Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Do you really want to delete this prezi?
Neither you, nor the coeditors you shared it with will be able to recover it again.
Make your likes visible on Facebook?
You can change this under Settings & Account at any time.
Vietnam: Sustaining the Growth of an Asian Tiger
Transcript of Vietnam: Sustaining the Growth of an Asian Tiger
Development Along with Problems
Intel’s chip assembly and testing facility, opened in Ho Chi Minh City in 2010, had attracted other companies, like contract manufacturers Foxconn and Compal.
Finding skilled employees had proven to be a challenge
Improve training by Higher Engineering Education Alliance Program
From French Occupation to the Communist Vietnam
The Economic History of Vietnam
Vietnam’s Economy Nowdays
By 2010, Vietnam’s growth had rebounded.
The poverty rate was at 14.8%, one third of the rate a decade before.
High inflation had put pressure on lower income urban residents as well.
Labor participation was high. Unskilled labor costs were still low but had been increasing.
Productivity remained at half of Indonesia’s level and about 40% of the Chinese level, despite a growth of more than 50% over the previous period.
Vietnam’s total trade (exports plus imports) accounted for roughly 150% of GDP, higher than in almost all neighboring Asian countries.
Vietnam’s investment rate stood in 2010 at 39% of GDP and Vietnam’s inward FDI stock was about 50% of GDP.
Thursday, July 17, 2014
Ryan Kurihara, Huang Chao, Yu Likuan
Vietnam‘s Role in Global Value Chain
A New Strategy for Vietnam
Prospects of Vietnam's Economy
Sustaining the Growth
of an Asian Tiger
From “Doi Moi” (Renovation) to WTO
The Economic History of Vietnam
Location： Southeast Asia
Resources: Forest, Sea, Fossil Energy...
Ho Chi Minh City
Population :87 million
Median Age of 26.9 Years
Young and Growing
Vietnam's Pop Stars: HKT
Single-party socialist system
“Decision processes were long and often ended in compromise solutions rather than decisive action.”
Joined the United Nations in 1977
Joined the Association of Southeast Asian Nations (ASEAN) in 1995
Joined the Asia-Pacific Economic Cooperation (APEC) forum in 1998
Became a full member of the WTO in 2007
The Ha Long Bay of Vietnam
Ho Chi Minh proclaimed Vietnam’s independence from France in 1945.
Invaded Cambodia in 1978
A costly border war with China in 1979
A total economic embargo imposed by Western countries
Exported raw materials and low-cost consumer goods and apparel in exchange for capital equipment, fuel, and other manufactured goods
Became the ninth-poorest nation in the world
Real GDP per capita had fallen by 7% between 1977 and 1980.
Adopted the “output contract system” of agriculture in 1981, allocated land to individual households
Vietnam had been a Chinese province until AD 939.
The economy was based on the cultivation of rice through an elaborate irrigation system of canals and dikes.
Vietnam became a colony of French by 1885.
The North: developed extractive industries
The South: more fertile lands, growed corps
The colonial government sought to develop Indochina as an economy that complemented France, barring heavy industries that could have competed with French companies.
The French agreed to a ceasefire in June 1954 that divided Vietnam into a communist North and democratic South at the 17th parallel.
Industrialization in both North and South.
Unification in 1975, after the Vietnam War, which brought huge damage to Vietnam's economic.
Prezi© Designed by Yu Likuan
Allowed industries to operate in the open market, so long as they fulfilled the quotas and sold at prices set by the state
Vietnam's Reforms in Early 1980s
Rationing was abolished, and prices of goods were allowed to be set with regards to costs and profits, in 1985
Government's budget deficit soared to 36.6% of GDP in 1985.
Expansionary monetary policy caused a hyperinflation, reaching 700% by one account.
Vietnam's Bussiness Environment
Literacy rate: 93%, higher than for many comparable countries.
Total spending on education amounted to 19.8% of government expenditures and 5.3% of GDP
The overall quality of education was perceived as low, with higher education the weakest.
Vietnam’s financial sector remained relatively underdeveloped.
10% of the population had opened bank accounts.
A rapid increase in bank lending had, pushed the overall level of outstanding loans above 100% of GDP, much higher than in other ASEAN countries.
