Flag of Vietnam

Vietnam country brief

Overview

The Socialist Republic of Vietnam (Vietnam) is 1,650 kilometres long and from 50 kilometres at its narrowest point to 600 kilometres wide. It borders China, Laos, Cambodia, the Gulf of Thailand and the South China Sea. Its 90 million people constitute the world's 13th largest population (third largest in ASEAN) inhabiting the 66th largest country—an area about one third that of New South Wales. Population density in parts of Hanoi is among the world's highest at around 35,000 per square kilometre, but there are also sparsely populated remote areas, where remaining poverty (between 15-20 per cent of the population) is concentrated, principally among the 53 minority ethnic groups. The 54th and majority ethnic group (Kinh) accounts for 85 per cent of the total population. The population is young (63 per cent under 35, median age 27) and adult literacy is around 94 per cent, but the quality of work-related skills and education is low.

Vietnam is now a middle-income country (GDP per capita USD1,900 in 2013) and its wealth is the second most evenly distributed in ASEAN after Indonesia. It is the world's 41st largest economy (PPP), in transition from agrarian to industrialised and from centrally planned to market-based. Vietnam has been cited as having the fastest growing middle class in the Southeast Asian region and this is expected to rise from 12 million in 2012 to 33  million in 2020 (Boston Consulting Group Survey 2012). Agriculture still accounts for some 70 per cent of employment, but contributes only 17 per cent of GDP, despite Vietnam being a global agricultural player in several commodities. The remainder of the economy is 40 per cent manufacturing, construction and industry, and the balance of 43 per cent services.

Political overview

Vietnam is one of the world's few remaining one-party communist states. The Communist Party of Vietnam (CPV) Central Committee—in which political power is formally vested—comprises 175 full and 25 alternate members elected at the Party Congress, held every five years (the Twelfth Party Congress is scheduled for 2016). The Central Committee meets twice a year and acts as the CPV's supreme decision-making organ. The Central Committee  in turn elects a Politburo (currently 16 members), which runs Party affairs between Central Committee meetings and is Vietnam's most powerful political body in practice. The three most powerful political positions are the General Secretary of the CPV, currently Dr Nguyen Phu Trong, Prime Minister, currently Mr Nguyen Tan Dung, who heads the government and the President, currently Mr Truong Tan Sang, who is Head of State.

The Government is accountable to the National Assembly. In recent years, the National Assembly has become increasingly active and influential in setting national priorities, with members prepared to criticise the Government vigorously. Administration and policy implementation is the responsibility of government ministries and equivalent agencies, although these organisations are now also playing a more significant role in policy development.

The increasing role of the National Assembly in reviewing legislation and policies and a gradually more incisive media have contributed to greater transparency in Vietnam, but there are limits to dissent. Individuals can incur long prison terms on broadly framed charges, such as espionage or undermining national security and propagandising against the state. Notwithstanding some recent responsiveness on the part of the Vietnamese authorities on questions of religious freedom, several high-profile arrests and trials over recent years have brought the international spotlight back onto Vietnam's one-party political system and management of diverse political views.

Vietnam pursues an explicit policy of comprehensive international integration and takes an active role in international affairs, highlighted by its hosting of APEC in 2006, accession to the World Trade Organization in 2007, its non-permanent membership of the UN Security Council in 2008-09 and chairing of ASEAN in 2010. Vietnam was recently elected to the Human Rights Council (2014-16) and is currently campaigning for a seat on the UN Security Council (2020-21).

