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COUNTRY BRIEFS


POLITICAL OVERVIEW

The Socialist Republic of Vietnam (Vietnam) is one of the world's few remaining one-party communist states. Political power lies with the Communist Party of Vietnam (CPV), led by General Secretary Nguyen Phu Trong .

The Party's peak organ, the fourteen-member Politburo, holds authority over the implementation of all major areas of policy. The Politburo is elected by the Party's Central Committee. Day-to-day policy guidance comes from the ten-member Secretariat to the Central Committee, which comprises some Politburo and Central Committee members. The Central Committee considers important policy issues several times per year, and five-yearly Party Congresses ratify major policy changes.

The Eleventh Party Congress was held in January 2011 and resulted in the election of a new Politburo and Central Committee. Nguyen Phu Trong was elected as General Secretary by Central Committee, replacing Nong Duc Manh.

Administration and policy implementation is the responsibility of government ministries and equivalent agencies, although these organisations are now also playing a more significant role in policy development. In recent years, the National Assembly has become increasingly active and influential in setting national priorities, with members prepared to criticise the Government vigorously.

The increasing role of the National Assembly in reviewing legislation and policies and a gradually more incisive media have contributed to greater transparency in Vietnam, but there are limits to dissent. Individuals can incur long prison terms on broadly framed charges, such as espionage or undermining national security and propagandising against the state. Notwithstanding some recent responsiveness on the part of the Vietnamese authorities on questions of religious freedom, several high-profile arrests and trials over recent years have brought the international spotlight back onto Vietnam's one-party political system and management of diverse political views.

Head of State and Government Ministry

-- State President: Truong Tan SANG
-- State Vice-President: Nguyen Thi DOAN, Mme  
-- Prime Minister: Nguyen Tan DUNG
-- Deputy Prime Minister: Hoang Trung HAI
-- Deputy Prime Minister: Nguyen Thien NHAN
-- Deputy Prime Minister: Vu Van NINH
-- Deputy Prime Minister: Nguyen Xuan PHUC

Ministers

-- Minister of Agriculture and Rural Development: Cao Duc PHAT
-- Minister of Construction: Trinh Dinh DUNG
-- Minister of Culture, Sports and Tourism: Hoang Tuan ANH
-- Minister of Education and Training: Pham Vu LUAN
-- Minister of Finance: Vuong Dinh HUE
-- Minister of Foreign Affairs: Pham Binh MINH
-- Minister of Home Affairs: Nguyen Thai BINH
-- Minister of Industry and Trade: Vu Huy HOANG
-- Minister of Information and Communications: Nguyen Bac SON
-- Minister of Justice: Ha Hung CUONG
-- Minister of Labor, War Invalids, and Social Welfare: Pham Thi Hai CHUYEN
-- Minister of National Defense: Phung Quang THANH, Sr. Lt. Gen.
-- Minister of Natural Resources and Environment: Nguyen Minh QUANG
-- Minister of Planning and Investment: Bui Quang VINH
-- Minister of Public Health Nguyen: Thi Kim TIEN
-- Minister of Public Security: Tran Dai QUANG, Lt. Gen.
-- Minister of Science and Technology: Nguyen QUAN
-- Minister of Transport: Dinh La THANG
-- Chairman, Government Inspectorate: Huynh Phong TRANH
-- Chairman, Office of the Government: Vu Duc DAM
-- Chairman, State Ethnic Minorities Committee: Giang Seo PHU
-- Governor, State Bank: Nguyen Van BINH

Politburo XI of the Communist Party of Vietnam (2011-2016)

