Economy of Vietnam

The economy of Vietnam is a developing mixed socialist-oriented market economy. It is the 35th-largest economy in the world by nominal gross domestic product (GDP) and the 26th-largest economy in the world by purchasing power parity (PPP). It is a lower-middle income country with a low cost of living. Vietnam is a member of the Asia-Pacific Economic Cooperation, the Association of Southeast Asian Nations and the World Trade Organization. The economy uses both directive and indicative planning through five-year plans, with support from an open market-based economy. Over that period, the economy has experienced rapid growth. In the 21st century, Vietnam is in a period of being integrated into the global economy. Almost all Vietnamese enterprises are small and medium enterprises (SMEs). Vietnam has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia.

Top Sectors in Vietnam

Agriculture, fishery and forestry in Vietnam

Vietnam produced an estimated 30.7 million cubic meters of wood. Production of sawn wood was a more modest 2,950 cubic meters. Vietnam's fishing industry, which has abundant resources given the country's long coastline and extensive network of rivers and lakes, has generally experienced moderate growth. In 2003, the total catch was about 2.6 million tons. However, seafood exports increased fourfold between 1990 and 2002 to more than US$2 billion, driven in part by shrimp farms in the South and "catfish", which are a different species from their American counterparts, but are marketed in the United States under the same name. By selling vast quantities of shrimp and catfish to the U.S., Vietnam triggered antidumping complaints by the U.S., which imposed tariffs in the case of catfish and was considering doing the same for shrimp. In 2005, the seafood industry began to focus on domestic demand to compensate for declining exports. Vietnam is one of the top rice exporting countries in the world, but the limited sophistication of small-scale Vietnamese farmers causes quality to suffer.[64] Vietnam is also the world's second-largest exporter of coffee, trailing behind Brazil.

Energy, mining and minerals in Vietnam

Petroleum is the main source of energy, followed by coal, which contributes about 25% of the country's energy (excluding biomass). Vietnam's oil reserves are in the range of 270-500 million tons. Oil production rose rapidly to 403,300 barrels per day (64,120 m3/d) in 2004, but output is believed to have peaked and is expected to decline gradually. mining and quarrying accounted for 9.4% of GDP, and the sector employed 0.7% of the workforce. Petroleum and coal are the main mineral exports. Also mined are antimony, bauxite, chromium, gold, iron, natural phosphates, tin, and zinc. Vietnam was the 9th largest world producer of antimony; 10th largest producer of tin; 11th largest producer of bauxite; 12th largest world producer of titanium ; 13th largest world producer of manganese and 9th largest producer of phosphate in the world. The country is also one of the world's largest producers of ruby, sapphire, topaz and spinel.

Tourism in Vietnam

Vietnam welcomed 6.8 million international visitors and the number is expected to reach over 7 million in 2013. Vietnam keeps emerging as an attractive destination. In TripAdvisor's list of top 25 destinations Asia 2013 by travelers' choice, there are four cities of Vietnam, namely Hanoi, Ho Chi Minh City, Hoi An and Ha Long.<br>2016 was the first year ever which Vietnam welcomed over 10 million international visitors.[83] Since then, this figure has continued to rise. In 2019, Vietnam with 18 million international visitors was fifth most visited country in the Asia-Pacific region as per World Tourism rankings released by the United Nations World Tourism Organization.

Banking and finance in Vietnam

The most important banks are the state-owned VietinBank, BIDV, and Vietcombank, which dominate the banking sector. There is also a trend of foreign investment into profitable banks. For example, VietinBank is currently owned by Bank of Tokyo Mitsubishi UFJ (19.73%) while Vietcombank is owned by Mizuho (15%).

Vietnam - Key Economic Indicators

Exports and Imports

Vietnam's export sector remains strong. While final 2023 figures aren't available yet, estimates suggest exports reached $429 billion in 2023. Electronics, machinery, and textiles continue to be key exports. Imports likely remained around the same level, with China still the largest trading partner.

Balance of Trade

Vietnam maintains a positive trade balance. While the surplus might fluctuate, recent data suggests a healthy gap between exports and imports, supporting economic growth and foreign reserves.

Infrastructure Development

The government's commitment to infrastructure development continues. As of 2021, Vietnam had over 43,000 kilometers of national roads. There's no official data yet on total road length in 2024, but ongoing projects suggest further expansion.

Fiscal Policy

Specific data on recent spending and taxation isn't readily available, but Vietnam likely maintains a balanced approach to fiscal policy, adjusting spending based on economic conditions.

Monetary Policy

The State Bank of Vietnam's most recent actions aren't publicly available, but their primary focus remains managing inflation and promoting economic stability through interest rate adjustments and open market operations.

Trade Agreements

Vietnam actively seeks new trade partnerships. There haven't been any major new FTAs signed in 2024, but existing agreements with the US, EU, and ASEAN nations continue to be crucial for trade and foreign investment.

Environmental Regulations

Vietnam's environmental regulations are undergoing revisions. Specific details on recent changes might be limited, but the overall trend points towards stricter regulations to address pollution and promote sustainable development.

Tax System in Vietnam

Capital gains tax: Vietnam taxes capital gains, but rates vary depending on the asset type. For example, profits from selling securities are taxed at 20%, while real estate gains can be taxed at 20% or a progressive rate up to 35%.
Corporate tax rate: The standard corporate tax rate in Vietnam is 20%. However, there are exemptions and incentives available for certain industries and locations, potentially lowering the rate.
Sales tax (VAT): Vietnam employs a Value Added Tax (VAT) on the supply of goods and services. The standard VAT rate is 10%, but there are lower rates (5% or 0%) for specific goods, such as essential items.
Property tax: Property tax rates in Vietnam depend on property type and location. Residential properties generally have lower tax rates compared to commercial properties. Rates can also vary based on factors like property value and area.
Payroll tax: Vietnam doesn't have a separate payroll tax. Instead, social insurance contributions act similarly, with both employers and employees contributing rates ranging from 17.5% to 32.5% depending on the insurance program.
Tax deductions and credits: Vietnam offers various tax deductions and credits to reduce tax liability. These can be for specific business expenses, investments in certain sectors, or social contributions.
Tax compliance: Tax compliance in Vietnam is improving, but challenges remain, particularly in the informal sector. The government is implementing initiatives to enhance tax collection efficiency.
Tax burden: Compared to some regional neighbors, Vietnam's tax burden is considered moderate. The government aims to balance revenue collection with fostering business growth.

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