Introduction
The Socialist Republic of Vietnam is a country in Southeast Asia with a population of 89.71 million people in 2013. Vietnam is a member of the regional economic organizations, namely ASEAN, APEC, ASEM, and since 2007 it is the member of the WTO. Momentous political event of the year was the adoption on 6 session of the National Assembly of XIII convocation in November 2013 the new Constitution of Vietnam, which fixed the state guarantees in respect of the private sector as an equal participant in the economic market of Vietnam. Among other important events of the political life of Vietnam in 2013 are VII and VIII of the CPV Central Committee plenums XI convocation, V and VI session of the National Assembly of the Socialist Republic of Vietnam XIII convocation, on the last plan of socio-economic development of Vietnam in 2014 was adopted.
This country has very attractive opportunities for investment. Natural resources, production capacity and high interest of the state in the inflow of financial investments have created a favorable investment climate in many areas of Vietnam’s economy. Investors are attracted to such factors as cheap labor. It is mainly young people, because half of the population of Vietnam age does not exceed 35 years. The result was not long in coming – large company began to explore new market several years ago, often in preference to China.
Macroeconomic Tendencies
Based on the estimates of Vietnam’s management, in 2013 the government task-oriented actions allow restoring macroeconomic stability. However, a significant impact on economic development was made by the consequences of the global crisis, first of all in countries – the main recipients of Vietnamese exports – the EU and the USA. The main reasons for the slowdown of the economy and reduction of business activity are endogenous.
Considering the information from Global edge (2014) positive factors of economic development are trade surplus for the second year in the amount of USD 863 Mio in 2013, a significant increase in foreign direct investment (35.9% to USD 2450 Mio), the increase in foreign exchange reserves up to USD 32 billion (12 weeks of imports), the strengthening of the dong against the US dollar, the lowest inflation rate for the past 10 years (6.59%).
Among the negative factors, which acquire a “chronic” nature, the following are examined, namely the low level of productivity (60% of the ASEAN countries), stagnation in the real estate sector during 2011-2013 (cost of unclaimed estate valued at $4 billion), slowdown in bank lending (8.8%) and inefficient banking sector reform. The state lacks the funds – the amount of capital investment budget remains at 2012. For the first time the plan of revenues to the state budget failed. In this situation, the rapid growth of the share of total investment in foreign direct capital investment and donor loans continued (more than 30% of total capital investment). Despite the anti-corruption measures taken and punishment, a noticeable improvement in this area was not achieved.
Based on the data from Trading economics (2014) the GDP of Vietnam was worth USD 171.39 billion in 2013. The priority sectors of the country’s economy are energy, manufacturing, high-tech industry, mining, metallurgy and chemical industry, defense industry. The United States, China, the EU, Australia, Japan and Singapore are considered the main exports partners. China, Taiwan, Thailand, Japan, South Korea and Singapore are import partners of machinery tools and spare parts, fabrics, steel, petroleum and plastics.
Reached in 2013 macroeconomic stability has a very “fragile” nature, as determined by existing imbalances in the economy. The main factors of risk in this case were the bad financial situation of state companies and the high dependence of public finances, in particular the investment process, on external factors.
Investment Climate
As per The Canadian Trade Commission Service (2011) discussing the investment climate in Vietnam, the peculiarity of the state system, which is very slow and moves towards liberalization with uncertain steps, should be taken into account. Vietnam is a very conservative country with a dominant position of the government in virtually all key industries. This relates to the energy sector of Vietnam, which almost under unchallenged control of three public companies – Electricity of Vietnam (EVN), PetroVietnam (PV) and Vinacoal and their subsidiaries.
Traditionally agriculture in Vietnam is the most vulnerable sector of the economy that is most susceptible to the negative impacts of the global market and natural disasters. Prolonged adverse weather conditions in the period under review increased the instability of production and further contribute to reducing the cost of goods manufactured.
According to Vladimirova (2014) one embodiment of the deployments of foreign investments is the creation of industrial complexes, for example, like in the Bắc Giang province. Here, in an area of over 500 hectares, 30 km from Hanoi, KUANG TAI Metal Industrial Co., Ltd., industrial complex, the largest in the north of Vietnam, is located. A high-tech factory of Sanyo OPT Vietnam specialized on the production of optical lenses for electronic equipment, operating since 2009, is considered notable element of the complex. The primary investment in this production amounted to 95 million dollars. The plant has more than 12 thousand employees, and its revenue reaches $300 million a year.
Among the other participants the Wintek Vietnam Company of Wintek Taiwanese consortium, which manufactures electronic parts and has brought investment to 1.12 billion dollars, should be stated. It is known as the major overseas venture in Bắc Giang.
On the territory of Din Cham, another industrial complex from Bắc Giang province, 72 investees are successfully implemented at once. Here are the companies operating in the food, electronic, mechanical, engineering, textile and packaging industries. Among them, for example, a plant for the production of construction equipment, the company of the production and trade of equipment for cameras, optical instruments, electronic products, computers, monitors, printers, and many others are.
According to Vladimirova (2014) rapidly developing Thái Nguyên Province in northeastern Vietnam also attracts many abroad sponsors. Thái Nguyên (SEVT), a high-tech Samsung complex, can be defined among already implemented in the province projects, as well as Samsung Electro-Mechanics Vietnam (SEM), a project for the production of microelectronic elements and computer-assisted parts for mobile phones. SEVT was recognized among the other high-tech systems as the major, running by Samsung Group in Vietnam. Mentioned venture promised to turn Vietnam into a foremost base point for the production of mobile phones. Projected production volume is 250 million pieces a year. One of the Samsung Group’s campaigns is to spend for the project USD 3.2 billion.
Mekong Delta is a location with great potential for economic development, which includes 12 provinces. It is known for being a significant farming area of southern Vietnam having a population of over 17 million people. Here the rice and a variety of fruits are grown, seafood is bred. Currently, the total amount of FDI in the area went above USD 11 billion. Mekong Delta has become an attractive destination for foreign investors due to the great efforts of the municipal government to improve the investment environment.
Conclusion
Therefore, Vietnam is one of the most politically stable Asian States, conducting a policy to encourage foreign investment in the country’s economy by providing various incentives and preferential terms, that against the entry of Vietnam into the WTO opens up to foreign investors excellent opportunities. Attracting foreign investment for extensive development takes a back seat. Importance was given to its own innovations and effective use of human resources. In connection with this, tasks to sharp training workers, engineers, managers, creating more jobs requiring high qualifications are put.
References
Global edge, 2014. ‘Vietnam: Introduction’, <http://globaledge.msu.edu/countries/vietnam>
The Canadian Trade Commission Service, 2011. ‘An Investment Guide to Vietnam’, <http://www.tradecommissioner.gc.ca/eng/document.jsp?did=91398&cid=539&oid=595>
Trading economics, 2014. ‘Vietnam – Economic Indicators’, <http://www.tradingeconomics.com/vietnam/indicators>
Vladimirova, R., 2014. ‘Vietnam open to investment’, viewed 04 June 2014, <http://eng.tpp-inform.ru/princple_theme/1196.html>
