GSBS6003 GLOBALISATION

UNIVERSITY OF NEWCASTLE AUSTRALIA

INDIVIDUAL ASSESSMENT

Table of Content

1.0 Introduction………………………………………………………………………………………………………. 2

2.0 Key aspects of Vietnam……………………………………………………………………………………….. 2

2.1 Political………………………………………………………………………………………………………… 2

2.2 Economic………………………………………………………………………………………………………. 3

2.3 Legal Systems………………………………………………………………………………………………… 5

3.0 Conclusion……………………………………………………………………………………………………….. 6

References…………………………………………………………………………………………………………….. 7

1.0 Introduction

Globalisation has caused a lot of markets across the globe to interconnect. In addition, it has also enhanced communication and recognition of business opportunities in various parts of the globe. Therefore, due to globalisation, investors can now easily access and identify new markets and investment opportunities than there before (Ali & Malik, 2021). Nations with a good relationship with each other can easily unify and enhance their economies via increased trade and investment. As a result, services and products previously available in a single nation are made accessible in other new markets. This directly improves the economic opportunities for employees in those nations. These opportunities offer a vast range of investment options and new channels to profit to investors. This assignment will review Vietnam’s legal, economic, and political environment and the nation’s attractiveness to FDI.

 

2.0 Key aspects of Vietnam

2.1 Political

In Vietnam, the president is democratically elected by the National Assembly. The Vietnamese president is the commander-in-chief as well as the head of state. On the other hand, the prime minister assumes the position of the head of the government. Vietnam is a type of country whereby it is controlled by a single communist party named the Communist Party of Vietnam (Fforde & Homutova, 2017). Nevertheless, most analysts claim that even if from a political philosophy point of view, Vietnam is socialism-based country, most of its economic rules have embraced capitalist policies. Vietnam is dedicated to creating and sustaining suitable relations with various nations in the world, irrespective of their political affiliations in world affairs. Currently, the country has managed to establish diplomatic relations with more than one hundred and seventy-eight nations across the globe. In addition, it is a member (WTO), United Nations (UN), (NAM), (ASEAN), and other global important institutions (Pengpid & Peltzer, 2017). Even if Vietnam had a hostile past with the United States of America, their relationship has improved quite positively in the last twenty years. In general, Vietnam has a stable political environment suitable for both domestic and foreign investors.

Nevertheless, based on the Human Right Watch, the nation has a very unpleasant history in human rights (Human Rights Watch, 2022). This is because, in the nation, the freedom of assembly, expression, and association is prohibited. Dissenters in the nation are normally imprisoned. In addition, since the Communist Party of Vietnams influences the nation’s media, media platforms and journalists usually risk sanctions for criticizing the administration and discussing sensitive topics. Corruption is another major issue in Vietnam. Since 2016, the government has been making an effort to minimize corruption (Phuong, 2017). Due to corruption, poor record and history of human rights, Vietnam might fail to attract many domestic and foreign investors. In 2021 the Transparency International Corruption Perception Index ranked Vietnam position eight seven out of one hundred and eighty nations (Transparency, 2022). In addition, the country also scored thirty-nine points out of a hundred on the 2021 Corruption Perceptions Index (Tradingeconomics, 2022).

Fig 1: Vietnam Corruption Index (Source: https://tradingeconomics.com/vietnam/corruption-index.)

 

2.2 Economic

According to World Bank, in 2020, Vietnam had a GDP of $271.16 billion. The Trading Economics global macro models anticipated that Vietnam would attain a GDP of $290 billion by 2021. In coming years, the GDP of Vietnam is anticipated to grow to $310 and $340 billion, in 2022 and 2023, respectively (Tradingeconomics, 2022). The nation has made significant progress concerning poverty eradication since it has successfully managed to lift forty five million individuals out of poverty between the years 2002 and 2018 (Nguyen & Pham, 2018). In the next five years, the country will continue experiencing robust and positive economic growth. The high economic growth rate will attract a number of foreign direct investments since there is a high number of individuals with high purchasing powers in a healthy economy. With high purchasing powers, individuals are able to purchase goods and services of the various organizations in the market. In addition, a healthy economy also has a high number of individuals in the middle and high-income groups.

Interestingly, Vietnam is one nation that has significantly benefited from the trade conflict between the United States of America and China. However, for years Vietnam has been struggling with the issue of high prices. Some of the major Vietnamese exports include broadcasting equipment, leather footwear, telephones, textile footwear, and integrated circuits (Duc, 2019). Some of the countries in which Vietnam exports its products include Germany, the United States of America, South Korea, China, and Japan. Conversely, some of the Vietnamese imports include textile fabrics, computers, instruments and accessories, electrical goods, mobile phones and parts, and telephones (Hoai et al., 2017). The country imports most of its goods from Singapore, China, Hong Kong, Japan, and South Korea. In Vietnam, the average Corporate Income Tax (CIT) is usually twenty percent. Nevertheless, the tax rate differs from thirty-two percent to fifty percent for companies that exist in the gas and oil industry. Conversely, the Personal Income Tax rate differs from five percent to thirty-five percent.

Fig 2: Vietnam GDP (Source: https://tradingeconomics.com/vietnam/gdp#:~:text=GDP%20in%20Vietnam%20is%20expected,according%20to%20our%20econometric%20models.)

 

2.3 Legal Systems

Vietnam has been ruled and controlled by four state constitutions: 1946, 1959, 1980, and the 1992 constitution, which is still utilized to date. The aim of the 1946 constitution was primarily to provide the nation with the freedom of assembly, speech, and press. The second constitution was entirely communist in nature, and therefore it offered power separation among various branches of the government, such as the judiciary, executive, and legislative (Son, 2017). The 1980 constitution concentrated the power to the newly created Council of State just as the Presidium of the Supreme Soviet. The purpose of the 1992 constitution was to reaffirm the fundamental principles or policies in the country’s constitutional history.

The Vietnamese legal system is grounded chiefly on personal decrees, and clashes are commonly solved on a case-by-case basis that relies on specific circumstances, contrary to other countries’ legal systems, such as Singapore, where legal decisions are based on the agreed precedent cases and common law (Nguyen et al., 2017). It is vital to comprehend that, even though contractual texts can be rewritten with other languages, only text written in the Vietnamese language is perceived as a legal document in Vietnam. In Vietnam, foreign organizations are allowed to venture into the country, and the government usually encourages the organizations to invest via indirect or direct investment (Gillespie, 2017). In recent years, the company law has, in fact, become quite easier, and therefore it is now easier for international investors to swiftly establish limited liability organizations. The legal system of Vietnam is likely to attract a lot of foreign direct investments since it is lenient to foreign investors and foreign organizations.

 

3.0 Conclusion

Vietnam is a Southeast Asian nation that borders China, Laos, Cambodia, the Gulf of Thailand, Malaysia, the Philippines, Indonesia, and the South China Sea. The nation has a population of about 97.8 million (Huu et al., 2018). