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VIETNAM’S ECONOMYVIETNAM’S ECONOMYA SWOT ANALYSISA SWOT ANALYSIS
The 15th Annual Conference on Pacific Basin Finance, The 15th Annual Conference on Pacific Basin Finance, Economics, Accounting and ManagementEconomics, Accounting and Management
Vu Thanh Tu AnhVu Thanh Tu AnhFulbright Economics Teaching Fulbright Economics Teaching ProgramProgram
Email: [email protected]: [email protected]
SUMMARY SUMMARY
Vietnam is a small, developing, transition, and Vietnam is a small, developing, transition, and integrated economy in a fast changing worldintegrated economy in a fast changing worldVietnam’s growth in the last 2 decade is impressive Vietnam’s growth in the last 2 decade is impressive but relies mostly on quantitative expansionbut relies mostly on quantitative expansionThe competitiveness of the nation and the firm is The competitiveness of the nation and the firm is relatively weak compared to major competitorsrelatively weak compared to major competitorsBiggest opportunities emerge from integrationBiggest opportunities emerge from integrationBiggest challenges come from competitionBiggest challenges come from competitionBiggest threat is backwardnessBiggest threat is backwardness
GDPGDP, Exports, and FDI, Exports, and FDI
0
5
10
15
20
25
30
35
4086 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
US
$ B
illlio
n
0
2
4
6
8
10
12
%
ExportsFDI - registeredGDP growth rate
Source: General Statistical Office, Vietnam Statistical Yearbook, various years,
Doi Moi
FDI Law
“Mini Bang”
BoomAsian
Financial Crisis
Enterprise Law
AFTA
BTA
WTO
Strengths of the EconomyStrengths of the Economy
Economic, political, and social stabilityEconomic, political, and social stabilityStableStable and fast growing economyand fast growing economy•• High export growthHigh export growth•• Large inflows of foreign capital Large inflows of foreign capital •• Dynamic domestic private sectorDynamic domestic private sector•• Abundant and young labor forceAbundant and young labor force•• Widening domestic market sizeWidening domestic market size
GDP growth GDP growth (%)(%)
-10
-5
0
5
10
15
1990 1992 1994 1996 1998 2000 2002 2004 2006
Việt Nam ASEAN
GDP growth (cont)GDP growth (cont)
-15
-10
-5
0
5
10
15
1990 1992 1994 1996 1998 2000 2002 2004 2006
Nước chuyển đổi Việt NamTransition countries Vietnam
Export GrowthExport Growth (2000(2000--06)06)
Source: Economist Intelligence Unit (EIU)Source: Economist Intelligence Unit (EIU)
18.84% 17.84%
7.60%
Trung Quốc Việt Nam ASEANChina Vietnam ASEAN
Attraction of FDIAttraction of FDI (% GDP, 2000(% GDP, 2000--06)06)
3.172.93
2.14
4.01
2.56
3.39
China Malaysia Thailand Vietnam World ASEAN
Source: Economist Intelligence Unit (EIU)Source: Economist Intelligence Unit (EIU)
VNVN--Index Index (2006(2006--2007)2007)
APEC
WTO
New business registrationNew business registration
0
10
20
30
40
50
60
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07F
Businesses ('000)
Enterprise Law implemented
Enterprise Law 2000
Source: Vietnam Chamber of Commerce and Industry, Ministry of PlSource: Vietnam Chamber of Commerce and Industry, Ministry of Planning & Investmentanning & Investment
Industrial output by sectorIndustrial output by sector (2006)(2006)
30%
38%
32%
Dân doanh (23.9%) Nước ngoài (18.8%) Nhà nước (9.1%)Private Foreign State
Abundant and young labor forceAbundant and young labor force
0
3
6
9
12
0-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85-8
9
90+
% of pop
Half the population is age 20 or less
Half population under 24
Source: General Statistical OfficeSource: General Statistical Office
Real demand growthReal demand growth (%, 2001(%, 2001--06)06)
4.8%
8.6% 9.2%
0%
2%
4%
6%
8%
10%
ASEAN Việt Nam Trung QuốcVietnamASEAN China
Source: Economist Intelligence Unit (EIU) Source: Economist Intelligence Unit (EIU)
Weaknesses of the economyWeaknesses of the economy
Poor infrastructurePoor infrastructureIncomplete market institutionsIncomplete market institutionsInefficient administrationInefficient administrationWeak business environment Weak business environment Inadequate education and training Inadequate education and training Inefficient use of capitalInefficient use of capitalWeak competitivenessWeak competitiveness
Inefficient use of capitalInefficient use of capital
Countries Investment GDP
Growth ICOR(%GDP) (%)
Vietnam ('00-'06) 38.3 7.5 5.1
China ('91-'03) 39.1 9.5 4.1
Taiwan ('81-’90) 21.9 8.0 2.7
South Korea ('81-’90) 29.6 9.2 3.2
Japan ('61-'70) 32.6 10.2 3.2
Ease of Doing Business (2007)Ease of Doing Business (2007)Ease of Doing Business - Rank
1
1825
93104
126135
143
0
20
40
60
80
100
120
140
160
Singapore Thailand Malaysia China Vietnam Philippines Indonesia Cambodia
Low quality of education and trainingLow quality of education and training
CountriesEducation and Human Capital
Index
English Proficiency
Index
High-tech Proficiency
Index
Singapore 6.81 8.33 7.83
China 5.73 3.62 4.37
Malaysia 5.59 4.00 5.50
Philiphine 4.53 5.40 5.00
Thailand 4.04 2.82 3.27
Vietnam 3.79 2.62 2.50
Indonesia 3.44 3.00 2.50
Labor Productivity Growth 2002 - 2005
Taiwan
SingaporeHongkong
Vietnam
Malaysia
China
Thailand
Philippines Indonesia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0 1 2 3 4 5 6 7 8 9 10
Growth rate (%)
GD
P/ca
pita
(PPP
, 200
5)
Source: Economist Intelligence Unit (EIU)Source: Economist Intelligence Unit (EIU)
Capital Productivity, 2001 - 2005
Taiwan
SingaporeHongkong
Vietnam
Malaysia
China
ThailandPhilippines
Indonesia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0.12 0.17 0.22 0.27 0.32
Incremental GDP growth due to 1% of GDP increase in invt
GD
P/ca
pita
(PPP
, 200
5)
Source: Economist Intelligence Unit (EIU)Source: Economist Intelligence Unit (EIU)
Total Factor Productivity Growth, 2002 - 2005
Indonesia
Philippines
Thailand
ChinaMalaysia
Vietnam
HongkongSingaporeTaiwan
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0 1 2 3 4 5 6
Growth rate (%)
GD
P/ca
pita
(PPP
, 200
5)
Source: Economist Intelligence Unit (EIU)Source: Economist Intelligence Unit (EIU)
Vietnam's Exports by Product, 2002
Electricity & lights Textile
Info. tech
Foodstuff
Leather
Oil & gas
Coal
Sportwares & children prods
Construction & repairs
EnginesTelecom Plastic
Agriculture produces
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
-0.2 -0.1 0 0.1 0.2 0.3 0.4
Change in Market Share, 1997-2002 (%)
Expo
rt M
arke
t Sha
re, 2
002
(%)
Source: Michael Porter, 2005Source: Michael Porter, 2005
Business Competitiveness (‘01Business Competitiveness (‘01--06)06)
2002 2003 2004 2005 2006 GDP 2005 (PPP)
Singapore 10 6 12 6 11 28.100Malaysia 25 24 23 23 20 11.201Indonesia 66 50 53 59 35 4.458Thailand 33 33 35 35 37 8.319China 39 46 48 54 64 7.204Philippines 64 72 71 66 72 4.923Vietnam 61 56 78 77 82 3.025Cambodia — — — 107 107 2.399No. of countries 79 97 100 113 121
New opportunitiesNew opportunities
New opportunities come mainly from the New opportunities come mainly from the deeper integrationdeeper integration•• MFN, fairer treatmentMFN, fairer treatment•• Access to and better allocation of resources Access to and better allocation of resources •• Domestic private sector development Domestic private sector development •• Economic reform promotionEconomic reform promotion
Exports to the USExports to the US
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2000 2001 2002 2003 2004 2005 2006
Primary Products Clothing Other Manufactures
Post BTAPre BTA
2% 1764%
164%8%
7%18%
38%21% 28% 3% 29% 31%
171%
80%
55%
58%
41%
Some ChallengesSome Challenges
More competition More competition More vulnarable to external shocksMore vulnarable to external shocks“Transaction costs” of policy and “Transaction costs” of policy and institutional changes institutional changes Unequal distribution of costs and benefits of Unequal distribution of costs and benefits of integration integration
Thank you for your attention!Thank you for your attention!
BON APETIT !BON APETIT !
