Académique Documents
Professionnel Documents
Culture Documents
Group :
Ananda Fahri | Hanif Syaifullah|Nursyamsi Olina| Rahmadoni
COUNTRY BACKGROUND
Since embarking on
major economic reforms
in 1987, Vietnam had
been one of Asia’s
fastest- growing
economies with an
average GDP growth of
5.5% over the last two
decades. Its GDP per
capita (PPP adjusted) had
reached $3,438 by 2010
Vietnam’s Economy in 2010
Vietnam’s Economy in 2010
UNCTAD’s World Investment Prospects Survey 2009–2011 ranked Vietnam as one of the 15 most
FDI-friendly countries in the world.
Vietnam’s Economy in 2010
For many years the government had a fiscal deficit: in 2010 the deficit was
at roughly 7% of GDP. Government’s net debt had jumped by 14% of GDP
between 2008 and 2010 to reach 50% of GDP. Two thirds of the debt was
owed to external creditors and about 75% of total debt was denominated in
foreign currency. International rating agencies had downgraded Vietnam’s
sovereign rating. There were concerns about unrecorded outflows of capital,
as Vietnamese tried to shelter their assets from inflation by buying gold and
foreign currency.
Business Environment
The literacy rate at 93% was higher than for many comparable countries. Total
spending on education amounted to 19.8% of government expenditure and 5.3% of
GDP. The overall quality of education was perceived as low, with higher education the
weakest.
Vietnam’s financial sector remained relatively underdeveloped. Only about 10% of
the population had opened bank accounts. A rapid increase in bank lending had,
however, pushed the overall level of outstanding loans above 100% of GDP, much
higher than in other ASEAN countries.
Agricultural
Benefit from natural condition
The fifth-largest grower of rice in the
world, and the second-largest
exporter after Thailand
The second-largest producer and
exporter of coffee after Brazil
The world largest exporter of cashew
and pepper
The world fourth-largest exporter of
rubber
By 2010, agricultural products
accounted for 7% of Vietnamese
exports and 9% of Vietnamese GDP
Composition of the Vietnamese Economy
Furniture Cluster
Exports of $4.0 billion in 2010
with the U.S. its largest
market
About 80% of wood material
was imported
The world’s largest importer
of hardwood
Had around 2,000
manufacturers, 15% of which
were export-oriented with 60
foreign firms
Composition of the Vietnamese Economy
Motorcycle Cluster
Emerged with the entry of Taiwan-
based SYM in 1992, followed by
Suzuki (1996), Honda (1997), and
Yamaha (1999)
Competition intensified after 2000
with the formation of over 50
domestic companies
Cheap domestic suppliers
Motorbike Industry Development
Strategy contemplated an increase
in motorcycle production to 31
million by 2015
Composition of the Vietnamese Economy
Electronics
Intel’s chip assembly and testing
facility, opened in Ho Chi Minh
City in 2010, had attracted other
companies, like contract
manufacturers Foxconn and
Compal
Finding skilled employees had
proven to be a challenge
Improve training by Higher
Engineering Education Alliance
Program
A New Strategy for Vietnam
In July 2010, Prime Minister Nguyen Tan Dung released the draft Socio-Economic
Development strategy for 2011-2020, setting out “rapid and sustainable
development” as the theme of coming decade.
Based on assessment that “our achievements have not been commensurate with our
potential,” the strategy emphasized the need to restructure the economy to achieve
“deep growth” and knowledge-intensive (rather than labor- and resource-intensive)
development. It identified institutions, skills, and infrastructure as three critical areas
on which policy should focus.
Porter’s Diamond Model
Porter’s Diamond Model
Factor Condition
Logistic
Starting new business Communications
Capital market
Research and development
Porter’s Diamond Model
Demand Condition
Technologies
Local supplier Local supplier
Machineries Cluster development dan policy
Research and training services
Porter’s Diamond Model
Firm Strategy, Structure & Rivalry
Investor protection
Competition Employment
Intellectual property protection Technology transfer
Capital flows FDI rules
Local competition