Head of State and Government Ministry

Ministers

Politburo XI of the Communist Party of Vietnam (2011–2016)

Foreign policy

Resolution No.13 by the Politburo issued in May 1988 aimed to have ‘more friends and fewer enemies’.  Since that time, Vietnam has pursued an explicit policy of comprehensive international integration and takes an active role in international affairs, highlighted by its joining the Association of Southeast Asian Nations (ASEAN) in 1995, hosting of Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in 2006, accession to the World Trade Organization in 2007, its non-permanent membership of the UN Security Council in 2008-09 and chairing of ASEAN in 2010.  Vietnam is currently serving on the Human Rights Council (2014-16) and is campaigning for a seat on the UN Security Council (2020-21) and the United Nations Economic and Social Council (ECOSOC) for the 2016-2018 period. It was also elected as the chairman of the Board of Governors of the Vienna-based International Atomic Energy Agency (IAEA) for the 2013-14 term, and elected to the UNESCO World Heritage Committee for the 2014-2017 tenure.

Vietnam works to create favourable international conditions to provide for accelerated socio-economic development, national industrialisation and modernisation of Vietnam. Vietnam aims to develop relations with countries and international organizations under the principles of respect for each other's independence, sovereignty and territorial integrity, non-interference in each other's international affairs; non-use or threat of force; settlement of disagreements and disputes by means of peaceful negotiations; mutual respect, equality and mutual benefit. As a claimant in the South China Sea territorial dispute, Vietnam aims to settle the dispute through negotiation and peaceful means, in accordance with international law and the 1982 United Nations Convention on the Law of the Sea (UNCLOS), the Declaration on the Conduct of Parties in the South China Sea (DOC) and working for the early formulation of a Code of Conduct for the South China Sea (COC).

Bilateral relations

Australia and Vietnam marked the 40th anniversary of diplomatic relations on 26 February 2013. Bilateral links between Australia and Vietnam have developed significantly since the establishment of diplomatic relations in 1973. In September 2009 the two countries signed the Australia – Viet Nam Comprehensive Partnership. The Plan of Action, signed in October 2010, provides a basis for engagement and cooperation in diverse areas of mutual interest.

People to people linksIn the 2011 Census, 221,114 people in Australia claimed Vietnamese ancestry. The first major wave of Vietnamese migration to Australia started in the mid-1970s, with the arrival of large numbers of refugees following the end of the Vietnam War. In more recent years the vast majority of Vietnamese migrants have come to Australia through the Family Stream migration program (family stream migrants are selected on the basis of their family relationship with their sponsor in Australia under four main categories—partner, child, parent and other family visa categories), although there are growing numbers of skilled migrants. Today Australians born in Vietnam represent the fifth largest migrant community in Australia. After the United States of America, Australia is the second most common destination for Vietnamese migrants. The environment in Vietnam since the advent of the doi moi (renovation) reforms has encouraged many Vietnamese expatriates to revisit their former homeland.

Further statistical information on the Vietnamese community in Australia can be found on the Country Profiles page of the Department of Immigration and Border Protection.

Scholarships and Fellowships

Australia has a generous scholarship and fellowship program with Vietnam and is the leading government provider of scholarships to Vietnamese students. In 2013, 482 Australia Awards were offered to Vietnamese students, comprising 272 long-term and 210 short-term awards. Australia Awards focus on areas of importance to the development of Vietnam's human resources, including economic integration, management and commerce, climate change, water and sanitation, university teaching and research capacity.

Since 2007, 349 Vietnamese students have accepted an Endeavour Scholarship or Fellowship to undertake study, research or professional development in Australia. Over the same period, 33 Australians have accepted an Endeavour Scholarship or Fellowship to go to Vietnam to undertake study, research or professional development.

For more information, see Vietnam: Australia Awards and Department of Education, Endeavour Scholarships and Fellowships.

Volunteers

The Australian Volunteers for International Development (AVID) program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes.

Australia’s overseas volunteer program, Australian Volunteers for International Development, has a one-stop entry point to Australian volunteering.

Defence, police relations and regional security

Formal defence relations between Australia and Vietnam were established in February 1998, with the opening of a Defence Attaché Office at the Australian Embassy in Hanoi occurring in 1999. Vietnam's first Defence Attaché to Australia took up his appointment in Canberra in September 2000.

The bilateral defence relationship includes: regular Australian Defence Force ship visits to Vietnamese ports; training of Vietnamese military officers in Australia under the bilateral Defence Cooperation Program; and visits between Australian and Vietnamese senior Defence Force officials. In October 2010, Australia and Vietnam signed a bilateral MOU on Defence Cooperation at the inaugural ASEAN Defence Ministers' Meeting- Plus held in Hanoi. During his visit to Vietnam in August 2012, former Australian Minister for Defence, Stephen Smith and Vietnamese Minister of National Defense, General Phung Quang Thanh, agreed Vietnam and Australia should take further practical steps to enhance the defence relationship and to progress a range of bilateral defence initiatives, including the establishment of an Annual Defence Ministers' Dialogue. The inaugural Australia-Vietnam Defence Ministers' Meeting was held in Canberra on 19 March 2013.

Australia and Vietnam have also held a senior officials-level bilateral Regional Security Dialogue since 1998. This was upgraded in February 2012, when the inaugural Joint Foreign Affairs/Defence (2+2) Australia-Vietnam Strategic Dialogue was held in Canberra at Deputy-Secretary/Vice-Minister level. The second meeting was held in Hanoi in November 2013.  Australia and Vietnam also conduct annual Australia-Vietnam Defence Cooperation Senior Officials' talks.

The Australian Federal Police maintains Law Enforcement Liaison Offices in Hanoi and Ho Chi Minh City.

Development assistance

In 2013-14, Australia will provide an estimated $138.9 million in official development assistance to Vietnam, making Australia Vietnam’s sixth largest donor. Estimated expenditure in 2014-15 is expected to be $141.3 million

The Australia–Vietnam Joint Aid Program Strategy (2010–2015) guides Australia’s aid to Vietnam in priority areas of economic integration, human resource development (including scholarships) and environmental sustainability.

Australia is supporting economic development in Vietnam by investing in infrastructure, supporting economic reforms and public financial management. In October 2013, Australia committed $160 million for the construction of the Cao Lanh Bridge which will assist Vietnam to construct the infrastructure necessary for strong national and regional economic integration.

Australia is providing enhanced leadership, knowledge and technical skills to Vietnamese to improve the quality of Vietnam’s human resources. The Australia Awards program builds on more than 35 years of investment in improving the credentials of Vietnam’s workforce (see Scholarships and Fellowships above). By 2013-14, there were 4419 Vietnamese Australia Awards alumni.

Addressing environmental sustainability will ensure that the development gains achieved by Vietnam are not undone. Australia is supporting climate change adaptation and mitigation in the Mekong Delta. Australian support is also helping the Government of Vietnam to adopt better planning and implementation approaches for providing rural water supplies and sanitation.

Australia is also working with the Government of Vietnam to address specific issues relating to corruption and human rights.

For more information, see the overview of Australia’s aid to Vietnam.

Education and training

Australia is a leading study destination for Vietnamese students. In recent years there has been an average of more than 24,000 student enrolments per year in education institutions in Australia and an estimated 10,000 students undertaking Australian education and training courses in Vietnam per year.

Vietnam currently ranks 4th as a source country of international students for Australia. In 2013, there were 26,015 enrolments (15.3 per cent increase on 2012 figures).

Australia collaborates on many education and training initiatives with Vietnam, including policy dialogue in areas such as quality assurance, qualification recognition and vocational education; facilitating institution-to-institution partnerships; and supporting vibrant Australian alumni associations.

The Memorandum of Understanding on Cooperation in Education and Training with the Ministry of Education and Training (MOET), first signed in 1994, was renewed in October 2013 as part of the enhanced education cooperation under the Australia–Vietnam Plan of Action 2010-2013. Under the auspices of the MoU, the Joint Working Group on Education and Training has met three times, most recently in Canberra in April 2014.

