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Economy of Vietnam

Following economic stagnation after reunification from 1975 to 1985, the 1986 Sixth Party Congress approved broad economic reforms (known as "Doi Moi" or renovation) that introduced market reforms, opened up the country for foreign investment, and dramatically improved Vietnam's business climate. Vietnam became one of the fastest-growing economies in the world, averaging around 8% annual gross domestic product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2007, GDP grew over 8% annually, slowing slightly to 6.2% in 2008 and 5.3% in 2009, and then recovering to 6.78% in 2010. Viewed over time, foreign trade and foreign direct investment (FDI) have improved significantly. The average annual foreign investment commitment has risen sharply since foreign investment was authorized in 1988, although the global economic crisis affected FDI in 2009. In 2010, disbursed FDI capital totaled $11.0 billion, up 10% compared to 2009. Registered FDI (including new and additional capital) was $18.6 billion in 2010, a fall of about 20% compared to 2009. In 2010, actual disbursed FDI was $11 billion and registered FDI was $18.6 billion. From 1990 to 2005, agricultural production nearly doubled, transforming Vietnam from a net food importer to the world's second-largest exporter of rice. In 2010, Vietnam’s exports ($71.6 billion) were up by 25%. Vietnam’s imports ($84 billion) were up by 22% from 2009, and the country was still running a structural trade deficit, reaching $12.4 billion in 2010.

The shift away from a centrally planned economy to a more market-oriented economic model has improved the quality of life for many Vietnamese. Per capita income rose from $220 in 1994 to $1,168 in 2010. Year-on-year inflation increased to 11.75% in 2010 from 6.52% in 2009. Experts doubt that the Vietnamese Government can reach its 2011 Consumer Price Index (CPI) target of 7%, given that inflation has remained above target for 4 straight months and April CPI was more than 9%. The average Vietnamese savings rate is about 25% of GDP. Unemployment remains low, but has been rising in recent years. Unemployment was 2.88% in 2010--a slight decline from 2.9% in 2009, but up from 2.4% in 2008--with urban unemployment being higher (4.43% in 2010) than rural (2.27% in 2010).

The Vietnamese Government still holds a tight rein over major sectors of the economy through large state-owned economic groups and enterprises. The government has plans to reform key sectors and partially privatize state-owned enterprises, but implementation has been gradual and the state sector still accounts for approximately 40% of GDP. Greater emphasis on private sector development is critical for job creation.

The 2001 entry-into-force of the Bilateral Trade Agreement (BTA) between the U.S. and Vietnam was a significant milestone for Vietnam's economy and for normalization of U.S.-Vietnam relations. Bilateral trade between the United States and Vietnam has expanded dramatically, rising from $2.91 billion in 2002 to $17.9 billion in 2010. The U.S. is Vietnam's second-largest trade partner overall (after China).

Implementation of the BTA, which includes provisions on trade in goods and services, enforcement of intellectual property rights, protection for investments, and transparency, fundamentally changed Vietnam's trade regime and helped it accede to the World Trade Organization (WTO) in 2007.

Vietnam was granted unconditional normal trade relations (NTR) status by the United States in December 2006. To meet the obligations of WTO membership, Vietnam revised nearly all of its trade and investment laws and guiding regulations and opened up large sectors of its economy to foreign investors and exporters.

A U.S.-Vietnam Trade and Investment Framework Agreement (TIFA), a bridge to future economic cooperation, was signed in 2007 during President Triet's visit to the United States. The first TIFA Council occurred in December 2007 in Washington, and there have been five TIFA meetings since then. During Prime Minister Dung's June 2008 visit, the United States and Vietnam committed to undertake Bilateral Investment Treaty (BIT) negotiations, and have completed three rounds of talks since then.

Agriculture and Industry
As in the rest of Asia, farms in Vietnam tend to be very small, and are usually less than one hectare (2.5 acres) each. Rice and other farm outputs are quite profitable, on a per-kilogram basis, but the total income from these small operations is increasingly insufficient to cover daily household needs. Off-farm income is necessary, and growing in importance. Due to its high productivity, Vietnam is currently a net exporter of agricultural products. Besides rice, key exports are coffee (robusta), pepper (spice), cashews, tea, rubber, wood products, and fisheries products. In 2010, Vietnam was ranked 17 among all suppliers of food and agricultural products to the United States, a strong indicator of Vietnam’s growing importance as a global supplier of key agricultural commodities. Agriculture's share of economic output has declined, falling as a share of GDP from 42% in 1989 to 21% in 2010, as production in other sectors of the economy has risen.

