ABOUT VIETNAM

Basic Facts

Full name: Socialist Republic of Vietnam
Land area: 329,566 sq. km.
Population: 75 Million
Capital City: Hanoi
People: 85% Vietnamese, 3% ethnic Chinese, also Khmers, Chams (remnant of the once-great Indianised Champa Kingdom) and members of some 60 etholinguistic groups
Languages: Vietnamese, Russian, French, Chinese, English and variety of Mon-Khmer and Melayo-Polynesian local dialects
Religion: Buddhism is the principal religion but there are also sizeable Taoist, Confucian, Hoa Hao, Caodists, Muslim and Christian minorities
Government: Communist People’s Republic

Political History

The characteristic feature of Vietnam’s history is the country’s struggle against foreign occupation and intervention, for a good part of the last 2,000 years.

The invaders were mostly but not exclusively the Han Chinese, who ruled Vietnam over 1,000 years from 111 BC to 938 AD. In mid 19th century, the French began intervening in the country’s affairs on a large scale, and they seized Saigon in early 1859. By 1886, France had conquered the whole country which they governed as a colony and incorporated into French Indochina despite resistance from the Vietnamese.

Communist guerrillas under the leadership of Ho Chi Minh resisted French domination. Ho Chi Minh’s declaration of Vietnamese independence after WWII sparked violent confrontations with the French, culminating in the French military defeat at Dien Bien Phu in 1954.

The Geneva Accords of 1954 temporarily divided Vietnam into 2 zones (the Communist north and the anti-Communist, US-supported south). Political and ideological opposition quickly turned to armed struggle, prompting the USA and other countries to commit combat troops in 1965. The Paris Peace Agreements, signed in 1973, provided an immediate cease-fire and signaled the withdrawal of US troops. Saigon eventually capitulated to the Communist forces on 30 April 1975. In July 1976, the nation was reunited, and the Socialist Republic of Vietnam was established.

..since then

Important events since the reunification of the country include a border war with China in 1979 and Vietnam’s invasion of Cambodia the year before. Vietnam finally withdrew its troops from Cambodia in 1989. The key feature of these events was that the country’s economy deteriorated and by the mid 1980’s had reached a dire position. The breakthrough came at the end of 1986 with the introduction of the doi moi or renovation policy.

Broadly, the aim was to move from a centrally-planned to a market economy whilst still retaining the socialist political structure. The introduction of the new foreign investment law in December 1987, allowing and encouraging foreign investment, was a major step from which all the current excitement in the international business community has stemmed. Parallels have inevitably been drawn with the developments in China during the 1980’s, and certainly Vietnam has drawn on China’s experience. Such has been the rapidity and strength of the progress that the near total withdrawal of Soviet aid (1991) and the collapse of the COMECON trading bloc, had remarkably little effect on Vietnam’s trade.

There is now far greater openness towards foreign countries in general and improved relations with other South-east Asian and Western nations. Vietnam became a full member of the Association of South-east Asian Nations ( ASEAN ) at the meeting in Brunei on 28 July 1995, and full diplomatic relations with the United States were re-established on 11 July 1995, some 20 years after the fall of Saigon.

Cultural Perspective
 
Over the centuries, Confucianism, Taoism and Buddhism have melded with popular Chinese beliefs and ancient Vietnamese animism to shape the spiritual life of the Vietnamese people, known as the Triple Religion.

The Vietnamese language kinh is a hybrid of Mon-Khmer, Thai and Chinese elements with most of its basic words deriving from the monotonic Mon-Khmer languages.

Popular artistic froms include traditional paintings on frames and mounted silk, puppetry theatre, music and cultural dance, and religious sculpture.

Geography and Climate

Vietnam is the largest and most populous of the 3 Indochinese countries and is located along the East Coast of Indochina and borders on Cambodia and Laos in the west and the People’s Republic of China in the north. It stretches over 1,600 km along the eastern cost of the Indochinese Peninsula.