-- Truong Tan Sang, Standing Secretariat Member

-- Phung Quang Thanh, Minister of Defence

-- Nguyen Tan Dung, Prime Minister

-- Nguyen Sinh Hung, Deputy Prime Minister

-- Le Hong Anh, Minister of Public Security

-- Le Thanh Hai, Ho Chi Minh city Party Secretary

-- To Juy Rua, Central Popularisation and Education Commission Chair

-- Nguyen Phu Trong, National Assembly Chair

-- Pham Quang Nghi, Hanoi Party Secretary

-- Tran Dai Quang, Vice-Minister of Public Security

-- Tong Thi Phong, National Assembly vice-Chair

-- Ngo Van Du, Head of Central Committee Office

-- Dinh The Huynh, Njan Dan ('People') newspaper Editor-in-Chief

-- Nguyen Xuan Phuc, Chairman of Government Office

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THE BILATERAL RELATIONSHIP -- POLITICAL AND SOCIAL

Bilateral links between Australia and Vietnam have developed significantly since the establishment of diplomatic relations in 1973. A significant milestone was reached in October 2010 when the two countries signed the Australia - Viet Nam Comprehensive Partnership (http://www.dfat.gov.au/geo/vietnam/comprehensive_partnership_vietnam.html). The Plan of Action consolidates the Comprehensive Partnership Agreement signed in 2009 and provides a strong basis for extensive engagement and cooperation in diverse areas of mutual interest.

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HIGH-LEVEL VISITS TO AUSTRALIA

High-level visits to Australia over recent years have served to maintain and deepen the bilateral relationship. Recent visits include:

-- 2010: Minister of Labour, Invalids and Social Affairs, Mme Nguyen Thi Kim Ngan
-- 2010Minister of Planning and Investment, Mr Vo Hong Phuc, accompanied by Vice Minister Le Duong Quang from Vietnam’s Ministry of Industry and Trade (for the 9th meeting of the Australia-Vietnam Joint Trade and Economic Cooperation Committee)

-- 2010 — Vice President of Vietnam’s National Assembly, Mr Uong Chu Luu, accompanied by a Parliamentary Delegation

-- 2009 — General Secretary Nong Duc Manh, accompanied by a senior delegation including the Deputy Prime Minister (also Minister of Foreign Affairs), the Minister of Planning and Investment, and the Minister of Industry and Trade

-- 2008 — Prime Minister, Mr Nguyen Tan Dung, accompanied by the Minister of Transport

-- 2008: Deputy Prime Minister, Mr Truong Vinh Trong

-- 2008: President of the National Assembly, Mr Nguyen Phu Trong
-- 2008Deputy Prime Minister and Minister of Education and Training, Dr Nguyen Thien Nhan

-- 2007 — State President, Nguyen Minh Triet; Deputy Prime Minister and Minister of Foreign Affairs, Pham Gia Khiem; and Minister of Industry and Trade, Vu Huy Hoang (for the APEC Economic Leaders Meeting)

-- 2007: Minister of Public Security, General Le Hong Anh

-- 2007Minister of Planning and Investment, Vo Hong Phuc (for the 7th meeting of the Australia-Vietnam Joint Trade and Economic Cooperation Committee)

These visits have been reciprocated by high-level Australian visits to Vietnam:

-- 2011 – Governor-General, Ms Quentin Bryce AC (to strengthen the bilateral relationship between Australia and Vietnam)

-- 2011 – Minister for Foreign Affairs, Mr Kevin Rudd (for bilateral meetings)

-- 2010 – Prime Minister, Ms Julia Gillard (for the East Asia Summit and bilateral meetings)

-- 2010 – Minister for Defence, Mr Stephen Smith (ASEAN-Plus Defence Ministers’ Meeting (ADMM+) and signing of a Memorandum of Understanding on Defence Cooperation)

-- 2009 — Minister for Trade, Mr Simon Crean (to co-chair the 8th meeting of the Joint Trade and Economic Cooperation Committee)

-- 2009 — Minister for Immigration and Citizenship , Mr Chris Evans

-- 2008 — Minister for Foreign Affairs, Mr Stephen Smith

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THE VIETNAMESE COMMUNITY IN AUSTRALIA

The Vietnam-born community in Australia is estimated at approximately 188,000. The environment in Vietnam since the advent of doi moi (renovation) has encouraged many Vietnamese expatriates to revisit their former homeland.

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DEFENCE, POLICE RELATIONS AND REGIONAL SECURITY

Formal defence relations between Australia and Vietnam were established in February 1999, with the opening of a Defence Attaché Office at the Australian Embassy in Hanoi. Vietnam's first Defence Attaché to Australia took up his appointment in Canberra in September 2000.

