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Since 1975, Vietnam had still remained the way of a communist country. The politic framework in Vietnam is a single party socialist republic. The current political system of Vietnam is composed of the following: the Communist Party of Vietnam (CPV), political organizations, socio-political organizations, socio-professional organizations, and mass associations. With those bodies, the Communist Party of Vietnam has a nationwide organizational system, from the Central to grassroots levels, and in political- social organizations and economic entities.

State system consists of The National Assembly (has the highest authority to make Constitution and Laws), The State Bureaucracy (has major executive and legislative power), The Government (is the executive organ of the National Assembly, and the supreme state administrative agency), Supreme People’s Court (is the highest judicial organ), Supreme People’s Procuracy, Local authorities (People’s Councils, People Committee, Local people’s committees, and Local people’s procuracy), The Vietnam Fatherland Front, Vietnam Labour Confederation, and Other social and political organizations (the Vietnam Women’s Association, the Ho Chi Minh Communist Youth’s Union, the Vietnam Veterans’ Association, and professional associations).

In practice, the Communist Party of Vietnam set the general direction for policy while the details of implementation generally are left to the four organizations: The State Bureaucracy, the legislature (The National Assembly), the Vietnamese People’s Army (VPA), and the other officially associations and organizations that exist under the The Vietnam Fatherland Front.

After joined the the World Trade Organization (WTO) on January 11, 2007 and signed the landmark U.S.-Vietnam Bilateral Trade Agreement on December 2001, the Commercial Legal Framework (CLIR) of Vietnam has extensive changes to conform more closely to international norms and practices.

Furthermore, Vietnam has adjusted many laws and regulations not directly required by the trade agreements, but which are equally integral to developing a stronger legal framework for market-based commercial activity, a more robust private sector, and a stronger and more independent court system (e.g., greatly improved law on contracts, secured transactions, negotiable financial instruments, court organization, and civil procedure).

With the introduction of a modern Enterprise Law in 1999, a great number of small businesses in Vietnam joined the formal sector through the process of company registration. Through improved legislation and procedures pertaining to entry into the formal sector, Vietnam has seized a critical mechanism in support of economic growth. One fundamental issue facing all smaller or newer private businesses in Vietnam, as well as many larger, more established ones, is the anticompetitive role played by state-owned enterprises in the economy. The new Enterprise Law (2005), which replaced the 1999 law, is legally sound and consistent with international standards. It continues the trend of liberalization of the private sector in Vietnam and levels the playing field among all types

of enterprises, whether private, foreign invested, or state owned. The new Investment Law (2005), which was developed in parallel with the new Enterprise Law, generally reinforces this commitment to nondiscrimination among types and ownership of enterprises. The revised Commercial Law and its implementing decrees regulate the establishment of representative offices and branches of foreign traders and foreign- invested trading enterprises in Vietnam.

  • 1. What is the relationship between the US and Viet Nam today?

  • 2. Give economic/financial numbers (GNP/capita, population, education, inflation

level, etc.) in VN today? GNP/capita: $2,700 (source: 20 Richest Asian Countries (GNP per capita*)


Population: 86,024,600 persons (source: General Statistics Office of Vietnam, Statistical Data, Population and population density in 2009 by province


Education: According to preliminary report, at the time of opening 2010-2011 school year, the country had 12,678 pre-schools, increasing 413 schools against the last school year; 15,242 primary schools, increasing 70 schools; 10,132 junior secondary schools, up 68 schools and 2,289 senior secondary schools, up 22 schools. Total teachers for the three educational levels were 820,400, up by 0.2% against the last school year, including 359,700 primary teachers up by 1.3%; 313,100 junior secondary teachers, down by 1.3% and 147,600 senior secondary teachers up by 0.9%. There was not much change in the number of pupils as compared to 2009 – 2010 school year with 6.9 million primary pupils; 5 million junior secondary pupils and 2.8 million senior secondary pupils. (source: General Statistics Office of Vietnam, Monthly statistical information, Socio-economic in 1st quarter of 2011)

Theo báo cáo sơ bộ, tại thời điểm đầu năm học 2010-2011, cả nước có 12678 trường mầm non, tăng 413 trường so với năm học trước; 15242 trường tiểu học, tăng 70 trường; 10132 trường trung học cơ sở, tăng 68 trường và 2289 trường trung học phổ thông, tăng 22 trường. Tổng số giáo viên của ba cấp học là 820,4 nghìn người, tăng 0,2% so với năm học trước, bao gồm 359,7 nghìn giáo viên tiểu học, tăng 1,3%; 313,1 nghìn giáo viên trung học cơ sở, giảm 1,3% và 147,6 nghìn giáo viên trung học phổ thông, tăng 0,9%. Số học sinh không biến động nhiều so với năm học 2009 - 2010, gồm 6,9 triệu học sinh tiểu học; 5 triệu học sinh trung học cơ sở và 2,8 triệu học sinh trung học phổ thông.

Tính đến cuối tháng 3/2011, cả nước có 55/63 tỉnh, thành phố trực thuộc trung ương hoàn thành phổ cập tiểu học đúng độ tuổi và 63/63 tỉnh, thành phố trực thuộc trung ương hoàn thành phổ cập giáo dục trung học cơ sở.

