Vietnam is the sixth largest economy in the 10-member ASEAN bloc, trailing the Philippines yet followed by Myanmar. Its service, industry and agriculture sectors account for, respectively, 44%, 39% and 17% of GDP. Major industry and service sectors of the country include manufacturing, mining, construction, real estate and finance.

In the first six months of 2017, Vietnam’s economy rose 5.7% year-on-year (YOY) thanks in part to the expansion in the industry sector, with manufacturing and processing recording a 10.2% growth. In the same period, the service sector also showed a solid 6.9% increase, supported largely by the 7.1% growth in wholesale and retail. In August 2017, Vietnam’s average consumer price inflation rate registered a YOY rise of 3.8%, driven mainly by higher prices for healthcare and medicine services.

The Vietnamese government has increased the minimum wage between 2010 and 2015 by an annual average of 18%. The National Wage Council announced in 2016 to raise the minimum wage by 7.3% from January 2017, lower than 12.4% for 2016. Nevertheless, Vietnam’s new monthly wage in Hanoi and Ho Chi Minh City (HCMC) now stands at US$166. The Minimum Wage Adjustment Road Map to 2020 released by the Ministry of Labour expects the minimum wage in Region One (covering Hanoi and HCMC) to go up to VND4.8 million (US$213) in 2020.

Under the Master Plan on Economic Restructuring in 2013-2020, restructuring of public investment, banks, and state-owned enterprises (SOEs) is high on government priorities. The Vietnamese authorities aim to divest 406 SOEs by 2020, with 135 scheduled for 2017 alone. SOEs targeted for divestment include the Vietnam Engine and Agricultural Machinery Corporation (VEAM) and the Airports Corporation of Vietnam (ACV).

To accelerate restructuring of the banking system, the Vietnamese government allowed foreign investors to own a bigger share in local banks, in which the equity limit for strategic foreign investors was lifted from 15% to 20% from 2014. In 2015, Vietnam further loosened its restriction on foreign ownership in public companies by allowing equity share of 100% in most public companies, with the exception of a few sensitive industries such as banking and defense.

Vietnam’s merchandised exports surged 18.9% YOY to US$97.8 billion in 1H 2017, while imports rose 24.1% YOY to US$100.5 billion, resulting in a trade deficit of US$2.7 billion. The export surge was caused by the rise in demand of electronics, computers and components as well as machines and equipment.

Exports of electronic items accounted for 30% of total merchandise exports in 2016. In particular, exports of phones and components rose 14% YOY to US$34.5 billion, driven by the foreign-invested manufacturing sector. Vietnam’s top export markets in 2016 were the US, China and Japan.

Major imported items in 2016 consisted of machinery, equipment and parts, and electronics, computers and accessories. A large part of Vietnam’s imported capital goods is related to export assembly. China is the largest source of Vietnam’s imports, followed by Korea and Japan.

Vietnam’s impressive export growth is largely driven by FDI. According to the Ministry of Planning and Investment, the FDI sector accounted for 72% of Vietnam’s total exports and nearly all of its telephones, electronics and computers and components exported in 2016.

As at 20 July 2017, Vietnam attracted a total FDI inflow of US$12.9 billion. Japan was Vietnam’s largest FDI source (US$4.8 billion), followed by Singapore and Korea. Hong Kong was Vietnam’s fifth largest source of inward FDI in the same period, valued at about US$0.6 billion. Major investment fields include manufacturing, automotive and real estate.

In May 2017, Vietnamese President Tran Dai Quang indicated that his country attaches great importance to broadening and deepening economic, trade and investment relations with China, which is pushing forward the Belt and Road Initiative, Two Corridors and One Circle Plan with Vietnam, as well as the construction of cross-border economic zone in Vietnam.

Source：HKTDC