About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
繁體 简体
Save As PDF Email this page Print this page

Vietnam: Market Profile

Major Economic Indicators

 

2011

2012

2013*

Population (million)

89.3

90.4^

91.5^

GDP (US$ billion)

122.7

141.7

160.0^

Real GDP growth (%)

5.9

5.0

4.9

GDP per capita (US$)

1,374^

1,528^

1,705^

Inflation rate (%)

18.7

9.2

6.7

Exports (US$ billion)

96.9

114.6

62.1

Imports (US$ billion)

106.7

114.3

63.4

Export growth (%)

+34.2

+18.3

+16.1

Import growth (%)

+25.8

+7.1

+17.4

Exchange rate (VND: US$)

20,510

20,859

20,872

Source: General Statistics Office of Vietnam (GSO), IMF, EIU, CEIC
^IMF, EIU estimates
*January-June 2013

Latest Development

  • Vietnam’s GDP growth recorded at 4.9% year-on year (YoY) in the first half of 2013. The country’s economic expansion has been driven by the service sector, growing at 5.9% YoY during the same period. 
  • In line with the fall in international commodity prices, inflation eased to 6.7% YoY in the first half of 2013, down sharply from 12.2% in the year-earlier period.
  • In 2012, Vietnam achieved a trade surplus for the first time since 1993, with exports increasing by 18.3% to US$114.6 billion. The expansion in exports was driven by the foreign-invested manufacturing sector.
  • In the first five months of 2013, Hong Kong’s exports to Vietnam up by 6.1% YoY to US$2.9 billion, while imports increased by 8.7% YoY to US$1.8 billion during the same period.

Current Economic Situation

In the first half of 2013, Vietnam’s economic growth slowed to 4.9% YoY. The IMF forecasts that the Vietnamese economy to grow at 5.2% in 2013, echoing the Vietnam Ministry of Planning and Investment (MoPI)’s GDP growth forecast of 5.5%. Vietnam’s economic growth decelerated from 5.9% in 2011 to 5.0% in 2012, the slowest pace of expansion since 1999. The country’s economic growth in recent years has been mostly driven by the service sector. In 2012, the agriculture, industry and services sectors registered respective growth rates of 2.7%, 4.5% and 6.4%.

Vietnam’s inflation rate moderated to 9.2% in 2012, down sharply from 18.7% in 2011. Inflation further decelerated to 6.7% in June 2013, with annual inflation averaged 6.7% in the first half of the year. The lower inflation in 2013 reflected the impact of the government’s effort in credit tightening. Following the subdued GDP growth data and slower inflation in early 2013, Vietnam is seen as pursuing a slightly more accommodative monetary policy to support economic growth. The State Bank of Vietnam (SBV) lowered its benchmark interest rate in May 2013, the second rate cut in 2013 and the eighth since March 2012.

In February 2013, the master plan on economic restructure 2013-2020 was approved. The plan focuses on the restructuring of public investment, banks, and state-owned enterprises (SOEs). Through full or partial privatisation, it is hoped to reduce the number of SOEs by about half to 690 by 2015, and then to 200 by 2020.

External Trade

There was a prominent change in Vietnam’s external trade in 2012. The country’s exports surged by 18.3% to US$114.6 billion, while imports grew slower at 7.1%, leading to a trade surplus of US$ 284 million in 2012, the first since 1993. The growth in exports continued in the first half of 2013, with exports up 16% YoY.

Exports of electronic items accounted for 18% of total merchandise exports in 2012, increasing from the 12% share in 2011. In particular, the exports of phones and components went up by 98%, driven by the foreign-invested manufacturing sector. Vietnam’s top export markets in 2012 were the US, China, Japan and South Korea.

Major imported items in 2012 consisted of machinery, equipment and parts, electronics and accessories. A large part of its imported capital goods is related to assembling goods for export. China is the largest source of Vietnam’s imports, followed by South Korea, Japan and Singapore.

Foreign Direct Investment (FDI)

Vietnam’s impressive growth of exports was largely driven by FDI. According to the Ministry of Industry and Trade, the FDI sector accounted for 100% of Vietnam’s exports of cameras, 98 % of mobile phones and parts, and 97% of computer and parts.

