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COUNTRY PROFILES


PROFILE

Country Profile

Area: 331,689 km2
Population: 83 million
Capital City: Hanoi (population 3.5 million)
Largest City: Ho Chi Minh City (population 7.8 million)
People: Kinh Vietnamese 85%, plus 53 other ethnic groups
Languages: Vietnamese, minority languages
Religion(s): mainly Buddhism, also Catholicism, Protestantism, Cao Dai and Hoa Hao religions
Currency: Vietnamese Dong (VND)
Major political parties: Communist Party of Vietnam (CPV)
Government: Vietnam is a one-party communist state, led by a triumvirate of CPV General Secretary MrNguyen Phu Trong, State President Mr Truong Tan Sang and Prime Minister Mr Nguyen Tan Dung
Deputy Prime Minister and Foreign Minister: Mr Pham Binh Minh
Membership of international groupings/organisations: Vietnam is a member of the United Nations, Association of South East Asian Nations (ASEAN) current Chair, the Non-Aligned Movement, the Asia-Europe Meeting (ASEM), the Asia Pacific Economic Cooperation (APEC), and the World Trade Organisation (WTO).

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ECONOMY

Basic economic facts (based on official and EIU statistics)

GDP: US$104billion GDP per head: approx. US$1174
Annual Growth: 6.8%
Inflation: 21.6 in October 2011
Major exports: (Jan-Sept 2011) Crude oil and gas, textiles, footwear, seafood, rice, wood products, electronics and computers, machinery tools and spare parts, valuable stones and metals, coffee and rubber.
Exchange rate: £1 = 33,709 (Oct 2011)
Compared with many of its neighbours, Vietnam suffered three 'lost decades' of economic development due to war. But it is catching up fast. Notwithstanding a hiccup following the 1997 Asian economic crisis, Vietnam has boomed since the CPV turned away from communist economic policies and central planning in the late 1980s under its 'doi moi' (renovation) policy. Vietnam is now among the fastest-growing economies in Asia.

Recent years have been challenging with high inflation - it touched 23% in 2011. The Government’s “high growth mentality since the renovation has been revised with a focus in 2011 on sustainable growth. In the second half of 2008 the impact of the global economic turbulence started to kick in, with reduced overseas demand for Vietnamese goods and declining foreign investment. 2011 global issues have further affected world-wide demand and the availability of finance. There is still a large fiscal deficit, a persistent trade deficit and pressure on the Dong. Inefficient state-owned enterprises and poor domestic investment remain concerns. Reform of state-owned enterprises, to place them on a sounder economic footing, is happening - but slowly and has focused on smaller enterprises. Large amounts of lending by state-owned banks to unreformed state-owned enterprises, has resulted in non-performing loans and the inefficient use of capital. Poor performance of commercial banks has necessitated stronger banking sector reform steps.

Long term investors maintain that Vietnam's long term prospects are good, providing that the government sticks to its reform plans, overcomes skills and infrastructure challenges, and tackles corruption.

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HISTORY

History since 1945

During World War II, Japanese forces displaced the French colonial rulers of Vietnam. Following Japan's surrender, the Viet Minh, a communist-dominated nationalist grouping under the leadership of Ho Chi Minh, stepped into the power vacuum and proclaimed Vietnam's independence in September 1945. The French tried to re-establish their authority over Vietnam, however, and fighting erupted between their forces and the Viet Minh. Following their defeat at Dien Bien Phu, the French agreed at the 1954 Geneva Conference to withdraw. Vietnam was effectively divided into a communist-controlled North (the Democratic Republic of Vietnam) and a Western-backed South (the Republic of Vietnam). After the South reneged on an agreement to hold nation-wide elections, the North began to strengthen the communist movement in the South with the aim of achieving national re-unification. The South became increasingly dependent on the USA.

The US began direct military intervention in the early 1960s and increased its commitment in Vietnam as the war escalated, reaching over 500,000 US troops in 1968. Withdrawal began thereafter due to lack of military success and domestic US opposition to the war. The US and North Vietnam finally reached a peace agreement in Paris in 1973. At this point, many Western countries, including the UK, established full diplomatic relations with North Vietnam. The civil war continued, however, and in 1975 the southern forces were defeated. Vietnam was formally re-unified as the Socialist Republic of Vietnam in 1976 and admitted into the UN in 1977.

