an appropriate tax rate level and avoid
complexity in tax rules. The World Bank Doing Business data indicates that in economies where it is more costly and
difficult to pay taxes, larger shares of economic activity end up in the informal sector where businesses pay no taxes at
all. According to the 2014 Doing Business Report, Vietnamese firms make 32 tax payments a year, spend 872 hours a
year for filling, preparing and paying taxes, and pay total taxes amounting to 35.2% of profit. The country needs to
simplify the tax payment system and reduce taxes to attract foreign investment.
Vietnam has launched a project to reduce the emissions of greenhouse gases, but adverse
environmental effect due to rice boom is a concern
In April 2013, Vietnam launched a project to control emissions of greenhouse gases (GHG) and adapt to climate change.
The $3.05m UNDP project will end in 2016. The project, comprising of three sub-projects, aims to reduce GHG
emissions in industrial production and create opportunities for trading with environment-friendly technology. The project
aims to improve awareness of climate change among policy makers. Proper implementation will help Vietnam in
achieving its National Strategy of Green Growth target of reducing GHG emission by 8-10% in 2020. This target was
adopted in September 2012.
The construction of elaborate networks of dikes and irrigation canals enabled Vietnam to become one of the leading rice
producers in the world. However, scientists have pointed out that the ongoing construction of dikes and irrigation
infrastructure across the Mekong Delta has affected the river delta's complex ecological systems. For example,
downstream fisheries and floodplain farms are deprived of vital nutrients as high dikes in the upstream areas block the
natural floodplain movement. Furthermore, agricultural chemicals have polluted irrigation canals and caused acidification
of water and soil, resulting in a general loss of biodiversity and decline in fish populations.
PESTLE highlights
Political landscape
 Vietnam is a one-party communist state led by a troika made up of General Secretary Nguyen Phu
Trong, President Truong Tan Sang, and Prime Minister Nguyen Tan Dung.
 The year 2011 marked 40 years of diplomatic ties between Vietnam and Denmark. A joint
declaration was signed in 2011 between the two countries that enhanced a strategic partnership
regarding climate change, energy, environment, and green growth.
Economic landscape
 Vietnam maintained average economic growth of 6.33% during 2005-12. However, Vietnam
underperformed in 2013 due to structural problems in the SOEs and the banking sector, and policy
distortions and recorded an economic growth of 5.42%.
 In June 2014, Standard & Poor's (S&P) affirmed the BB- long-term and B short-term credit ratings on
Vietnam with a stable outlook despite tensions over China's intrusion in the East Sea (or South
China Sea), short-term security issues in some parts of Vietnam and concerns over fall in investment

prospects due to rising investor concerns.
Social landscape
 In the 2013 Human Development Index (HDI), the country was positioned 127th out of 187 countries
with a HDI value of 0.617. This places Vietnam in the medium development category.
 Vietnam and Australia are working together to tackle tuberculosis. A sum of $1.3m has been
allocated for a project in which Vietnam will receive advice from Australian tuberculosis experts. This
advice will be applied at all levels of the healthcare system.
Technological landscape
 The science and technology (S&T) policy for 2011-20 aims to increase the number of researchers
per 1000 people to around 10 by 2015 and to 11-12 by 2020. It also aims to increase international
publications by 15-20% per annum.
 The number of mobile and internet subscribers in Vietnam has increased; however, the country is
placed in the 84th place out of 148 countries in the Networked Readiness Index 2014.
Legal landscape
 In January 2014, Vietnam in collaboration with the World Bank launched the Vietnam Anti-Corruption
Initiative Program 2014, which is the third and the last of the Vietnam Anti-Corruption Initiatives
(VACI) Program series. The latest VACI supports the implementation of innovative ideas to
strengthen accountability, transparency and integrity.
 In the 2014 Index of Economic Freedom, Vietnam was ranked 147th among 178 countries. There
was decline in its monetary freedom, business freedom and freedom from corruption.
Environmental landscape
 The Hon Me Rescue Station was inaugurated on July 27, 2012 in Hon Dat District for the protection
of endangered animals. The station was established as part of collaboration between Wildlife at
Risk, Free the Bears, Kien Giang Forest Protection Department, and the Brigitte Bardot Foundation.
 The Ho Chi Minh (HCM) city, as a precautionary step to mitigate the effects of climate change, has
allocated VND70.54 trillion ($3.28 billion) to finance 36 projects related to climate change. It will
focus on developing an energy efficient economy.

Key fundamentals
Table 1: Vietnam - key fundamentals
2012 2013 2014f 2015f 2016f 2017f 2018f
GDP, constant 2005 prices ($ billion) 87.55 92.30 97.51 103.08 109.08 115.55 122.46
GDP growth rate (%) 5.25 5.42 5.64 5.72 5.82 5.93 5.99
GDP, constant 2005 prices, per capita ($) 988.15 1030.03 1075.60 1125.56 1179.06 1236.47 1297.36
Inflation (%) 9.21 6.60 6.50 6.41 6.37 6.34 6.20
Exports, total as a percentage of GDP 79.72 73.81 67.62 61.90 56.58 51.64 47.13
Imports, total as a percentage of GDP 81.08 77.38 69.77 62.91 56.67 51.00 45.92
Mid-year population, total (million) 88.60 89.61 90.65 91.58 92.51 93.45 94.39
Unemployment rate (%) 4.31 4.19 4.20 4.20 4.20 4.21 4.21
Mobile penetration per 100 people 150.32 152.12 153.66 154.96 156.07 157.00 157.80
Source: Country Statistics MarketLine MARKETLINE

TABLE OF CONTENTS
Overview 2
Catalyst 2
Summary 2
Key Facts and Geographic Location 12
Key facts 12
Geographical location 13
PESTLE Analysis 14
Summary 14
Political analysis 15
Economic analysis 19
Social analysis 24
Technological analysis 28
Legal analysis 31
Environmental analysis 34
Political Landscape 38
Summary 38
Evolution 38
Structure and policies 39
Performance 41
Outlook 42
Economic Landscape 43
Summary 43
Evolution 43
Performance 46

Outlook 54
Social Landscape 56
Summary 56
Evolution 56
Performance 59
Outlook 60
Technological Landscape 61
Summary 61
Evolution 61
Performance 62
Outlook 63
Legal Landscape 64
Summary 64
Evolution 64
Performance 65
Outlook 66
Environmental Landscape 67
Summary 67
Evolution 67
Performance 67
Outlook 69
Appendix 70

Ask the analyst 70
Disclaimer 70

TABLE OF FIGURES
Figure 1: Map of Vietnam 13
Figure 2: State-owned enterprises equitized in Vietnam, 2000-15f 23
Figure 3: Vietnam - political events timeline 38
Figure 4: Vietnam - key political figures 39
Figure 5: Vietnam - historical GDP growth, 1991-2013 44
Figure 6: GDP and GDP growth rate in Vietnam, 2007-17f 46
Figure 7: GDP composition by sector in Vietnam, 2013 47
Figure 8: Agricultural output of Vietnam, 2008-13 48
Figure 9: Industrial output of Vietnam, 2008-13 49
Figure 10: Services output of Vietnam, 2008-13 50
Figure 11: External trade of Vietnam, 2009-13 52
Figure 12: Consumer Price Index and Consumer Price Index-based inflation in Vietnam, 2007-17f 53
Figure 13: Unemployment and unemployment rate in Vietnam, 2007-17f 54
Figure 14: Vietnam - composition of religion 58
Figure 15: Government healthcare expenditure, 2006-12 59
Figure 16: Internet users in Vietnam, 2008-12 62
Figure 17: Carbon dioxide emissions in Vietnam, 2004-11 69

TABLE OF TABLES
Table 1: Vietnam - key fundamentals 6
Table 2: Vietnam - key facts 12
Table 3: Analysis of Vietnam's political landscape 15
Table 4: Analysis of Vietnam's economy 19
Table 5: Analysis of Vietnam's social system 24
Table 6: Analysis of Vietnam's technology landscape 28
Table 7: Analysis of Vietnam's legal landscape 31
Table 8: Analysis of Vietnam's environmental landscape 34
Table 9: Mid-year population by age (as percentage), 2013 57

Key Facts and Geographic Location
KEY FACTS AND GEOGRAPHIC LOCATION

Key facts
Table 2: Vietnam - key facts
Country and capital

Full name Socialist Republic of Vietnam
Capital city Hanoi
Government
Government type Communist state
Chief of state President Truong Tan Sang
Prime minister Nguyen Tan Dung
Population (2013) 89.61 million
Currency Vietnamese dong
Gross domestic product per capita (purchasing power parity) $4,086
Internet domain .vn
Demographic details
Life expectancy (2013) 72.7 years (total population)
70.2 years (men)
75.4 years (women)
Kinh (Viet) 85.7%, Tay 1.9%, Thai 1.8%, Muong 1.5%, Khmer 1.5%,
Ethnic composition (1999 census)
Mong 1.2%, Nung 1.1%, other 5.3%.
Buddhist 9.3%, Catholic 6.7%, Hoa Hao 1.5%, Cao Dai 1.1%,
Major religions (1999 census)
Protestant 0.5%, Muslim 0.1%, none 80.8%
Country area 329,560 sq. Km
Languages Vietnamese (official), English (increasingly favored as a second

language), some French, Chinese, and Khmer; Mon-Khmer; and
Malayo-Polynesian (mountain area languages).
Exports Clothes, shoes, electronics, seafood, crude oil, rice, coffee, wooden
products, machinery
Imports Machinery and equipment, petroleum products, steel products, raw
materials for the clothing and shoe industries, electronics, plastics,
automobiles
Source: Country Statistics, MarketLine and CIA - The World Factbook MARKETLINE

Key Facts and Geographic Location
Geographical location
Vietnam is located in Southeast Asia. The country is bordered by the Gulf of Thailand (to the southwest), the South
China Sea (to the southeast), and the Gulf of Tonkin (to the east). Cambodia and Laos lie to the west of Vietnam, while
China lies to the north.
Figure 1: Map of Vietnam
Source: CIA - The World Factbook MARKETLINE

PESTLE Analysis
PESTLE ANALYSIS
Summary
Vietnam has progressed considerably since the Vietnam War ended in a communist victory in the mid-1970s. Liberal
economic reforms from the mid-1980s led to strong growth during the 1990s. Political reform has been slower to
materialize, with the communists' monopoly on power still firmly in place.
The pace of economic reform received a boost in 2001 when the country signed a comprehensive package of reforms
created in conjunction with the Bretton Woods international financial agreements. The same year marked the signing of
a historic trade agreement with the US, finally normalizing trade between the former enemies. Rising exports and
structural and economic reforms ahead of the country's accession to the World Trade Organization (WTO) contributed
to average growth of 7.27% during 2001-06. The global economic slowdown reduced growth to 5.40% in 2009, before
it recovered to 6.42% in 2010. Growth declined again in 2011 to 6.24% before ebbing to 5.25% in 2012. In 2013,
economic growth was 5.42%.
As a whole, Vietnam's population is very young, which is an advantage for the country because it not only adds to the
workforce but also reduces social expenditure, unlike in many developed countries that are facing the problem of aging
population. The planned creation of new universities will improve higher education and help create a skilled workforce.
However, lack of religious freedom and rapid growth in slums remain an area of concern.
Vietnam has decided to build a new technology research center in Hanoi, with a projected investment of $350m
sourced from Japan's Official Development Assistance budget. The center will aim to implement the country's space
technology research and application strategy by 2020. The F-1 satellite, considered the first of its kind, was designed
and manufactured in Vietnam by the space research division of FPT Technology University. Vietnam installed the
nation's largest solar power station at Saigon Hi-Tech Park in April 2012. In addition, Vietnamese Internet security firm
BKAV is planning to invest $16m in the construction of an IT complex at Hoa Lac Hi-Tech Park in Hanoi.
Corruption is perceived to be high in the country, which has not only undermined efforts to improve market institutions
and the legal system, but has also eroded public trust. Vietnam has to take measures to alleviate corruption, as it can
act as an impediment to foreign investment. The country faces a serious challenge as it lacks an independent judiciary.
The Communist Party of Vietnam (CPV) selects judges and vets them for political reliability. The party also seeks to
influence the outcome of cases involving perceived threats to the state or to the party's dominant position.
A large part of Vietnam is covered in forests. The country is known for its biodiversity; its terrestrial ecosystem contains
over 13,200 floral species and about 10,000 animal species. The inauguration of the Hon Me Rescue Station for
endangered species demonstrates Vietnam's efforts to ensure wildlife protection. However, Vietnam incurs high
economic losses due to recurring natural disasters and it faces other challenges such as rising water pollution and
deforestation.

PESTLE Analysis
Political analysis
Overview
Since the unification of Vietnam in 1976, the CPV has been in charge of the country. The government does not tolerate
political dissent and regularly jails political activists. Its decisions constitute national policy, which the executive (Central
Committee) and the legislature (National Assembly) are required to follow. The CPV has not faced any serious threat to
its power in the last few years, and is expected to continue to rule the country in the near future. However, its territorial
dispute with China has continued over the years and escalated further in May 2014, when Vietnam accused Chinese
energy company, China National Offshore Oil Corporation (CNOOC), of illegally drilling in its waters.
Table 3: Analysis of Vietnam's political landscape
Current strengths Current challenges

▪ Political stability and commitment to fight corruption ▪ Stifling of dissent.
▪ Defense agreements ▪ Territorial dispute with China
▪ High corruption levels
Future prospects Future risks

▪ Free trade agreement with European Union ▪ Land seizures could lead to civil unrest.
▪ Struggle for power between conservatives and reformers
Source: MarketLine MARKETLINE
Current strengths
Political stability and commitment to fight corruption
The ruling CPV has faced no recent threats to its power, and this situation is expected to persist over the coming years.
In the elections to the National Assembly held in May 2007, a cabinet was instated in July 2007. Nong Duc Manh was
re-elected as general secretary. During his first term during 2001-06, he focused on fostering unity and stability within
the party, and he continued with the same policies in his second term. Manh was a supporter of reform and countered
attempts to roll back progressive motions.
With a single ruling party, the political situation in Vietnam is very stable. In January 2011, the CPV was re-elected in
the 11th National Congress to rule for the next five years. Nguyen Tan Dung was reappointed prime minister and
Nguyen Phu Trong was elected as party general secretary. For the duration of his second term from 2011-16, Dung
plans to support greater economic liberalization, while appeasing hardliners by strictly following CPV policies. The party
aims to achieve economic growth in an attempt to satisfy the social and material needs of the people, thereby quelling
discontent and demands for political and social freedoms. The CPV has been seeking to combat the increasing levels
of corruption; the positive results of this effort are expected to be seen in the near term.

PESTLE Analysis
Defense agreements
As a part of government strategy to enhance ties with Europe along with boosting military and defense capabilities,
Vietnam expanded its relations with France and Italy. Agreements were signed between France and Vietnam in
January 2013. Both the countries proposed to strengthen their bilateral defense ties in sea patrols, national defense,
military training and maritime security. Vietnam is also considering purchase of French military equipment. In January
2013, Vietnam and Italy agreed to enhance cooperation in the field of defense and signed an agreement to co-operate
in shipbuilding and training. During the visit of Russian president, Vladimir Putin, in November 2013, he agreed to
expand military supplies to Vietnam. Vietnam has also signed a defense agreement to expand maritime security
relations with Japan in March 2014. Against the backdrop of expansionist Chinese policy, the agreements are likely to
strengthen its defense.
Current challenges
Stifling of dissent
Political dissent is suppressed in communist Vietnam. Six democracy activists, who hung pro-democracy banners on a
road bridge in October 2009, were sentenced to up to six years in prison for spreading propaganda against the
government. They were accused of being part of the banned pro-democracy group Bloc 8406. In December 2009, pro-
democracy activist Tran Anh Kim received a five-and-a-half year jail sentence for subversion, after allegedly publishing
pro-democracy articles on the Internet. Tran Anh Kim is a former army officer and a member of the Democratic Party of
Vietnam and Bloc 8406, both of which are banned. Four activists, including prominent human rights lawyer Le Cong
Dinh, were jailed on charges of trying to overthrow the government in January 2010. Internet entrepreneur Tran Huynh
Duy Thuc received the longest sentence of 16 years. Human rights groups are viewing this as a sign of a crackdown on
freedom of expression.
The government continues to be silent when asked to comment about the fate of political dissidents. After coming to
power in January 2011, the current government has ratcheted up the pressure on dissidents. Many religious activists
have been imprisoned since July 30, 2011. In January 2013, 14 pro-democracy activists were sentenced to 13 years in
prison. In February 2013, the government jailed 22 activists for subversion. The harsh verdicts highlight the
government's intolerance of dissent. In March 2014, a court in Danang sentenced a former journalist to two years in
prison for criticizing the government. The sentencing suggested that Vietnam's hard stance against dissent is likely to
continue.
Territorial dispute with China
Over the years, the claims by several countries over the two island chains—Paracel and the Spratly—have become a
source of major dispute and concern. China claims the largest portion of the territory followed by other countries like
Vietnam, the Philippines, Malaysia and Brunei. China's claim over the Paracel and the Spratly islands is challenged by
Vietnam on grounds that China had never claimed sovereignty over the islands before the 1940s and Vietnam has
documents supporting its claim that Vietnamese ruled the two islands since the 17th century. In the dispute between
the countries, Vietnam suffered casualties when both sides clashed in 1974 and in 1988. The Paracel went to the
Chinese in 1974 and resulted in the death of more than 70 Vietnamese troops. The South China Sea is included in
Chinese maps because China considers the area as its own. However, like many other nations, Vietnam has refused to
stamp new editions of Chinese passports that include the map showing the disputed areas as a part of Chinese
territory.
In May 2014, tensions between the countries escalated when Vietnam accused Chinese energy company, China

PESTLE Analysis
National Offshore Oil Corporation (CNOOC), of illegally drilling in its waters. The oil rig, which costs $1 billion, lies 17
nautical miles from the Paracel islands and about 150 miles from Vietnamese coast. The accusation is based on the
law prescribed by the United Nations Convention on the Law of the Sea, which defines an exclusive economic zone, as
an area that stretches from the baseline out to 200 nautical miles from its coast. Within that zone, a state has special
rights over the exploration and use of marine resources. However, here competing sovereignty claims have
complicated the situation.
Meanwhile, China's installation of an oil rig fuelled anti-China sentiments in Vietnam, which resulted in anti-China riots
during May 13-14, 2014. Anti-China protests were a common phenomenon in Vietnam, but the government failed to
gauge the scale of public anger this time. Industrial facilities in the southern provinces of Binh Duong and Dong Nai
were damaged. Angry mobs set fire to factories causing workers to flee to hotels for safety. The torching of the
factories affected the business operated by companies from China as well as other countries (Taiwan, Singapore,
Japan and South Korea). The riots led to the death of few Chinese workers and caused injury to several others. This
further strained Vietnam's relationship with China, which evacuated over 3,000 of its nationals from Vietnam due to the
nationwide backlash. The countries have been involved in clashes since the oil rig was stationed on the disputed
waters. There were a number of clashes in the area around the Chinese oil rig, involving fishing and coastguard
vessels from both sides. On June 3, 2014, state media in Vietnam released a video that appeared to show a Chinese
vessel ramming a Vietnamese vessel near the drilling site. With China showing no sign of reconciliation and taking its
dispute with Vietnam over the deployment of the oil rig in the contested waters to the United Nations, the issue is likely
to escalate in the medium term.
High corruption levels
Vietnam has high corruption and the country lags behind other Asian countries in terms of control of corruption. The
country ranked 116th out of 177 countries in the Corruption Perception Index 2013. Corruption is present in various
sectors and key institutions in the country. According to Government Inspectorate of Vietnam, in 2013, 45 corruption
cases were detected, which involved 99 people and the total amount embezzled in the same year was $16.7m. In April
2014, Vietnamese officials were accused of accepting bribes for handing contracts to Japanese firms, which indicates
the government's failure in ensuring greater transparency.
The core of Vietnam's national socio-economic development strategy is its ambitious goal of becoming a modern and
industrialized country by 2020. Achieving this target depends on the timely completion of various large infrastructure
projects. Thus, the country has become highly dependent on Official Development Assistance (ODA) for this purpose.
Japan over the years has proved to be an important ally of Vietnam. Over the past 20 years, Japan has provided
crucial support to Vietnam including training nearly 20,000 Vietnamese employees, funding huge projects such as the
Noi Bai International airport at Hanoi and supporting the country with ODA amounting to $17.5 billion. In April 2014, a
Japanese contractor admitted that their company bribed officials in Vietnam to win attractive ODA deals and it was a
blow to the country's measures to handle the issue of corruption. The bribery involved payments to at least one official
at the Vietnam Railways Corporation (VRC) to secure a contract for the Hanoi city urban railway construction project.
Such allegations of corruption relating to ODA have not been uncommon in Vietnam. In 2008, executives of Pacific
International, a Tokyo based company, admitted to winning the contract for a large transport project (East-West
Highway in Ho Chi Minh City) by bribing a Vietnamese official directing the work, Huynh Ngoc Sy. Four years later, in
2012, Denmark, decided to halt ODA, which was intended for various climate related projects, as it was found that
Vietnamese partners fraudulently misused over $547,000 of its money.
While investigation about the recent bribery allegation is on, Japan announced on June 2, 2014 that it is putting some

PESTLE Analysis
ODA spending on hold. Recurring corruption allegations are tarnishing Vietnam's image, especially at a time when it is
trying to improve the way the world perceives the country. Such allegations question the ability of the recently formed
Central Steering Committee on Corruption Prevention, chaired by the general secretary of the ruling Communist Party
of Vietnam, Nguyen Phu Trong to rein in corruption. The new committee was formed after the old one chaired by Mr.
Dung was dissolved as it failed to have much impact. Any further allegations concerning the ODA in the future will not
only damage its foreign relations but also hamper its ability to achieve its important 2020 development goals.
Future prospects
Free trade agreement with the European Union (EU)
The EU seeks to broaden and diversify its relationship with Vietnam. This will include increased political cooperation on
issues of global concern. A Partnership and Co-operation Agreement (PCA) was signed in June 2012 to further
enhance bilateral ties. In the same month Vietnam and the EU launched negotiations on a FTA. The negotiations cover
tariffs and non-tariff barriers to trade, along with issues like regulation, public procurement, intellectual property rights
and sustainable development. According to the Ministry of Industry and Trade, two-way trade between the two sides
amounted to $34.1 billion in 2013, increasing by 16.11% compared to 2012. By the end of January 2013, the EU had
1810 FDI projects in Vietnam with a capital outlay of $34.28 billion. Both sides met in March 2014 for the seventh round
of negotiations, with the talks progressing at a good pace. The EU is speeding up the negotiations of the FTA, which is
likely to be signed in late 2014. The FTA is likely to ensure an effective environment for trade and investment relations.
Future risks
Land seizures could lead to civil unrest
Vietnamese security forces ruthlessly crushed protests against land seizures, leading to increased resentment towards
the government. There is civil unrest in the central highlands, which is home to a number of ethnic minorities. In
October 2012, residents of the Van Giang district of the Hung Yen province held a rally in front of a government
building demanding the return of the land that was illegally confiscated for developing the EcoPark Satellite City project.
Land seizure took place in two stages in 2009 and in 2012. Land seizures continued in different areas over the years.
In February 2014, the Con Dau Catholics were again victims of land seizures and demolitions. For the past six years,
the government has justified its actions on grounds of ecological needs. This could fan widespread discontent, as the
CPV does little to accommodate political grievances.
Struggle for power between conservatives and reformers
There have also been reports of a struggle for power between conservatives and reformers, following changes in the
upper echelon of the CPV. The party has reportedly become ridden with factionalism, which is not related to any
specific ideology but is more about grabbing positions of power. Prime Minister Nguyen Tan Dung is said to be a
reformer and President Truong Tan Sang is conservative. Nguyen Tan Dung faced a confidence vote in June 2013 and
survived it. However, a closer look indicates that he managed to get 120 votes of confidence and 160 votes of low
confidence. On the contrary, President Truong Tan Sang received 330 votes of high confidence. The result, which was
a rare public blow for the prime minister, has increased the speculation of a split within the party. If the balance of
power shifts towards the conservatives the progress of economic reforms could slow significantly, which could be
detrimental to Vietnamese companies.

PESTLE Analysis
Economic analysis
Overview
Increasing debt problems in the banking sector led to a lending freeze in 2011. In 2013, its average annual lending rate
dropped to 10% compared to 22% in 2011. With an economic growth of 5.42% in 2013, Vietnam continued to perform
below its potential due to structural problems in the SOEs and the banking sector. The easing of monetary policy since
March 2012 is expected to bring down lending rates and bolster the economy. The country intends to restructure its
economy to revive growth, but the vulnerable banking system casts a shadow on the future prospects of the economy.
Table 4: Analysis of Vietnam's economy

▪ Strengthening economic ties ▪ Challenges ahead of rice industry

▪ Boost to auto sector ▪ Vulnerable banking system
▪ Government's support to the real estate sector ▪ Doubts over privatization of the SOEs
Current strengths
Strengthening economic ties
In January 2013, Prime Minister Dung and his Japanese counterpart Shinzo Abe vowed to strengthen their strategic
partnership. Japan agreed to support Vietnam in achieving its industrialization and modernization goals by 2020. Total
merchandise trade between the two countries was $23.4 billion in 2013. During a visit by former Russian Prime
Minister Dmitry Medvedev in December 2012, both the countries agreed to deepen their energy co-operation. Vietnam
and Russia have also begun talks on a free trade agreement, and as of June 2014, the fifth round of negotiations was
completed. Vietnam also agreed to increase co-operation with Cuba in the field of pharmaceuticals. Improving
economic ties with Japan, Russia and Cuba is likely to increase Vietnamese exports and help the country maintain a
current account surplus.
Current challenges
Challenges ahead of the rice industry
Vietnam is mainly a rice-based agricultural economy, where rice is cultivated on most of the arable land. The rich deltas
of the Red River and Mekong are responsible for most of the rice production. The Doi moi reform, which was launched
in 1986, transformed the economy from being an importer of rice to one of the most important exporters in the world.
However, recent trends indicate that Vietnamese farmers are growing a crop that is no longer sustainable and for
various reasons the farmers are left behind. Rice farming industries face institutional, economic and environmental
challenges. The above challenges are rendering the sector uncompetitive by affecting the production and export of rice.
Vietnamese rice often faces quality issues. Vietnam exports considerable quantities of rice to Japan but often issues

PESTLE Analysis
related to quality standards arise. Most of the grains produced in Vietnam fail to meet Japan's strict quality standards.
In 2008, Japan stopped importing rice from Vietnam after significant amounts of pesticide residue was discovered.
However, shipments resumed five years later when companies started working with the farmers to ensure that the
grains are at par with Japan's stringent requirements. Furthermore, Vietnam focuses on producing rice that can be
grown more quickly. Consequently, it fails to cater to the needs of top-tier markets like the US, where there is a
demand for high-quality varieties like jasmine rice. Vietnam faces various other problems that prevent the country from
growing better rice.
The rice industry is fragmented and small scale production often leads to poor post-harvest management like improper
storing and milling, which results in degradation. Consequently, effective inspection is hampered, leading to problems
like pesticide residue. Rice cultivation in Vietnam is labor intensive and is done in the traditional way where majority of
the farmers still harvest by hand or using small machines with a limited capacity. Unlike industrialized countries where
mechanical dryers are used, Vietnamese farmers dry the rice in the sun. They usually dry rice on the road or in their
gardens, where the rain can damage it. The government tried to address these issues by encouraging farmers to form
cooperatives. During the 1950s-80s, it turned many individual farms into "cooperatives" as part of their effort to
collectivize agriculture. However, such cooperatives were abandoned later as they failed to boost output.
Apart from this, many rice farmers are unable to make a living by cultivating rice and hence are taking up other
livelihoods to make ends meet. The labor-intensive job offers scant benefits and rice farmers earn far less than what is
earned by coffee and pepper growers or those involved in non-agricultural occupations. Many young people from the
Mekong Delta, where 95% of rice for exports is produced, are moving away from rice production, seeking lucrative jobs
in cities and industrial zones. According to an NGO, although the government invests a lot of resources in rice
production, most of the subsidies go to the traders. Currently, land registered as rice land cannot legally be transferred
to growing other crops in order to maintain the land quota; however, many farmers in the Mekong Delta are converting
their paddy farms to shrimp farms illegally.

PESTLE Analysis
Finally, according to the Vietnam Food Association (VFA), after record high exports of 7.72 million tons in 2012, rice
exports declined to 6.68 million tons in 2013. The decline in exports was due to a drop in exports to the Philippines and
Malaysia. In 2013, rice exports to the Philippines dropped by 63% and by 35% in the case of Malaysia. Indonesia
stopped importing from Vietnam due to an increase in domestic production. The country is likely to face stiff price
competition in 2014 as Thailand will start selling its massive rice stockpiles that was created as a result of the then
government's rice-buying subsidy scheme. Thus, with increasing dissatisfaction among young rice farmers, quality
issues and stiff competition, the road ahead for Vietnam's rice industry is mired with challenges. The country needs to
develop high-quality seedlings and grow varieties that are in high demand to remain competitive.
Future prospects
Boost to auto sector
The government plans to develop the nation's domestic automotive industry by 2020. A car owner in Vietnam has to
pay 14 taxes that increase the value of the vehicle by almost 60%, which dissuades car buyers. To support the
industry, the government halved the consumption tax and ownership registration fee on cars with an engine capacity
below 2000 cc. Registration fees on vehicles with fewer than 10 seats were cut to 10-15% of their value from 15-20%.
For second-hand cars with fewer than 10 seats, the fee was cut from 12% to 2%. According to the Vietnam Automobile
Manufacturers Association (VAMA), the April 2013 cut in registration fees led to improved sales. Increased investment
in the automotive sector depends on the approval of the draft plan. Approval and prudent implementation of the plan
are likely to encourage investment.
Government's support to the real estate sector
The property bust in 2008 has been an impediment to Vietnam's economic growth. Prices halved when the bubble
started in 2008 especially for high-end condominiums. There were many unsold properties and according to the
Ministry of Construction, at the end of 2013, the total inventory was valued at $4.5 billion. Most of the inventory was in
the form of land and unsold residential houses and apartments. The government has taken measures to assist the real
estate sector, which includes preferential tax rates, reduction in land rental fees and financial support. In the area of
tax, a number of incentives were announced for enterprises who invested in social residential projects. Effective from
July 1, 2013, the rate of corporate income tax was 10% for enterprises investing in residential projects and they
became entitled to a 50% reduction of input VAT during July 1, 2013-June 30, 2014. During the same period,
enterprises investing in low income residential projects became eligible for a reduction of 30% of output VAT.
Land rental, which is applicable if enterprises, individuals and households rented land from the government, doubled in
2010. The new Decree 121 reduced such rentals by 50%. The government provided financial support by instructing
banks to lend at low interest rate to enterprises investing in social residential housing and low-income earners. The
government is also planning to ease foreign ownership laws in order to encourage foreign ownership of residential
housing. The government extended the repayment terms for its VND30 trillion ($1.39 billion) lending project by five
years to 15 years.
These measures helped in the modest recovery of the sector and real estate inventory fell by 1.9% in the first two
months of 2014. The sector is showing signs of improvement but impediments like poor infrastructure need to be
overcome.

