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- GDP (PPP):
- $320.7 billion
- 5.0% growth
- 5.9% 5-year compound annual growth
- $3,548 per capita
- Inflation (CPI):
- FDI Inflow:
Vietnam’s economic freedom score is 50.8, making its economy the 147th freest in the 2014 Index. Its score is 0.2 point worse than last year, reflecting declines in freedom from corruption, monetary freedom, and business freedom that outweigh improvements in labor freedom and fiscal freedom. Vietnam is ranked 33rd out of 42 countries in the Asia–Pacific region, and its overall score is lower than the world and regional averages.
Over the 20-year history of the Index, Vietnam has advanced its economic freedom score by about 9 points. Improvements in seven of the 10 economic freedoms include gains in trade freedom, business freedom, and freedom from corruption, scores for which have advanced by 10 points or more. Reforms have included partial privatization of state-owned enterprises and increasing recognition of private property rights.
Vietnam has fluctuated within the lower ranks of the “mostly unfree” economies for two decades, constrained by key institutional shortcomings. Although measurable progress has been made in enhancing the rule of law, the weak judiciary continues to be vulnerable to political influence, and corruption remains widespread. The overall regulatory environment, despite ongoing reform efforts, is not particularly efficient or transparent. Investment is hindered by opaque bureaucracy and an unreliable legal system.
The Socialist Republic of Vietnam is a Communist dictatorship characterized by political repression and a lack of respect for basic human rights. Economic liberalization began in 1986 with its doi moi reforms, and Vietnam joined the World Trade Organization in 2007. In 2012, Prime Minister Nguyen Tan Dung acknowledged mismanagement of the Vietnamese economy and affirmed his commitment to reforming the state sector, but delays persist. Vietnam’s economy is driven primarily by tourism and exports, but inflation is a problem, and the country has struggled to attract more investment in the absence of a transparent legal and regulatory system.
Corruption and abuse of office are serious problems, as are the lack of transparency and the lack of media freedom. Many companies report having to pay bribes for customs clearances. The judiciary is subservient to the ruling Communist Party, which controls courts at all levels. Private property rights are not strongly respected, and resolution of disputes can take years. Infringement of intellectual property rights is common.
The top individual income tax rate is 35 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals 21.1 percent of gross domestic income. Public expenditures amount to 31 percent of GDP. Government debt is equivalent to slightly over 50 percent of the domestic economy.
Launching a business takes 10 procedures on average, and no minimum capital is required. However, completing licensing requirements still takes more than 100 days. The labor market remains relatively rigid, although the non-salary cost of employing a worker is moderate. The government influences prices though state-owned and state-subsidized companies and administrative controls on interest rates.
Vietnam’s average tariff rate is 5.7 percent. Import licensing and tariff-rate quotas impede imports. The role of state-owned enterprises in the economy has declined but remains significant. The financial sector, dominated by banks, continues to expand, with capital markets gradually evolving. The four largest state-owned commercial banks still dominate the banking sector, although their market shares have declined.