First, the trajectory of Vietnam's economic development
The first period: healing the wounds of war and economic recovery (1975-1985)
After more than 20 years of war, Vietnam finally realized the unification of the north and south in 1975. After reunification, Vietnam was riddled with holes and its economy faced collapse. Due to the devastation of the war, coupled with the rigid economic management model and bureaucracy, the whole country of Vietnam was plunged into a serious economic and social crisis, people's lives were very difficult, the necessities of life had to be rationed by the state, there was a great shortage of daily necessities, and the inflation rate was as high as a three-digit figure, which was 128% in 1976 and 313% in 1981.
Beginning in the early 1980s, the Party and the government of Vietnam began to try some reforms, especially in agriculture, encouraging cooperatives and members of the community to reclaim land and reclaim the land, and experimental contracting of products, which effectively mobilized the enthusiasm of the majority of farmers, and the recovery of agriculture; in industry, the government experimented with some preliminary reforms, including decentralization of business autonomy, the implementation of contract wages, piece-rate pay, and so on. In industry, the government has tried some initial reforms, including the decentralization of business autonomy and the introduction of contract wages, piece-rate wages and other forms of wages to mobilize workers; in the circulation sector, initial reforms have also been carried out, such as the abolition of the ticket system.
The second period: innovation and opening up and the establishment of a socialist oriented market economy (1986-1995)
Vietnam's economy really entered into rapid growth and development, which began with the implementation of innovation and opening up in 1986. The revolution and opening up also started with the agricultural sector. The core of the agricultural innovation was to return the land to the farmers, so that the farmers had full autonomy over the land and the harvest, thus fully mobilizing the farmers' enthusiasm for production. On the industrial front, emphasis was placed on market factors, changing the strategy of overemphasizing the development of heavy industry, introducing foreign investment and encouraging the development of export-oriented manufacturing industries. Through several years of efforts, by the early 1990s, Vietnam had initially escaped from the economic crisis and the country's economic and social situation had improved significantly, with the inflation rate dropping to 67.4% in 1990, food production increasing year after year, and exporting 1-1.5 million tons of rice annually since 1989 (and importing 450,000 tons of rice in 1988), and by 1999, Vietnam's exported rice quantity increased to more than 4 million tons, ranking second in the world after Thailand.
The strategy of innovation fully liberated Vietnam's productive forces, from 1991 to 1995, GDP grew by 8.2% per year, of which industry grew by 13.3%, agriculture grew by 4.5%, exports grew by 20%, and the inflation rate dropped from 67.1% in 1991 to 12.7% in 1995, creating more than 1 million jobs per year. jobs per year.
The third period: the period of national industrialization and modernization (1996-present)
From June 28 to July 1, 1996, Vietnam held the 8th National Assembly, which summarized the 10 years of implementing the Renovation Line and proposed a line to promote the country's industrialization and modernization. 1996-2000, Vietnam, despite being severely hit by the financial crisis, achieved an average annual economic growth rate of 7%. 2001-2005, Vietnam achieved an annual economic growth rate of 7%. From 2001-2005, Vietnam's economy entered a phase of rapid growth with an average annual growth rate of 8%. In particular, the accession to the World Trade Organization in 2006 expanded the openness of the Vietnamese economy and accelerated its integration into the world economy. With sustained social development, declining poverty rate, rapid growth in exports, the economic structure began to undergo major changes: the proportion of industry and services gradually increased, the proportion of agriculture gradually decreased, and Vietnam has begun the transition from an agricultural country to an industrialized and modernized country.
On August 17, 2004, the Vietnamese government issued Decision No. 21 on "Orientation of Solid Development Strategy". The decision declares that by 2020, Vietnam will become an industrialized country, and in order to achieve this goal, the annual growth rate of industrial output is required to be more than 13%, and by 2020, the structure of Vietnam's economy will be fundamentally changed, with agriculture, forestry, and fisheries accounting for only about 13% of the output, while the proportion of industry and services will rise to 45% and 42%, respectively.