But national re-unification did not lead to peace and stability. Relations with Cambodia's Khmer Rouge government and their Chinese backers soon deteriorated. After a series of provocative border incidents, Vietnam sent troops to Cambodia in 1978, removed Pol Pot's regime and installed a friendly government. Vietnam's intervention was widely condemned internationally. China launched a short punitive invasion into northern Vietnam in 1979, although quickly withdrew. Conflict in Cambodia continued into the 1980s as Vietnamese forces and their Cambodian allies faced attack from Khmer Rouge guerrillas. Vietnam endured a period of international isolation, supported only by the Soviet Union and its allies. Vietnamese forces finally withdrew from Cambodia in 1989.

Vietnam's economy, sapped by over 30 years of war, was further weakened by the disastrous introduction of Soviet-style collectivist economic policies after reunification. As Vietnam neared economic collapse, hundreds of thousands of refugees (the 'Vietnamese Boat People') fled in the late 1970s/early 1980s. Vietnam's government, faced also with declining Soviet aid, was forced to make a drastic change in economic direction. In 1986, Vietnam introduced a ground-breaking new economic programme called 'doi moi' (renovation), which slowly introduced liberal market principles and set the foundations for today's rapid economic growth in Vietnam.

Following formal settlement of the Cambodian conflict at the 1991 Paris Conference, Vietnam's international isolation ended. Vietnam normalised relations with China in 1991, with Japan in 1993 and (finally) with the US in 1995 - the same year Vietnam became a member of ASEAN.

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INTERNATIONAL RELATIONS

Following years of isolation, Vietnam has sought to reach out and rejoin the world since the early 1990s. Vietnam joined ASEAN in 1995 and, in 2004, hosted the Fifth Asia-Europe Meeting of world leaders in Hanoi. Vietnam is the 2010 ASEAN Chair. Vietnam hosted the APEC Summit in November 2006 and joined the WTO in January 2007. Vietnam took its place on the Security Council in January 2008, a seat it held for two years. In 2011 Vietnam stated a move to a foreign relations policy of “Global Integration” from “Global Economic Integration” and that it would undertake a more active economic role.


Vietnam’s relations with its neighbours.

Vietnam's relations with their largest neighbour, China, are complex. One thousand years of Chinese rule of what is now northern Vietnam, ending in the 10th century, had a deep impact on Vietnamese culture and the Vietnamese psyche. In recent times, the political relationship has swung back and forth, from Chinese support for Ho Chi Minh during the war against the French to a short Chinese invasion of northern Vietnam in 1979. Communist solidarity between the two nations sometimes takes a back seat to narrow national interests.

Sovereignty over the Spratley and Paracel Islands in the South China Sea and border disagreements continue to lead to occasional incidents.

Vietnam's relations with the US

The Socialist Republic of Vietnam and the US established diplomatic relations in 1995 and exchanged Ambassadors in May 1997. Following a visit by President Clinton and the signing of a US-Vietnam Bilateral Trade Agreement bilateral relations appeared to take off. The relationship was further strengthened by a landmark visit to the US by Prime Minister Phan Van Khai in July 2005 and, more recently, Vietnamese President Nguyen Minh Triet paid an official visit to the US in June 2007 and Prime Minister Dung visited in June 2008. Then US President George W. Bush visited Vietnam for the APEC Summit in November 2006. The US joined the East Asia Summit in 2010 as an observer and in 2011 as a full member. There were many bilateral meetings at various levels during Vietnams Chair of ASEAN in 2010 and subsequently. There remain significant irritants, however, particularly in the field of human rights where many US-based NGOs and Vietnamese-Americans are vocal in their criticism of Vietnam's human rights record. US-Vietnam cooperation on the search for US MIAs (soldiers missing-in-action) is good.