The bilateral defence relationship includes: regular Australian Defence Force ship visits to Vietnamese ports; training of Vietnamese military officers in Australia under the bilateral Defence Cooperation Program; and visits between Australian and Vietnamese senior Defence Force officials. In October 2010, Australia and Vietnam signed a bilateral MOU on Defence Cooperation at the inaugural ASEAN Defence Ministers Meeting Plus held in Hanoi.

The Australian Federal Police maintains Law Enforcement Liaison Offices in Hanoi and Ho Chi Minh City (http://www.afp.gov.au/policing/international-liaison.aspx). Australia and Vietnam have also held a senior officials-level bilateral Regional Security Dialogue since 1998. The last Dialogue was held in Hanoi in August 2009.

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EDUCATION AND TRAINING

Australia is a leading study destination for Vietnamese students, with more than 23,000 student enrolments in Australian education institutions and an estimated 10,000 students undertaking Australian education and training courses in Vietnam.

Australia collaborates on many education and training initiatives with Vietnam, including policy dialogue in areas such as quality assurance, qualification recognition and vocational education; facilitating institution-to-institution partnerships; and supporting vibrant Australian alumni associations. The Joint Working Group on Education and Training was established as part of the enhanced education cooperation under the Australia-Viet Nam Plan of Action 2010-2013. The first meeting of the Joint Working Group was held in Canberra on 2-3 March 2011.

Australia is the leading government provider of scholarships to Vietnamese students, with up to 245 scholarships to be awarded in 2011. Vietnam has been a significant beneficiary of the expanded Endeavour Program - a prestigious merit-based regional scholarship program administered by the Department of Education, Employment and Workplace Relations which supports high-achieving students, researchers and professionals.

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AUSTRALIA'S APPROACH TO HUMAN RIGHTS IN VIETNAM

Australia and Vietnam have held formal human rights talks regularly since 2002. The eighth round of the Australia-Vietnam Human Rights Dialogue took place on 17-18 February 2011 in Canberra. (http://www.dfat.gov.au/media/releases/department/091210.html)

Vietnam and Australia introduced a program of technical cooperation on human rights in 2006. The program, administered by the Australian Human Rights Commission and funded by AusAID, provides opportunities to foster practical cooperation between institutions with human rights responsibilities and expertise. The Government has also funded programs in Vietnam under the Human Rights Small Grants Scheme for the past four years.

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AUSTRALIA'S DEVELOPMENT COOPERATION PROGRAM WITH VIETNAM

Australia's total overseas development assistance to Vietnam in 2011-12 is expected to reach $137.9 million, making Vietnam Australia's sixth largest development assistance partner. Amongst 30 donor countries and agencies in Vietnam, Australia ranks among the top ten bilateral donors.

Australia’s commitment of $160 million and the signing of the Statement of Principles on the Cao Lanh Bridge between the Governments of Australia and Vietnam during the Australian Prime Minister’s visit in October 2010 were important milestones for the program.

For further details about Australia's development assistance program in Vietnam, visit the AusAID website (http://www.ausaid.gov.au/).

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ECONOMIC OVERVIEW

Vietnam has been in transition from a centrally-planned to a 'socialist oriented market economy' since the introduction of the doi moi reforms in 1986. In the early-to-mid 1990s, liberalisation measures resulted in rapidly expanding exports and high economic growth, with real GDP growth averaging 9 per cent per year. Growth slowed in the late 1990s, but the momentum picked up, with GDP growth averaging about 7.5 per cent per year since 2001, reaching a high of 8.5 per cent in 2007. Poverty rates are now less than 20 per cent, down from almost 60 per cent in the early 1990s.

Performance and outlook

Near-term forecasts for growth were scaled down significantly in light of the global financial crisis. Real GDP is forecast to grow by 6.3 per cent in 2011. An export-oriented economy, Vietnam saw demand from key export markets decline during the economic slowdown. At the same time, FDI inflows were slowing with tightening global credit conditions.

In response to the economic slowdown, the Government introduced a range of measures to loosen monetary policy and stimulate the economy. This included a 4 per cent subsidy on commercial loans. The capacity of the Government to deliver a large fiscal stimulus to the economy, however, was limited by a large trade deficit and low foreign exchange reserves.