New Colombo Plan and Student mobility

The Australian Government encourages Australian students to undertake a study overseas experience to immerse themselves into social and academic cultures of other countries. The existing programs aim to increase the overall number of Australian students studying abroad through closer ties with partner institutions overseas. Students can undertake a range of activities as part of their degree or course including internships, clinical placements, volunteer and research projects as well as traditional semester-based study.

On 26 August 2014, the Minister for Foreign Affairs, the Hon Julie Bishop MP, announced that Vietnam was to be included in the expanded New Colombo Plan roll-out for 2014.  Further information is available at the New Colombo Plan website.

The 2013 round of mobility programs for Asia resulted in 40 Australian students undertaking these programs in Vietnam. From 2008, 13,331 Australian students have travelled to Vietnam to participate in short-term and exchange study opportunities through existing mobility programs.

Australia's approach to human rights in Vietnam

Australia and Vietnam have held formal human rights talks regularly since 2002. The eleventh round of the Australia-Vietnam Human Rights Dialogue took place on 28 and 29 July 2014 in Hanoi.

Australia's delegation included representatives from the Australian Human Rights Commission, and senior officials from the Department of Foreign Affairs and Trade.

The two delegations were able to engage in frank discussion about freedom of expression, freedom of association and freedom of information in Vietnam, including specific cases of concern, as well as underscoring Australia's concern about the severity of sentencing for democracy activists and Australia's opposition to the death penalty. The rights of political prisoners and the harassment and physical abuse of activists were also key areas of discussion.

Australia also welcomed improvements in some areas and encouraged implementation of these gains, particularly in relation to legal reforms, gender equality, and rights for lesbian, gay, bisexual, transgender and intersex persons.

Vietnam and Australia introduced a program of technical cooperation on human rights in 2006. The program, administered by the Australian Human Rights Commission and funded by the Australian Government, provides opportunities to foster practical cooperation between institutions with human rights responsibilities and expertise. Australia has also funded programs in Vietnam under the Human Rights Grants Scheme.

Australia also raises human rights at senior levels, including at ministerial-level, with the Vietnamese government at appropriate opportunities.

Australia plays a constructive role at the UN Human Rights Council, including through the Universal Periodic Review (UPR) process. The UPR provides a forum for constructive discussion of human rights situations in all UN member states, including Vietnam, and identifies practical steps to address specific human rights concerns.

Australia was an active participant in Vietnam's UPR review in 2009 and in February 2014. Australia’s statement for the UPR of Vietnam. Vietnam agreed with the 182 of 227 recommendations made at their 2014 UPR. Australia welcomes this development and encourages implementation of the accepted recommendations by Vietnamese authorities as soon as practicable.

Economic overview

Rapid economic growth since the early 1990s has helped Vietnam to lift more than 35 million people out of poverty. It achieved lower middle-income status (GDP per capita AUD 1800) in 2010. Its economy is in transition from agrarian to industrialised and from centrally planned to market based. With a young and increasingly wealthy population of around 90 million and an ideal location to take advantage of regional economic progress, Vietnam has significant long-term potential.

Vietnam has been in transition from a centrally-planned to a market-based economy since the late 1980s. This process has accelerated over the last decade as Vietnam has worked towards and achieved WTO membership in January 2007. While significant reforms remain outstanding, changes to date have resulted in economic benefits for Vietnam, particularly through increased exports and foreign direct investment. Vietnam has spectacularly reduced its poverty rate from 58 per cent in 1993 to around 12 per cent in 2009.

Today, Vietnam is a low middle-income country with a strong outward orientation. GDP per capita is $3,750 (PPP terms). In global GDP (PPP terms), Vietnam ranks 40th in the world (Australia ranks 18th). Vietnam is the world’s second-largest coffee producer (after Brazil) and rice exporter (after Thailand). Its urban middle class is growing and is increasingly sophisticated. However, Vietnam is still a developing country. Agriculture remains a key source of national income and employs more than half the workforce. Income disparities are pronounced. Many Vietnamese live in low-lying deltas, and Vietnam is one of five countries most vulnerable to rising sea levels.