Vietnam is the 2nd largest country in South East Asia after Indonesia. It is divided into 3 regions:

• Northern Vietnam consisting of provinces bording China and those that lie in the Red River Delta
• central Vietnam with provinces lying between the central coast and the 1,600 km-long Truong Son mountain range; and
• southern Vietnam which includes Ho Chi Minh City, the few provinces east of the city, and the rice-rich provinces of the Mekong River Delta.

The south of Vietnam mainly consists of plains. 2 major rivers, the Mekong River in the south and the Red River (Hong) in the north each form deltas of considerable size before entering the South China Sea. The Red River also runs through Hanoi, the capital city.

Although the country is located in the tropics, the climate is tropical only in central and southern Vietnam, with warm and humid weather all year round (22-35oC). In the north, there is a distinct winter season due to cold inland winds. Usually, the winter is also the dry season for the entire country, but the rains are highly unpredictable owing to the influence of several monsoons.

Economy & Economic Structure

Like China, Vietnam has made a rapid transition from a command economy to one that is heading for open-market free trading. But it still has a very long way to go to get there. In spite of this, there are a vast number of foreign companies that can see the enormous market potential for business investments in Vietnam.

In spite of considerable efforts to industrialize the country especially in the north, Vietnam’s economy is still dominated by agricultural production. This is also the sector where economic reforms have so far had most success. Vietnam recently turned from being a rice-importing nation into the world’s third largest rice-exporter.

Economic liberalization started in 1987. Since then a number of measures have been taken to gradually turn the country’s centrally-planned economy into a market economy.

Most importantly, foreign investment is now encouraged and the new constitution guarantees that enterprise with foreign invested capital will not be nationalized. A number of laws have been passed to create the legal framework for foreign investment. Bilateral investment protection treaties and double taxation treaties have also been signed with a number of countries.

While the country’s long-term growth prospects remains good, short-term problems such as the lack of adequate infrastructure, especially in the transport network and communications system as well as in the financial sector, and governmental bureaucracy remain handicaps. The World Bank has suggested that Vietnam will have to allocate at least US$7 billion to US$10 billion for infrastructure development by the year 2000.

Despite the Doi Moi policy, Vietnam had continued to maintain stringent controls over flows of money & currency to its economy. It has also yet to launch its stock market. These two factors actually turned out to be blessing for Vietnam. The currency speculators and hedge funds who wrecked havoc in several Asian countries, left Vietnam unscratched.

Investment Rating

After years as a closed economy, Vietnam opened up to foreign investment in 1987 with the promulgation of the foreign investment law, considered one of the most liberal in the Asia-Pacific region. The opportunities the country has to offer have been greeted enthusiastically by foreign investors, and since 1988 investment pledges have reached over 1,200 foreign investment projects having an aggregate investment capital of over US$16 billion. Foreign trade has also mushroomed. Over 700 foreign companies from over 40 countries are now investing in Vietnam.

Not surprisingly, Vietnam is often referred to as Asia’s next tiger, and there is no doubt that its emerging economy offers foreign businesses a range of exciting trade and investment opportunities. However, to succeed in Vietnam, the foreign businessman must have patience as well as be willing to make long-term commitments. The foreign investor needs to be aware of the possible problems and pitfalls which may be encountered, just as they may be encountered in the early stages of any rapidly developing economy.

  Vietnam can offer the following attractions and advantages:

• Abundant mineral and natural resources;
• Active government encouragement of foreign investment;
• Cheap labor and a literate workforce;
• Potential for tourism;
• A potentially important consumer market with a population of nearly 90 million;
• A central location in the fast-growing Asia-Pacific region;
• A comparatively liberal foreign investment law which continues to be refined;
• Attractive tax incentives for foreign investors;
• The Government’s success in bringing a previously weak local currency and high inflation under control. Both have been remarkably stable since 1992;
• Once an adequate legal and infrastructural framework has been created, Vietnam may well have similar or greater growth rates than that enjoyed by, inter alia, Thailand and China over the recent years.