Diverse resource base. Location in East Asia. Much lower labor costs than second-tier NICs such as Malaysia and Thailand.
Weaknesses
Weak economic institutions will make transition to a full market economy difficult. Enormous task of reconstruction after war; dependent on aid from the West, Japan and China.
Profile
Vietnam is already being billed by some commentators as the next Asian "tiger." The prospect is still distant, though the potential certainly exists. Mineral resources, located mostly in the north, and a resumption of Western aid to the capital-starved economy, are the foundations on which the adoption of a full market economy will be based. The major concerns are the need to develop the private sector and to maintain inflation at a tolerable level. It is now running at 4%, compared with 600% in 1987รป1988. The tax net also needs to be widened if government finances are to be set on a proper footing.
Even before the collapse of the Soviet Union, there was a widespread acceptance in Vietnam that the centrally planned economy had problems. The encouragement of private enterprise began in 1988. Between 1988 and 1993, foreign investors proposed new projects worth over $6.8 billion. Exports, including rice, textiles and seafood, grew at 30% a year over the same period. In 1993, the economy grew by over 8.3%. The government has set a target of doubling Vietnam's GDP in the next decade.
