Vietnam’s economic pillars are exports and tourism, although it also sees a lot of support from foreign investment in its stock market, as many international investors are cluing into its steady growth as it transitions from a communist nation into a posterchild for the free market.
Foreign Investment and the Stock Market
An important part of the Doi Moi reforms in the mid-1980’s was the Law on Foreign Investment, introduced in 1987. Foreigners wanting to get in on the ground floor flooded into the market, and by 1994, 10% of Vietnam’s GDP was from foreign direct investments. When Vietnam’s stock market opened in 2001, it enabled further growth in foreign investment. In fact, 2015 has seen an unprecedented spike in foreign investment, up to the equivalent of 14.5 billion US dollars.
Political stability, a robust workforce, and steady economic growth over time has continued to secure strong foreign investments for the nation. With the incorporation of stronger legal protection for business, a more integrated infrastructure, and effective public transportation, Vietnam hopes to continue to be a magnet for foreign investors and businesses.
Trade Agreements and International Relationships
The late 90’s brought a lot of reform regarding the relationship between the US and Vietnam. The US-Vietnam Bilateral trade agreement, signed in 2001, opened doors that eventually led to Vietnam’s induction into the WTO (World Trade Organization) in 2007, which further encouraged foreign investors to put money into Vietnam.
Vietnam has entered into free trade agreements with the European Union, South Korea, and the ASEAN Economic Community. Vietnam continues to find a place in global supply chains and thrive through foreign trade.
U.S. Lifts Embargo, Supports Vietnamese Autonomy
With President Obama’s visit in May of 2016, relations between the US and Vietnam were strengthened, giving further weight to the Trans-Pacific Partnership. A landmark development that was highlighted with the president’s visit is a lift on the U.S.-enforced embargo preventing weapons sales to the Vietnamese government.
Undoubtedly, this is not only a move meant to strengthen economic ties with Vietnam that can lead to profitability for both nations, but also a calculated risk meant to undermine China’s stranglehold on trade in the South China Sea. Obama hinted at this when he stated, "Vietnam will have greater access to the equipment you need to improve your security… Nations are sovereign and no matter how large or small a nation may be, its territory should be respected."