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MINISTRY OF FOREIGN AFFAIRS

Viet Nam A Country Book

Distributed by the Department of Economic Affairs (MOFA) and Vietnam Economic Times


VIET NAM A COUNTRY BOOK

Contents

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CONTENTS

LETTER FROM DEPUTY PRIME MINISTER AND MINISTER OF FOREIGN AFFAIRS PHAM BINH MINH 3

64 INTERNATIONAL INTEGRATION

16 VIET NAM AT A GLANCE Historical Background

18

Geography

19

Demographics

20

Regions and Provinces

22

Political System

24

Culture

26

Gateways to Viet Nam

44

Economy

54

International economic integration

68

An active player in global and regional arenas

80

A destination for investors

88


Contents

VIET NAM A COUNTRY BOOK

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152

98 HUBS OF OPPORTUNITIES

DIRECTORIES

Information and Communications Technology

Viet Nam’s overseas diplomatic missions 102

Fourth Industrial Revolution

106

Startups

108

Capital Markets

110

Banking

115

Oil and Gas

119

Electricity

123

Renewable Energy

127

Transportation

131

Responsible for Publishing: TRAN CHI DAT - Director & Editor in Chief

Construction and Real Estate

134

Editors: Ngo Tan Dat - Bui Thi Nga

Tourism

139

Designed by: Viet Nam Economic Times

Human Resources and Education

143

Agriculture

147

Foreign embassies and missions in Ha Noi

INFORMATION AND COMMUNICATIONS PUBLISHING HOUSE 6th Floor 115 Tran Duy Hung Street - Cau Giay District - Ha Noi

Printed 10,000 copies, size 191 mm x 235 mm, at Tien Bo Printing Company Address: 175 Nguyen Thai Hoc, Ba Dinh District, Ha Noi

Publishing permit No: ………. - 2017/CXBIPH/……… - ………/TTTT Publication decision No: .......... /QĐ - NXB TT&TT dated on 12, 12, 2017. Copyright deposit in November 2017. Code: …... ISBN: …………………


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Viet Nam at a Glance Culture

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1 VIET NAM AT A GLANCE Historical Background

18

Geography

19

Demographics

20

Regions and Provinces

22

Political System

24

Culture

26

Gateways to Viet Nam

44

Economy

54

Ha Giang. Photo: Tran Bao Hoa


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Lo Lo people in Ha Giang. Photo: Tran Bao Hoa

Viet Nam at a Glance Culture


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Viet Nam at a Glance Historical Background

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HISTORICAL BACKGROUND The first human civilization in Viet Nam is believed to have appeared in the Red River Delta about 35,000 years ago. Legend has it that the Vietnamese are descendants of Lac Long Quan and Au Co, also known as the “Dragon Lord of the Seas” and the “Fairy of the Mountains”. Their eldest son, Hung Vuong, established the very first dynasty: Van Lang. The foundation of Viet Nam went through a number of historical periods with major dynasties such as the Ly, Tran, and Le. The Nguyen Dynasty (1802-1945) was the last ruling family of the country. The Proclamation of Independence by President Ho Chi Minh founded the Democratic Republic of Viet Nam in 1945. The country then had to endure two lengthy wars of self-defense over a 30-year period, which witnessed the famous victory at Dien Bien Phu in 1954, subsequently putting an end to French colonialism in Indochina, and culminating in the Great Spring Offensive of 1975, which resulted in the country’s reunification.

Japanese Covered Bridge, Hoi An ancient town. Photo: Tran Bao Hoa

After Doi Moi - the economic reform initiated in 1986 - Viet Nam entered into a new and successful period of international integration and economic development and is regarded as one of the fastest-growing economies over the last decade.


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GEOGRAPHY Lying on the eastern edge of the Indochinese peninsula, Viet Nam has a total land area of 331,223.1 sq km. The country’s total length from north to south is 1,650 km, with 3,260 km of coastline. China borders to the north, Laos and Cambodia to the west, and East Sea to the east. Viet Nam is a transport junction between the Indian Ocean and the Pacific Ocean. The climate in Viet Nam is tropical and monsoonal. Average humidity is 84 per cent throughout the year, annual rainfall ranges from 1,200 to 3,000 mm, and annual temperatures vary between 5oC and 37oC. Due to the variety of topographical relief in plains, lowlands, highlands, and mountains, the climate varies considerably depending on the terrain. The north of Viet Nam enjoys four distinctive seasons, while there are only the dry and wet seasons in the south. Viet Nam is fairly rich in natural resources. Coal reserves, mainly in the north, have been estimated at 20 billion tons. Iron ore, chromites, bauxite, manganese, and phosphates are other commercially-exploitable metals and minerals. Crude oil and natural gas reserves are considered relatively large. In early 1987, Viet Nam began exporting crude oil for the first time and since then the production of crude oil and natural gas has increased substantially. The Red River Delta and the Mekong Delta provide a large source of irrigated land for agriculture.

Xuan Hai, Phu Yen. Photo: Tran Bao Hoa


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DEMOGRAPHICS As at the end of 2016, Viet Nam’s population was recorded at 92.7 million, an increase of 1.07 per cent, or 985,300 people, against 2015, ranking it the 14th most populous country in the world. Average life expectancy is around 73.4 years of age. The country has been successful in its “Fighting the Illiteracy Enemy” campaign, which began in 1945, and its literacy rate now stands at 95 per cent for those under the age of 25, expanding the workforce by around 1 million each year. Viet Nam has a total of 54 ethnic groups, with the Kinh accounting for 86.2 per cent of the population. The origins of the Vietnamese are conventionally traced back to the inhabitants of the Red River Delta around 35,000 years ago. Like their contemporary descendants, they were largely villagers, skilled in rice cultivation and fishing. Together with the Kinh, 53 other ethnic groups form the great family of Viet Nam. Major groups include Tay, with 1.9 per cent, Thai 1.7 per cent, Muong 1.5 per cent, Khmer 1.4 per cent, Chinese 1.1 per cent, Nung 1.1 per cent, and Hmong 1 per cent. The spiritual and religious life of most Vietnamese is usually influenced by a complex mixture of in-house philosophical teachings, and people are free to practice their beliefs. Over 70 per cent of the Vietnamese population practice the “triple religion”: a fusion of Buddhism, Taoism, and Confucianism, due to the heavy influence of feudalism in the past. Other religions include the native Cao Dai and Hoa Hao, while others, like Christianity, arrived in Viet Nam more recently. According to the Government Committee for Religious Affairs, in 2012 there were 24 million followers of 13 religions in the country, of which about 10 million people follow Buddhism, 6.2 million Catholicism, more than 1 million Protestantism, 2.4 million Cao Dai, around 1.3 million Hoa Hao Buddhism, and 60,000 Islam. There are around 5 million overseas Vietnamese, who are considered by the State as “an indispensable part of the nation”. Working and living in foreign countries, they contribute to the development of the homeland and its foreign relations. The US, Europe, and Australia are home to two-thirds of overseas Vietnamese.


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Hoi An. Photo: Tran Bao Hoa

Viet Nam at a Glance Demographics


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Viet Nam at a Glance Regions and Provinces

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REGIONS AND PROVINCES Viet Nam has 63 cities and provinces. Ha Noi, Hai Phong, Da Nang, Ho Chi Minh City, and Can Tho are centrally-governed cities, while other major cities, including Nha Trang and Hue, belong to provinces. Geographically, the 63 cities and provinces can be grouped into different regions according to their terrain characteristics: plain, highlands, or coastal.

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NORTHERN HIGHLANDS AND MOUNTAINOUS PLATEAUS

The highlands and mountainous plateaus of the north and northwest are inhabited mainly by ethnic minority groups. The Truong Son Mountain Range forms Viet Nam’s border with Laos and Cambodia and runs down through the country to the Mekong Delta, just north of Ho Chi Minh City. Mountains in the Truong Son, which have several high plateaus, are irregular in elevation and form. The country’s highest peak, Fan Si Pan in the northwest, stands 3,142 meters above sea level.

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RED RIVER DELTA

Coming down from the north, the Red River stretches some 1,200 km with two main tributaries: the Lo River and the Da River. These contribute to the high water volume in the Red River, which provides high capacity for hydro-electricity production. With a total area of more than 21,000 sq km, the Red River Delta is considered the birthplace of Vietnamese wet rice civilization. The capital Ha Noi and Hai Phong are the two industrialized cities in the region.

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CENTRAL REGION

Narrow, flat coastal lowlands extend south from the Red River Delta to the Mekong Delta. On the landward side, the Truong Son Mountain Range rises precipitously above the coast, its spurs jutting into the coast at several points. The coastal strip is generally fertile and rice is cultivated intensively. The region boasts four UNESCO World Heritage Sites: Phong Nha - Ke Bang National Park, the former imperial capital of Hue, Hoi An ancient town, and the My Son Sanctuary.

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CENTRAL HIGHLANDS

Within the southern part of Viet Nam lies the central highlands, approximately 51,800 sq km of rugged mountain peaks, plateaus, extensive forests, and fertile soil. Comprising five relatively flat plateaus of basalt soil, the central highlands accounts for 16 per cent of the country’s arable land and 22 per cent of its forested land, with coffee, pepper, and rubber the main agricultural products. The region is also famous for the local culture of its ethnic groups, such as the Jrai and Ede, among others.


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SOUTHEAST REGION

With one city - Ho Chi Minh City - and five provinces, the region is the most economically developed in Viet Nam, contributing nearly 60 per cent of the State budget. It is also the most urbanized, with more than 57.1 per cent of the population living in urban areas, compared to 25 per cent nationwide. Tourism is also very developed, with Vung Tau and Phan Thiet being two noteworthy destinations.

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MEKONG DELTA

The Mekong Delta, covering about 40,000 sq km, is a low-lying plain no more than three meters above sea level at any one point. Known as “the river delta of nine dragons” or “the land of water and rivers”, the region is crisscrossed by a maze of canals and nine branches of the Mekong River. About a quarter of its total area is under rice cultivation, making it one of the major rice-growing regions of the world. It also cultivates and exports a number of exotic fruit, basa and tra fish (pangasius), and shrimp. The southern tip, Ca Mau Peninsula, is covered by dense jungle and mangrove swamps. Natural land reclamation in the region amounts to dozens of meters every year. Season of water lilies in the Mekong Delta. Photo: Kim Cuong


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Viet Nam at a Glance Political System

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POLITICAL SYSTEM

Mr. Nguyen Phu Trong

Mr. Tran Dai Quang

Mr. Nguyen Xuan Phuc

General Secretary of the CPV

President

Prime Minister

Ms. Nguyen Thi Kim Ngan Chairwoman of the National Assembly

Viet Nam is a republic and considered one of the most politically and socially stable countries in the world. The current Constitution was adopted on November 28, 2013, and inherits from and builds upon previous Constitutions (1946, 1959, 1980, and 1992). It clearly indicates that the State is “of the people, by the people, for the people”. The people access State power through the National Assembly and People’s Councils, which are composed of elected representatives who represent the people’s will and aspirations. The Constitution endows all citizens, men and women alike, with equal rights in all political, economic, cultural, and social spheres, as well as in family affairs, the freedom of belief and the right to choose and practice a religion, the right to freedom of movement and residence in the country, and the right to go abroad and return home as stipulated by law.


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The Communist Party of Viet Nam is the only governing political party in Viet Nam and was founded on February 3, 1930 at the dawn of the struggle for national liberation and independence. The two most important organs of the Party are the Politburo and the Central Committee. All Party organizations operate within the framework of the Constitution and laws. A National Party Congress is convened every five years to chart the political course and formalize key strategies and policies. The latest (12th) Congress was convened in January 2016. The National Assembly, elected every five years, is the highest representative body of the people, endowed with the highest State power of the Socialist Republic of Viet Nam. It governs constitutional and legislative rights and decides fundamental domestic and foreign policies, socioeconomic tasks, and national defense and security issues, among others. It exercises the right to supreme supervision of all activities of the State. The President is the Head of State, elected by the National Assembly from among its deputies to represent the Socialist Republic of Viet Nam in domestic and foreign affairs. The Government is the executive body of the Socialist Republic of Viet Nam. It has the same term of office as the National Assembly and administers the implementation of State affairs in the fields of politics, economics, culture, society, national defense and security, and foreign relations. The government is led by the Prime Minister and comprises Deputy Prime Ministers, Ministers, and other government members. The Supreme People’s Court is the judicial body of the Socialist Republic of Viet Nam. It supervises and directs the judicial work of local People’s Courts, Military Courts, Special Courts, and others, unless otherwise prescribed by the National Assembly at the establishment of such courts. The Supreme People’s Procuracy is responsible for prosecutions and supervising judicial activities. It oversees the enforcement of the law and exercises the right to prosecution, and ensures serious and uniform implementation of the law.


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CULTURE Viet Nam’s cultural base is one of the oldest in Southeast Asia. It stems from wet rice civilization but at the same time has kept pace with the nation’s history. At a time of globalization, Vietnamese culture is influenced by the interactions with other cultures. The question is how to enrich the culture while preserving its uniqueness, reflected in many features of Viet Nam’s cultural life, such as festivals, food, arts, architecture, music, and costume.


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Traditional wrestling festival. Photo: Tran Bao Hoa

Viet Nam at a Glance Culture


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FESTIVALS One of the most popular features of Viet Nam’s culture is festivals. Since the country’s culture stems from an agricultural civilization, festivals have long been pivotal events, especially for farmers, as they provide the opportunity for people to honor gods of nature and pray for luck in the next crop. On these occasions people get together, organize games, and prepare dishes for relatives and friends. In different regions people organize different kinds of festivals worshipping different saints, with almost all saints once being human beings who contributed extensively to the local community. The Hung Kings festival is among the most significant. There are also traditional festivals that have transcended throughout the 4,000-year history of the country, such as Tet (the Lunar New Year) and the Mid-Autumn Festival, among others. In modern times, Vietnamese people also celebrate other festivals, such as the Hue Festival and the Da Lat Flower Festival. More than 40 popular festivals are celebrated in different parts of Viet Nam each year.

: ON THE LAST DAY OF THE LUNAR YEAR AND THE FIRST THREE DAYS OF THE NEW LUNAR YEAR

TET

The premier festival in Viet Nam is Tet, or the Lunar New Year, when the entire population downs tools to attend family get-togethers. The full name “Tet Nguyen Dan” means “Feast of the First Morning”, with the festival being celebrated from the first day of the first Lunar Calendar month until at least the third day. During this period, many shops and companies close their doors and business grinds to a halt. Homes will have been carefully cleaned and decorated with kumquat trees two to three feet tall. These trees have to be selected with care: they must be symmetrical and the fruit bright orange in colour. On this occassion, Vietnamese people visit their families and friends exchanging wish and “lucky money”. Temples and pagodas often welcome many visitors as people come to worship their ancestors and pray for good fortune. Tet traditionally marks the coming of Spring, so the word “Xuan” (Spring) sometimes becomes a synonym of Tet.


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HOI AN LANTERN FESTIVAL

The Hoi An Lantern Festival transforms the quaint UNESCO World Heritage Site into a spectacular display of lanterns. Every shop, restaurant, bar and business in the old quarter switches off all electricity and lights up hundreds of candles and lanterns. At temples, you can see monks and local people holding candlelit ceremonies. The streets are also filled with musicians playing traditional instruments and people playing chess and holding poetry readings and lantern-making classes.

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PERFUME PAGODA FESTIVAL

This annual festival draws throngs of pilgrims from all over Viet Nam to Ha Noi’s iconic Perfume Pagoda, where they pray for a prosperous year and pay their respects to Buddha. The pilgrimage starts with a dragon dance at Den Trinh (Trinh Temple), and from there pilgrims and tourists travel by boat along the Yen Spring to the base of Huong Mountain, passing limestone caves and rice fields along the way. The journey continues on foot, with a climb up hundreds of stone steps to Huong Tich Cave, where there’s a colorful display of food offerings, statues of deities, incense burning, and local people in prayer.

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FROM THE SIXTH DAY OF THE FIRST LUNAR MONTH TO THE END OF THE THIRD LUNAR MONTH

LIM FESTIVAL

The Lim Festival is where you can enjoy classic quan ho folk singing performances and a wide range of traditional games in Lim village, Tien Du district, Bac Ninh province (18 km from Ha Noi). Several stages are built within the village, where you get to see local people performing in period costumes. The Lim Festival also hosts folk games such as danh du (bamboo swings), cockfighting, tug-of-war, dragon boat races, wrestling, human chess, and blind man’s bluff.

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ON THE 14th DAY OF EVERY LUNAR MONTH

ON THE 12th & 13th DAYS OF THE FIRST LUNAR MONTH

HUNG KINGS TEMPLE FESTIVAL

The Hung Kings Temple Festival is held in Phong Chau district, Phu Tho province (80 km from Ha Noi). The main spiritual event takes place at Hung Temple, which is at the top of Nghia Linh Mountain. One hundred lanterns are released into the sky on the eve of the festival. The next morning, a flower ceremony is held at Den Thuong (Upper Temple), where the Hung Kings worshipped deities during their reign. Lastly, a huge procession of pilgrims makes its way from the foot of the mountain to the main Hung Temple. Along the way there are classical xoan singing performances and ca tru operas at several temples.

TENTH DAY OF THE THIRD LUNAR MONTH


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: EARLY MAY

This is celebrated by devotees throughout Viet Nam on the eighth day of the fourth lunar month. Many temples are adorned with lavish decorations, with local people offering fruit, flower garlands, and various Vietnamese delicacies. The event draws thousands of visitors looking to partake in street parades and prayer sessions. Hoi An is arguably the best place to enjoy the festivities. Held at Phap Bao Pagoda, the day starts with a procession of monks along the streets of the ancient town’s old quarter, then in the evening there’s a lively parade along the main road, where animals are released while flower garlands and lanterns are placed along the riverbank.

: BIANNUALLY, IN EITHER APRIL, MAY, OR JUNE, FOR ONE WEEK

WANDERING SOULS DAY

Local people believe this is the day when the spirits of their ancestors are able to visit their homes. On the eve of the festival, families flock to Buddhist temples and the graves of their departed loved ones to offer prayers, flowers, sticky rice cakes, sugarcane, and fruit. Paper money and clothes are also burned during this time of the year. Wandering Souls Day is celebrated by the Buddhist population all over Viet Nam, but the best place to view the sombre festivities is in Hue, where numerous Buddhist shrines and pagodas are flooded with local people and monks performing rituals and prayers. The festival is also known as the Cold Food Festival (Tet Han Thuc), as chilled dishes such as banh troi (floating rice cake) and banh chay (glutinous rice balls with mung bean paste) are typically eaten.

: 14th & 15th DAYS OF THE EIGHTH LUNAR MONTH

HUE FESTIVAL

The old imperial capital of Hue hosts a biennial arts festival in even-numbered years, with local and international performers entertaining visitors at historical sites and arts centers around the city. Founded in 2000, the festival is held to honour traditional customs that were practiced during the Nguyen Dynasty. If you’re visiting Hue at this time of year, you can expect to see unique events such as the Hue Poetry Festival, the Dialogue of Drums and Percussions, ao dai fashion shows, sporting activities like kite flying, boat racing, and human chess, as well as street performances, film screenings, and art exhibitions.

: 15th DAY OF THE SEVENTH LUNAR MONTH

BUDDHA’S BIRTHDAY

MID-AUTUMN FESTIVAL

The festival features processions of children carrying paper lanterns, lion dances, and food booths selling the special mid-Autumn treat: mooncakes. Mooncakes are round pastries, traditionally measuring about 8 cm in diameter and 3 cm in height. There’s an imprint on top of each cake symbolising longevity and harmony. The outer layer of wheat dough pastry envelopes a sweet, dense filling of red bean and lotus seed paste, nuts, dried candied fruit, and often a whole, salted egg yolk. The Mid-Autumn Festival


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is also known as the Harvest Festival. Households set up an altar during the night of the festival, on which they display offerings in honour of the full moon.

DA LAT FLOWER FESTIVAL

The Dalat Flower Festival takes place in the city of Dalat and Lac Duong district in the central highlands province of Lam Dong. Thanks to its cool climate all year round, Dalat is ideal for growing flowers, and 4,000 ha are planted, including daisies, roses, mimosas, forget-me-nots, carnations, pensee, gladioli, begonias, orchids, snapdragons, and purple flamboyants. In addition to the spectacular flower displays, the festival features fairs, exhibitions, colourful street parades, and stage shows on the shores of Xuan Huong Lake.