Vietnam attracted 1,110 licensed FDI projects in 2012 with a total registered investment capital of US$7.85 billion. Japan was Vietnam’s largest FDI source in 2012, with a registered investment capital of US$4 billion, followed by South Korea, Hong Kong and Singapore. In the first half of 2013, Vietnam attracted 554 new FDI projects with registered capital of US$5.8 billion.

Major sources of FDI

2012

Jan-Jun 2013

Country/Region

Registered capital (US$ mn)

Share

Country/Region

Registered capital (US$ mn)

Share

Japan

4007.4

51%

Singapore

2323.0

40%

South Korea

757.1

10%

Russia

1015.2

18%

Hong Kong

549.5

7%

Japan

956.0

16%

Singapore

488.4

6.2%

South Korea

466.8

8%

Others

2051.7

25.8%

Others

1051.1

18%

Total

7854.1

100%

Total

5812.1

100%

Source: General Statistics Office of Vietnam (GSO)

WTO Accession

Vietnam became a World Trade Organisation (WTO) member in January 2007. While facing fewer restrictions and lower tariffs in export markets, Vietnamese manufacturers also benefit from the improving access to imports of cheaper raw materials and semi-processed inputs as Vietnam's import tariffs drop.

Upon its WTO accession in January 2007, Vietnam was committed to bound tariff rates on most products ranging from zero to 35%, although tariffs on cars and motorbikes remain high, with certain sensitive products (such as eggs, tobacco, sugar and salt) subject to tariff quotas (higher duties for quantities exceeding the quotas).

Among other benefits, WTO accession allows Vietnam to take advantage of the phase-out of the Agreement on Textiles and Clothing, which eliminated quotas on textiles and clothing for WTO partners on 1 January 2005.

In January 2009, Vietnam allowed foreign investors to operate 100% foreign-owned retail business as per its WTO commitments. Previously, foreign companies had to form joint ventures with local companies if they wanted to enter the retail market.

CAFTA Membership

The China-ASEAN Free Trade Area (CAFTA), formally established in January 2010, is the world’s largest free trade area by population (1.9 billion), with a combined GDP of more than US$7.7 trillion and total trade of US$4.8 trillion. Under CAFTA, Vietnam will eliminate 90% of its tariff lines for goods traded with China by 2015, with the remaining 10%, which cover items on the sensitive list such as textiles, seeing their import tariffs lowered more slowly.

In 2012, bilateral trade between Vietnam and China reach US$50.5 billion, up 26% compared with 2011, also significantly higher than US$30.1 billion in 2010. 

Hong Kong's Trade with Vietnam

In the first five months of 2013, Vietnam was the 9th largest export market for Hong Kong. Hong Kong’s total exports to Vietnam grew by 6.1% YoY to US$2.9 billion. Major export items included telecom equipment & parts (12.3% share), other meat & edible meat offal (fresh, chilled or frozen) (7.4%), crustaceans, molluscs & aquatic invertebrates (7.1%).

Hong Kong’s imports from Vietnam gained 8.7% YoY to US$1.8 billion in the same period. Major import items included telecom equipment & parts (62.9% share), rotating electric plant & parts (2.9%) and footwear (2.7%).

(US $ million)

2012

Jan-May 2013

Value

Growth (%)

Ranking

Value

Growth (%)

Ranking

Total Exports

6,500

+9.9

10

2,939

+6.1

9

Domestic Exports

178

+22.1

7

100

+53.2

6

Re-exports

6,322

+9.6

10

2,839

+5

9

Imports

4,688

+86.5

16

1,793

+8.7

17

(of which re-exported)

1,948

+53.4

18

834

+4.2

18

Total Trade

11,188

+32.8

13

4,732

+7.1

14

Trade Balance

1,812

-

-

1,145

 

 

Source: Hong Kong Census & Statistics Department

Vietnam’s involvement in Hong Kong

Vietnamese residents in Hong Kong reached 5,381 as at end-June 2013, according to Immigration Department of Hong Kong. In addition, Vietnamese visitors to Hong Kong totalled 28,113 in the first five months in 2013, increased by 11.0% YoY.


Related information: Vietnam infographics

Content provided by Picture: Jacqueline Yuen