Starting a Business in Vietnam
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Starting A Business in Vietnam
Vietnam’s economic liberalisation programme, commonly known as “Doi Moi”, started in 1986. Since then, the country has become one of Asia’s high growth emerging markets.
Vietnam joined the WTO in 2007 and an EU Vietnam Free Trade Agreement is currently under negotiation.
Vietnam is ranked 78th (out of 189) in the World Bank’s (WB) “Doing Business 2015” report ahead of some of its regional neighbours, such as the Philippines (95), Indonesia (114) and Cambodia (135). Of the large BRIC economies only China is ranked slightly higher at 90th position.
In the Global Competitiveness Report 2014-15 published by the World Economic Forum, Vietnam is ranked 68 (out of 144). Both reports highlight red tape and corruption as continuing challenges for foreign companies seeking to do business in Vietnam.
Vietnam maintained an average growth rate of 7% in the decade to 2011, at the expense of inflation averaging 9%. Since then, the Government have prioritised stability over growth, which has since fallen to around 5%. GDP growth in real terms is forecast to average 5.6% between 2012 and 2020.
Vietnam is an increasingly important exporter, with companies such as Samsung making major investments here. This is driving the fast growing domestic demand for goods and services. Vietnam is trying to move up the value chain, including by increasing the quality of education and improving its infrastructure. The UK is in a good position to capture some of the opportunities emerging from this growth.
The Government has an extensive programme of reform of the State Owned Enterprises (SOEs) planned. Progress on this agenda has not been as fast as some had hoped, but the longer-term need for the transition to a more efficient economy with the private sector playing a greater role is clear. Less clear is how effectively this change will be implemented. SOEs currently represent around 32% of GDP (in comparison to the private sector contribution of more than 45%), so the implications of these reforms will be significant.
The UK-Vietnam Strategic Partnership agreement, signed by the Foreign Secretary William Hague and Deputy Prime Minister Pham Gia Khiem in September 2010, was a significant step towards developing a stronger bilateral relationship.
Trade and investment is one of the key components of this agreement; other key elements are education, the fight against illegal migration and organised crime, and development cooperation. In addition, the UK-Vietnam’s Joint Economic and Trade Committee (JETCO) was set up in 2007 to identify and address any potential barriers to trade between the two countries. This annual forum has started to produce some very positive outcomes for the UK.
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