BIANNUALLY, FROM LATE DECEMBER TO EARLY JANUARY

Da Lat Flower Festival. Photo: DK

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3 1/ Ghe ngo (boat) racing A traditional festival in Soc Trang. Photo: Kim Cuong 2/ Lunar New Year (Tet). Photo: Viet Tuan 3/ Mid-Autumn Festival. Photo: Viet Tuan 4/ Hue Festival. Photo: Nguyen Van Sum 5/ Da Lat Flower Festival. Photo: DK

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5


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LITERATURE Vietnamese literature has developed throughout the history of the nation. Despite the harsh trials from repeated foreign invasions, its signature features remain. Vietnamese literature includes two major components developed simultaneously and profoundly interrelated: folk literature and written literature. Vietnamese folk literature came into existence in very early times and had a profound influence on the spiritual lives of Vietnamese people. It commonly praises beauty, humanity, and the love of goodness, and contributes substantially to the formation of a national identity. Legends, fairytales, humor, epics, folk songs, and folk poems, largely by unknown authors, possess a tremendous vitality and live on today. Written literature first appeared around the 10th century. It plays a leading role and bears the main traits of Vietnamese literature. Traditionally, Vietnamese literature featured patriotism, national pride, and humanity. (It was not by chance that great cultural identities such as Nguyen Trai, Nguyen Du, and Ho Chi Minh were also humanists). From the 10th century onwards, literary works were written ideographically in Han (classical Chinese) and chu Nom, a writing system adopted from Han by Vietnamese, which is more understandable. From the 16th century, chu Nom literature became increasingly popular and held the prime position by the early 18th century. Well-known works written in chu Nom include Chinh Phu Ngam by female poet Doan Thi Diem, poems by female poet Ho Xuan Huong and, most significantly, Truyen Kieu by Nguyen Du, which has been translated into many languages. These works represent the essence of Vietnamese literature. However, classical Chinese (chu Han) and chu Nom both became unpopular, since only middle- to upper-class people were able to afford official studies. Since the 1920s, the country’s literature has been written in a system of Romanized characters, called Quoc ngu. People nowadays can more easily learn to read and write Vietnamese and foreign languages.


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MUSIC AND PERFORMANCE Vietnamese musical culture is highly syncretistic. Nha nhac, Quan Ho, Ca Tru, Xoan singing, Vi Giam, don ca tai tu and Cong-chieng (Gongs) are recognized by UNESCO as Intangible Cultural Heritages.

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NHA NHAC

This imperial court music was played at the Imperial Court of the Nguyen Dynasty. It was synthesized by the Nguyen Emperors and is based on earlier Vietnamese imperial court music. Nha nhac is a genre of scholarly music. It attracted the participation of many talented songwriters and musicians, with numerous traditional musical instruments. Along with Nha nhac, the Imperial Court of Viet Nam in the 19th century also held many royal dances that have been passed on to modern times. The theme of most of these dances is to wish the emperors longevity and the country wealth.

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QUAN HO

Originating in northern Bac Ninh and Bac Giang provinces, numerous variations of Quan Ho exist, especially in other northern provinces. Sung in a cappella, Quan Ho is improvised and is used in courtship rituals. This is a style of singing where songs alternate from group to group. Quan Ho singing is a folk art of a highly collective nature. Those who sing are not entertainers but are part of the performance, and anyone is welcome to join in.

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CA TRU

Also known as Hat A Dao, Ca Tru is a popular form of folk music that is said to have begun with A Dao, a female singer who charmed her partner with her voice. Therefore, most singers are female. The genre has been revived since the beginning of Doi Moi in the mid-1980s. Ca Tru, where poetry and music meet, is a musical genre that calls for expertise as well as sensibility on the part of the listener. In return, it provides the most reďŹ ned enjoyment.

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MUA ROI NUOC (WATER PUPPETRY)

A distinctively Vietnamese art form that arose in the 12th century, a split-bamboo screen obscures puppeteers that stand in the water and manipulate puppets using long poles hidden beneath the water. There are many contributing factors to the art of water puppetry, including handicrafts such as wood sculptures and lacquer work. The factors all work together to bring out charming glimpses of the Vietnamese psyche as well as typical landscapes in Viet Nam.


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CONG-CHIENG (GONGS)

Recognized as an Intangible Cultural Heritage, Cong-chieng is a unique performance of ethic groups in the central highlands. Considered sacred instruments, gongs have been an integral part of the spiritual lives of many ethnic groups. Playing gongs electriďŹ es the people participating in dances and other forms of entertainment and are mainly used in offerings, rituals, funerals, wedding ceremonies, New Year festivities, agricultural rites, and victory celebrations, etc.

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CA HUE

Originating in Hue, Viet Nam’s imperial capital from the 17th to 18th centuries, Ca Hue, or Hue tunes, is a mixture of Hue Royal court music and Hue folk songs. It is considered the representative form of classical music in the central region. Thanks to its long history, its repertoire has a total of 60 basic tunes, both vocal and instrumental.

Ca Hue performances are held at different sites. While the night shows on dragon boats oating along the Huong (Perfume) River are popular with the public and tourists, the in-chamber variety is more academic and acoustic. Ca Hue chamber music originated from performances in royal and mandarin houses during the feudal era, where it was performed at wine or tea parties. Many great Ca Hue songs were composed by the intellectuals and aristocrats who staged performances in their homes. A typical Ca Hue show features traditional Vietnamese musical instruments such as dan tranh (16-string zither), dan ty ba (pipa), dan nhi (erhu), dan nguyet (moon-shaped lute), and sanh tien (wooden clappers). Performers also make unique clapping sounds with a teacup held in one hand, amusing audiences with their skills and the uniqueness of the instrument. Audience members are attracted by both the music and the lyrics. The melodies can stir the soul, with both sorrowful and delightful moods, while the lyrics depict the beauty of the motherland, love affairs, sadness, and historical stories.

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MODERN MUSIC

Developed in the 1930s with Western instruments and theories, in contrast to the traditional style, modern music is now widespread throughout the country and especially popular among the younger generation. Trinh Cong Son is considered one of the most internationally-recognized Vietnamese songwriters of the 20th century. The national anthem, Tien Quan Ca (March to the Front), was written by Van Cao, who is well-known for his high-art works in music and poetry.


A woman in the Muong ethnic group costume performing dance. Photo: Thai A

Don ca tai tu. Photo: Le Hoang Vu

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Viet Nam at a Glance Culture


Ca Hue. Photo: Song Phuoc

Cong-chieng (Gongs). Photo: Tran Phong

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VI GIAM

Native to the north-central provinces of Nghe An and Ha Tinh, Vi Giam singing depicts the lives and loves of local workers. The folk music was recognized by UNESCO as a World Intangible Cultural Heritage in 2014. No one knows exactly when Vi Giam singing first began but the folk songs have long been important for the inhabitants of nearly 260 villages in Nghe An and Ha Tinh provinces. Vi Giam’s stage and artists are unusual. As the folk music is a “product” of work, it can be performed by everyone, such as farmers, fishermen, and weavers, at any time, and there is no need to wait until the harvest or a festival.

Vi Giam includes two types of folk music, Vi and Giam. Vi singing can be linked to poetry, with gentle melodies. Many Vi songs are proverbs or phrases set to music, following the rhyme of each verse. There are some 20 tunes in Vi singing, which are distinguished and named following the characteristics of the multiple occupations common in the region and the mood of daily life. Giam singing, meanwhile, shares multiple similarities with Vi in the way it is composed and played. The difference is that it originates from fables or tales. Giam rhythms are also clearer and stronger than Vi. As Giam songs often tell long stories or describe a particular state of mind, their rhythms are lower, deeper, and more monotone than Vi.

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DON CA TAI TU

Rooted in the southern part of Viet Nam, this type of folk music gained World Intangible Cultural Heritage recognition from UNESCO in 2013. The music has a large area of influence, covering 21 provinces in the south. Don ca tai tu emerged in the late 19th century, originating from Hue royal court music and folk literature. It is a performing art that brings people together and evokes their lifestyle and work in the Mekong Delta region, while also reflecting their inner feelings and emotions, industriousness, generosity, and courage.

Don ca tai tu is choir performances played after working hours by ordinary young men and women in rural areas. The audience as well as the performers are all friends, neighbors, or members of the same family, so they often don’t bother with costumes. The folk music is usually performed at events, festivals, death anniversary rituals, and other celebratory social events and gatherings. It is also played in the shade of trees, on boats, or on bright moonlit nights. The performers express their feelings by improvising, ornamenting, and varying the “skeletal melody” and main rhythmic patterns of these pieces. Don ca tai tu is played on a wide range of instruments, including the dan Nguyet (moon-shaped lute), dan nhi (two-stringed fiddle), dan tranh (16-stringed zither), dan ti ba (pipa), percussion, monochord, and bamboo flute. Its repertoire is based on 20 principal songs and 72 classical songs. The art is passed on orally, based on imitation, from master instrumentalists and singers to students.


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XOAN SINGING

Xoan singing is practiced in northern Phu Tho province in the ďŹ rst two months of the lunar year. Traditionally, singers from Xoan guilds performed songs in sacred spaces such as temples, shrines, and communal houses for spring festivals. There are three forms of Xoan singing: worship singing for the Hung Kings and village guardian spirits; ritual singing for good crops, health and luck; and festival singing, where villagers alternate male and female voices in a form of courtship. Each Xoan music guild is headed by a leader, referred to as the trum, while male instrumentalists are called kep and female singers dao. Although only four traditional guilds remain, in recent years the singing has been taken up by clubs and other performing groups.

Water puppetry. Photo: Viet Tuan


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CUISINE Due to the wet rice civilization, rice plays a key role in most of Viet Nam’s traditional dishes. A common Vietnamese meal is thought of as healthy, as it contains mostly rice, vegetables, or exotic fruit. However, the eating habits of people differ from region to region. Southern Vietnamese tend to have sweet tastes while in the central region dishes are rich with peppers and chilies. People from the north tend to consume more meat, as the weather is colder. Some Vietnamese food has gained international note. Pho, banh chung (sticky rice cake), and cha gio or nem (spring rolls) are among dishes preferred by foreigners.

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PHO

With rice noodles as the main ingredient, pho is the most popular dish among Vietnamese. It is considered unique to Viet Nam and has become the symbol of Vietnamese cuisine. Pho is commonly consumed for breakfast, although many people also like it for lunch or dinner. Like hot green tea, which has a distinctive fragrance, pho also has a special taste and smell. Preparations may vary, but when the dish is served its smell and taste are special. The grated rice noodle is made from the best variety of fragrant rice. The broth for pho bo (with beef) is made from stewed beef and pork bones in a large pot cooked for hours. Pieces of fillet mignon together with several slices of ginger are reserved for pho bo tai (rare fillet). Slices of well-done meat are offered to those less keen on eating rare fillet. The soup for pho ga (with chicken) is made of stewed chicken and pork bones. The chicken is boneless and cut into thin slices.

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BANH CHUNG (STICKY RICE CAKE)

Sticky rice cakes are a traditional Vietnamese dish and part of every Tet meal, and must be placed on the altar as an offering to the ancestors. Banh chung is made from glutinous rice, pork, and green bean paste wrapped in a square of bamboo leaves, giving the rice a green color after boiling. According to legend, under the reign of the Hung Kings, Prince Lang Lieu created sticky rice cakes and presented them to his father. Banh chung won high acclaim from the King, who awarded the prince his throne. Making banh chung is a meticulous and timeconsuming task. However, spending the night with the family beside the stove, waiting for banh chung to be ready, is an unforgettable memory from everyone’s childhood.


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NEM, OR CHA GIO (SPRING ROLLS)

Called nem in the north and cha gio in the south, though ranking among Viet Nam’s specialty dishes they are relatively easy to prepare and have long been a preferred food on special occasions such as Tet and other family festivities. The ingredients used for nem ran (fried spring rolls) are lean minced pork, sea crab or unshelled shrimp, two kinds of edible mushrooms, dried onions, duck eggs, pepper, salt, and different kinds of seasoning. All are mixed carefully before being wrapped with transparent rice paper into small rolls. These rolls are then fried in boiling oil. Pho, nem and banh chung. Photos: Viet Tuan


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COSTUME The traditional costume of Vietnamese people tends to be very simple and modest. Men wear brown shirts and white trousers, and their headgear is simply a piece of cloth wrapped around the head and their footwear a pair of plain sandals. The ao dai (long dress) has been the traditional dress for Vietnamese women since long ago. There are many different types of ao dai: the four-part flowing tunic has two equal front flaps that women tie together, while the five-part flowing tunic has an additional small front flap that buttons up on the right side. Vietnamese women wear the ao dai to important events, while female Vietnamese students wear white or violet ao dai as school uniforms. This traditional costume is a symbol of Vietnamese culture around the world. An elegant looking conical palm hat, which is traditionally known as a non bai tho (a hat with poetry), is worn as part of a woman’s formal dress. The traditional conical hat is particularly suitable for a tropical country such as Viet Nam, where fierce sunshine and hard rain are commonplace. Viet Nam has 54 different ethnic groups, many of whom have creatively crafted indigenous and inventive traditional clothing. Ethnic minority women go to markets not only to buy and sell daily needs but also to showcase their colorful and skillfully-made dresses. Vietnamese ethnic minority clothing, especially women’s, expresses their hardworking character, cleverness, and sense of beauty. The Mong people make their clothes from linen. Women’s attire consists of a skirt, a blouse that opens at the front and has embroidery on the back, an apron to cover the skirt at the front, and leggings. Meanwhile, people of the Tay ethnic minority wear brocade with original designs; their most famous craft. Thai women wear short and colorful blouses, accented down the front with lines of silver buttons in various shapes. Their blouses fit beautifully with their tube-shaped black skirts, with belts being a colored silk band. Among the many ethnic minority peoples, the Lo Lo Hoa in Viet Nam’s north probably create the most admired, complex, and striking embroidered textiles. Like many in the north, they dye cloth in two signature colors: indigo and black. But they put together their traditional costumes using various textile techniques and multiple intricate patterns. The clothes of the Red Dao are commonly described thus: “Women usually wear a long blouse over trousers. Their clothes are colorfully embroidered with designs that appear on both sides of the material. The men typically wear a short shirt with long trousers, and a head-scarf. Both men and women have a square piece of fabric on the back of their shirts that represents them being children of God”. The traditional costumes of ethnic groups are diverse, but knowledgeable travelers will soon learn to distinguish one from the other thanks to their differing styles.


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Ede people in Dak Lak. Photo: Réhahn Photography

Cham woman in her traditional outfit. Photo: Réhahn Photography

Ma people in Lam Dong. Photo: Réhahn Photography

Hre people in Quang Ngai. Photo: Réhahn Photography


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GATEWAYS TO VIETNAM TRAVELLERS RAVE ABOUT VIET NAM’S INCREDIBLY FRIENDLY PEOPLE, 54 UNIQUE ETHNIC GROUPS, AND BEAUTIFUL LANDSCAPES In the north, spend your time wandering through the charming colonial boulevards of Ha Noi. Enjoy the finest cuisine at a rich number of local and international restaurants in the city. Ha Noi is one big marketplace and with the traffic full of families piled onto motorbikes it’s hard to imagine anybody stays at home. Meanwhile, the sensuous, serene scenery of Ha Long Bay in the northeast is another absolute must-see and a comfortable day trip from Ha Noi. Any trip to central Viet Nam would not be complete without exploring the majesty of Hue, the former imperial capital and a quiet city renowned for the magnificent architecture of its citadel, palaces, royal tombs, pagodas, and temples, built under the Nguyen Dynasty on the banks of the Huong (Perfume) River. Hue is less hectic than Ha Noi, but its back roads are full of bustle and it’s a pleasure getting lost among the bread shops and pagodas. The atmospheric Hoi An, south of Da Nang, is a UNESCO World Heritage Site and a riverfront port town crammed with historic homes, tiny museums, stylish cafes, and bustling silk and fish markets. Further south, entertain your senses in Ho Chi Minh City. Formerly Saigon, the city is a metropolis as ripe with life as Ha Noi. It is every bit the intoxicating Indochina of the imagination. The city is brimming with energy and the nearby countryside is painted with classic Asian images and an overall atmosphere of true warmth. Exploring the Mekong Delta region is also an essential part of any holiday in Viet Nam, and Vinh Long is a recommended stop before returning to the busy Ho Chi Minh City.


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Nhon Ly, Binh Dinh. Photo: Tran Bao Hoa

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TRIBAL LIFE Only five hours drive from Ha Noi, Mai Chau is a whole other world. The tiny farming village, set in a valley surrounded by breathtaking, brilliant green mountains, is home to the ethnic Thai people, one of the country’s 54 ethnic groups. Here you can stay in a traditional stilt-house and sample the local specialty, ruou can, a potent liquor made from plantain that is drunk through long, curved straws made from bamboo. Night in Mai Chau is a time for ethnic performances, particularly spring-themed dances and songs. The folk troupe of Lac village includes around 12 beautiful Thai people with happy smiling faces dancing and singing songs that symbolize their daily activities of climbing mountains, wading through streams, and walking through forests. Sa Pa is another home to ethnic groups and is 1,600 meters above sea level, with an average temperature of 18oC. Visitors to Sa Pa in the summer may experience the four seasons in just one day. In the morning and afternoon it is cool like spring and autumn. At noon, it is as sunny and cloudless as summer, and in the evening it can be quite cool. With no advance warning, a short rain spell may roll in at noon on any summer’s day. A rainbow then appears, transforming Sa Pa into a magical land, which for years has been a constant source of poetic inspiration. Sa Pa’s population is a mix of many ethnic groups, such as Hmong, Red Dao, White Thai, Giay, Tay, Muong, and Xa Pho. The people of each group can be identified through their different style of dress. Sa Pa. Photo: Viet Tuan

VIET NAM’S MOST MAJESTIC MOUNTAINS


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BAY WATCH Visiting northern Viet Nam without seeing Ha Long Bay is like visiting Nevada and missing the Grand Canyon. With some 2,000 islands rising out of a jade-green sea, the vast bay, covering 1,500 sq km, is truly spectacular. The limestone islands, sculpted over millennia into fantastic fairytale shapes, are riddled with caves and dotted with empty white-sand beaches. Ha Long Bay assumed a prominent spot on the world stage in 1994, after UNESCO inscribed its islands and islets on the World Heritage List in recognition of its outstanding, universal aesthetic appeal. But even among the select company of UNESCO’s natural wonderlands, Ha Long Bay is a standout. In 2000, the World Heritage Commission also recognized Ha Long Bay for its outstanding geological and geomorphologic value and its World Heritage Listing was updated. Overnight in Ha Long Bay on board a boat is an experience not to be missed. Ha Long Bay from the deck of a boat is an incredible sight, while kayaking around the bay offers the most magnificent seascapes you’re ever likely to see.

Ha Long Bay. Photo: Tran Bao Hoa

NO TRIP TO NORTHERN VIET NAM IS COMPLETE WITHOUT A VISIT TO HA LONG BAY


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SECRETS OF PHONG NHA No matter how eager you are to visit Phong Nha Cave, one of Viet Nam’s attractions with World Heritage status, here in Quang Binh province you are advised to keep the best until last. From Xuan Son Port on the Son River, you can buy a ticket on a boat to the cave. In the rainy season - from October to the end of the year - the water of the Son River turns red, the reason behind its name (son meaning red in Vietnamese). Along the west bank, the tremendous Trung Son Mountain Range stands like a giant between Viet Nam and Laos. At the end of the river the cave appears like a monster opening its mouth to swallow the river and its cargo. The engine is turned off and the boat floats gently into the cave. It’s a dizzying sensation being in a space where the river below is 10 to 30 meters deep and the cave ceiling is nearly 50 meters above. Everywhere are marvelous stalactites, formed by millions of years of water dripping through the stony heart of Ke Bang Mountain. Lights have been installed in Bias Ky and Tien Son caves, where the most spectacularly-shaped stalactites are to be found. For centuries, Phong Nha has been home to many mysteries, and explorers from the British Caving Association agree that Phong Nha’s complexity, beauty and length are incomparable. The association has tentatively mapped out the caves, with its latent rivers, sand fields and unknown species, including fish that have lost their sense of sight after millions of years living underground - the Chinh fish, as they’re called in Vietnamese. Waterfall at Ken Cave, Phong Nha. Photo: Kim Cuong

THE MYSTERIOUS PHONG NHA CAVE, ANOTHER WORLD HERITAGE SITE IN VIET NAM


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DA NANG On the southern side of Hai Van Pass, for many years Da Nang, the transport hub in the central region, has set itself as one of the most well-organized, well-planned, and wellmanaged cities in Viet Nam. The third-largest city in the country in terms of economy and urbanization, following Ha Noi and Ho Chi Minh City, and a major port city, Da Nang still boasts many gems that are yet to be discovered, making it a convenient, friendly, and exciting tourism hub. Son Tra Peninsula, some 10 km from the city center, is a magnet for those who love to immerse themselves in nature. As it’s largely covered by dense rainforest, hiking trips in the home of the rare red-shanked douc and other outstanding wildlife are unforgettable. It gets even better when you take one of the various trails and paths leading down to beautiful and quiet beaches. A small lighthouse, a museum, and famous Linh Ung Pagoda, with an iconic 67-meter Lady Buddha statue and an old banyan tree, which is said to be more than 1,000 years old, are some of the gems found on the peninsula. Bordered by the sea to the east, Da Nang is home to many pristine, picturesque beaches with white sand, slight slopes, and calm, warm water. The city’s hospitality market offers a wide range of choice for visitors, from cheap guesthouses and hostels to five-star villas, resorts, and hotels. Whether staying in low-cost accommodation or fancy five-star resorts, visitors have the chance to see the daily lives of local people, who are famous nationwide for their friendliness, or watch fishermen go about their daily routines, fishing with traditional methods passed down through the generations. Son Tra Peninsula. Photo: Viet Tuan

A DYNAMIC CITY AND TOURISM HUB


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SEA DANCE On a beautiful summer’s morning, off the coast of Nha Trang, from a distance Mun Island looks like a green carpet rising out from the sea. The island is uninhabited and has retained its natural beauty with an original forest, white sands, fresh air, and an array of marine life in clear blue water near the shore. The boat was skimming over the waves through the sunshine against the gentle sea breeze. The water ahead was blue, the sky above was clear. Beneath the boat the water was about ten meters deep, sheltering millions of colorful creatures. Welcome to heaven for diving in Viet Nam! Every year divers from all over the world flock to Nha Trang to enjoy its underwater beauty. It is said that there are about 200 kinds of coral to be seen. Drifting through the sea, time seems out of kilter with the world above; minutes pass like hours and hours pass like minutes as you are struck by the alien beauty of the strange world around you. Several gardens of coral can be seen stretching along the seabed, some of them looking like strange flowers, some like colorful buffalo horns. They are amazingly soft to the touch. Fish, sea lungs, and other creatures hide under the coral as divers approach. Nha Trang Bay has once been voted one of the 29 most beautiful bays in the world, with a wonderful year-round climate. Its transparent water and marine life eco systems make it an ideal place for swimming, snorkeling, and diving, or travelling by glass-bottom boat to explore the coral reefs. Cruise in Nha Trang. Photo: Pham Ha

EXPLORE THE WEALTH OF MARINE LIFE AT NHA TRANG


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HIGHLAND RETREAT Once the favored summer hideaway of French colonialists, Da Lat is now the destination of choice for Vietnamese honeymooners. The mountain air is invigorating, and with its surrounding lakes, waterfalls, cultivated fields, and pine forests, the area is ideal for long rambling walks or romantic picnics. The town itself has a faded charm, with steep, winding streets lined by crumbling colonial villas. If you can look past the peeling paint and overgrown gardens, it’s easy to imagine the tennis courts and perfectly manicured lawns of days gone by. On this 1,500-meter-high plateau the air is fresh and clean throughout the year. The city was discovered in 1893 by Dr. Alexandre Yersin, a protégé of the legendary Louis Pasteur. Four years later, the General Governor of Indochina ordered a sanatorium be built. Then nothing much changed until 1915, when new roads were built to improve access from then-Saigon. Two years after that, a railway service began operating to Da Lat from Phan Rang on the coast. Word of the blessed coolness of Da Lat quickly spread among expats in the steaming cities. The French administration decided to build a luxury hotel, the Langbiang Palace Hotel, which was opened in 1922. Ten years later, the Hotel du Parc was built. Meanwhile, Bao Dai, Viet Nam’s last emperor, had no less than three palaces built in Da Lat for himself and his entourage.

