IB Fall 2017 Country Analysis-Vietnam Trang Carnes

VIETNAM

Trang Carnes
Country Analysis-VIETNAM
Francisco Paredes
Fall 2017

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I. Introduction
I was born and raised in Vietnam, so I decided to choose Vietnam for my country
analysis paper. Vietnam located in Southeast Asia, the north side border by China, the west side
border by Laos and Cambodia, and the entire east side is the sea side (Pacific Ocean). Vietnam
cover about 310070 square kilometer (approximate 127247 square mile). The population of
Vietnam approximately about 91 million in 2012, which make Vietnam become 13th largest
country in the world in term of population. Vietnam is under the leadership of single-party
government, which called Vietnam Communist Party, since 1954 after they gained their freedom
back from France.
II. Political Economy
Vietnam was French’s colony for about 100 years until the August Revolution in 1945.
French military was defeated by the communist military led by Ho Chi Minh, and Ho Chi Minh
declared independent from France shortly after that. In 1954, civil war started because the North
government accept communism in exchange for wartime supported from Chinese government
which called Socialist Republic of Vietnam. The South Vietnam get supported form U.S
government, and was a democratic government entity (Republic of Vietnam). In 1973, U.S.
government withdrew their troops back to the U.S. and South Vietnam got defeated by the North
in 1975. After April 30, 1975, North and South Vietnam were unified and became under control
by a single-party government. The Vietnam National Assembly (VNA) established in 1976, and
they elected their own people for difference positions inside the party, not through citizens
voting.
a. Political System-Vietnam classified as communist totalitarian country because the state
denied granting their citizens any basic human rights. The citizens can elect local officers
for commissioners but not high-ranking position officers because they’re always get elect
by VNA members. The current president of Vietnam is Tran Dai Quang, and he was
elected by VNA in April 2, 2016. I would like to say it would be possible for a foreign
company to invest in Vietnam right now because the economy keeps growing and people
have better education compare to the 80s’.
b. The economy of Vietnam during 70s’-80s’ was a pure command economy, and free
trade were limited to other communist countries. The economy was largely depended on
agriculture (over 70%) which viewed as a failed initiative. The new economic model
implemented was introduced in 1986 called Doi Moi. Since the government adopted Doi
Moi economic model, it transformed Vietnam from state-planned economy into a market-
oriented economy for a last three decades. In 1992, after the collapse of Soviet Union, the
Vietnamese government amended a new constitution to recognize the role of private
business sector, allowed FDI to invest and operated in Vietnam, also allowed
international trading. Since the integrating into international business from 1992 had
brought tremendous opportunities for the domestic market and helped the country to
reformed. Costumers had a chance to purchased foreign goods from all over the world,
and not just limited to communist countries. In 1995, Vietnam became a member of
Association of Southeast Asian Nation (ASEAN). In 2007, Vietnam became a fully
member of WTO. The economy of Vietnam today is considered a mixed-economy
because over half of the major businesses is state-owned enterprises. “Together with the

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impressive economic achievements, Vietnam also saw its diplomatic and political status
constantly improved in the international arena” (Vuong, 2014).

This map demonstrated the growth of Vietnam economy since Doi Moi period until
present time (30 years) period. We can see the economy scale was changing
tremendously after 1992, and it was hurt during Asian Financial crisis during 97-99
period. In 2000, Vietnam debut their stock market trading into international market for
the first time. The stock market boosted the economy up at a steady rate until the present.

