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Vietnam Economy & Currency

13/04/2019 850 Views
The economy of Vietnam is a socialist-oriented market economy, which is the 45th-largest in the world as measured by nominal gross domestic product (GDP) and 33rd-largest in the world as measured by purchasing power parity (PPP). Vietnam is a member of Asia-Pacific Economic Cooperation, Association of Southeast Asian Nations and the World Trade Organization.

Vietnam Economy

  • Historically, Vietnam has been an agricultural civilization based on wet rice cultivating. The Vietnam War destroyed much of the economy of Vietnam. Upon taking power, the Government created a planned economy for the nation. Collectivization of farms, factories and economic capital was implemented, and millions of people were put to work in government programs. For a decade, united Vietnam's economy was plagued with inefficiency and corruption in state programs, poor quality and underproduction and restrictions on economic activities and trade. It also suffered from the trade embargo from the United States and most of Europe after the Vietnam War. Subsequently, the trade partners of the Communist blocs began to erode.
  • In 1986, the Sixth Party Congress introduced significant economic reforms with market economy elements as part of a broad economic reform package called "đổi mới" (Renovation), resulting in a Socialist-oriented market economy. Private ownership was encouraged in industries, commerce and agriculture.
  • Vietnam achieved around 8% annual GDP growth from 1990 to 1997 and continued at around 7% from 2000 to 2005, making it the world's second-fastest growing economy. Simultaneously, foreign investment grew threefold and domestic savings quintupled.
  • Manufacturing, information technology and high-tech industries form a large and fast-growing part of the national economy. Vietnam is a relative newcomer to the oil business, but today it is the third-largest oil producer in Southeast Asia with output of 400,000 barrels per day (64,000 m³/d). Vietnam is one of Asia's most open economies: two-way trade is around 160% of GDP, more than twice the ratio for China and over four times India's.
  • Vietnam is still a relatively poor country with an annual GDP of US$280.2 billion at purchasing power parity (2006 estimate).[30] This translates to a purchasing power of about US$3,300 per capita (or US$726 per capita at the market exchange rate). Inflation rate was estimated at 7.5% per year in 2006. Deep poverty, defined as a percent of the population living under $1 per day, has declined significantly and is now smaller than that of China, India, and the Philippines.
  • As a result of several land reform measures, Vietnam is now the largest producer of cashew nuts with a one-third global share and second largest rice exporter in the world after Thailand. Vietnam has the highest percent of land use for permanent crops, 6.93%, of any nation in the Greater Mekong Subregion. Besides rice, key exports are coffee, tea, rubber, and fishery products.
  • However, agriculture's share of economic output has declined, falling as a share of GDP from 42% in 1989 to 20% in 2006, as production in other sectors of the economy has risen. According to the CIA World Fact Book, the unemployment rate in Vietnam is 4.3%.[32] Among other steps taken in the process of transitioning to a market economy, Vietnam in July 2006 updated its intellectual property legislation to comply with TRIPS.
  • Vietnam was accepted into the WTO on November 7, 2006. Vietnam's chief trading partners include China, Japan, Australia, ASEAN countries, the U.S. and Western European countries.

Vietnamese Currency - Vietnam Dong (VND)

  • The currency of Vietnam is  "Dong" (abbreviated  "d" or  VND). Bank notes are: 100d , 200d and 500d (too small value - rarely used); 1,000d; 2,000d; 5,000d; 10,000d, 20,000d, 50,000d; 100,000d, 200,000d and 500,000d. Coins have recently come into circulation but not widely been accepted due to inconvenience, including: 200d; 500d; 1,000d; 2,000d and 5,000d.
  • US dollar is widely accepted while most major currencies can be exchanged at leading banks in Vietnam (Vietcombank, ANZ, ACB, VIB Bank…) or some hotels and jewelry shops. The official rate of exchange is approximately VND17,500 to US$1. With the relatively low value of Dong, you are recommended to carry US dollar in small notes; it will help you to change easily.
  • Euros was widely accepted in Vietnam. 1EUR = VND25,000 (August 2009).
  • ATMs can be a choice as it’s very popular in most of tourist destinations now. Vietcombank (VCB) has the best network in the country. Withdrawals are issued  in Dong (50,000d; 100,000d; 200,000d; 500,000d only). There is a  limit of 2,000,000d (about US$115) for each withdrawal and a daily limit of 20,000,000d. Fee is 50,000d (US$3) each time.
  • Visa,  MasterCard and  JCB cards are widely accepted. Some merchants also accept  Amex. A  4%-commission charge on every transaction (3% for other cards) is pretty common, due to bank’s policy. Getting cash in advance from cards is possible at Vietcombank and some foreign banks in Hanoi and Ho Chi Minh City.
  • Travellers Cheques are accepted at most of hotels, restaurants but in major cities. If you only have travellers cheques, stock up on US dollars at a bank, which usually charge anywhere from  1.25% to 3% commission to change them into cash. VCB charges no commission to changing travellers cheques for Dong. If your travellers cheques are in currencies other than US dollars, they may be useless beyond the major cities. Hefty commissions are the norm it they can be exchanged at all.
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