The Socialist Republic of Vietnam began its transition from a centrally planned to a market economy in 1986. That year the Vietnamese government embarked on a series of economic and political reforms called the Doi Moi policy (doi moi translates, approximately, to “renovation”). The policy spurred growth and has lifted Vietnam off the list of the world’s poorest countries and up into the ranks of lower-middle income countries, in just 30 years.

The benefits of this economic growth have been distributed equitably to a large degree. Extreme poverty (signified by an income of under USD 1.90 per day) decreased from 58% in 1993 to 3.2% in 2014. The proportion of Vietnamese living below the poverty line has fallen to 13.5%.

The GDP growth rate has hovered around 6% since the 1990s. The only Asian nation that has grown faster than Vietnam is its giant northern neighbour China. Vietnam’s young and educated workforce with a median age of 30 is giving a significant boost to its growth trajectory for the next decade.

Vietnam’s biggest competitive advantage, however, is its proximity to southern China, to which it is well connected by air and sea. As wages rise in China, Vietnam has become the destination of choice for firms seeking lower-cost production hubs.

Partly as a result of this strategy, Vietnam has moved from a primarily agrarian economy to one powered by manufacturing and services, which contributed 43.7% and 38.8%, respectively, to the country’s GDP in 2016.

Foreign direct investment (FDI) inflows into Vietnam totalled USD 24.4 billion in 2016, up 9% from 2015. The largest foreign investor in Vietnam is South Korea, which accounted for 28.8% of FDI inflows in 2016.

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Vietnam’s Fact File

World Giving Index Rank

2016
64 79 in 2015
  • 34%giving money
  • 19%volunteering time
  • 55%helping a stranger

Population

2016
95.26 million

GDP (PPP)

2016
595.5 billion World Rank 36

Poverty

2012
11.3%

Per capita GDP (PPP)

2016
USD 6,429 World Rank 125

Global Competitiveness Index

2016
60 56 in 2015

Source: CIA, Charities Aid Foundation (CAF, 2016), Credit Suisse (2016), OECD (2016), World Economic Forum (WEF, 2016), World Bank (2017)

Economic Context for Investors

  • Favourable
  • Moderately favourable
  • Unfavourable
Factors Index Score/Rank Description
GDP Growth 2016
Index Score/Rank
6.1%
The economy grew 6.1% in 2016, slower than the 6.7% growth rate of 2015. In 2017, GDP growth is projected to be between 6–6.5%.
Governance 2015
Index Score/Rank
-0.4
Vietnam scored above 36% of all countries in the 2015 World Bank’s Worldwide Governance Indicators.
Consumer Market 2015
Index Score/Rank
USD 323 billion
Between 2010–15, disposable income increased in real terms by 32% and, in turn, consumer spending by 33%.
Labour Force 2016
Index Score/Rank
56 million
Vietnam’s labour force increased by 1.2% from 2015 to 2016. Vietnam has an abundance of low-wage labour.
Infrastructure 2016
Index Score/Rank
3.9
Vietnam ranked 79 among 138 countries in terms of infrastructure in the 2016 WEF’s Global Competitiveness ranking.
Financial Access 2014
Index Score/Rank
31% of the population
Financial access increased by 44% from 2011 to 2014. The government is looking into promoting financial inclusion, particularly for low-income and vulnerable populations in the country.
Digital Access 2015
Index Score/Rank
53% of the population
Internet penetration increased by 9% from 2014 to 2015. Vietnam has 131 mobile-cellular subscriptions per 100 inhabitants.
Ease of Doing Business 2016
Index Score/Rank
82/190
Vietnam’s Ease of Doing Business rank improved from 91 in 2015 to 82 in 2016. Corruption, overlapping jurisdictions among government ministries and the evolving nature of regulatory regimes have been major challenges for companies operating in Vietnam.
  • Favourable
  • Moderately favourable
  • Unfavourable

SDG Dashboard

Raising agricultural productivity is central in Vietnam’s rural poverty alleviation strategy. Infrastructure improvement, especially in healthcare and sanitation, labour productivity and environmental preservation are key issues that Vietnam is attempting to tackle in its development journey. Accordingly, the government’s 2011–2020 Socio-Economic Development Strategy (SEDS) is built around structural reform, environmental sustainability, social equity and emerging issues of macroeconomic stability. Specific areas of focus are: (i) promoting skill development, (ii) improving market institutions and (iii) infrastructure development.