Vietnam's industrial production has also grown. Industry and construction contributed 41% of GDP in 2010, up from 27.3% in 1985. Subsidies have been cut, though state enterprises still receive priority access to resources, including land and capital. The government is also continuing the slow process of "equitizing" a significant number of smaller state enterprises--transforming state enterprises into shareholding companies and distributing a portion of the shares to management, workers, and private foreign and domestic investors. However, to date the government continues to maintain control of the largest and most important companies.

Trade and Balance of Payments
To compensate for drastic cuts in Soviet-bloc support after 1989, Vietnam liberalized trade, devalued its currency to increase exports, and embarked on a policy of regional and international economic re-integration. Vietnam has demonstrated its commitment to trade liberalization in recent years, and integration with the world economy has become one of the cornerstones of its reform program. Vietnam has locked in its intention to create a more competitive and open economy by committing to several comprehensive international trade agreements, including the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) and the U.S.-Vietnam Bilateral Trade Agreement (BTA). Vietnam's accession to the World Trade Organization further integrated Vietnam into the global economy. In November 2010, Vietnam officially joined the Trans-Pacific Partnership (TPP).

As a result of these reforms, exports expanded significantly, growing by as much as 20%-30% in some years. Exports accounted for about 70% of GDP in 2010. Imports have also grown rapidly, and Vietnam has maintained a structural trade deficit, reaching $12.4 billion in 2010. Vietnam's total external debt, amounting to 39% of GDP in 2009, was estimated at around $27.93 billion.

GDP (2010): $102 billion.
Real growth rate (2010): 6.8%.
Per capita income (2010): $1,168.
Inflation rate: 9.19% (average monthly Consumer Price Index of 2010, year-on-year); 12.79% (average monthly CPI through first quarter 2011, year-on-year).
External debt (2009): 39% of GDP, $27.93 billion.
Natural resources: Coal, crude oil, zinc, copper, silver, gold, manganese, iron.
Agriculture, forestry, and fisheries (20.58% of GDP, 2010): Principal products--rice, coffee, cashews, maize, pepper (spice), sweet potato, pork, peanut, cotton, plus extensive aquaculture of both fish and shellfish species. Cultivated land--12.2 million hectares. Land use--21% arable; 28% forest and woodland; 51% other.
Industry and construction (41.09% of GDP, 2010): Principal types--mining and quarrying, manufacturing, electricity, gas, water supply, cement, phosphate, and steel.
Services (38.33% of GDP, 2010): Principal types--tourism, wholesale and retail, repair of vehicles and personal goods, hotel and restaurant, transport storage, telecommunications.
Trade (2010): Exports--$71.6 billion. Principal exports--crude oil, garments/textiles, footwear, fishery and seafood products, rice (world’s second-largest exporter), pepper (spice; world’s largest exporter), wood products, coffee, rubber, handicrafts. Major export partners--U.S., EU, ASEAN, Japan, China, and South Korea. Imports--$84 billion. Principal imports--machinery, oil and gas, iron and steel, garment materials, plastics. Major import partners--China, ASEAN, Japan, Taiwan, South Korea, and EU. Exports to U.S. (2010)--$14.3 billion. Imports from U.S. (2010)--$3.7 billion.

