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- GDP (PPP):
- $300.0 billion
- 5.9% growth
- 6.5% 5-year compound annual growth
- $3,359 per capita
- Inflation (CPI):
- FDI Inflow:
Vietnam’s economic freedom score is 51, making its economy the 140th freest in the 2013 Index. Its score is 0.3 point worse than last year, with declines in monetary freedom, labor freedom, and trade freedom overshadowing improvements in control of government spending, business freedom, and freedom from corruption. Vietnam is ranked 30th out of 41 countries in the Asia–Pacific region, and its overall score is lower than the world and regional averages.
The Vietnamese economy has weathered the global economic downturn relatively well. Capitalizing on its measured integration into the global trade and investment system, the country has slowly been transforming itself into a more market-oriented economy. Reforms include partial privatization of state-owned enterprises, modernization of the trade regime, and increasing recognition of private property rights.
The rule of law remains an issue, a remnant of decades of Communism. The court system is inefficient, and the protection of intellectual property has been a major area of contention in international trade negotiations. A lack of democratic governance and accountability continues to perpetuate systemic corruption.
The Socialist Republic of Vietnam continues to experience 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 April 2012, Prime Minister Nguyen Tan Dung affirmed his commitment to reforming the state sector, pushing for partial privatizations after support for state-owned enterprises largely backfired. The government is slowly liberalizing key economic sectors, including financial institutions, and is part of the Trans-Pacific Partnership free trade negotiations. Vietnam’s fast-growing 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.
The judicial system is not independent and lacks efficiency. Private property rights are not strongly respected, and resolution of disputes can take years. Infringement of intellectual property rights is common. Corruption is due in large part to a lack of transparency and media freedom, but systems for holding officials accountable for their actions are inadequate as well. Many companies report having to pay bribes for customs clearances.
The top 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 24.3 percent of total domestic income. Government spending is equivalent to 30.3 percent of GDP. Deficits have been persistently high, but public debt has remained at around 38 percent of GDP. A huge stimulus package in 2009 has threatened fiscal health.
Despite ongoing reform efforts, the overall regulatory framework lacks efficiency. Although no minimum capital is required, starting a business still takes more than the world average of 30 days and seven procedures. Completing licensing requirements still takes more than 100 days. The labor market remains dominated by the public sector, but there is considerable informal labor activity. Inflation has spiked, damaging monetary stability.
The trade-weighted average tariff rate is 5.7 percent, with some additional non-tariff barriers limiting more dynamic gains from trade. Despite a desire to attract more foreign investment, the investment regime lacks efficiency, and flows are severely hampered by various restrictions. The financial sector continues to expand, with capital markets evolving. Directed lending by state-owned commercial banks has been scaled back in recent years.