  • No Poverty
  • Zero Hunger
  • Good Health and Well-Being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
  • Reduced Inequalities
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life On Land
  • Peace, Justice and Strong Institutions
  • Partnerships for the Goals
  • Sustainable Development Goals

Source: sdgindex.org (2016)

Government Focus on Development Gaps

Focus Area SDG Goals Gap Government Focus
Agriculture
SDG Goals
  • No Poverty
  • Zero Hunger
  • Decent Work and Economic Growth
Gap
Agriculture employed 44% of the total workforce and contributed 18.8% to the GDP in 2015, indicating low productivity.
Government Focus
The Ministry of Agriculture and Rural Development (MARD) and the Food and Agriculture Organisation (FAO) have implemented 400 programmes and projects in the areas of sustainable agricultural development, pesticide management, marketing, trade initiatives, forestry, fisheries, animal health and livestock production.
Climate action
SDG Goals
  • Climate Action
Gap
Vietnam ranked 18 on the 2016 World Risk Report, placing it in the very high risk category. Floods have been one of the major causes for economic losses.
Government Focus
The Vietnamese government and the World Bank signed a USD 560 million loan in 2016 to support urban development and climate resilience in the Mekong Delta through the use of analytics, monitoring and flood-control management.
Energy access
SDG Goals
  • Affordable and Clean Energy
Gap
Although 99% of the population have access to electricity, only 43.8% use non-solid sources of fuel.
Government Focus
Government Decision No. 432/QĐ-TTg dated 12 April 2012 stipulates national strategies for the achievement of sustainable development for 2011-2020, which include increasing the share of clean and renewable energy in total energy consumption.
Healthcare
SDG Goals
  • Good Health and Well-Being
Gap
Although Vietnam spent the equivalent of 7.1% of its GDP on healthcare in 2014, higher than the East Asia and Pacific average of 6.9%, it faces the challenges of outdated equipment and overcrowding in hospitals.
Government Focus
The Master Plan on the development of Vietnam’s healthcare system up to 2010 with a vision to 2020 aims to develop qualified medical human resources and postgraduate health personnel, and to maintain and develop existing central general hospitals.
Labour productivity
SDG Goals
  • Decent Work and Economic Growth
Gap
The World Bank rated the quality of Vietnam’s labour at 3.39/10, the second lowest among 12 rated Asian countries in 2014. The country’s labour productivity was one-fifth of that of Malaysia and two-fifths of that of Thailand in the same year.
Government Focus
The Vietnamese government has partnered with the Asian Development Bank (ADB) in 2012 to carry out training in English, IT, and other essential skills.
Small and medium-sized enterprise (SME) growth
SDG Goals
  • Decent Work and Economic Growth
  • Sustainable Cities and Communities
Gap
SMEs contributed 45% to the GDP and were responsible for 62% of jobs in 2015. Only about 30% of SMEs, however, have access to secure bank loans.
Government Focus
The SME Development Fund lent USD 22.4 million to eligible SMEs with viable projects in 2016. A total of USD 67.2 million will be disbursed by 2019.

Social Economy

Vietnam’s social economy is at early stages of growth, supported largely by international agencies and social investors.

There are 1000 SEs in Vietnam.

Category Factor Rating Description
SPOs
Factor
Legislative environment
quarter Legal procedures for setting up SPOs may take up to 18 months.
SPOs
Factor
Government support for SEs
half While Vietnam is one of the few Asian countries that provides a legal definition of SEs, the government has not supported SEs in any substantive way.
SPOs
Factor
SEs across sectors
three-quarter SEs in Vietnam are active in a wide range of sectors including education, vocational training, healthcare, arts and crafts, community media, agriculture and environmental protection.
SPOs
Factor
Presence, size, and maturity of SEs
half There were around 1,000 SEs in Vietnam as of 2016. The majority are in the early stages, strapped for capital and in need of capacity building.
Investors
Factor
Philanthropic contributions
quarter The culture of institutional giving is yet to take root.
Investors
Factor
Presence of social investors
half In addition to international impact investors increasingly growing their footprint in Vietnam, the country is one of the few emerging economies to have homegrown impact funds.
Investors
Factor
Corporate sector
quarter The lack of data on corporate contributions to SEs underscores the limited and donation-based CSR approach. It also highlights the sizeable potential for informed and strategic CSR.
Enablers
Factor
Incubators, accelerators, and capacity-builders
half Notable incubators, accelerators and capacity builders supporting the SE ecosystem in Vietnam include: CSIP, Spark, Insitor Incubator, Young Entrepreneurs & Sustainability Education, Habataku Co. Ltd. Partnership Opportunity
Enablers
Factor
Networks and platforms
half AVPN, British Council, the LIN Center for Community Development, VCCI and VCSDB are networks and platforms present in Vietnam.
Enablers
Factor
Knowledge and research
half British Council partnered with the Central Institute for Economic Management (CIEM), the National Economics University and CSIP to publish 2 landscape studies in 2012 and 2016. (PO) Partnership Opportunity
Enablers
Factor
Partnerships
half Examples of partnerships include CSIP and Oxfam’s Inclusive Impact Investments, the LIN Centre for Community Development with corporates, and Spark, Lotus Impact and Kiva. (PO) Partnership Opportunity

partnership Partnership Opportunity

Demand, Supply and Support Ecosystem in Vietnam

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