Vietnam Forecast 1 June2010

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Vietnam Forecast 1 June2010

  1. 1. Vietnam:Country ForecastJune 2010VietnamEditor: Hilary EwingEditorial closing date: 1st June 2010Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  2. 2. Vietnam: Five-year forecast summaryCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  3. 3. Vietnam: Five-year forecast summary The Economist Intelligence Unit expects the political scene to be broadly stable during theforecast period. The Communist Party will stay firmly in control, but there are pockets of organisedopposition, and, although still rare, political dissidence will become more common. Politicaleffectiveness will remain fairly poor during the forecast period. Vietnam’s business environment rankings will see solid improvements in the forecast period.There will be progress in nearly all areas of the business environment, underpinned largely by theruling party’s efforts to push ahead with its economic reform programme. Although Vietnams long-term economic growth prospects remain positive, the early part of theforecast period will be challenging. In 2010-11 annual real GDP growth is forecast to average 6.6%.Growth will accelerate to around 7.5% a year on average in 2012-14. Real GDP growth (%)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  4. 4. Vietnam: Five-year forecast summary The Economist Intelligence Unit expects the political scene to be broadly stable during theforecast period. The Communist Party will stay firmly in control, but there are pockets of organisedopposition, and, although still rare, political dissidence will become more common. Politicaleffectiveness will remain fairly poor during the forecast period. Vietnam’s business environment rankings will see solid improvements in the forecast period.There will be progress in nearly all areas of the business environment, underpinned largely by theruling party’s efforts to push ahead with its economic reform programme. Although Vietnams long-term economic growth prospects remain positive, the early part of theforecast period will be challenging. In 2010-11 annual real GDP growth is forecast to average 6.6%.Growth will accelerate to around 7.5% a year on average in 2012-14. Real GDP growth (%) 2010 2011 2012 2013 2014 Vietnam 6.2 7.0 7.4 7.5 7.8 Asia (excl Japan) 7.3 6.3 6.5 6.6 6.5 World 3.1 2.5 2.8 3.0 3.0Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  5. 5. Vietnam: Five-year forecast summary The forecast for market opportunities is broadly positive. However, in most parts of the countryopportunities will still be limited mainly to the lower end of the market, while opportunities at thehigher end will be restricted to the main urban areas. Rising disposable income per head willcontribute to strong growth in demand for consumer goods. The prospects for long-term economic growth are bright. The economy will remain strong,supported by an expanding private sector. Our central forecast indicates that annual growth in GDPper head will average 4.5% in 2010-30. Household consumption per head (US$)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  6. 6. Vietnam: Five-year forecast summary The forecast for market opportunities is broadly positive. However, in most parts of the countryopportunities will still be limited mainly to the lower end of the market, while opportunities at thehigher end will be restricted to the main urban areas. Rising disposable income per head willcontribute to strong growth in demand for consumer goods. The prospects for long-term economic growth are bright. The economy will remain strong,supported by an expanding private sector. Our central forecast indicates that annual growth in GDPper head will average 4.5% in 2010-30. Household consumption per head (US$) 2010 2014 China 1,456 2,726 US 33,774 37,489 Vietnam 759 1,197 Malaysia 3,713 5,120 Philippines 1,350 1,968Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  7. 7. Vietnam: Business environment rankings Value of index a Global rankb Regional rankc 2005-09 2010-14 2005-09 2010-14 2005-09 2010-14 Overall position 4.93 5.62 71 66 15 15 Political environment 5.0 5.2 55 56 10 11 Political stability 6.3 6.3 47 47 9 9 Political effectiveness 3.9 4.2 59 62 12 14 Macroeconomic environment 4.7 4.9 80 82 15 17 Market opportunities 5.9 5.5 39 49 9 12 Policy towards private enterprise & competition 3.8 5.0 69 61 16 14 Policy towards foreign investment 6.0 6.9 59 45 13 8 Foreign trade & exchange controls 6.9 7.3 55 49 12 12 Taxes 5.2 6.3 63 38 16 12 Financing 2.9 4.8 79 67 17 16 The labour market 5.7 5.5 54 65 14 14 Infrastructure 3.4 4.9 76 70 15 12 a b c Out of 10. Out of 82 countries. Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. MethodologyCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  8. 8. Vietnam: The political environmentCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  9. 9. Vietnam: Political outlook Highlights The ruling Communist Party of Vietnam will maintain its firm grip on power and will continue to dictate the political agenda in 2010-14. However, political stability is not assured. Ongoing economic troubles, combined with the governments continued harsh crackdown on dissenters and disputes with various religious groups, could lead to public protests. The party is due to hold its next national congress in January 2011, and this means that from mid-2010 until the congress there will be considerable jockeying for position within the current leadership, although it will be largely invisible from the outside. There will be major personnel changes in higher echelons of the party, but the organisations central tenets will remain unchanged and its overriding objective will be to maintain its position of dominance. The leadership will claim to be committed to maintaining the momentum of economic and administrative reforms, but actual progress could be limited. A widening gap between competing factions within the party means that consensus on key reforms could become increasingly difficult to establish. Vietnam will continue to make strides in strengthening its ties with the West, particularly the US, but it will also maintain close relations with China. The government will continue to pursue bilateral and multilateral free-trade agreements. More from ViewsWire…Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  10. 10. Vietnam: DemographicsCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  11. 11. Vietnam: Demographic outlook Population (m) 2005 2009 2014 Total 83.5 87.0 91.3 Period averages (%) 2005-09 2010-14 Population growth 1.0 1.0 Labour force growth 2.3 2.1 Vietnams population is forecast to continue to grow at a steady rate of around 1% a year during the forecast period, and as a result the population will reach 91.3m by 2014, up from 87m in 2009. The government has partially relaxed its "one or two child" family-planning policy, which penalised families with three or more children. There are growing concerns over the countrys sex ratio at birth: the preference for male sons has increased the incidence of gender-based abortions, and although the government will maintain the ban on such abortions, reducing their incidence will be difficult.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  12. 12. Vietnam: The business environment forecastCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  13. 13. Vietnam: Business environment outlook The Economist Intelligence Unit’s business environment rankings assess a country’s relative attractiveness as an investment location, both globally and regionally. Vietnam moves up to 66th place out of 82 countries in the Economist Intelligence Units global business environment rankings for 2010-14, but the country remains near the bottom of the regional rankings.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  14. 14. Vietnam: Macroeconomic environment The macroeconomic environment will worsen in 2010-14 relative to 2005-09, decreasing the attractiveness of the country as a place in which to do business. Policymakers will face severe challenges during the early part of the forecast period in terms of striking a balance between stimulating the economy and maintaining price stability. We forecast that there will continue to be institutional weaknesses in policymaking, most notably with regard to the lack of independence of the State Bank of Vietnam (SBV, the central bank).Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  15. 15. Vietnam: Fiscal policy Central government budget balance (% of GDP) After expanding to an estimated 9% of GDP in 2009, the budget deficit (excluding on-lending) will remain wide in 2010-14. There are serious concerns about how the government will fund its deficit, particularly in view of the fact that it is already borrowing heavily to finance its off-budget spending programmes. The budget deficit is forecast to narrow gradually in the forecast period, to stand at 4.9% of GDP in 2014, but this will not allay fears about fiscal sustainability. The governments tax base remains narrow, and tax evasion is still a serious problem.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  16. 16. Vietnam: Fiscal policy Central government budget balance (% of GDP) After expanding to an estimated 9% of 2005 -4.1 GDP in 2009, the budget deficit (excluding on-lending) will remain wide in 2010-14. 2006 -2.9 2007 -7.3 There are serious concerns about how the 2008 -5.4 government will fund its deficit, particularly 2009 -9.0 in view of the fact that it is already borrowing heavily to finance its off-budget 2010 -7.7 spending programmes. 2011 -6.8 2012 -5.9 The budget deficit is forecast to narrow 2013 -5.5 gradually in the forecast period, to stand at 4.9% of GDP in 2014, but this will not 2014 -4.9 allay fears about fiscal sustainability. The governments tax base remains narrow, and tax evasion is still a serious problem.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  17. 17. Vietnam: Monetary policy Money market interest rate (%) The SBV is expected to tighten monetary policy further in 2010 as inflationary pressures build, but it will move cautiously in order to ensure that a lack of available financing does not undermine economic growth. Although it is not our central forecast, the government may choose to loosen policy again in 2010 in order to boost economic activity. However, such a course of action would have a severely negative impact on economic stability. Over the longer term, the government will seek to maintain an accommodative monetary policy stance to support economic activity.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  18. 18. Vietnam: Monetary policy Money market interest rate (%) 2010 2011 2012 2013 2014 China 3.0 3.7 4.0 4.0 4.0 US 0.4 1.3 3.2 4.6 4.8 Vietnam 9.3 9.0 9.0 7.6 7.3 Malaysia 2.5 3.0 3.5 3.6 3.6 Philippines 4.7 5.0 5.1 5.1 5.1 The SBV is expected to tighten monetary policy further in 2010 as inflationary pressures build, but it will move cautiously in order to ensure that a lack of available financing does not undermine economic growth. Although it is not our central forecast, the government may choose to loosen policy again in 2010 in order to boost economic activity. However, such a course of action would have a severely negative impact on economic stability. Over the longer term, the government will seek to maintain an accommodative monetary policy stance to support economic activity.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  19. 19. Vietnam: Policy towards private enterprise & competition2010-11: The government makes a determined effort to reform state-owned enterprises (SOEs), but progress is slow. There are signs that the competition law will be implemented more forcefully, with firms that abuse their monopoly status being punished.2012-14: More SOEs undertake reforms and are equitised (part-privatised). Progress is made in removing distortions in terms of access to opportunities and resources.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  20. 