Business in Vietnam

Vietnam Travel Blog

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Garbage disposal

Vietnam, the next best thing…?
After more than a century of turbulence, Vietnam has managed to find stability and raise the interest of foreign investors. Vietnam needs to climb from far down, but shows an enormous potential. Next year STAR’s international business study will conduct a extensive research on the possibilities of the country. It is time to dig into the past, look ahead and explore what the country is really about.

A turbulent past
The Vietnam War, which occurred from 1959 to 1975, had a detrimental effect on the country. The American economic embargo, which lasted until 1994, has put a continuing burden on the economic development.
'Uncle Ho' Ho Chi Minh
The Vietnamese refer to the Vietnam War as the American War, since they had to endure a multitude of invaders. French military activity started as early as 1847 and incorporated the country as The Indochinese Union in 1887. In the Second World War the Japanese forces occupied the country, leaving the French in place for the day-to-day operations.
In 1945 the British Army liberated the country. The patriotic, nationalist movement Viet Minh led by Ho Chi Minh, has strived for independence since the Second World War, now trying to take advantage of the power vacuum. The French colonizers however returned in strength and managed to regain control of Vietnam, at least in name by 1946. This was when the Franco ďż˝" Minh War broke loose.
Statue for the female NVA soldiers (DMZ)
After eight years of fighting, on 7 may 1954 the French recognized their defeat and this brought an end to the colonial adventure in Indochina.
The country was temporary divided into two zones until nationwide elections could be held. In the North the nationalist and Communist Viet Minh ruled and in the South a strong anti-communist Catholic regime. Nationwide elections however, were never held, as the Americans feared that Ho Chi Minh would win by a landslide. The American interference initiated the Vietnam War.  

Vietnam, Rising star?
After more than a century of turbulence, the Communist regime has managed to bring stability to the country. With the lifting of the American trade boycott, the doors have opened for an economic revival.
Trafficjams in Ho Chi Minh
The country has managed to escape the position of underperformer. It is now one of Asia’s fastest developing countries, with an average economic growth rate of above 7 per cent for the last decade. Since the 1990, Vietnam’s exports have increased faster than China’s. It is world’s largest exporter of pepper, second coffee exporter and aims to overtake Thailand’s number one position in rice export.
Another source of future income is tourism. The country offers a wealth of attractions for all tastes: historic cities and churches from French colonial times; war sites like the tunnels in demilitarized zone, an idyllic coastline and an enormous potential for ecotourism with over twelve national parks. Surrounded by countries with a rising spending power, like China, South Korea, Taiwan and Japan, guarantee a steady inflow of tourism.
The richness of the Mekong markets

Vietnam’s rise has been initiated in 1986 by the Doi Moi (renovation) politics; here the ruling Communists acknowledged that capitalism and open markets were the way forward. The government allows for a market-based system, while steadily controlling the pace to guarantee the Party’s power. The slow pace of the reforms, for example the the country's banks and to investment rules, has scared of investors in the 1990s. Slowly, but surely the country has managed to come forward. The government has come to realize that foreign investments are beneficial to the country and do not necessarily threaten the position of the Communist’s party. The former skepticism towards the outside world has disappeared as the country welcomes tourists and works on the foreign relationships. The Vietnam news of the 29th of September, a government controlled newspaper, illustrates the recent outward look of the government: “Leaders see tighter world ties as vital to growth”.
Preparing food for the poor


A long road ahead
Vietnam however, has to climb from far down. It is still considered the poorest country in Asia, with income per head behind India’s. When you visit the country the signs of poverty are all to clear: market vendors that literally live and sleep at their market stand, waiters that spend the night on the restaurant tables and families living in sheds on the water.

Next to the obvious signs of poverty, the rapid economic development is also present, mainly in the big cities. In Ho Chi Minh City (the former Saigon), Vietnam’s largest metropolis, you can see the flashy sport-utility vehicles passing expensive designer boutiques. With a population of 6.3 million people and 3.3 million motorbikes the city seems like a chaotic mess of traffic logged roads and urban bustle.
Dragon style
Like Hanoi, the city has a high Honda-density, which triples the average travel time during peak hours. Ho Chi Minh is a frontrunner driving Vietnam’s economic boom. Investment has led to a numerous hotels, restaurants, trendy nightclubs and high-end boutiques. In the city the middle class seems broader and is therefore very different than remote areas of the country.