Inflation level: Vietnam Inflation rate (consumer prices)

Inflation rate (consumer prices): 11.8% (2010 est.) 6.5% (2009 est.)

Inflation level: Vietnam Inflation rate (consumer prices) Inflation rate (consumer prices): 11.8% (2010 est.) 6.5% (2009

Year Inflation rate (consumer prices) Rank Percent Change Date of Information

  • 2003 3.90 %


2002 est.

  • 2004 3.10 %


-20.51 %

2003 est.

  • 2005 9.50 %


206.45 %

2004 est.

  • 2006 8.30 %


-12.63 %

2005 est.

  • 2007 7.50 %


-9.64 %

2006 est.

  • 2008 8.30 %


10.67 %

2007 est.

  • 2009 24.40 %


193.98 %

2008 est.

  • 2010 7.00 %


-71.31 %

2009 est.

  • 2011 11.80 %


68.57 %

2010 est.

  • 3. Pick out three the index listed below and explain what they are telling you. You only need a few sentences.

  • 4. Give reasons for a foreign company to manufacture in VN today.

Vietnam is changing

For investors, Vietnam looks different in significant ways from 10 years ago. Those differences include legal reforms, the newly established stock market and a breakneck GDP growth record, which has consistently exceeded 7% since 2002. Most important, there is a philosophical understanding among the top leadership that the country needs to engage rather than shirk from the international community, as witnessed by its recent efforts to undertake the sometimes wrenching structural reforms necessary to join the WTO.

Vietnam: exciting

A recent Merrill Lynch report estimated Vietnam "will be the fastest-growing [Asian] country in the next 10 years, far more exciting [than] Thailand, far more than anywhere else in ASEAN" (the Association of Southeast Asian Nations).

Last October's sovereign bond issue underscored that optimism. Originally planned as a US$500 million flotation, the debut deal attracted $4.5 billion worth of actual orders, goading underwriters to increase the issuance to $750 million to soak up the excess demand. Similarly, the January initial public offering of Vinamilk, a state-run dairy conglomerate, was fully subscribed, pushing the equity market's total value past $1.1 billion. The planned listings of other state-owned enterprises promise to push the stock market's capitalization even higher.

All the good economic and financial news gave international ratings agency Moody's enough reason to upgrade Vietnam's sovereign rating for the first time in seven years, from B1 to Ba3.

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.


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.

Previously, foreign investors were limited by the business models that were available to them, which in essence consisted of either joint ventures with state enterprises or business cooperation contracts that were heavily and at times arbitrarily regulated by the government. Now, foreign firms can diversify into other business models, most notably 100% wholly foreign-owned businesses, as well as limited and joint stock companies.

Equitization process

Vietnam is also giving special emphasis to the equitization process, opening the way for foreign businesses to buy shares in state concerns. Sectors that were previously off limits to foreigners, particularly in the financial services, have recently opened up in anticipation of entry to the WTO. Standard Chartered, ANZ Bank and HSBC have all recently taken stakes in local commercial banks, and there are currently 28 different foreign bank branches now operating in Vietnam - perhaps the most visible indication of how deeply capitalism has taken root here over the past decade.

Beefed-up incentives and greater ownership rights have recently paved the way for a number of big-ticket foreign investments. On February 28, US technology giant Intel announced $300 million investment plans to build a chip testing and assembly plant in

Vietnam. As Intel enters the market, its suppliers, service and support partners are likely to follow to reduce shipping and transportation costs, company executives indicated.


Microsoft head Bill Gates also visited Vietnam in April 2006 and met with Prime Minister Phan Van Khai, signaling that his firm might be the next major global player to invest in the country's fledgling but arguably energetic software sector. The Vietnam Software Association (VINASA), with support from the government, has recently stepped up its marketing activities and set a goal to secure 10% of Japan's software outsourcing market by 2010.


Japan, Asia's largest and Vietnam's third-biggest foreign investor, has recently warmed to the opportunities on offer. Since 2003, notably in the wake of the anti-Japanese riots in China, Vietnam has benefited from a new tendency among Japanese firms to diversify their investments across the region. Rising labor costs in China - now twice as high as in Vietnam - and power shortages have driven some big new Japanese investments away from China and toward Vietnam.

In January, Japan's Nidec raised its investment in the Ho Chi Minh technology park to $1 billion, approximately double the $500 million it had previously committed. Japanese investors have also committed combined funds of more than $250 million to industrial parks in Haiphong, Long Binh, and Dong Nai provinces. Camera maker Canon, meanwhile, has recently shifted its global production to Vietnam. Yamaha and Mabuchi Motors, too, have recently invested heavily in manufacturing facilities here.

Vietnam's call to foreign investors comes at a time that China and India still consume the lion's share of Asia-directed FDI. China is increasingly the locomotive of Asia's economic growth, whereby its growing appetite for imports and willingness to shoulder trade deficits is helping to fuel the growth of its smaller regional neighbors. But as Asia's emerging division of labor comes into clearer view, Vietnam has plenty of comparative advantages to leverage in attracting new investments.

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.