Industry has expanded dramatically in the last two decades with average annual 8% growth, and benefited from legal improvements that removed some obstacles to private investment in the industrial sector development
The government is making efforts to introduce reforms and a legal framework that can create a more favourable business environment and adopted an Anti-Corruption Law in 2005 that implements several measures to counteract the phenomenon. However, the results haven’t been as good as wished due to lack of enforcement and limited accountability of financial institutions to the civil society. Government representatives recently stated that restructuring of state companies is underway, but the road is long and tough, and several powerful groups of interest put obstacles on the way. Despite the important signals that the Vietnamese economy and society are at a critical turning point, which will determine whether the country will be able to attain the upper middle-income bracket in a near future, the improvements brought to its population by the last three decades of economic development are undeniable.The strength of the export sector has helped many to reach a good income level during the booming years, but on the other hand the spill-over effects haven’t spread evenly across the country. Experts warn that Vietnamese government needs to fully commit itself to reform the financial sector and the economy in a more regulated and sustainable way in order to continue on the development path and keep attracting investors that are increasingly turning to faster-growing neighbours such as Philippines or Indonesia. In 2011 FDI grew by 31% in Malaysia and Indonesia and by an estimated 89% in Myanmar, while in Vietnam it dropped by 7%; moreover, the total amount of FDI fell 28% in the first nine months of 2012. This shift in international investors’ attitude is attributed in part to the difference between Vietnam’s potential and its real performance, and also to the country’s downgrade by Moody’s who cut its debt’s rating to the same level of Cambodia, five levels below Indonesia. However, although it lost several places in the global competitiveness index, Vietnam is still an attractive investment destination especially for those companies who wish to relocate from China, considering it too expensive. As reported by the consulting firm Dezan Shira and Associates, the South-eastern region has attracted the largest quantity of foreign direct investment so far, followed by the Red River Delta whose FDI inflow was double than that scored by the North and Central Coasts together. The Mekong River Delta, Central and North-western regions instead attracted little FDI.These trends have recently been shifting towards an increased attention to formerly neglected provinces. Three key economic zones have been pointed out as leading areas for the country’s economic development until 2015, namely the Northern, Central and Southern Key Economic Zone. In such areas the annual average per capita income is expected to increase to US$3,000 and trade revenues are targeted to rise by 14% a year. Their performance in the period 2006-2010 was markedly positive, with annual GDP growth rate of 10.8%, per capita income averaging over US$1,600 (well above national average), an 89% share of the country’s total import-export value (US$602 billion), and over 90% of the total foreign investment projects in Vietnam (12,478 projects, US$162 billion).
Woman working in a rice field in spring in Vietnam sklyarova iryna / Shutterstock.com
22 • Infomedix 1/2013
INTERNATINAL MEDICAL MAGAZINE FOR B2B