Gross Domestic Product (GDP) growth is accelerating at an almost alarming rate (5.8% GDP growth in 2011), with a healthy International Monetary Fund (IMF) forecast of 6.3% GDP growth in 2012.
According to relocation statistics, Vietnam’s exports to the United States have risen to 900% from 2001 to 2007, securing Vietnam in the global picture for worldwide economic reform. Vietnam, though comparatively diminutive in size when compared to other developing countries with emerging economies (such as the BRICs), is a member of the Next 11 and the thirteenth most highly populous country in the world with a population of 89 million.
Vietnam mapGDP growth in Vietnam has not fallen below 5% since 1990, despite the economic downturn in recent years and the global financial crisis in 2008.
This has been prosperous for those with international links and exportations, yet a blessing and a curse for the Vietnamese people as it has led to a high rate of inflation, which is continuously escalating year on year.
According to the Financial Times, annual inflation spiked in August 2011 at an astounding 23%, which has since fallen to a recorded 16% last month after major Vietnamese banks cut lending rates. This comes after government promises of monetary reform, after years of inflation which have been especially tough for those on low incomes; severely testing the socioeconomic stability of Vietnam.
Major Industry Sectors and Exports
Rich in natural resources, Vietnam is home to Phosphates coal, manganese, chromate, offshore oil, hydropower, bauxite and an abundance of dense forests. Oil is a major export, and Vietnam is the third biggest oil exporter in the South East. Other major industries include food processing, apparel, machinery, mining, coal, steel, cement, chemical fertilizer, glass, tires and paper.
According to Economy Watch statistics, manufacture and industry reign supreme in terms of value added to GDP, last recorded at 20.4% (manufacturing) and 39.8% (industry) respectively.
Vietnam major exports are to the USA, Japan, China and South Korea and include the following commodities:
Clothes, Shoes, Marine products, Crude oil, Electronics, Wooden products, Rice, Machinery.
Agricultural exports include paddy rice, coffee, tea, rubber, cotton, pepper, soybeans, cashews, sugar cane, peanuts, bananas, poultry and fish. Imports include machinery equipment, petroleum, raw materials for the clothing industries, electronics, plastics and automobiles.
Vietnam borders the Gulf of Thailand, Gulf of Tonkin and the South China Sea and is situated next to China, Laos and Cambodia and 65% of the population are between 15 and 65. The country enjoys two seasons as opposed to the Western four – Rainy (November to April) and Dry (May to October). The capital of Vietnam is Hanoi and lies to the North of Vietnam near the border with China.
However, it is the southern city of Ho Chi Minh (previously known as Saigon) which serves as Vietnam’s most important and fast developing economic hub. The Vietnamese workforce is large and enjoys a reputation for diligence, talent, efficiency and hard work. Whilst renowned for learning fast and having an appetite for international businesses, good management specialists are few and far between, making the talent pool fairly small. Enter global mobility.
Global Mobility & Talent
Some large corporations in Vietnam have begun management skills programs to bridge the knowledge gap between local staff and international assignees, although this may take some time to see true fruition and improvement.
Many corporations are choosing to expatriate talent to Vietnam for senior management positions, whilst sourcing other assignees in Asia or local Vietnamese for lower and middle management positions. As with many developing countries, Human Resources, widespread legal compliance and best practice amongst other common Western business methods may differ in Vietnam according to location. Consequently a well defined relocation policy and a seasoned relocation service provider are essential and must be sought to ensure a successful assignment to Vietnam.
Immigration can be a problem due to the fast changes and processes implemented by the Vietnamese government. The immigration procedure is not unlike Singapore, in that it is complex, requires a large amount of official ID documentation and is coordinated to mirror the Vietnamese’ preferred wording and format. In line with the recently implemented European Union Blue Card, foreign workers must obtain a work permit on top of their business visa. Non compliance could result in a fine or even a period of exclusion from Vietnam.
Whilst still developing, Vietnam has much to offer in terms of international business opportunities, especially concerning exports and a rising middle class. Exports to China and Taiwan are viable through the North border, whilst Thailand and Singapore lie to the South.
Cross culturally, Vietnamese people are quick to acquire international business methods, and are warm in their welcome, yet courteous and fast learning. As with all cultures, the Vietnamese hold those who behave similarly and respectfully in high esteem. In many social and business situations, it is considered rude to talk about the Vietnam War, and many expatriates and Vietnamese alike feel it is a subject best avoided.
As mentioned above, Ho Chi Minh City is a major business hub and sea port filled with modern skyscrapers, malls and restaurants combined with a wealth of French Colonial architecture. Road travel is the most common in Vietnam, and many people choose to travel via motorbike.
Traffic is also a big issue for many assignees in the cities of Vietnam, as simply crossing the street can prove impossible! Public transport (by road) is widely available; buses are abundant but not easily accessible without knowing a little Vietnamese first. There are many taxis (which are reasonable if you use a reputable company) and also many ‘xe om’ drivers (motorbike drivers) who will also take you around the city.
The cities of Vietnam are split in to districts. District 1, for example, of Ho Chi Minh City is the business district and home to the vast majority of offices, malls, bars and restaurants in the city. This is also where the traffic is worse, but where the social opportunities are best, making it a popular hangout for expatriates and Vietnamese locals alike.
Rental properties are in abundance in Vietnam, and seem to be the accommodation of choice for many expats. To rent a property, you will need a deposit of two months rent, your passport, work visa, permit and your employer’s contact details. It is required of landlords in Vietnam to report this information to the government if and when they rent their property to a foreign national. Rent prices vary depending on the district, and naturally for larger properties and/or busier places, the monthly rent is significantly higher than in less populated or uncultivated areas. Serviced apartments are also popular, and available in the busier districts.
Buying property in Vietnam is a little more complex. Property prices in the inner cities and other covetable locations are comparable with major international cities around the world (New York, Beijing, Singapore and London to name a few). Outside the busier and highly populous districts, property is relatively inexpensive, although the surrounding land may be vast and neighbours can be scarce, leading many expats to stick to the more central districts.
As you may expect from a developing country, health care in Vietnam is not the same standard as it is in the West. There are some international hospitals providing good health care, especially in the larger cities. These are often internationally staffed. Like China, Vietnam’s hospitals combine Eastern and Western medicine, and government hospitals are not standardised. Vietnam does not have a government led National Health scheme, and so medical insurance is essential.
Vietnam is subject to irregular typhoons, especially in the months between May and January, and extensive flooding (especially near rivers) is common during the rainy season. It would be wise to engage an Assignee Crisis Management policy should there be a particularly bad rainy season leading to a large scale natural disaster or epidemic.
Relocating to Vietnam
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