Vietnam - Asia Pacific Business Outlook Conference

Doing Business in Vietnam William Marshak Commercial Oﬃcer Hanoi Popula<on •  1. China • 
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1,355,692 2. India 1,236.344 3. European Union 507,163 4. United States 318,892 5. Indonesia 253,609 6. Brazil 202,657 7. Pakistan 196,174 8. Bangladesh 166,280 9. Russia 142,470 10. Nigeria 177,156 11. Japan 127,103 12. Mexico 120,286 13. Philippines 107,668 • 
14. Vietnam 93,422 Traffic jam in Hanoi
Sources: United States’ Census Bureau & Eurostat 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 Source: CIA Fact Book Black H’mong sisters by Eric Laﬀorgue 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-oy)
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
US$10 bil
US$11 bil
US$11 bil1
N/A
US$11.5 bil
Implemented
FDI
Source: Euromonitor 2013 Regional Economic Comparison Series title
Indonesia
Malaysia
Myanmar (Burma)
Philippines
Singapore
Thailand
Vietnam
GDP (% real
change pa)
5.3
4.7
6.8
6.8
3.5
3.1
5.3
Nominal GDP (US$
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
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
Population
Source: CIA World Fact Book U.S. -‐ Vietnam Trade ($millions) 2012
2013
Exports to Vietnam
4,623.3
5,013.1
Imports fm Vietnam
20,265.9
24,649.2
Total trade
24,889.2
29,662.3
Balance
-15,642.6
-19,636.1
Sources: United States’ Census Bureau
Composi<on of trade 2013 ($millions) •  US Exports to Vietnam $5,013.1 Top 5 categories: 1. 
2. 
3. 
4. 
5. 
6. 
Agricultural Products: Foods and Kindred Products: Computers and Electronics: Chemicals: Machinery, Except Electrical: Waste and Scrap: Sources: United States’ Census Bureau
$1,164.6 $816.7 $717.5 $526.6 $312.6 $210.8 Composi<on of trade 2013 ($millions) •  Vietnam’s Exports to the U.S. $24,649.2 Top 5 categories: 1. Apparel and Accessorizes: 2. Fish and Other Marine Products: 3. Leather and Allied Products: 4. Computers and Electronics;
5. Furniture and Fixtures 6. Agricultural Products: Sources: United States’ Census Bureau
$8,181.9 $1,182.7 $3,611.9 $3,094.1 $3,005.3 $953.4 US trade with ASEAN countries 14.44
Vietnam
23.64
Thailand
Myanmar (Burma)
18.5
Laos
Cambodia
8.6
0.09
0.03
13.62
1.46
19.62
Malaysia
Indonesia
Philippines
Singapore
Why Vietnam? • 
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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 • 
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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
Power generation
current capacity
21,000 MW
Renewable energy 3.5% Gas power 39% Nuclear power Import 5% 0% By 2030 - Installed
Capacity to be
137,700 MW
Hydro power 37% Coal power 15% Renewable Nuclear power energy 10% 6% Gas power 15% Import 4% Hydro power 9% Coal power 56% Power Genera<on IPPs 5.6
BOT % 7.74% Vinacomin 3.7% Petro Vietnam 10.59% Electricity of Vietnam 68.9% Opportuni<es in power •  ConsulVng and engineering services for coal-‐ﬁred power plants •  Equipment for coal-‐ﬁred power plants •  Spare parts and overhaul services for coal-‐ﬁred power plants •  Investment in IPP projects Oil and Gas • 
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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: 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<on: –  water supply only meets approx. 70% of demand; –  water loss rate ~ 32%; –  combined sewerage system of storm water; no centralized wastewater treatment plants; –  75% of industrial wastewater is untreated; week environment law enforcement. • 
Financing for Water Projects comes mainly from WB and ADB • 
WB funds US$50 million to support the enforcement of wastewater treatment regulaVons for IZs in the four most industrialized provinces: Nam Dinh, Ha Nam, Dong Nai and Ba Ria Vung Tau. 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<al Buyers: ODA projects • 
Vietwater Expo & Forum 2014, November 12-‐14, Vietnam’s largest water event Educa<on • 
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70% of populaVon under 35 Three top prioriVes for Vietnamese government in the next 10 years: -‐ Infrastructure -‐ InsVtuVonal Reform -‐ Human Resources Development •  EducaVon holds an esteemed posiVon within Vietnamese society and is a cornerstone of U.S. bilateral relaVonship with Vietnam •  Vietnam currently ranks 8th -‐ 16,098 students studying in the U.S. in 2012/2013 (up 3.4% from the previous year) •  Academic level breakdown: 70.7%
Undergraduate 17.3%
Graduate 5.3%
Other 6.7%
OPT (OpVonal PracVcal Training) Source: Open Doors 2013 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 • 
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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

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