1 - Introduction

Summary

This volume comprises a selection of papers presented at the Sixth Vietnam Update Conference and the Second Vietnam Economic Research Workshop, both held at the Australian National University in November/December 1995. The theme of the volume is ‘creating a sound investment climate in Vietnam’. Although its economy has made a decisive turnaround this decade, Vietnam is still one of the poorest countries in the world. In terms of GDP per capita, it ranks 151st among the world's 174 countries, although, according to the UNDP's Human Development Index, it is in 121st place. Even at the current growth rate of 9.5% per annum, it will still take Vietnam 15 years to reach the standard of living presently enjoyed by Indonesia, and 28 years to reach that of Thailand.

Macroeconomic reforms and structural adjustments over the past 10 years, together with successful resource exploitation, have certainly brought impressive results, including sustained rapid growth and moderate inflation levels. However, rapid growth has also meant that most of the excess capacity in capital equipment and infrastructure created under central planning has been utilised. Continued growth of 9–10% per annum would thus require higher rates of investment than in the past. A sound investment climate is essential for the fulfilment of Vietnam's ambitions to catch up with other rapidly growing countries in the Asia–Pacific region.

Four themes emerge from the following chapters as necessary components of a sound investment climate. First, Vietnam must continue to provide a stable macroeconomic environment. Second, it must persist with its agenda for microeconomic reform. Third, there must be greater clarification of its laws, particularly in relation to property rights. In this regard, the administration of laws affects the investment climate almost as much as the laws themselves. Underpinning these three factors is the need for the political leadership to redefine its concept of the ‘leading role of the state’ to one in which the state provides the economic, legal and administrative framework for the functioning of a market economy.