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Vietnam

Vietnam, officially The Socialist Republic of Vietnam (SRV), is a country located in Southeast Asia, in the east of the Indochina Peninsula along the coast of the South China Sea. Its population is over 90 million and the capital is Hanoi. The country is ruled by a communist government; however private enterprise is allowed. The official language is Vietnamese. Relations between the EU and Vietnam are based mainly on the Cooperation Agreement between the European Community and Indonesia, Malaysia, Philippines, Singapore and Thailand (i.e. member countries of ASEAN) signed in Kuala Lumpur on March 7th, 1980 and effective as of October 1st, 1980. SRV joined this agreement by signing the Protocol on the extension of the Cooperation Agreement in Singapore on February 2nd, 1997. In June 2012, the EU-Vietnam Partnership and Cooperation Agreement (PCA) were signed. This agreement focuses particularly on supporting areas of political dialogue, business, investment and economic, social and cultural cooperation. In the last trimester of 2014, the negotiations of the Free Trade Agreement between the EU and Vietnam are expected to be concluded.

SWOT analysis


Strengths

  • long-term export tradition, familiarity with the Vietnamese market as well as needs of Vietnamese partners
  • stable economic growth of Vietnam exceeding 8% in several past years; GDP growth appeared even in the period of financial crisis: 5.3 % in 2009, 6.8 % in 2010 and 5.9 % in 2011
  • political stability, moderate liberalization in the state administration
  • advancing integration into global economic structures, membership in the WTO
  • utilizing elements of a market system in planned economy
  • continual growth of inhabitants’ living standards
  • gradual liberalization of the domestic market, improvement of legislation
  • growing experience of Czech enterprises with the Vietnamese market and real estate

Weaknesses

  • intransparent legislation, in some cases inconsistent with international standards; high rate of corruption
  • still slow pace of economic reform (transformation into joint-stock companies and denationalization) and poor management of state-owned enterprises
  • low production efficiency, waste of energy and natural resources
  • persisting underdevelopment of rural residents in particular
  • limited opportunity for development of business activities without the physical presence on the Vietnamese market

Opportunities

  • substantial economic growth potential
  • launched process of structural reforms
  • modernization of obsolete production base and introduction of new technologies
  • process of strengthening the electric power sector, particularly power production
  • renovation and modernization of the underdeveloped infrastructure
  • effort to improve environment
  • transformation of state-owned enterprises, their modernization
  • dynamic development of the private sector
  • inflow of foreign investment, improvement of conditions for investors
  • interest of banks and international institutions in funding projects
  • persisting lack of market saturation and thus dynamic growth of import

Threats

  • uncertainty connected with the political situation and lacking ability to ensure long-term stability
  • bankruptcy of inefficient state-owned enterprises and its negative impact on the economy development
  • constantly increasing differences between the pace of development in cities and rural areas
  • dynamic improvement of competitiveness of domestic producers
  • as the Vietnamese market is becoming more and more attractive for the most powerful world producers, difficult competitive environment is forming in most areas

Source: http://www.businessinfo.cz