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Vietnam: from Poverty to Internationalization

, by Claudio Dordi - professore associato presso il Dipartimento di studi giuridici, translated by Alex Foti
The country has opened up over the last fifteen years and has liberalized its trade laws: exports are now 70% of GPD. Italian companies have a scant presence there, but the few experiences of foreign direct investment have turned out to be very positive indicators for future economic relations

Fifteen years ago, Vietnam was among the poorest nations on the planet. Politically isolated after the end of the bipolar world, it was still ruled by a socialist system, unfavorable to market growth and unpalatable for foreign investment. Ten years after the end of collectivism which had pulled the population below the poverty line, the country was still unequipped with any form of business legislation.

In 1995, two decades after the end of the war, the country has re-established diplomatic ties with its former foe and has cautiously started to reform the legal system and business regulations. Reforms have been accompanied by growing openness to trade and foreign investment, stimulated by the country's participation in international trade agreement, regional (ASEAN), as well as multilateral. However, as late as 2000, income per capita stagnated in spite of the reforms.

So, since 2001, the Party, which still retains the diehard communist label, has revolutionized commercial law, by introducing a modern laws for business and customs taxation, protection of intellectual property, a new code of civil law and procedure, IT legislation, financial regulation, antitrust law, consumer protection, professional associations, real estate law, and many other fundamental changes in how business is done in Vietnam. Results weren't late in coming: today, Vietnam exports 70% of its GDP and its citizens have finally crossed the $1,000 GDP-per-capita threshold. Trade policy is somewhat astonishing: in 2007, the country joined the WTO and has opened the domestic market to foreign goods (import tariffs are set at a low 9%), so much that in 2009 it had a sizable trade deficit ($12 billion). All major European banks have set up shop there (including Unicredit and IntesaSanPaolo), and major electronics and mechanics manufacturers are firmly installed in the country, in order to tap into an abundant and cheap labor supply. By joining AFTA, the free trade area (10 countries and half a billion people) that is part of ASEAN, and, within ASEAN, by signing of free trade agreements with the neighboring countries (China, Japan, Korea, India, Australia, and New Zealand) the country has become part of a huge three-and-a-half-billion-person market where goods flow almost unimpeded. Italy is trailing behind (it is only ranked 30th in terms of foreign investment flowing into the country), but Ariston and Piaggio have done well, and hopefully others will follow.

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