20. Vietnam: Policy towards foreign investment2010-11: The government further reduces restrictions on foreign investment and seeks to promote such investment in listed firms. Uncertainty persists regarding the implementation of the unified legal system for foreign and domestic firms.2012-14: Red tape remains a hindrance. Policy towards foreign portfolio investment becomes less restrictive. The government opens up more service sectors to foreign investors.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  21. 21. Vietnam: Foreign trade and exchange controls2010-11: Vietnams membership of the World Trade Organisation leads to a lowering of trade barriers and a reduction in tariffs. Negotiations towards a free-trade agreement (FTA) with the EU begin.2012-14: Trade barriers are lowered further. Vietnam pursues additional FTAs. The government maintains capital controls.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  22. 22. Vietnam: Taxes2010-11: Progress is made on improving the efficiency of tax collection, but distortions persist. Corporate taxes are held steady at 25%.2012-14: The tax base is broadened, but the tax regime remains overly complicated. The government fails to meet some of the demands of foreign investors regarding the tax regime, particularly in relation to the foreign-contractor withholding tax.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  23. 23. Vietnam: Financing2010-11: State-owned commercial banks undertake reforms. The government directs lending towards important sectors and introduces a subsidy on lending interest rates. The stockmarket remains weak.2012-14: The availability of financing improves as limits on the activities of foreign banks are relaxed further. As the regulatory environment improves, the stockmarket emerges as an important source of finance.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  24. 24. Vietnam: The labour market2010-11: Wages for unskilled labour remain low, and there are shortages of skilled labour. Labour unrest becomes an increasingly serious problem for domestic and, in particular, foreign investors.2012-14: Wages rise in line with the implementation of a unified minimum wage, but are still low. The education system remains ill equipped to train the next generation of young professionals in order to meet the needs of foreign-invested enterprises.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  25. 25. Vietnam: Infrastructure2010-11: Transport infrastructure is weak, with a shortage of capacity at ports a particular problem. There are capacity constraints in energy supply and telecommunications as demand rises sharply.2012-14: Infrastructure improves markedly as a result of heavy investment. Bottlenecks at ports are effectively resolved, and several of the country’s major airports are expanded. Ongoing investment in power plants improves the reliability of the power supply.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  26. 26. Vietnam: The economic forecastCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  27. 27. Vietnam: International assumptions Economic growth (%) The European financial crisis has been contained by massive emergency support, so that its impact on the world economy is likely to be limited. There are no clear signs that the crisis has undermined the ongoing global economic recovery. Positive data for a number of countries have led to a slight increase in our 2010 forecast for world GDP growth at purchasing power parity rates, to 4.1%, from 3.9% previously. However, the outlook remains uncertain, and global growth will slow in 2011 as the impact of stimulatory measures dissipates. Global GDP growth will pick up in the latter half of the forecast period to an annual average of 2.9%.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  28. 28. Vietnam: International assumptions Economic growth (%) 2009 2010 2011 2012 2013 2014 US GDP -2.4 3.3 1.8 2.0 2.2 2.3 World GDP -2.2 3.1 2.5 2.8 3.0 3.0 World trade -11.2 6.8 5.3 6.3 6.4 6.3 Inflation indicators US CPI -0.3 1.8 1.3 1.9 2.5 2.8 Oil (Brent; US$/b) 61.9 80.2 78.5 82.3 78.3 75.5 Non-oil commodities (measured in US$) -22.5 12.0 0.4 4.0 4.3 3.4 Financial indicators € 3-month interbank rate 1.2 0.7 0.9 1.5 3.6 4.1 US$ 3-month commercial paper rate 0.3 0.2 0.5 1.9 3.9 5.1 ¥ 3-month repo rate 0.4 0.2 0.3 1.1 1.8 2.1 The European financial crisis has been contained by massive emergency support, so that its impact on the world economy is likely to be limited. There are no clear signs that the crisis has undermined the ongoing global economic recovery. Positive data for a number of countries have led to a slight increase in our 2010 forecast for world GDP growth at purchasing power parity rates, to 4.1%, from 3.9% previously. However, the outlook remains uncertain, and global growth will slow in 2011 as the impact of stimulatory measures dissipates. Global GDP growth will pick up in the latter half of the forecast period to an annual average of 2.9%.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  29. 29. Vietnam: Economic outlook Economic outlook (% real change) Although Vietnams long-term economic growth prospects remain positive, the early part of the forecast period will be challenging. In 2010-11 annual real GDP growth is forecast to average 6.6%. Growth will accelerate to an annual average of 7.5% in 2012-14. Both private consumption growth and fixed investment growth will strengthen during the forecast period, but government consumption growth will weaken as fiscal stimulus is withdrawn. Export growth will accelerate during the forecast period, but the pick-up in import growth will be almost as strong.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  30. 