The GDP per capital in Vietnam was 5955.30 USD in 2016. The GDP per capital when
adjusted by PPP is equivalent to 34% of the world average.
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The major industries in Vietnam in this present time is mainly rely on FDI, which
constitute about 35 percent of industrial productions.
Top Export Goods and Partners
Today, Vietnam is the 28th largest export economy in the world, exporting $165 billion
worth of goods every year. Its principal export goods include: broadcasting equipment
($23.8 billion), computers ($7.98 billion), crude petroleum ($6.87 billion), leather
footwear ($6 billion), and integrated circuits $4.6 billion). Many of these exports go to
the following countries: the US ($29.9 billion), China ($17.5 billion), Japan ($15.2
billion), South Korea ($7.92 billion), and Germany ($7.64 billion) (Pariona, 2017).
Top Import Goods and Partners
This country imports $151 billion worth of goods every year which gives it a positive
trade balance of $13.7 billion. Its top imported goods include integrated circuits ($9.6
billion), telephones ($8.22 billion), refined petroleum ($7.81 billion), light rubberized
knitted fabric ($2.96 billion), and flat-rolled steel ($1.98 billion). Many of its imports
come from the following places: China ($44.7 billion), South Korea ($21.7 billion), Japan
($11.9 billion), Other Asian countries ($9.4 billion), and Singapore ($7.98 billion)
(Pariona, 2017).
The Currency Exchange rate from USD to Vietnamese Dong is 1USD = 22710.40 VND.
The exchange rate is very important for doing exports/imports because it represents the
effective international purchasing power of entire nation.
Vietnam has an absolute advantage in producing price (3rd place rice exporter in the
world), and the comparative advantage are low cost labors, rich natural resources.
c. Legal System-legal system in Vietnam is based on socialist legal system, and the
system inherited from French civil law system but also have some major implementation
from Marxist-Leninist ideology. The Legal Committee members get elect from National
Assembly, so they would have assisted the National Assembly to make law and enforce
the law. International treaties play an important role in the development of the legal
system because it could become another source of law after being ratified by the National
Assembly (Oxford Group, 2017).
d. Ethical System-
Vietnam current Corruption Perception Index in 2016 was ranked 113/176 and 33 scored,
which mean Vietnam is the 113 least corrupt nation out of 176 countries.
Although working hours are varying from one to another organization, but by law it was
limited to 8 hours/day and 48 hours/week. All employees are entitled for 12 days/year
fully paid vacation. Maximum overtime is 4hours/day and 200 hours/year. Employee
can’t be paid under minimum wage. Vietnamese and foreign workers of the same

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enterprise, and are performing the same job should be pay equally by law. The minimum
wage in Vietnam is approximate 106 USD/month.

