Doing  Business  in  Vietnam    

 

William  Marshak  Commercial  Officer  

Hanoi  

Popula

The  People  

•  Age  structure:  24.3%  14  and  under;  68.3%  15-‐64  

•  Median  age:  28.7  years  •  Ethnic  Viet:  85.7%  •  Religion:  Buddhist:  9.3%,  

Catholic  6.7%,  none  80.8%,…etc  

Black  H’mong  sisters  by  Eric  Lafforgue  

Source:  CIA  Fact  Book  

System  of  government  

•  Communist State

•  Prime Minister Nguyen Tan Dung (since 2006)

•  President Truong Tan Sang (since 2011)

•  Party Congress 2015

•  63 Provinces & Special Municipalities

Le8  to  right:  President  of  State  Truong  Tan  Sang,  Prime  Minister  Nguyen  Tan  Dung,  General  Secretary  of  the  Central  CommiFee  Nguyen  Phu  Trong,  Chairman  of  NaGonal  Assembly  Nguyen  Sinh  Hung  

Economic  &  Trade  Milestones  

•  1986:  Doi  Moi  reforms  proclaimed  •  1994:  U.S.  liUs  trade  restricVons  •  1995:  U.S.  and  Vietnam  reestablish  diplomaVc  relaVons;  Vietnam  joins  

ASEAN  •  2001:  (December)  Vietnam  and  U.S.  implement  BTA  •  2007:  Vietnam  become  the  150th  member  of  the  WTO  •  2010:  Vietnam  becomes  full  member  of  TPP  negoVaVons  •  2013:  (July)  President  Sang  and  President  Obama  proclaim  

‘Comprehensive  Partnership’  

2013  Economic  Overview  2009 2010 2011 2012 2013

GDP growth rate (y-o-y)

5.3% 6.8% 5.8% 5.0%

5.3%

Lending rate 12.75% (Down from 21% in Q3) 16%-17.0% (Late 2010) 22% - 25%

2 13% 10.9%

Inflation (Average, y-o-y)

6.9%1 9.2%

(Dec. 2010: 11.8%) 18.58%1 7%

6.7%

Exports US$57.1 bil US$71.6 bil US$96.3 bil US$105.4 bil US$133.3 bil

Imports US$69.9 bil US$84.0 bil US$105.8 bil US$113.3 bil US$132.9 bil

US$/VND (Commercial banks)

18,497 (Dec. 31, 2009)

19,500 (Dec. 31, 2010)

Devalued by 5.4% vs. Dec. 2009

21,036 (Dec.31, 2011)

Devalued by 7.9% vs Dec. 2010)

20,828

20,932

US$/VND (Unofficial market)

19,470 (Dec. 31, 2009)

21,010 (Dec. 31, 2010)

21,275 (Dec. 31, 2011) N/A 21,130

Committed FDI US$22.6 bil

1 US$18.6 bil

(US$6.8 bil real estate)

US$14.7 bil 1 (US$845.6 mil real

estate) US$16.3 bil US$21.6 bil

Implemented FDI US$10 bil US$11 bil US$11 bil

1 N/A US$11.5 bil

Source:  Euromonitor  

2013  Regional  Economic  Comparison  Series title Indonesia Malaysia Myanmar (Burma) Philippines Singapore Thailand Vietnam

GDP (% real change pa)

5.3 4.7 6.8 6.8 3.5 3.1 5.3

Nominal GDP (US$ billions at PPP)

1,285.0 525.0 111.1 454.3 339.0 674.3 358.9

Exchange rate (US$)

10,341.6 3.2 947.9 42.7 1.3 30.6 21.1

Budget balance (% of GDP)

-3.3 -4.4 -3.4 -1.8 0.7 -3.0 -4.2

Lending interest rate (%)

12.1 4.5 13.0 5.8 5.4 7.0 10.5

Consumer prices (% change pa)

7.7 2.2 5.7 2.8 2.4 2.2 6.8

Population 253.6 30.1 55.7 107.7 5.5 67.7 93.4

GDP per head (% at PPP)

$5,200.0 $17,500.0 $1,700.0 $4,700.0 $62,400.0 $9,900.0 $4,000.0

Total exports FOB (US$ millions)

178.9 230.7 9.0 47.5 442.9 279.1 128.9

Total imports CIF (US$ millions)

178.6 192.9 10.1 63.91 380.3 223.0 121.4

Source:  CIA  World  Fact  Book  

U.S.  -‐  Vietnam  Trade  ($millions)  

2012 2013 Exports to Vietnam 4,623.3 5,013.1 Imports fm Vietnam 20,265.9 24,649.2 Total trade 24,889.2 29,662.3 Balance -15,642.6 -19,636.1

Sources:  United  States’  Census  Bureau

Composi

Composi

US  trade  with  ASEAN  countries  

14.44

18.5

0.09 0.03

1.46 19.62 13.62

8.6

23.64 Vietnam Thailand Myanmar (Burma) Laos Cambodia Malaysia Indonesia Philippines Singapore

Why  Vietnam?  