Vietnam's relations with the UK

The UK has had a diplomatic presence in Hanoi, for over 60 years. We opened a consulate in Hanoi in 1946, which was upgraded to a consulate-general in 1954. It remained open throughout the war (at the same time, a British Embassy was also open in what was then Saigon (now Ho Chi Minh City), capital of South Vietnam). Following the establishment of full diplomatic relations in 1973, our consulate-general in Hanoi was upgraded to an embassy. The embassy grew substantially in the mid-1990s to meet the growing demand of the enhanced relationship. As well as an Embassy, we now have a Consulate-General in Ho Chi Minh City (formerly Saigon), British Council offices in Hanoi and Ho Chi Minh City, and a DFID office in Hanoi.

The UK/Vietnam bilateral relationship has developed greatly since the establishment of full diplomatic relations in 1973. It now encompass a wide-range of issues including high-level political contacts, growing trade and investment links, cooperation against international crime and illegal migration, education and a well established DFID development assistance programme that will run to 2016.

In May 2004, Mr Tran Duc Luong, the then President of the Socialist Republic of Vietnam, paid the first official visit by a Vietnamese Head of State to the UK. This historic visit marked a new high point in the relationship between the UK and Vietnam. The first-ever visit by Vietnamese Prime Minister Nguyen Tan Dung to the UK took place in March 2008. At their meeting in London on 5 March 2008, Prime Minister Nguyen Tan Dung and Gordon Brown agreed to work together on five priority areas: trade and investment; development (including good governance, accountability and rule of law issues); international issues (including reform of international architecture, Security Council co-operation and climate change); education and tackling illegal migration and organised crime.

In September 2010, Mr Pham Gia Khiem, then Deputy Prime Minister and Foreign Minister for Vietnam undertook a successful visit to the UK during which the UK and Vietnam signed a Strategic Partnership. The Strategic Partnership marks the beginning of enhanced relations between our two nations and our officials are co-operating closely in the seven areas. These are political and diplomatic co-operation, global and regional issues, trade and investment, development, education and science, security and defence and people to people links.

More recently in 2011, Jeremy Browne, Minister for State at the Foreign and Commonwealth Office, visited Vietnam. The Secretary of State for Business visited in November 2011 and the Lord Mayor was in Vietnam in October 2011.

Inter-parliamentary links are also growing. Then Deputy Leader of the House of Commons Mr Nigel Griffiths MP visited Vietnam in October 2006. The UK All-Party Parliamentary Group visited Vietnam most recently in October 2011. The Chair of the National Assembly Mr Nguyen Sinh Hung visited the UK in December 2011.

UK Development Assistance

Overview

Vietnam has been doing very well in reducing poverty but challenges remain: 12 million people still live in poverty, and the poverty rate among ethnic minorities is alarmingly high at over 50%. To help these people, the UK, through the Department for International Development (DFID) has provided more than £417 million in grant aid to Vietnam since 1992. This support is well grounded on a ten-year Development Partnership Arrangement (DPA, 2006 - 2016) signed in 2006 between the two governments. In addition to our bilateral programme, over £25 million in debt relief has been granted to Vietnam through the Multilateral Debt Relief Initiative for humanitarian efforts since 2006. In May 2011 the Minister of State for International Development, the Rt Hon Alan Duncan visited Vietnam to formalize the UK’s commitment to continue to support Vietnam in the next five years – until 2016 – with a total budget of £70 million.

Our areas of focus

-- Millennium Development Goals (MDGs): We will continue to support Vietnam to achieve the MDGs, particularly in HIV/AIDS prevention, water and sanitation improvement, and full-day schooling primary education.
-- Wealth creation:We will step up programmes in this area by supporting Vietnam to benefit from global trade agreements and achieve a growth path that is more private sector led.
-- Governance: We will step up our engagement with, and support for, key accountability institutions, through the UK’s leading role on anti-corruption.
-- Climate change:We will launch a new trilateral partnership with the Government and the World Bank. Across the HMG, we have been working closely with Vietnam in this area.

Our approach

We will be moving away from large financial transfers to strategic and innovative technical cooperation. We will end our general budget support after 2011 and phasing out large MDG programmes by 2013/14.

Partnerships are key in our delivery strategy. We will continue our close relationship with the World Bank in the majority of programmes, with the United Nations on selected issues. We will also explore partnerships with non- traditional players and relevant regional bodies.

We will work closely with other HMG departments present in Vietnam to deliver the beyond aid agenda on governance, trade/growth, and climate change, to ensure the sustainability of UK support after DFID graduate from Vietnam.

Recent Visits

High-level Visits to the UK

2009

16-17 March: Mr Doan Xuan Hung, Vice Minister, Foreign Affairs
16 – 20 March: Vice Minister of Justice Hoang The Lien
28-29 April: Mr Vu Van Ninh, Minister, Finance
15-19 July: Mr Uong Chu Luu, Vice Speaker, National Assembly
16-17 July: Mr Pham Khoi Nguyen, Minister, Natural Resources and Environment
28 September – 3 October: Mr Tran Dai Quang, Vice Minister, Public Security
19-21 October: Mr Hoang Trung Hai, Deputy Prime Minister
28 October: Vice Minister Finance Tran Xuan Ha
22-24 November: Ms Nguyen Thi Kim Ngan, Minister, Labour, Invalid & Social Affairs
15 – 21 November: Vice Justice Minister Nguyen Duc Chinh

2010

8-10 March: Deputy Prime Minister Nguyen Thien Nhan and Deputy Minister for Foreign Affairs Nguyen Quoc Cuong
8-10 September: Deputy Prime Minister Pham Gia Khiem and Deputy Minister for Foreign Affairs Nguyen Quoc Cuong and Deputy Minister for Planning and Investment Dang Huy Dong

2011

28 - 29 September: Nguyen Thi Kim Tien, Minister of Health
24 - 28 October: Bui Thanh Son, Vice Minister, MOFA
29 - 30 October: Dang Van Hieu, Standing Vice Ministry, MPS
1 - 2 November: Major General Nguyen Viet The, General Director of MPS’s IT Department
2 - 5 November: To Huy Rua, Politburo member, Chairman of Commission for Personnel and Organisation, CPV
23 - 25 November: Lt Gen Nguyen Chi Vinh, Vice Minister of Defence
7 - 10 December: Nguyen Sinh Hung, Politburo member, Chairman of National Assembly, accompanied by Vuong Dinh Hue, Minister of Finance and Dinh La Thang, Minister of Transport

High-level Visits to Vietnam

2009

12-14 January: Peter Ricketts, Permanent Under Secretary, Foreign & Commonwealth Office
19-20 January: Gareth Thomas, Minister of State for Development and Trade
14 April: Lord Davidson, Advocate General
25-26 May: Bill Rammell, Minister of State, Foreign & Commonwealth Office
25-29 May: All Party Parliamentary Group
2-6 July: Ian Luder, Lord Mayor of London
1-2 October: Professor Beddington, Chief Scientific Adviser to the Government
4-6 October: HRH Duke of York
26 October: Lord Davidson, Advocate General
19 November: David Hanson, Minister for Policing, Home Office

2010

22-23 March: Scott Wightman, Director of Asia-Pacific Directorate, FCO
8-10 June: Alan Duncan , Minister of State, DFID

2011

18 - 22 March: Lord Mayor of the City of London
6 - 7 April: Jeremy Browne, Minister of State, FCO
23 - 26 May: Rt Hon Alan Duncan, Minister of State, DFID
17 - 19 August: Joy Hutcheon, Director General, Country Programmes, DFID
15 - 16 September: Beverley Warmington, Regional Director for Asia, DFID
18 - 23 September: All Party Parliamentary Group
31 October - 3 November: David Armond, Head of SOCA International
2 - 4 November: Vince Cable, Secretary of State for Business, Innovation and Skills

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GEOGRAPHY

In area, Vietnam is slightly larger than the UK and Ireland. It stretches 1,600km north to south, but is only 40km wide at its narrowest point in the centre. Vietnam is bordered by China to the north, Laos to the northwest, Cambodia to the southwest and the South China Sea to the east. It is predominantly mountainous, with densely-populated fertile plains in the north and south around the Red River and Mekong deltas respectively. The Vietnamese consider that Vietnam has three regions, the north, the centre and the south. Spoken Vietnamese differs considerably between them. Vietnam’s 53 ethnic minorities are primarily concentrated in mountainous areas in the north and central highlands. Climate varies considerably from north to south, but is generally hot (bar a cool winter in the north), humid and – during rainy season – wet..

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TRADE AND INVESTMENT

Trade and Investment with the UK

UK - Vietnam trade has registered consistent double-digit growth over the past decade and currently stands at well over £1.8 billion. As of Nov 2011, UK imports from Vietnam were valued at £1.5244 billion, while the UK’s exports to Vietnam were worth approximately £295 million (Source: BIS). UK exports to Vietnam are, of course, supplemented by goods and services delivered via third countries. There is no UK measure of invisible earnings from Vietnam from the delivery of banking, legal, financial and creative services such as marketing/advertising and architectural design in which the UK plays a leading role.

Major UK exports are in medicinal and pharmaceutical products, leather products, niche engineering components, telecommunications and sound recording equipment plus professional, scientific and control instruments. Major imports from Vietnam include footwear, seafood, clothing, accessories and furniture.

The value of UK investments across a range of sectors in Vietnam is approximately USD$ 2.6bn billion in 2011. This makes the UK the 13th largest overall foreign investor as well as the 3rd largest European investor in Vietnam after the Netherlands and France. Top investors remain Japan, Taiwan, Korea and Singapore. (Vietnamese Ministry of Planning and Investment figures).

There are over 100 UK companies with registered offices in Vietnam, including Prudential (the largest foreign employer of Vietnamese workers), HSBC, Standard Chartered Bank, BP, Shell Tate & Lyle Rolls Royce and Harvey Nash.

UK Trade & Investment has two teams in Vietnam. One, including the Trade Director is based in the British Consulate in Ho Chi Minh City and the other in the British Embassy in Hanoi. They both provide advice and assistance through a range of services to UK- registered companies seeking to develop their business in Vietnam. The Hanoi team also focuses on trade policy issues such as market access and forthcoming opportunities emerging from Vietnam's WTO accession in 2007. UK Trade & Investment also provides advice to Vietnamese businesses on how to invest or set up a presence in the UK.

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POLITICS

Political System

Vietnam is a one-party state in which the Communist Party of Vietnam (CPV) decides all major policy issues, which are then implemented by the government. The country is led by a triumvirate of CPV General Secretary, State President and Prime Minister. Although the National Assembly is increasingly powerful, it remains firmly subordinate to the CPV. However, its Chairman sits on the Politburo along with the above three leaders and ten others.

No legal opposition to the regime is permitted in Vietnam, but neither is there much sign of widespread popular opposition. The CPV still enjoys popular support following its success in defeating the French colonialist rulers, resisting American intervention, re-unifying the country, opposing Chinese encroachment and - most importantly - creating and maintaining peace and stability. In addition, the party draws support from continued socio-economic development. Vietnam's record on poverty reduction is excellent – the proportion of people living in poverty (under US$1 per day) has fallen from 58% in 1993 to 15% in 2007. For their part, the younger generation are greatly interested in their economic prospects, and are becoming increasingly vocal and open to debate. As Vietnam has opened to the world, ordinary people enjoy much more personal freedom on a day-to-day level than previously. But an ever-present, effective security apparatus keeps watch on society.

Elections

There are no free elections in Vietnam. Candidates for election to the National Assembly and local People's Councils must in practice be approved by the CPV. There is, however, an increasing minority of elected representatives who are not CPV members.

Vietnam's main legislative body is the National Assembly, which convenes twice per year. It has developed, in recent years, from little more than a 'rubber stamp' body to one increasingly able to scrutinise legislation and hold government to account. It has, on paper at least, wide powers over the state budget and its Members, 25% of whom are full time, are increasingly professional. Ultimately, however, the National Assembly remains firmly under the control of the CPV and thus is still far from being a proper democratic legislature. Elections to the 500-Member National Assembly are held every five years. The last election was in May 2007 and the next will be in 2012.