Geography of Vietnam

Location: Southeastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea, alongside China, Laos, and Cambodia Geographic coordinates: 16 00 N, 106 00 E Map references: Southeast Asia Area: total: 329,560 sq km land: 325,360 sq km water: 4,200 sq km Area - comparative: slightly larger than New Mexico Land boundaries: total: 4,639 km border countries: Cambodia 1,228 km, China 1,281 km, Laos 2,130 km Coastline: 3,444 km (excludes islands) Maritime claims: contiguous zone: 24 NM continental shelf: 200 NM or to the edge of the continental margin exclusive economic zone: 200 NM territorial sea: 12 NM Climate: tropical in south; monsoonal in north with hot, rainy season (mid-May to mid-September) and warm, dry season (mid-October to mid-March) Terrain: low, flat delta in south and north; central highlands; hilly, mountainous in far north and northwest Elevation extremes: lowest point: South China Sea 0 m highest point: Ngoc Linh 3,143 m Natural resources: phosphates, coal, manganese, bauxite, chromate, offshore oil and gas deposits, forests, hydropower Land use: arable land: 17% permanent crops: 4% permanent pastures: 1% forests and woodland: 30% other: 48% (1993 est.) Irrigated land: 18,600 sq km (1993 est.) Natural hazards: occasional typhoons (May to January) with extensive flooding Environment - current issues: logging and slash-and-burn agricultural practices contribute to deforestation and soil degradation; water pollution and overfishing threaten marine life populations; groundwater contamination limits potable water supply; growing urban industrialization and population migration are rapidly degrading environment in Hanoi and Ho Chi Minh City Environment - international agreements: party to: Biodiversity, Climate Change, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Ozone Layer Protection, Ship Pollution, Wetlands signed, but not ratified: Climate Change-Kyoto Protocol, Nuclear Test Ban Geography - note: extending 1,650 km north to south, the country is only 50 km across at its narrowest point

Government of Vietnam

A new state constitution was approved in April 1992, reaffirming the central role of the Communist Party of Vietnam (CPV) in politics and society, and outlining government reorganization and increased economic freedom. Though Vietnam remains a one-party state, adherence to ideological orthodoxy has become less important than economic development as a national priority.

The most important powers within the Vietnamese Government--in addition to the Communist Party--are the executive agencies created by the 1992 constitution: the offices of the president and the prime minister. The Vietnamese President functions as head of state but also serves as the nominal commander of the armed forces and chairman of the Council on National Defense and Security. The Prime Minister of Vietnam heads a cabinet composed of deputy prime ministers and the heads of ministries and agencies, all confirmed by the National Assembly.

Notwithstanding the 1992 constitution's reaffirmation of the central role of the Communist Party, the National Assembly, according to the constitution, is the highest representative body of the people and the only organization with legislative powers. It has a broad mandate to oversee all government functions. Once seen as little more than a rubber stamp, the National Assembly has become more vocal and assertive in exercising its authority over lawmaking, particularly in recent years. However, the National Assembly is still subject to Communist Party direction. More than 90% of the deputies in the National Assembly are party members. The assembly meets twice yearly for 7-10 weeks each time; elections for members are held every 5 years, although its Standing Committee meets monthly and there are now over 100 "full-time" deputies who function on various committees. In 2007, the assembly introduced parliamentary "question time," in which cabinet ministers must answer often-pointed questions from National Assembly members. There is a separate judicial branch, but it is still relatively weak. There are few lawyers and trial procedures are rudimentary.

The Politburo, selected during the Party Congress of the Communist Party of Vietnam and headed by the Communist Party General Secretary, determines government policy; its Secretariat oversees day-to-day policy implementation. In addition, the Communist Party's Central Military Commission, which is composed of select Politburo members and additional military leaders, determines military policy.

A Party Congress meets every 5 years to set the direction of the party and the government. The most recent Party Congress, the Eleventh, met in January 2011. The Central Committee is elected by the Party Congress and usually meets at least twice a year. The most recent Central Committee Plenum also met in January; principal government officials and members of the Politburo were announced the same month.

Principal Government Officials
President--Nguyen Minh Triet
Prime Minister--Nguyen Tan Dung
National Assembly Chairman--Nguyen Phu Trong (also Communist Party General Secretary)
Deputy Prime Minister and Minister of Foreign Affairs--Pham Gia Khiem
Ambassador to the United States--Nguyen Quoc Cuong
Ambassador to the United Nations--Le Luong Minh

Vietnam maintains an embassy in the U.S. at 1233 20th Street, NW, #400, Washington DC 20036 (tel. 202-861-0737; fax 202-861-0917); Internet home page: www.vietnamembassy-usa.org/. There is also a consulate general located in San Francisco at 1700 California Street, Suite 430, San Francisco, CA 94109 (tel. 415-922-1707; fax 415-922-1848; Internet homepage: http://www.vietnamconsulate-sf.org/.

