Economy of Vietnam

Vietnam was desperately destroyed from the decades of wars; it needed then a great restoration and construction. After the reunification, Vietnam economy faced the stagnancy during 1975 through 1985 despite the government accelerating development. In 1986, Vietnam adopted the experimentally economic reform initiated by the Soviet Union under the name of Doi Moi policy which has significantly improved the Vietnamese business atmosphere since then. Vietnam became then one of the fastest-growing economies in the world with its annually GDP growth of 8%. Foreign investment grew three-fold; agricultural doubled, transforming Vietnam from a food importer to the world second-largest rice exporter after Thailand.

The more liberal rules and the market-oriented economy under the new policy proved the remarkably economic growth in both agricultural and industrial sectors. Moreover, with more foreign investments, there are more capitals flowing in the market of Vietnam.

The July 13, 2000 signing of the Bilateral Trade Agreement (BTA) between the United States and Vietnam is a noteworthy step-forward for Vietnam's economy. Under this agreement, the Vietnamese goods will be provided the Normal Trade Relations (NTR) status in the U.S. market. Hereby, Vietnam could accelerate its transformation into a manufacturing-based, export-oriented economy and also attract more foreign investment in industrial sector. In the agricultural sector, land reform, decollectivization, and the opening of the agricultural sector to market forces are the main factors to solve the problem of food shortage of the country in early 1980s. The industrial sector was simultaneously reformed and implemented. Previously, the central plan was adopted in economy, resulting in low productivity and inefficiency in state-owned enterprises. Consequently, under the more open economic policy, the Foreign Direct Investment (FDI), the new industrial zone determined by the government was formed in order to encourage the industrializing economy in Vietnam. The leading foreign investors in Vietnam are from Korea, Singapore, and Taiwan.

Although the economic reform in Vietnam is remarkable, the political reform is not mentioned or considered. Along with the flow of changes in commerce and economy, the only one thing in Vietnam which seems stable and constant is the Communist ideology of Vietnamese government and bureaucratic restraints. Most of country's leadership still holds on for changing the economic rein to foreign investors. The model of economic system now is then the same pattern as China in that the central government still has right to control over the large-scale, gross-amount-revenued industries, for example, the banking system, airlines, and communications. Most of foreign enterprises are allowed only to operate the join-venture businesses rather than directing on their own.

The ideology of the government which seems controversial to the market-oriented-economy has hindered Vietnam somehow in progressing if compare to its regional competitors. There rose an anti-reform movement in the government which considers any flow of the Western ideas as "social evils" deemed to pollute the Vietnamese society. Consequently, measures to "clean up" the pollution were put in action by the late 1995. The advertising signs in English presenting products of the Western companies were destroyed. Meanwhile, social evils such as video tapes, music tapes, magazines, and others representing the western culture were all burned in public. Conservative camp was calmed down by the threat to pull out of the country among the foreign investors; the Vietnamese authorities loosened the rules somewhat in fear of economic loss, but still go on the campaign indirectly through presses. In any cases, Vietnamese economy is proved successful in economic improvement despite internal problems and volatility of economic situation in the region. Together, its integration into the regional and global economy by joining international organizations such as ASEAN, APEC, and in the near future, WTO promises the right direction towards the significant role in the world market among other Asian countries.

This article is authored and copyrighted 
by Royal Exclusive Travel

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