International trade, investment and remittances

Goods and services exports now constitute around 70 per cent of Vietnam's GDP up from a 30 per cent share recorded in the mid 1990s. Vietnam's major exports are crude oil, textiles, footwear, seafood, timber products, rice, rubber, coffee, cashews, pepper and coal. Its major merchandise export destinations in 2009 were the United States, Japan, China and Switzerland.

Vietnam's major imports are machinery and spare parts, refined petroleum products, urea, steel ingots, pharmaceuticals, textile and garment inputs, plastics and chemicals. (Source: GSO). The top three sources of imports in 2009 were China, Japan and the Republic of Korea.

According to official statistics, total committed foreign direct investment (FDI) in 2009 topped US$21.4 billion. (Source: Foreign Investment Agency, MPI). The State Bank of Vietnam estimates remittances from overseas Vietnamese in 2008 exceeded US$7.8 billion. Remittances remain an important financial inflow but are estimated to have fallen in 2009 with the global economic slowdown.

Economic and corporate reform

Since 2000, Vietnam's Enterprise Law has fostered the creation of over 200,000 registered private domestic enterprises, accounting for around 10 per cent of the economy and a smaller proportion of the labour force. Over time, the Enterprise Law (2005) and Investment Law (2005), which came into effect in 2006, are gradually contributing to an improved business environment and a more 'level playing field' in most economic sectors. The challenge for the Government will be to maintain the pace of economic and corporate reform in the face of pressures arising from the global financial crisis.

In the early 1990s, shortly after Vietnam's economic reform process began, Vietnam started a program to equitise (semi-privatise) its state-owned enterprises (SOEs) as part of an effort to improve the competitiveness of the state corporate sector and maintain the momentum of foreign investment. In late 2007 the Government announced an ambitious plan to extend the equitisation process to major state-owned conglomerates in sectors such as banking, insurance, aviation, cement, steel and textiles, with a target to reduce the number of SOEs to around 550 by 2010. These SOEs would operate in public services, national defence and security and some economic sectors deemed to be of national importance.

To date, however, the equitsation agenda has not reached its target and there are no reliable statistics on the actual number of SOEs equitised. In addition, a number of new SOEs created during the past few years, especially under the umbrella of state-owned conglomerates have not been supervised or reflected in official statistics. The vast majority of SOEs that have been equitised were small and medium-sized enterprises and the state continues to maintain a controlling share in a large number of enterprises following equitisation. The equitisation has not touched parent companies of major state-owned conglomerates. There are technical challenges associated with equitising major SOEs, particularly in assessing assets to prepare for sale. Many observers have noted that the momentum for equitisation may be weakening.

Financial sector

In 2006 the Vietnamese Government approved a banking development plan up to 2020. The plan includes moving the State Bank of Vietnam (SBV) towards a modern central bank, with more independence in its monetary and exchange rate policy, and improved supervision capacity over the banking system. This importantly complements the plans to equitise all five state-owned commercial banks, which the SBV currently both regulates and 'owns'. Challenges in this reform process include: addressing tensions arising from the SBV's dual regulatory and ownership role; resolving the legacy of directed lending to SOEs, and consequential bad loans; strengthening the banking system in such key areas as assessment of credit risk; and developing a greater understanding of international banking practices and products.

The stock market witnessed spectacular development during 2006 and most of 2007, with capitalisation of shares reaching the equivalent of over 40 per cent of GDP by December 2007. This growth was driven by more liberal foreign ownership caps, a strong increase in the number and size of listed entities and strong interest from domestic and foreign investors (Source: State Securities Commission). But the share market began to fall dramatically in October 2007 and in early 2009 hit its lowest point since January 2006. While it has risen since then, it has not returned to previous growth rates.

Business operating environment

The Vietnamese Government is gradually loosening foreign investment limits, for example, by lifting the foreign ownership limit in listed companies to 49 per cent, and in unlisted companies to 40 per cent. The legal system is also undergoing major change to better align commercial statutes with international norms. The implementation of WTO commitments is gradually contributing to a better operating environment over the medium and longer-term as tariffs are cut, investment restrictions loosened still further, and a more transparent and predictable commercial legal and administrative system comes into place. This process will take some years to begin to show real benefits.

