Rastus Pre Trip PresentationPresentation Transcript
The Vietnam Economy The Council rasmus – lester – brian – shawn – darren – rastus
Road map Vietnam’s economy: In the Past (Before 1999) Transition of Economic Activity Present Economy Current concerns
History in short 1954-1975 French developed the area by segments South involved in irrigation and agriculture North is reserved for manufacturing Resulted in ideological differences and the civil war Unemployment & Lack of food
History in short 1976-1986 A series of plans were created to centralizing the economy Growth figures for industrial and agricultural sectors and national income Plans were extremely unrealistic Not enough resources : Technological shortfalls,too much small-scaled business
History in short 1986-1990s Free-market reforms known as Đổi Mới (renovation) Transition from a command economy to a Socialist-oriented market economy. Deregulation of laws Foreign investment grew
ĐổiMới 1. Payment of wage and salaries on a straight cash basis 2. Pricing of inputs to state enterprises on the basis of costs 3. Permission for private employers to employ up to ten workers 4. Abolition of internal customs check points 5. A revised Foreign Investment Law 6. Virtual decollectivization of agriculture 7. Elimination of virtually all direct subsidies and price controls 8. Increased autonomy for enterprise managers 9. Devaluation of the currency (dong) to market rates 10. Elimination of the State's monopoly in foreign trade 11. Provision for foreign participation in banking 12. Reduced restrictions on private enterprise 13. Creation of export processing zones for 100% foreign-owned enterprises 14. Legislation on shareholding corporations 15. Dismantling of major elements of central planning and bureaucracy 16. A 15% reduction in the government workforce 17. A return to former owners or their heirs of businesses in the South that were nationalized in 1975.
Under Đổi Mới Industries Sector Private businesses and foreign investments thrived More liberal operations 30,000 private businesses created, Economy grew at an annual rateof more than 8% Poverty was nearly halved.
UnderĐổiMới Agricultural Sector Scrapped agricultural collectives Removed price controls Enabled farmers to sell their goods in the marketplace Rapid growth in agricultural and industrial production
The Past Average growth 8% Level of exports and imports
The Past Per capita income $220 (1994) Poverty reduction :
Transition of Economy activity State Bank of Vietnam
Transition of Economy activity Does this mean that Vietnam is a agriculture heavy country? Where is the country shifting its’ focus to?
Does this mean that Vietnam is a Agriculture heavy country??
Transition of Economy activity Where is Vietnam shifting its’ focus to? Employed population as of annual 1 July by kind of economic activity
Transition of Economy activity Agriculture and Forestry: A decrease of 13% Others: An increaseof 12%
GDP Growth http://www.indexmundi.com/vietnam/gdp_real_growth_rate.html
Export and Import Figures 2003
Export and Import Figures2005 Export and Import Figures 2005
Export and Import Figures2006 Export and Import Figures 2006
Export and Import Figures2007 Export and Import Figures 2007
Monthly Average income
Current Concerns Inflation Poor Infrastructure Power Shortage Corruption
Current Concerns - Inflation High inflation of 25% Increased cost of production Affects Investors
Current Concerns – Poor Infrastructure
Current Concerns – Poor Infrastructure World Bank agreed to loan US$190 million to Vietnam For infrastructure development (for public and private sectors)
Current Concerns – Poor Infrastructure
Current Concerns – Power Shortage In MayVietnam faces power shortage (because of drought) Power obtained from hydroelectric power plants. NO WATER, NO POWER!
Current Concerns – Power Shortage In August Electricity of Viet Nam (EVN) reports that country is facing a severe power shortage of 1,400 MW. EVN imported approx. 2.2 billion kWh of electricity from china. (In first 7mths) Plans to increase supply sources and retain water.
Current Concerns - Corruption Corruption Perception Index (CPI)
Current Concerns - Corruption
Current Concerns - Corruption Risks of Corruption Sources indicates land management to be most corrupt sector in Vietnam. Policies and laws on land have many loopholes Encourage corruption Investors should take care during contracting procedures
Current Concerns - Corruption Positive Developments – related to Corruption Corruption is now a priority on the political agenda Vietnam has abolish almost 200 ‘unnecessary’ permits (for operating a business) Companies special relationship with authorities have declined