Introduction
Vietnam is located in the eastern part of the Indochina Peninsula in continental Southeast Asia and borders Cambodia, Laos, and China. The capital and political center is Hanoi, and the economic center is Ho Chi Minh, which has the largest population in Vietnam. Vietnam has a long geographical feature running from north to south, with major cities in the north, central, and south representing the region. The northern region is represented by the capital Hanoi and Hai Phong, the central region is Hue and Da Nang, and the southern region is represented by Ho Chi Minh City and Can Tho in the Mekong River Delta region.
Vietnam has a variety of cultural resources from the past, influenced by China to the north and the Cambodian Khmer Empire to the south. Although it was ruled by China for a long time, it was influenced by cultural factors such as language and institutions to establish a dynasty and its own culture, and relics from this period are registered as world cultural heritage sites. It continued as an independent dynasty from the early 10th century to the 19th century before being colonized by France. Although it gained independence from France in 1945, it was again divided into North and South, and national unification was achieved through the Vietnam War (1960-1975).
After unification in 1975, Vietnam implemented political and economic changes to become a socialist republic, but it did not produce results, and in 1986, it implemented a reform and openness policy to accept a market economy. As a result, it became a region where the capital of the world’s transnational corporations was invested, creating remarkable economic development. Even today, Vietnam is recording a high economic growth rate and is expanding its economic scope by implementing various trade policies.
The name of the country ‘Việt Nam (Việt Nam)’ is derived from ‘Nam Việt (Nam Việt in Vietnamese)’, an ancient country around the 2nd century BC that reached from present-day northern Vietnam to southern China. It was called by various names depending on the period, such as ‘Annam’, ‘Southern Han’, and ‘Đại Cồ Việt’, until the name ‘Vietnam’ appeared in the 16th and 17th centuries. In modern times, it appeared as a title in Phan Bội Châu’s History of the Fall of Vietnam, and became the official name of the country after the Democratic Republic of Vietnam declared independence from France in 1945.
Vietnam is used as one word in English as ‘Vietnam’, but in the Vietnamese government and the United Nations (UN), it is divided into two words and used as ‘Viet Nam’. In Korean-speaking countries, the notations ‘Vietnam’ and ‘Vietnam’ are used.
Economy
Vietnam showed an average annual GDP growth rate of 9% until the mid-1990s, and the average GDP growth rate in the 1990s was 7.6%. The growth rate was maintained in the 5% range after 2012, and then in the 6-7% range from 2015 to 2019. In 2007, Vietnam joined the World Trade Organization (WTO), and after joining the WTO, more foreign direct investment (FDI) flowed into Vietnam, achieving its current development. Since then, Vietnam has become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is expanding its economic expansion by signing free trade agreements (FTAs) with various countries.
Vietnam has recently been active in creating a favorable external trade environment by concluding FTAs with large economies such as the United States, the European Union (EU), and the Eurasian Economic Union (EAEU). Vietnam has concluded a total of 12 FTAs, and the FTA with the European Union passed the European Union Parliament in February 2020 and came into effect in the summer. When the FTA with the European Union, Vietnam’s second largest export market, goes into effect, tariffs on 100% of Vietnamese industrial products will be eliminated, so the purpose is to utilize Vietnam’s FTA network to invest and advance into third countries. Local investment by global companies is expected to continue to expand. Foreign direct investment (FDI), official development assistance (ODA), remittances to overseas Koreans, and traditional small business capital are the driving forces of economic growth. Within the Association of Southeast Asian Nations, it has emerged as the largest investment destination, surpassing Indonesia, Thailand, and Singapore.
Vietnam’s nominal GDP per capita is $3,521 (2020). In 2020, Vietnam’s economy achieved a growth rate of 2.91%. Although it is a decrease compared to 2019, the world’s major countries recorded a good economic growth rate compared to negative growth in the COVID-19 situation. Due to the impact of COVID-19, foreign investment is counted, and although the figure is very low compared to the previous year, it can be seen that investment by foreign companies is continuing. In 2020, Vietnam’s agriculture, forestry and fisheries sector grew by 2.68%, the industry and construction sector grew by 3.98%, and the service sector grew by 2.34%.
Economic development
The Vietnamese government announces the mid- to long-term Socio-Economic Development Strategy (SEDS) every 10 years and sets the tone for its development policy. For economic development, we are actively pursuing state-owned enterprise reform, financial reform, and monetary policy. Currently, it has emerged as the largest investment destination in the Association of Southeast Asian Nations and is showing rapid economic growth.
In 2021, the five-year (2021-2025) Vietnam socio-economic development plan was announced. Vietnam set the average GDP growth rate at 7% in its 2021-2025 socio-economic development plan. We are urging active cooperation from each ministry, agency, economic organization, state-owned enterprise, and local government for the social and economic development of Vietnam.
Revitalizing the digital economy
Due to the COVID-19 pandemic, interest in non-face-to-face and online platforms has grown, and the result of revitalizing e-commerce based on low transportation costs that has led to rapid social change is serving as a foundation for Vietnam’s digital economy to grow. Vietnam’s online education platform VNEDU received a lot of attention this year, ranking second in Google search terms. In June 2020, former Prime Minister Nguyen Xuan Phuc declared a grand vision to increase the proportion of Vietnam’s digital economy, digitize all sectors of the economy and society, and build a digital economic ecosystem.
Industrial structure
Vietnam has traditionally developed primary industries, but as industrialization is rapidly progressing due to foreign investment companies, the contribution of manufacturing and service industries is increasing. As of the end of 2020, Vietnam’s industrial structure, based on contribution rate to gross domestic product (GDP), was 14.85% in the agriculture, forestry and fisheries sector, 33.72% in industry and construction, and 41.63% in the service sector.