Level and Composition of Investment
Significant differences in business environment conditions across Vietnam
Import barriers remained relatively high, ranked 127th among 179 countries.
R&D spending was low, accounting for 0.19% of GDP
Foreign-owned companies accounted for 14% of GDP, 22% of employment, 26% of investment, 50% of profits, and 55% of exports.
Composition of the Vietnamese Economy
Benefit from natural conditions
The fifth-largest grower of rice in the world, and the second-largest exporter
The second-largest producer and exporter of coffee
The world largest exporter of cashew and pepper
The world’s fourth- largest exporter of rubber
By 2010, agricultural products accounted for 7% of Vietnamese exports and 9% of Vietnamese GDP.
Oil and Gas
The world’s 35th-largest oil and 46th-largest natural gas producer
Oil and gas production was predominantly offshore.
Vietnam traditionally exported all crude production and imported fuel and petrochemical products
Apparel and Footwear Cluster
After Vietnam opened up, many East-Asian companies established garment factories in Vietnam to take advantage of the country’s export quotas and low labor costs.
Over 2,000 companies with more than 2 million workers
Apparel exports accounting for 14% of total exports
The fourth-largest footwear supplier
Exports of $4.0 billion in 2010
About 80% of wood material was imported
The world’s largest importer of hardwood
Had around 2,000 manufacturers, 15% of which were export-oriented, with 60 foreign firms
Emerged with the entry of Taiwan-based SYM in 1992, followed by Suzuki (1996), Honda (1997), and Yamaha (1999)
Competition intensified after 2000
Cheap domestic suppliers
“Rapid and sustainable development”
———天the theme of the coming decade
“Our achievements have not been commensurate with our potential”
Based on the assessment， Vietnam‘s new strategy emphasized the need to restructure the economy to achieve “deep growth” and knowledge-intensive (rather than labor- and resource-intensive) development. It identified institutions, skills, and infrastructure as three critical areas on which policy should focus.
Vietnam started renovation in 1986
Land reform: households were allowed to pursue private agricultural activity
Abolishment of the dual price control system
Allowed full foreign ownership of green field projects in many industries
Guaranteed free repatriation of profits, capital and assets and no asset expropriations
Establishment of export processing zone and industrial zone
A major reorganization was initiated to reduce red tape and expenses
Industrial policy shifted in 1997 from export promotion to the creation of industrial zones (IZs) with policy-makers focused on import substitution industries.
The tax system was reformed in 1999, with value-added and corporate income taxes replacing sales and profit taxes.
The Enterprise Law, passed in 1999 and implemented in 2000, unified all previous legislation on private companies.
The 2001 Public Administration Reform (PAR), implemented in 2004 and 2005, marked an effort to improve governance.
Join the WTO
In 2006, Vietnam was admitted to the World Trade Organization (WTO).
In preparation for accession, a number of laws were introduced or revised to comply with WTO requirements. Foreign investors, for example, were allowed to purchase more than 30 percent of a Vietnamese enterprise.
While Vietnam committed to specific target years beyond 2010 for the full removal of trade barriers, no transparent implementation schedule was developed.
Between 2006 and 2008, exports continued to grow at around 20% annually, before global trade collapsed in 2009. Exports shifted increasingly from natural-resource related to manufacturing goods.
Imports grew even more, pushing the trade deficit to more than 10% of GDP. Strong FDI inflows helped to balance the capital account. Intel announced that it would invest US$1 billion in an assembly and testing facility.
Low Unit labor Costs
Mainly because of the low wage and the large amount of unskilled workers.
Benefits from the Renovation
"Friends to all" diplomatic stance, good relationship with developed countries
Use value-added and corporate income taxes instead of sales and profit taxes
Support of private companies and foreign companies
Adjacent to main suppliers and markets
Joined the WTO
High premium on education
Better potential on educating high-skilled workforce than comparable countries
Vietnam's Awkward Position in GVC:
Use the Shoemaking Industry as an Example
Low Labor Cost
Highly Rely on other countries
Lacking in R&D
Less stability in workers’ employment
Suffering from the shortage of workers
"To solve these problems, and to sustain its output advantage, Vietnam had set up an aim, namely making its footwear product localize to 100% by 2020, which may help it less dependent on other countries’ support. More importantly, increasing the number of footwear material produce companies in home may play a significant role to tackle with the problem."