Da Lat. Photo: DK

DA LAT – CITY OF LOVE


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CAI BE FLOATING MARKET Cai Be, one of many well-known floating markets in the Mekong Delta, was formed during the Nguyen Dynasty in the 19th century. The Cai Be Floating Market is always busy, bearing all the characteristics of life in the Mekong Delta. All goods are transported to the market by rafts and boats. The floating market lies on the Tien River, at the junction of three provinces: Tien Giang, Vinh Long, and Ben Tre. The market is divided into two sections: buying and selling. Rafts and boats are anchored along the two banks of the river for many kilometers. From the floating market, goods are moved for sale at inland markets or small boats take them for delivery along canals in the Plain of Reeds. From 3am in the morning, rafts and boats crowd the river. Many traders live on the river, following generations past. Cai Be seems to be an inseparable part of their daily lives. On each boat, goods are hung on poles that are called cay beo. Hundreds of such poles point skywards. Boats also operate like “taxis’; convenient for tourists in the region. Along the crisscrossed canals, people in the Plain of Reeds not only take goods from each place to Cai Be but also take their unique cultural characteristics, creating a beautiful river setting. Vinh Long and Tien Giang provinces are renowned for their fruit orchards of durians, longans, plums and mangosteens. They are also home to traditional crafts and folk music and dance, and where local cuisine is carefully preserved and farmers can be heard singing the sweet arias of traditional southern opera, don ca tai tu. Floating market in Mekong Delta. Photo: Pho Ba Cuong

EXPLORE DAILY LIFE IN THE MEKONG DELTA


Young women wearing traditional ao dai in Hoi An. Photo: Nguyen Quoc Dzung

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ECONOMY The fundamental reform known as Doi Moi, started 30 years ago, has transformed Viet Nam from a poor nation into a lower middle-income country and one of the most dynamic economies in the Asia-Pacific region, with poverty reduced from around half of the population in the 1990s to 3 per cent in 2016. Thanks to an internal restructuring that focused on manufacturing and services and opened the economy to foreign investors, the country’s dynamic market-oriented economy is gradually maturing. The private sector has also developed rapidly and been identified, together with foreign direct investment (FDI) enterprises, as the major driving forces of economic growth. Built upon these successes, Viet Nam’s growth strategy has been refined to be ready for a new phase of development. Its priority is deep-rooted integration into the global economy and a higher position in the value chain by engaging in a series of new-generation free trade agreements. Further strengthening the domestic private sector and radically restructuring the State-owned enterprises (SOEs) are also on top of the country’s agenda.

RECENT PERFORMANCE Viet Nam has maintained impressive growth since the 2008-2009 economic-financial crisis. For three consecutive years (2014 to 2016), annual GDP growth exceeded 6 per cent. This remarkable result was driven by a strong manufacturing sector, which grew 7.6 per cent in 2016. The country’s mid-term growth outlook is positive thanks to strong domestic demand, healthy export performance, and a resilient agriculture sector. Core inflation, meanwhile, has been relatively low and will continue to be one of the government’s long-term priorities. The country’s mid-term prospects are optimistic, as the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have forecast 6.2 and 6.3 per cent growth for 2017, respectively. The World Bank has predicted the country’s healthy performance will continue over the next five years, thanks to its traditional strengths: political stability, a rapidly-growing domestic market, and a robust, export-oriented FDI sector.


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GDP GROWTH RATE

GDP BY SECTOR, 2016 (%)

(%)

16.32

8 7 6 5 4

6.7 6

6.4

40.92

6.7

5.4

32.72

3 2 1 0 2013

2014

2015

2016

est. 2017

Agriculture

Services

Source: GSO

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STRUCTURE AND PRODUCTIVITY

Services has become the most important sector in Viet Nam’s economy in recent years, contributing 44.1 per cent of GDP in 2015, Industry and construction ranked second, with 38.5 per cent. Such development is in accordance with the country’s Five Year Development Plan 2016-2020, which set a target of increasing the share of industry and services in GDP to 85 per cent. Agriculture, though contributing only 15 per cent of national GDP, employs 47 per cent of the national workforce, meaning the sector’s importance will not decline in the years to come. Viet Nam’s business community consists of four main groups: SOEs, large domestic corporations, foreign giants, and many small and medium-sized enterprises (SMEs) in all sectors. Large domestic and foreign giants corporations possess relatively high competitiveness and make significant contributions to the country’s exports and growth. SOEs is facing economic inefficiency and require radical restructuring, while SMEs, finding it difficult to access capital and new technologies, are struggling to position themselves in the global value chain.

Manufacturing

Sources: GSO


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CONTRIBUTION TO GDP GROWTH % ON AVERAGE 2011–2016 Size of bubble indicates the sector’s share of GDP

Manufacturing 1.4

2.0

1.5

1.0 Mining 0.2

Real estate 0.2

0.5

Finance & banking 0.4

Retail trade 0.8 Agricuture 0.5

Health care 0.1

0

Education 0.2

-0.5

Transportation 0.2

Construction 0.4

Electricity 0.4

Hotels and tourism 0.2 Sources: World Bank estimates based on GSO data

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STRONG INTERNATIONAL TRADE

Exports remain the country’s major strength, growing 7.9 per cent in 2015 and 9 per cent in 2016 despite weak growth in global trade. This increase is a remarkable achievement compared to regional competitors. Meanwhile, Viet Nam’s imports have also witnessed stable increases, providing inputs for its flourishing industries, including automobiles, electronics, construction, footwear, and garments and textiles. Over the last 15 years, its share in global trade has increased five-fold.


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MERCHANDISE EXPORT GROWTH

10

2015

(%, current US$)

2016

5 0 -5 -10 -15 -20 China

Indonesia

Malaysia

Philippines

Singapore

Thailand

Vietnam Source: World Bank

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FAVORABLE INVESTMENT ENVIRONMENT

Foreign investment continues to pour into Viet Nam to capitalize on the country’s competitive advantages as well as opportunities arising from the new-generation of free trade agreements (FTAs) Viet Nam has concluded. In 2016, $15.8 billion worth of FDI came to the country, an increase of 9 per cent compared to 2015. This clearly indicates investors’ confidence in the economy’s long-term prospects and the opportunities generated by the government’s liberalization efforts. The FDI sector contributed one-fifth of the country’s GDP in 2016, nearly one-quarter of total investment, two-thirds of exports, and created at least 3.5 million direct jobs and 4 million indirect jobs. The Law on Investment, effective from July 2015, has broadened and clarified the definition of foreign investor while also streamlining registration procedures and considerably increasing the number of sectors permitted to attract FDI. Recent reform efforts have taken Viet Nam from 91st to 82nd in the World Bank’s Doing Business rankings. The policy of equitizing major SOEs has made the country even more attractive in the eyes of foreign investors.


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GROWING DOMESTIC MARKET

A domestic market of 90 million has proven crucial in helping Viet Nam to weather certain economic challenges in recent years and will continue to do so in the future. In 2016, retail sales enjoyed a 9.1 per cent increase, with an impressive expansion in both supermarket chains and e-commerce platforms, many of which are operated by foreign investors. The fast-moving consumer goods (FMCGs) segment currently plays a signiďŹ cant role in fueling national purchasing power and this is expected to remain the case for the next few years. However, a young and fast-growing middle class will boost consumption considerably, given their readiness to spend more on new and luxurious products and services.

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FUTURE PLANS

The Vietnamese Government understands that to maintain high and sustainable growth, renewed economic reform is inevitable. A number of major measures will be implemented to maintain economic stability and promote broader and deeper global economic integration. It includes participating in new-generation FTAs, successfully equitizing and restructuring SOEs while also nurturing private enterprises, and attracting FDI of higher quality, which will bring not only capital but also much-needed new technologies to different industries.


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STATE BUDGET - FISCAL POLICIES

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FOSTERING FISCAL SUSTAINABILITY

The Vietnamese Government prioritizes stabilizing fiscal policy towards promoting economic growth, encouraging an entrepreneurial spirit, and consolidating social security. The government's efforts to bridge the State budget deficit, adjustments to fiscal policy towards minimizing expenditure, especially public spending, and continued tax cuts significantly freed up manufacturing and production and supported the economy overall during the 2011-2016 period. Politburo Resolution No. 07 - NQ/TW dated 18 November 2016 on guidelines and measures to restructure the State budget and manage public debt, and the National Assembly Resolution No. 25/2016/QH14 dated 9 November 2016 on the national five-year financial plan for the 2016-2020 period came into force to ensure public finance security and serve the country’s sustainable development goals.

THE OBJECTIVES: 1 2

3

4

State budget revenues during the 2016-2020 period are to reach $302 billion, or 1.65 times higher than in the 2011-2015 period. State budget expenditure is to be gradually restructured towards rationalization. Expenditure during the 2016-2020 period is to be $353.26 billion, or 24-25 per cent of GDP on average. Some 25-26 per cent of total expenditure will be allocated to development and investment, while regular spending will account for up to 64 per cent of total GDP. Special attention will be paid to ensuring spending on debt repayments and national reserves. The State budget deficit during the 2016- 2020 period is capped at 3.9 per cent of GDP. The State budget deficit is to be gradually reduced to 3.5 per cent of GDP by 2020, ensuring public debt remains within the country’s self-imposed limit. Ensuring public debt security.


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POLICY GUIDELINES

State budget collections: Increasing the GDP mobilization rate to the State budget, ensuring domestic collections to meet the minimum rate outlined and to be in line with the country’s development. Securing a reasonable proportion between indirect and direct taxes, increasing the proportion of domestic revenues while lowering collections from crude oil, resources, and export-imports. Promoting methods to combat tax losses, significantly reducing tax arrears and other State budget collections. Minimizing the formulation of policies to reduce State budget revenues. State budget expenditure: Reasonably proportionating collection and spending, increasing development spending, and reducing regular expenditure. Securing 20 per cent of total State budget expenditures for education and training and 2 per cent for science and technology. Adjusting the base salary and pension for people with meritorious service at an annual increase of 7 per cent following an appropriate roadmap. State budget deficit: Significantly reducing the State budget deficit rate to ensure the above specific targets. Restructuring public debt, reducing foreign debt, and raising the proportion of domestic debt. Developing the bond market while minimizing the issue of international bonds. Ensuring a higher rate of government bonds issued with terms of more than five years, lifting the average term during the 2016-2020 period to around 6-8 years.


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BUDGET COLLECTION & EXPENDITURE

Total State budget collection in the first nine months:

$37.1 billion Domestic revenue: $29.2 billion Crude oil revenue: $1.5 billion Export-import revenue: $6.3 billion Other revenue: $119 million

Total State budget expenditure in the first nine months:

$39.8 billion Investment and development spending: $7.3 billion Debt repayment and donations: $3.3 billion Regular spending: $29 billion Other spending: $150 million Source: Ministry of Finance


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PROPORTION OF REVENUE SOURCES IN STATE BUDGET (%)

100 90 80 70 60 50 40 30 20 10 0

2 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Domestic revenue

Export-import revenue

Crude oil revenue

Revenue from donations

Source: Statistical Yearbook and Ministry of Finance

THRESHOLD FOR PUBLIC DEBT AND FOREIGN DEBT (%)

70 60 50 40 30 20 10 0 2011

2012

2013

2014

Public debt to GDP

National foreign debt to GDP

Government debt to GDP

Government debt obligations to State budget collection

2015

2016 (estimated)

Ministry of Finance


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PROPORTION OF STATE BUDGET COLLECTION TO GDP, VIET NAM AND OTHER COUNTRIES (%)

35 30 25 20 15 10 5 0 2008

2009

2012

2013

2014

2015

2016

2017 (estimated)

Average of low-income countries

Crude oil exporting countries

Asian countries

Saharan countries

Other countries

Viet Nam

Latin American countries

Source: Statistical Yearbook and Ministry of Finance


2 INTERNATIONAL INTEGRATION International economic integration

68

An active player in global and regional arenas

80

A destination for investors

88

Ha Noi. Photo: Tran Bao Hoa


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Viet Nam at a Glance Culture


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Color Me Run festival: Photo: Tran Bao Hoa

Viet Nam at a Glance Culture


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INTERNATIONAL ECONOMIC INTEGRATION In pursuing a foreign policy of openness, multilateralization, and diversification of international relations, Viet Nam has since the early years of Doi Moi promoted international integration, in which economic integration is the cornerstone. Over the past three decades, it has gradually opened up its economy and integrated successfully into the region and the world, reaffirming its role as an active participant in almost all economic and trade cooperation mechanisms at sub-regional, regional, inter-regional, and global levels. Important milestones have been reached during the country’s international economic integration: joining the Association of Southeast Asian Nations (ASEAN) in July 1995, being a founding member of the Asia-Europe Cooperation Forum (ASEM) in 1996, joining the Asia-Pacific Economic Cooperation (APEC) forum in 1998, and becoming a member of the World Trade Organization (WTO) in 2007. Viet Nam’s reform and international economic integration have brought about significant achievements. The country has established trade relations with over 230 countries and territories and concluded over 90 bilateral trade agreements and nearly 60 agreements on investment promotion and protection. The reform of the domestic economy along with the full implementation of international commitments has helped create a competitive and conducive business environment. Viet Nam has become one of the most open economies in Southeast Asia.


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VIETNAM: A VIBRANT HUB OF ASEAN Since joining ASEAN in 1995, Viet Nam has always played an important role in designing its development roadmap, especially milestones policies. Envisioning a global, highly interconnected, and integrated ASEAN, Viet Nam, together with other members, enhances both intra-regional trade and investment through increasing economic cooperation across all sectors and international cooperation through a network of free trade agreements (FTAs) with important partners, with the ambition of making ASEAN a major global economic and trade center. Viet Nam is actively implementing the AEC Blueprint 2025, with the goals of promoting green development, curtailing the development gap, enhancing productivity through technological innovation and human capital improvements, and broadening ASEAN connectivity, which can be realized at ďŹ rst by sub-regional cooperative initiatives. Viet Nam is committed to building a single ASEAN market and production base, an attractive regional environment for investment with high adaptability and competitiveness, balanced economic growth, and deep integration into the global economy. It actively fosters cooperation in priority sectors, including micro, small and medium-sized enterprises (MSMEs), digital innovation technology, agriculture, energy security, water security, and curtailing the development gap towards a self-reliant, inclusive, peopleoriented, and people-centered ASEAN.

ASEAN flag raising ceremony in Ha Noi on 8 August 2017. This year celebrates the 50th anniversary of the Association and the 22th anniversary of Viet Nam’s membership. Photo: Giang Huy


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NORTHEAST ASIA: VIET NAM’S FOREMOST TRADE AND INVESTMENT PARTNER General Secretary Nguyen Phu Trong meets with Chinese President Xi Jinping (right) on 12 January 2017 in Beijing. Photo: Ha Thang/ VOV

:

CHINA: A NEIGHBORING MARKET WITH VAST POTENTIAL

The Comprehensive Strategic Cooperative Partnership, established between Viet Nam and China in 2008 and upgraded in 2011, is continuously strengthened, creating a firm foundation for bilateral relations. The two countries have established ten frameworks, including an inter-governmental steering committee and many provincial mechanisms to facilitate economic cooperation. Thanks to these efforts, China continues to be Viet Nam’s largest economic partner, with bilateral trade increasing by an average of 19 per cent in the 2011-2015 period. In 2016, it reached $71.9 billion, accounting for 25 per cent of Viet Nam’s imports and 10 per cent of its exports. This also makes Viet Nam China’s largest trade partner in ASEAN. Ranking among the Top 10 foreign investors in Viet Nam, China currently has more than 1,600 projects and total registered capital of $11 billion. Viet Nam is also a popular destination for Chinese tourists, with 2.8 million arrivals in 2016. Viet Nam-China relations are characterized by intensive border cooperation. Cross-border trade makes up nearly one-third of bilateral trade, while diversified cross-border activities, ranging from infrastructure projects to youth and cultural exchanges, have all contributed to strengthening the partnership.


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:

JAPAN: LONG-TERM ENGAGING INVESTOR

The Viet Nam-Japan extensive strategic partnership has flourished in recent years with an unprecedented level of political trust. For the first time since the establishment of diplomatic relations in 1973, the Japanese Emperor and Empress made a historic visit to Viet Nam in 2017. Thanks to excellent political relations, economic cooperation also sees significant development. Japan is Viet Nam’s largest ODA sponsor, providing $30.5 billion in the 19922016 period, accounting for 30 per cent of all ODA Viet Nam receiving from international donors. With $46.19 billion in accumulated capital, Japan is also the second-largest foreign investor in Viet Nam, while $30 billion in trade turnover in 2016 makes it the country’s fourth-largest trade partner. With the Joint Statement co-issued by the countries’ two Prime Ministers in June 2017, Viet Nam-Japan relations are expected to soar even higher. Apart from economic links, tourism and cultural exchanges are also highlights of bilateral relations. Each is a popular destination for tourists from the other, while the annual Vietnamese Festival in Japan and the Sakura Festival in Viet Nam always attract thousands of participants and visitors.

President Tran Dai Quang and Spouse receiving Japanese Emperor Akihito and Empress Michiko on 1 March 2017 in Ha Noi. Photo: Quang Phuc


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:

REPUBLIC OF KOREA: WIN-WIN GROWTH PARTNER

Viet Nam and the Republic of Korea are celebrating the 25th anniversary of diplomatic ties in 2017. In 2001, the two countries signed a Joint Statement on “The Viet Nam - Republic of Korea Comprehensive Partnership”. Ties were upgraded to strategic cooperative partnership status in 2009.

Thanks to the talent of various South Korean artists, Tam Thanh village in central Quang Nam province has become known as the “mural village”. Photo: Nguy Ha

Bilateral cooperation has expanded across all fields, from economics and diplomacy to security and defence. Economic cooperation has become a spotlight in the bilateral relationship. The Republic of Korea is the largest investor out of 119 countries and territories investing in Viet Nam, with total registered capital of $54.5 billion (as at June 2017). Viet Nam is the Republic of Korea’s biggest ODA recipient. Under the Framework Credit Agreement for 2016-2020, it will provide $1.5 billion worth of ODA to Viet Nam. The Bilateral Free Trade Agreement, which came into effect on December 20, 2015, has created new momentum to make bilateral trade reach the target of $100 billion by 2020. The country is also Viet Nam’s second-largest tourism market, with 1.5 million South Koreans visiting Viet Nam in 2016. Cultural and people-to-people exchanges are strongly promoted. Some 150,000 citizens of each country now live, work, or study in the other.