Vietnam is carrying out a policy to foster the manufacturing industry, a policy to foster the parts and materials industry to expand local investment by global companies and advance the manufacturing industry, a policy to support small and medium-sized enterprises and startups, and a policy to foster private companies. The government is seeking economic growth by adopting agricultural machinery, shipbuilding, automobiles, petrochemicals, agriculture, forestry and fisheries, and textile and clothing manufacturing for export as main industries, and travel and dining out due to the increase in overseas travelers coming to Vietnam and the increase in income of local consumers. The service industry is also growing rapidly due to increased demand.
Major industries include the electric power industry, electrical/electronic industry, steel industry, IT industry, construction industry, textile/clothing industry, shoe industry, and automobile industry. The power industry’s influence is growing as demand for power continues to increase due to rapid industrialization and urbanization. Vietnam Electricity Corporation, a state-owned enterprise, is a representative power generation and transmission and distribution business, but recently, foreign investment companies, along with Korea National Petroleum Corporation and Korea Coal Mineral Corporation, are entering the power development market.
The electrical and electronics industry is currently the industry that is driving Vietnam’s exports (overtaking the textile and sewing industry, which had traditionally ranked first, in 2013), accounting for more than 30% of exports as mobile phones, electronics, computers and parts. As Vietnam has rapidly emerged as a new global production base replacing China due to the recent US-China trade dispute, many global electronics companies, including Samsung, LG, Canon, Panasonic, Intel, and Foxconn, are actively investing in Vietnam.
While the steel industry is struggling in the global steel market due to the global economic downturn, Vietnam’s steel market is enjoying a significant boom due to the growth of downstream industries such as manufacturing, construction, and infrastructure. However, a significant trade deficit continues.
The IT industry is a field with high growth potential. According to the 《Vietnam Information and Communication Technology (ICT) White Paper, Wite Book of Vietnam》, Vietnam’s IT industry continues to grow, and the size of Vietnam’s IT market in 2018 is USD 102.9 billion, approximately 70% more than in 2015. This figure has increased. Although it lacks cutting-edge technology, it continues to achieve high growth by relying on foreign capital. Until now, it has grown mainly around IT manufacturing such as mobile phones and electronic components, but outsourcing, services, and SW fields are becoming more active. In particular, Vietnam has strengths in the software outsourcing industry.
The construction industry is an industry that has recently been in the spotlight, and the real estate and construction market has recently achieved growth of 6%. It is attracting attention again as domestic real estate investment increases. In addition, future growth is noteworthy as the development of transportation infrastructure such as roads, railways, and aviation is planned.
The textile and clothing industry is Vietnam’s traditional industrial sector and boasts the world’s highest productivity. However, the production infrastructure for raw materials in Vietnam is lacking, and many of them are dependent on overseas imports. The shoe industry has also been a major part of Vietnam’s industry for a long time. In the first half of 2019, Vietnam’s major shoe export countries were the United States and the European Union, ranked first and second, followed by China and Japan, and footwear exports are increasing significantly due to Vietnam’s trade changes (CPTPP, EVFTA).
The automobile industry is an industry that Vietnam started relatively recently and is expected to grow along with Vietnam’s economic development and income increase. According to the Vietnam Automobile Manufacturers Association, the total number of automobiles sold by member companies in 2018 was 290,000, an increase of about 183% compared to 2014. The Vietnam Industry and Trade Policy Strategy Institute predicts that the Vietnamese automobile market will grow at an average annual rate of 22.6% between 2018 and 2025.
It is an information and communication term that refers to a technology that focuses on indirect value creation encompassing all tangible and intangible technologies and means necessary to build an information technology information system. It has emerged as a technology leading the information revolution with the development of the information and communication industry.
Income distribution
According to data from the National Statistical Office of Vietnam, the average annual gross domestic product (GDP) per capita was about $3,000. As of 2019, the average monthly income per person in Vietnam is 5.6 million dong (about 240 dollars). The average monthly income of a university-educated worker is estimated at 9.3 million dong (about $400). The region with the highest average income in Vietnam is Ho Chi Minh City. Ho Chi Minh City’s average GDP per capita already exceeded $6,000 in 2018. In Vietnam, the average annual income per household is estimated at $6,206. According to 《BMI Research》, the average annual income per household in Vietnam was $5,729 in 2019.
However, there is a significant gap in income depending on educational level and region. According to data from KOTRA’s Hanoi Trade Center, the income gap between income classes and urban and rural areas in Vietnam has widened over the past 10 years. The total number of poor households in Vietnam is approximately 1 million, which is approximately 50% of all households and 20% of the total population.
Energy resources and trade
Vietnam has abundant energy resources such as oil, coal, and natural gas, and has been supplying its own energy consumption. However, due to the development of the manufacturing and service industries that are driving rapid economic growth, it has become a net importer of coal since 2015. Fuel imports are expected to increase gradually, with fuel imports expected to increase threefold between 2020 and 2030, and eightfold by 2050. As energy imports increase, energy import reduction through efficiency improvement has emerged as a national task.
《Vietnam Energy Outlook Report 2019, EOR19》 assessed that Vietnam has abundant solar energy, wind power and biomass, which is advantageous in the field of renewable energy development to reduce greenhouse gas emissions and environmental pollution. did. It is predicted that if a stable, simple, and transparent legal system and a power structure to increase the competitiveness of renewable energy projects are established, the proportion of renewable energy in electricity production can be increased to 40% in 2030.
Conclusion
It is a country in the eastern part of the Indochina Peninsula in Southeast Asia, bordering China, Laos, and Cambodia. After independence from French colonial rule in 1945, unification was achieved through the Vietnam War.