30. Vietnam: Economic outlook Economic outlook (% real change) 2010 2011 2012 2013 2014 Real GDP growth 6.2 7.0 7.4 7.5 7.8 Private consumption 6.3 6.3 7.6 7.8 8.5 Government consumption 8.0 7.8 7.8 7.7 7.0 Gross fixed investment 6.2 7.2 8.0 8.2 9.1 Exports of goods & services 13.5 11.3 11.8 11.9 11.9 Imports of goods & services 12.6 9.7 9.8 11.2 11.9 Although Vietnams long-term economic growth prospects remain positive, the early part of the forecast period will be challenging. In 2010-11 annual real GDP growth is forecast to average 6.6%. Growth will accelerate to an annual average of 7.5% in 2012-14. Both private consumption growth and fixed investment growth will strengthen during the forecast period, but government consumption growth will weaken as fiscal stimulus is withdrawn. Export growth will accelerate during the forecast period, but the pick-up in import growth will be almost as strong.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  31. 31. Vietnam: Wage and price inflation Consumer price inflation (%; annual av) Inflation will rise in 2010 on the back of supply-side pressures and higher global commodity prices. The Economist Intelligence Unit expects year-on-year inflation to average 10.2% in 2010-11 before slowing to an average of 7.7% in the remainder of the forecast period. Vietnam will remain highly vulnerable to movements in international commodity prices, which will continue to have a significant impact on the domestic rate of inflation.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  32. 32. Vietnam: Wage and price inflation Consumer price inflation (%; annual av) Inflation will rise in 2010 on the back of 2005 8.3 supply-side pressures and higher global 2006 7.4 commodity prices. 2007 8.3 The Economist Intelligence Unit expects 2008 23.1 year-on-year inflation to average 10.2% in 2009 7.0 2010-11 before slowing to an average of 2010 10.4 7.7% in the remainder of the forecast 2011 10.1 period. 2012 8.2 Vietnam will remain highly vulnerable to 2013 7.8 movements in international commodity prices, which will continue to have a 2014 7.2 significant impact on the domestic rate of inflation.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  33. 33. Vietnam: Exchange rates Exchange rates Strong demand for US dollars, underpinned by Vietnams wide trade deficit and rising inflationary expectations, put the dong under downward pressure against the US dollar in recent months. Responding to this pressure, the SBV has devalued the dong twice recently. Until there are clear signs that the trade deficit is narrowing, foreign direct investment is rising and inflationary pressures are receding, it is unlikely that downward pressure on the dong will diminish significantly. The dong is forecast to depreciate to an annual average of D19,146:US$1 in 2010 and D20,820:US$1 in 2011.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  34. 34. Vietnam: Exchange rates Exchange rates 2009 2010 2011 2012 2013 2014 D:US$ (av) 17,799.63 19,145.82 19,610.64 20,028.03 20,413.79 20,820.07 D:US$ (end-period) 18,472.00 19,428.23 19,819.34 20,216.91 20,616.93 21,023.22 D:¥100 (av) 18,995.44 20,542.72 21,086.71 21,651.93 22,188.90 22,754.18 D:€ (av) 24,794.88 24,856.06 23,974.01 23,683.15 24,139.30 25,140.24 Real effective exchange-rate index (1997=100; av) 105.3 103.5 107.4 109.6 111.8 117.2 Purchasing power parity D:US$ (av) 6,465.54 7,008.62 7,414.40 7,752.50 7,967.84 8,141.48 Strong demand for US dollars, underpinned by Vietnams wide trade deficit and rising inflationary expectations, put the dong under downward pressure against the US dollar in recent months. Responding to this pressure, the SBV has devalued the dong twice recently. Until there are clear signs that the trade deficit is narrowing, foreign direct investment is rising and inflationary pressures are receding, it is unlikely that downward pressure on the dong will diminish significantly. The dong is forecast to depreciate to an annual average of D19,146:US$1 in 2010 and D20,820:US$1 in 2011.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  35. 35. Vietnam: External sector External sector (US$ bn unless otherwise indicated) The current account will remain in the red throughout the forecast period, but as a proportion of GDP the deficit will narrow, shrinking from an estimated 6.6% in 2009 to 5.5% in 2014. The merchandise trade deficit will narrow modestly in the latter half of the forecast period as export growth edges higher than import growth. The services and income accounts will remain in the red throughout the forecast period.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  36. 36. Vietnam: External sector External sector (US$ bn unless otherwise indicated) 2009 2010 2011 2012 2013 2014 Current-account balance -6.1 -7.9 -7.5 -7.3 -8.0 -8.5 Current-account balance (% of GDP) -6.6 -7.8 -6.6 -5.8 -5.7 -5.5 Goods: exports fob 56.9 68.5 75.0 86.1 98.5 113.2 Goods: imports fob -65.0 -78.0 -83.9 -94.5 -106.8 -121.2 Trade balance -8.1 -9.5 -8.9 -8.5 -8.2 -8.0 Services balance -1.0 -1.1 -1.2 -1.2 -1.7 -1.9 Income balance -3.4 -4.2 -4.7 -5.2 -5.7 -6.6 Current transfers balance 6.3 6.9 7.3 7.6 7.7 8.0 The current account will remain in the red throughout the forecast period, but as a proportion of GDP the deficit will narrow, shrinking from an estimated 6.6% in 2009 to 5.5% in 2014. The merchandise trade deficit will narrow modestly in the latter half of the forecast period as export growth edges higher than import growth. The services and income accounts will remain in the red throughout the forecast period.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  37. 37. Vietnam: Foreign direct investmentCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  38. 38. Vietnam: Foreign direct investmentStocks and flows According to the government, foreign direct investment (FDI) commitments for new projects (that is,excluding additional investment in existing projects) fell to US$16.3bn in 2009, after reaching a recordhigh of US$60.3bn in 2008. However, the bulk of FDI commitments are not disbursed in the year in which they are promised, if atall. According to government figures (which often differ significantly from IMF statistics), totaldisbursements fell by 13% in 2009, to US$10bn. FDI has flowed into Vietnam from a wide range of countries, although nations in the Asia andAustralasia region are particularly prominent investors. Vietnam has received less FDI than most of its South-east Asian neighbours, and the impact of FDIhas been less marked, with little technology transfer between foreign firms and their local partners. Inward foreign direct investment stock, 2010 (% of GDP)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  39. 