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:

THE UNITED STATES: ENHANCED COMPREHENSIVE PARTNERSHIP

Twenty years since the normalization of diplomatic relations, Viet Nam-US relations have seen extensive and substantive development with an increasing level of mutual trust, especially since the establishment of the Comprehensive Partnership in July 2013. During the official visit to the US by Prime Minister Nguyen Xuan Phuc in May 2017, a Joint Statement for Enhancing the Comprehensive Partnership was issued, laying out an important premise for future cooperation between the two countries. Since the Viet Nam-US Bilateral Trade Agreement came into force in 2001, trade between the two countries and US investment in Viet Nam have grown dramatically. Trade has grown from $451 million in 1995 to nearly $52 billion in 2016. In 2016, Viet Nam was the US’s fastest-growing export market, increasing 77 per cent between 2014 and 2016. Viet Nam’s exports to the US, meanwhile, totaled $42 billion in 2016. US investment in Viet Nam has grown significantly over the last eight years, to nearly $10 billion, putting it among the leading investors in the country. People-to-people ties have flourished. Nearly 21,000 Vietnamese now study in the US. The new Fulbright University Viet Nam has been founded. Over 21,000 Vietnamese are members of the Young Southeast Asia Leaders Initiative. The US and Viet Nam signed a Peace Corps framework agreement in 2016.

Prime Minister Nguyen Xuan Phuc meets with US President Donald Trump on 31 May 2017 at the White House. Photo: Thong Nhat / VNA


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A panel discussion at the launching ceremony of EuroCham Viet Nam’s White Book 2017. Photo: EuroCham

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EVFTA: NEW MOMENTUM FOR VIETNAM–EU COOPERATION

Since 1990, Viet Nam-EU relations have seen continuous expansion in almost every aspect. Aside from its close cooperation with the EU as a whole, Viet Nam also emphasizes bilateral relations with major EU members. One-third of Viet Nam’s 15 strategic partners come from the EU, which is Viet Nam’s second-largest export market (reaching $34 billion in 2016), third-largest trade partner, and fifth-largest foreign investor. One of the most remarkable achievements has been the establishment of a new framework to facilitate broader and deeper cooperation. The Framework Agreement on Partnership and Cooperation (PCA) was signed in 2012 and effective since 2016, signifying both sides’ commitment to broadening cooperation in trade, environment, energy, science and technology, good governance, human rights, tourism, culture, and migration. The EU-Viet Nam Free Trade Agreement (EVFTA), expected to be ratified in 2018, will be the key to unlock huge economic potential for both sides by eliminating nearly all customs duties, including taxes on fisheries, pharmaceuticals, and chemicals. As the European and Vietnamese economies complement each other, it is forecast to contribute an additional 8 per cent to Viet Nam’s GDP by 2025. The agreement will also help trigger a new wave of high quality investment in both directions.


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:

RUSSIA: STRATEGIC PARTNERSHIP BUILT ON TRADITIONAL FRIENDSHIP

Developed on the solid foundation of long-lasting trust and friendship, the comprehensive strategic relations between Viet Nam and Russia have flourished across various cooperation spheres and scopes. Thanks to the effective operation of intergovernmental committees on economics, science and technology, and defense cooperation, intensive cooperative ties have been seen in the impressive growth in bilateral trade, reaching $2.7 billion in 2016. Russia ranks 23rd among the 119 countries and territories investing in Viet Nam. It has 115 investment projects with total registered capital of $1 billion, focusing on energy, mining, processing and manufacturing, and banking. Vietnamese investment in Russia had increased from $100 million in 2008 to nearly $3 billion in 2016, with 18 projects relating to petroleum, trade, and agriculture. Energy is the traditional, strategic and effective field of cooperation, bringing in substantial revenues to both Viet Nam and Russia. The two countries have established the Vietsopetro, Rusvietpetro, VietGazprom, and GazpromViet joint ventures. Viet Nam recently became the first country to establish a free trade zone with the Eurasian Economic Union, comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Effective implementation of the FTA will contribute to efforts to increase trade between Viet Nam and Russia to $10 billion by 2020.

President Tran Dai Quang meets with Russian President Vladimir Putin on 29 June 2017 at the Kremlin. Photo: Nhan Sang / VNA


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Chairwoman of the National Assembly Nguyen Thi Kim Ngan meets with the Speaker of India’s Lower House Sumitra Mahajan on 9 December 2016. Photo: Trong Duc / VNA

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BROADENING THE VIET NAM – INDIA STRATEGIC PARTNERSHIP

Viet Nam-India relations have deepened significantly in recent years. The strategic partnership, established in 2007 and upgraded to a Comprehensive Strategic Partnership in 2016 on the occasion of Prime Minister Narendra Modi’s official visit to Viet Nam, is the key framework enabling bilateral cooperation to expand, especially in trade and investment. India is currently one of Viet Nam’s Top 10 trade partners, with bilateral trade reaching $5.4 billion in 2016 after growing on average 16 per cent annually during the 2008-2013 period. Indian companies in Viet Nam mostly invest in the steel, energy, and software sectors. The Long Phu 2 power plant, the flagship project of bilateral relations with investment of $1.8 billion, will be completed in 2022. In 2017, the two countries celebrated the 45th anniversary of diplomatic relations and the 10th anniversary of the Strategic Partnership with many significant activities. Both sides will work closely to reach the bilateral trade target of $15 billion by 2020.


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OTHER IMPORTANT PARTNERS

:

CANADA

Viet Nam and Canada agree to enhance their partnership in traditional fields, particularly trade and investment, development assistance, and education and training. Both are determined to expand cooperation to potential areas such as security and defence, science and technology, collaboration in multilateral frameworks, and dealing with global challenges.

:

AUSTRALIA

Australia is among Viet Nam’s Top 10 trade partners, reaching $5.2 billion in 2016. It is also one of Viet Nam’s largest ODA sponsors, with an average annual commitment of $65-70 million for infrastructure, human resources development, and agriculture and rural development. The two sides have increased bilateral cooperation in security and defence, education, and agriculture. More than 30,000 Vietnamese students are now studying in Australia.

:

NEW ZEALAND

Two-way trade between Viet Nam and New Zealand was $800 million in 2016. New Zealand is a major development sponsor and partner, especially in agriculture and the environment, with flagship projects such as capacity building for the fruit industry and technical support for dike and embankment maintenance. An increasing number of Vietnamese students are now studying in New Zealand.

:

LATIN AMERICA

To better tap into the potential of emerging markets in Latin America, Latin American countries have been given high priority in Viet Nam’s foreign policy. Viet Nam’s relations with Latin America have been constantly strengthened in all fields, with trade volume enjoying 20 per cent annual growth and reaching $11.6 billion in 2016; eight-times higher than in 2008. Viet Nam and Latin American countries share a mutual determination to enhance and elevate bilateral relations to a higher, more substantial level.

:

MIDDLE EAST AND AFRICA

Viet Nam currently maintains diplomatic relations with 68 of the 70 countries in the Middle East and Africa. Both sides actively and positively support each other at regional and international forums and cooperative mechanisms. Exchanges of visits are also flourishing, particularly high-level visits. In 2017, the President of Israel, the Prime Minister of Mozambique, the Prime Minister of Turkey, and the President of Egypt visited Viet Nam. Economic cooperation is one of the highlights of the relationship between Viet Nam and the Middle East-Africa region. Two-way trade more than tripled during the 2010-2016 period, from $5 billion to $16.5 billion. In particular, bilateral trade between Viet Nam and several regional partners, including the UAE, Turkey, Israel, Saudi Arabia, and South Africa, has consistently reached over $1 billion in recent years. While the Middle East is a potential market for attracting FDI and ODA into Viet Nam, Africa is a crucial investment destination for Vietnamese enterprises such as Viettel, which has invested over $1.5 billion into telecommunication projects in Mozambique, Tanzania, Cameroon, and Burundi.


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AN IMPORTANT HUB FOR FTA LINKS IN ASIA-PACIFIC Entering the 21st century and responding to the unfolding development of the global economy and growing economic integration in the Asia-Pacific, Viet Nam identifies joining FTAs, especially next-generation FTAs, as one of the major focuses of its extensive and comprehensive international integration. In March 2010, it began negotiating the Trans-Pacific Partnership (TPP), an agreement requiring the broadest and deepest commitments and with the highest standards Viet Nam had ever participated in. The conclusion of negotiations on the TPP and the FTA with the EU took place in 2015, coinciding with other important developments such as the establishment of the ASEAN Economic Community and the completion of FTA negotiations with the Republic of Korea and the Eurasian Economic Union. Once the 16 concluded FTAs and other FTAs under negotiation are implemented, Viet Nam will become an important hub in this extensive FTA network, connecting it with 58 economies around the globe, including major economic centers such as the EU and Japan, which account for more than 70 per cent of global GDP, 76 per cent of global trade, and 60 per cent of the world’s population. The implementation of FTAs, especially next-generation FTAs, provides major opportunities for Viet Nam to diversify its markets, attract investment, technology, capital, and management skills, improve its legal framework and market economy institutions, enhance competitiveness, deepen participation in regional and global supply chains and production networks, promote economic restructuring, and transform its growth model towards achieving sustainable economic development based on science and technology. Viet Nam will continue to strengthen cooperation with its partners, especially major partners with shared interests in promoting high quality and comprehensive economic and trade links. The Vietnamese Government has done its utmost and given the highest priority to effectively participating in and implementing its international commitments in order to create new momentum for the economy to maintain rapid but sustainable development. Viet Nam stands ready to make active contributions to regional economic integration and the formation of a cohesive, resilient, and prosperous Asia-Pacific.


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Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh and participants of the Symposium on priorities for APEC 2017 held on 8 December 2016 in Ha Noi. Photo: chinhphu.vn

A panel discussion at the conference to celebrate the 50th Anniversary of ASEAN, organized by the Ministry of Foreign Affairs. Photo: Tuan Anh/ TG&VN


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AN ACTIVE PLAYER IN GLOBAL AND REGIONAL ARENAS VIET NAM-UNITED NATIONS: A 40-YEAR JOURNEY On 20 September 1977, Viet Nam officially became a member of the United Nations (UN). Over the 40 years since, it has made deeper engagements in and substantive contributions to UN activities, becoming a dynamic and responsible member and an important partner of the UN and its member states. Cooperation between Viet Nam and the UN has become a model of development cooperation among UN member countries and the role of the UN in promoting international cooperation and in addressing economic, social, and cultural issues. The UN has always worked in close partnership with Viet Nam in the formulation of national plans and development programs, during the difficult period following the war and this present period of extensive integration. The UN has supported Viet Nam in various fields to carry out reform, modernization, and industrialization. Funding, knowledge, and experience from the UN are considered an important external source helping Viet Nam achieve its socioeconomic development goals. Viet Nam has become a success story, as it completed the Millennium Development Goals (MDGs) ahead of schedule. For its part, Viet Nam has made important contributions to the development and implementation of many global agreements under the UN framework, especially the Agenda 2030 on Sustainable Development, the Paris Agreement on Climate Change, and the UN Initiative on Resilience to El Nino and La Nina. Viet Nam is among the pioneering countries in implementing the “Delivering as One” initiative. It has increased its participation in UN activities and become a member of many important UN bodies. In July 2017, Viet Nam and the UN signed the One Strategic Plan for 2017-2021, laying a firm foundation for close cooperation between the two in the years to come.

Prime Minister Nguyen Xuan Phuc meets with United Nations Secretary-General António Guterres on 30 May 2017 at UN Headquarters in New York. Photo: Thong Nhat / VNA


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VIET NAM’S HIGHLIGHTS IN THE UNITED NATIONS th

1977

Became the 149 member of the United Nations

1997

Vice Chairman of the General Assembly

1998-2000

Member of the Economic and Social Council

2000-2002

Member of the Development Program’s Executive Board

2008-2009

Non-permanent Member of the Security Council

2014

First participated in UN peacekeeping operations.

2014-2016

Member of the Human Rights Council

2016-2018

Member of the Economic and Social Council

2017-2021

First-time Member of the International Law Commission

A COMMITTED WTO MEMBER SINCE ACCESSION Since joining the WTO on 11 January 2007, Viet Nam has been considered one of its most active members as it has fully delivered on its commitments and made active contributions to the work of the organization. Viet Nam has also actively participated as a member of multilateral agreements under the WTO, such as the Trade Facilitation Agreement (TFA) and the Information Technology Agreement (ITA), and as an observer of the Government Procurement Agreement (GPA).

:

VIET NAM’S TEN YEARS OF WTO MEMBERSHIP

Joining the WTO has had a strong and positive impact on Viet Nam’s socioeconomic development, creating a fundamental foundation and impetus to accelerate reforms and economic restructuring. Over the last ten years, Viet Nam has made significant progress in economic development, with annual economic growth averaging 6.29 per cent and GDP per capita increasing from $730 in 2006 to $2,445 in 2016. WTO accession is also a precondition for Viet Nam to deepen its participation in the global economy, expanding economic and trade partnerships by concluding 16 FTAs with nearly 60 partners, including many major economies in the G7 and G20.


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VIET NAM IN APEC: 20 YEARS OF FORGING A DYNAMIC FORUM TOGETHER Becoming a member of APEC in 1998 was a strategic decision undertaken by Viet Nam and the foundation for a broad-based and open foreign policy and international economic integration. In the last 20 years, Viet Nam has always actively contributed to APEC cooperation. In 2006, it became the Chair of APEC for the first time, successfully organizing the APEC Economic Leaders’ Week and more than 100 related conferences that bore crucial results for encouraging regional integration and reforming APEC’s activities. Viet Nam also assumed the Chairmanship of the APEC Secretariat in 2005-2006. With a stronger position and increased capabilities after 30 years of Doi Moi and a policy that stresses multilateral diplomacy, Viet Nam hosts APEC activities for the second time in 2017. This is a focus of its foreign policy during an era of extensive international integration and represents an important contribution to APEC, with the goal of fostering new motivation for sustainable development towards building a vision of regional integration post-2020. It will create a firm foundation for jointly building an Asia-Pacific partnership for sustainable and broad-based development in the 21st century.

: Theme: Creating New Dynamism, Fostering A Shared Future

APEC VIET NAM 2017

Creating “new dynamism” for economic growth and integration has become an urgent demand for the Asia-Pacific region amid the sluggish recovery of regional and global trade and economic growth in the aftermath of the global financial crisis. Boosting trade and investment and promoting economic integration, structural reforms and SME innovation are critical factors that will enable APEC economies to better harness all opportunities from the fourth industrial revolution and the third wave of globalization. The theme also accentuates the common and long-term goal of APEC to build a peaceful, stable, integrated, and prosperous community in the Asia-Pacific. Priorities To highlight the theme of APEC 2017 and ensure the continuity of priorities from APEC Peru 2016, Viet Nam has selected four priorities: 1 Promoting Sustainable, Innovative, and Inclusive Growth. 2 Deepening Regional Economic Integration. 3 Strengthening MSMEs’ Competitiveness and Innovation in the Digital Age. 4 Enhancing Food Security and Sustainable Agriculture in Response to Climate Change.


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APEC VIET NAM 2017

APEC: Founded in November 1989 The foremost regional economic cooperation mechanism, aimed at attaining prosperity for the people of Asia- Pacific through promoting growth and integration.

39 %

57 %

49 %

global population

global GDP

global trade

CREATING NEW DYNAMISM, FOSTERING A SHARED FUTURE

To highlight the theme of APEC 2017 and ensure the continuity of priorities from APEC Peru 2016, Viet Nam has selected four priorities:

Promoting Sustainable, Innovative, and Inclusive Growth

1

Strengthening MSMEs’ Competitiveness and Innovation in the Digital Age

3

2

Deepening Regional Economic Integration

4

Enhancing Food Security and Sustainable Agriculture in Response to Climate Change


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FOUNDING MEMBER OF ASEM Viet Nam’s engagement as a founding member of ASEM in 1996 marked a major step in executing the country’s foreign policies of openness, multilateralization, diversification of relations, and international economic integration. Among other important international forums to which Viet Nam is a member, ASEM is of great importance to its reform, development, and far-reaching international integration. Viet Nam’s most notable contribution was hosting the fifth ASEM Summit in 2004 and ministers’ meetings in the fields of economics, information technology, external affairs, education, and labor from 2001 to 2012. To date, it has proposed 23 initiatives and cosponsored 25 initiatives in various fields, such as food security, natural disaster prevention and management, climate change adaptation, efficient and sustainable water management, vocational training and skills development, education and human resources development, and women’s empowerment. Since 2011, it has worked together with Mekong River countries to initiate the Mekong-Danube cooperation, the first mechanism in ASEM in water resources management to help lift Mekong sub-regional cooperation to a higher level. ASEM is currently home to 19 of Viet Nam’s 25 strategic and comprehensive partners, making up 70 per cent of its FDI and international trade and 80 per cent of international tourists visiting Viet Nam. Fourteen of the 16 FTAs signed or under negotiation by Viet Nam are with ASEM partners. This enables Viet Nam to become a crucial link in the large economic integration network consisting of 60 partners, 47 of which are ASEM members.

30 European

ASEM

ASEM

53 members

EU Established in 1996 with 26 members

21

Asian countries

ASEAN Secretariat

63 % world’s population

57 % global GDP

68% global trade


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VIET NAM AND THE WEF: PARTNERSHIP FOR THE FOURTH INDUSTRIAL REVOLUTION Relations between Viet Nam and the World Economic Forum (WEF) were established in 1989 and have developed greatly since. The Prime Minister and leaders of the Vietnamese Government have participated in many meetings of global and regional forums, such as the World Economic Forum Annual Meetings and the World Economic Forums on East Asia (then the World Economic Forum on ASEAN). Viet Nam was host of the World Economic Forum on East Asia in 2010 in Ho Chi Minh City, and the World Economic Forum on ASEAN will take place in Viet Nam in 2018. The two sides have engaged in many ongoing initiatives in areas such as food security, trade, infrastructure, and the future of production. At the 47th World Economic Forum Annual Meeting in January 2017 in Davos, Switzerland, Viet Nam and the WEF signed a partnership agreement on “Future-proofing the Vietnamese Economy”. This is an endeavor to support Viet Nam to fully prepare for the transformations ignited by the fourth industrial revolution. “The fourth industrial revolution will bring unprecedented changes to every country in the world, and Viet Nam is no exception,” said Mr. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “Viet Nam has recorded tremendous success in reaching middle-income status in just a few decades and we look forward to helping the country navigate the new global context so that it is able to raise growth and living standards even further.”

Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh spoke at the closing session of The World Economic Forum on Mekong Region held in Ha Noi on 25 October 2016. Photo: chinhphu.vn


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VIET NAM IN MEKONG SUB-REGION COOPERATION The Mekong is the longest river in Southeast Asia and the 12th longest in the world. It flows through six countries, with China and Myanmar upstream and Thailand, Laos, Cambodia, and Viet Nam downstream. The Mekong plays a vital role in the development of the Mekong Sub-region and is the source of livelihood for more than 60 million people living along its banks. To promote cooperation for the common goals of peace, prosperity, and sustainable development, the Mekong countries have established various cooperative frameworks that cover many areas, including infrastructure development, trade and transport facilitation, health and education, tourism and culture, and environmental protection and resources management. As a responsible and active member of Mekong cooperation, Viet Nam has proposed many important initiatives with the aim of increasing the efficiency and effectiveness of cooperation, strengthening coordination among different mechanisms and frameworks and formulating project pipelines. Viet Nam’s contributions have been appreciated by Mekong countries and international and regional organizations and development partners. In 2016, it successfully hosted the 7th Summit of the Ayeyawady - Chao Phraya - Mekong Economic Cooperation Strategy (ACMECS) and the 8th Summit of Cambodia - Laos - Myanmar - Viet Nam Cooperation (CLMV) in Ha Noi. The outcomes of the Summits gave new impetus to and opened up a new chapter of cooperation within the sub-region. In March 2018, Viet Nam will host the 6th Summit of the Greater Mekong Sub-region (GMS) Economic Cooperation Program, which highlights 25 years of the GMS’s operations and achievements and provides guidance for future endeavors.


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On the Mekong Photo: Tran Bao Hoa

International Integration Active Player in Global and Regional Arenas


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A DESTINATION FOR INVESTORS COUNTRY OVERVIEW Fourteenth-largest country in terms of population Large workforce of around 60 per cent of total population Fast-growing economy Stable political environment Reform-oriented government Attractive market with: A relatively low-cost base Part of the ASEAN Economic Community (AEC) Emerging domestic market

VIET NAM: WE MEAN BUSINESS Viet Nam’s real GDP growth in 2016 was 6.2 per cent. Over the next few quarters, it’s believed that Viet Nam’s openness to trade, investment and tourism and its increasing demographic dividend will continue to bode well for the manufacturing sector and the broader economy. The country can expect real GDP growth to increase 6.4 per cent in 2017 and 2018, according to the latest report from Business Monitor International (BMI) Research. The government has set a GDP growth target of 6.7 per cent for 2017.

