Vietnam Economic Report

Overview In 2003 Vietnam's GDP achieved 7.24% growth rate. Agriculture, forestry and aquaculture increased by 3.2%; industry and construction increased by 10.34%; and services increased by 6.57%. The above growth rate was the highest in four years 2000-2003. The growth of agriculture, forestry and aquaculture at 3.2% rate in 2003 was lower than 4.06% of 2002. Due to unfavorable weather conditions and flood, agriculture in 2003 only achieved 2.78% growth comparing to 4.01% of 2002. Aquaculture increased by 7.08% in 2003 comparing to 5.67% in 2002, due to reduced cost and the combination of rice cultivation and fish farming. Industry and constructions growth rate of 10.34% in 2003 was higher than 9.44% of 2002; Industry increased by 10.27% comparing to 9.12% of 2002. Mining industry increased from 1.1% in 2002 to 5.79% in 2003. Crude oil production and coal mining in 2003 increased comparing to 2002, greatly contributing to the economy growth in general and export revenue in particular. Some key products of processing industry greatly influenced economy and export growth such as aquaculture processing, papers, garment and textiles, chemical, fertilizers, cement, iron and steel, electrical engines, and TV and car assembling. Power generation continued to enjoy high growth rate (10.81% in 2002 and 11.62% in 2003). Growth of construction sector was maintained as last year level. Industry and construction continued to be the most contributing sectors for overall economic growth with 53.35% share (40.01% in2001). In services, 6.7% growth in 2003 was higher than 6.54% in 2002. Growth in first half of the year heavily suffered from negative impact of SARS, especially in tourism and air transportation, but quickly recovered in the second half of the year, thanks to the organization of 22 SEA GAMES in Vietnam. Table 1. GDP Growth by Sectors 2000-2003 2000 6.79 4.63 10.7 5.32 2001 6.89 2.98 10.39 6.10 2002 7.04 4.06 9.44 6.54 % 2003 7.24 3.20 10.34 6.57

GDP Growth Agriculture, forestry and aquaculture Industry and construction Services
Source: General Statistic Office (GSO)

Of the 7.24% GDP growth in 2003, industry and construction sector contributed 3.86%; services contributed 2.67%; agriculture, forestry and aquaculture contributed 0.70%. Observing 4-year period 2000 - 2003, the contribution of industrial sector was comparatively high and stable: the contribution of services was increasing gradually, while the contribution of agriculture, forestry and aquaculture was low and unstable.

Submitted by Vietnam Chamber of Commerce and Industry 1

Import Export Export revenue in 2003 was US$ 19.9 billion, an increase of 19% comparing to 2002 of which domestic sector exported US$ 9.9 billion, an increase of 11.7%; FDI sector exported US$ 10 billion, an increase 27.2%. Revenue from 7 products - crude oil, garment and textiles, footwear, electronic and computers, rice, wood products (products with export revenue over US$ 500 million) - contributed US$ 13.8 billion, comprising 69.5% of total export revenue, an increase of 19.5% comparing to 2002. Import value in 2003 was US$ 25 billion, an increase of 26.7% to the year 2002, where domestic economic sector imported US$ 16.3 billion, accounting for 65.l%, an increase of 24.9%; FDI sector imported US$ 8.7 billion, an increase of 30.1%. Imports value increased mainly by the increase in importation of raw materials, machinery for production of products for domestic and foreign market.

Trade deficit of US$ 5.12 billion in 2003 i.e. 25.7% of export revenue, was the biggest deficit in the last 5 years. The deficit by domestic sector was US$ 6.4 billion while FDI (including crude oil) had an export surplus of US$ 1.29 billion; excluding the revenue from crude oil, the FDI deficit was US$ 2.49 billion. Table 2. Foreign Trade in 2003 Total Export Total value (US$ million) 44875 19880 Domestic sector 26138 9868 FDI sector (including crude oil) 18737 10012 In comparison with 2002 (%) 23.2 19.0 Domestic sector 19.6 11.7 FDI sector 28.5 27.2
Source: General Statistic Office (GSO)

Import 24995 16270 8725 26.7 24.9 30.1

Foreign Direct Investment Industry and construction had 415 projects with US$ 1.027 billion; contributing 69.6% in total number and 67.9% in registered capital. Agriculture, forestry and aquaculture had 84 projects with total registered capital of US$ 157.5 million, accounting 14.1% in number and 10.4% in registered capital. Services had 97 projects with US$ 328 million, accounting for 16.3% in number and 20.7% in registered capital. Countries and territories leading in FDI in Vietnam include: Taiwan (151 projects with US$ 293.8 million), Korea (147 projects with US$ 249.3 million), British Virgin Islands (24 projects with US$ 193 million), China (51 projects with US$ 137.6 million), Australia (11 projects with US$ 110.3 million), Hongkong (35 projects with US$ 102.7 million), and Japan (40 projects with US$ 78.6 million).

Table 3. Development Investment in 2003

Implemented (VND trillion) 2002 2003 Total I. State budget investment II. Private sector investment III. FDI
Source: General Statistic Office (GSO)

183.8 103.3 46.5 34.0

217.6 123.0 58.1 36.5

Against targets of 2003 and implementation of 2002 (%) Target Implemented of 2003 2002 100.9 118.3 101.9 119.0 100.2 124.9 101.3 107.4

So far, there have been over 4,200 foreign invested projects in Vietnam with total registered capital of over US$ 40 billion, representing 14% of GDP, 30% of export value and 40% of industrial output. Conclusion 2003 Vietnam economy achieved all major socio-economic targets: GDP growth of 7.24%, with the growth recorded in all 3 sectors (industry 10.34%, agriculture, forestry and aquaculture 3.2%, service 6.57%). It was regarded as one of the fast growing economies in the region. The fast growth of the economy was attributed to the development of export, and expansion domestic economic activities. The non-state sector was growing very fast, accelerating the proportion of private investment in GDP and creating a lot of jobs for the economy. With the dynamism of the economy, its integration with the region and the world and the expansion of all sectors, Vietnam economy is expected to attain stable development in 2004 with GDP growth of 7 8%.