39. Vietnam: Foreign direct investmentStocks and flows According to the government, foreign direct investment (FDI) commitments for new projects (that is,excluding additional investment in existing projects) fell to US$16.3bn in 2009, after reaching a recordhigh of US$60.3bn in 2008. However, the bulk of FDI commitments are not disbursed in the year in which they are promised, if atall. According to government figures (which often differ significantly from IMF statistics), totaldisbursements fell by 13% in 2009, to US$10bn. FDI has flowed into Vietnam from a wide range of countries, although nations in the Asia andAustralasia region are particularly prominent investors. Vietnam has received less FDI than most of its South-east Asian neighbours, and the impact of FDIhas been less marked, with little technology transfer between foreign firms and their local partners. Inward foreign direct investment stock (% of GDP) China US Vietnam Malaysia Philippines 2010 9.9 17.2 60.0 41.6 13.1Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  40. 40. Vietnam: Foreign direct investmentDeterminants Foreign investors have generally been attracted to Vietnams buoyant economy. Other factors toVietnams advantage include its stable political scene and low-cost labour base. Vietnam has been viewed as an appealing alternative to China by many foreign investors keen todiversify their investment. In an effort to bolster foreign investor interest, the government has appearedwilling to implement reforms, most notably eradicating discrimination against foreign firms byimplementing a Unified Enterprise Law and a Common Investment Law in 2006. Foreign investors arealso now permitted to convert profits and principal into foreign exchange without any restrictions.Foreign investors are still discouraged by pervasive red tape, weak human capital and problemsinvolving access to land and capital. The government is aware of these difficulties and is taking stepsto tackle them . Inward foreign direct investment stock per head, 2010 (US$)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  41. 41. Vietnam: Foreign direct investmentDeterminants Foreign investors have generally been attracted to Vietnams buoyant economy. Other factors toVietnams advantage include its stable political scene and low-cost labour base. Vietnam has been viewed as an appealing alternative to China by many foreign investors keen todiversify their investment. In an effort to bolster foreign investor interest, the government has appearedwilling to implement reforms, most notably eradicating discrimination against foreign firms byimplementing a Unified Enterprise Law and a Common Investment Law in 2006. Foreign investors arealso now permitted to convert profits and principal into foreign exchange without any restrictions.Foreign investors are still discouraged by pervasive red tape, weak human capital and problemsinvolving access to land and capital. The government is aware of these difficulties and is taking stepsto tackle them . Inward foreign direct investment stock per head (US$) China US Vietnam Malaysia Philippines 2010 416 8,285 690 3,259 249Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  42. 42. Vietnam: Foreign direct investmentPotential Vietnam joined the World Trade Organisation in 2007, in a development that has already broughtabout far-reaching changes benefiting foreign investors and increasing the countrys appeal as aninvestment destination. Vietnam is set to lower barriers to entry in a number of important sectors, including insurance, bankingand telecommunications. FDI inflows fell in 2009 as a result of the global economic crisis and will recover only slowly in 2010-11. The longer-term prospects for FDI inflows are more positive. Annual inflows of foreign direct investment (US$ m)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  43. 43. Vietnam: Foreign direct investmentPotential Vietnam joined the World Trade Organisation in 2007, in a development that has already broughtabout far-reaching changes benefiting foreign investors and increasing the countrys appeal as aninvestment destination. Vietnam is set to lower barriers to entry in a number of important sectors, including insurance, bankingand telecommunications. FDI inflows fell in 2009 as a result of the global economic crisis and will recover only slowly in 2010-11. The longer-term prospects for FDI inflows are more positive. Annual inflows of foreign direct investment (US$ m) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual inflows of FDI 1,954 2,400 6,700 9,579 8,700 9,600 11,200 11,800 12,900 14,000 % of gross fixed investment 11.2 11.8 24.6 30.6 27.0 25.0 25.3 22.9 21.4 19.8Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  44. 44. Vietnam: Market opportunitiesCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  45. 45. Vietnam: Market opportunities GDP per head (US$ at PPP) Market opportunities in Vietnam will expand in line population growth and rising incomes, although the countrys low GDP per head by regional standards will limit the extent of opportunities. Opportunities at the higher end of the market will be restricted to the main urban areas, and particularly to the capital, Hanoi, and Ho Chi Minh City, which are significantly richer than the rest of the country. Rising per-head disposable income in the forecast period will contribute to strong growth in demand for consumer goods, particularly as the market in Vietnam for most consumer goods is not yet fully developed.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  46. 