Vietnam is currently implementing a new five-year plan (2006-2010), according to which the average annual economic growth rate for the period will reach more than 8%, and the GDP in 2010 will be 2.1 times that of 2000, reaching about US$94-98 billion, with a national income per capita of US$1,050-1,100.
Second, Vietnam's current macroeconomic situation
In an article analyzing the situation in Southeast Asia published in early 2008, the author was more optimistic about the prospects for Vietnam's economic development, saying that "Vietnam is the star of economic growth in this region."" International economists and observers are generally optimistic about Vietnam's economy as a rising new industrial country in Asia. Vietnam's economic growth rate has been maintained at a high level of about 8% for several years in a row, which is one of the fastest growing countries in Southeast Asia. In addition, the effect of joining the WTO will be further highlighted, and Vietnam's links with the world economy will be further strengthened, especially the strengthening of economic ties with China, which has benefited Vietnam greatly.On January 24, 2008, the Ministry of Planning and Investment held a conference on foreign investment in Hanoi, according to which, from 1987-2007, Vietnam absorbed 9,500 foreign investment projects over the past 20 years a***. foreign investment projects, with total foreign investment amounting to US$98 billion, which came from 80 countries and territories around the world, of which 68% came from Asia, 16.2% from the EU and 11% from the US. After joining the World Trade Organization (WTO), Vietnam's advantages in attracting foreign investment have become even more prominent, according to statistics, in 2007, $20.3 billion of foreign direct investment (FDI) entered the country in one ****, an increase of 69.2 per cent over the previous year. Foreign investment has contributed positively to the transformation of the economy and production structure, promoting Viet Nam's progress towards industrialization and modernization. At the same time, it has boosted Vietnam's ties with the world economy, creating favorable conditions for Vietnam's further integration into the world economy. According to some foreign observers, in recent years, China's labor costs have risen sharply and bottlenecks such as the environment and natural resources have become increasingly prominent, with many foreign enterprises that had been investing in China turning their eyes to Vietnam, and China's own capital beginning to accelerate the pace of investment in Vietnam. It is foreseeable that in the next few years, with the further improvement of Vietnam's investment environment, more foreign capital will enter Vietnam. Driven by a large number of foreign investment, the Vietnamese economy has entered the fast lane, Vietnam is likely to replace China, become the main processing base for the export of labor-intensive products, in other words, Vietnam will become another world factory.
Recently, the regional and world economic situation has undergone major changes, by the U.S. recession and the world economic situation is uncertain and other factors, Vietnam's macroeconomic situation has also appeared a number of worrisome phenomena, can not help but cause alarm. In view of the new situation, the Vietnamese government has lowered its economic growth expectations for 2008 from the original 8.5-9% to 7%,
One is the phenomenon of high inflation. Some scholars have pointed out that the biggest risk facing Asian countries at the moment may not be the impact of the sub-prime crisis in the US, but the impact of high inflation, which is precisely the case in Vietnam. In recent months, Vietnam's inflation has risen like a wild horse out of control, with the nation's consumer price index reaching about 14 percent at the end of 2007, rising to 15.7 percent in February 2008, 25 percent in May, and possibly 27 percent in June. Some foreign organizations predicted that it would reach or exceed 20 per cent for the whole of 2008. In particular, food and food prices have risen the fastest, with the lives of the lower and middle classes being more seriously affected. High inflation is testing the Vietnamese government and signs of social instability are beginning to appear in some places: strikes are on the rise and people's discontent with the government is building up. In order to ensure the stable development of Vietnam's economy and society, the Vietnamese government has recently launched an emergency program, including measures in eight areas: taking various measures to encourage farmers to increase agricultural production; restricting the export of food; raising interest rates, tightening the monetary base, temporarily suspending some unimportant investment projects to make way for and secure funds for projects directly related to the country's economy and people's livelihoods; injecting capital into commercial banks; and providing assistance to poor people living below the poverty line. The government has also been working on a number of projects, such as the "Poverty Reduction Program" (PRP).
Secondly, there is a slowdown in exports. Due to the sharp rise in domestic food prices, seriously affecting people's lives, the Vietnamese government has decided to cut food exports from the original plan to export 4 million tons to about 3.2 million tons or so, and other agricultural exports will also be reduced. In addition, in response to the tight supply of new materials in the country, Vietnam will also reduce the export of raw products such as coal in 2008. In addition, demand from the United States, Europe and Japan is declining, and Vietnam's commodity exports have been affected to some extent as a result. Although Vietnam's export market has been quite diversified, China and other East Asian countries are also Vietnam's main market, but Europe, the United States and Japan are still Vietnam's main trading partners, if the developed countries have a recession, the negative impact on Vietnam's exports is undoubted.
Third, the many contradictions accumulated by the sustained and rapid economic development have become acute. In the 20 years since 1986, Vietnam's economy has continued to develop at a rapid pace, initially getting rid of poverty and backwardness. However, the rapid development over the past 20 years has also brought many problems, and many contradictions have been gradually exposed and sharpened, including the contradiction between the long-term rapid economic development and relatively backward infrastructures, labor and capital disputes and contradictions, contradictions between districts and urban and rural areas, contradictions between cadres and the masses, and the contradiction between innovation and openness, as well as the contradiction between the government and the people. contradictions between regions and urban and rural areas, between cadres and the masses, and between innovation and openness and adherence to socialism. Take labor disputes and contradictions as an example, according to the Asia Times, in recent years, there have been numerous strikes by Vietnamese laborers to improve their wages and protect their rights and interests. Between 1995 and 2006, there were more than 1,000 strikes of various scales throughout Vietnam, and in 2007, there were at least 541 strikes in one year, with the participation of about 350,000 workers in factories, most of which are foreign-invested enterprises. most of which are foreign-invested enterprises. Most of the strikes were for higher wages. Although the Vietnamese government had already raised the minimum wage for workers by 25% in 2007, labor discontent was high as prices of consumer goods soared and lower class workers were still unable to make ends meet.In mid-February 2008, more than 5,000 workers at Yazaky Eds Viet Nam Ltd, a Japanese-owned company in Hai Phong, went on strike demanding higher wages and reduced working hours. The factory is a foreign-owned enterprise specializing in the production of auto parts for export. According to local newspapers, the average monthly wage of workers at this enterprise is between VND 1.1-1.2 million (approximately US$68-75), which, although exceeding the minimum wage set by the Vietnamese Government, is still insufficient to cover workers' daily living expenses. In early April 2008, more than 20,000 workers at a Taiwanese-owned enterprise specializing in the production of Nike shoes for export to the United States staged a large-scale strike demanding an increase in their monthly wage (US$59) and a reduction in working hours. monthly wage ($59) by 20%.
Regarding the current problems and contradictions in Vietnam's economic and social life, the Party and the government of Vietnam have also recognized that "the starting point of the economic base is still low, its efficiency and competitiveness is weak, the progress of the innovation of the political and administrative system has been slow, coupled with the fact that a number of cadres have become more and more serious in terms of moral corruption, deterioration, corruption, wastefulness, and other shortcomings. " "The pace of structural transfer of the economy is slow; the process of reforming cultural and social mechanisms and policies is slow, and various difficult social problems have not yet been properly solved." "The Party's innovative thinking in some areas is progressing slowly." "Some cadres, party members, and even key party members at all levels are poor in quality, ability, responsibility, lack of vanguard, do not set an example, not enough level and ability to accomplish the task."
Third, Vietnam's investment environment analysis
Since the implementation of the renewal and opening up policy in 1986, Vietnam has been regarded as a "blessing" for foreign investors, China, Taiwan, Singapore, South Korea, Thailand, Malaysia, the United States and Europe's capital came and went, setting off a wave after wave of investment boom. Why are foreign investors so favorable to Vietnam? It can be seen from the following three aspects:
First, rich in natural resources. Vietnam's national land 1 / 3 for arable land, suitable for the development of agricultural production and export-oriented agriculture; Vietnam's tropical rainforest resources are also very rich, the vegetation coverage rate of 43.8%; Vietnam's rich mineral resources, so far, has been found more than 90 kinds of mines more than 2,000, of which 120 kinds of mines 30 kinds of minerals have been designed to exploit, mainly oil, natural gas, coal, and various metal and non-metallic products. Vietnam has a long coastline with rich and diverse aquatic potential.
Secondly, human resources are abundant and cheap. Vietnam's national population (2006) is 84.1 million, with urban population accounting for 26.2% and rural population accounting for 73.8%, of which 2/3 were born after the war (after 1975). In the 1980s and 1990s, most manual labor workers earned only US$30-50 per month. In recent years, the Vietnamese government has repeatedly raised the minimum wage for workers, but it is still around US$60-100, making it the cheapest labor in Southeast Asia. As the Vietnamese government has always attached importance to the universalization of primary and secondary education, therefore, although the Vietnamese laborers are the cheapest in Southeast Asia, but their cultural and technical qualities are relatively high.
Again, the political and legal environment is stable and favorable. Vietnam has a one-party system under the leadership of the ****productivity party, the party has a democratic tradition and culture, the ****productivity party in the long-term revolutionary war has established a high prestige, the legitimacy of the regime based on a very solid, although some Western forces also attempted to implement the "Orange Revolution" in Vietnam, but could not get the support of the people. The Party and Government of Vietnam have also paid great attention to improving the legal system, emphasizing the rule of law. The new Party Constitution adopted at the 10th National Congress of the Communist Party of Vietnam (CPPV) stresses the need to correctly deal with the relationship between Party leadership and the law as well as with people's democracy, and to "renew the Party's way of leadership, which should be focused on renewing the way of the Party's leadership of the State. The way of leadership should be institutionalized and concretized into the Constitution and laws." "The Party operates within the framework of the Constitution and laws." "Respecting and exercising the people's right to be masters and being monitored by the people." The Party and Government of Vietnam have paid particular attention to the legal system in the process of renewal, with the National Assembly of Vietnam passing 77 laws since the founding of the country in 1946 I***, of which more than half were newly enacted in the period of 1986-2007, and more than 20 others were laws that have been revised many times. For example, the Law on Foreign Investment has been amended and supplemented five times, in 1987, 1990, 1993, 1996 and 2000***, to establish a comprehensive legal system. In response to the problem of official corruption, which has become increasingly rampant in recent years, the Party and Government of Viet Nam have stepped up efforts to combat and prevent it. According to statistics, in the 2001-2006 period, the Vietnamese ****production party disciplined more than 40,000 party members in the form of condemnation, warning, expulsion, dismissal from office, and sending them to court for trial, etc. Among the punished party members, 118 were leading cadres who had held important jobs in the leading bodies managed by the Politburo or the Registry at the level of deputy secretary of the Central Secretariat, chairperson of the People's Committee, secretary of the provincial Party Committee, ministers and deputy ministers. Thirteen of them are members of the Central Committee, 19 are ministers or deputy ministers and 26 are secretaries or deputy secretaries of municipal and provincial committees.
Things are two sides of the same coin, the above favorable factors in Vietnam's investment environment can change under certain conditions and may be transformed from favorable to unfavorable. For example, because of the favorable investment environment in Vietnam, it attracts a large number of foreign investors to enter, thus creating a relatively fierce competition. As mentioned earlier, foreign investment in Viet Nam has reached as many as 80 countries and territories, with the top 10 foreign investor countries (territories) including Taiwan, Singapore, Japan, South Korea, Hong Kong, China, the British Virgin Islands, France, the Netherlands, Malaysia and Thailand. These foreign investors have invested in Vietnam to set up factories for a relatively long time, has formed a more complete production and sales network, in the competition to occupy a favorable position, such as in the early days of a very low price to rent a large area of land for plants, and the local government of Vietnam has established a good relationship with the local Vietnamese people familiar with Vietnamese local customs and traditions.
The serious lag in infrastructure is also a problem that must be noted. The author and the scholars who went with the study of Vietnam have come to a **** the same conclusion, that is, the Vietnamese government's national income distribution policy is an important feature of the "hide the wealth of the people", the people are relatively rich, private houses are very beautiful, and the government's annual budget is not enough to make ends meet, the fiscal deficit accounts for about 5% of the GDP, the government does not have the financial resources to engage in large-scale infrastructure construction. The government does not have the financial resources to engage in large-scale infrastructure development. For example, industrial zones in Binh Duong Province around Ho Chi Minh City, the transportation roads are relatively poor, local investment in Taiwan businessmen said, to engage in road repair and other infrastructure construction, generally by the manufacturers of half of the pooled capital, the local government to pay half of the money. In addition, Vietnam's geographic location and conditions also caused the inconvenience of north-south transportation, Vietnam's land from north to south is more than 1,600 kilometers long, like an elongated Latin letter S. North and south ends are wide, narrow in the middle, coupled with Vietnam's topography is high in the west and low in the east, determining the direction of most of its rivers flow from west to east, therefore, to the north and south of the land transportation of the construction of a number of obstacles. So far, Vietnam does not have a single highway, and the railroads are still the narrow-gauge railroads built during the French colonial era, which are very slow. In addition, the problem of power shortage in Vietnam has still not been fundamentally solved, with power outages common in major medium-sized cities and many villages not yet connected to roads and electricity. In addition, there are still some unsatisfactory areas in the soft environment, such as bureaucracy and corruption at all levels of government.
At present, investment in Vietnam must pay attention to the following issues:
First, according to Vietnam's national development strategy to determine the focus and direction of business investment.
Vietnam's development strategy for the next 10 years or so focuses on accelerating the pace of industrialization and modernization, in particular to "encourage the development of high-tech industries, manufacturing, software and other subsidized industries that have high competitive advantages, export products, and absorb a large number of labor; the development of open economic zones and Special Economic Zones (SEZs); and to encourage and create smooth conditions for the development of daily necessities with the participation of all economic components". components to participate in the development of daily and export products; produce important means of production in accordance with the direction of modernization; give priority to attracting investment from economic groups and multinational companies; and attract domestic and foreign capital as soon as possible to invest in important projects in oil refining, petrochemicals, smelting, machine building, fertilizers, construction materials, and infrastructure construction." According to the 5-year development plan for 2006-2010 announced by the Vietnamese government, the following five areas will be the focus of encouraging investment: first, electronic industry and high-tech investment projects. A factory to produce electronic medical equipment is to be built in Hanoi, and foreign investors are welcome to invest in the fields of information, biochemistry, new materials, microelectronics, automation, and optical processes in the Hoa Lac High-Tech Industrial Zone and the Ho Chi Minh City High-Tech Industrial Zone. Second, oil refining and chemical projects. It is proposed to build an oil refinery with an annual capacity of 7 million tons of petroleum products in Yishan District, Thanh Hoa Province, and petrochemical enterprises in Tau Ton and Thanh Hoa. Thirdly, the power industry, it is proposed to attract investment to build five thermal power plants and a transformer production plant; fourthly, the manufacturing industry, including attracting investment to build automobile engine and parts production plants, shipbuilding plants, tractor factories and so on. Fifth, infrastructure construction, the main projects include: building a 78-kilometer-long railroad from Bien Hoa Province to Tou Don Province, a 49-kilometer-long railroad from Dong Nai Province to Ho Chi Minh City, a 176-kilometer-long, 4-6-lane highway from Ho Chi Minh City to Dong Nai and Bat Dieu - Tou Don Province, and a 176-kilometer-long, 4-6-lane highway from Ho Chi Minh City to Can Tho City. highway.
Secondly, the location and position of business investment are determined according to the advantages of location and resources in different parts of Vietnam.
On August 13, 2004, the Vietnamese government issued a decision on the establishment and development of 3 key economic zones, according to which the country is divided into 3 key economic zones, with the aim of taking advantage of the potentials, geographical advantages, and resource advantages of each local area in order to accelerate the pace of socio-economic development.
Northern Key Economic Zone. It includes 8 provinces and municipalities including Hanoi, Hai Phong, Quang Ninh, Hai Duong, Hung Yen, Ha Tay, Vinh Phuc and Bac Ninh. The economic zone focuses on areas such as high-tech industries, high-quality services such as software industry, information equipment, automation and products of technological research results, production of automated equipment, robots, new materials, high-quality steel, shipbuilding, machinery manufacturing.
Central Key Economic Zone. It includes 5 provinces and cities including Da Nang City, Thanh Tien-Hue, Quang Nam, Quang Ngai and Binh Dinh provinces. Among them, Da Nang is one of the largest ports in Vietnam. The focus of the zone's development is to drive economic development in the central and western regions centered on the port. It will accelerate the construction of Chu Lai Economic Development Zone in Quang Nam Province, Rong Orange Economic Zone and Trinh Mai Linh Economic and Trade Development Zone in Quang Ngai Province, and plan for the construction of Nhon Hoi Economic Zone in Binh Dinh Province, so that it will be gradually developed into the core of the region by 2010. At the same time, the role of Da Nang, Hue and Quy Nhon cities in trade centers, services and international trade will be vigorously promoted to make the region a center of trade, services and tourism in the central and western plains.
Southern Key Economic Zone. Including 8 provinces and cities, including Ho Chi Minh City, Binh Duong, Toupon-Badi, Dong Nai, Tay Ninh, Binh Phuoc, Long An and Tien Giang provinces, it aims to build the region into an economically vibrant, fast-growing and solid area, leading in the national industrialization and modernization business, ahead of the integration into the international economy, and becoming an engine to drive the economic development of the southeastern region. In line with this goal, an integrated economic zone will be established in the northwestern part of Ho Chi Minh City, including Long An, Tay Ninh and Ho Chi Minh City; high-quality training centers and medical centers will be developed in Binh Duong Province; high-level vocational training centers will be developed in Toum Ton-Ba Dee Province; adjusted highways from Ho Chi Minh City to Toum Ton-Thon, Trung Luong and Tay Ninh will be constructed; and the airport of Long Thanh City will be built.
Third, focus on labor-capital relations. In the early days, of the three relations between labor, capitalists and the government in Vietnam, the relationship between the government and capitalists may be closer, and the government generally favors the capitalists in case of labor disputes. In recent years, the Vietnamese government has amended the Law on Trade Unions and the Labor Law, giving more power to trade unions at all levels. In general, when there is a labor dispute, the trade unions will side with the workers, and if a strike is approved by the trade unions, the factory must also pay the workers their wages during the strike. A Taiwanese manager who used to work in mainland China compared workers in China and Vietnam, arguing that although Vietnamese workers are cheaply paid, their technical quality is far inferior to that of Chinese workers, who can easily be trained to become skilled workers, while Vietnamese laborers are much more difficult to train. The reason for this is that there is a lot of land in the rural areas of Vietnam, and the living environment and conditions of the farmers are relatively favorable. Most of the farmers regard working in factories as a kind of adjustment and a supplement to increase their income during their farming time, so they do not attach much importance to working in factories, and they do it as soon as they are satisfied, and then leave if they are dissatisfied, because going back home to work in the fields is also not a bad choice for Vietnamese workers. Unlike workers in mainland China, who are often landless or landless peasants, working in the city is their only means of earning a living, so they tend to value the job and will not quit at will.
In addition, we must also look at Vietnam's abundant human resources dialectically. In recent years, there has been a surge in the number of Vietnamese laborers working overseas. According to Vietnamese authorities, about 500,000 Vietnamese are now working in 40 countries and regions around the world, mainly in Taiwan, South Korea, Malaysia and Japan, with an annual remittance of US$1.5 billion to the country. Labor export is a strategic approach for Vietnam to solve the problem of employment of surplus labor, and there is a trend of continued growth in the future. Some bosses investing in Vietnam to set up factories are also worried that Vietnam will experience a labor shortage in the next few years, skilled and technical workers have always been in short supply. According to the author's observation, to invest in Vietnam's labor-intensive industries, such as clothing, electronics, household appliances, etc., in the last few years there may still be some competitive advantage, but the advantage will not exist for a long time.
Fourth, the conclusion
Recently, domestic and foreign media frequently published reports and comments on the economic crisis in Vietnam, that Vietnam has an economic crisis similar to that of 1997, and is about to spread to the entire region. In the author's opinion, these claims lack factual basis.
First, the correct view of the macroeconomic situation in Vietnam. In the author's view, the current problems of the Vietnamese economy should be viewed realistically, objectively and calmly. Overall, the fundamentals of Vietnam's economic development is still good, the economic problems she has experienced since 2008 is a financial turmoil rather than a financial crisis. In the era of economic globalization, financial turbulence or instability in developing countries, especially emerging economies, is common and not worth making a fuss about. The overreaction of the public at home and abroad is also due to excessive media speculation. It is true that Vietnam's economy is experiencing greater difficulties, but it is not a crisis; rather, it is a gradual intensification of some of the contradictions caused by the overheating of the economy in previous years. The Vietnamese government has taken a series of urgent measures since the beginning of 2008 to address the phenomenon of economic overheating and policy adjustments, which have now begun to bear fruit.
Second, the current problems of the Vietnamese economy are closely related to the world economic situation. After more than 20 years of reform and opening up, Vietnam's economy has become more and more closely linked to the world economy, and the recession in the US and the uncertainty of the world economy have also had a direct impact on the Vietnamese economy. Taking high inflation as an example, this is not a problem faced by Vietnam alone, but a global problem, with both developed and developing countries facing inflationary pressure, especially emerging economies. In the early post-war period, Vietnam also experienced an inflation rate as high as 300%, but the Vietnamese people managed to survive. This is due to the fact that she is very rich in natural resources, food, tropical crop products, fishery products and other basic foodstuffs are exported in large quantities in addition to meeting the basic needs of the domestic people. Therefore, Vietnam's high inflation will not bring special difficulties to the people's lives.
Third, the current instability and difficulties faced by Vietnam's financial sector will not have a serious impact on other sectors. Vietnam's financial sector has not been completely liberalized, although she is currently implementing socialist-oriented market economy reform, but the government still has many macro-control tools and instruments in hand, not completely out of control. Moreover, Vietnam is still an agricultural country, is currently in the stage of rapid industrialization, Vietnam's virtual economy in the national economy does not account for a high proportion, as long as agriculture and industry do not appear big problems, Vietnam's economy will be able to basically maintain a healthy development trend.
Fourth, as long as foreign investment into Vietnam remains at a fast growth rate, Vietnam's economic growth is likely to continue at a relatively high level. In the first half of 2008, Vietnam will reportedly receive foreign investment applications totaling $33 billion, 65 percent higher than the 2007 total of $20 billion. And those withdrawing from China, where costs are rising, including globally recognized brands such as Canon Inc. and Intel Corp. as well as Taiwanese steelmakers and some South Korean shipbuilders have begun to invest massively in Vietnam.
Fifth, Vietnam is still a dynamic post-development country. The author believes that Vietnam's economic development is currently experiencing difficulties is only temporary, will not change the basic direction of its economic development and momentum, as long as the world economic situation and the economic situation in neighboring regions to improve, Vietnam will be able to quickly overcome the difficulties and regain vitality to embark on a healthy track of development. Both Capital Partners LLC, a Los Angeles-based investment firm, said it would take three to six months to see clearly whether Vietnam could control its inflation problem. But in a recent research note, the firm said, "Once Vietnam's economy recovers from its currency problems, we expect global investors to once again get excited about Vietnam's long-term prospects."