PESTLE Analysis
Future risks
Vulnerable banking system
The vulnerability of the banking system and the extent of non-performing loans (NPL) continue to pose economic risks.
NPLs have affected the interbank money market since late 2011, as some banks were unable to recover funds lent to
smaller banks with much higher NPLs. In 2012, the SBV restricted banks with interbank debts overdue by more than 10
days from borrowing through the interbank market. Although those measures reduced interbank transaction risks, they
also restricted the functioning of the economy. To tackle the situation, the government created the Vietnam Asset
Management Company (VAMC) from July 2013 under central bank supervision. The VAMC acquired NPLs in banks
and credit institutions against the issue of special bonds. These bonds can be further refinanced by the central bank
and the proceeds can be lent out. However, the extent of such re-lending will depend on the profitability of the bank
and its capital position. Moreover, according to Fitch Ratings, the capability of banks to restructure and support
domestic economy is likely to be hindered due to the lack of fresh capital.
According to the SBV, the profitability of banks is doubtful with many indicators showing a decline. In the first quarter of
2013, the banking sector's return on assets, at 0.23%, halved from the same period in 2012. State-owned banks in
particular witnessed the steepest decline from 0.76% in the first quarter of 2012 to 0.29% in the first quarter of 2013. In
case of joint stock banks it decreased by 0.04% to reach 0.18% in the same period. Return on equity, which measures
the efficiency of capital in generating returns, also declined to 2.52% in the first quarter of 2013 compared to 3.97%
during the same period in 2012. In 2013, its average annual lending rate dropped to 10% compared to 22% in 2011.
Lack of transparency about the scale of NPAs in the country along with the uncertainty with regard to the process of
auctioning of toxic debt by VAMC indicate that the country's banking sector would remain vulnerable in the medium
term.
Doubts over privatization of the SOEs
The poor performance of state-owned enterprises (SOEs) in the mid-1980s compelled the government to restructure
the public sector; as a result, the government initiated the privatization process as an important strategy. Privatization
through equitization involves the process of changing corporate ownership of former SOEs with the purpose for
mobilizing capital from private investors in order to increase its financial resources, allowing employees to be
shareholders and invest in new technology. Furthermore, the debt-burdened public sector has been an impediment to
growth as a major portion of Vietnam's bank lending went to the SOEs. Inefficient investment plans by many SOEs
have contributed to their financial difficulties. In 2013, over 400 SOEs were almost on the verge of bankruptcy, which
forced the government to undertake quick and at times expensive restructurings. Prime Minister Nguyen Tan Dung
announced in February 2014 that the government plans to partly privatize 432 SOEs in 2014-15. The government's aim
to restructure major firms like Vietnam Airline and the Vietnam National Textile and Garment Group (Vinatex) indicates
the government's renewed interest in reviving the long-stalled privatization project.
However, the entire process of restructuring has been slow and there are doubts about its outcome. The government's
target of partly privatizing 432 SOEs during 2014-15 seems ambitious against the fact that less than 100 SOEs were
equitized during 2011-13. Cumbersome regulatory framework, difficult market conditions and complex restructuring
process are expected to hamper the process. Furthermore, as the cost of financial restructuring is high, the
government also needs to gauge its impact on the budget. Lastly, it is feared by many that privatization may fuel
corruption and become a major obstacle in Vietnam's growth.

PESTLE Analysis
Figure 2: State-owned enterprises equitized in Vietnam, 2000-15f
900
800
700
600
Number
500
400
300
200
100
0
2002
2000
2001
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Ministry of Finance MARKETLINE

PESTLE Analysis
Social analysis
Overview
As a whole, Vietnam's population is very young, which is an advantage for the country because it not only adds to the
workforce but also reduces social expenditure, unlike in many developed countries that are facing the problem of aging
population. The planned creation of new universities will improve higher education and help create a skilled workforce.
However, lack of religious freedom and rapid growth in slums remain an area of concern.
Table 5: Analysis of Vietnam's social system

▪ A young society ▪ Lack of religious freedom
▪ Approval for new universities ▪ Suppression of freedom of expression
▪ High poverty among ethnic minorities

▪ Urban development plan ▪ Rapid growth in slums
▪ Plan to improve hospitals
▪ Allocation for mental health
Current strengths
A young society
According to MarketLine estimates, as of 2013, 24.59% of the population is in the 0-14 age group, 69.82% of the
population belongs to the 15-64 age group, and just 5.59% of the population is in the 65+ age group. Vietnam had a
median age of 29 years in 2013. While many developed nations are faced with the problem of an aging population and
rising social expenditure, Vietnam's demographic structure works in its favor, as there are regular additions to its labor
force.
Approval for new universities
The Ministry of Education and Training has the approval of the prime minister to establish six new universities in the
Mekong Delta. The Can Tho University of Technology and the Vinh Long University of Technical Education will be
state-owned. On the other hand, Long An Mekong University, Can Tho University of Economy and Technology,
Mekong Delta University, Ben Tre University of Economy and Maritime Technology, and Chau Doc College in An
Giang Province will be private universities. A project plan to upgrade Ben Tre College into Ben Tre University and to set
up the Bac Lieu University of Economy and Technology and the Ca Mau College has been completed by the Ministry of
Education. These moves will increase the access to higher education and help to create a skilled workforce.

PESTLE Analysis
Current challenges
Lack of religious freedom
The government continues to deny Vietnamese citizens the right to freely practice their religion. In 2011, Catholics from
Hanoi's Thai Ha parish went on a protest demanding the return of property appropriated by communists in the 1960s.
During these protests, the police allegedly assaulted activists participating in peaceful prayer vigils. Such events have
been a feature of the Vietnamese landscape for many years, with demands for the return of confiscated property often
followed by state repression.
According to the US Commission on International Religious Freedom report 2014, the Vietnamese government
continues to imprison individuals for advocating religious freedom and for religious activity. The government uses
specialized religious police force and vague national security laws to curb the activities of Cao Dai, Hoa Hao,
Protestant, independent Buddhist, which hampers their growth. In April 2011, a Protestant pastor was arrested on
charges of harming national unity. In September 2011, the government's violent expulsion of more than 300 followers
of the world-renowned Buddhist monk and peace activist Thich Nhat Hanh from Bat Nha monastery once again
brought to light the Vietnamese government's suppression of religious freedom. Apart from that, many Catholic
bloggers were arrested during July- September 2011.
According to Human Rights Watch, throughout 2012, the government used articles in the penal code that makes
certain civil and political rights criminal in nature to arrest many religious advocates. The government's new law
mandates certain conditions for the registration of religious activities and includes many limitations on religious
practice. In June 2012, Communist Party officials were accused of attacking the members of a small parish in Quy
Chau district in order to compel the latter to give up the land owned by the local Church. Suppressing religious beliefs
continued in 2013. In January 2013, Decree 92 was implemented, which further extended controls on religious groups.
As a part of its enforcement actions, the government harasses, monitors and at times, violently cracks down on
religious group that operate outside government registered or controlled religious institutions. Accordingly,
unrecognized branches of the Hoa Hao Buddhist church, Cao Dai church, Khmer Krom Buddhist temples and others in
this category became the main targets in 2013. The lack of freedom to practice one's religion and the persecution of
citizens with religious beliefs continues to be a major problem in the country.
Suppression of freedom of expression
According to Human Rights Watch, Vietnam continues to suppress freedom of expression, peaceful assembly and
association. The government is continuing to persecute those who expose official corruption, question government
policies or voice their opinion for multi-party rule is still persistent. Harassment and intimidation of activists continues
with full support of the government. This includes arbitrary arrests, torture, denying access to legal counsel and
prosecution by courts which lack independence. Excessive force was used by the police in 2013 in response to rising
protests over police brutality, land confiscation and evictions. Farmers face unjust confiscation of their lands by
government officials. Any sort of resistance is met with abuses from local authorities. The country gained a seat in the
United Nations Human Rights Council (UNHRC) for the 2014-16 term, which seems ironic against the denial of basic
rights to its citizens.
High poverty among ethnic minorities
In Vietnam, poverty has declined over the years but the decline among the minority group was less. According to the
World Bank, between 2010-12, growth elasticity, which is the percentage decline in a poverty rate divided by the
percentage change in GDP per capita, was only 0.98 for ethnic minorities while it was 1.55 overall. In the early 1990s

PESTLE Analysis
when Vietnam was a much poorer country, ethnic minorities were poorer compared to the Kinh majority. Over the years
the population comprising of the ethnic minorities increased and as of 2012, they comprised around 15% of the
population. However, their economic situation has not improved much. The welfare of the ethnic group has increased
over the years but the social improvement has been low when compared to the Kinh. The reasons for this difference
includes less access to education, less mobility, limited access to formal financial services and some preferential
benefits given to Kinh migrant households. The government should take steps to reduce the high poverty rates among
the ethnic minorities.
Future prospects
Urban development plan
Prime Minister Nguyen Tan Dung has approved a $147.2m urban development project in the Greater Mekong Sub-
region. Of the total amount, $130m is sourced from the Asian Development Bank. The main aim of the project is to
expand roads, build wastewater treatment plants, improve water supply systems and enhance urban management.
This in turn will support local socioeconomic development and turn traffic corridors into real economic corridors. The
project is scheduled to be implemented from 2013-18. In addition, the Ministry of Construction has submitted a draft
program for developing urban areas across the country until 2020. The program aims to enhance the regional and
international competitiveness of Vietnam's urban centers by building technical and social infrastructure and creating a
good urban environment for residents. The target of the program is to raise the country's rate of urbanization to 38%,
with 870 urban centers by 2015.
Plan to improve hospitals
In March 2013, the Ministry of Health (MoH) announced a plan to resolve overcrowding in state-run hospitals. The plan,
with a horizon up to 2020 and a budget of $1.19 billion, aims to reduce hospital bed occupancy from the current 120%
to 100% by 2015. If implemented, it will initially focus on the establishment of hospitals in HCM and Hanoi. Certain
hospitals will specialize in fields like trauma, cancer, paediatrics, cardiology and obstetrics to ease the pressure on
health infrastructure. The plan also proposes to ensure greater co-ordination between doctors and hospitals. Currently,
Vietnam has only 18 hospital beds per 10,000 citizens compared to the world average of 25. The approval and
implementation of the plan is likely to reduce overcrowding in hospitals.
Allocation for mental health
In December 2012, the government of Vietnam announced an investment program for assisting and rehabilitating
people with mental disorders. In November of the same year, the government announced an investment of VND8.38
trillion ($389m) till 2020 with major allocations going towards building facilities and the provision of necessary
equipment in 50 healthcare centres. Health centers will be set up to provide treatment to 300-500 patients in six
regions. According to the World Health Organization, a total of 14.9% among Vietnamese population suffered from
mental disorders as of March 2014. The government has taken the initial steps; however, it has to increase allocation
to meet the needs of patients suffering from mental disorders.
Future risks
Rapid growth in slums
Vietnam's rapid growth has resulted in increasing urbanization. According to the World Bank, every year around a
million people move to the cities and add pressure on housing demands. However, there has been no significant
investment in infrastructure. A large portion of the urban population lives in slums, with inadequate water and poor

PESTLE Analysis
sanitation. Most of these slums do not have paved roads, which makes transportation extremely arduous during the
rainy season. There is an undersupply of lower cost units in urban areas and oversupply of high-end units. The
mismatch indicates market failures in the housing sector. Schemes to provide affordable housing with the support of
the government and international organizations can be helpful to mitigate the situation. In 2013, HCM authorities
reallocated only 237 households affected by the Tham Luong-Ben Cat-Rach Nuoc Len, Hoa-Lo Gom and Bac Kenh
Doi canal sanitation projects. Lack of investors due to its low profitability and tight budget has hindered the smooth
progress of site clearance, reallocation and resettlement of projects under the slum relocation program.

PESTLE Analysis
Technological analysis
Overview
With increasing globalization, the development of science and technology (S&T) involves international co-operation.
The assimilation of technical knowledge from myriad sources helps countries to develop S&T skills. Vietnam's
increasing co-operation with other countries has helped the country in improving its S&T base. However, the transfer of
high technology through FDI remains an elusive goal for Vietnam and the low number of patents registration with the
USPTO reveals that it needs to take steps to encourage innovation.
Table 6: Analysis of Vietnam's technology landscape

▪ Strategy for science and technology development ▪ Poor performance on patents
▪ Increasing co-operation on science and technology ▪ Transfer of sophisticated technology through FDI remains
elusive

▪ Approval of a telecommunications development plan ▪ High piracy rates
▪ Emerging e-commerce sector
Current strengths
Strategy for science and technology development
In 2012, Vietnam approved the strategy for science and development for the period 2011-20. The strategy aims to
increase the contribution of science and technology to economic growth by 2020. According to the Ministry of Science
and Technology, the strategy aims to increase the value of hi-tech products to around 45% of the GDP by 2020. The
strategy sets an ambitious target of increasing the speed of technology and equipment innovation at 10-15% for the
2011-15 period and over 20% per year for the 2016-20 period. The strategy also aims to increase the number of
officers in charge of scientific research and technological development to nine persons per 10,000 people. The targets
along with effective implementation are likely to improve the country's technological base.