Vietnam has many economic strengths, not least the skills and entrepreneurial bent of its youthful workforce and its location in the most dynamic part of the globe. However, Vietnam faces many challenges in maintaining its growth and development trajectory over the longer term.

Vietnam is a member of a growing network of free trade agreements, both individually and as part of ASEAN. Vietnam is participating in Trans-Pacific Partnership Agreement (TPP) negotiations with Australia and seven other APEC economies (Brunei, Chile, Malaysia, New Zealand, Singapore, Peru and the US), which commenced in March 2011. As part of these negotiations Australia held a Trade Negotiations Capacity Building Seminar in Hanoi on 24-25 November 2010 in conjunction with New Zealand.

More information on the business operating environment is available at the Austrade website Austrade (http://www.austrade.gov.au/) or the Australian Trade Commission in Vietnam (http://www.austrade.gov.au/Austrade-s-offices-in-Vietnam/default.aspx) .

Vietnam's trade policy

Vietnam is committed to the long-term objective of global economic integration through participation in APEC, the ASEAN Free Trade Area, the TPP and the WTO. Vietnam successfully hosted APEC in 2006.

Vietnam and the WTO

Vietnam became a member of the WTO on 11 January 2007 (http://www.wto.org/english/thewto_e/countries_e/vietnam_e.htm) and is making progress in implementing its WTO accession commitments, including: adopting implementing legislation; improving transparency of trade regulations; and clarifying consistency of treatment for private companies and state-owned enterprises. While such changes will no doubt present challenges to Vietnam in the short term, WTO membership is expected to be accompanied by significant expansion in trading opportunities, and Australian exporters stand to benefit considerably.

The bilateral relationship: economic

The Ministerial level Australia-Vietnam Joint Trade and Economic Cooperation Committee (JTECC) is the primary government-to-government mechanism to take the bilateral trade and investment relationship forward, and address any problem areas. JTECC met for the tenth time on 13 December in Hanoi. The meeting provided an opportunity to discuss key areas of potential for increased bilateral trade and investment, including education and training; infrastructure; and resources and environment. Multilateral and regional issues of mutual interest were also discussed.

-- 10th Australia-Vietnam Joint Trade and Economic Cooperation Committee Joint Communiqué (http://www.dfat.gov.au/geo/vietnam/111213-JTECC-joint-communique.html)

Australia and Vietnam are parties to the ASEAN-Australia-New Zealand Free Trade Agreement (http://www.dfat.gov.au/fta/aanzfta/index.html) which entered into force on 1 January 2010 Vietnam ratified the agreement on 24 June 2009.

Two-way trade between Australia and Vietnam registered encouraging growth over the last five years to reach $6 billion in 2009.

Merchandise trade

Two-way merchandise trade reached a record-level of A$8 billion in 2007-08, but fell 23.5 per cent to A$6.2 billion in 2009-10, largely as a result of the deteriorating international economic situation.

Australia's merchandise exports to Vietnam in 2009-2010 totalled A$1.4 billion. Significant Australian export items to Vietnam in 2009-2010 included wheat, copper, aluminium and ferrous waste and scrap.

In 2009-10, Australia's merchandise imports from Vietnam totalled A$3.1 billion. Oil constituted more than 70 per cent of Australia's total merchandise imports during this period. Other significant items were furniture (A$101m), fruit and nuts (A$77m) and footwear (A$72.4 million).

Services trade

Two-way services trade between Australia and Vietnam continued to perform well in 2009-2010, growing by 18.8 per cent to reach A$1.6 billion. Services exports to Vietnam during this period were worth A$957 million triple that of 2005. Education-related exports remain Australia's single largest services export, worth A$796 million in 2009-2010. Services imports from Vietnam in the same period were valued at A$676 million, dominated by recreational travel (A$481 million).

Australian investment in Vietnam

According to Vietnamese Government statistics, Australia ranked 20th in overall foreign direct investment in Vietnam as at April 2010. There were 224 currently valid Australian-funded projects with disbursed FDI valued at US$224 million. Over the past five years, the most significant Australian investments have involved expansions by established Australian companies, which continue to diversify their operations. Prominent examples include ANZ Bank, QBE, Santos, Qantas and the Commonwealth Bank.