In 2015, EPA cooperate with Vietnam to create a strong environment, reducing exposure
to toxic chemical by monitoring mercury in rain water and provide technical assistant for
treatment of dioxin-contaminate site. Improving air quality by operating air quality
monitor which measure PM 2.5 (a fine particle is visible to human eyes but can impact
respiratory health problem). Cleaning up E-waste by sharing experience with local
management base on what they’re learned across the countries.
In November 2015, National Assembly revision another penal code, it become effective
on 1 July 2016, are notable, indicating Viet Nam’s strong commitment to protecting its
environment. Vietnam’s new penal code strengthens provisions specifically targeting
environmental crime. The code now stipulates that legal entities, as well as individuals,
can be prosecuted for a range of environmental crimes including intentionally causing
pollution, non-compliance with environmental remediation and protection regulations,
and breaching hazardous waste management regulations. Companies can also be found
liable for illegal logging and wildlife trade, damage to aquatic resources, causing harm to
endangered species, and importing or dispersing foreign species harmful to the
environment (Asian Blog, 2016).
Being under control of Communist party, people in Vietnam basic right are restricted
including freedom to speech, opinions, association, and assembly. All the religious group,
reporters must operate under government surveillance. Government also tighten their
restriction over social media and internet. Protesters would be facing punishment, for
instance, physical assaults, restricted movement, get convicted or sentence to the prison.
Bribery rate in Vietnam is considerably high, which account for 65%. Bribery is a very
common way of doing business in Vietnam, and this matter is impossible to eradicated
because “corruption permeates the whole network from top to bottom and bottom to top”
(Dien 2017).
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Vietnam, like many other countries in Asia, offer an intellectual protection towards
foreign business. Vietnam is currently negotiating a Free Trade Agreement with EU as
well as TPP. Vietnam tried to assure foreign investor by taking a step forward to granted
IP protection towards foreign works. “On July 1st, 2006, the Law on Intellectual Property,
which codified the government regulation on intellectual property, came into force. These
are the two principal laws governing the protection of intellectual property rights in
Vietnam and adopted by Vietnam to conform to WTO standards on intellectual property
protection (Embassy, 2017).”
III Social and Cultural Aspects
Chinese language had a great influenced over Vietnamese language due to 1000 years
under China control. Originally, Vietnamese language was mix between Mon-Khmer and
other tongues like Cambodian but they’re using Chinese script for all the legal documents
and education. Up until 17th century, there were a missionary from France named
Alexandre de Rhodes converted the language into Roman scriptures after many years of
observance local people speaking and how they’re stress their tone (six tones dialect).
This script wasn’t popular until late 19th, early 20th century when Vietnam was a colony
of France.
Like I mentioned above, China had a great influence over culture, language, religion
belief. There are three main religions in Vietnam: Buddhism, Confucianism, and Taoism.
Buddhism came from India and became an official religion during Ly Dynasty from 1010
to 1214. Confucianism and Taoism came from China. Buddhism is still a major religion
in Vietnam today, and the main core of Buddhist teaching that there are eight right way to
live virtuously and law of Karma. Confucius is about social order, hierarchies, and
stressed the improvement of moral self. Taoism is philosophy of harmony and effortless
flux of nature, for instance, light and dark, negative and positive side, etc. There are also
a few minor religions include: Catholic, Muslim, and Cao Dai. All the religious activities
are under government control and there is no freedom of religions in Vietnam.
Vietnamese culture is considered collectivism. Vietnamese people life based on family
tradition value so it’s very common to see three or four generations live under one roof.
Under Confucius belief, the father would be head of the family and his responsible is
providing food and shelter for his own family. Ancestors worship must be performed by
their descendant annually on the anniversary of a person’s death.
Social Structure in Vietnam based on four social division structures including: Ruling
Class, Scholar Class, Working Class, and Business Class/Merchant. The social class in
Vietnam were totally depend on how well people get educate because education would
reveal people occupation and social status and it could upward their mobility within the
society. Below is the chart of Vietnam Social Hierarchy but the Ruling Class is replaced
by a Communist Party because the Nguyen Dynasty was end in 1945.

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Education is a very important factor that would determine people prestige in Vietnam
society. Unfortunately, in the past, there were low percentage of adult literacy rate until
1986 when Doi Moi became effective than the rate was greatly improved since most of
the employers want to hire at least high school grads level. Adult literacy of Vietnam
increased from 87.6% in 1989 to 97.3% in 2016 based on 15+ age.
Vietnam, like other Confucian neighbor countries, the concept of ‘face’ is very important
because it reflects the reputation, dignity and prestige of an individual within the society.
It’s an important for the foreigners to be aware of the things they said during the meeting
because their words and actions could unintentionally cause them to lose their face.
Handshakes are uses upon meeting and departing, but it’s more common between
members of the same sex. For the female, it’s uncommon for handshaking in Confucian
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society, always wait for her either to reach out her hand first toward you or bow your
head slightly if she doesn’t. Vietnamese refers face-to-face meeting so early appointment,
within a few weeks, would be require. Business cards presents during the meeting must
be present with both hands.
IV. Economic growth and tendencies (Last 10 years)

Compared to its neighbor, China, Vietnam GNI growth tremendously within 10 years.
Although the number on the 1st chart is VND Billion, and the 2nd chart is USD millions,
it’s a huge gap between Vietnam and China economy but both countries economy are
growth steadily for a decade. The cause of this tendency of this economy happen since
those countries engaged in free trade agreement. For Vietnam, Doi Moi economic model
in 1986 was a big change for the economy for the last three decades.
V. SWOT Analysis

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Vietnam is one of the fastest growing country in Asia since the last two decades. Also,
being WTO, ASEAN member has given Vietnam the access into foreign market to
increase their competition towards worldwide competitors, so they can build a stronger
enterprise in the future. Vietnam would offer great opportunities for foreign investors
because of their comparative advantage: location and low-cost labor.