PESTLE Analysis
Increasing co-operation on science and technology
With increasing globalization, the development of science and technology (S&T) involves international co-operation.
The assimilation of technical knowledge from myriad sources helps countries in developing S&T skills. Vietnam's
increasing co-operation with other countries has helped the country to improve its S&T base. On April 5, 2013, a
meeting was held between the S&T minister of Vietnam and vice chairman of the National S&T Committee of the
Republic of Belarus. They discussed issues regarding the implementation of the action plan for encouraging S&T
during 2012-13. Belarus agreed to continue its support for S&T initiatives in Vietnam. In the same month, Slovakia
expressed its desire to share its experience in atomic energy with Vietnam in order to help the country build its first
nuclear power plant. A protocol for establishing an Inter-governmental Committee for S&T co-operation with Israel was
signed by the S&T ministry of Vietnam on April 24, 2013. Increasing government support and international co-operation
paves the way for Vietnam to achieve its target of becoming an industrialized country by 2020.
Current challenges
Poor performance on patents
The number of patents a country registers is considered to be a significant indicator of its scientific and technological
development. It not only reflects the actual effectiveness of theoretical research but also the potential for application
research. Countries like Japan and South Korea rank highly in terms of the number of patents granted by the US
Patent and Trademark Office. Vietnam was granted only six patents between 2006 and 2010, with none being
registered in 2011. In 2012, the country registered only two patents. In 2013, the number of patents granted increased
to five. Obstacles such as lack of proper mechanisms to support invention registration, lack of experienced lawyers in
patent registration and intellectual property, and the lack of interest among universities have led to this poor outcome.
This will continue to be a challenge for the economy and the government has to take steps to improve the situation.
Transfer of sophisticated technology through FDI remains elusive
Foreign direct investment (FDI)—considered a vehicle of technology transfer—is desired by most countries and
governments design their policies to facilitate it. According to the Ministry of Planning and Investment (MPI), the
transfer of high technology in Vietnam through FDI was below expectations. The ministry pointed out that only 5-6% of
Vietnamese enterprises is using advanced technology whereas 14% are using obsolete systems. Often, foreign
investors bring obsolete and polluting technologies into the country by exploiting loopholes in Vietnamese laws. Some
foreign firms are listed as advanced technology firms, but the phases of production that require advanced technology
are located in other countries. The failure to attract transfer of sophisticated technology through FDI is a serious
challenge to the government.
Often, the technology brought by investors serves just their interests and fails to help the country's technological
development. Investors in Vietnam are responsible for the technology that they bring in and in principle, need to explain
their choice to the state management agencies. Enterprises have to prove that their choice of technology is
appropriate. However, in a bid to attract more investment, laws were simplified and hence investors get away with
obsolete technology. Vietnam being one of the fastest growing economies in Southeast Asia needs to strengthen its
investment laws in order to ensure the transfer of advanced technology.
Future prospects
Approval of a telecommunications development plan
Prime Minister Nguyen Tan Dung approved a plan to develop the country's telecommunications network up to 2020,

PESTLE Analysis
with a target of 40-45% of households having telephone access by 2015 and 55-60% by 2020. The plan is to achieve
90% mobile phone coverage by 2015 and 95% by 2020. It will not only lead to the development of the
telecommunications sector, but will also generate revenue, which is expected to reach $15-17 billion or 6-7% of GDP
by 2020.
Emerging e-commerce sector
According to the Ministry of Industry and Trade, it is estimated that on an average every buyer spent approximately
$120 on online purchases in 2013. Revenue from online shopping amounted to $2.2 billion, which is an increase of
over 300% from $700m in 2012. Fashion, shoes and cosmetics (62%) were the major products ordered online followed
by technology products (35%), household products (32%) and flight tickets (25%). Survey results indicated that 61% of
online shoppers purchased items online via e-commerce websites. With majority of the buyers being either
manager/office staff (41%) or students (37%), the sector has scope to improvise and expand their customer base.
While the e-commerce market is expected to generate revenues of $4 billion in 2015, obstacles like worse product
quality than advertised, dispute over price, unprofessional shipping, etc. should be addressed.
Future risks
High piracy rates
Vietnam has a high piracy rate, which could deter investment in R&D-intensive areas. According to the 2011 Business
Software Alliance's Global Software Piracy Study released in May 2012, the commercial value loss of unlicensed
software in the country amounted to $395m in 2011. The study covers pirated software that runs on personal
computers including desktops, laptops, and ultra-portables. According to the study, countries with high levels of PC
sales from non-branded vendors have high rates of piracy. The study concludes that 81% of the packaged software in
Vietnam is pirated, which puts it among the top 10 globally in this respect. The International Intellectual Property
Alliance (IIPA) has put Vietnam on its Priority Watch List in 2014 for allowing intellectual property rights violations that
cause huge losses to companies.
A joint study by BSA and International Data Corporation (IDC) concluded that a 10% decrease in piracy rate over a
four-year period would add $1.17 billion to the economy, around 2,100 high tech jobs will be created and additional
$60m will be generated as tax revenues. In June 2013, government agencies as a part of their national compliance
campaign for computer software went for a copyright check and found illegal products worth VND7 billion ($325,445).
The government urgently needs to strengthen its legal framework to prevent an escalation of piracy rates.

PESTLE Analysis
Legal analysis
Overview
Vietnam's legal landscape has been improving since its bid to become a member of the WTO. According to the World
Bank's Doing Business indicators, it is easy to register property in the country compared to elsewhere in Southeast
Asia. Vietnam is a centrally planned socialist economy with state-owned enterprises in monopoly positions, and needs
to ease restrictions to promote competition. The country's judiciary is under the control of the CPV, and the party
exercises its power to influence the outcome of cases involving perceived threats to the state or to the party's dominant
position.
Table 7: Analysis of Vietnam's legal landscape

▪ Landmark law to curb money laundering ▪ Monopolies of state-owned companies
▪ Lack of independent judiciary
▪ High tax compliance costs

▪ New laws ▪ Ineffective anti-corruption law
▪ Reduction in tax rates
Current strengths
Landmark law to curb money laundering
Vietnam has been considered a favored destination for money launderers for a number of years. However, the Law on
Prevention and Combat of Money Laundering is expected to have a noteworthy effect on alleviating the problem. The
law was ratified by the National Assembly on June 18, 2012 and has been effective since January 1, 2013. It provides
a broader definition of money laundering and encompasses a wider range of individuals and organizations. If properly
implemented, the law is likely to curtail money laundering in the country.
Current challenges
Monopolies of state-owned companies
Vietnam has not yet emerged fully from being a centrally planned socialist economy, with state-owned enterprises
holding monopoly positions. In the electricity, aviation and telecommunications industries, government-run companies
generally have a complete monopoly, with market shares of at least 80%. The cement, sugar, banking and petroleum
sectors are heavily regulated, with state-owned entities holding 10-40% of these markets. In all of the sectors where
government-run organizations enjoy a monopoly, prices tend to be exorbitant and companies tend to be inefficient and
uncompetitive. The government must initiate measures to ease regulations in some of these sectors, and actively
support privatization in order to foster competition and efficiency.

PESTLE Analysis
Lack of independent judiciary
Vietnam lacks an independent judiciary, in part because the CPV selects judges and vets them for political reliability.
Furthermore, the party seeks to influence the outcome of cases involving perceived threats to the state or to the party's
dominant position. In an effort to increase judicial independence, the government transferred the authority of local
courts from the Ministry of Justice to the Supreme People's Court in September 2002. However, there is little evidence
to suggest that this move has improved judicial independence. Vietnam's judiciary is also hampered by a shortage of
lawyers and undeveloped trial procedures. The CPV's influence over the judiciary is a major challenge to the country.
High tax compliance costs
Taxes play a crucial role in the economy. They are important for funding infrastructure, public amenities and services.
However, it is very important to choose an appropriate tax rate level and avoid complex tax rules. The World Bank
Doing Business data indicates that in economies where it is more costly and difficult to pay taxes, larger shares of
economic activity end in the informal sector where businesses pay no taxes at all. According to the 2014 Doing
Business Report, Vietnamese firms make 32 tax payments a year, spend 872 hours a year for filing, preparing and
paying taxes, and pay total taxes amounting to 35.2% of profit. In the latest report, Vietnam slipped four places
compared to 2013 and ranked 149th out of 189 economies. In 2014, Vietnam increased employers' social security
contribution rate, which made paying taxes for companies more costly. The country needs to ease its tax rates to
prevent tax avoidance.
Future prospects
New laws
The government has passed a series of laws in order to protect the country's culture, education, housing development,
land management, and science and technology. The law on Personal Income Tax states the scope and subjects of
personal income tax and provides exemptions to pensioners and social welfare beneficiaries. The new threshold for
paying taxes has been increased to VND9m ($418.43) from the previous VND4m ($185.97), benefitting those with low-
income. In order to systemize administrative procedures for tax payers, the Law on Tax Management was designed.
The amended Electricity Law intends to give more priority to developing power infrastructure in the rural, mountainous
and disadvantaged areas. Other laws include Law on Lawyers, Law on Publishing, Law on Co-operatives and Law on
National Reserve.
Reduction in tax rates
Corporate income tax rate was reduced from 25% to 22% from January 1, 2014. However, small and medium sized
enterprises (SMEs) with less than 200 full time employees and yearly earnings of $2.4m from manufacturing or $9.2m
from services received the benefits before 2014. The country aims to further cut the tax rate to 20% by 2020. In order
to boost the property market, the government plans to lower value added tax (VAT) for developers of affordable
housing. The tax cuts are a part of Vietnam's tax reform strategy 2011-20. The reduction in tax rates aims to boost
Vietnam's position for attracting FDI amidst stiff competition from its peers. Furthermore, the reduced rates are likely to
benefit the country during the current economic slump.
Future risks
Ineffective anti-corruption law
Vietnam has dangerously high levels of corruption. The Anti-Corruption Law approved by the national assembly in

PESTLE Analysis
November 2005 came into effect in June 2006. To tackle corruption at the highest levels, the National Steering
Committee for Corruption Prevention and Control, headed by the prime minister, was created. However, the committee
lacks full independence, which has raised questions about the impartiality of investigations. The committee is placed in
a very tight spot over cases involving CPV politicians. Corruption is perceived as a serious problem in Vietnam and has
not only undermined efforts to improve market institutions and the country's legal system, but has also eroded public
trust. The country in collaboration with the World Bank launched the Vietnam Anti-Corruption Initiative Program 2014,
which is the third and the last of the Vietnam Anti-Corruption Initiatives (VACI) Program series. The latest VACI
supports the implementation of innovative ideas to strengthen accountability, transparency and integrity. Such
initiatives are important but their success depends on effective government implementation. Vietnam must initiate
further measures to tackle corruption as it deters foreign investors.

PESTLE Analysis
Environmental analysis
Overview
A large part of Vietnam is covered in forests. The country is known for its biodiversity; its terrestrial ecosystem contains
over 13,200 floral species and about 10,000 animal species. The inauguration of the Hon Me Rescue Station for
endangered species demonstrates Vietnam's efforts to ensure wildlife protection.
However, Vietnam incurs economic losses due to recurring natural disasters and it also faces other challenges such as
rising water pollution and deforestation.
Table 8: Analysis of Vietnam's environmental landscape

▪ Reduction of greenhouse gas emissions ▪ Economic cost of natural disasters
▪ Protection of endangered animals ▪ Rising water pollution
▪ Solar power station in Vietnam ▪ Adverse environmental effect of rice boom

▪ Disaster risk management ▪ Rising deforestation
▪ Potential for renewable energy ▪ Policy challenge
Current strengths
Reduction of greenhouse gas emissions
Excessive GHG emission contributes to global warming and causes imbalances in the environment. Considering the
severity of the situation, the country needs to adopt preventive measures. In April 2013, Vietnam launched a project to
enhance the capacity of its industries to control emissions of GHG and their ability to adapt to climate change. The
$3.05m UNDP project will end in 2016. The project, comprising of three sub-projects, aims to reduce GHG emissions in
industrial production and opens opportunities for adopting environment friendly technology. Furthermore, the project
aims to impart knowledge regarding the awareness of climate change among policy makers. Proper implementation of
the project will help Vietnam in achieving the target of reducing GHG emissions by 8-10% by 2020. This target was
adopted by its National Strategy of Green Growth in September 2012.
Protection of endangered animals
The Hon Me Rescue Station was inaugurated on July 27, 2012 in Hon Dat District for the protection of endangered
animals. The station was established as part of collaboration between Wildlife at Risk, Free the Bears, Kien Giang
Forest Protection Department, and the Brigitte Bardot Foundation. At present, more than 50 animals belonging to eight
endangered species are being cared for at Hon Me Rescue Station; these include moon bears, sun bears, giant Asian
pond turtles and elongated tortoises. In July 2012, local residents brought in a leopard cat. Such stations will be helpful
in protecting endangered species.

PESTLE Analysis
Solar power station in Vietnam
Intel Products Vietnam installed the largest solar power station in Vietnam at Saigon Hi-Tech Park in April 2012. The
power station was built at an estimated cost of $1.1m. The solar station is expected to supply about 30% of Intel's total
electricity consumption for the next 20 years. The solar power station, which comprises 1,092 solar panels and 21
adapters, can directly provide the company with around 321,000KWh of electricity per year without the use of
rechargeable batteries, which is equivalent to electricity consumed by 500 households in Vietnam. This is the first and
only solar power station to have been built by Intel Corporation in Asia and is larger than the stations it has developed
in Israel and in Oregon in the US. The new power station will help Vietnam achieve a reduction of 221,300kg of carbon
dioxide emissions and promises to be economically beneficial by creating jobs.
Current challenges
Economic cost of natural disasters
Natural disasters often cause huge economic losses for an economy. Apart from the impact of the disaster, the lack of
appropriate infrastructure often aggravates losses. According to the Central Committee for Flood and Storm Control of
Vietnam, during 2008-12, natural disasters resulted in economic damages equivalent to 1.5% of GDP, 0.5% higher
compared to 2003-07. The damage for 2008-12 was estimated to be around VND74 trillion ($3.44 billion). The
country's lack of proper infrastructure was evident when a flash flood in the Lao Cai province in 2008 swept away a
village but there was no news of any damage to the Chinese village nearby. China built drains and bridges to manage
floodwater. Often, disaster-related standards are overlooked while constructing infrastructure for socio-economic
development. In 2013, Vietnam was hit by various storms, namely, Wutip, Nari and Haiyan. Typhoons Wutip and Nari
struck the country's central part and resulted in economic losses amounting to $663m and $71m respectively. Typhoon
Haiyan, which had weakened considerably before striking Vietnam, resulted in heavy rainfall and the death of around
10 people. Vietnam needs to build requisite infrastructure to mitigate the impact of such natural disasters.
Rising water pollution
Vietnam has its own network of rivers and its surface water resources account for around 2% of the world's total river
flow. Vietnam's water exploitation exceeds the level recommended by international water resource organizations. In the
Ninh Thuan province of Vietnam, exploitation of local flow reaches 80%, much higher than the recommended 30%.
Excessive exploitation has resulted in the qualitative and quantitative degradation of the water resources in the basins
of the Red River, the Thai Binh River and the Dong Nai River.
The compounding effect of climate change has affected the volatility of Vietnam's rainy season and increased the
chance of both severe flooding and drought. Recent years witnessed drought in many regions across Vietnam due to
the early retreat of the rainy season. The severity of water resource depletion is high, particularly in the Southern,
Central and Central Highland regions. Furthermore, wastewater discharge from urban areas, industrial zones and
factories are contaminating water. Vietnam's agricultural sector uses a lot of water and happens to be the biggest
source of wastewater.
Pollution in the Dong Nai River has worsened due to waste disposal from factories and it is affecting the supply of
water in Ho Chi Min (HCM) City and surrounding provinces. According to the southern Dong Nai Province's
Environmental Observation Centre, water below the Tri An Hydro-power Reservoir and Dau Tieng Reservoir up to the
mouth of the river is polluted in many areas. According to the Department of Natural Resources and Environment,
pollutants like iron, bacteria and organic substances in the Dong Nai River already exceed the permissible levels for
quantity of pollutants. In January 2014, tones of dead fish were seen in Bien Hoa city, which indicates the catastrophic

