Vietnam: Feeding the Dragon. Stuart Schaag Senior Commercial Officer U.S. Commercial Service Vietnam

Transcription

1 VIET NAM

2 Vietnam: Feeding the Dragon Stuart Schaag Senior Commercial Officer U.S. Commercial Service Vietnam

3 Population, in 1,000s 1. China 1,393, India 1,267, European Union 507, United States 322, Indonesia 252, Brazil 202, Pakistan 185, Nigeria 178, Bangladesh 158, Russia 142, Japan 127, Mexico 123, Philippines 100, Ethiopia 96, Vietnam 93,175 Sources: Worldometers & Eurostat

4 The People Age structure: 24.3% 14 and under 62.6% Median age: 29.2 years Ethnic Viet: 85.7% Religion: Buddhist: 9.3% Catholic: 6.7% None: 80.8% (1999 census) Source: CIA Fact Book June 2014

5 System of government Communist State Prime Minister Nguyen Tan Dung (since 2006) President Truong Tan Sang (since 2011) Party Congress Provinces & Special Municipalities Left to right: President of State Truong Tan Sang, Prime Minister Nguyen Tan Dung, General Secretary of the Central Committee Nguyen Phu Trong, Chairman of National Assembly Nguyen Sinh Hung

6 Economic & Trade Milestones 1986: Doi Moi reforms proclaimed 1994: U.S. lifts trade restrictions 1995: U.S. and Vietnam reestablish diplomatic relations; Vietnam joins ASEAN 2001: (December) Vietnam and U.S. implement BTA 2007: Vietnam become the 150 th member of the WTO 2010: Vietnam becomes full member of TPP negotiations 2013: (July) President Sang and President Obama proclaim Comprehensive Partnership 2015: Transpacific Partnership??

7 2014 Economic Overview GDP growth rate (y-o-y) 6.8% 5.8% 5.0% 5.3% 5.95 % Lending rate Inflation (Average, y-o-y) 16%-17.0% (Late 2010) 9.2% (Dec. 2010: 11.8%) 22% - 25% 2 13% 10.9% 9-10% 18.58% 1 7% 6.7% 4.09% Exports US$71.6 bil US$96.3 bil US$105.4 bil US$133.3 bil US$150.2 bil Imports US$84.0 bil US$105.8 bil US$113.3 bil US$132.9 bil US$148.1 bil US$/VND (Commercial banks) 19,500 (Dec. 31, 2010) Devalued by 5.4% vs. Dec ,036 (Dec.31, 2011) Devalued by 7.9% vs Dec. 2010) 20,828 20,932 21,246 US$/VND (Unofficial market) 21,010 (Dec. 31, 2010) 21,275 (Dec. 31, 2011) N/A 21,130 21,400 Committed FDI US$18.6 bil (US$6.8 bil real estate) US$14.7 bil 1 (US$845.6 mil real estate) US$16.3 bil US$21.6 bil US$20.23 bil Implemented FDI US$11 bil US$11 bil 1 N/A US$11.5 bil US$12.35 bil Sources: Euromonitor, State Bank of Vietnam, General Statistics Office of Vietnam; Ministry of Planning and Investment

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9 U.S. - Vietnam Trade ($millions) Exports to Vietnam Imports from Vietnam , , , , , ,583.6 Total trade 24, , ,308.5 Balance -15, , ,858.7 Sources: United States Census Bureau

10 Composition of Trade 2014 U.S. Exports to Vietnam $5,725 million 1. Agricultural Products: $2,044 (does not include $395 in cotton or $255 in wood) 2. Computers and Electronics: $ Machinery, Except Electrical: $ Chemicals: $ Medical Equipment: $184 Sources: United States Census Bureau; ($millions)

11 Composition of Trade 2014 Vietnam s Exports to the U.S. $30,583 million 1. Apparel and Accessories: $9,471 (+ $972 in leather products) 2. Computers and Electronics: $3, Footwear: $3, Furniture and Fixtures: $3, Agricultural Products: $2, Fish and Other Marine Products: $1,136 Sources: United States Census Bureau; ($ millions)

12 Why Vietnam? Demographics for Growth - Vietnam has the fastestgrowing middle and affluent class in the region. Political Stability especially in this region! Real Income Increasing - Receptivity to U.S. Products and Services Growing Market for Technologies & Inputs that U.S. Companies Provide - higher Internet penetration (43%) than Thailand (41%) or Indonesia (29%). Growing Consumer Market - consumers are among the most optimistic in the world.

13 The Good News in 2014 Inflation not an issue Currency Stable Real Estate Market Stabilized and Recovering GDP Growth Rate Ticking Upward Again - expected to break 6% this year. Business Confidence Increasing Increased steps to divest SOEs, but still much progress to be done.

14 Challenges To Economic Growth: Banking System: NPLs SOE Reform Infrastructure: Power Transportation HR: Education and Skill Mismatch Engineering, Management, Healthcare Legal system: Still New and Developing Transparency Corruption ODA and Competition for Financing

15 Ease of Doing Business ASEAN Perspective Economy Rank Starting a business Permits Electricity Getting credit Protecting investors Trading Across Border Enforcing contrast Resolving insolvency Singapore Malaysia Thailand Vietnam Philippines Indonesia Cambodia Lao PDR Source: DoingBusiness.org, 2015 report, numbers in red indicate a drop in the ranking since 2014

16 Some Keys to Success Ability to adapt your business style but don t stray from your business values. Ability to finance your deal. The larger the sale or project, the more critical this becomes. Ability to find a good partner and develop long-term relations: distribution networks are still underdeveloped. Don t go adrift You need to be here on a regular basis. Place liability on your foreign suppliers regarding Vietnamese administrative procedures and regulations.