GDP FORECASTS, 2015-2025 Unit: %

8 7

7.8

6 5

6

4 3 2

6.2

5.8

6.8

6.8

4.5 3.8 2.7

1 0 Indonesia Thailand Philippines Malaysia Singapore Viet Nam Myanmar Cambodia

Laos

Source: Business Monitor International


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REAL GDP GROWTH AND INFLATION RATE Unit: %

8 7 6

6.8

6.6

6.7

6.6 6

5 5.2

6.8

6.3

6.2

6.2

5.4

4

5

4.74

4.7

4.8

4.5

4

3 2 1 0.6

0 2012

2013

Real GDP growth rate

:

2014

2015

2016

Inflation rate

2017f

2018f

2019f

2020f

Note: GDP growth (% real change per annum) Inflation rate (% change per annum average) Source: Economic Intelligence Unit, GSO

REMARKABLE POLITICAL AND ECONOMIC STABILITY

Throughout 30 years of Doi Moi, the country’s political system has demonstrated a remarkable capacity to master strategic changes and navigate its economy through global and regional challenges. In March 2017, two major credit rating agencies, Moody’s and Standard & Poor’s (S&P), affirmed Viet Nam’s sovereign rating. One month later, Moody’s also revised its outlook on Viet Nam's ratings to positive from stable. The positive outlook is based on expectations that strong FDI inflows, fostered by ongoing economic reform, will continue to diversify the economy and enhance economic performance compared to rating peers, and that macroeconomic and external stability as well as modest external debt will be maintained. Knowing that Viet Nam’s flexibility and stamina will be tested further in the years to come, the government has radically shifted from a high growth strategy to one that will bring macroeconomic stability and resilience while also enabling sustainable growth.


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:

STRONG AND PROMISING EXPORT INDUSTRIES

Viet Nam’s textiles industry is one of the largest contributors to exports, with $31 billion in 2016. Global giants have set up plants in the country, transforming it into a manufacturing hub for electronics goods, including smartphones. Viet Nam is now set to rival major regional players for supremacy in the textiles and electronics manufacturing segments, with the government increasingly incentivizing key segments, including automotive, shipbuilding, food processing, steel, petrochemicals, and software.

EXPORTS, IMPORTS IN VIET NAM Unit: $ billion

200

177

150

162 150 132

100 107

115

166

174

148

131

114

97 50

0 2011 Exports

2012 Imports

2013

2014

2015

2016 Source: General Statistics Office


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TOP 10 MAIN EXPORTS, 2016 Unit:$billion

Telephones, mobile phones and parts thereof

20.08

Textiles and garments

20.77 11.66

Electronics, computers and spare parts, components thereof

10.22

Footwear 7.87

Fishery products Machinery, equipment, tools and instruments

7.26

Crude oil

7.18 6.1

Wood and wooden products

5.48

Other means of transportation, parts and accessories thereof Coffee

3.55 Source: Customs.gov.vn

EXPORT MARKETS, 2016

20.5%

19.4%

1.7% 2.2% 2.3%

Hong Kong

EU

United Arab Emirates

China 18.4%

2.6% 3.4%

US

Japan RoK

7.1% 8.5%

13.9%

Thailand Malaysia India Other

Source: Customs.gov.vn


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:

DOMESTIC MARKET

Major foreign retail brands have been preparing to tap into a rapidly-growing consumer base that has been driven by rising disposable incomes, rapid urbanization, and higher living standards. As shopping preferences shift, modern supermarkets and shopping malls are booming, especially in urban areas. Retailers are drawn to the country’s relatively young population of consumers. The 1564 age bracket accounts for 70 per cent of an overall population of around 90 million and is a key demographic in spurring further sales.

RETAIL SALES, 2008-2017f Unit: $ billion

120 100

109 96.9

80 85.4 75.6

60

66.5 53.9

40 42.3

43

2008

2009

60.5

46

20 0 2010

2011

2012

2013

2014f

2015f

2016f

2017f

Source: Economist Intelligence Unit


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:

HIGH LEVEL OF OPENNESS

International economic integration has always been a priority for Viet Nam since Doi Moi. The country joined the WTO in 2007, putting it on an equal footing in the global trading system. It also played an active role in the formation of the ASEAN Economic Community, a common market with 622 million people and $2.55 trillion in GDP, in 2015. Viet Nam also concluded three big trade deals in 2015 - an FTA with the EU, an FTA with the Republic of Korea, and an FTA with the Eurasian Economic Union. In total, Viet Nam is party to 12 FTAs and is negotiating four more, many of which are new-generation FTAs. Once effective, these will help turn Viet Nam into an important regional trade hub.

FTAs concluded

FTAs Negotiating

1996

AFTA (ASEAN FTA)

Viet Nam-Israel

2002

4/11/2002 * ASEAN- China

Viet Nam-EFTA

2003

8/10/2003 * ASEAN- India * ASEAN- Japan

2005

13/12/2005 * ASEAN- Republic of Korea

2008

25/12/2008 * Viet Nam-Japan

2009

27/2/2009 * ASEAN-Australia/New Zealand

2011

11/2011 * Viet Nam-Chile (effective 01/01/2014)

2015

5/5/2015 * Viet Nam-Republic of Korea (signed) effective 20/12/2015 29/5/2015 * Viet Nam-EAEU (signed) approved 20/8/2015

2016

04/02/2016 : * TPP (enforcement: estimated 2018 )

2017

7/2017 * Viet Nam-Hong Kong 2017 * Viet Nam-EU (expected to sign in 2017 ) agreement completed 02/12/2015

RCEP

ASEAN-EU

FTA considered ASEAN-Canada


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COMMITTED TO REFORM

Viet Nam is intensifying its economic restructuring with a growth model based on competitiveness and comparative advantage. Efforts are being focused on better participation in value chains and the global production network, as well as on deepening international integration and capacity building to engage in higher value-added stages. The government is working hard to promote democracy, social progress, and justice, ensure social welfare, and raise living standards. Special emphasis is placed on the design of a more proactive response to climate change, the effective management of the country’s natural resources, and the protection of the environment. Viet Nam is also committed to reform in order to build an action-oriented government that enables and facilitates development. The government is striving to create the most favorable environment possible for businesses and making business satisfaction a measure of the efďŹ ciency, effectiveness, and quality of government performance.

TOP 10 FDI, BY YEAR Unit: $ billion

70

64 Registered capital ($billion)

60

Realized capital ($billion) 50

40

30

23.1

21.34

20

10

2.5 2.2 2.9 2.8 3.1 2.7 4.5 2.7

18.6 11.5

12 8.03

6.9 3.3

21.6

10

11.5

14.7

13 11

10.5

20.2

11.5

12.4

22.7 14.5

24.3 15.8

4.1

0 2012

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

Source: General Statistics Office, 2016


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TOP 10 FDI, BY SECTOR

Unit: $ billion

200

12000

11,622 $172.5

Projects

Manufacturing & Processing

10000

Total Capital ($ billion)

Real Estate

150 8000

Power, Water, & Gas

6000

Construction

4000

Warehousing &Transportation

Hotels &Tourism 100

Information &Communications

570 $52 50

110 $12.7

1,370 $10.7

519 $11.2

1,465 $4.7

0

595 $4.2

515 $3.5

Agriculture, Forestry & Fisheries

102 $3.49

139 $3.1

2000

Mining & Mineral Exploitation Entertainment & Arts

0

Source: General Statistics Office, 2016

TOP 10 FDI, BY COUNTRY/TERRITORY

China

8

Projects 1,530 Total Capital $10.1 billion

9

United States Projects 816 Total Capital $10 billion

Hong Kong

Projects 681 Total Capital $21.3 billion

Projects 5,656 Total Capital $52.58 billion

2

6

Japan Projects 3,242 Total Capital $42 billion

10

Projects 443 Total Capital$7.76 billion

5

Republic of Korea

Projects 1,152 Total Capital $16.6 billion

Thailand

British Virgin Islands

1

4

Chinese Taipei Projects 2,494 Total Capital $31.28 billion

Singapore

3

Projects 1,772 Total Capital $38 billion

7

Malaysia Projects 545 Total Capital $12 billion

Source: General Statistics Office, 2016


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FDI SECTORS WITH SPECIAL TREATMENT Special treatment includes tax exemptions and/or reductions during the investment period, import duty exemptions on fixed assets, and reductions or exemptions on land rentals. Projects with high technology and potential for technology transfer New materials, renewable energy Automobiles, agricultural machinery IT and software products, digital content Agriculture, forestry, and fisheries processing Waste management and treatment Urban infrastructure and transportation

KEY MEASURES TO ATTRACT FDI AND IMPROVE FDI QUALITY New Law on Investment (2014) and follow-up legislation, which allows investors to participate in all sectors except six related to national security and an additional 267 provisional sectors. Tax reform and the establishment of an electronic customs clearance system. Introduction of the Provincial Competitiveness Index (PCI), which ranks provinces by transparency and business facilitation. Simplification of administrative procedures, including the enterprise registration process.


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FDI’S CONTRIBUTION TO VIET NAM’S ECONOMY State budget revenue contributed by the FDI sector has continually increased, from $1.8 billion in the 19942000 period to $14.2 billion in the 2001-2010 period and $23.7 billion in the 2011-2015 period. FDI has become a driving force, creating a shift towards a modern economic structure. FDI has increased export revenue and broadened Viet Nam’s external economic relations and international economic integration. From 1991 to 1995, exports from the FDI sector were estimated at $1.12 billion, then $10.6 billion in the 1996-2000 period, for an increase of eight-fold and accounting for 23 per cent of total export revenue in the country. Exports from the FDI sector in the 2011-2015 period also increased substantially. In 2015, export revenue from the FDI sector was estimated at $89 billion, accounting for 67.4 per cent of the country’s total exports. Viet Nam’s trade balance improved greatly as a result and FDI has contributed substantially to the trade surplus recorded in recent years. The number of Vietnamese people working in the FDI sector has increased significantly and the quality of human resources has improved. The FDI sector is at the forefront in regards to technology transfer and onthe-job training for Vietnamese workers, with many Vietnamese managers now replacing foreign managers.

CONTACTS FOR INVESTORS FOREIGN INVESTMENT AGENCY (FIA), MINISTRY OF PLANNING & INVESTMENT 6B Hoang Dieu Street, Hanoi, Ba Dinh District Tel: (84) 080248461; Fax (84) 247343769 www.fia.mpi.gov.vn INVESTMENT PROMOTION IN CENTRAL-NORTH VIETNAM(IPCN) 65 Van Mieu, Ba Dinh District, Hanoi Tel: (84) 2437475998;Fax: (84) 2438437927 www.ipcn.vn INVESTMENT PROMOTION IN CENTRAL VIET NAM (IPC) 5th Floor, Office Building No. 3 of Ministry of Planning and Investment in Da Nang 103 Le Sat, Hai Chau District, Da Nang Tel: (84) 25113707669; Fax: (84) 25113797679 www.centralinvest.gov.vn SOUTHERN FOREIGN INVESTMENT CENTER 178 Nguyen Dinh Chieu, District 3, HCMC Tel: (84)2839306671; Fax: (84) 2839305413 www.ipcs.mpi.gov.vn


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3 HUBS OF OPPORTUNITIES Information and Communications Technology 102 Fourth Industrial Revolution

106

Startups

108

Capital Markets

110

Banking

115

Oil and Gas

119

Electricity

123

Renewable Energy

127

Transportation

131

Construction and Real Estate

134

Tourism

139

Human Resources and Education

143

Agriculture

147

Ho Chi Minh City. Photo: Tran Bao Hoa


Viet Nam at a Glance Culture

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Viet Nam at a Glance Culture


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Ho Chi Minh City. Photo: Tran Bao Hoa

Viet Nam at a Glance Culture


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INFORMATION AND COMMUNICATIONS TECHNOLOGY

Photo: Quang Phuc

Developing information and communications technology (ICT) and utilizing it to facilitate comprehensive development has been a strategic priority of Viet Nam in recent years. The new wave of startups, the emergence of technology giants, and the extensive adoption of ICT in public services are clear evidence of the strategy’s initial success.

> HIGH RANKINGS The government’s targets are developing high-quality ICT human resources and transforming ICT, especially software engineering, digital content and services, into a spearhead industry that will make a greater contribution to both GDP and exports. As a result, Viet Nam has reached a relatively high position in global ICT rankings in recent times. It jumped five places to sixth in the 2017 Global Services Location Index (GSLI) compiled and released by management consultants A.T. Kearney, thanks to the growing popularity of business process outsourcing (BPO). The BPO industry has grown by 20-25 per cent annually over the last decade. An abundance of young people fluent in English and low labor costs have made Viet Nam an increasingly attractive outsourcing destination in Asia.


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Viet Nam’s Networked Readiness Index (NRI), calculated by the World Economic Forum’s Global ICT Report, also increased six places in 2016, to 79th out of 139 countries. The country was particularly praised for its ICT service accessibility, which ranked third among the 139, and its broadband subscription cost, which was the lowest of all.

> MARKET OF GREAT POTENTIAL Viet Nam’s consumer ICT market has seen vibrant development recently. As at January 2017, the country had 50.5 million internet users, accounting for 53 per cent of the population, 46 million social networks users, 41 million active mobile subscribers, and 36.5 million smartphone users. As at June 2017, the country had 54 million 3G subscribers and four major mobile carriers (Vinaphone, MobiFone, Viettel, and Gmobile) now have permission to provide 4G LTE services, making it one of the most competitive sectors in the industry. Given the government’s plans to expand 3G and 4G coverage to 95 per cent of residential homes by 2020, more capital will be needed for the installation of tens of thousands of new base stations around the country. As the average mobile bandwidth has increased, the market has seen a remarkable shift from basic voice and text services to more digital content and over-the-top (OTT) services, such as mobile games, video-on-demand, and mobile payments. The e-commerce market is also flourishing. The rate of users searching for information on products before purchase stands at 40 per cent of the e-commerce market, users entering online retail sites is 43 per cent, online transactions is 39 per cent, and online payments via laptop and mobile phones is 29 per cent. Market scale, however, remains relatively modest compared to Viet Nam’s GDP of $220 billion, with a total value of $1.8 billion. This represents an ideal foundation for ICT startups to blossom in the years to come.


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NUMBER OF REGISTERED ENTERPRISES IN IT 2015

2016

2016 (est)

Unit: $ billion

Hardware electronic enterprises

Digital enterprises

IT services (excluding sales, distribution) enterprises Source: MIC

Export turnover of digital content

60.789

52.954

57.737

2.491

2.192

0 Software enterprises

0.561

10

0.503

20

49.860

40 30

2,700

2,339

3,404

2,980

4,000

50

34.365 38.738

10,196 6,143

6,000

7,433

8,000

10,965

60

10,000

0

2015

70

12,000

2,000

IT IMPORTS & EXPORTS

Export turnover of software

Import value Export Total IT export of hardware, turnover turnover computers, of hardware, electronics computers, electronics Source: MIC

> POLICIES IN PLACE Politburo Resolution No. 36-NQ/TW dated 1 July 2014, Resolutions No. 26/NQ-CP dated 15 April 2015 and No. 36a/NQ-CP dated 14 October 2015 from the government are the master plans to “turn Viet Nam into a strong country in ICT”. Prime Ministerial Decision No.149/QD-TTg, approving the program for the development of broadband telecommunications infrastructure to 2020 affirms telecommunications as important infrastructure for socioeconomic development.

> FACTS & FIGURES Viet Nam has 74 enterprises providing fixed landline telecommunications services and five providing landline mobile telecommunication services. According to Viet Nam’s ICT White Book Report 2017, total telecommunications services revenue was $6.16 billion in 2016, an increase of 1.6 per cent over 2015. Mobile subscribers totaled 128 million, including 36.2 million mobile broadband subscribers. Total fixed mobile broadband subscribers were 9 million. As at June 2017, 2G and 3G subscribers totaled 68.8 million and 54.2 million, respectively. Total fixed phone and mobile phones subscribers were 130 million, including 7.3 million fixed phone subscribers. Internet broadband subscribers totaled 10.11 million.


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> IT INFRASTRUCTURE Percentage of households with PCs: 21.3% Number of PCs per 100 households: 23 Total number of online public services in 2016: 109,644. Of which public service levels 1 and 2 reached 97,394 (accounting for 88.8 per cent of total public services), public services level 3 was 10,872 (nearly 10 per cent), and public services level 4 was 1,378. Enterprise IT applications: Percentage of enterprises with website: 45% Percentage of enterprises making e-tax declarations: 99.64% Percentage of enterprises carrying out e-customs procedures: 95.31% IT is becoming a fast-growing, sustainable, and high-revenue sector with signiďŹ cant export value and makes a substantial contribution to Viet Nam’s GDP. The total number of IT enterprises nationwide in 2016 was over 24,500, up 13.13 per cent compared to 2015. Total revenue in the information technology sector: In 2016, $67.693 billion, an increase of 11.49 per cent compared to 2015. The hardware segment earned $58.838 billion, software $3.038 billion, digital $739 million, and IT services (excluding sales, distribution) $5.078 billion. First half of 2017: Total IT revenue was estimated at $31.34 billion, an increase of about 15 per cent year-on-year, of which the hardware sector accounted for over 91 per cent. Electronics, computers, and components reached $7.59 billion, up 12.36 per cent year-on-year. IT export turnover: 2016 turnover is estimated at $60.789 billion, of which electronics hardware was $57.737 billion and software $2.491 billion. Total State budget contributions are estimated at $1.5 billion, contributing 3.4 per cent of total State budget revenue.

NUMBER OF INTERNET USERS 1

Number of internet users

2

Number of internet users per 100 people

2015

2016

49,288,223

50,231,474

54

54.19

3

Number of households with internet connection

-

6,841,981

4

Percentage of households with internet connection

-

27.3

5

Number of fixed broadband subscriptions

7,657,619

9,098,288

6

Fixed broadband subscriptions per 100 people

8.4

9.8

1,677,775

3,816,027

35,694

79,659

7

Total internet bandwidth

8

Total internet bandwidth per internet user (Bit/s)


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Hubs of Opportunities Fourth Industrial Revolution

106

FOURTH INDUSTRIAL REVOLUTION

Photo: Quang Phuc

> FOURTH INDUSTRIAL REVOLUTION Viet Nam is building a comprehensive strategy to make the most of the opportunities from the fourth industrial revolution (4IR). The government has insisted that everything possible be done to move forward and not be left behind. According to the Viet Nam ICT Summit 2017, many Vietnamese businesses have also prepared themselves for 4IR, with 35.2 per cent of 275 respondent enterprises, most of which are in the banking and IT sectors, believing they are ready.

> OPPORTUNITIES TO SEIZE Viet Nam is in the midst of a process of industrialization and the revolution will be a unique opportunity for the country to upgrade technology, enhance production capacity and competitiveness, and attract investment in digital sectors. According to experts, the country is extremely well placed to capitalize from 4IR, as it possesses key prerequisites that underpin success from it, including a high rate of internet users (54 per cent of the population), high smartphone penetration (55 per cent), a vibrant IT industry (growing at 16 per cent annually), and a place among the Top 5 fastest-growing countries in terms of IT.


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Viet Nam is performing exceptionally well among the world’s most innovative countries, according to the Global Innovation Index 2017. Its innovation capacity has improved remarkably, rising 12 places to rank 47th globally. This is the highest level Viet Nam has ever reached; a positive sign for the country’s ability to meet its modernization goals.

> CHALLENGES TO OVERCOME The first challenge Viet Nam must address is its level of development. Many experts have noted that existing production levels are only at the level of the second or third revolution. A complete change in living standards and management is also required to take full advantage of the internet and artificial intelligence. Existing modes of production and living standards still create barriers to accessing and applying new technological trends. The new trend also poses numerous challenges for policy makers if they want to create a favorable business environment that ensures harmony with traditional business models, control of information transparency, managing e-transactions, quality management products and services, and social issues such as employment.

> POLICIES FOR DEVELOPMENT To better prepare for 4IR, the Prime Minister issued Directive No. 16/CT-TTg on 5 May 2017 as a guideline for the public service and the business sector to take advantage of the opportunities offered by the revolution. The Directive also proposes further improvements to the business environment, a review of strategies and action programs, solid adjustments to policies, and reform in vocational training. It also requires relevant ministries and agencies to develop tax and financial mechanisms and policies to encourage enterprises to invest in technological innovation and research and development.

VIET NAM’S ADVANTAGES IN INDUSTRY 4.0

Human resources: 77%

Government determination: 70.4%

IN DUS TRY

Technological infrastructure: 59.1%

Source: Viet Nam Software and IT Services Association (VINASA), September 2017


VIET NAM A COUNTRY BOOK

Hubs of Opportunities Startups

108

STARTUPS

Photos: Viet Tuan

> EMERGING TREND Startups are relatively new in Viet Nam but have become particularly vibrant in recent times, setting a trend within the community of young entrepreneurs and technology professionals. The first generation of startups, established in the early 2000s, included FPT, VNG, and VC Corp., while the second generation, created around 2010, has found success. The third generation has become prominent over the last two or three years and been very active in education technology, agriculture, financial technology, e-commerce, entertainment, and media. Appreciating the potential of such models, the government chose 2016 as “Entrepreneurship Year” and approved a project on establishing a startup ecosystem by 2025, under which at least 2,000 startups will receive government support. The year also saw some prominent startups awarded substantial investments, with five of the most successful venture investments totaling $40 million.

> FAVORABLE ECOSYSTEM There are currently some 30 venture capital funds operating in Viet Nam, many of which were established in 2016 and 2017, some by domestic and others by foreign investors, including several angel investment networks.


Hubs of Opportunities Startups

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According to Ministry of Science and Technology figures, 24 business incubators (BIs) and ten business accelerators (BAs) have been set up in Viet Nam. Most BIs are support mechanisms that take ideas and technologies and connect them to research institutes and universities. A number of networks have also been established to support startups, such as the SMEs Mentoring Network. Many activities have also been organized to connect domestic and international startup ecosystems and promote an entrepreneurial culture in the business community. The country’s startup ecosystem, however, still has certain shortcomings, including a lack of information on capital sources, a fragmented support network, inexperience in pitching projects to venture capital funds, and invariable quality in the projects themselves.