Type: Single-party constitutional republic (Communist Party).
Independence: September 2, 1945.
New constitution: April 15, 1992.
Branches: Executive--president (head of state and chair of National Defense and Security Council) and prime minister (heads cabinet of ministries and commissions). Legislative--National Assembly. Judicial--Supreme People's Court; Prosecutorial Supreme People's Procuracy.
Administrative subdivisions: 58 provinces, 5 municipalities (Can Tho, Haiphong, Danang, Hanoi, Ho Chi Minh City).
Political party: Communist Party of Vietnam (CPV) with over 3 million members, formerly (1951-76) Vietnam Worker's Party, itself the successor of the Indochinese Communist Party founded in 1930.
Suffrage: Universal over 18.

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History of Vietnam

Vietnam's identity has been shaped by long-running conflicts, both internally and with foreign forces. In 111 BC, China's Han dynasty conquered northern Vietnam's Red River Delta and the ancestors of today's Vietnamese. Chinese dynasties ruled Vietnam for the next 1,000 years, inculcating it with Confucian ideas and political culture. In 939 AD, Vietnam achieved independence under a native dynasty. After 1471, when Vietnam conquered the Champa Kingdom in what is now central Vietnam, the Vietnamese moved gradually southward, finally reaching the rich Mekong Delta, encountering there earlier settled Cham and Cambodians. While Vietnam's emperors reigned ineffectually, powerful northern and southern families fought civil wars in the 17th and 18th centuries. French Rule and the Anti-Colonial Struggle In 1858, the French began their conquest of Vietnam starting in the south. They annexed all of Vietnam in 1885, but allowed Vietnam's emperors to continue to reign, although not actually to rule. In the early 20th century, French-educated Vietnamese intellectuals organized nationalist and communist-nationalist anti-colonial movements. Japan's occupation of Vietnam during World War II further stirred nationalism. Vietnamese communists under Ho Chi Minh organized a coalition of anti-colonial groups, the Viet Minh, though many anti-communists refused to join. After Japan stripped the French of much power in Indochina in March 1945, Ho Chi Minh announced the independence of the Democratic Republic of Vietnam on September 2, 1945. North and South Partition France's post-World War II unwillingness to leave Vietnam led to failed talks and an 8-year guerrilla war between the communist-led Viet Minh on one side and the French and their anti-communist nationalist allies on the other. Following a humiliating defeat at Dien Bien Phu in May 1954, France and other parties, including Britain, China, the Soviet Union, and the United States, convened in Geneva, Switzerland for peace talks. On July 29, 1954, an Agreement on the Cessation of Hostilities in Vietnam was signed between France and the Democratic Republic of Vietnam. The United States observed, but did not sign, the agreement. French colonial rule in Vietnam ended. The 1954 Geneva agreement provided for a cease fire between communist and anti-communist nationalist forces, the temporary division of Vietnam at approximately the 17th parallel, provisional northern (communist) and southern (non-communist) zone governments, and the evacuation of anti-communist Vietnamese from northern to southern Vietnam. The agreement also called for an election to be held by July 1956 to bring the two provisional zones under a unified government. However, the South Vietnamese Government refused to accept this provision. On October 26, 1955, South Vietnam declared itself the Republic of Vietnam. After 1954, North Vietnamese communist leaders consolidated their power and instituted a harsh agrarian reform and socialization program. In the late 1950s, they reactivated the network of communist guerillas that had remained behind in the south. These forces (commonly known as the Viet Cong), aided covertly by the north, started an armed campaign against officials and villagers who refused to support the communist reunification cause. American Assistance to the South In December 1961, at the request of South Vietnamese President Ngo Dinh Diem, President Kennedy sent U.S. military advisers to South Vietnam to help the government there deal with the Viet Cong campaign. In the wake of escalating political turmoil in the south after a 1963 generals' coup against President Diem, the United States increased its military support for South Vietnam. In March 1965, President Johnson sent the first U.S. combat forces to Vietnam. The American military role peaked in 1969 with an in-country force of 534,000. However, the Viet Cong's surprise Tet Offensive in January 1968 deeply hurt both the Viet Cong infrastructure and American and South Vietnamese morale. In January 1969, the United States, governments of South and North Vietnam, and the Viet Cong met for the first plenary session of peace talks in Paris, France. These talks, which began with much hope, moved slowly. They finally concluded with the signing of a peace agreement, the Paris Accords, on January 27, 1973. As a result, the south was divided into a patchwork of zones controlled by the South Vietnamese Government and the Viet Cong. The United States withdrew its forces, although U.S. military advisers remained. Reunification In early 1975, North Vietnamese regular military forces began a major offensive in the south, inflicting great damage to the south's forces. The communists took Saigon on April 30, 1975, and announced their intention of reunifying the country. The Democratic Republic of Vietnam (north) absorbed the former Republic of Vietnam (south) to form the Socialist Republic of Vietnam on July 2, 1976. After reunification, the government confiscated privately owned land and forced citizens into collectivized agricultural practices. Hundreds of thousands of former South Vietnamese Government and military officials, as well as intellectuals previously opposed to the communist cause, were sent to re-education camps to study socialist doctrine. While Vietnamese leaders thought that reunification of the country and its socialist transformation would be condoned by the international community, this did not happen. Besides international concern over Vietnam's internal practices, the Vietnamese invasion of Cambodia in 1978 and its growing tight alliance with the Soviet Union appeared to confirm suspicions that Vietnam wanted to establish hegemony in Indochina. Vietnam's invasion of Cambodia also heightened tensions that already existed between Vietnam and China. Beijing, which had long backed the Khmer Rouge regime in Cambodia, retaliated in early 1979 by initiating a border war with Vietnam. Vietnam's tensions with its neighbors and its stagnant economy contributed to a massive exodus from Vietnam. Fearing persecution, many Chinese in particular, fled Vietnam by boat to nearby countries. Later, hundreds of thousands of other Vietnamese nationals fled as well, seeking temporary refuge in camps throughout Southeast Asia. The continuing grave condition of the economy and the alienation from the international community became focal points of party debate. In 1986, at the Sixth Party Congress, there was an important easing of communist agrarian and commercial policies.

