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Global member - Vietnam


Introduction of Vietnam

The Socialist Republic of Vietnam is the easternmost nation on the Indochinese Peninsula. With a population of nearly 87 million, Vietnam is the 13th most populous country in the world. Legend has it that Vietnam’s origin lay in the harmonious union of Lac Long Quan, King of the Sea, and Au Co, Princess of the Mountains. In real life, Vietnam’s history is characterised by a nearly continuous struggle for autonomy. Reunified in 1975 but for over two decades since then the country experienced little economic growth because of conservative leadership policies. Since 2001, Vietnamese authorities have committed to economic liberalisation and enacted structural reforms needed to modernise the economy and to produce more competitive, export-driven industries. Political stability and encouraging foreign investment policies help Vietnam’s FDI grow steadily.

Foreign Investment Agency figures show that Vietnam’s FDI capital grew substantially from US$4.55 billion in 2004 to peak US$71.73 billion in 2008 at significant rates of above 150%; in particular, FDI capital’s growth rate reached the highest of 330% in 2008. As Transnational Corporations delayed investment plans during the course of the global financial crisis, the total FDI inflows into Vietnam fell sharply to US$21.48 billion in 2009, around one-third of 2008 figure. The next two years witnessed further decline in FDI inflows; in the first 4 months of 2011, newly registered and increase capital of FDI into Vietnam is around 52.2% over the same period of 2010. Regardless of this declining trend, from a regional perspective focusing on countries within the Association of Southeast Asian Nations (ASEAN), Vietnam is considered as one of top favourites in terms of attracting FDI in the coming years.


Location: South-eastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea,
alongside China, Laos, and Cambodia
Area: total: 329,560 sq km
Land: 325,360 sq km
Water: 4,200 sq km
Coastline: 3,444 km (excludes islands)

Climate: Tropical in south; monsoonal in north with hot, rainy season (mid-May to mid-September) and warm, dry season (mid-October to mid-March)
Population: 87,642,000 (2011 est.)(1)
Age structure: 0-14 years: 24.46% (2009 census)
15-64 years: 69.12% (2009 census)
65 years and over: 6.42% (2009 census)
Population growth rate: 1.10% (2011 est.)
Life Expectancy: 71.4 (2008 est.)
Literacy Per cent: 94.99 (2009 census)
Languages: Vietnamese (official), English (increasingly favoured as a second language), some French, Chinese, and Khmer; mountain area languages (Mon-Khmer and Malayo-Polynesian)


Vietnam is a densely-populated, developing country that in the last 35 years has had to recover from the ravages of war. Growth averaged around 9% per year from 1993 to 1997. The 1997 Asian financial crisis highlighted the problems in the Vietnamese economy and temporarily allowed opponents of reform to slow progress towards a market oriented economy. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999. Growth then rose to around 7.5% in 2000-06 even against the background of global recession, making it the world’s second-fastest growing economy. Simultaneously, investment grew three-fold and domestic savings quintupled.

According to Vietnam’s General Statistic Office, the GDP growth was estimated at 6.78% in 2010, which is rather higher than that of 6.31% in 2008 and much higher than that of 5.32% in 2009. Since 2001, Vietnamese authorities have reaffirmed their commitment to economic liberalisation and international integration. They have moved to implement the structural reforms needed to modernise the economy and to produce more competitive, export-driven industries. Vietnam’s exports to the US doubled in 2002 and again in 2003. Vietnam has successfully completed accession to the WTO in 2006.

Legal System

Vietnam uses the Civil Law system which based on written laws. The hierarchy of the legal System in Vietnam can be simply classified into three basic layers in term of its governing scope and level: (1) The National Assembly issues the Constitution, laws, codes and resolutions; the National Standing Committee issues ordinances and resolutions; (2) Legal instruments issued the central executive and justice bodies including: decisions and mandates of the State President; decrees and resolutions of the Government, decisions and directives of the Prime Minister; decisions, directives and circulars of Ministers and equivalent levels; resolutions of the Supreme Court’s Judge Council and other legal instruments of the Supreme Procuracy; and (3) resolutions of the People Councils and decisions and directives of the People’s Committees.

All laws and regulations root from the Constitution and then the Civil Code. Other important laws concerning foreign investment and trade include the Law on Investment in Vietnam; the Law on Enterprise; the Law on Commerce; the Labour Code; the Law on Land; Law on Corporate Income Tax; the Law on Value Added Tax; the Law on Competition, etc.

Forex Control

Vietnam imposes a strict control over foreign currency. Foreign investors who wish to transfer capital in foreign currency into Vietnam must open a specialised foreign currency bank account at a legal bank in Vietnam. During the operation, foreign currency remitted into Vietnam by foreign investors must be converted into Vietnamese dong or deposited in a foreign currency bank account. Payment made by enterprises in foreign currency can be implemented in certain cases as described by the State Bank of Vietnam (SBV), such as payment for imported goods and services; abroad remittance by foreign investors of invested and reinvested capital, earning profits from undertaking in Vietnam, principals and interests of off-shore loans and credits, and other legal benefits; payment for travel allowances to employees travelling abroad, payments of salaries and other legal incomes of foreigners; personally carried foreign currency are also allowed(but for a limited amount defined by law for different circumstances and in case of excess, the whole amount will be taxed like forex trading). In all cases above the amount of foreign currency are monitored.

Foreign investors who are in need of foreign currency for paying allowed business transactions can buy foreign currency from permitted banks in Vietnam. Offshore loans reaped by enterprises are subject to certain conditions as regulated by SBV. Medium and long term loans are required to be registered with SBV.