Export and investment opportunities for Australia

Vietnam's rapid economic growth over recent years has increased demand for imported goods, creating significant opportunities for Australian exporters of metals, wheat, dairy produce, machinery, petroleum-based products and live animals. While the global economic slowdown presented challenges, the long term outlook for Australia-Vietnam trade and business relationships remains positive.

The continuing shift towards a more market-based economy and strong economic growth in Vietnam have increased demand for education and training services. Education sector reforms are also under way with support from the Government of Vietnam and donors including the World Bank and Asian Development Bank. The need for training in areas such as English language, business and management and information technology remains high, especially in the major urban centres of Hanoi and Ho Chi Minh City.

Vietnam has large deposits of oil and gas, and a wide range of exploitable mineral deposits. Many Australian companies have expressed interest in minerals development in Vietnam, but remain concerned by uncertainty in the regulatory environment and the fiscal regime.

Australian companies are generally well received in Vietnam. Australia is regarded as a modern, technologically advanced and friendly country located within Vietnam's immediate sphere of interest. Long-term trade and investment opportunities should increase in line with Vietnam's progress in implementing its legislative and administrative reform program.

If you would like more information on specific export opportunities in Vietnam, or more information on export assistance, go to the Austrade website (http://www.austrade.gov.au/) .

Examples of recent successes in Vietnam

RMIT - University

RMIT - International University Vietnam began operations in 2001 in Ho Chi Minh City as the first wholly foreign-owned University in Vietnam. By 2004, RMIT Vietnam had also opened a campus in Hanoi. In its 10th year of providing an international standard higher education experience within Vietnam, RMIT Vietnam has almost 6,000 students studying degree and post-graduate programs, and academic English classes, and by 2010 had graduated over 2,500 students. RMIT Vietnam is now a leader in the higher education industry in the region, assisting local universities build capability such as by assisting with their development of Learning Resource Centres. RMIT Vietnam continues to expand its program offering as well as its facilities; this year RMIT Vietnam is constructing a second top quality designed academic building at RMIT Vietnam's Saigon South Campus.

Building bridges in Vietnam

On 2 September 2009 NSW-based construction company Baulderstone, in partnership with Bilfinger Berger, completed the construction of the Phu My Bridge across the Saigon River in Ho Chi Minh City. The bridge, completed four months ahead of schedule at a cost of $150 million, will provide a crucial link between the southern Mekong Delta region and the central and northern parts of Vietnam. Baulderstone also built the My Thuan Bridge over the Mekong River in 2000, which was funded by the Australian Government

Strategic Marine opens shipyard in Vung Tau

February 2009: Strategic Marine officially opened its US$16.3 million shipyard in the southern Vietnamese city of Vung Tau. The shipyard, which boasted $61.8 million in orders at the time of the opening, employs a workforce of over 1,100 people to produce a range of vessels for Vietnamese and international customers. The company has pioneered and funded an apprenticeship scheme which will see 55 Vietnamese undertake a two-year course in a range of specialized shipbuilding skills. The scheme has been developed under the guidance of Melbourne's Box Hill TAFE.

Arrow Energy to join other Australian players in Vietnam's oil and gas sector

January 2008: Arrow Energy signed a major Production Sharing Contract (PSC) with the state-owned PetroVietnam. Arrow Energy announced in January 2009 that exploration drilling commenced on the first well in an initial 8 well program on its block in northern Vietnam.

Australia moves into Vietnamese energy market

September 2008: Origin Energy Australia has become the majority share-holder in a joint-venture with Vietnamese company, CN Industries, to store and distribute LPG in Vietnam. Foreign companies have been permitted to take a controlling share in companies providing distribution services in Vietnam since 1 January 2008 as a part of Vietnam’s WTO commitments package.

Commonwealth Bank opens its first branch in Vietnam

August 2008: The Commonwealth Bank opened its first branch in Vietnam. Commonwealth Bank has had a long-standing interest in Vietnam, having established a representative office there in 1995.

English language joint venture in Danang

June 2007: The English Language Institute, a joint initiative of the University of Danang, Vietnam, and the University of Queensland opened in Danang.

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Last Updated: February 2012

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