Meanwhile a shortage of land is hampering agriculture development and a surging inflation could instigate a currency collapse. The fertile valleys of the Mekong and Red rivers are already heavy populated. The availability of land seems to be one of the most prominent problems for the future. Next to that is the inflation, which is over 25% year-on-year, is a matter of concern, to say the least.

Entrepreneurial spirit
“Hey you, need motorbike taxi? Want to buy banana? Very cheap.
Floathing market Can Tho
Hey where you going, stay in my hotel! Please come in my shop and buy something. Your shoes need polish! Book, for you mister?” As a tourist in Vietnam it is hard to escape the representatives of the informal economy who seem to come out of nowhere. They know exactly: when the tourist buses arrive, the routes of the tours and popular spots in the city. There they arrive to offer their goods or services, which range from fresh fruit, souvenirs, drinks to rides on the bicycle-taxi.

Throughout the country commercial activity is dominant. On the floating markets, market vendors purchase their goods. The street vendors buy their goods from the market vendors and they approach the customers while carrying two baskets held up by a bamboo pole. On the sidewalks small restaurants serve the national dish Pho, a noodle soup with pork that is served for breakfast, lunch and dinner.
Every ten meters a motorcycle taxi driver is waiting for customers, while lying on his motorcycle. The country has to find jobs for 1 million people joining the workforce each year which makes the competition fierce. Because of the huge supply of these products and services, prices are low and these people still struggle for survival.
Here is where foreign investments and business could make a difference, by offering employment and knowledge. Agriculture, for one thing, could benefit from the sophisticated methods used in the Western world. Right now the preferred method of ploughing the land is still by oxen or water buffalo’s.

Foreign initiatives
Vietnam has fought its way up to being one of the multinational’ favorites, 1 out 5 multinationals has plans to transfer activities from China to Vietnam.
Young student
The low wages, tax benefits and a large working population are among the most important considerations. For example, the US chip producer Intel that has invested one billion USD into a new factory in Vietnam. A big part of the foreign investments is going into golf courses, resorts and hotels that focus on the top of the market.

Private firms have long been illegal, but that ship has sailed. But private firms still face an excess of red tape, corruption and poor regulation. Communist bureaucracy makes the process of buying and selling land complicated and corrupt. In most occasions it is still forbidden for foreigners to own property in Vietnam, which makes things instantly more complicated. Businessmen like the Australian Craig Anderson, who runs several scuba supply stored in Vietnam, has everything on the name of his Vietnamese fiancé.
My students whom I have teached English.
He has seen other foreign businessmen lose everything, as they went into a 49-51% joint venture with a local. Even for Westerns to stay in rent housing involves a strict government permit, while things are much easier in the globalized Ho Chi Minh City.
Many investors have poured in loads of money in firms that are still considered government enterprises. The government shows willing toward continuing the liberalization and much work lies ahead to get there. Time will tell whether the government can live up to its promises.

Future outlook
The global downturn will hit Vietnam as hard as any other country. In a land where everything goes by motorbike, rising fuel prices can have a strain on the economy. While rice producers benefit from the rising food prices, the people that consume rice (read everyone in Vietnam) will be disadvantaged.

But other than that the outlooks are good. If the Communists speed up the reform and cut the red tape they will drag in even more investors. The government is already half-way through a huge project that strives to cut down bureaucracy and minimize official procedures.

The ambitions of the government are high, it wants to become a rich, high-tech country by the year 2020. The government plans are laden with targets for increasing output and improving infrastructure. If the government can live up to it’s ambitions, foreign investment is stimulated and tourism will continue to flourish, Vietnam could really be the next best thing.


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Garbage disposal
Garbage disposal
Uncle Ho Ho Chi Minh
'Uncle Ho' Ho Chi Minh
Statue for the female NVA soldiers…
Statue for the female NVA soldier…
Trafficjams in Ho Chi Minh
Trafficjams in Ho Chi Minh
The richness of the Mekong markets
The richness of the Mekong markets
Preparing food for the poor
Preparing food for the poor
Dragon style
Dragon style
Floathing market Can Tho
Floathing market Can Tho
Young student
Young student
My students whom I have teached En…
My students whom I have teached E…
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