Viet Nam 

Viet Nam country policy

Policy established 20 December 2011

• ILC, bank guarantee or central public guarantee (unconditional)
• The country ceiling is 1500 mln euro
• - of which was used as at 2012-02-29 1818 mln euro

Country class: 5

Dekkingsadviessituatie

Cover advice situation

Viet Nam country facts

Country Report last updated : 26 November 2011   Atradius Dutch State Business Economic Research
Country :  VIETNAM

Political Situation
Stable

Head of state
President Truon Tang Sang (since July 2011)

Form of government
Government of Communist Party (CP).

Member of: UN, IMF, IBRD, ASEAN, AFTA, ADB, WTO, Francophonie

Internal Economic Situation
Very High Inflation

General situation
Vietnam is moving from a centralized communist economy to a system of market-socialism. Economic reform (doi moi) has resulted in relatively high economic growth. Real GDP growth has been high for many years, but has levelled off since 2007. Vietnam’s economy is extremely export-driven. Vietnam has specialized in the export of textile and footwear production and the country is therefore vulnerable. Government stimulus packages and foreign investment, largely in infrastructure, have prevented a recession. Inflation peaks at 20% this year and tightening monetary policy is highly necessary but politically sensitive.  
The banking sector is dominated by five large state-owned commercial banks (SOCB). NPL’s are high due to politically motivated lending but the government is may support them if necessary. Restructuring of the banking sector seems to be stuck and the deteriorating state of the economy will affect the health of the banking sector. Corruption, the ineffective legal system and bureaucratic procedures hinder private investment. Main structural challenges are: (1) reform of banking sector (2) reform of inefficient and opaque SOE’s  (3) improvement of infrastructure and (4) education of the workforce; (5) Fight against corruption.
 
External Economic Situation
Large Current Account Deficit

Main sources of foreign exchange
Crude oil (17%), textiles & garments (15%), agricultural commodities (12%), seafood (7%), footwear (8%), tourism, remittances.

Main foreign markets
EU (23%, Germany 6%), US (22%), Japan (11%), Australia (7%), China (9%).

Main expenses of foreign exchange
Machinery & equipment (16%), petroleum products (11%), steel (7%), garment material & leather (4%).

 
Balance of payments 
Vietnam strongly dependant on foreign investment, but sentiment has worsened recently