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Work Cites

“A look at Vietnam legal system.” Oxford Business Group. Retrieved 11/08/17

https://www.oxfordbusinessgroup.com/overview/law-land-look-country%E2%80%99s-legal-
system

“Companies in Vietnam to become liable for environmental crimes.” Asian Development Blog.
April 25, 2016. Retrieved 11/09/17 https://blogs.adb.org/blog/companies-viet-nam-become-
liable-environmental-crimes

“Embassy of the Socialist Republic of Vietnam in the USA.” Retrieved 11/13/17

http://vietnamembassy-usa.org/basic-page/intellectual-property

“Labor in Vietnam.” April 22, 2008. Retrieved 11/09/17 http://www.vietnam-

ustrade.org/index.php?f=news&do=detail&id=35&lang=english

“A Guide to Vietnam-Etiquette, Customs, Culture and Business.” Kwintessential. Retrieved

11/13/17 http://www.kwintessential.co.uk/resources/guides/guide-to-vietnam-etiquette-
customs-culture-business/

“International Cooperation: EPA Collaboration with Vietnam.” Retrieved from:

https://www.epa.gov/international-cooperation/epa-collaboration-vietnam
“Understanding-Vietnam ‘SWOT Analysis’.” May 6, 2015. Retrieved 11/14/17
https://www.slideshare.net/PinnacleSourcingCons/understandingvietnam-47814238
“Vietnam: Events of 2016.” Human Right Watch. Retrieved 11/10/17
https://www.hrw.org/world-report/2017/country-chapters/vietnam
“Vietnam Guide: A look at Vietnamese Language, Culture, Customs, and Etiquette.” Retrieved
11/14/17 https://www.commisceo-global.com/country-guides/vietnam-guide
“Vietnam Gross National Income (1990-2017.” Trade Economics. Retrieved 11/14/17
https://tradingeconomics.com/vietnam/gross-national-product
“Vietnam GDP per capita PPP (1990-2017).” Trading Economics. Retrieved 11/10/17
https://tradingeconomics.com/vietnam/gdp-per-capita-ppp

“Vietnam Corruption Rank.” Trading Economics. Retrieved 11/10/17

https://tradingeconomics.com/vietnam/corruption-rank

“Vietnam Social Hierarchy.” Hierarchy Structure. Retrieved 11/14/17

https://www.hierarchystructure.com/vietnam-social-hierarchy/

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“Where is Vietnam.” Retrieved 11/10/17 http://www.worldatlas.com/as/vn/where-is-viet-

nam.html
Dien, An. “Business as usual: Bribery remains a way of life in Vietnam.” Oct 11, 2017.
Thanhnien news. Retrieved 11/10/17 http://www.thanhniennews.com/politics/business-as-usual-
bribery-remains-a-way-of-life-in-vietnam-42245.html

Huynh, Dinh Te. “Religion of the Vietnamese.” Retrieved 11/14/17

http://www.vietspring.org/religion/religioninvn.html

Pariona, Amber. “The Economy of Vietnam.” April 25, 2017. Retrieved 11/10/17
http://www.worldatlas.com/articles/the-economy-of-vietnam.html
Steinfeld, Joshua M. and Thai, Khi V. “Political Economy of Vietnam: Market Reform, Growth,
and the State.” October 8, 2013. Retrieved 11/10/17
http://digitalcommons.law.umaryland.edu/cgi/viewcontent.cgi?article=1218&context=mscas
Vuong, Quan H. “Vietnam’s Political Economy in Transition.” May 27, 2014. Retrieved
11/10/17 https://worldview.stratfor.com/the-hub/vietnams-political-economy-transition-1986-
2016

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