It is not that the conference will be attended by Boeing, IBM, Adidas, Canon, Intel, Nestle, Nissan, Nokia and other major groups that brings weight to the “Rising Star” status for Vietnam. Actually, the country’s growth rate is the fastest since its economy grew 9.3% 11 years ago. But that is old story when in 1995 the US lifted its trade embargo and Vietnam’s GDP understandably enjoyed an instant thrust to rise by 9.5%.

In 2006, the rate was 8.2% while the Government targets around 9% in economic growth in 2008.

According to a statement released yesterday by the General Statistics Office (GSO) in Ha Noi, Vietnam’s industry and construction made up 42% of the economy, followed by the services sector with 38%, and agriculture, forestry and fisheries with 20%.

Vietnam, which launched market reforms two decades ago, has attracted a record US$20.3 billion in Foreign Direct Investment (FDI) in 2007 from $12 billion the previous year.

The country has what it takes to attract more foreign investors, especially in the manufacturing sector, according to Voice of America’s December 30 broadcast.

VOA said Vietnam will continue to be one of the fastest growing economies in Asia in 2008 and will soon become a supplier of manufactured products to the world market.

The radio added that one of the indications for Vietnam’s becoming more of an attractive base for exports can be seen from the shift in the structure of the country’s exports, from such farm produce as rice and coffee to textiles and furniture.

Vietnam’s furniture export volume has risen by 24% from 2006 to $2 billion in 2007, VOA said.

Following its January accession to the World Trade Organization, the developing nation has scrapped quotas on textile exports and pledged to further open up its markets.

The government last week raised VND10.5 trillion ($656 million) by selling a 6.5% stake in Joint-Stock Commercial Bank for Foreign Trade of Vietnam, paving the way for telephone and beer companies to sell shares in 2008.

According to a Ministry of Planning and Investment statement last week, income per capita has increased to $833 in 2007 from $720 the year before.

The benchmark VN Index rose 23%, rounding out a fourth yearly gain. The rally in the equity market has improved sentiment among the 85 million Vietnamese, boosting the domestic economy, Bloomberg quoted Prakriti Sofat, an economist at HSBC Holdings Plc in Singapore as saying.

Thanks to the booming stock and real estate markets in 2007, there has appeared a newly rich class consuming the most expensive cars and mobile phones.

By last month, a record 10,110 automobiles had sold, up 167% over 2006.

Just on December 14 Germany-based luxury Porsche car manufacturer officially set foot in the Vietnamese market at a launching ceremony in Ho Chi Minh City. It is offering its Cayenne series priced at US$125,000-245,000 and Carrera series at $207,000-347,000.

Recently, Le Hoang Anh, CEO of Shiseido Vietnam Cosmetics brought home a US$450,000 Bentley Continental Flying Spur. That is not to mention an unnamed Ho Chi Minh City businessman who acquired a DaimlerChrysler Maybach 62 for over US$1 million in late 2006.

Then, Vertu mobile phones imported from the UK worth US$100,000 each are also on offer in Vietnam.

2007, Year of Economic Diplomacy

The Ministry of Foreign Affairs has chosen 2007 as the year of economic diplomacy, Deputy Prime Minister and Foreign Minister Pham Gia Khiem told Vietnam News Agency during a recent interview.

A series of visits in 2007 by Party, State and Government leaders to many countries succeeded politically and economically, lifting the country’s relationship with these countries to a new plane and bringing in economic deals worth tens of billions of US dollars, Mr. Khiem said.

Vietnam made a major political achievement when it entered the United Nations Security Council as a non-permanent member for the 2008-2009 term following a 183/190 voting by the UN General Assembly in October.

Vietnam and its neighbors, especially China and Laos, have gained remarkable achievements in trade cooperation, seen positive progress in handling border issues, and implemented effective cooperation between their agencies, sectors, localities and peoples, China’s Xinhua news agency reported.

During President Nguyen Minh Triet’s visit to China in mid-May, both sides agreed to follow the policy of "long-term stability, orientation to the future, good-neighborly friendship and comprehensive cooperation" and push for in-depth, extensive development of bilateral relations.

Mr. Triet visited the United States from June 18-23, becoming the first Vietnamese head of state to tour Washington since the Vietnam War ended in 1975.

During this historic visit, companies from the two countries signed agreements worth nearly $11 billion.

President Triet also became the first head of state to visit New Zealand in September since their diplomatic relations establishment in 1975.

In addition, Mr. Triet has, again become the first head of state to officially visit Japan from November 25-29 since the two countries established diplomatic relations in 1973.

Over $4.5 billion worth of contracts were signed between the two countries’ enterprises.

Communist Party Chief Nong Duc Manh’s trips to the Republic of Korea in November and the Democratic People’s Republic of Korea in October also express Vietnam’s active contribution to facilitating peace, stability, cooperation and development on the Korean Peninsular, Xinhua reported.

Meanwhile, Prime Minister Nguyen Tan Dung toured France, Russia and the Czech Republic in September, and five members of the Association of Southeast Asian Nations (ASEAN) in August, India in July, and Italy in January.

During Dung’s trip to France in September, enterprises from the two sides signed economic deals valued at US$6 billion. Besides, Dung’s meetings with Pope Benedict XVI and the Vatican Secretary of State Cardinal Tarcisio Bertone on January 25, the first between a Vietnamese Prime Minister and the Vatican’s leadership, have helped enhance mutual understanding and expand relations.

High inflation, trade deficit

Economic growth may have been hampered by low production capacity, increases in prices of imported goods, and natural disasters, GSO added in the aforementioned statement.

Faster economic growth has spurred inflation. The Consumer Price Index (CPI) for November surged 10% year-on-year, the highest rise since 1996.

Vietnam’s economic growth has also been restricted by typhoons and floods in the last couple of months, as well as an outbreak of cholera, GSO added.

The Malaysia Star had an article yesterday pointing out several pressing issues for Vietnam’s economy including a potentially serious power shortage.

Vietnam is estimated to lack 4.3-10.3 billion kWh from 2007 to 2009.

Then trade deficit is another threat.

Unlike many export-oriented Asian economies, Vietnam has been running a trade deficit, the Malaysia Star continued.

In the first 11 eleven months of 2007, the country registered a trade deficit of US$10.5 billion compared with US$5.1 billion in 2006, far surpassing the Ministry of Industry and Trade’s estimates of $10 billion for the entire year.

A shortage of skilled labor force, inadequacy in legal system coupled with bureaucracy and red tape continue to hamper progress.

In a recent survey by the World Bank and International Finance Corp, Vietnam ranked 91 out of 178 economies in terms of ease of doing business, whereas China ranked 83 and Thailand 15.

Source: SGGP.