The Southeast Asia Country Series: The Socialist Republic of Vietnam

This country profile produced by the research wing of The Pakistan Business Council (PBC) is part of the PBC’s initiative to introduce Southeast Asia countries to Pakistani businesses. This publication is the fifth in the Southeast Asian Country series and features the Socialist Republic of Vietnam (Vietnam).

Vietnam is one of the fastest growing economies in the world and is classified as a lower middle-income country. Located in Southeast Asia, the country shares land borders with China, Cambodia, and Laos. Vietnam has a population of 97.04 million; and is predominately inhabited by the people of Viet ethnic group. The economy is dominated by the services sector (51.30%) and had a GDP growth rate of 6.81 % (2017).

Vietnam has become an attractive destination for FDI as it offers low wage rates, an abundant labor force, tax incentives on prioritized projects – such as renewable energy, high-tech industries and textile and apparel industry. Additionally, incentives are also given to those FDI projects which are located in disadvantaged areas, industrial parks and export-processing zones. In 2017, Vietnam attracted net FDI inflows worth USD 14.10 billion.

Vietnam’s economy is driven by trade. With exports of USD 265.13 billion against imports of USD 237.32 billion, Vietnam had a trade surplus of USD 27.81 billion in 2017. Telephones for cellular networks, parts of telephone sets and electronic integrated circuits were the main exports – with a combined export value of USD 73.99 billion. Vietnam’s major trading partners were China, the USA, the Republic of Korea and Japan. The recent trade agreements such as the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as the EU-Vietnam FTA is likely to further boost Vietnamese exports.

Vietnam’s trade with Pakistan amounted USD 717.00 million in 2017. In 2016, Vietnam’s trade deficit with Pakistan turned into a trade surplus and reached USD 154.60 million in 2017. Telephones for cellular networks comprise the largest share in Vietnamese exports to Pakistan while imports from Pakistan mainly include frozen flat fish, frozen Salmonidae and frozen boneless meat of bovine animals. This study identifies Pakistani high potential exports to Vietnam, these include: instruments used in medical, surgical, or veterinary sciences, women’s or girls’ trousers, and polyethylene terephthalate. The study also lists high potential Vietnamese exports to Pakistan, these include: photosensitive semiconductor devices, telephones for cellular networks, and machines for the receptions.

The table below provides a brief comparison between Vietnam’s and Pakistan’s economy.  As compared to Pakistan, Vietnam has a much higher GDP per capita and net FDI inflows. Moreover, Vietnam enjoys a trade surplus of USD 27.81 billion while Pakistan has a trade deficit of USD 35.56 billion. In doing business rankings, Vietnam is way ahead of Pakistan.

Vietnam’s textile and apparel industry contributes 12.89 % to Vietnam’s total export revenue. It primarily focuses on original equipment manufacturing and relies heavily on imported raw materials. In 2017, Vietnam’s textile and apparel exports had climbed to USD 34.16 billion with a major share comprising of apparel and clothing exports. Vietnam has a growing share in in apparel exports to the world; in 2017 it stood at 6.00 % against Pakistan’s 1.10 %. The major apparel exports of both Vietnam and Pakistan include T-shirts, Men’s or boys’ shirts of cotton, men’s or boys’ trousers, and women’s or girls’ trousers.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 78) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk.