World Country Guide

Business Profile

Economy
The economy of Vietnam was devastated by 30 years of war up to 1975, after which, policy errors and a USA-enforced trade boycott combined to stifle development. Since the end of the boycott in 1994, and the introduction of liberalising and deregulating measures by the Government, the Vietnamese economy underwent significant growth of around 8 to 9 per cent annually. The 1997 Asian financial crisis put a temporary brake on the economy but annual growth has since recovered to 7.2 per cent in 2003; inflation was 5.5 per cent in the first quarter of 2004, and unemployment estimated at 7 per cent.
Agriculture remains the principal employer in Vietnam and produces 25 per cent of total output. Rice, of which Vietnam is the world’s second-largest exporter (after Thailand), is the staple crop. Other cash crops include sugar cane, coffee, rubber, tea, cotton and groundnuts. Timber was once exploited on a large scale but the industry was cut back throughout the 1990s prior to a total ban in 1997. Oil, coal and natural gas are present in significant quantities, along with deposits of tin, zinc, antimony, chromium and gold. The oil and gas fields are mostly offshore and of relatively low quality, but after steady growth during the 1990s, it now accounts for 16 per cent of Vietnam’s industrial output. The remainder of the industrial sector is devoted to the production of textiles, chemicals, processed foods and machinery. The industrial sector, whose annual growth has averaged over 10 per cent since 1995, now accounts for 25 per cent of GDP.
The ending of the US embargo in 1994 allowed Vietnam to join institutions such as the World Bank and IMF, as well as giving access to the wider international financial system. The banking and finance sector has undergone rapid growth in the last few years, and the government has belatedly realised the importance of modernising what is a fairly primitive system. Similar considerations apply to Vietnam’s relatively poor infrastructure and the archaic condition of many of its state-owned industries. A recent trade agreement with Washington is likely to boost foreign investment in Vietnam. Vietnam is a member of the Asian Development Bank and has signed the ASEAN Free Trade Agreement. Japan, Singapore and Hong Kong are Vietnam’s principal trading partners, followed by France and Germany.

Business
Smart lightweight casuals would usually be worn for meetings as suits are needed for only the most formal occasions. English is not spoken by all officials and a knowledge of French will be useful. Business cards should have a Vietnamese translation on the back. Office hours: Mon-Sat 0730-1200 and 1300-1630.

Commercial Information
The following organisation can offer advice: Vietcochamber (Chamber of Industry and Commerce of Vietnam), 4th Floor, 9 Dao Duy Anh Street, Hanoi (tel: (4) 574 3985; fax: (4) 574 3063; e-mail: vbfhn@hn.vnn.vn or vcci@fmail.vnn.vn; website: www.vcci.com.vn).