Vietnomics Update: Critical Political Decisions Ahead

Vietnam ended 2010 facing internal challenges and a chorus of foreign analysts raising questions about whether the government has the will and the wherewithal to handle them. Fortunately, the answers will begin coming in January (though not necessarily to the satisfaction of the international business community) when the ruling Communist Party holds its 11th Congress and chooses leadership and direction for the next several years. The meeting follows a decade of robust economic growth that attracted increasing attention from multinational corporations and investors. However, the country faces high inflation, a large trade imbalance, lacking confidence in its currency, still unresolved financial problems in one of its biggest state-owned companies, and downgraded bond ratings. Americans interested in this frontier market need to pay close attention as the party lays the foundation for Vietnam’s economic development over the next decade.

 What to Anticipate in Vietnam Early in 2011

The Communist Party Congress will be held January 11-19 to ratify policy direction.  For Vietnam to continue to attract international attention as a leading frontier market, the leadership will need to address three central categories:

  • Economic growth – Short-term concerns are monetary policy, inflation, currency stability, and balance of payments; for the long term, the biggest concern is infrastructure – especially transportation and energy.
  • Social infrastructure – Vietnam’s two primary social challenges are health care and education. With one of the world’s most attractive demographic profiles, the country needs to improve its workforce training and education at all levels.
  • Environmental sustainability – With its economic progress emulating China, Vietnam faces similar environmental concerns (especially water and air pollution), plus high vulnerability to climate change.

The complete Vietnomics Winter 2011 update on the Vietnam business climate

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