Vietnam is committed to the long-term objective of global economic integration through participation in APEC, the ASEAN Free Trade Area, the WTO and a growing network of free trade agreements, including the ASEAN–Australia–New Zealand FTA (AANZFTA). It is also a party to the Trans-Pacific Partnership Agreement (TPP) and Regional Comprehensive Economic Partnership (RCEP) negotiations. In December 2013, Vietnam became the 20th member of the Cairns Group.

Performance and outlook

The General Statistics Office announced at the end of 2012 that Vietnam’s GDP increased by 5.03 per cent. This was the lowest rate of growth since 1999 and was below previous targets for 2012. Growth in 2013 was only marginally better at 5.4 per cent. Exports performed well in 2012, giving Vietnam a net boost in this category. Vietnam recorded a trade surplus of USD 9.061 billion in 2013. 2012 merchandise exports to October were 19 per cent higher (USD 83.8 billion) than they were at in October 2011, this has been largely driven by foreign investor-led intensive manufacturing industries like electronic products, vehicles and apparel.

The governor of the State Bank of Vietnam (SBV), Nguyen Van Binh, announced in September 2012 that non-performing loans stood at 8.8 per cent of total lending (valued at more than USD 10.5 billion). The fallout from this high rate of non-performing loans, especially in the State Owned Sector which dominates the Vietnamese economy, continues to be a drag on economic activity. Concerns about Vietnam’s banking system led rating agency Moody’s to downgrade the country’s sovereign credit rating on 28 September 2012 from B1 to B2. It also downgraded eight Vietnamese banks’ credit ratings. The Communist Party has however identified banking reform as a key pillar of the economic restructuring program it announced in 2012.

International trade, investment and remittances

Goods and services exports now constitute over 80 per cent of Vietnam's GDP up from a 30 per cent share recorded in the mid-1990s. Vietnam's major exports are crude petroleum, telecommunications equipment, rice, rubber, footwear, coffee, jewellery articles, fish and furniture. The US remains Vietnam’s largest export market (18 per cent), followed by the EU (17 per cent), ASEAN (15 per cent) and Japan (12 per cent).

Vietnam's major imports are refined petroleum products, telecommunications equipment, electronic circuits, iron and steel, gold, medicaments, chemicals, plastics and textile and garment inputs. China was the biggest exporter of products to Vietnam as at October 2012, accounting for 25 per cent of all imports into the country, up by 17 per cent compared to October 2011.

Vietnam attracted 28 per cent less foreign direct investment (USD 9.5 billion) in the first three quarters of 2012 for the same period in 2011. Most new investors (61 per cent) were Japanese.

Business operating environment

The Vietnamese Government is gradually loosening foreign investment limits, for example, by lifting the foreign ownership limit in listed companies to 49 per cent, and in unlisted companies to 40 per cent. The legal system is also undergoing major change to better align commercial statutes with international norms. The implementation of WTO commitments is gradually contributing to a better operating environment over the medium and longer-term as tariffs are cut, investment restrictions loosened still further, and a more transparent and predictable commercial legal and administrative system comes into place. This process will take some years to begin to show real benefits.

Vietnam has many economic strengths, not least the skills and entrepreneurial bent of its youthful workforce and its location in the most dynamic part of the globe. However, Vietnam faces many challenges in maintaining its growth and development trajectory over the longer term.

Vietnam is a member of a growing network of free trade agreements, both individually and as part of ASEAN. Vietnam is participating in Trans-Pacific Partnership Agreement (TPP) negotiations with Australia and other APEC economies (Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore, Peru and the US), which commenced in March 2011. As part of these negotiations Australia held a Trade Negotiations Capacity Building Seminar in Hanoi on 24-25 November 2010 in conjunction with New Zealand. Vietnam is also participating in the Regional Comprehensive Economic Partnership negotiations, which were launched by leaders from ASEAN and its free trade agreement partners in the margins of the East Asia Summit in Phnom Penh, Cambodia on 20 November 2012.

