Socialist Republic of Vietnam

by Vu Khoan, Deputy Prime Minister of Vietnam

Since 1986, Vietnam has been pursuing a policy of economic openness (doi moi), promoting a multi-sector economy through the transformation of the centrally planned into a market system under state regulation, combining economic growth with social development, optimizing internal resources while taking advantage of international and regional integration.

Great attention has been paid to maintaining harmony between economic and social development and political and social stability, between economic development and social equity, between market mechanism transformation and state regulation at the macro level, and between internal resource maximization and international cooperation. Thanks to these principles, Vietnam has recorded great achievements, both internally and externally.

Despite complex developments in the region and the world, the Vietnamese economy achieved high growth, 7% annually on average since 2000, the second-highest in the region. In addition, exports have expanded significantly. Vietnam has become one of the world’s leading exporters in rice, coffee, black pepper and other commodities.

Special attention has been given to social issues. Over one third of the total budget is allocated to poverty reduction, universal education, job creation and healthcare for all. From 1995-2003, gross domestic product (GDP) per capita doubled. In 2003, the literacy rate reached 91%. The percentage of poor households was reduced to 11% in 2003 from over 30% in 1993. Citizens’ rights inscribed in the constitution, including the right to freedom of belief and religious practice, are guaranteed. The number of religious followers and dignitaries as well as religious establishments in Vietnam continues to increase.

The legal system has been increasingly improved to build a law-governed state of the people, for the people and by the people. In the economic area, since the entry in force of the Enterprise Law four years ago, over 75,000 private enterprises have been established with a total capital of $10 billion, creating nearly 6 million jobs.

The state economic sector has been rearranged and reformed to improve its efficiency. The number of state-owned enterprises was reduced from over 12,000 to 4,700, of which nearly 1,000 enterprises have been equitized. It is our goal to equitize 2,000 more enterprises by 2005. The government is in the process of drafting the Competition Law, reducing and controlling business monopoly to create a fair competition environment in accordance with international standards and practice.

The Law on Foreign Investment in Vietnam and a series of other legal documents have step by step created a transparent and flexible legal system attractive to foreign enterprises. By the end of 2003, Vietnam had attracted nearly $41 billion of foreign direct investment with over 4,300 projects in various industries. At present, the foreign-invested sector accounts for 14% of GDP and 31% of export volume, creating hundreds of thousands of jobs.

Active steps have also been taken by the government to integrate more into the regional and world economy through participation in Asian free trade agreements like Asian Free Trade Area, Asian Pacific Economic Cooperation, Asian-Europe Meeting and efforts to join the World Trade Organization as soon as possible.

The Government attaches great importance to financial and banking reforms. Achievements in this respect have helped maintain macroeconomic stability, reduce the budget deficit, control inflation, improve transparency of public finances, remove subsidies through the credit system, introduce interest and exchange rates in accordance with demand and supply in the market and increase the effectiveness of fund raising and use. For the first time, various markets such as a stock market, financial market, labor market and real estate market have been formed in Vietnam.

These important and encouraging achievements demonstrate the correctness of the doi moi policy and at the same time create a firm foundation for Vietnam to continue this policy of developing Vietnam into an industrialized nation by 2020.

In the years to come, Vietnam will focus on increasing the quality of growth, the effectiveness and competitiveness of the economy, products and services to keep pace with its international integration. The Government will undertake concrete and strong measures to improve the investment and business environment further, develop simultaneously all markets, remove subsidies, reduce protectionism and monitor monopolies. More proactive and stronger steps will be taken in the process of international economic integration.

In attracting foreign investment, the government, while continuing to make the policy more consistent, flexible and suitable to international practice, will continue to improve master plans for sectoral and local development, further decentralize authority to localities and increase the number of forms and areas of foreign investment that are eligible for investment registration instead of investment licensing.

The need for comprehensive human development is another priority of the government, especially job creation, poverty reduction, education, training and healthcare quality improvement, scientific and technological capacity building, environment improvement and public administration reform. Strong measures will be undertaken to raise the efficiency of state management, combat corruption and red-tape and promote democracy.

Under the Ten-Year Socio-Economic Development Strategy (2001-2010) and the Five-Year Plan (2001-2005), compared to 2000, GDP is expected to increase by 1.4 times by 2005 and double by 2010. To these ends, in the 2001-05 period, Vietnam needs a total investment of some $60 billion. Two thirds of this amount are estimated to come from internal, $20 billion from external resources. From the latter, development assistance will be provided first to infrastructure building, human resources development and social issue.

In its foreign policy, the government has always been consistent in the emphasis on independence, self-reliance, openness, diversification, multilateralization and proactive integration in the regional and world economy. Vietnam has established diplomatic relations with nearly 170 states and almost all major international organizations. Our prestige and position have been unceasingly enhanced in the international arena.

Vietnamese-U.S. ties have not been simple after years of war and confrontation. Since the establishment of diplomatic ties in 1995, this relationship has been normalized and developed significantly. In the political field, exchanges at different levels, including recent contacts in defense, have been conducted. Our cooperation in addressing war consequences like missing-in-action, landmine clearance and Agent Orange has been maintained. In particular, economic and trade relations have grown strongly. Only two years after implementing the Bilateral Trade Agreement, the United States has become Vietnam’s biggest trading partner with two-way trade amounting to nearly $5 billion in 2003. However, U.S. investment in Vietnam grows at a rather low rate. Hopefully, the United States will soon no longer rank only 10th among foreign investors, thanks to keen interests of U.S. companies and what both sides could do to promote investment.

It is important to maintain a stable development for the bilateral relations. This benefits both peoples as well as peace, stability and cooperation in Southeast Asia and Asia-Pacific. To this end, it is essential to build our relationship on the basis of mutual respect, non-interference and equal and mutually beneficial cooperation. For its part, Vietnam attaches great importance to the promotion of its relations with the United States – a major power occupying an important position in the world – on that basis. It is hoped that this goodwill will be reciprocated to ensure a steady growth in the two countries’ relations in the new century.

The Washington Times, September 28, 2004