PESTLE Analysis
impact of rising pollution in the Dong Nai River. The gravity of the situation demands immediate implementation of
policies to prevent further escalation of problems.
Adverse environmental effect due to rice boom
The construction of elaborate networks of dikes and irrigation canals enabled Vietnam to become one of the leading
rice producers in the world. In the last four decades, factors such as high yielding varieties of rice and construction of
dikes enabled the farmers to plant more than one crop in a year. This transformed Vietnam from a poor country to a
lower middle income one. However, scientists have pointed out that the ongoing construction of dikes and irrigation
infrastructure across the Mekong Delta has affected the river delta's complex ecological systems. For example,
downstream fisheries and floodplain farms are deprived of vital nutrients as high dikes in the upstream areas block the
natural floodplain pulse. Furthermore, agricultural chemicals have polluted irrigation canals and caused acidification of
water and soil, which resulted in a general loss of biodiversity and contributed to a decline in fish populations.
The same problem is observed in Vietnam's southern coast where dikes and sluice gates were built to facilitate
freshwater rice farming and prevent the upstream movement of saline water during the dry season. The construction
adversely affected an endemic palm species, nypa palm, as it restricted the transfer of organic material between
freshwater and saline aquatic environments. The large mangroves are also in danger because the shoreline dikes are
interrupting a balanced flow of fresh and salt water based nutrients. Scientists have warned that if the mangroves die
then Vietnam is likely to be more vulnerable to intensifying storms and rising sea levels. These myriad environmental
issues require government attention.
Future prospects
Disaster risk management
Disaster management is crucial for any economy considering the destruction that follows a natural disaster. In July
2013, the United Nations Development Programme (UNDP) and the Australian Agency for International Development
(AusAID) announced assistance to Vietnam in disaster risk management, with emphasis on risks related to climate
change. A budget of $5m, mostly funded by the UNDP, aims to assist and enhance the capacity of the Vietnam Red
Cross, the Ministry of Agriculture and Rural Development (MARD) and the Vietnam Women's Union in handling
disaster risk management.
The project known as the Institutional Capacity Building for Disaster Risk Management will extend its support to the
natural disaster management center of the country and to committees formed at the provincial level to prevent floods.
Under the project, support will be given while formulating and implementing plans, and for supervising disaster risk
management programs. The agricultural ministry reported that the target of the program is to develop a strategy that
would help in adapting to climate change, implementing multilateral agreements and designing effective measures to
mitigate risks associated with natural disasters. At present, implementation has begun in Ha Noi and 20 other cities,
and will continue until 2016. Such efforts are likely to increase the ability of the country to handle disasters in the
medium term.
Potential for renewable energy
Sustainable development of the environment requires the adoption of clean and environment friendly technology.
Vietnam has a huge potential for renewable energy owing to its vast resources. As the country is situated in the tropical
zone, it receives around 2,000-2,500 hours of sunshine per year. Vietnam's average solar energy density is about 150
kCal per centimeter square, equivalent to 43.9 million tonnes of oil per year. Its wind energy is estimated at 800-1,400
kWh per meter square per year and its total estimated wind energy potential is 713,000 MW. As Vietnam has many hot
PESTLE Analysis
streams situated in northwest and central regions, its geothermal power potential is estimated to be 1,400 MW. The
country also has around 1050 potential sites for small hydropower projects. The National Energy Development Strategy
adopted in 2007 aimed to increase the exploitation of renewable energy to 11% by 2050. Effective policies for the
proper tapping of renewable energy are likely to help the country to reduce pollution and take a step towards
sustainable development.
Future risks
Rising deforestation
A large portion of the country is covered with forest. In 2005, Vietnam's natural forests were estimated at 9.5 million
hectares, while planted forests are believed to extend to over 2.9 million hectares; altogether, forest covers 38% of the
land. The country has initiated many projects to increase the forest cover, including a nationwide afforestation program
costing VND31.6 trillion ($1.47 billion) that was approved in 1997. The project failed to meet its target of planting 5
million hectares of forests by 2010, with afforestation being achieved in just 2.45 million hectares by 2010, or 49% of
the target. Vietnam's loss of forest is estimated at 200,000 hectares a year: the factors causing this are nomadism
(which accounts for the loss of 60,000 hectares), fires (50,000 hectares), and logging activities (90,000 hectares).
According to the Vietnam Administration of Forestry, during January-March 2013, more than 450 cases of illegal
deforestation were discovered. A forest fire in the Bac Bien Ho Forest in the Central Highlands province of Gia Lai in
March 2013 destroyed 160 hectares of woodland. The progress of the afforestation program was very slow and only
4% of the target was achieved during the first three months of 2013. Representatives from the Tuyen Quang
Department of Agriculture and Rural Development complained that the allocation of VND15m ($697.38) for a three-
year period work was a constraint for a successful implementation of the program. The loss of mangrove trees is also a
big source of concern for the government. The government needs to do more to increase the forest cover in the
country.
Policy challenge
Increasing water pollution reduces access to clean water and consequently poses policy challenges for the
government. Treatment of wastewater in urban Vietnam is less than 10% and households use ill-maintained septic
tanks or other systems that provide inadequate sewage treatment. As a result, the probability of polluting fresh water
increases. An increasing urban population implies that the government needs to invest more in the collection and
treatment of wastewater in order to protect public health as well as to prevent the pollution of freshwater resources.
According to the World Bank, the government aims to connect around 36 million people to a centrally connected
wastewater collection and treatment system by 2025. This requires investment of around $8.3 billion. Urban
infrastructure in Vietnam is the responsibility of local governments, which often lack the technical and financial
resources to manage urban environmental programs. Existing wastewater utilities are not prepared to operate on a
commercial basis and fail to attract financing and expertise from the private sector. Moreover, poor sanitation leads to
economic losses of $780m or 1.3% of GDP every year according to the World Bank.
Legislation and regulations governing existing wastewater treatment facilities need amendment to ensure proper
allocation of resources. The government faces the challenge of designing appropriate policies to attract private
investment in wastewater management so that it can supplement public funds.

Political Landscape
POLITICAL LANDSCAPE
Summary
Vietnam remains a one-party state, dominated by the Communist Party of Vietnam (CPV). In recent years, the party
has moved towards a modernizing agenda, particularly concerning the economy. However, international partners and
human rights groups remain critical of abuses of minority rights and scant religious freedoms, as well as the
continuation of the system of one-party rule. A triumvirate consisting of a president, a prime minister, and a general
secretary heads the CPV. The authorities pay little attention to international pressure on democracy and human rights,
and fundamental political reform seems some way off.
Evolution
The significant political events in Vietnam are shown in figure 3:
Figure 3: Vietnam - political events timeline
1930−54 1955−68 1969−79 1980− 2001 2002 onwards
• Ho Chi Minh founded • Communist insurgency • Ho Chinh Minh died in • Vietnamese troops • In 2007, President
the Indochinese began in South Vietnam 1969 and President withdrew from Nguyen Minh Triet
Communist Party (ICP) in 1957. Nixon started Cambodia in 1989. made the first ever visit
in 1930. withdrawing troops. to the US by a
•American aid to Diem • A new constitution was Vietnamese head of
• In response to
was increased in 1960. • A ceasefire agreement adopted and certain state.
Japanese invasion in
was signed in Paris economic freedoms
1941, ICP formed the • Prime Minister Nguyen
•Viet Cong, the and the US troops were given in 1992.
Viet Minh. Tan Dung was
communist guerrillas were pulled out by
reappointed in 2007 and
• The Viet Minh seized operating in South March 1973. • US lifted its 30-year
he promised to usher in
power and announced Vietnam, defeated the trade embargo in 1994.
economic reforms.
Vietnam’s South Vietnamese Army • North Vietnamese
independence in 1945. and overthrew President troops invaded South • Vietnam became a full • China and Vietnam
Diem in 1963. Vietnam and took member of the resolved the border
• Viet Minh forces
control of the whole Association of dispute, in December
attacked an isolated
• A US destroyer was country in 1975. Southeast Asian 2008, 30 years after
French military outpost
attacked triggering Nations in 1995. the1979 war.
in the town of Dien Bien
bombing raids on North • Socialist Republic of
in 1954. • Prominent human rights
Vietnam in 1964. Vietnam was • The US and Vietnam
lawyer Le Cong Dinh
• In the same year, the proclaimed in 1976. normalized their trade
and four other activists
French government • The US troops reached relations in 2001.
were jailed on charges
agreed to peace talks in 500, 000 in 1967. • Vietnam invaded
of trying to overthrow
Geneva. At the Geneva Cambodia and ousted • In the same year, the
the government in
conference, Vietnam • A combined assault by the Khmer Rouge Communist Party
January 2010.
was split into North and Viet Cong and the North regime of Pol Pot in chose Nong Duc Manh
South at the 17th Vietnamese army on US 1979. as its new leader.
Parallel. positions began in 1968.

Political Landscape
Structure and policies
Key political figures
The key political figures in Vietnam are:
 President Truong Tan Sang
 Prime Minister Nguyen Tan Dung.
Figure 4: Vietnam - key political figures
Truong Tan Sang became the president of the country after gaining the parliamentary approval
in July 2011. He is expected to support market-oriented policies. The president is a ceremonial
head in Vietnam and the prime minister oversees the daily working of the government.
Nguyen Tan Dung became the prime minister on the approval of the national assembly in
2006. He was a governor of the state bank of Vietnam between 1998–99. He joined the
Communist Party of Vietnam on June 10, 1967 and then joined the army as a full-fledged
fighter. He was subsequently elected a member of the Party’s Politburo at the eighth, ninth and
tenth national party congresses. The congress of the Communist Party reappointed Nguyen
Tan Dung as prime minister in January 2011.
Structure of government
Vietnam is a one-party communist state and is currently led by a troika consisting of General Secretary Nguyen Phu
Trong, President Truong Tan Sang, and Prime Minister Nguyen Tan Dung. In early 1975, North Vietnamese military
forces began a major offensive in the south of the country, inflicting great damage on the region's forces. The
communists took Saigon on April 30, 1975 and announced that they would reunify the country. The Democratic
Republic of Vietnam (the north) absorbed the Republic of Vietnam (the south) to form the Socialist Republic of Vietnam
on July 2, 1976. The CPV has been in charge ever since unification. National policy is dictated by the party's leadership
and the executive (Central Committee) and legislature (National Assembly) are expected to comply. At provincial and
city levels, people's committees have considerable influence, as their approval is a prerequisite for all development
projects and expenditure within their jurisdiction. The party secretariat comprises 14 Politburo and 160 Central
Committee members, and deals with day-to-day policy. Key issues are put forward for the consideration of the Central
Committee. Major policies have to be ratified by the party congress, which meets every five years.
Key political parties/figures
The Secretariat of the CPV formulates the major policies. The Central Committee considers key policy issues, while
five-yearly party congresses ratify major policy changes. The 10th party congress, held in April 2006, led to significant
changes in the party leadership, although Nong Duc Manh retained the key position of general secretary at that time.
The National Assembly's June 2006 session subsequently confirmed a new government leadership, including a new
Political Landscape
president, prime minister, and key cabinet ministers. The new government includes some relatively young ministers,
which is considered the first step towards installing a new generation of leaders.
Religious and media freedoms are closely controlled, and political pluralism is yet to be accepted. There is strong
asymmetry between the Vietnamese markets that are being opened up and the country's centrally controlled political
system. Vietnam remains a communist one-party state, ruled by President Truong Tan Sang, Prime Minister Nguyen
Tan Dung, General Secretary Nguyen Phu Trong, and a close circle of others within the CPV. The CPV tolerates little
criticism and restricts the basic civil and political freedoms of its citizens, meaning that while the country's economic
transition has proceeded at a rapid pace, the political realm lags far behind in terms of development.
Key policies
Economic policies
Economic reforms began in Vietnam with the aim of improving living standards and encouraging foreign investment
through more open economic policies in 1986. The CPV initiated economic reforms under its Doi Moi policy in the late
1980s. During the 1990s, enhanced institutional support and steadily improving infrastructure made Vietnam's growth
rate one of the highest in the region. This growth brought about impressive gains in terms of income and quality of life
for the Vietnamese people. The government decided to permit foreign investors to acquire up to 49% of total equity in
unlisted companies in the country, up from the previous figure of 30%. The move was implemented from June 1, 2009.
The government has embarked on Project 30, which focuses on simplifying all national and sub-national regulations
that dampen business activity.
The government struggles to control inflationary pressures as it continues to aim for fast growth. Poor domestic
investment by the government and inefficient state-owned enterprises remain a concern. The Vietnamese government
has initiated measures to reform state-owned enterprises in order to improve their financial situation, but the pace at
which these reforms are taking place is slow. A key problem with large and inefficient state-owned enterprises is that
they have been lent large amounts of money from state-owned banks. Consequently, the banks have accumulated a
large percentage of non-performing loans in their balance sheets.
Social
The number of people living below the poverty line came down remarkably during 1993-2006. This was achieved due
to the Doi Moi process, which has included land reform, price liberalization, and agricultural de-collectivization. A social
security plan provides old age, disability, and survivorship benefits, as well as work-based injury and medical insurance
coverage, which is compulsory for public sector employees and employees of companies with more than 10
employees. Sound reforms have transformed Vietnam from one of the world's poorest countries to a lower middle-
income country. According to the World Bank, poverty headcount fell from 58% in early 1990s to around 10% by 2010.
Poverty rates came down to 7.8% in 2013. Vietnam has attained five out of its 10 Millennium Development Goal (MDG)
targets and two more are likely to be met by 2015. The five-year Socio-Economic Development Plan (SEDS) 2011-20,
will be an important document in setting the strategic directions that Vietnam must take to respond to major global and
regional trends that impact the country's development. The new SEDS will ideally build on the achievements of the
2001-10 SEDS and will lay the foundation for Vietnam to become a middle-income country by 2020.

