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Submitted by ctv_en_3 on Mon, 01/01/2007 - 07:12
2006 marked the year Vietnam became the 150th member of the World Trade Organisation (WTO), successfully hosted the APEC Summit, implemented the first year of the five-year economic development plan and achieved encouraging results. These important events added momentum to the country to move forward with confidence in 2007.

In 2006, Vietnam achieved encouraging results. The national economy development continued to achieve a high stable growth rate of 8.2 percent. Export turnover hit nearly US$40 billion, an increase of 22 percent from 2005. Foreign-direct investment (FDI) capital reached over US$10 billion and official development assistance (ODA) capital pledged by donors hit a record high of US$4.45 billion. In 2006, the securities market developed rapidly in both quality and quantity, with its value equivalent to 15 percent of GDP. In terms of external affairs, cooperative relations between Vietnam and other countries, foreign groups, international organisations, bilateral and multilateral donors have been constantly improving and developing. 

A record 3 percent reduction in the number of poor households
According to the Government’s report, the rate of poor households under the new standard was reduced by 3 percent – the highest ever rate in comparison with the average reduction rate of 2 percent in the 2000-2005 period.

Localities, particularly those having a high rate of poor households, applied effective measures to reduce poverty. The living conditions of poor households in remote and mountainous areas have been greatly improved.

Do Truong Son, chairman of the Si Ma Cai district, northern Lao Cai province, said the close cooperation between local authorities, non-governmental organisations and local people has proved to be successful in poverty reduction.

In 2007, the Government plans to reduce the rate of poor households under the new standards to 16 percent, increase the number of provinces meeting junior secondary school standards to 40, and increase the enrolment for universities and colleges by 10 percent and high school by 15 percent. To fulfil the set target, the Government decided to invest VND900 billion from the State budget to implement the second phase of the national socio-economic development programme in disadvantaged communes (known as Programme 135) and the ongoing national programme on providing housing, cultivation land and clean water for ethnic minority groups (known as Programme 134).

 

Two more members added to the US$1 billion Export Club

Export turnover in 2006 reached nearly US$40 billion, up 22 percent compared to 2005’s figure and exceeded nearly US$2 billion against the set target. Key export items were garment and textiles, footwear, seafood, electronics and computers. These staples continued to take the lead in export value although there have been fluctuations in the market and trade barriers over the past year.


Apart from crude oil, garment and textiles continued to top the list with an export value of around US$5.9 billion, up 22 percent compared to last year. Major export markets are the US, followed by the European Union and Japan.


By the end of 2006, the US$1 billion Export Club welcomed two more members: rubber and coffee which raked in US$1.3 billion and US$1.1 billion from exports respectively. Notably, a sharp rise in price drove the export turnover of rubber up 64 percent against 2005. So far, the club has had nine products including aquatic products, rubber, coffee, rice, crude oil, garment and textiles, footwear, wood products, electronics and computer components.


However, there remain some shortcomings to be resolved in 2007. First, Japan has strictly inspected antibiotic residue in Vietnam’s cuttlefish and shrimps for export. Therefore, seafood enterprises should improve aquaculture methods in accordance with international norms. Second, although rubber is a new item of the US$1 billion export club, there is lack of sustainability. Most of rubber products are in the form of raw materials while the country still has to import finished rubber products for local consumption and production. Similarly, export turnover of wood products reached nearly US$2 billion but Vietnam has to import 65 percent of materials. Footwear is also in the same situation.


So far, newly registered FDI has also reached a record high - nearly US$10.2 billion, surpassing the set target of US$6.5 billion for the whole year. There are many increased-capital projects on a larger scale, including Intel Products Vietnam (US$395 million), Bach Ma Ceramics Co, Ltd (US$150 million), VMEP Company (US$93.6 million), Canon Vietnam Co, Ltd (US$70 million). Head of the Foreign Investment Department under the Ministry of Planning and Investment Phan Huu Thang said the Government of Vietnam have made great efforts in bilateral and multilateral cooperation to improve investment environment in the country. 