> ENABLING POLICIES To facilitate the development of startups, the government has issued policies for the national startup ecosystem to 2025, which focus on strengthening the legal framework, establishing a national startup portal, and setting up a $44 million fund to assist 800 new projects and 200 existing startups. By 2025, the government expects to have 2,000 projects and 600 existing startups, 100 of which will receive investment from venture capital funds. Vietnam’s startup landscape has become more attractive to foreign investors, as foreign funds such as CyberAgent, 500 Startups, and Golden Gate Ventures have set up offices in the country. Among local funds, FPT Venture is particularly active, while others have expressed a strong interest in the sector. The Ministry of Planning and Investment is working on new legal documents to encourage and regulate investments in startups, including the application of corporate income tax incentives in accordance with the Law on Small and Medium Enterprises.


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Hubs of Opportunities Capital markets

110

CAPITAL MARKETS

Photo: Viet Tuan

Under the Scheme on the Development of Viet Nam’s Capital Markets to 2010 and Vision towards 2020, approved by the Prime Minister, the securities market plays a dominant role and is to develop in a rapid, consistent, and sustainable manner into an important component of the financial market, thus greatly contributing to mobilizing capital for development investment and economic reforms. Viet Nam’s capital market is also to reach the development level of regional countries, with the securities market’s capitalization to account for 70 per cent of GDP by 2020. The scheme on restructuring the securities and insurance markets prioritizes four principal targets: scaling up the volume, raising the quality, and diversifying the types of commodities to meet market demand; vigorously developing capital supply channels both at home and abroad for the market and expanding the network of investors, especially institutional ones, while fully developing intermediary institutions; diversifying provided services; and ensuring the existence of all the components of a developed capital market in the region.

> SECURITIES MARKET With 678 listed companies on the country’s two bourses, the Ho Chi Minh Stock Exchange (HoSE) and the Hanoi Stock Exchange (HNX), and more than 200 companies registered for trade on the Unlisted Public Company Market (UPCoM), capitalization in Viet Nam’s securities market has increased 339-fold since 2000 and become an impor-


Hubs of Opportunities Capital markets

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tant capital mobilization channel for the economy. Despite many fluctuations in global stock markets in 2016, Viet Nam continued to maintain positive growth as one of five Southeast Asian markets with the greatest potential for development. Total capital mobilization through the securities market rose 54 per cent in 2016 compared to 2015, reaching $15.32 billion, while capital from equitizations and divestments via the stock market stood at more than $880.4 million. During the last ten years alone, mobilization through the securities market has met around 23 per cent of investment needs for the whole economy, equal to 60 per cent of credit supplied through the banking sector. It has become a key funding channel for government bond issuances and the State budget, with mobilization from government bond issuances during the 2010-2015 period standing at $35.03 billion. The securities market has improved both in size and liquidity, with capitalization now equal to roughly 60 per cent of the country’s GDP.

HoSE

• Stocks • Corporate bonds • Closed-end funds/ETF • Covered warrants

HOSE OVERVIEW: - Listed stocks: 321 - Total market capitalization: $86 billion - Average P/E ratio: 14.5 - New listings: 25 - Daily transaction value: $180 million - Foreign ownership ratio: 22% (VN30) - Foreign investors’ net buy: $500 million

HNX

• Stocks • Government bonds • Exchange-traded funds • Derivatives

HNX OVERVIEW: - Listed stocks: 378 - Total market capitalization: $8.1 billion - Average P/E ratio: 12.3 - New listings:12 - Daily transaction value: $24.5 million

UPCoM

UPCoM OVERVIEW: - Listed stocks: 644 (up 87% year on year) - Total market capitalization: $22,76 billion (up nearly 65% year on year) - New registrations for trade: 195 (as at October 2017) - Daily transaction value: $357.6 million


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> DEBT MARKET The bond market has also become an important capital mobilization channel for the government, policy banks, cities and provinces, and businesses. As at the end of September 2017, total government and corporate bonds accounted for more than 33 per cent of GDP. According to the recently-approved plan to develop Viet Nam’s bond market in the 2017-2020 period and vision to 2030, value is to equal 45 per cent of the country’s GDP by 2020 and 65 per cent by 2030. Of the total, the value of government and government-backed and municipal (city and provincial) bonds are set to equal 38 per cent of GDP by 2020 and 45 per cent by 2030. The government also expects to see the volume and value of government bonds held by insurance and social insurance firms, pension funds, and other non-bank financial institutions increase to 50 per cent of the total by 2020 and 60 per cent by 2030. OUTSTANDING DEBT IN BOND MARKET

Outstanding debt of bond market Corporate bonds Government bonds, government-guaranteed bonds, municipal bonds markets 65 60 55 50 45 40 35 30 25 20 15 10 5 0

Unit: %

65

45

45 38

GOVERNMENT BOND MARKET OVERVIEW 7

20

Year 2020

Year 2030

Listed bonds: 571 Total value: $43 billion New listings: 19 Daily transaction value: $357.6 million Source: State Securities Commission of Viet Nam

> DERIVATIVES MARKET Viet Nam’s derivatives market was officially launched on 10 August 2017, with the first type being VN30-Index futures contracts. Longer-term plans include offering contracts on the HNX30-Index as well as government bond futures.


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> SEEKING FOREIGN INVESTMENT Foreign indirect investment inflows have been on a steady rise since the start of 2017 as the local stock market has been one of the best performers in the Asia-Pacific region and the government continues to attract overseas investors. As at the end of July 2017, foreign investors’ portfolio investment had risen 28 per cent since the end of last year, with the foreign ownership ratio at listed companies on the two bourses varying between 20 and 25 per cent. The weight of Vietnamese stocks in the MSCI Frontier Markets 100 Index increased to 12.63 per cent in June from 8.01 per cent at the end of January 2017, trailing only Kuwait and Argentina in frontier markets. The government is continuing its efforts to remove obstacles for the country’s securities market to be upgraded from frontier to emerging status, and one matter much appreciated by market observers is the promotion of transparency and governance in both businesses and the stock market; an important factor for institutional investors when considering investments. Companies applying international accounting standards would help professional investors make better comparisons between domestic and international enterprises. While the value of the market in Viet Nam remains lower than in neighboring markets, listed companies are posting a higher return on equity (ROE) and profits, which represents potential for investment opportunities. Sectors of potential in Viet Nam include retail, infrastructure, logistics, technology, industry, and pharmaceuticals.

> SOE EQUITIZATION Aligned with restructuring and equitization, the State-owned enterprise (SOE) reform process has been implemented by the government for nearly 20 years and has become an important supply channel for the country’s two main bourses and UPCoM. The government greatly appreciates the role of foreign investors during the equitization process, as in addition to investment capital they also bring international corporate governance practices and modern technology that help to improve the overall quality of companies in the market. Viet Nam has set a target of 127 SOEs completing their equitization process during the 2017-2020 period, with 44 set to complete the process in 2017, 64 in 2018, and 18 in 2019. Many new policies have been introduced since 2011 to improve the efficiency and enhance the operations of SOEs in accordance with market mechanisms while at the same time developing the private sector. In recent years, mechanisms and policies regarding enterprise finance management, equitization, and divestment of State capital from enterprises have been introduced in a comprehensive and consistent manner, adjusted and supplemented towards the actual operations of the enterprise and the market situation, helping enterprises to implement equitization plans approved by relevant au-


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thorities and divesting State capital from non-core business lines to avoid loss of capital and State assets. Many large corporations and economic groups have also actively accelerated their equitization process, including the Viet Nam Rubber Group, the Viet Nam Southern Food Corporation, and three power generation corporations under Electricity of Viet Nam (EVN). The corporate value of the National Oil and Gas Group (PetroVietnam)’s PV Power and PV Oil has also been set and publicized.

> INSURANCE MARKET Viet Nam has an open development policy for foreign players since its early start compared to other countries in the region. The market grew by more than 20 per cent in 2016, with gross premiums in life and non-life reaching $3.8 billion and contributing 1.85 per cent to total GDP. This was bolstered by growth in the life market reaching a ten-year record and accounting for 60 per cent of total premiums. As at September 2017, the market had 63 insurers, including 29 non-life insurers, 18 life insurers, two reinsurers, 12 insurance brokers, and one branch of a foreign non-life insurer. Decision No. 193/QD-TTg, approved by the Prime Minister, on the Strategy for the Development of Viet Nam’s Insurance Market during the 2011-2020 Period, contains objectives such as the formulation of a complete, transparent, fair, and comprehensive system of regimes and policies on the insurance business; encourages and assists enterprises to diversify their insurance products, ensuring that they satisfy the diverse insurance requirements of organizations and individuals; and facilitates all organizations and individuals, especially low-income earners, to purchase insurance coverage. By 2020, total revenue in the insurance industry is targeted to reach 3-4 per cent of GDP, while the size of insurance reserve funds is set to be 4.5-fold higher than in 2010. During the next three to five years, Viet Nam’s insurance market is expected to grow by 60-120 per cent from current levels, driven by rising incomes and an emerging middle class with more money to spend and a desire to spend that money to improve their lives. Growth potential is not only limited to life insurance, which has witnessed a growing awareness among Vietnamese people due to health concerns, but also in non-life insurance products, including motor vehicle insurance, property insurance, and travel insurance, which hold promise given Viet Nam’s increasingly dynamic population. The Ministry of Finance is also planning to develop other types of insurance, including public asset insurance, agricultural insurance, and micro insurance.


Hubs of Opportunities Banking

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BANKING

The five years of implementing “The Restructuring Plan for the Banking Sector in the 2011-2015 Period” were positive overall and resulted in the banking sector becoming more effective, with commercial banks constantly improving their service quality. As at the end of June 2017, Viet Nam had 49 banks, including seven State-owned banks, where the State holds 50 per cent of charter capital, 28 joint stock banks (down by nine compared to 2010), nine banks with 100 per cent foreign capital (up by four compared to 2010-2015), two social policy banks, two joint venture banks, and one cooperative bank. There were also 16 financial companies, eleven finance leasing companies, three microfinance institutions, and 51 branches and offices of foreign financial institutions. The restructuring of the banking sector has helped stabilize and safeguard credit institutions in the country. Many poor performers have been identified and restructured. In addition, bad debts have been limited to less than 3 per cent, and the financial capacity and operational scale of credit institutions have also improved, contributing to economic growth. According to figures from the State Bank of Viet Nam (SBV), basic indicators in the banking sector continued to increase sharply during the first half of 2017 compared to the end of 2016. As at the end of June 2017, total assets of credit institutions stood at $403.9 billion, up 7.22 per cent; equity capital had reached $30 billion, up 6.68 per cent; total charter capital was $22.5 billion, up 2.4 per cent; the minimum capital adequacy ratio

Mr. Nghiem Xuan Thanh (center), Chairman of Vietcombank, receives “The Strongest Bank by Balance Sheet in Vietnam 2017” award from The Asian Photo: Vietcombank


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was 12.55 per cent; and the bad debt ratio 2.48 per cent. Return on assets (ROA) and return on equity (ROE) at the end of 2016 were 0.58 per cent and 7.51 per cent, respectively, up sharply from 0.29 per cent and 3.54 per cent, respectively, at the end of the ďŹ rst half of 2016.

RATIO OF LOANS TO DEPOSITS OF STATE-OWNED COMMERCIAL BANKS

RATIO OF NPLS IN TOTAL OUTSTANDING LOANS, BY QUARTER, OF STATE-OWNED COMMERCIAL BANKS Unit: %

100 98 96 94 92 90 98 96 94 92 90

Unit: %

3.0 2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 1.5

8/2016 9/2016 10/2016 11/2016 12/2016 1/2017 2/2017 3/2017 4/2017 5/2017 6/2017 7/2017

QIII/2016

QIV/2016

QI/2017

QII/2017

GROWTH RATE OF OUTSTANDING LOANS IN THE ECONOMY

RATIO OF CASH FLOW IN TOTAL PAYMENT METHODS Unit: % 18

25

17

20

16

Unit: %

30

15

15 14

10

13

5

12

0

11 -5

10 9

-10 8/2016 9/2016 10/2016 11/2016 12/2016 1/2017 2/2017 3/2017 4/2017 5/2017 6/2017 7/2017

8/2016 9/2016 10/2016 11/2016 12/2016 1/2017 2/2017 3/2017 4/2017 5/2017 6/2017 7/2017 Agriculture, forestry and fisheries Transport & telecommunications

Industry Construction Other services Total

Trade

Source: State Bank of Viet Nam


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> M&A OPPORTUNITIES On 19 July 2017, the Prime Minister issued Directive No. 32/CT-TTg on the implementation of Resolution No. 42 and Decision No. 1058/QD-TTg on approving the scheme for restructuring credit institutions in combination with resolving non-performing loans (NPLs) in the 2016-2020 period. General solutions for restructuring credit institutions associated with dealing with bad debts in the 2016-2020 period include completing the legal framework and mechanisms and policies on monetary and banking activities; raising financial capacity and transforming business, management, and administration models; and intensifying the renovation of banking inspection and supervision tasks. The main focus of Decision No. 1058 is to continue to restructure credit institutions with a focus on dealing with bad debts and weak credit institutions consistent with mechanisms to reduce the number of weak credit institutions. There will then be an appropriate number of reputable credit institutions operating in a healthy manner and ensuring liquidity. In the 2016-2020 period, solutions for banking sector restructuring will encourage foreign investors in general and foreign financial institutions in particular to buy or merge with weak commercial banks. The sector has witnessed two merger and acquisition (M&A) deals in 2017: ANZ selling its retail segment to Shinhan Bank, in April, and the Commonwealth Bank of Australia (CBA) selling its Ho Chi Minh City branch to VIB Bank, in July. In addition to efforts to attract foreign investors into Viet Nam’s banking sector via M&A deals, the SBV has recently permitted foreign banks to set up 100 per cent foreignowned banks. Viet Nam had just five 100 per cent foreign-owned banks by 2015 but the figure has increased to nine since June 2016: HSBC Viet Nam, ANZ Viet Nam, Standard Chartered Viet Nam, Shinhan Viet Nam, Hong Leong Viet Nam, Woori Bank, Public Bank Berhad (Malaysia), CIMB Bank Berhad (Malaysia), and, most recently, United Overseas Bank (UOB) Viet Nam. The number is likely to increase in the future, as many banks within the ASEAN region continue to seek SBV approval to establish such banks in the country. Opportunities for foreign investors to participate more deeply in Viet Nam’s banking and finance sector also accompany the arrival of the fourth industrial revolution (Industry 4.0). A boom in financial technology (FinTech) companies will also help improve access to banking and finance services, to the benefit of customers.


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FinTech is considered to have major potential in Viet Nam, given the size of its population and its comparative advantage in information technology (IT) human resources. In order to attract FinTech businesses, the SBV has taken the initiative in removing obstacles and creating the necessary conditions for such enterprises to enter the market. SpeciďŹ cally, the SBV Governor signed Decision No. 328/QD-NHNN dated 16 March 2017, to establish the SBV Steering Committee on Financial Technology. With representatives from functional departments of the SBV and the National Payment Corporation of Viet Nam (NAPAS), the Steering Committee is responsible for formulating and submitting annual action plans to the SBV Governor and advising the Governor on solutions to completing a relevant ecosystem, including a legal framework to facilitate the performance and the development of FinTech companies, in line with guidance and direction from the government.


Hubs of Opportunities Oil and Gas

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OIL AND GAS

Viet Nam ranks 28th among 52 countries with oil and gas potential in the world, according to the BP Statistical Review of World Energy, 2016. Total proven oil reserves are 4.4 billion barrels; among the highest in Southeast Asia. Production capacity of 336,000 barrels per day ranks Viet Nam fourth in Southeast Asia, after Indonesia, Malaysia, and Thailand.

> EXPLOITATION The oil and gas industry is substantially represented by the State-owned Vietnam Oil and Gas Group (PetroVietnam). Crude oil is being exploited from mines by both domestic companies and joint ventures with foreign partners. As at 31 December 2016, the entire petroleum industry had produced over 370.33 million tons of oil and 123.14 billion cu m of natural gas. Oil production had averaged over 16 million tons of oil per year, or 0.5 per cent of total global oil production. Gas production reached 10 billion cu m per year, or 0.2 per cent of total global gas production.

Photos: PetroVietnam


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PETROVIETNAM'S INVESMENT PLANS, 2016-2020

15.3

Total investment

Owner

Unit: $ billion

PetroVietnam will increase its exploration of domestic crude oil reserves by 35-45 million tons per year

8.5 6.5 5.1

Exploration of domestic reserves to increase 20-35 million tons per year.

4.7 2.7

1.7

2

1.4

0.8

Exploration Gas industry Power Refinery Oil and generation and and gas production petrochemicals technical services

Exploration of overseas reserves to increase 10-15 million tons per year. Crude oil exploration to reach 16-17 million tons per year. Gas exploration to reach 10 billion cu m per year. Source: PVN

> OIL PRODUCTION Though a crude oil exporter, Viet Nam also imports a huge amount of petroleum products to serve its economy. According to the General Department of Viet Nam Customs, the total volume of imported petroleum in the first eight months of 2017 was 8.63 million tons worth $4.51 billion, up 8.8 per cent in volume and 39.5 per cent in value yearon-year. Oil and gas processing is becoming a core sector. It plays an important role in the development of Viet Nam’s oil and gas industry, with the purposes of enhancing the value of oil and gas resources and contributing to ensuring energy security. Construction of fertilizer plants started in 2001, and Phu My - the first fertilizer plant of PetroVietnam - went into operation in 2004, with a capacity of 800,000 tons per year. 2009 marked an important step in the oil and gas processing activities of PetroVietnam, when the first oil refinery in Viet Nam - the Dung Quat Oil Refinery - went into operation, with a capacity of 6.5 million tons per year. Since then, PetroVietnam has possessed complete activities within the oil and gas value chain, from exploration to processing. The Nghi Son Refinery and Petrochemical Complex, with a capacity of 10 million tons per year, is under construction and is expected to come online in the fourth quarter of 2017. PetroVietnam has also been implementing a series of new projects in oil refining,


Hubs of Opportunities Oil and Gas

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petrochemicals, and biofuels, and plans to expand and upgrade the Dung Quat Oil Refinery in order to meet demand for petroleum, feedstock, and petrochemical products in the country.

> GAS PRODUCTION Over the past 30 years, the collection, treatment, and compression of gas has proven to be effective, as the Vietsovpetro joint venture collected all associated gas from mines in the Cuu Long Basin tank and part of the gas from the Nam Con Son tank. At 1.10am on 1 October 2017, Vietsovpetro had recorded total gas collection and treatment (gaslift and brought on shore) of 50 billion cu m. However, developing national gas resources has become a priority just recently, as it was mostly used as raw materials and fuel for the gas and electricity industries. Though gas production first began in the early 1980s at the Tien Hai C field in the Song Hong Basin, the second field only began operations in August 2015 to meet local industrial demand. Given the increasing importance of gas, PetroVietnam is working with various partners to develop more projects and build a new pipeline network to transfer gas inland. Meanwhile, the country’s onshore unconventional gas resources remain virtually untapped, but will prove to be more valuable in the mid-term when current fields are approaching depletion. Unit: billion cu m

Bringing the first associated gas from the White Tiger field onshore.

40

50

30 20 10

3/5/1995

15/5/1998

25/3/2008

25/10/2011

15/4/2015

1/10/2017 Source: PVN


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:

FOREIGN INVESTMENT IN OIL AND GAS

As at the end of the first quarter of 2017, a total of 106 petroleum contracts had been signed, including 62 contracts that are currently valid. More than 40 local and foreign contractors are partnering with PetroVietnam in these contracts. Many large projects in the fields of gas, electricity, refining, and petrochemicals, as well as technical services, have been brought on stream to fuel Viet Nam’s economic development and industrialization and modernization. There are now more than 40 international oil companies operating in the upstream, midstream, and downstream sectors in Viet Nam. Several major oil companies are cooperating with PetroVietnam, mainly in the upstream sector, such as Chevron and ExxonMobil (the US), KNOC (Republic of Korea), Gazprom (Russia), Petronas (Malaysia), PTTEP (Thailand), Talisman (formerly from Canada, now Spain), and Total and Neon Energy (France). Most of these companies have invested in the form of capital contributions with PetroVietnam to implement petroleum contracts.

> DEVELOPMENT OBJECTIVES TO 2025

(Source: PVN)

Exploration of oil and gas in 2016-2025 Domestic crude oil: 13-15 million tons Natural gas: 15-16 billion cu m Overseas crude oil: 2.5-5.5 million tons Supply capacity to 2025 Crude oil: 18-20 million tons per annum Gas: 15-16 million cu m per annum Stock by 2020 National oil stockpile of about 60 days

> OPPORTUNITIES Foreign investors are able to participate in Viet Nam’s oil and gas market in a range of activities, such as drilling discovery, rigs, infrastructure construction, and refinery construction, operations and maintenance, among others.