Political Landscape
Foreign
Vietnam has reached out to the world since the early 1990s after decades of isolation. The country joined the
Association of Southeast Asian Nations (ASEAN) in 1995—a historic moment for the nation. In 2004, the fifth Asia-
Europe Meeting of world leaders was held in Hanoi. Vietnam hosted the Asia Pacific Economic Co-operation summit in
November 2006, and joined the World Trade Organization in January 2007. The country became a member of the UN
Security Council in January 2008. Vietnam's relations with its largest neighbor, China, are intricate. The country was
subjected to 1,000 years of Chinese rule in what is now North Vietnam, ending in the 10th century. Chinese rule had a
deep impact on Vietnamese culture, and relations between the two countries remain unpredictable. Despite being a
communist state, Vietnam is wary of China. There have been disagreements over the sovereignty of the Spratley
Islands in the South China Sea, and disputes regarding the border between the two countries have led to occasional
demonstrations such as those in Hanoi and Ho Chi Minh City at the end of 2007. Bilateral relations between both the
countries reached their lowest point with China's decision in May 2014 to drill for oil in water that is also claimed by
Vietnam. This was followed by the violent anti-Chinese riots, which affected the relations between both countries. With
China showing no sign of reconciliation and Vietnam has taken China to the United Nations over the deployment of the
oil rig in the contested waters. This issue is likely to escalate in the medium term.
Amidst escalating tensions with China, Vietnam will continue to foster closer ties with the US, including broader military
ties. The signing of the Trans-Pacific Partnership (TPP) free trade agreement is likely to strengthen the economic
relationship between the two countries. The only source of bilateral tension between them is likely to be US's concerns
over the status of human rights and religious freedom in Vietnam. The periodic release of political prisoners during
important interactions with the US government will do little to ease the concerns. Vietnam's relation with Laos is likely to
be strained as the latter begins construction of the Don Sahong dam on the Mekong River.
Performance
Governance indicators
The World Bank report on governance uses voice and accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law, and control of corruption as indicators for 215 countries and
territories over 1996-2012. Daniel Kaufmann of the Brookings Institution, Massimo Mastruzzi of the World Bank
Institute, and Aart Kraay of the World Bank Development Economics Research Group carried out the study. For any
country, a percentile rank of 0 corresponds to the lowest possible score and a percentile rank of 100 corresponds to the
highest possible score.
In 2012, Vietnam was given a percentile rank of 9.48 on voice and accountability. This parameter measures the extent
to which a country's citizens are able to participate in selecting their government, as well as freedom of expression,
freedom of association, and freedom of the media. In comparative terms, Vietnam scored much lower than the
Philippines, which received a percentile rank of 47.87. The CPV does not allow any form of dissent in the country, and
the media is firmly controlled by the state.
Vietnam was assigned a percentile rank of 55.92 in terms of political stability in 2012, which is higher than the
Philippines' 14.69 percentile rank. The CPV has a firm grip on the country, and there seems to be no threat to its power
in the near term.
In terms of government effectiveness, Vietnam received a percentile rank of 44.50 in 2012. Government effectiveness
measures the quality of public and civil services, the degree of governmental independence from political pressures,
the quality of policy formulation and implementation, and the credibility of the government's commitment to such
Political Landscape
policies. The Philippines is well ahead in terms of government effectiveness, as it registered a percentile rank of 57.89
in 2012.
Vietnam's percentile ranking in terms of regulatory quality was 27.27 in 2012. Regulatory quality measures the ability of
the government to formulate and implement sound policies and the existence of regulations that permit and promote
private sector development. Vietnam's performance on this parameter is lower than that of the Philippines, which had a
percentile ranking of 51.67 in 2012.
Vietnam received a percentile rank of 37.91 in the rule of law index in 2012. Rule of law measures the extent to which
agents have confidence in and abide by the rules of society and the quality of contract enforcement, the police, and the
courts, as well as the likelihood of crime and violence. Vietnam is ahead of the Philippines in terms of rule of law, with
the latter achieving a percentile rank of 36.49 in 2012.
Vietnam's percentile ranking in terms of control of corruption was 35.41 in 2012. The country has been troubled with
the problem of corruption, and enforcement of anti-corruption laws has been ineffective and inconsistent. No institution
in the country, including the judiciary, the executive, and the legislature, is perceived to be beyond the reach of
corruption. The Philippines' percentile ranking in terms of control of corruption was 33.49 in the same year, lower than
Vietnam's.
Outlook
Vietnam's political landscape is dominated by a single party—the CPV. Over the years, the CPV has formulated
policies and taken decisions for the well-being of the economy. The party is likely to remain in power in the next five
years and the party is likely to remain stable despite the existence of factional splits. High public sector corruption and
disappointing economic performance in 2012-13 has weakened the prime minister's position while the influence of
President Truong Tan Sang and the CPV's conservative bloc has grown. However, Vu Duc Dam and Pham Binh Minh,
who are considered to be supporters of Mr. Dung, have been appointed as deputy prime minister in late 2013, which
suggested that the prime minister's influence is reviving. Apart from internal power struggles, the leadership is likely to
face challenges over issues such as land disputes and territorial disputes with China. Furthermore, the country's rocky
economic performance is likely to undermine the party's support, which may lead to more demand for open elections
and multi-party democracy. However, it is unlikely that such demands will be fulfilled in the near term.

Economic Landscape
ECONOMIC LANDSCAPE
Summary
The Vietnamese economy witnessed strong growth throughout the 1990s, as liberal economic reforms instituted from
the mid-1980s onwards bore fruit. International trade and investment flows received a substantial boost from the lifting
of the US trade embargo in 1994. The economy was hit by the regional financial crisis in 1997-98, although the
comparatively underdeveloped financial sector offered a degree of insulation from the full impact of these events.
Gross domestic product (GDP) growth between 2005 and 2007 was the highest it had been since the Asian Financial
Crisis of the late 1990s, peaking at 7.55% in 2005. A rise in exports and petroleum price hikes were largely responsible
for this robust performance. Developments in 2006 included the successful completion of a bilateral trade agreement
with the US, followed by the gaining of World Trade Organization (WTO) membership.
The global economic slowdown reduced the country's GDP growth rate to 5.66% in 2008 and to 5.40% in 2009. An $8
billion stimulus package, introduced in 2009, propelled growth to 6.42% in 2010. However, growth declined to 6.24% in
2011 and further to 5.25% in 2012. In 2013, Vietnam, with an economic growth of 5.42%, continued to perform below
its potential due to structural problems in the SOEs and the banking sector, and policy distortions.
Evolution
1950-90
Significant economic events during this period included:
 Following reunification in 1975, Vietnam's economy was overwhelmed with problems such as
imbalances in supply and demand, inefficiencies in distribution and circulation, soaring inflation
rates, enormous difficulties in production, and rising debt problems.
 At the Communist Party of Vietnam's (CPV's) second plenum in April 1987, measures were
introduced to give greater scope to the private sector, reduce the budget deficit, and boost the
output of agricultural and consumer goods in order to raise market supplies and exports.
1991-2013
The Vietnamese economy witnessed strong growth throughout the 1990s, as liberal economic reforms instituted from
the mid-1980s onwards bore fruit. International trade and investment flows received a substantial boost from the lifting
of the US trade embargo in 1994. The economy was hit by the regional financial crisis in 1997-98, although the
comparatively underdeveloped financial sector offered a degree of insulation from the full impact of these events.
At 7.55%, GDP growth in 2005 was the highest since the Asian Financial Crisis of the late 1990s. Developments in
2006 included the successful completion of a bilateral trade agreement with the US, followed by WTO membership.
Authorities have updated intellectual property rights regulations to comply with the Trade Related Intellectual Property
Rights agreement, adding to Vietnam's potential to attract further investment. New laws on investments and enterprises
were brought into effect during 2006 in an attempt to synchronize the investment climate for both domestic and foreign
investors. The country's economy grew by 6.98% in the same year. The global economic slowdown reduced the GDP
growth rate to 5.66% in 2008 and to 5.40% in 2009. Inflation hit a high of 23.12% in 2008, which was due to both
shortsighted domestic macroeconomic policies and global economic turbulence. Inflation came down to 6.80% in 2009,
before climbing to 9.20% in 2010. The inflation rate doubled in 2011 to reach 18.58%. In 2012, GDP growth was

Economic Landscape
5.25%. This was the slowest growth in 12 years due to tight fiscal and monetary policies adopted in 2011. However, the
policies helped in reducing inflation, stabilizing the exchange rate and rebuilding foreign reserves. Inflation in 2012
decreased to 9.21%. In 2013, economic growth was 5.42%.
Figure 5: Vietnam - historical GDP growth, 1991-2013
9.00
8.00
7.00
6.00
Growth rate (%)
5.00
4.00
3.00
2.00
1.00
0.00
1991 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
Source: Country Statistics, MarketLine MARKETLINE
Financial authorities and regulators
President Ho Chi Minh gave his assent to the establishment of the Vietnam National Bank based on the new economic
and financial policy set out in the second congress of the Vietnam Workers' Party in February 1951. The bank was to
implement the party's directions and policies during the period of modernization and industrialization. During 1975-85,
the national bank of the Republic of Vietnam (in the south) was nationalized and unified with the State Bank of
Vietnam, and new banknotes of the Socialist Republic of Vietnam replaced the old notes in both the north and the
south in 1978. The State Bank of Vietnam did not adopt market-oriented policies until late in the 1980s. It monitors and
supervises banking activities, controls credit activities, and handles all monetary and banking violations in accordance
with law. Moreover, the bank formulates national monetary plans for the government to submit to the National
Assembly for approval.
The State Securities Commission (SSC) of Vietnam was incorporated in 1996. The duties and responsibilities of the

Economic Landscape
SSC include the following:
 developing the capital markets in Vietnam
 issuing licenses to participating companies
 drafting and implementing rules and regulations.
The SSC receives assistance from the International Finance Corporation for the creation of regulations in the country.
The Ho Chi Minh City Securities Trading Center was located in Ho Chi Minh City, and was previously known as the
Stock Trading Center of Vietnam. It was incorporated in 2000, and on August 8, 2007, it was renamed and upgraded to
the Ho Chi Minh Stock Exchange. The stock exchange functions as an authorized body of Vietnam's SSC. The market
capitalization reached $48.26 billion as of April 2014 according to World Federation of Exchanges.
The Hanoi Securities Trading Center is based in the capital. It was incorporated in 2005, and deals with the purchase,
sale, and auction of shares and bonds. It was established five years after the Stock Trading Center of Vietnam was first
founded.
Key policies
Economic reforms in Vietnam began in 1986 with the aim of improving living standards and encouraging foreign
investment through more open economic policies. The CPV initiated economic reforms under its Doi Moi policy in the
late 1980s. During the 1990s, enhanced institutional support and a steadily improving infrastructure made Vietnam's
growth rate one of the highest in the region. This growth brought about impressive gains in the income and quality of
life experienced by the Vietnamese people. In 2014, the government plans to strengthen its restructuring agenda.
Equitizing a large number of SOEs is likely to send a positive signal to investors about the government's commitment
towards this agenda. Moreover, cuts in its key policy rates in March 2014 are expected to support businesses and
bolster the economy.

Economic Landscape
Performance
GDP and growth rate
At 7.55%, GDP growth in 2005 was the highest since the Asian Financial Crisis of the late 1990s according to
MarketLine estimates. A rise in exports and petroleum prices were largely responsible for this robust performance. In
2006, the economy grew at a rate of 6.98%, which decreased to 5.66% in 2008. The global economic slowdown
reduced GDP growth to 5.40% in 2009, before recovering to 6.42% in 2010. However, the GDP growth rate declined in
2011 to 6.24% due to turbulence in the global economy, tight monetary and fiscal policy, and weak domestic demand.
In 2012, growth further ebbed to 5.25% due to the effects of tight monetary and fiscal policies adopted in 2011. Growth
rate improved marginally to 5.42% in 2013 driven by the service sector.
Figure 6: GDP and GDP growth rate in Vietnam, 2007-17f
140.00 8.00
120.00 7.00
6.00
100.00
5.00
Growth rate (%)

80.00
$ billiion
4.00
60.00
3.00
40.00
2.00
20.00 1.00
0.00 0.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
GDP Real GDP growth rate

Economic Landscape
GDP composition by sector
The industrial sector, which includes mining and quarrying, manufacturing, electricity, gas, water supply, cement,
phosphate, and steel, makes the most significant single contribution to the country's GDP, at 40.79% in 2013. The
services sector contributes 37.17%, while agriculture contributes 22.04% according to MarketLine estimates in the
same year.
Figure 7: GDP composition by sector in Vietnam, 2013
Agriculture, 22.04%
Services, 37.17%
Industry, 40.79%

Economic Landscape
Agriculture
The country's agricultural output growth dropped from around 41.83% in 2008 to 5.12% in 2009. However, the sector
recovered in 2010, registering growth of 17.55%. The country's main agricultural products are paddy rice, coffee,
rubber, cotton, tea, pepper, soybeans, cashew nuts, cane sugar, peanuts, and bananas. In 2011, the sector recorded
growth of 36.95%. Agricultural output growth was 17.43% and 12.09% in 2012 and 2013, respectively.
Figure 8: Agricultural output of Vietnam, 2008-13
800.00 45.00
700.00 40.00
35.00
600.00
30.00
Growth rate (%)

500.00
VND trillion
25.00
400.00
20.00
300.00
15.00
200.00
10.00
100.00 5.00
0.00 0.00
2008 2009 2010 2011 2012 2013
Year
Agriculture output Growth rate
Note: sectoral breakdown given in local currency due to exchange rate fluctuations.

Economic Landscape
Industry
Vietnam's industrial sector contributed 40.79% to the country's GDP in 2013; the main segments include food
processing, garments, shoes, machine-building, mining, coal, steel, cement, chemical fertilizer, glass, tires, oil, and
mobile phones. The country's industrial output dropped from 24.79% in 2008 to 12.89% in 2009, due to the global
economic slowdown. Industrial output recovered in 2010, recording growth of 21.95%. In 2011, the sector recorded
growth of 25.35%. In 2012, industrial output growth was 13.74%. In 2013, industrial output growth was 15.64%.
Figure 9: Industrial output of Vietnam, 2008-13
1600.00 30.00
1400.00
25.00
1200.00
20.00
1000.00
VND trillion
Growth rate (%)

800.00 15.00
600.00
10.00
400.00
5.00
200.00
0.00 0.00
2008 2009 2010 2011 2012 2013
Year
Industry output Growth rate

Economic Landscape
Services
Vietnam registered double-digit output growth during 2002-08, registering an average increase of 17.06%. However,
services output declined from a robust 29% in 2008 to 17.82% in 2010. In 2011, the sector registered growth of
25.96%, which decreased to 14.36% in 2012. In 2013, services output growth was 14.95%.
Figure 10: Services output of Vietnam, 2008-13
1400.00 35.00
1200.00 30.00
1000.00 25.00
Growth rate (%)

VND trillion
800.00 20.00
600.00 15.00
400.00 10.00
200.00 5.00
0.00 0.00
2008 2009 2010 2011 2012 2013
Year
Services output Growth rate
Fiscal situation
According to the Asian Development Bank (ADB), budget deficit widened to 5.5% of GDP in 2013 compared to 4.3% of
GDP in 2012.

Economic Landscape
Current account
According to the Asian Development Bank (ADB), the current surplus in 2013 was 6.5% of GDP due to trade surplus,
receipts from tourism and inflows due to remittances.
Exports and imports
Vietnam had recorded increased exports every year since 2003 until the global economic crisis led to a decline in 2009.
The country's exports came down to $62.76 billion in 2009, from $69.64 billion in 2008. It recovered in 2010 to reach
$79.59 billion. In 2011, there was further improvement in exports and it reached a value of $105.49 billion. Exports
increased to $124.02 billion and $128.10 billion in 2012 and 2013, respectively. Similarly, imports came down from
$88.59 billion in 2008 to $77.99 billion in 2009, before recovering to $94.61 billion in 2010. Imports rose to $118.46
billion in 2011 and $126.13 billion in 2012. In 2013, imports further increased to $134.29 billion.
According to CIA - The World Factbook, Vietnam's major exports include clothes, shoes, electronics, seafood, crude
oil, rice, coffee, wooden products and machinery. In 2012, Vietnam's major export partners were the US (17.8%),
Japan (11.8 %), China (11.2%), South Korea (5%) and Malaysia (4.1%). Vietnam's major imports include machinery
and equipment, petroleum products, steel products, raw materials for the clothing and shoe industries, electronics,
plastics, and automobiles. In 2012, Vietnam's major import partners were China (which accounted for 25.8% of
Vietnamese imports), South Korea (13.9 %), Japan (10.4%), Singapore (6%), Thailand (5.2%), and the US (4.3%).