•  Demographics  for  Growth  •  PoliVcal  stability  •  Real  Income  Increasing  •  RecepVvity  to  U.S.  Products  and  Services  •  Growing  Market  for  Technologies  &  Inputs  U.S.  

Companies  Provide  •  Growing  Consumer  Market  

The  Good  News  in  2013  

•  InflaVon  Down  •  Currency  Stable  •  Stock  Market  Up  •  Real  Estate  Market  Weak  but  Perhaps  

Stabilizing  •  GDP  Growth  Rate  Ticking  Upward  

Again  •  Business  Confidence  Increasing      

Challenges  

•  To  Economic  Growth:  –  Banking  System:  NPLs  –  SOE  Reform  

•  Infrastructure:    –  Power  –  TransportaVon  

•  HR:    EducaVon  and  Skill  Mismatch  –  Engineering,  Management,  Healthcare  

•  Legal  system:  SVll  New  and  Developing  •  Transparency  •  CorrupVon  •  ODA  and  CompeVVon  for  Financing  

Ease  of  doing  business  

Economy Rank Starting a business

Permits Electricity Getting credit

Protecting investors

Trading Across Border

Enforcing contrast

Resolving insolvency

Singapore 1 3 3 6 3 2 1 12 4

Malaysia 6 16 43 21 1 4 5 30 42

Thailand 18 91 14 12 73 12 24 22 58

Vietnam 99 109 29 156 42 157 65 46 149

Indonesia 120 175 88 121 86 52 54 147 144

Cambodia 137 184 161 134 42 80 114 162 163

Philippines 108 170 99 33 86 128 42 114 100

Lao PDR 159 85 96 140 159 187 161 104 189

Source:  Doing  Business.org  

Best  Prospects  

Current:  •  Power  GeneraVon,  Transmission,  DistribuVon  •  Telecom  Equipment  and  Services  •  Airports/AviaVon  (ACWG)  •  Health  Care/Medical  Equipment  

Growing:  •  Environmental  Technology  •  Industrial  Machinery  •  Renewable  Energy  •  EducaVon:  16,000  Vietnamese  students  study  in  the  US  •  Franchising  

Source:  Embassy  of  Vietnam  in  the  US  

Power  

•  Growth  rate  of  13%-‐15%  due  to  rapid  industrializaVon    

•  Main  power  plant  developers:  EVN,  PVN,  Vinacomin  and  private  sector  

•  EVN  in  charge  of    transmission  and  distribuVon  

•  GVN  regulates  electricity  retail  prices.  Plan  to  be  market  price  by  2015  

•  US$  48.8  billion  required  for  the  period  2006-‐2020  development,  and  US$75  billion  for  2021-‐2030  

 

Power  Master  Plan  VII  (2011)  

Development of Power Sources  

Hydro  power  37%  

Coal  power  15%  

Gas  power  39%  

Renewable  energy  3.5%  

Nuclear  power  0%  

Import  5%   Hydro  power  

9%  

Coal  power  56%  

Gas  power  15%  

Renewable  energy  6%  

Nuclear  power  10%  

Import  4%  

Power generation current capacity

21,000 MW

By 2030 - Installed Capacity to be

137,700 MW

Power  Genera

Opportuni

Oil  and  Gas  

•  Major  source  of  naVonal  income:  18-‐20%  GDP  •  Growth  rate    14-‐16%  •  PVN-‐  largest  company  in  upstream,  mid-‐stream  and  downstream  •  Offshore  oil  and  gas  equipment  and  services  $3.5  billion  in  2013  •  Require  an  investment  of  $203  billion  for  the  2006-‐2025  period  •  OpportuniVes  in:  Ø  Oil  &  gas  equipment,  accessories,  chemicals,  services  for  the  upstream,  

midstream  and  downstream  segments  Ø  Offshore  enhanced  oil  recovery  Ø  Deep-‐water  development      

ICT  

SoUware:15%  growth  y-‐o-‐y,  60%  imported  (24%  U.S.)    Hardware:  17%  growth  y-‐o-‐y,  95%  imported  (38%  U.S.)    •  81%  soUware  piracy  –  sVll  higher  than  the  average  of  60%  among  ASEAN  

countries  •  In  2013,  ICT  spending  reached  $9.9B,  increased  by  8.4%  compared  to  2012  •  Best  prospects:    

§  Hardware:  wireless,  telecom,  network,  informaVon  security  equipment    §  SoUware:  security,  database,  cloud  compuVng,  applicaVon  for  SME’s  

 

Sources:  IDC,  MIC  Vietnam,  SBA  Vietnam  

Healthcare  

•  Growth  rate  of  15%  -‐17%  •  US$2.5  billion  to  build/  upgrade    hospitals  (200  projects)    •  MOH  manages  $1.20  bil  of  ODA-‐  health  care  projects.  50%  for  medical  

equipment  purchase  mainly  imported  (90.7%  )  •  PharmaceuVcal  market  is  $2.4  billion.  Medicine  and  acVve  ingredients  

are  imported  (1.4  bil)  •  Since  2009  health  insurance  compulsory  •  61  %  of  health  care  expenditure  is  private  •  34.7  health  workers,  6.5  doctors,  1.2  phamacists  and  8.3  nurses  per  

10,000  people  •  Medical  equipment  and  supplies  is  $599  million  ($7  per  capital)  

Water  &  Wastewater  

•  Major  Contributors  to  Pollu

Water  &  Wastewater  (cont)  

•  Vietnamese  government  plans  to  invest  US$2.78  billion  in  the  water  sector  by  2020.  ADB  approved  a  MulV-‐tranche  Financing  Facility  (MFF)  of  up  to  US$1  billion  for  2011-‐2020  to  help  finance  water  supply  and  sanitaVon  projects  in  Da  Nang,  Haiphong,  HCMC,  &  Hue,  and  the  NaVonal  Nonrevenue  Water  (NRW)  Program.  

•  Best  Prospects:  pumps  &  valves,  water  treatment  chemicals,  water  filtraVon  systems,  water  control  &  monitoring  equipment,  sludge  treatment,  energy  saving  treatment  system,  wastewater  treatment  equipment  and  technologies,  etc.  

•  Poten

Educa

Trans-‐Pacific  Partnership  

•  11  countries  •  In  2012,  total  U.S.  trade  with  TPP  countries:  $1.3tn  in  merchandise;  

$172bn  in  services    •  Market  access  eliminate  tariffs  (11,000),  Vietnam  highest  average  tariff  

8-‐9%  •  Regulatory  coherence,  compeVVveness  across  sectors,  support  for  

SMEs  •  Facilitate  development  of  producVon  and  supply  chains,  customs,  e-‐

commerce,  environment,  cross  broader  services,  financial  services,  IPR,  government  procurement,  investment,  trade  remedies.  

TPP  Status  

•  TPP  –  Final  stages  of  negoVaVons.    

–  All  TPP  chapters  closed  or  virtually  closed,  only  a  handful  of  issues  remain.    –  Strong  focus  on  Japan’s  market  access  offer  for  sensiVve  agricultural  

products.      

–  Vietnam  is  concerned  about  the  lack  of  Trade  PromoVon  Authority  (“Fast  

Track”)  in  Congress.    

 

 

   

TPP  Benefits  to  U.S.  Companies  

•  Increased  market  access  –  especially  in  Services,  Agriculture  •  Tariff  savings  –  for  key  U.S.  exports  •  Vastly  improved  investment  climate  –  Greater  transparency,  Customs  

and  trade  facilitaVon,  compeVVon  policies,  dispute  resoluVon,  stronger  intellectual  property  protecVon.    

•  Improved  standards    -‐  Safety,  Technical  Barriers  to  Trade,  Sanitary  and  phytosanitary  standards  (SPS)  

•  Greater  efficiencies  –  due  to  deeper  regional  economic  integraVon    

TPP  -‐  Some  Challenging  Issues  Remain  

•  Labor  •  Government  procurement  •  CompeVVve  neutrality  of  SOEs  •  Rules  of  origin  (especially  texVles)  •  Investment  (investor-‐state  dispute  resoluVon)  •  Environment  •  Intellectual  property  

 

Thank you!

U.S.  Commercial  Service  –  Vietnam  www.export.gov/vietnam