Hubs of Opportunities Electricity

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ELECTRICITY

Being a developing country, Viet Nam’s energy demand is among the highest in the world and has been rising sharply over the last 15 years. Power consumption grew by an average of 13.07 per cent annually between 2006 and 2010 and about 11 per cent between 2011 and 2015. Energy resources include coal, oil, natural gas, hydropower, and renewables. According to Electricity of Viet Nam (EVN), total capacity as at the end of 2016 was 42,341 MW, in which coal-powered and hydropower were the main sources. As industrialization continues, energy demand is forecast to increase from 7.5-8.5 per cent each year in the 2021-2030 period. Consumption will have increased three or fourfold by 2030 compared to 2014. In order to meet growing consumption needs, the total capacity of Viet Nam’s power plants by 2030 will have to be around 129,500 MW. Coal power will increase from about 34 per cent of supply in 2016 to 48 per cent by 2025 and then fall to 44 per cent by 2030. Renewable energy will account for a larger share, supplying around 21 per cent by 2030.

Photos: Viet Tuan


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> POWER GRID As at the end of 2015, Viet Nam’s power grid was ranked second in ASEAN and 30th in the world in terms of installed capacity. Power coverage reached 99.85 per cent of communes and 98.88 per cent of rural households. The target by 2020 is coverage of 100 per cent. The total length of electricity lines is 520,800 km. Of this, 500kV lines stretch 7,444 km, 220 kV lines 16,551 km, 110kV lines 20,215 km, and mid-low voltage lines 476,572 km. Total capacity of transformer substations is 202,700 MVA. 500kV stations have 26,100 MVA, 220 kV stations 44,602 MVA, 110 kV stations 50,813 MVA, and medium step-down stations 81,141 MVA. In line with the development of power sources, Viet Nam will also expand transmission and distribution grids to ensure the secure and effective transmission of electricity from power centers to load centers and to consumers. The total length of 500 kV and 220 kV transmission lines from 2016 to 2030 is to reach 25,052 km, while the total capacity of 500KV - 220KV electrical substations during the period is to reach 178,254 MVA.

POWER TRANMISSION NETWORK BY 2016

110kV

Mid-low voltage

Total

500kV

220kV

110kV

81,141

50,813

220kV

44,602

26,100

7,444 500kV

202,700

Capacity of transformer substations (MVA)

520,800

476,572

20,215

16,551

Length of electricity line (km)

Mid-low voltage

Total

Source: EVN


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> ELECTRICITY MARKET Viet Nam continues to develop its power market and appropriate pricing policies to provide an open and transparent price signal in order to attract investment in the power sector, diversifying investment and trading modes. The roadmap for the formation and development of the power market was approved by the Prime Minister in Decision No. 63/2013/QD-TTg dated 8 November 2013. Level 1: the Viet Nam Competitive Generation Market (VCGM) was piloted from 2011 to 2012 and officially operated from 2012 to 2015. As at July 2017, there were 76 power plants participating in the country’s power market with total capacity of 20,728 MW (accounting for 49 per cent of total installed capacity). Forty-four power plants indirectly involved in the electricity market have a total installed capacity of nearly 21,838 MW. Level 2: the Viet Nam Competitive Wholesale Electricity Market (VWEM) is being piloted from 2016 to 2018 and will go into official operation from 2019 to 2021, implementing a fully competitive electricity wholesale market. Level 3: the Viet Nam Competitive Retail Electricity Market (VREM) will be piloted from 2021 to 2023 and will officially begin operations in 2023, implementing a fully competitive electricity retail market. The electricity generation market is currently dominated by three State-owned enterprises: EVN, PetroVietnam, and the Viet Nam National Coal and Minerals Corporation (Vinacomin). However, the government is now opening the market up to new models such as independent power producers (IPPs) and foreign build-operate-transfer (BOT) projects.

ELECTRICITY SUPPLY Unit: MW

60,000

By 2020

By 2030 55,300

50,000 40,000

0 Hydropower

Coal-fired power

Gas-thermal power

27,195

19,000

9,000

26,000

10,000

21,600

20,000

27,800

30,000

5,940

6,200 1,440

Renewable energy

Improted electricity Source: EVN


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> INVESTMENT INCENTIVES The increasing domestic demand and its commitment on greenhouse gas emissions means that in the future Viet Nam will have to produce more power in a cleaner way and at a higher cost. This requires a large amount of capital, particularly from the private sector. According to the revised Power Development Plan 7, the total investment for the development of power sources and grids (excluding BOT contracts) will be around $141 billion in the 2016-2030 period, of which 75 per cent will be spent on power development and the remainder on electricity grid development. As such, each year Viet Nam needs $10 billion for the industry. The World Bank forecasts that about 50 per cent of investment in Viet Nam’s power sector will be made by IPPs. The government is aiming at diversifying capital sources and encouraging foreign investment in power development in the BOT, build-own-operate (BOO), and public-private partnership (PPP) forms, with no restrictions on foreign ownership. Viet Nam has seen a steady increase in foreign investment in the sector, with total capacity standing at 2,800 MW in 2015. Opportunities for investors range from consultancy services and project management to installation services, power plant construction, equipment supply, and providing replacement and spare parts for both power plants and the national grid. The equitization of State-owned power companies under EVN is also open to foreign investors.

TOTAL INVESTMENT CAPITAL FOR THE DEVELOPMENT OF POWER SOURCES & GRIDS, 2016 - 2030

Unit: $billion

37.7 Total:

141

2016-2020 Period 2021-2030 Period

103.3 Source: EVN


Hubs of Opportunities Renewable energy

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RENEWABLE ENERGY

Nature has blessed Viet Nam with the capacity to develop a wide range of renewable energy sources, from solar and wind to hydro, geothermal, and biomass, and the government took advantage of this by designing a new development strategy for the sector, which was issued in November 2015. The country plans to generate 30 per cent of its energy output from renewable sources (including hydro) by 2020.

> WIND ENERGY With more than 3,200 km of coastline and a monsoon climate, Viet Nam possesses abundant wind energy resources, primarily in coastal provinces such as Ninh Thuan, Binh Thuan, Soc Trang, Tra Vinh, and Bac Lieu, together with islands. According to a World Bank study, 8.6 per cent of Viet Nam’s territory is suitable for installing large turbines, with wind speeds of over 7 meters per second and estimated wind energy reserves of more than 500,000 MW. Since 2008, the government has introduced a host of incentives for wind energy producers, including the latest feed-in-tariff scheme in 2015, import duty exemptions for equipment, and a preferential corporate income tax rate of 10 per cent for wind farms. The newly-increased feed-in-tariff is expected to boost wind energy’s attraction among investors.

Photos: Viet Tuan


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As at July 2017, there were more than 100 registered wind energy projects with total capacity of 7,000 MW. Of these, four projects are operating commercially, with total designed capacity of 160 MW, while four others are being implemented, all in southern provinces. If the revised Power Development Plan 7 proceeds as expected, national wind power capacity will reach 800 MW by 2020.

> SOLAR ENERGY As a tropical country, Viet Nam has a constant source of solar energy, with around 2,000-2,500 hours of sunshine per year. The central and southern regions record the highest solar radiation levels, ranging from 4 to 5.9 kWh per sq m per day, equal to 334,000 MW per year. In April 2017, the government issued a new framework to encourage the development of solar energy, aimed at increasing the share of solar power to 1.6 per cent by 2025 and 6 per cent by 2030. Hundreds of new projects have been registered since, with total capacity of 17,000 MW, 140 of which are located in Ninh Thuan province with another 100 to be built in Binh Thuan province. Solar power has recently become much more competitive against conventional electricity thanks to the considerable decline in global prices for solar photovoltaic panels in recent years, making the next few years the best time for Viet Nam to adopt solar energy.

> BIOMASS With its intensive agricultural activities, Viet Nam possesses ample resources for biomass energy, including from rice husks, paddy straw, bagasse (sugarcane, coffee husk, and coconut shells), wood, and plant residue. It is estimated that agriculture can generate 150 million tons of materials each year for biomass power, with an estimated potential of 1,000-1,600 MW.


Hubs of Opportunities Renewable energy

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POLICIES ON RENEWABLE ENERGY DEVELOPMENT PROMULGATED BY THE PRIME MINISTER Decision No. 37/2011/QD-TTg dated 29 June 2011, on mechanisms supporting the development of wind power projects. Decision No. 24/2014/QD-TTg dated 24 March 2014, on support mechanisms for biomass power development. Decision No. 31/2014/QD-TTg dated 5 May 2014, on support mechanisms for the development of power generation projects using solid waste. Decision No. 2068/QD-TTg dated 25 November2015, approving the development strategy for renewable energy by 2030 and vision to 2050. Decision No. 428/QD-TTg dated 18 March 2016, approving revisions to the national power development plan from 2011 to 2020 with a vision extended to 2030. Decision No. 11/2017/QD-TTg dated 11 April 2017, on mechanisms to encourage the development of solar power projects.

> INVESTMENT IN RENEWABLE ENERGY

:

WIND ENERGY

Four wind farms with total capacity of 159.2 MW are currently in operation: Phong Dien 1 in Binh Thuan province (First Phase: 30 MW), Phu Lac in Binh Thuan (First Phase: 24 MW), Phu Quy in Binh Thuan (6 MW), and Bac Lieu in Bac Lieu province (99.2 MW). Four others are being constructed, with a capacity of 403.5 MW: Khai Long in Ca Mau province (offshore, with 300 MW), Thuan Nhien Phong in Binh Thuan (32 MW), Trung Nam in Ninh Thuan (First Phase: 34 MW) and Mui Dinh in Ninh Thuan (37.5 MW). The Phuong Mai 3 wind turbine project at the Nhon Hoi Economic Zone, Quy Nhon city, Binh Dinh province, with a capacity of 21-28 MW, will be implemented in 2017-2018.

:

SOLAR ENERGY

Ninh Thuan province has huge potential for solar power, attracting some 140 projects already, followed by Binh Thuan province with 100 projects, Dak Lak province with 13 projects, and Khanh Hoa province with 12 projects. Large solar energy projects with thousands of MW include the Thien Tan Company’s investments in Ninh Thuan and Quang Ngai provinces (2,000 MW), the Xuan Cau Group’s solar energy project in Tay Ninh province (2,000 MW), Xuan Thien’s solar energy project in Dak Lak province (2,000MW), TH True Milk Group’s project in Dak Lak (1,000 MW), and Electricity of Viet Nam (EVN)’s 20 or so solar energy projects with a total capacity of 2,000 MW in Khanh Hoa, Kon Tum, Ninh Thuan, Binh Thuan, and Dong Nai provinces.


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:

BIOMASS

As at July 2017, there were 41 registered biomass projects in the country with a total capacity of 600 MW, in Gia Lai, Khanh Hoa, Phu Yen and Thanh Hoa provinces. Total capacity already in operation is 186.7 MW and some 395 MW is currently being developed. STRATEGY FOR THE DEVELOPMENT OF RENEWABLE ENERGY, 2015 – 2050

62 25 2015

2020

2025

2030

2020

2025

16 2.5

2015

2020

2025

32.3

2015

2020

2025

1.4 2020

2025

7.8 2020

2025

2030

32

2020

2030 5.0

2.7 Negligible

1.0

2015

2020

Rate of electricity produced from solar energy in total electricity production

Rate of electricity produced from biomass in total electricity production

2025

2025

2030 20

6 Negligible

0.5

2015

2020

2025

2030 8.1

6.3 1.0

3.0

2015

2020

2025

Unit: million TOE

37

Unit: billion kWh

85

Biomass

43

38

Rate of electricity produced from wind power in total electricity production

2030

2030

Unit: %

0.01 2015

Unit: billion kWh

35.4

35

2015

2030 210

Solar energy

2015

31.0

Unit: %

53

0.18

Rate of electricity produced from renewable energy in total electricity production

2030 Unit: billion kWh

Wind energy

0.6

31.8

Unit: %

186 101

Unit: billion kWh

452

2015

44.0

37

Electricity generated from renewable energy 58

Rate of renewable energy in total primary energy consumption

Unit: %

138

Unit: million TOE

Total renewable energy sources produced and used

2030

Source: Ministry of Industry & Trade


Hubs of Opportunities Transportation

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TRANSPORTATION

As Viet Nam has continued to enjoy stable economic growth, there is high demand for new transportation infrastructure everywhere in the country. Figures show that from 2011 to 2015 the sector attracted $17.6 billion in investment. It is estimated that 37 key traffic projects in the 2016-2020 period need an additional $44 billion to ensure the sector’s pioneering mission of facilitating continued economic development.

> OPPORTUNITIES FOR INVESTORS The country is planning a massive expansion of its highway network, with the construction of 21 highways with a total distance of 6,400 km, requiring investment of over $21.5 billion. By 2020, Viet Nam plans to build five new airports, three international and two domestic, to accommodate the annual growth of 15% in the industry and to ensure the country becomes the next regional hub for air travel. It is estimated that passenger traffic through Vietnamese airports will reach 120 million by 2020. Passenger volumes in 2016 surpassed 65 million, of which nearly 20 million were international travellers. With 3,200 km of coastline along one of the busiest maritime trade routes in the world, sea transport is also poised for major long-term expansion, particularly when the need for deep-water seaports is increasing beyond the capacity of the present 14 ports.

Photos: Viet Tuan


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While less urgent, railways are also one of the government’s development priorities, in which the existing single-track line from Hanoi to Vinh and Ho Chi Minh to Nha Trang will be upgraded between 2020 and 2030.

PROPORTION OF INFRASTRUCTURE INVESTMENT IN GDP, REGIONAL COUNTRIES

FORCASTED INFRASTRUCTURE INVESTMENT Based on current investment

(Including State and private sector) Unit: %

Unit: $ billion

Based on investment demand

35

7

30

6

32

25

5

29

20

4 3

15

2

10

1

5

0

0 China Viet Nam India Indonesia Myanmar Singapore Philippines Malaysia Thailand

25 22 19 17 15

2017

26 24

21

19

16

2020

2025

2030

2035

2040

Source: Global Infrastructure Hub


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> FACILITATING POLICIES Though the government has agreed to spend 3.5-4.5 per cent of GDP on infrastructure investment, the State budget can only meet 11 per cent of actual demand, while overseas development assistance (ODA) resources are shrinking and public debt is on the rise. It is therefore particularly important to attract both foreign and domestic private capital. New regulations have also been introduced to better govern and facilitate the buildoperate-transfer (BOT) and public private-partnership (PPP) models, improve market transparency, and resolve inequalities between local and foreign contractors. In order to increase the attractiveness of transport projects, the Ministry of Transport (MoT) is focusing on finalizing institutions and policies on investment, business, and infrastructure. It will also pilot a number of policies to attract foreign investors, such as revenue guarantees and government liability insurance. The Ministry will aim to create long-term credit sources for investment in transport infrastructure, to further diversify the mobilization of foreign capital for large-scale projects as well as those facing difficulties in investment implementation. It is necessary to accomplish the regulatory and policy framework on engaging the private sector in infrastructure development, transferring or providing long-term leases on rights to operate projects, and improving capacity building among contractors and investors on project management and operations.

FACTS & FIGURES The total length of Viet Nam’s road network is about 570,448 km, of which over 22,000 km are highways (including 741 km of expressways, 5,900 bridges, and eight road tunnels). The country’s railway network totals 2,600 km, of which over 2,500 km are main lines. The Hanoi - Ho Chi Minh line is the longest in the country, with a length of 1,726 km. In the maritime sector, there are currently 14 routes with 44 seaports. Lach Huyen Deep Sea Port is under construction and is expected to be completed by 2019. In aviation, there are currently 21 airports around the country. The project to expand Tan Son Nhat International Airport in Ho Chi Minh City has been included on the list of key transport projects in 2016-2020 period. In 2016-2020, MoT will focus on developing feasibility studies for Long Thanh International Airport, the NorthSouth Expressway, and the North-South Express Railway, from which plans will be submitted to the government.


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CONSTRUCTION AND REAL ESTATE

Photos: Viet Tuan

> OVERVIEW The construction sector has enjoyed annual sustainable growth and made a substantial contribution to Viet Nam’s GDP. According to figures from the General Statistics Office, 2016 saw growth of 10.1 per cent in the sector, with a contribution of 0.6 per cent made to national economic growth. Viet Nam is among the Top 3 regional countries in maintaining rapid growth in the construction sector. The government has approved the Master Plan for the Restructuring of the Construction Sector in the 2014-2020 period, which adopts the latest trends in growth towards higher quality, better efficiency, and greater competitiveness. The restructuring process aims to achieve annual average growth of 9-14 per cent in the sector. In 2014, the National Assembly promulgated the Law on Housing and the Law on Real Estate Business, regulating the development of the country’s real estate sector. Measures have been recently undertaken by the government to support the development of construction-related industries, with regulations issued on the build-operatetransfer (BOT), public-private partnership (PPP), and other investment models, to bolster market transparency and address existing disparities between domestic and foreign contractors. According to the Foreign Investment Agency, Viet Nam’s real estate sector has attracted 618 construction projects to date, with capital of $50.99 billion, or 16.6 per cent of total investment capital. The sector ranks second in FDI attraction, after the manufacturing and processing industry. Though project numbers have fallen slightly compared to the 2007-2009 period, foreign investors have engaged in sub-sectors in the construction sector, resulting in higher efficiency and service quality.


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> OPPORTUNITIES

:

INFRASTRUCTURE

Dynamic economic growth has been a driving force for Viet Nam’s infrastructure development. The budget for infrastructure development is currently only around onethird of requirements. International investment provides around 40 per cent of necessary funds, while 15 per cent is private investment. Private investment, funding from multilateral development banks (World Bank and Asian Development Bank), and ODA from foreign countries such as Japan have spurred investment in infrastructure, but financing continues to be a major challenge.

:

URBANIZATION

With an urbanization target of 40 per cent by 2020, a number of cities at the national and regional levels and so-called heritage cities, tourism cities, science cities, and others, will be formed. These master-planned developments seek investment in projects such as industrial parks, commercial areas, housing, hospitals, schools, and retail centers. Nationally, 4,015 urban and housing development projects have been planned and licensed, requiring investment capital of around $197.7 billion.

> REAL ESTATE SEGMENTS

:

OFFICE AND HOUSING

Annually, 58,000 and 42,000 new households have been added to existing numbers in Ho Chi Minh City and Ha Noi, respectively. Of these, the number of one-person households will account for 10 per cent by 2019. At present, 27 per cent of urban dwellers live in sub-standard housing in need of upgrading. As at June 2017, the floor area per person was 23 sq m, which is targeted to increase to 30 sq m by 2030. Office rental costs remain quite modest compared with the region, with demand for rented office space increasing steadily since 2015. In Ho Chi Minh City, supply showed signs of levelling off in 2016, with an occupancy rate of 95 per cent. In Ha Noi, quarterly supply rose from 20,000 to 30,000 sq m, with occupancy standing at 86 per cent. The expected growth in foreign companies arriving in Viet Nam will boost demand for serviced apartments and rented and purchased apartments. With the new Law on Housing permitting foreigners to buy houses in the country, many foreign customers


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will be encouraged to own rather than rent, especially since the price of housing in Viet Nam is significantly lower than in neighboring countries.

:

HOSPITALITY / RESORTS

During the first half of 2017, Viet Nam welcomed more than 6 million international tourists, a 30 per cent increase year-on-year. It targets welcoming 17-20 million international tourists and hosting 82 million domestic tourists by 2020, with a renewed focus from the government on developing the tourism industry. The government is investing more in tourism marketing and promotion, as part of targets for tourism revenue to account for 10 per cent of GDP by 2020, from 6.6 per cent in 2016. Hospitality investment is centered primarily around two tourism hotspots: along the iconic coastline in central Viet Nam - stretching 30 km from bustling Da Nang to the famed UNESCO World Heritage Site of Hoi An ancient town - and the southern island of Phu Quoc. There are also many hotel and resort projects being developed in Ha Long Bay, Bai Tu Long, and Van Don in Quang Ninh province, and Do Son and Cat Ba Island in Hai Phong city.

:

RETAIL

Retail has emerged as a promising market given the number of foreign investors planning to enter Viet Nam’s retail market. Domestic investors have planned to develop retail real estate, such as commercial centers, retail outlets, shopping malls, convenience stores, and other types. In 2016, retail supply in Ho Chi Minh City and Ha Noi saw rapid increases compared to 2015. In Ho Chi Minh City, supply reached 60,000 to 100,000 sq m quarterly, with occupancy of 91 per cent. In Ha Noi, supply was 25,000 sq m quarterly, with occupancy of 75 per cent. The prospects for this segment are high as the population is increasing in the two major cities.

:

INDUSTRIAL REAL ESTATE AND WAREHOUSING

The government has adjusted regulations in recent times, permitting the construction of industrial zones coupled with residential housing in order to promote stronger development, especially at the Singapore-invested Viet Nam-Singapore Industrial Parks (VSIPs). It is forecast that foreign manufacturers will likely consider moving to Viet Nam from other countries, given Viet Nam’s favorable investment environment.

:

STATE-OWNED ENTERPRISE (SOE) EQUITIZATION

The government has called for the equitization or divestment of State capital from 16 leading State-owned construction groups and corporations during the 2017-2018 period, primarily in key sub-sectors of the construction industry, in line with its surrender of majority holdings in SOEs.