Economic Landscape
Figure 11: External trade of Vietnam, 2009-13
300.00
262.40
250.15
250.00
223.94
200.00
174.20
134.29
$ billion
126.13
150.00 140.76 118.46
124.02 128.10
94.61 105.49
77.99
100.00
79.59
62.76
50.00
0.00
2009 2010 2011 2012 2013
Year
Exports Imports Total trade
External debt
According to CIA - The World Factbook, the country's external debt increased from $63.95 billion in 2012 to $68.38
billion in 2013.
International investment position
Total foreign investment
According to the Vietnamese Ministry of Planning and Investment, sectors such as banks, infrastructure and property
have seen significant FDI inflows in recent years. There has also been a rise in FDI in retail, technology and
manufacturing. According to UNCTAD (World Investment Report, 2014), FDI inflows increased from $8.37 billion in
2012 to $8.90 billion in 2013. According to Vietnam's Foreign Investment Agency, Vietnam attracted $5.5 billion in FDI
in the first five months of 2014.
Credit rating
In June 2014, Standard & Poor's (S&P) affirmed the BB- long-term and B short-term credit ratings for Vietnam with a
stable outlook despite tensions over China's intrusion in the East Sea (or South China Sea), short-term security issues
in some parts of Vietnam and concerns over decline in investment prospects due to rising investor concerns.

Economic Landscape
Monetary situation
Key monetary indicators
Inflation
High rates of inflation continue to be a major cause for concern in Vietnam. The global financial crisis resulted in
23.12% inflation in 2008. Inflation declined to 6.80% in 2009 but rose to 9.20% in 2010. There has been a sharp rise in
the prices of necessities such as food, electricity and transportation. Inflation doubled to reach 18.58% in 2011. In
2012, inflation declined to 9.21%. Factors such as modest international commodity prices, subdued domestic demand
and steady food production led to lower inflation rate of 6.60% in 2013.
Figure 12: Consumer Price Index and Consumer Price Index-based inflation in Vietnam,
2007-17f
350.00 25.00
300.00
20.00
250.00
Percentage (%)
Consumer Price Index
15.00
200.00
150.00
10.00
100.00
5.00
50.00
0.00 0.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Consumer price index Inflation
Interest rate
The State Bank of Vietnam (SBV) cut its benchmark interest rates in order to encourage lending and boost
consumption after slow economic growth in 2012. In March 2014, the refinancing rate was reduced to 6.5% from 7%
and the discount rate was reduced from 5% to 4.5%.
Banking sector
The central bank is not independent, as it is under the control of the government and, ultimately, the CPV. There are 37

Economic Landscape
joint stock commercial banks, five state-owned commercial banks, four joint venture banks, 35 foreign-invested
branches, and 43 representative offices. Foreign banks may now open 100%-owned subsidiaries, branches, or
representative offices, and are allowed to provide almost all of the services provided by Vietnamese banks. Lending by
state banks is still used as an arm of government policy, particularly in terms of subsidized interest rates and debt relief
to farmers and large state-owned enterprises. In 2013, its average annual lending rate dropped to 10% compared to
22% in 2011. The NPL rate had declined to 3.6% of all loans by the end of 2013, owing mainly to transfers to the
Vietnam Asset Management Company (VAMC).
Unemployment
Unemployment decreased from 4.65% in 2007 to 4.45% in 2009 and dropped to 3.95% in 2010 after GDP growth
improved. In 2011, the unemployment rate was 4.15% but it increased marginally to 4.31% in 2012. In 2013,
unemployment rate declined to 4.19%. In 2013, the agricultural sector provided the most employment (48.49%)
followed by the services sector (29.97%) and the industrial sector (21.54%).
Figure 13: Unemployment and unemployment rate in Vietnam, 2007-17f
2.20 4.80
4.60
2.10
4.40
Unemployment in millions
2.00
4.20
Percentage (%)
1.90
4.00
1.80
3.80
1.70
3.60
1.60 3.40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Total unemployment Rate of unemployment (%)
Outlook
Vietnam is one of the fastest growing economies in Southeast Asia, which has witnessed sound growth. The economy
is likely to grow at a moderate pace of 5.64% in 2014. Continuation of cautious monetary policy and renewed focus on

Economic Landscape
structural reforms indicates macroeconomic prudence. In 2014, trade and current account is likely to remain in surplus,
although by a smaller amount compared to 2013. Apart from that, modest credit growth is likely to ensure that inflation
is within the government target of 7%. However, the high public sector debt points towards growing risks and indicates
the need for fiscal consolidation to preserve debt sustainability in the medium term.

Social Landscape
SOCIAL LANDSCAPE
Summary
Vietnam has a high rate of disability, and the Ministry of Labor, War Invalids, and Social Affairs administers welfare in
the country. . Vietnam had a median age of 29 years in 2013, which means that half of the population is below this age.
The population remains predominantly rural, although the percentage of the population living in urban areas has been
increasing since the initiation of the Doi Moi economic reforms in 1986.
Evolution
The country's welfare system focuses on the victims of the Vietnam War (1954-75), such as individuals disabled in
combat or by toxic chemicals, and the families of fallen combatants. Around 5 million Vietnamese-more than 6% of the
population-were in the disabled category in 2005. The Ministry of Labor, War Invalids, and Social Affairs also
administers welfare in the country and oversees a social insurance system with provisions for old age, disability, and
death, sickness and maternity, and workplace injury. Coverage is mandatory for state employees, non-state enterprises
with more than 10 employees, and foreign-invested enterprises. Special programs exist for government civil servants
and armed forces personnel.
The government of North Vietnam established a public health system in 1954 that reached down to the village level.
This system was extended to the south after reunification in 1976. However, in the late 1980s the quality of healthcare
began to decline as a result of budgetary constraints, a shift of responsibility to the provinces, and the introduction of
charges. Inadequate funding has led to delays in planned upgrades to water supply and sewerage systems. As a
result, almost half of the population had no access to clean water in 2005, a deficiency that promotes such infectious
diseases as malaria, dengue fever, typhoid, and cholera. Inadequate funding has also contributed to a shortage of
nurses, midwives, and hospital beds.
Demographic composition
Composition by age and gender
According to MarketLine estimates, Vietnam's population was 89.61 million in 2013. In Vietnam, 24.59% of the
population is in the 0-14 age group, 69.82% of the population belongs to the 15-64 age group, and 5.59% of the
population is in the 65+ age group. Vietnam had a median age of 29 years in 2013, which means that half of the
population is below this age. Vietnam's demographic structure works in its favor, as there are regular additions to its
labor force. The gender ratio in the country is around 1.12 males per female. The infant mortality rate in the country is
around 19.6 deaths per 1,000 live births. The life expectancy of the population is around 72.7 years in 2013.

Social Landscape
Table 9: Mid-year population by age (as percentage), 2013
Age Female Male

0-4 7.75 8.65
5-9 7.93 8.77
10-14 7.70 8.41
15-19 8.34 8.99
20-24 9.43 10.05
25-29 9.42 9.88
30-34 8.37 8.65
35-39 7.41 7.67
40-44 6.99 6.83
45-49 6.35 6.15
50-54 5.86 5.30
55-59 4.47 3.89
60-64 3.12 2.47
65-69 1.93 1.47
70-74 1.73 1.16
75-79 1.43 0.85
80+ 1.77 0.81
Urban/rural composition and migration
Vietnam is a predominantly rural country—one that has become increasingly urbanized since the Doi Moi economic
reforms were introduced in 1986. These reforms successfully boosted income and employment opportunities in the
cities. In 2013, 32.31% of the country's population was urban and 67.69% was rural according to MarketLine estimates.
Urban areas such as Ho Chi Minh City, Hanoi, Da Nang, and the Central Highlands have attracted significant numbers
of migrants, who are continuing to move from the north of the country to the southern region.
Religious and ethnic composition
According to CIA - The World Factbook (1999 census), the country's population comprises the following religious
groups: Buddhist (9.3%), Catholic (6.7%), others (3.2%), and none (80.8%).

Social Landscape
Figure 14: Vietnam - composition of religion
Buddhist
9.3%
Catholic
6.7%
Others
3.2%
None
80.8%
Source: CIA - The World Factbook MARKETLINE
Health
Vietnam's government spent around 1.76% of its GDP on healthcare in 2001, which was more than that of neighboring
Laos. In Vietnam, only one quarter of health spending is from the public sector, with the rest coming from private
sources. Compared to Vietnam, only Cambodia has a lower share of public-to-private spending in the region; despite
higher operating costs in remote areas, most healthcare spending in such locations has benefited from richer
households, according to an International Monetary Fund report. The low percentage of government healthcare
spending in Vietnam is a cause for concern. Given that the country has witnessed GDP growth in excess of 7% since
2002 the rich have been able to bear out-of-pocket healthcare expenses, but the poor continue to lack access to
medical services. Vietnam and Australia are working together to tackle the problem of tuberculosis (TB). An amount of
$1.3m has been allocated for a partnership project and Vietnam will receive advice from Australian TB experts, which
will be applied throughout all levels of Vietnam's healthcare system.
Social welfare
Social welfare policies
The Ministry of Labor, War Invalids, and Social Affairs administers welfare in Vietnam. The country has a social
insurance system with provisions for old age, disability, and death; sickness and maternity; and workplace-related
injury. Coverage is mandatory for state employees, non-state enterprises with more than 10 employees, and
companies with foreign investment. Special programs exist for civil servants and armed forces personnel.

Social Landscape
Performance
Healthcare
According to MarketLine estimates, government expenditure on healthcare amounted to $3.69 billion or 2.37% of GDP
in 2012 compared to $3.31 billion or 2.46% of GDP in 2011.
Figure 15: Government healthcare expenditure, 2006-12
4.00 3.00
3.50
2.50
3.00
2.00
2.50
$ billion
Percentage (%)
2.00 1.50
1.50
1.00
1.00
0.50
0.50
0.00 0.00
2006 2007 2008 2009 2010 2011 2012
Year
Expenditure on healthcare, Public(Absolute) Public healthcare expenditure as % of GDP
Income distribution
According to MarketLine estimates, Vietnam's GDP per capita increased from $988.15 in 2012 to $1030.03 in 2013.
However, income inequality remains high; the country's Gini index was 35.57 in 2012. Income varies widely across
regions. In the 2013 Human Development Index (HDI), the country is ranked 127th out of 187 countries with a HDI
value of 0.617. This places Vietnam in the medium development category.
Education
Although five years of primary school education is considered compulsory and 92% of eligible children were enrolled in
primary school, only two thirds completed the fifth grade in 2000. The cost of tuition, books, and uniforms and the need
to supplement family income are the two main reasons that children drop out. A huge disparity exists between primary
school enrollment in cities and the rural parts of Vietnam. In some rural areas, only 10-15% of children progress

Social Landscape
beyond third grade, whereas almost 96% of pupils in Ho Chi Minh City complete fifth grade. According to MarketLine
estimates, the total literacy rate was estimated to be 94.08% in 2013. The Ministry of Education and Training has the
approval of the prime minister to establish six new universities in the Mekong Delta. This will improve higher education
and help to create a skilled workforce.
Outlook
The UN Educational, Scientific, and Cultural Organization's (UNESCO's) Asia Pacific education office praised
Vietnam's efforts in implementing the UN Decade of Education for Sustainable Development 2005-14 framework in July
2007. UNESCO stated that Vietnam was one of the first countries to establish a national action committee on the issue
of sustainable development. A National Action Program has been initiated to improve the quality of education in the
country, and raise student awareness of sustainable development. Vietnam's efforts to improve educational quality and
to raise awareness of sustainable development are important first steps towards the country's long-term progress.
Furthermore, Prime Minister Nguyen Tan Dung has approved a strategy for the development of Vietnamese youth from
now until 2020. The aim of the strategy is to build a well-developed generation of patriotic Vietnamese with awareness
of socialist ideals, and their responsibilities and duties as citizens. With the help of this strategy, the country hopes to
reduce unemployment and provide 600,000 new jobs to young people each year. Vietnam aims to equip at least 80%
of its young people with basic life skills, and knowledge of gender equality and reproductive health. The achievement of
these targets will create a generation of young people who will contribute to the development of the country.

Technological Landscape
TECHNOLOGICAL LANDSCAPE
Summary
Vietnam's telecom sector is growing quite rapidly, and the Internet has become very popular in the country. The
number of Internet users doubled during 2003 and 2004. In addition, at the start of the new millennium, the country
decided to embark upon the creation of Millennium Science Institutes (MSIs). However, the country registered only six
patents with the US Patent and Trademark Office during 2006-10, with none being registered in 2011. The Central
Committee of the Communist Party of Vietnam recognizes the importance of biotechnology, and has initiated steps to
foster its development in the country. Japan is funding Vietnamese power projects based on renewable resources so
that it can receive the required Certified Emission Reduction credits. The construction of a new center for space
technology and investment in an IT complex at the Hoa Lac Hi-Tech Park in Hanoi are promising prospects for the
future.
Evolution
Mobile telephony continues to grow despite severe price constraints. Vietnam is mirroring China and India on a smaller
scale, with Western-educated Vietnamese citizens returning to the country to add foreign management and technical
experience to the low-cost workforce. Vietnam is one of the fastest growing markets for technology of any sort - and
telecoms in particular - as large infrastructure projects continue to attract investment and consumers.
The Ministry of Science and Technology (MOST) is responsible for technological and scientific initiatives in the country.
Vietnam embarked upon the development of a series of MSIs starting in 2000. These institutes will have the following
characteristics:
 They will be efficient, small in size, and usually located within existing institutions.
 Their principal activity will be scientific research, and their principal product will be educated
individuals.
 Each institute will have a small permanent scientific staff of very high quality, a flow-through of
junior scientists, and numerous visiting scientists.
 The Institutes will be autonomous concerning local institutional structures. At the same time, they
will be linked to other institutions, the private sector, the government, and one another.
 Each institute will feature a leader of major scientific stature, with entrepreneurial qualities and
charisma, who is able both to work at the frontiers of research and to serve local needs.
 Institutes should be flexible in concept and design, and adapted to local conditions.
Intellectual property
There is little innovation in Vietnam, with only six patents being registered during 2006 to 2010 and none in 2011. In
2012, the country registered only two patents. In 2013, the country registered five patents.