Recent Political Developments

The 11th National Congress of the Communist Party of Vietnam (CPV) was held from 11-19 January 2011. The National Congress is the supreme CPV organ and is held every five years. The Congress elects the 175-member Central Committee, the highest authority within the CPV, which in turn appoints the Politburo. The 14-member Politburo is the main body to determine and implement government policy.. Vietnam joined the WTO in January 2007, which has brought both benefits and challenges for the government and the Vietnamese economy. FDI and exports have grown, but post-WTO reforms have been slow and the economy has been exposed to increasing scrutiny and international competition. Recently, this pressure has led to increased protectionism.
Vietnam was ASEAN Chair in 2010 and pursued a policy of working hard towards delivery of the ASEAN Community in 2015. Vietnam also focused on regional security issues.

2010 marked 1000 years of Hanoi and a large international cast, led by the Duke of York, joined domestic guests in celebration.

The CPV has stated its wish to tackle the high level of corruption in Vietnam, which it perceives as a threat not only to economic growth but also to the popular legitimacy of the political system.

Another major issue facing Vietnam is the under-development and high poverty in remote, ethnic-minority regions, and the flux of unregistered internal migrants flocking to major cities. Despite fast economic growth, poverty among some ethnic minority groups in remote areas remains far above the national average.

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HUMAN RIGHTS

In its 2010 Annual Report on Human Rights, the Foreign & Commonwealth Office cited Vietnam as a country of particular human rights concern.

Freedom of expression and access to information continue to be suppressed through a combination of stringent legislation, tight control of the state-run media, internet restrictions and the arrest and imprisonment of bloggers and political activists. These restrictions have been further tightened over the past year.

In the area of social and economic rights, Vietnam’s performance has been noticeably better. Vietnam’s impressive record of socio-economic development was underscored by the country meeting or exceeding a number of the 2015 UN Millennium Development Goal targets in 2010, including alleviating extreme poverty and hunger.

Modest advances have been made in the field of freedom of religion, with the government continuing to promote compliance with its legal framework on freedom of religion, although concerns remained over implementation in some areas of the country.

Corruption in Vietnam remains systemic. As lead donor partner the UK is working closely with the Vietnamese Government to support the delivery of the Government’s Anti-Corruption Strategy to 2020.The Government and donor partners have agreed that there are a number of priority areas for action, including the effective implementation and enforcement of the existing legislation; enhancing transparency, including the introduction and implementation of an effective access to information law; and broadening engagement with key stakeholders outside central government, such as Provincial and local government, civil society, citizens and the private sector. The UK is also supporting the strengthening of institutions such as the National Assembly and the State Audit Office of Vietnam, which can play a role in holding the government to account.

The media also has a critical role to play in tackling corruption. All domestic media in Vietnam remains state controlled. However, the number of publications has expanded rapidly, internet use is growing steadily (more than 25% of the population have access to the internet) and the increasingly vocal blogging community continues to grow, although outspoken bloggers face harassment and in some cases imprisonment. Three main internet news sites exist, all of which remain state controlled. Reporting on sensitive issues is not permitted, and remains subject to censorship and self-censorship. Foreign journalists also face restrictions, with the government continuing to censor some foreign publications and news broadcasts, and blocking certain foreign websites. The Government of Vietnam is considering revisions to its media law and the international community is engaging with them to encourage such regulations to promote, rather than restrict, further media development.

Figures on the death penalty remain a state secret. Consequently, the Vietnamese authorities are reluctant to share any data with members of the international community. However, state-controlled media sources reported that more than 100 people were sentenced to death in 2010, although the actual numbers may have been much higher. There are also concerns that Vietnam's legal system does not offer fair trials in many cases. We continue to urge the Vietnamese Government to adopt a more transparent approach to its application of the death penalty, and to consider the introduction of a moratorium on its use.

The UK raises its human rights concerns with Vietnam both bilaterally and, with EU partners, including through the EU-Vietnam Human Rights Dialogue. The EU also maintains a list of Persons/Detainees of Concern, whose cases are brought up regularly with the Vietnamese authorities. We seek to help Vietnam constructively improve its human rights performance through targeted project-work with government and other state bodies.

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Last Updated: March 2012

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