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APARTMENT MARKET (Ha Noi and Ho Chi Minh City) 400,000

Total supply Absorption rate

300,000

200,000

100,000

0

2009

2010

2011

2012

2013

2014

2015

2016 1H2017

Source: Savills Vietnam

APARTMENT MARKET SIZE 2016 Ho Chi Minh City and Ha Noi are the leading markets in the region 40,000

4

Primary transactions Transaction/1,000 people

30,000

3

20,000

2

10,000

1

0

0

HCMC Bangkok Jakarta Ha Noi

KL

Phnom penh Yangon Vientiane

Source: Savills Vietnam


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HOUSING Objectives Annually, 100 million sq m of floor area is to be built, of which 20 per cent in projects in urban areas will be for social security purposes and low-income earners. The median floor area per person is now 25 sq m, with 29 sq m in cities and 22 sq m in rural areas. The government is striving to reach a minimum floor area of 8 sq m per person. In the 2016-2020 period, the government plans to build 12.5 million sq m of social housing in urban areas, which will meet 80 per cent of demand among students at universities, colleges, and vocational schools, and 70 per cent of demand among workers at industrial zones. It also plans to support 500,000 poor households in rural areas under new poverty criteria to improve housing conditions. Apartment projects will account for 90 per cent of development projects in Ha Noi and Ho Chi Minh City, 60 per cent in Tier-1 and Tier-2 cities, and 40 per cent in Tier-3 cities. Thirty per cent of residential housing in Tier-3 cities and higher tier cities will be for rent.

Policies The Master Plan also mentions orientations for the restructuring of several sub-sectors and products in the construction sector. All real estate projects in the country will be revisited to classify those in each locality that need to be implemented, those that need to be halted, and those that need to be adjusted to meet market demand. The Master Plan also addresses unfinished urban areas, especially in Ha Noi and Ho Chi Minh City. The government has adopted preferential policies to encourage other economic sectors to become engaged in developing social housing for sale, rent, and delayed payment (where a deposit is made, followed by full payment at an agreed time). This aims to improve housing conditions for targeted beneficiaries under social policies, government employees, armed forces personnel, and low-income earners, through support in land, finance, taxes, and preferential credit. To attract more FDI, the Master Plan also proposes the expansion of real estate business operations to foreign organizations and individuals, and also to overseas Vietnamese.


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TOURISM

With targets of attracting 20 million international visitors and hosting 82 million domestic travelers by 2020, Viet Nam is expected and plans to become one of the leading tourism destinations in Southeast Asia by 2030, under the Politburo’s Resolution No. 08/2017 on tourism development to 2035. Total revenue from tourism is to reach $35 billion by 2020, contributing 10 per cent to GDP. 2016 witnessed a significant achievement by Viet Nam tourism industry, with the country welcoming a record 10 million international visitors, and turning tourism into a spearhead economic sector is recognized as a strategic goal. In 2017, the Viet Nam National Administration of Tourism (VNAT) is forecasting a further 15 per cent increase in international tourist arrivals to 11.5 million and $20 billion in revenue.

> MARKET POTENTIAL Viet Nam’s tourism sector has made significant changes over the last 30 years since the Doi Moi policy was introduced. The number of international visitors has increased more than 30-fold, with stable growth of about 9-10 per cent on average each year. Endowed with a special geographical location, a coastline of over 3,200 km, indigenous culture, and excellent cuisine, Viet Nam possesses advantages for tourism development. While boasting 125 beautiful beaches, some of which have been voted as the most beautiful in the world, Viet Nam is also included in the club of 12 countries that have the most picturesque bays, such as Ha Long, Nha Trang, and Lang Co. Additionally, seven of the

Photos: Viet Tuan


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13 world heritage sites and six out of the eight biosphere reserves in the country are located in areas linked to maritime tourism. Viet Nam is considered an ideal destination for travelers who want to immerse themselves in beautiful nature and discover oriental culture. The country also has a rich and diverse network of tangible and intangible cultural heritages, including seven UNESCO-recognized world cultural heritages. Some 7,996 festivals are organized around the country every year. Vietnamese cuisine has now become a tourism attraction. International visitors love Vietnamese food thanks to the richness and diversity of dishes from different regions and the harmony between ingredients and spices. In recent years, travel demand among Vietnamese has also increased remarkably. According to the Viet Nam Tourism Association, 6.5 million Vietnamese traveled abroad in 2016, an increase of 15 per cent over 2015, and spent $7-8 billion. Domestic travel has also been growing well. In the first six months of 2017, the number of domestic travelers reached 40.7 million, up 25 per cent compared with the same period of 2016 (32.4 million). Improving incomes is the major reason behind higher travel demand.

> NEW TYPES OF TOURISM Along with traditional forms of travel, Viet Nam has also caught on to the global trend of developing new types, such as eco-tourism, homestays, and Airbnb accommodation. The country is considered to have rich potential in eco-tourism thanks to its diverse ecosystems. Three-quarters of its land area is mountains and hills with rainforests and caves. It’s stunning coastline and tropical monsoon climate are also in its favor. A range of eco-tours have been introduced, such as farming tours, which give visitors the chance to spend a day as a “real” farmer, taking on jobs such as ploughing fields, planting vegetables and seeds, and harvesting, while there are also other tours available where they can catch fish or pick tea leaves. Homestays are now much favored by tourists, allowing them to discover not only the local landscapes but also the culture and daily lives of local people. From the north to the south, homestays are now available all around the country but especially in mountainous and river areas such as Ba Vi, Mai Chau, Moc Chau, Sa Pa, Ninh Binh, Ha Giang, My Tho, Ben Tre, Vinh Long, and Can Tho. Airbnb, meanwhile, the latest global trend in accommodation, has taken hold in Viet Nam. Joining the Airbnb network has become a new line of “business” for many Vietnamese. As at June 2017, there were some 6,500 lodging facilities listed on the network, according to Grant Thornton Viet Nam. The Airbnb network in the country continues to


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expand and is beginning to eat away at the huge market share once controlled by traditional accommodation. It also explains why four- and ďŹ ve-star hotels have refrained from increasing their room rates despite the surge in international arrivals last year and this year.

DOMESTIC TRAVELERS

TOURISM REVENUE Unit: million of travelers

Unit: $ billion

80

20.2

20

70

20.4

60 15

50 40

14.8 8.8

10

30

5.7

20

10.1

7

5

10 0

0 2011

2012

2013

2014

2015

2016

2017(est) Source: VNAT

INTERNATIONAL VISITORS Unit: million of travelers

14 12 10 8 6 4 2 0 2011

2013

2014

2015

2016

2017(est) Source: VNAT

2011

2012

2013

2014

2015

2016

2017(est) Source: VNAT


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> ACTION PLAN FOR TOURISM DEVELOPMENT The potential for Viet Nam’s tourism development has not been fully tapped. This is partly due to insufficient investment in tourism infrastructure, a shortage of attractive and distinctive products, the limited quality of tourism services, and weaknesses in human resources. The government has unveiled an action plan to transform the tourism sector into the country’s economic engine, following the Politburo’s decision to pursue that goal. The plan includes eight core tasks, ranging from changing mindsets on tourism development, restructuring the sector, and improving the related institutional framework, to human resources development. Among these tasks, investment in tourism infrastructure and promotion activities will need substantial funds from both the State budget and the private sector. Stronger infrastructure will provide the foundation for the tourism industry’s continued growth. Numerous projects, including highways, seaports, airports, and railways, are to be completed in the next few years. In turn, enhanced tourist flows are creating more opportunities for the hotel market, especially in the upper-mid to high-end segments. Incentive policies for tourism investment, particularly in key areas and remote areas with tourism potential and special tourism products, and for human resources training, will be introduced, while public-private partnerships (PPPs) for tourism development will be encouraged. The State will allocate funds for tourism planning, human resources training, and promotion activities. In addition, a tourism development support fund will be set up. Another task is restructuring the tourism industry to ensure professionalism, modernity, and sustainable development under market economy rules towards international integration. The industry will be restructured to conform with the country’s general economic development. A plan for tourism restructuring will be developed towards prioritizing tourism infrastructure building, linking input value chains of industries, focusing on highly-competitive sea, island, cultural, spiritual, ecological, and community tourism, renewing methods and increasing the effectiveness of tourism promotions, and ensuring a secure and civilized tourism environment.

As at September 2017, Viet Nam had 1,780 international travel businesses, of which eight are State-owned enterprises, 560 are joint stock companies, 20 are foreign-invested enterprises, and 1,192 are limited liability companies and private enterprises.

The government has also emphasized the need to invest in tourism infrastructure and technical facilities, under which the State will develop infrastructure facilities in key areas to increase traffic connections to tourist attractions and ensure traffic safety for tourists as well as service quality. The policy on “opening the skies” will be implemented, facilitating airlines to launch new services connecting Viet Nam with source markets and increasing the frequency of existing flights. Seaports and specialized waterway ports will be developed in provinces favorable for sea and waterway tourism development, while railway infrastructure and service quality will be improved to better serve tourists.


Hubs of Opportunities Human Resource and Education

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HUMAN RESOURCE AND EDUCATION

> WORKFORCE Viet Nam possesses a young, large workforce. Diligent and eager-to-learn yet inexpensive, the youth of the country’s workforce is considered an important advantage for its economy. As at October 2017, the country had 55 million people of working age, or 59 per cent of the population. Agricultural workers accounted for 40 per cent, employees in industry and construction 25.6 per cent, and those in the service sector 34 per cent. In recent years, Viet Nam has had success in maintaining a low unemployment rate of less than 3 per cent. As Viet Nam’s economy develops further, it is forecast that labor demand and supply in industries such as processing, construction, transportation, logistics, and ICT, among others, will soar. However, just 30 per cent of the workforce hold tertiary qualifications, which results in a lack of high-quality workers across some sectors, For example, Viet Nam’s education sector can only provide 250,000 new ICT workers each year, while demand stands at some 450,000. Education and training is therefore a sector of major potential for both domestic and foreign investors.

Photos: Viet Tuan, Quang Phuc


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NUMBER OF UNIVERSITIES IN VIETNAM

58

60

Total

60

NUMBER OF COLLEGES 27

65

Total

Total

Total

Total

214

219

223

235

214

156

159

163

170

2013 - 2014

2014 - 2015

2015 - 2016

2016 - 2017

Non-public

30

28

187 2013 - 2014

Total

Total

217

219

189

189

2014 - 2015

2015 - 2016

Public

NUMBER OF COLLEGE LECTURERS

NUMBER OF UNIVERSITY LECTURERS 1,000 university lecturers

75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

1,000 college lecturers

30 25 20 15 10 5 0

2013 - 2014

2014 - 2015 Total

2015 - 2016 Public

2016 - 2017 Non-public

2013 - 2014

2014 - 2015 Total

Public

2015 - 2016 Non-public

Unit: Ministry of Education & Training


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> EDUCATION AS AN INDUSTRY Education has long been considered a publicly-provided service in Viet Nam but this has changed remarkably in recent years as private institutions flourish around the country. Viewing education as a national strategy and a driver of sustainable development, the government also encourages newer models, including private investment, publicprivate partnerships (PPP), and foreign partnerships. With 42 per cent of the population aged under 24 years old, many of whom belong to the rapidly growing middle class, there exists a huge but as yet untapped demand for quality education. Many Vietnamese are willing to spend large sums to provide their children with the best education possible, believing that education is the future. The share of education in the spending of Vietnamese families is higher than in the US, Japan, and other OECD countries. It is estimated that an average family sets aside about 47 per cent of their income for educational purposes, according to a Taylor Nelson survey. Although the country currently has 235 universities and 37 research institutes, only a handful are considered of international standard. The legal framework for education has been significantly opened up in recent years, particularly under Viet Nam’s WTO commitments. There are now 60 private universities in the country, some of which are invested in by industrial corporations who recognize the potential the sector holds and decided to expand their business into education, such as Vingroup and TH Group. In 2016, there were 70 foreign projects in education with total registered capital of $47 million. Partnerships between domestic universities and foreign institutions is a popular model, with more than 500 international programs being offered. The government is also searching for suitable foreign partners to establish high-quality vocational training schools to address the severe shortage of skilled technical workers and to alter a common mindset in society that university studies are the only path to career success.


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MAJOR ECONOMIC AND LABOR MARKET INDICATORS

2016

2017

Indicator

Q2

Q3

Q4

Q1

Q2

GDP growth rate (%)

5.8

6.6

6.7

5.1

6.2

Export turnover growth (% y-o-y)

5.9

6.7

8.6*

12.8

18.9**

Social investment / GDP (%)

32.9

33.1

33*

33.5

32.8**

CPI (% y-o-y)

1.72

2.07

2.66*

4.96

4.15**

Workforce (million people)

54.36

54.44

54.56

54.51

54.52

Workforce participation rate (%)

76.62

76.65

76.82

76.55

76.45

Rate of trained workers with certificates (%)

20.62

21.5

21.39

21.52

21.6

Number of employed workers (million)

53.24

53.27

53.41

53.36

53.4

Rate of salaried employees / employed workers (%)

41.26

41.03

41.62

42.16

42.77

Employment rate in agriculture, forestry and fisheries sector / total employment (%)

42.02

41.61

41.54

40.5

40.44

Number of unemployed people of working age (million people)

1.088

1.117

1.110

1.101

1.081

Unemployment rate among people of working age (%)

2.29

2.34

2.31

2.3

2.26

Unemployment rate in urban areas (%)

3.11

3.23

3.24

3.24

3.19

Unemployment rate in urban areas (%)

3.11

3.23

3.24

3.24

3.19

Youth unemployment rate (15-24 years) (%)

7.1

7.86

7.28

7.29

7.67

Source: General Statistics Office (GSO) 2016-2017, GSO Survey on Labor and Employment Reality (SEU) 2017, Report on Socio-economic Situation in Q2 2017 (*) Year 2016; (**) First half of 2017


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AGRICULTURE

Agriculture is one of three sectors with the greatest impact on Viet Nam’s economy, contributing 25-30 per cent to GDP. It’s agreed that the sector has recorded “amazing” development for the last 30 years since Doi Moi was introduced and has helped Viet Nam become a major agriculture, forestry, and fisheries exporter, with ten products achieving export value of more than $1 billion annually. The Ministry of Agriculture and Rural Development (MARD) forecasts growth of 3 per cent in 2017. According to the General Statistics Office (GSO), production in agriculture, forestry, and fisheries increased 3.1 per cent on average in the 2011-2015 period, with agriculture growing 0.79 per cent ($28.3 billion on average), forestry 6.17 per cent ($1.2 billion), and fisheries 2.91 per cent ($8.8 billion).

Photo: Viet Tuan


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AGRICULTURE GROWTH, 2011-2017 Unit: %

PERCENTAGE OF AGRICULTURE FDI IN TOTAL FDI, 2012-2016

4.5 4.0 3.5

4.02

4.0

2012

2013

2014

0.6%

0.8%

0.5%

2015

2016

1.0%

1.2%

3.6

3.0

3.0

2.5

3.0

2.62

2.0 1.5 1.0

1.36

0.5 0 2011

2012

2013

2014

2015

2016

2017 (est)

EXPORT VALUE GROWTH, 2007-9M 2017

FDI in agriculture

Total FDI in Viet Nam

Unit: $ billion

35 30 25

27.54

20

30.8 30.14 32.1 27.0

23.0

15 10

28.6

19.15 12.8 14.0

15.61

5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (9M) Source: Ministry of Agriculture & Rural Development

> FOCUS ON HIGH-TECH One of the problems the agriculture sector has had to face is low investment, which has fallen short of development demand. In the 2011-2016 period, average investment capital from the State budget was only 6 per cent of total investment. Cumulative ODA capital going to agriculture is $6 billion, representing just 7 per cent of all ODA Viet Nam has received. Cumulative foreign direct investment (FDI) capital is $4 billion, a mere 1.2 per cent of the total. Micro finance provided for the sector accounts for 4 per cent of GDP. Total agriculture investment has met just 60 per cent of demand and does not reflect the sector’s contribution to Viet Nam’s economy.


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According to the Ministry of Planning and Investment, as at the end of 2016, there were 540 effective FDI projects in agriculture, forestry, and fisheries nationwide, with total registered capital of $3.94 billion. Agriculture projects account for only 2.4 per cent of total FDI projects, while average capital per project stands at $6.7 million. As a strategic move, Viet Nam has recently given priority to and encouraged domestic and foreign enterprises to invest intensively in high-tech agriculture. Many major local enterprises have extended their business lines to include this new emerging sub-sector and have seen success, such as Vingroup, Hoang Anh Gia Lai, Phuc Sinh, Hung Vuong, TH True Milk, Vinamilk, and Hoa Phat. There are currently 34 high-tech agriculture areas planned in 19 provinces. A great deal of modern high technologies have been imported and applied into agricultural production. Viet Nam has set a target of high-tech agriculture’s production value representing 30-35 per cent of total production value by 2020. In 2017, the Prime Minister approved the master plan on developing high-tech agriculture to 2020 and requested commercial banks provide credit packages valued at $4.4 billion for high-tech agriculture programs. The Ministry of Finance was assigned to complete preferential treatment mechanisms to promote high-tech agriculture, especially in the fields of research, production technology transfer, preserving and processing agricultural products, and importing equipment that cannot be produced locally. The Ministry of Science and Technology has been assigned to further complete policies on promoting and encouraging research, innovation, technological development and transfer, and the application of technology in production. High-tech agriculture remains an attractive investment field for both local and foreign investors. Recognizing that FDI in agriculture is strategically crucial for the sector, MARD has approved a decree on policies to encourage FDI flows. The target is to call for $5 billion in 2020 and $8 billion in 2030. The Ministry lists some priority categories for FDI: development of new plant and animal strains, production of high value-added inputs for the feed industry and investment in clean farming technologies, agriculture, forestry, and fisheries processes using modern technologies, and the production of veterinary and plant protection medicines. Public-private partnerships (PPPs) will be an important channel for attracting foreign direct investment in agriculture.


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AGRICULTURAL SUB-SECTORS Planting In the first nine months of 2017, planting recorded production value of $20.2 billion . Viet Nam now has 3.8 million ha for rice planting, with an average productivity of 56 quintals per ha (5,600 kg per ha). The area for planting short-term industrial crops was 487,800 ha. The total area for plant perennial crops (pepper, coffee, tea, and cashew nuts) is estimated at 3.367 million ha.

Breeding Breeding is undergoing a clear shift from being small and scattered to being concentrated, under models for farms and farming households and the application of technology to increase value. It is estimated that as at September 2017, cattle heads nationwide had increased 5.3 per cent and beef productivity reached 772,700 tons, an increase of 6.1 per cent year-on-year.

Aquaculture Over the last five years, aquaculture has recorded average annual output of more than 6.5 million tons per year, of which aquaculture farming represents 50 per cent. In the first nine months of 2017, aquaculture farming productivity reached 2.813 million tons, an increase of 6 per cent year-on-year, while aquaculture exploitation and fishing productivity reached 2.636 million tons, up 5.2 per cent year-on-year.

Forestry Forestry production in 2016 grew 6.17 per cent compared to 2015. Wooden products are among Viet Nam’s key export items, with major markets including the US, Japan and China. Many provinces are adopting a new corporation format in which planting, harvesting, manufacturing, and exclusive selling are secured in a complete production chain.


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FACTS & FIGURES Exports of agriculture products have continuously and significantly increased over the last 30 years. In 2016, total export value was $32.1 billion. According to MARD, in the first three quarters of 2017, total export value totaled some $27 billion, an increase of 14.1 per cent compared to the same period of 2016. In the first three quarters of 2017, rice exports totaled 4.57 million tons worth $2.02 billion, increases of 20.8 per cent and 18.6 per cent, respectively, year-on-year. China was the leading importer of Vietnamese rice, receiving 38.8 per cent of the total, followed by the Philippines, with 9.3 per cent, and Malaysia 7.8 per cent. Exports of fruit and vegetables in 2016 reached $2.4 billion, an increase of 31.2 per cent against 2015. In the first three quarters of 2017, export value came in at $2.64 billion, up 44.2 per cent year-on-year. China, Japan, the US, and the Republic of Korea were the four leading importers. Coffee exports stood at 1.79 million tons in 2016, worth $3.36 billion. In the first three quarters of 2017, quantities fell 20.7 per cent year-on-year to 1.11 million tons, but value increased 1 per cent, to $2.54 billion. Germany and the US continued to be the largest markets, importing 14.7 per cent and 13.5 per cent of the total, respectively. Aquaculture exports in 2016 totaled $6.99 billion. In the first three quarters of 2017, value was $5.91 billion, up 18.1 per cent year-on-year. The US, Japan, China, and the Republic of Korea were the four leading importers, representing 54.4 per cent of the total collectively.

MEASURES TO RESTRUCTURE THE AGRICULTURE SECTOR Changing to large and concentrated agricultural production models based on enterprises, collectives, and farms. Focusing on developing industries and services that support key agricultural fields to serve domestic consumption and exports. Building a large and effective agriculture sector, ensuring food safety and hygiene and environmental sustainability. Focusing on developing modern agriculture with high productivity and high added value, applying high-technology, and cutting pollution and adapting to climate change. Promoting research and science and technology transfer and application. Developing the roles of enterprises in researching, transferring, and applying science and technology in agricultural production.


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4 DIRECTORIES Viet Nam’s overseas diplomatic missions

154

Foreign embassies and missions in Ha Noi

159

Ha Giang. Photo: Tran Bao Hoa


Viet Nam at a Glance Culture

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Viet nam a country book  
Viet nam a country book  
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