Vietnam was once billed as Asia's next economic tiger, but double-digit inflation, a ballooning trade gap, tumbling share prices and banking sector concerns have dampened expectations to a large degree.
Vietnam was once billed as Asia's next economic tiger, but double-digit inflation, a ballooning trade gap, tumbling share prices and banking sector concerns have dampened expectations to a large degree.
The Vietnamese government has recently increased its economic growth forecast for 2008 to between 7 per cent and 8 per cent and is attempting to lower inflation to single digits.
The communist government is facing its biggest economic test since market liberalisation began in the mid-1990s, with inflation in double digits every month since last November and the trade deficit tripling.
Despite these difficulties, however, the government's growth projection for 2009 is above forecasts by the Asian Development Bank, which said last month that Vietnam's economy would accelerate to 6.8 percent growth next year from an expansion of 6.5 per cent this year, making it Asia's second fastest-growing economy, behind China.
This year marks 35 years of diplomatic relations between Australia and Vietnam, as well as the 10-year anniversary for the Australian Chamber of Commerce in Vietnam (Auscham).
Auscham national president Paul Fairhead believes Vietnam is becoming an increasingly competitive business hub on an international scale.
"Our members inform us that they are experiencing high demands for their products and services," Mr Fairhead said.
Last year, Vietnam spent $8.2 billion importing equipment and machinery, a 40.3 per cent increase on 2006-07.
"The current reforms and business growth in Vietnam over the past few years are signs that Vietnam is destined to be a major economic player in the very near future, Mr Fairhead told WA Business News.
Vietnam possesses substantial oil reserves but no refineries, and as a result the country spent $7.8 billion on petroleum products in 2007, a rise of 90.7 per cent on the previous year amid skyrocketing global energy prices.
Australia's major exports to Vietnam are non-monetary gold, copper, aluminium and wheat.
Australia is an important foreign investor in Vietnam, with ANZ Bank, Bluescope Steel, Foster's and Commonwealth Bank all having established a local presence.
As well as joining the World Trade Organisation, Vietnam is an active player in Asean and Apec.
"WTO accession has existed for over a year now and the milestone is widely touted as the direct cause of Vietnam's current strong economic development," Mr Fairhead said.
"The reality is that, apart from the symbolic value of accession, the benefits of joining the WTO are long term."
Perth-based scooter company Vmoto Ltd has recently signed a 12-month agreement with a major Vietnamese business, a sign of Vietnam's full WTO trade status eroding long-standing protectionist barriers.
Vmoto managing director Patrick Davin said the Vietnamese domestic market required 1.5 million units a year, offering significant potential for the company.
"This new alliance to deliver Vmoto product in Vietnam is very exciting for the company and only the tip of the iceberg," he said.