People of Vietnam

Originating in what is now southern China and northern Vietnam, the Vietnamese people pushed southward over 2 millennia to occupy the entire eastern seacoast of the Indochinese Peninsula. Vietnam has 54 ethnic groups; ethnic Vietnamese or Kinh constitute approximately 85% of Vietnam's population. The next largest groups are ethnic Tay and Thai, which account for 1.89% and 1.8% of Vietnam's population and are concentrated in the country's northern highlands. With a population of more than 900,000, Vietnam's Chinese community has historically played an important role in the Vietnamese economy. Restrictions on economic activity following reunification of the north and south in 1975 and a general deterioration in Vietnamese-Chinese relations caused increasing anxiety within the Chinese-Vietnamese community. As tensions between Vietnam and China reached their peak in 1978-79, culminating in a brief but bloody war in February-March 1979, some 450,000 ethnic Chinese left Vietnam by boat as refugees (many officially encouraged and assisted) or were expelled across the land border with China. Other significant ethnic minority groups include central highland peoples (formerly collectively termed Montagnards) such as the Gia Rai, Bana, Ede, Xo Dang, Gie Trieng, and the Khmer Krom (Cambodians), who are concentrated near the Cambodian border and at the mouth of the Mekong River. Taken collectively, these groups made up a majority of the population in much of Vietnam's central highlands until the 1960s and 1970s. They now compose a significant minority of 25% to 35% of the provinces in that region. Vietnamese is the official language of the country. It is a tonal language with influences from Thai, Khmer, and Chinese. Since the early 20th century, the Vietnamese have used a Romanized script introduced by the French. Previously, Chinese characters and an indigenous phonetic script were both used. Nationality: Noun and adjective --Vietnamese (sing. and pl.). Population (2011): 90 million. Annual population growth rate (2011): 1.077%. Ethnic groups (2009): 54 groups including Vietnamese (Kinh) (73.594 million, or 85.7% of the population), Tay (1.89%), Thai (1.8%), Muong (1.47%), Khmer (1.46%), Chinese (0.95%), Nung (1.12%), Hmong (1.24%). Religions (2008): Buddhism (approx. 50%), Catholicism (8%-10%), Cao Dai (1.5%-3%), Protestantism (0.5%-2%), Hoa Hao (1.5%-4%), Islam (0.1%), and other animist religions. Languages: Vietnamese (official), English (increasingly favored as a second language), some French, Chinese, and other ethnic minority languages. Education (2009): Literacy --94%. Health (2011): Birth rate --17.07 births/1,000 population. Infant mortality rate-- 20.9 deaths/1,000 live births. Life expectancy --73 yrs. Death rate --5.96/1,000 population.