 


Currently, the country has more than 6,760 valid projects with a combined capital of over US$59 billion, generating around 70,000 jobs. Foreign invested enterprises contributed US$22.9 billion to the country’s total export value, up 42.5 percent compared to 2005. Vietnamese officials and workers working at FDI enterprises met basic requirements of international labour standards.

The figures demonstrated a bright prospect in attracting FDI into Vietnam in the next five years. During the APEC Week in Hanoi, around 1,200 foreign investors visited Vietnam and signed contracts worth US$2 billion. In addition, many other investors have made surveys on Vietnamese investment environment. Economic experts said FDI capital into Vietnam will not only come from mainly Asian investors but also from European and American investors. According to a recent survey conducted by the Japanese Bank for International Cooperation (JBIC), Vietnam ranked third among 10 countries with prospects for medium-term investment, and this is the first time Vietnam passed Thailand in the ranking.

US$4.45 billion ODA capital for 2007
Donors’ commitment to provide nearly US$4.45 billion in official development assistance (ODA) to Vietnam in 2007, the highest figure so far, showed donors’ growing confidence in the country’s efforts in economic reform.

Although around US$1.78 billion of ODA capital was disbursed in 2006, surpassing the set target, Vietnam’s ODA disbursement rate was still lower than that of other regional countries. Klaus Rohland, World Bank’s country director for Vietnam said he hopes ODA disbursement will be implemented more effectively. Slow disbursement leads to slow investment and slow benefits. Bureaucracy is one of the main causes for slow disbursement.

Vietnam
aims to disburse around US$11 billion worth of ODA by 2010. The capital will be given priority to big infrastructure projects in Hanoi and Ho Chi Minh City, inter-region transportation lines (north-south), the “two corridors and one economic beltway” project, the East-West transport system, the Mekong Delta transport system and the trans-national railway. In addition, Vietnam pledged to strengthen State-owned enterprises’ reform, clean up commercial banks and speed up administrative reform and corruption fighting and prevention.

Capital of securities market accounts for 15 percent of GDP
2006 saw significant progress in the domestic securities market. A total capital in the securities market reached nearly US$10 billion, or 15 percent of GDP (while the set target was 6 percent). Around 150 shares of enterprises are being listed and transacted at the Ho Chi Minh Securities Trading Centre and the Hanoi Securities Trading Centre. The achievement demonstrated a new demand of the economy – a demand for open and transparent information that attracts capital for production and trading. However, fast development posed challenges in policy and infrastructure for securities market development.

Securities investors saw the rise and fall of the securities market in 2006 – the most sensitive market of any economy in the world. In May 2006, VN-Index dropped to under 300 points while in mid-December it reached over 800 points, demonstrating the complexity of the securities market. According to financial experts, it was due to unprofessional domestic investors, and an increase in the number of professional foreign investors with capital of more than US$100 million. The participation of big State-owned enterprises such as Vietnam Dairy Products Joint-Stock Company (Vinamilk), Bao Minh Insurance Joint-Stock Company, and Vinh Son-Hinh River Hydroelectricity Joint-Stock Company helped the securities market to develop strongly.

As from January 1, 2007, the Securities Law came into effect, creating an important legal foundation for the securities market to develop effectively. With the current growth, the target to increase capital on the securities market to around 20-30 percent of GDP by 2010 will be met, and 2007 will be an important year to fulfil the target.

Vietnam
’s becoming the 150th WTO member and successful organisation of the 14th APEC Economic Leaders’ Meeting affirmed the high appreciation of international friends for the country's deep international integration.

All the achievements in 2006 are considered firm foundations for the country, a WTO member, to successfully implement tasks set for 2007.

 

Main targets for 2007

- GDP growth will be 8.2-8.5 percent, equal to around US$70 billion.
- GDP per capita will be US$820.
- Total export value will reach US$46.5 billion, a year- on-year increase of 17.4 percent.
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Total import value will rise 15.5 percent.
- Around 1.6 million jobs, including 1.3 million new jobs, will be generated.
- Urban unemployment rate will be reduced to 5.2 percent.
- Skilled workers will increase from 27.5 percent in 2006 to 30 percent in 2007.

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