17 TPP Opportunities for Vietnam Broader market access for Vietnam s exports, especially to the U.S. market for products such as textiles, seafood, footwear, wood products, etc. Increase market access for new products such as auto parts and processed seafood. Promote investment from the United States and other countries into Vietnam. Take advantage of the trend of regional economic integration. Raise Vietnam's international status and promote relationships with key partners.

18 Additional TPP Opportunities for Vietnam Formal commitment to reform The high standards of the TPP require Vietnam to make certain reforms which will help spur growth (e.g SOE restructuring, IPR) Better regulatory and legal environment for all Increased transparency Streamlined processes and procedures (e.g. Customs) Stronger linkage to production chains, overall productivity gains Support momentum of reforms, growth

19 Thank you! Thank You.. cam o'n U.S. Commercial Service Vietnam

20 Best Prospects Current: Power Generation, Transmission, Distribution Telecom Equipment and Services Airports/Aviation (ACWG) Health Care/Medical Equipment Growing: Environmental Technology Industrial Machinery Renewable Energy Education: 16,000+ Vietnamese students study in the US Franchising Source: Embassy of Vietnam in the US

21 Power Growth rate of 13%-15% due to rapid industrialization Main power plant developers: EVN, PVN, Vinacomin and private sector EVN in charge of transmission and distribution GVN regulates electricity retail prices. Plan to be market price by 2015 US$ 48.8 billion required for the period development, and US$ 75 billion for

22 Power Master Plan VII (2011) Development of Power Sources Power generation current capacity 21,000 MW By Installed Capacity to be 137,700 MW Renewable energy 3.5% Nuclear power 0% Import 5% Hydro power 37% Renewable energy 6% Gas power 15% Nuclear power 10% Import 4% Hydro power 9% Gas power 39% Coal power 15% Coal power 56%

23 Power Generation BOT 7.74% Vinacomin 3.7% IPPs 5.6 % Petro Vietnam 10.59% Electricity of Vietnam 68.9%

24 Oil and Gas Major source of national income: 18-20% GDP Growth rate 14-16% PVN- largest company in upstream, mid-stream and downstream Offshore oil and gas equipment and services $3.5 billion in 2013 Require an investment of $203 billion for the period Opportunities in: Oil & gas equipment, accessories, chemicals, services for the upstream, midstream and downstream segments Offshore enhanced oil recovery Deep-water development

25 ICT ICT value and (forecast) year-on-year Value (US$ mil.) Rate (%) Value (US$ mil.) Rate (%) growth rate Hardware 4, , Packaged software IT Services Telecom services 7, , Total ICT 12, ,011 8 Opportunities: Hardware: personal computers, network equipment, security equipment, etc. Software: security, database, cloud computing, application for SME s, etc. Major ICT projects: Saigon Water Corporation s ICT upgrade project, phase 2, US$50 million Da Nang City s E-Government project, phase 2, US$60 million Source: International Data Corporation

26 Healthcare Growth rate of 15% -17% US$2.5 billion to build/ upgrade hospitals (200 projects) MOH manages $1.20 bil of ODA- health care projects. 50% for medical equipment purchase mainly imported (90.7% ) Pharmaceutical market is $2.4 billion. Medicine and active ingredients are imported (1.4 bil) Since 2009 health insurance compulsory 61 % of health care expenditure is private 34.7 health workers, 6.5 doctors, 1.2 phamacists and 8.3 nurses per 10,000 people Medical equipment and supplies is $599 million ($7 per capital)

27 Water & Wastewater Major Contributors to Pollution: water supply only meets approx. 70% of demand; water loss rate ~ 32%; combined sewerage system of storm water; no centralized wastewater treatment plants; 75% of industrial wastewater is untreated; week environment law enforcement. Financing for Water Projects comes mainly from WB and ADB WB funds US$50 million to support the enforcement of wastewater treatment regulations for IZs in the four most industrialized provinces: Nam Dinh, Ha Nam, Dong Nai and Ba Ria Vung Tau.

28 Water & Wastewater (cont.) Vietnamese government plans to invest US$2.78 billion in the water sector by ADB approved a Multi-tranche Financing Facility (MFF) of up to US$1 billion for to help finance water supply and sanitation projects in Da Nang, Haiphong, HCMC, & Hue, and the National Nonrevenue Water (NRW) Program. Best Prospects: pumps & valves, water treatment chemicals, water filtration systems, water control & monitoring equipment, sludge treatment, energy saving treatment system, wastewater treatment equipment and technologies, etc. Potential Buyers: ODA projects Vietwater Expo & Forum 2014, November 12-14, Vietnam s largest water event

29 Education 70% of population under 35 Three top priorities for Vietnamese government in the next 10 years: - Infrastructure - Institutional Reform - Human Resources Development Education holds an esteemed position within Vietnamese society and is a cornerstone of U.S. bilateral relationship with Vietnam Vietnam currently ranks 8 th - 16,579 students studying in the U.S. in 2013/2014 (up 3% from the previous year) Academic level breakdown: 71.7% Undergraduate 15.5% Graduate 5.3% Other 7.5% OPT (Optional Practical Training) Source: Open Doors 2014