46. Vietnam: Market opportunities GDP per head (US$ at PPP) 2010 2011 2012 2013 2014 China 7,509 8,183 8,945 9,877 10,905 US 48,093 49,274 50,606 52,542 54,708 Vietnam 3,145 3,374 3,642 3,962 4,342 Malaysia 14,372 14,835 15,494 16,321 17,472 Philippines 3,417 3,551 3,715 3,913 4,150 Market opportunities in Vietnam will expand in line population growth and rising incomes, although the countrys low GDP per head by regional standards will limit the extent of opportunities. Opportunities at the higher end of the market will be restricted to the main urban areas, and particularly to the capital, Hanoi, and Ho Chi Minh City, which are significantly richer than the rest of the country. Rising per-head disposable income in the forecast period will contribute to strong growth in demand for consumer goods, particularly as the market in Vietnam for most consumer goods is not yet fully developed.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  47. 47. Vietnam: The long-term forecastCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  48. 48. Vietnam: Long-term outlook Real GDP growth (% annual change) Vietnam is one of the poorest members of the ten-country Association of South-East Asian Nations (ASEAN), but it has enjoyed relatively rapid rates of economic growth in the past few years. Vietnams favourable demographic profile will help to facilitate continued economic expansion. Wide-ranging economic reforms will bolster foreign investor confidence in the country, paving the way for a sustained pick-up in foreign direct investment (FDI). This in turn will contribute to the upgrading of technology and to improved competitiveness.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  49. 49. Vietnam: Long-term outlook Real GDP growth (% annual change) 2009-10 2011-20 2021-30 China 9.3 7.0 4.3 US 0.4 2.6 2.6 Vietnam 5.7 5.8 4.8 Malaysia 2.6 4.7 4.0 Philippines 2.3 5.6 5.7 Vietnam is one of the poorest members of the ten-country Association of South-East Asian Nations (ASEAN), but it has enjoyed relatively rapid rates of economic growth in the past few years. Vietnams favourable demographic profile will help to facilitate continued economic expansion. Wide-ranging economic reforms will bolster foreign investor confidence in the country, paving the way for a sustained pick-up in foreign direct investment (FDI). This in turn will contribute to the upgrading of technology and to improved competitiveness.Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  50. 50. Vietnam: Long-term outlook Demographic trends: Vietnams demographic profile is relatively favourable. The working-age population in 2009 is estimated at 60.3m, representing around 69% of the population. This ratio will rise over the next decade or more, thereby providing potential for continued economic expansion. There are concerns about the growth of the elderly population, which is set to rise in line with improvements in health indicators such as life expectancy. This trend could expose inadequacies in social security and healthcare. External conditions: Vietnam will benefit from an increasingly favourable external environment in the coming decades. Its relations with the US have improved greatly, and Vietnam joined the World Trade Organisation in 2007, in a development that testifies to the willingness of the ruling Communist Party to embrace the global trend towards a market-based economic model. Vietnam looks set to follow the regional trend for the negotiation of bilateral free-trade agreements. Long-term performance: The economy will remain strong during the next few decades, supported by an expanding private sector, which will contribute to greater competition and the more efficient allocation of resources. Wide-ranging economic reforms could prove painful initially as Vietnam becomes increasingly open to international trade, but these changes will bolster foreign investor confidence, so paving the way for a sustained pick-up in FDI. The Economist Intelligence Unit forecasts that annual growth in GDP per head will average 4.5% in 2010-30. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  51. 51. Vietnam: Long-term outlook GDP per head (US$ at PPP; index, US=100) Nominal GDP (US$ at PPP; index, Vietnam=100)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  52. 52. Vietnam: Long-term outlook GDP per head (US$ at PPP; index, US=100) 2010 2030 China 16 30 US 100 100 Vietnam 7 11 Malaysia 30 35 Philippines 7 11 Nominal GDP (US$ at PPP; index, Vietnam=100) 2010 2030 China 3,642 3,884 US 5,391 3,263 Vietnam 100 100 Malaysia 150 125 Philippines 124 132Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  53. 53. Vietnam: ResourcesCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  54. 54. Vietnam: MapCountry Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  55. 55. Vietnam: Comparative GDP, 2009 Gross domestic product Gross domestic product per head (US$ bn; market exchange rates) (US$; market exchange rates)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  56. 56. Vietnam: Comparative GDP, 2009 Gross domestic product Gross domestic product per head (US$ bn; market exchange rates) (US$; market exchange rates) China 4,909.0 Australia 46,233.4 India 1,287.1 Singapore 35,529.6 Australia 982.9 Hong Kong 29,865.9 South Korea 832.5 New Zealand 26,796.1 Indonesia 540.3 South Korea 16,857.6 Taiwan 378.9 Taiwan 16,389.3 Thailand 263.9 Malaysia 6,759.1 Hong Kong 210.7 Thailand 3,938.6 Malaysia 191.3 China 3,677.9 Singapore 177.1 Indonesia 2,248.6 Pakistan 166.5 Sri Lanka 2,074.6 Philippines 160.8 Philippines 1,641.7 New Zealand 116.0 India 1,103.8 Bangladesh 89.5 Vietnam 1,026.4 Vietnam 89.3 Pakistan 918.1 Sri Lanka 42.0 Bangladesh 549.9Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  57. 57. Vietnam: Basic data Land area 330,363 sq km Population 85.2m (2007, General Statistics Office estimate) Climate Tropical monsoon; north cool and damp in winter (November-April), hot and rainy in summer; south more equable; centre most subject to typhoons. The rains are highly unpredictable Weather in Hanoi Hottest month, June, 26-33°C; coldest month, January, 13-20°C; wettest month, August, 343 mm average rainfall; driest month, January, 18 mm average rainfall Weather in Hottest month, April, 24-35°C; coldest month, January, 21-32°C; wettest month, Ho Chi Minh City September, 335 mm average rainfall; driest month, February, 3 mm average rainfall Language Vietnamese (spoken by about 90% of the population); English (increasingly favoured as a second language); some French; a little Russian and German; minority languages such as Hmong, Thai, Khmer in remoter rural areas Currency Dong (D). Average exchange rate in 2009: D17,800:US$1 Time 7 hours ahead of GMT Public holidays January 1st (New Year’s Day); February 14th-18th (Tet, Lunar New Year); April 30th (Liberation of Saigon); May 1st (Labour Day); September 2nd (National Day)Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  58. 58. Vietnam: environment rankings: Methodology BusinessOutline of the modelThe business rankings model measures the quality or attractiveness of the business environment in the 82 countriescovered by Country Forecasts using a standard analytical framework. It is designed to reflect the main criteria used bycompanies to formulate their global business strategies, and is based not only on historical conditions but also onexpectations about conditions prevailing over the next five years. This allows the Economist Intelligence Unit to utilise theregularity, depth and detail of its forecasting work to generate a unique set of forward-looking business environmentrankings on a regional and global basis.The business rankings model examines ten separate criteria or categories, covering the political environment, themacroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreigninvestment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. Each categorycontains a number of indicators that are assessed by the Economist Intelligence Unit for the last five years and the nextfive years. The number of indicators in each category varies from five (foreign trade and exchange regimes) to 16(infrastructure), and there are 91 indicators in total.Almost half of the indicators are based on quantitative data (eg, GDP growth), and are mostly drawn from national andinternational statistical sources for the historical period (2005-09) and from Economist Intelligence Unit assessments forthe forecast period (2010-14). The other indicators are qualitative in nature (eg, quality of the financial regulatorysystem), and are drawn from a range of data sources and business surveys adjusted by the Economist Intelligence Unit,for 2005-09. All forecasts for the qualitative indicators covering 2010-14 are based on Economist Intelligence Unitassessments.The main sources used in the business rankings model include CIA, World Factbook; Economist Intelligence Unit,Country Risk Service, Country Finance, Country Commerce; Freedom House, Annual Survey of Political Rights and CivilLiberties; Heritage Foundation, Index of Economic Freedom; IMF, Annual Report on Foreign Exchange Restrictions;International Institute for Management Development, World Competitiveness Yearbook; International LabourOrganisation, International Labour Statistics Yearbook; UN, Human Development Report; US Social SecurityAdministration, Social Security Programs Throughout the World; World Bank, World Development Report; WorldDevelopment Indicators; World Economic Forum, Global Competitiveness Report. Back to Rankings Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  59. 59. Vietnam: environment rankings: Methodology BusinessCalculating the rankingsThe rankings are calculated in several stages. First, each of the 91 indicators is scored on a scale from 1 (very bad forbusiness) to 5 (very good for business). The aggregate category scores are derived on the basis of simple or weightedaverages of the indicator scores within a given category. These are then adjusted, on the basis of a linear transformation,to produce index values on a 1-10 scale. An arithmetic average of the ten category index values is then calculated to yieldthe aggregate business environment score for each country, again on a 1-10 scale.The use of equal weights for the categories to derive the overall score reflects in part the theoretical uncertainty about therelative importance of the primary determinants of investment. Surveys of foreign direct investors intentions yield widelydiffering results on the relative importance of different factors. Weighted scores for individual categories based oncorrelation coefficients of recent foreign direct investment inflows do not in any case produce overall results that aresignificantly different to those derived from a system based on equal weights.For most quantitative indicators the data are arrayed in ascending or descending order and split into five bands (quintiles).The countries falling in the first quintile are assigned scores of 5, those falling in the second quintile score 4 and so on.The cut-off points between bands are based on the average of the raw indicator values for the top and bottom countries inadjacent quintiles. The 2005-09 ranges are then used to derive 2010-14 scores. This allows for intertemporal as well ascross-country comparisons of the indicator and category scores.Measurement and grading issuesThe indices and rankings attempt to measure the average quality of the business environment over the entire historical orforecast period, not simply at the start or at the end of the period. Thus in the forecast we assign an average grade toelements of the business environment over 2010-14, not to the likely situation in 2014 only.The scores based on quantitative data are usually calculated on the basis of the numeric average for an indicator over theperiod. In some cases, the "average" is represented, as an approximation, by the recorded value at the mid-point ofthe period (2007 or 2012). In only a few cases is the relevant variable appropriately measured by the value at the startof the period (eg, educational attainments). For one indicator (the natural resources endowment), the score remainsconstant for both the historical and forecast periods. Back to Rankings Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  60. 60. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Political environment 1. Risk of armed conflict 4 3.4 4 3.6 2. Risk of social unrest 3 3.1 3 3.1 3. Constitutional mechanisms for the orderly transfer of power 1 3.1 1 3.3 4. Government and opposition 5 3.6 5 3.8 5. Threat of politically motivated violence 4 3.5 4 3.3 6. International disputes or tensions 3 3.2 3 3.1 7. Government policy towards business 3 3.5 3 3.6 8. Effectiveness of political system in policy formulation and execution 3 3.2 3 3.2 9. Quality of the bureaucracy 2 3.2 2 3.3 10. Transparency and fairness of legal system 2 2.9 2 3.1 11. Efficiency of legal system 2 3.5 2 3.5 12. Corruption 1 2.5 1 2.7 13. Impact of crime 3 3.5 4 3.6a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  61. 61. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Macroeconomic environment 1. Inflation* 3 4.4 4 4.5 2. Budget balance as % of GDP* 2 3.7 2 3.4 3. Government debt as % of GDP* 4 3.8 4 4.0 4. Exchange-rate volatility* 4 4.1 4 4.2 5. Current-account balance as % of GDP* 1 3.8 1 4.1 6. Quality of policymaking 3 3.6 2 3.5 7. Institutional underpinnings 2 3.7 2 3.8 8. Asset prices 2 2.3 3 3.0a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  62. 62. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Market opportunities 1. GDP, US$ bn at PPP* 3 3.7 3 3.9 2. GDP per head, US$ at PPP* 1 2.8 1 2.9 3. Real GDP growth* 5 3.6 5 4.0 4. Share of world merchandise trade* 3 3.4 3 3.5 5. Average annual rate of growth of exports* 5 2.5 4 3.1 6. Average annual rate of growth of imports* 5 2.7 4 3.4 7. The natural resource endowment* 1 2.5 1 2.5 8. Profitability* 4 3.8 4 4.1 9. Regional integration 3 2.9 3 3.1 10. Proximity to markets 2 2.4 2 2.4a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  63. 63. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Policy towards private enterprise and competition 1. Degree to which private property rights are protected 2 3.9 3 4.2 2. Government regulation on setting up new private businesses 2 3.3 3 3.5 3. Freedom of existing businesses to compete 2 3.4 3 3.6 4. Promotion of competition 2 2.8 3 3.2 5. Protection of intellectual property 2 2.9 2 3.2 6. Price controls 3 3.6 3 3.6 7. Distortions arising from lobbying by special interest groups 2 2.6 3 2.9 8. Distortions arising from state ownership/control 2 3.1 2 3.3 9. Minority shareholders 3 3.6 3 3.6a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  64. 64. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Policy towards foreign investment 1. Government policy towards foreign capital 3 3.6 4 3.9 2. Openness of national culture to foreign influences 3 3.4 3 3.5 3. Risk of expropriation of foreign assets 4 4.1 4 4.2 4. Availability of investment protection schemes 3 3.4 4 3.6 5. Government favouritism 3 3.6 3 3.6a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  65. 65. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Foreign trade and exchange controls 1. Capital-account liberalisation 3 3.5 3 3.9 2. Tariff and non-tariff protection** 2 3.5 3 3.6 3. Ease of trading 3 3.8 3 4.0 4. Openness of trade* 5 4.4 5 4.2 5. Restrictions on the current account 5 4.5 5 4.7a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  66. 66. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Taxes 1. The corporate tax burden** 3 3.6 4 3.6 2. The top marginal personal income tax* 3 4.1 4 4.2 3. Value-added tax* 4 4.2 4 4.2 4. Employers social security contributions 3 4.1 3 4.0 5. Degree to which fiscal regime encourages new investment 3 3.2 3 3.4 6. Consistency and fairness of the tax system 3 3.4 3 3.5 7. Tax complexity 2 3.5 3 3.6a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  67. 67. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Financing 1. Openness of banking sector 2 3.2 3 3.4 2. Stockmarket capitalisation 2 3.4 2 3.6 3. Distortions in financial markets** 2 3.8 3 4.1 4. Quality of the financial regulatory system 2 2.9 3 3.5 5. Access of foreigners to local capital market 1 3.1 2 3.4 6. Access to medium-term finance for investment 2 3.2 3 3.2a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  68. 68. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea The labour market 1. Labour costs adjusted for productivity* 5 3.6 5 3.9 2. Availability of skilled labour* 2 2.9 2 3.1 3. Quality of workforce 3 3.1 3 3.2 4. Quality of local managers 2 3.7 2 3.6 5. Language skills 2 3.8 2 3.7 6. Health of the workforce* 3 3.4 3 3.7 7. Level of technical skills 2 3.4 2 3.5 8. Cost of living* 4 2.9 3 2.5 9. Incidence of strikes** 4 3.6 3 3.6 10. Restrictiveness of labour laws 3 3.2 3 3.3 11. Extent of wage regulation 3 3.9 3 3.8 12. Hiring of foreign nationals 2 3.0 3 3.4a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.Note. A single asterisk (*) denotes scores based on quantitative indicators. Indicators with a double asterisk (**) are partlybased on data. All other indicators are qualitative in nature. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010
  69. 69. Vietnam: Indicator scores in the business rankings model 2005-09 2010-14 Regional Regional Vietnam averagea Vietnam averagea Infrastructure 1. Telephone density* 2 3.1 3 3.5 2. Reliability of telecoms network** 1 3.1 2 3.6 3. Telecoms costs* 1 3.5 2 3.9 4. Mobiles* 3 3.4 5 4.3 5. Stock of personal computers* 3 3.5 4 3.9 6. Internet use* 3 3.4 5 3.8 7. Broadband penetration* 3 3.5 4 3.8 8. R&D expenditure as % of GDP* 2 3.1 2 3.1 9. Research infrastructure 2 3.5 2 3.5 10. The infrastructure for retail and wholesale distribution** 2 2.9 2 3.4 11. Extent and quality of the road network** 2 3.3 3 3.4 12. Extent and quality of the rail network** 2 2.7 2 2.8 13. Quality of ports infrastructure 3 3.4 3 3.8 14. Quality of air transport 2 3.6 2 3.8 15. Production of electricity per head* 1 2.8 2 3.1 16. Rents of office space* 1 2.8 1 2.7a Out of 17 countries: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand,Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. Country Forecast June 2010 © The Economist Intelligence Unit Limited 2010

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