Performance
Telecommunications and Internet
Vietnam has witnessed rapid growth rates in terms of both mobile and fixed line users. Mobile penetration per 100
individuals increased from 87.64 in 2008 to 113.72 in 2009 and then to 152.12 in 2013. The number of mobile phone
subscribers increased from 74.37 million in 2008 to 136.32 million in 2013. The number of internet subscribers
increased from 31.09 million in 2011 to 35.39 million in 2012.
Figure 16: Internet users in Vietnam, 2008-12
40.00 45.00
35.00 40.00
35.00
30.00
Internet users in millions
30.00
25.00
Percentage (%)
25.00
20.00
20.00
15.00
15.00
10.00
10.00
5.00 5.00
0.00 0.00
2008 2009 2010 2011 2012
Year
Number of users Percentage of population
Biotechnology
In June 2005, the Central Committee of the Communist Party of Vietnam issued decree number 50 regarding the
development and application of biotechnology in the country, followed by the prime minister's decision to pave the way
for its application in agriculture, fisheries, production, environmental protection, and security and defense. Vietnam's
biotechnology sector reached a good standard during its development from 2006 to 2009. In an international
conference held in Hanoi in February 2013, the deputy minister of S&T of Vietnam, Chu Ngoc Anh said that Vietnam
considers India a strategic partner in biotechnology. Problems like population growth, the degradation of land, climate
change and decreasing agricultural land due to urbanization are slowly taking its toll on agricultural production. In order
to prevent further deterioration of the situation, the government used biotechnology as its strategic measure. According
to the Ministry of Agriculture and Rural Development, biotechnology has led to great development in the agricultural
sector, mainly through the application of gene technology in creating high-yielding and disease-resistant species of
crops and livestock.
Outlook
Vietnam is one of the fastest growing economies in Southeast Asia, which in spite of hurdles, is trying to improve its
technological landscape. The government maintains close ties with countries like France, Slovakia, Belarus and Israel
in order to improve its S&T sector. The government encourages active participation from researchers and educators to
implement advanced infrastructure applications for making the Vietnam Research and Education Network (VinaREN)
more efficient. Though the number of mobile and internet subscribers in the country has increased, Vietnam is in the
84th place out of 148 countries in the Networked Readiness Index 2014. The S&T policy for 2011-2020 aims to
improve the situation and ensure development.

Legal Landscape
LEGAL LANDSCAPE
Summary
Vietnam's judiciary is not independent, as it is under the control of the Communist Party of Vietnam (CPV). The
country's accession to the World Trade Organization (WTO) has eased regulations in various sectors including law,
banking, and engineering. Prospective judges are vetted by the CPV to ensure that only supporters of the party are
appointed. The judicial system in the country is two-tiered, with courts of first instance and courts of appeal. Vietnam
has differential tax rates, which also vary for Vietnamese citizens and foreigners. According to the World Bank's Doing
Business indicators, Vietnam's tax system lags behind the Southeast Asian average in terms of ease in paying taxes.
Evolution
The judicial system of Vietnam is under the control of the CPV. The Constitution of 1980 is explicit when it states that
the CPV is to be "the force leading the state and society". Regulatory conditions in the country have improved since the
government's decision to join the WTO in January 2007. Furthermore, the US-Vietnam bilateral trade agreement came
into effect in December 2001. Vietnam has been allowing 100% foreign-owned companies into various sectors such as
law and engineering since January 11, 2007. The country's accession to the WTO has led to the opening up of the
banking and non-insurance industries. Foreign commercial banks have been able to establish representative offices,
branches, and commercial joint venture banks (with foreign capital contributions not to exceed 50% of chartered
capital) since April 1, 2007.
Judicial system
The judicial selection process favors supporters of the CPV. Extra-judicial prison sentences are frequently imposed
through administrative procedures without due process of law, and these decisions are not subject to judicial review.
Trials are generally open to the public, and defendants have the right to be present at the trial, the right to an attorney,
and the right to cross-examine witnesses.
Structure of the system
The country has a two-tier court system, which includes courts of first instance and courts of appeal. Judgments are
susceptible to further review under special circumstances. The court system consists of the Supreme Court, the
provincial people's courts, and the district people's courts. There are specialized courts at the Supreme Court and at
the provincial levels; these include the criminal court, the civil court, the economic court, the administrative court, and
the labor court.
Legislation affecting business
Establishing operations as a foreign enterprise
There are five main means available to a foreign enterprise to start its operations in Vietnam. These are wholly foreign-
owned companies; joint ventures; business co-operation contracts (which are used in sectors where participation is
restricted, such as the oil, gas, and telecommunications industries); build-operate-transfer projects; and foreign
investment shareholding companies, also known as joint stock companies. The latter allow for the transformation of
existing foreign-investment enterprises through public trading of shares on the bourse.

Legal Landscape
Tax regulations
Income tax
Vietnam has differential tax rates from 5% to 35%, and there are varying rates for Vietnamese residents. Non-residents
are subject to a flat 20% tax on their income from Vietnam. Non-employment income is taxed at rates from 0.1% to
25%.
Corporate tax
The corporate income tax rate was lowered from 25% to 22% (for some enterprises it is 20%) from January 1, 2014.
The rate for enterprises operating in the oil and gas and natural resource sectors ranges from 32% to 50% depending
on the project.
Capital gains tax
Gains are taxed at the standard corporate tax rate of 22% as there is no separate capital gains tax.
Withholding tax
A 5% withholding tax is imposed on dividends remitted to overseas individuals. Interest paid to nonresidents is subject
to a 5% withholding tax unless the rate is reduced under a tax treaty. A withholding tax of 10% is applicable on royalties
paid to a nonresident unless the rate is reduced under a tax treaty.
Value-added tax
Vietnam levies VAT and Special Sales Tax (SST) on the sale of goods and the provision of services. The rates for VAT
are 0%, 5% and 10%. In case of SST, the rate ranges from 10% to 70%.
Corporate governance
Most enterprises in Vietnam have inspection committees that are responsible for overseeing all operations and
business activities of a company on behalf of the shareholders, according to Enterprise Law 1999. The law also
specifies that an inspection committee is required for any company that has more than 11 shareholders. In practice,
however, many such committees in Vietnam lack adequate authority to perform their roles to the fullest extent. The
members of an inspection committee are often subordinate to the company's senior management, and therefore lack
authority to challenge any malpractice that they see occurring. Vietnam's internal corporate controls are often too weak
to guard against related party transactions, which could be detrimental to firms and their shareholders and lead to
potential conflicts of interest. Majority of firms have no written guidelines on these issues and are therefore susceptible
to abuse.
Performance
Effectiveness of the legal system
According to the World Bank's 2014 Doing Business report, Vietnam is placed in the 99th position out of 189
economies and lags behind other Southeast Asian countries in ease of starting a business. The number of procedures
required to start a business in Vietnam is 10, which is higher than the East Asia and Pacific regional average of seven.
In terms of the number of days required to start a business, it takes an entrepreneur 34 days to do so in Vietnam, which
is lower than the regional average of 37.8 but higher than the OECD's average of 11.1 days. In the 2014 Index of
Economic Freedom, Vietnam was ranked 147th among 178 countries. There was decline in its monetary freedom,
business freedom and freedom from corruption. In the Press Freedom Index 2014, Vietnam was in the 174th place out

Legal Landscape
of 180 economies. The propaganda and training departments of the CPV control the media and set press guidelines.
Laws are designed to curb press freedom and to punish those whom the government feels are guilty.
Outlook
The transition from a centrally planned economy to a market oriented one involved changes in policies and laws to gain
investor confidence. Although the country is lauded for its efforts to open up business, widely prevalent corruption,
weak enforcement of laws and the lack of an independent judiciary deter investment. According to the World Bank,
Vietnam, through its regulatory reform, has eased the process for local firms to start a business, but compared to other
Southeast Asian countries it has been less rigorous in improving its business environment. The country's ranking in
press freedom continues to deteriorate with no effort from the government to halt it. Vietnam has initiated many laws to
ensure smooth functioning of the economy; however, it also needs to ensure transparency in implementation.

Environmental Landscape
ENVIRONMENTAL LANDSCAPE
Summary
Despite starting late in terms of recognizing the environment as a separate legal domain, Vietnam has comprehensive
environmental laws. The country is party to various international agreements and pacts; however, it has witnessed
rapid development in the last few years, which has led to an increase in carbon dioxide emissions. The country's
carbon fuel usage has also increased in recent years.
Evolution
Environmental law did not exist as a separate legal domain or a separate legal branch before 1993. This was mainly
because the state's leading priorities were to heal the wounds of war and to rebuild the economy. The National
Assembly passed the Environmental Protection Law, the country's first environmental law, on December 27, 1993.
After 12 years, the National Assembly passed a new Environmental Protection Law on November 29, 2005.
Environmental regulations
The country has various ecological laws, such as the Mineral Law, the Law on Protection of Public Health, the Forest
Protection and Development Law, the Petroleum Law, the Land Law, the Water Resources Law, and the Enterprise
Law. Moreover, even the civil and penal codes contain provisions on environmental protection. In 2003, the
government established the Ministry of Natural Resources and approved the National Strategy for Environmental
Protection. In 2004, the Environmental Impact Assessment requirements for project approvals were increased, and the
Strategy for Sustainable Development (Agenda 21) was adopted.
Participation in global efforts/agreements/pacts
Vietnam is party to several major international pacts and agreements such as are Biodiversity, Climate Change, the
Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes,
Law of the Sea, Ozone Layer Protection, Ship Pollution, and Wetlands.
Agent Orange clean-up
Vietnam has initiated a joint operation with the US in order to remove traces of the toxic Agent Orange. During the
Vietnam War (1959-75) US forces sprayed up to 12 million gallons of the chemical in order to destroy vegetation cover
for communist forces in the Vietnam War. A chemical called dioxin used in Agent Orange has been linked with cancer
and birth defects. The cleanup will focus on areas that have been identified as Agent Orange hotspots in the attempt to
remove harmful dioxins from the soil as well as any unexploded ordnance. Initially the US Congress appropriated $3m
in 2007 towards this effort and the figure leapt to $32m in 2012.
Performance
Environmental impact
Industrial production in Vietnam has increased at an extremely fast pace. However, the enterprises responsible have
poor environmental records due to the obsolete equipment they use and their inadequate treatment of wastewater and
air emissions. Many industrial pollutants have the potential to do considerable damage to the health of the country's

citizens. For instance, Vedan (Vietnam) Enterprise Corporation, a unit of Taiwan's Vedan Group, makes monosodium
glutamate. The company was caught illegally discharging untreated wastewater from its monosodium glutamate factory
in Dong Nai Province into Thi Vai River in 2008, affecting individuals living along the riverbank. It agreed to pay a
VND218.9 billion ($10.18m) fine as compensation for the environmental damage it caused to three provinces in South
Vietnam. The government of Vietnam introduced a penalty for water pollution in early 2007; however, enforcement
continues to be erratic.
According to the Environmental Observation Station under the Department of Natural Resources and Environment in
Dong Nai Province, pollution levels in almost all rivers and springs in the southern province of Dong Nai continue to
increase. In addition to disposals from local households, businesses and industries continue to dump wastewater and
substances.
The Ministry of Health plans to implement a nationwide project for wastewater treatment in hospitals at a total
investment of $155m. It is expected that the project will be completed by 2017, under which it will build solid waste
wastewater treatment systems in at least 150 central and local hospitals. As part of the project, training will be provided
to operate these waste treatment facilities. This effort will help towards reducing pollution in the country.
With rapid development over the last few years, Vietnam's carbon dioxide emissions have consistently increased.
According to MarketLine estimates, emissions rose from around 90.24 million metric tonnes in 2007 to around 121.35
million metric tonnes in 2010. The carbon dioxide emissions grew by 15.93% in 2010. However, in 2011, emissions
reduced to 112.66 million metric tonnes.
In the 2014 Environmental Performance Index (EPI), conducted by Yale University, the country is a poor performer with
a rank of 136 out of 178 countries. The country needs to design policies and ensure proper implementation to improve
its ranking.

Figure 17: Carbon dioxide emissions in Vietnam, 2004-11
140.00 20.00
120.00
15.00
100.00
10.00
Percentage (%)
Metric Tons (Millions)
80.00
5.00
60.00
0.00
40.00
-5.00
20.00
0.00 -10.00
2004 2005 2006 2007 2008 2009 2010 2011
Year
Volume Growth rate
Outlook
The environmental landscape of a country plays an important role in ensuring the sustainable development of the
country. Likewise, sound policies and their proper implementation are equally important for ensuring a pollution free
environment. Vietnam has realized the importance of environment as an important domain and over the years has
designed policies to address issues related to it.
Though carbon dioxide emissions have declined, pollution levels in the country continue to remain high. Increasing
pollution in water due to the discharge of wastes from industries and households has become an important challenge
needing immediate attention. Provinces like Binh Duong have already initiated measures to clean up the environment
and it includes some strict measures to control industrial pollution. Apart from that, Vietnam is also addressing the
issue of climate change. HCM city, as a precautionary step to mitigate the effects of climate change, has allocated
VND70.54 trillion ($3.28 billion) to finance 36 projects.
Vietnam considers the conservation of biodiversity as one of the important tasks in its endeavor to protect the
environment. The country plans to consolidate links between national and international conservation efforts, revise its
legal framework and strengthen its law enforcement capacity.

Appendix
APPENDIX
Ask the analyst
MarketLine's Country Analysis Practice consists of a team of economists, analysts, and researchers, all with expertise
in their given fields. For any questions or comments about this report you can contact the author directly at
reachus@marketline.com.
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Appendix

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Country Profile Series

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Vietnam's e-commerce sector is emerging; however, poor performance on patents is a dampener

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Table 1: Vietnam - key fundamentals

2012 2013 2014f 2015f 2016f 2017f 2018f

Inflation (%) 9.21 6.60 6.50 6.41 6.37 6.34 6.20

Source: Country Statistics MarketLine MARKETLINE

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Key Facts and Geographic Location 12

Structure and policies 39

Structure and policies 44

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Structure and policies 56

Structure and policies 61

Structure and policies 64

Structure and policies 67

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Figure 2: State-owned enterprises equitized in Vietnam, 2000-15f 23

Figure 3: Vietnam - political events timeline 38

Figure 4: Vietnam - key political figures 39

Figure 5: Vietnam - historical GDP growth, 1991-2013 44

Figure 6: GDP and GDP growth rate in Vietnam, 2007-17f 46

Figure 7: GDP composition by sector in Vietnam, 2013 47

Figure 8: Agricultural output of Vietnam, 2008-13 48

Figure 9: Industrial output of Vietnam, 2008-13 49

Figure 10: Services output of Vietnam, 2008-13 50

Figure 11: External trade of Vietnam, 2009-13 52

Figure 13: Unemployment and unemployment rate in Vietnam, 2007-17f 54

Figure 14: Vietnam - composition of religion 58

Figure 15: Government healthcare expenditure, 2006-12 59

Figure 16: Internet users in Vietnam, 2008-12 62

Figure 17: Carbon dioxide emissions in Vietnam, 2004-11 69

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Table 2: Vietnam - key facts 12

Table 3: Analysis of Vietnam's political landscape 15

Table 4: Analysis of Vietnam's economy 19

Table 5: Analysis of Vietnam's social system 24

Table 6: Analysis of Vietnam's technology landscape 28

Table 7: Analysis of Vietnam's legal landscape 31

Table 8: Analysis of Vietnam's environmental landscape 34

Table 9: Mid-year population by age (as percentage), 2013 57

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

KEY FACTS AND GEOGRAPHIC LOCATION

Table 2: Vietnam - key facts

Country and capital

Population (2013) 89.61 million

Currency Vietnamese dong

Gross domestic product per capita (purchasing power parity) $4,086

Internet domain .vn

Country area 329,560 sq. Km

Languages Vietnamese (official), English (increasingly favored as a second

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Figure 1: Map of Vietnam

Source: CIA - The World Factbook MARKETLINE

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

PESTLE Country Analysis Report: Vietnam ML00002-033/Published 06/2014

Table 3: Analysis of Vietnam's political landscape

Current strengths Current challenges