Main Imports: machinery equipment & parts, refined petroleum, steel, textile industry materials, cloth.
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GDP growth averaged 6.8% per year from 1997 to 2006 even against the background of the Asian financial crisis and a global recession. Since 2001, Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive, export-driven industries. The economy grew 8.5% in 2007. Vietnam's membership in the ASEAN Free Trade Area (AFTA) in December 2001 have led to even more rapid changes in Vietnam's trade and economic regime.
Vietnam joined the WTO in January 2007, following over a decade long negotiation process. WTO membership has provided Vietnam an anchor to the global market and reinforced the domestic economic reform process. Among other benefits, accession allows Vietnam to take advantage of the phase-out of the Agreement on Textiles and Clothing, which eliminated quotas on textiles and clothing for WTO partners on 1 January 2005. Agriculture's share of economic output has continued to shrink, from about 25% in 2000 to less than 20% in 2007. Deep poverty, defined as a percent of the population living under $1 per day, has declined significantly and is now smaller than that of China, India, and the Philippines.
Vietnam is working to create jobs to meet the challenge of a labor force that is growing by more than one-and-a-half million people every year. In an effort to stem high inflation which took off in 2007, early in 2008 Vietnamese authorities began to raise benchmark interest rates and reserve requirements. Hanoi is targeting an economic growth rate of 7.5-8% during the next four years.
VIBRANT YOUNG WORKFORCE Wages in Vietnam represent some of the least expensive - albeit low-skilled - labor in all of Asia. With 60% of Vietnam's 82 million population born after 1975, the country has a vibrant young workforce, with an additional 1.5 million workers each year, leading to 20% per annum growth in domestic consumption in recent years.
INFRASTRUCTURE DEVELOPMENT Vietnam is now calling for $25 billion in foreign direct investment (FDI) to top up the whopping $115 billion the government has provisionally earmarked over the next five years for a wide range of projects, including big capital outlays for infrastructure development. From $ 21.3 billion registered FDI in 2007, $ 8.03 billion have been implemented.
REFORMS There have already been several noteworthy reforms, many offering foreign investors greater legal protection than ever before. Changes to the legal framework, specifically the Unified Enterprise Law (UEL) and the Common Investment Law (CIL), promise to level the competitive playing field for foreign and domestic businesses.
The Vietnamese government has approved an interest rate subsidy of 4% for short-term Vietnam dong loans as spart of an economic stimulus package. The subsidy is designed to assist enterprises and individuals who need capital as a result of the global economic crisis to remain in production, reduce output prices and create jobs.
In a meeting with WEF Managing Director Borge Brende, the Deputy Prime Minister asserted that Vietnam is willing and able to host the East Asia WEF in 2010. Participants at the forum considered Vietnam, which posted the highest growth rate in Southeast Asia, of 6 percent, and attracted USD 60 billion in foreign direct investment in 2008, as one of just a few attractive investment destinations.
Since Vietnam joined the WTO in 2007, the country eagerly implements its resulting obligations. Important legal changes have taken effect on January 01, 2009. For the first time foreign enterprises are now able to get licenses for distribution services in the wholesale and retail sector without the need of a Vietnamese Partner. With regard to this the well established A.T. Kearny Global Retail Development Index 2008 lists Vietnam as the top investment destination for retailers, ahead of local powerhouses China and India. The same goes for the wholesale sector.
The second annual Pricewaterhouse Coopers Emerging Market 20 Index shows that Vietnam remains attractive for foreign investment. Vietnam is now ranked the fifth most attractive emerging market destination for investment in manufacturing. Thailand rank eleventh, Malaysia thirteenth, China fourteenth.
Although countries like Vietnam and Cambodia are still relatively small economies, their low cost base can sometimes offer higher margins for manufacturers, the report said.