Further information about both FTA negotiations.

More information on the business operating environment is available at the Austrade website or the Australian Trade Commission in Vietnam.

Trade and investment

The Ministerial level Australia–Vietnam Joint Trade and Economic Cooperation Committee (JTECC) is the primary government-to-government mechanism to take the bilateral trade and investment relationship forward, and address any problem areas. JTECC met for the tenth time on 13 December 2011 in Hanoi. The meeting provided an opportunity to discuss key areas of potential for increased bilateral trade and investment, including education and training; infrastructure; and resources and environment. Multilateral and regional issues of mutual interest were also discussed.

Australia and Vietnam are parties to the Agreement Establishing the ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) which entered into force on 1 January 2010. Vietnam ratified the agreement on 24 June 2009.

Total two-way trade between Australia and Vietnam in 2013 was around $7.8 billion, representing 1.2 per cent of Australia's total trade.

Total two-way services trade for 2013 was $1.9 billion (ranked 16th out of 34 countries for which the ABS reports total services—1.5 per cent share).

Total two-way goods trade for 2013 was approximately $5.9 billion (ranked 16th—1.2 per cent share).

Australia's major exports to Vietnam in 2013 were:

Australia's major imports from Vietnam in 2013 were:

Live Cattle

Live cattle trade with Vietnam is skyrocketing. In 2012-13, Vietnam was Australia’s tenth largest export market, valued at $12 million and representing two per cent of trade. In 2013-14, Vietnam has jumped to Australia’s third largest export market, valued at $125 million and represents 12 per cent of trade – a year on year increase of 952 per cent.

Australian investment in Vietnam

Australian investment in Vietnam was valued at $666 million in 2013, $401 million being considered foreign direct investment.  Over the past five years, the most significant Australian investments have involved expansions by established Australian companies, which continue to diversify their operations. Prominent examples include BlueScope Steel, ANZ Bank and QBE.

Export and investment opportunities for Australia

Vietnam's rapid economic growth over recent years has increased demand for imported goods, creating significant opportunities for Australian exporters of energy, dairy, meat, fast moving consumer goods, wheats and grains, machinery and services. While the global economic slowdown presented challenges, the long term outlook for Australia–Vietnam trade and business relationships remains positive.

The continuing shift towards a more market-based economy and strong economic growth in Vietnam has increased demand for education and training services. Education sector reforms are also underway with support from the Government of Vietnam and donors including the World Bank and Asian Development Bank. The need for training in areas such as English language, business and management and information technology remains high, especially in the major urban centres of Hanoi and Ho Chi Minh City.

Vietnam has large deposits of oil and gas, and a wide range of exploitable mineral deposits. Many Australian companies have expressed interest in minerals development in Vietnam, but remain concerned by uncertainty in the regulatory and fiscal environment.

Australian companies are generally well received in Vietnam. Australia is regarded as a modern, technologically advanced and friendly country located within Vietnam's immediate sphere of interest. Long-term trade and investment opportunities should increase in line with Vietnam's progress in implementing its legislative and administrative reform program.

If you would like more information on specific export opportunities in Vietnam, or more information on export assistance, go to the Austrade website.

High level visits

February 2014: Minister for Foreign Affairs the Hon Julie Bishop MP made her first visit to Vietnam. She met with senior government figures in Hanoi to advance Australia's economic diplomacy agenda and visit the Australia-Vietnam Joint Trans-National Crime Centre in Ho Chi Minh City. During her visit, Ms Bishop announced new Australian support for Vietnam’s economic reform process and two initiatives to support the empowerment of women in Vietnam.

Visits from Vietnam to Australia

Visits from Australia to Vietnam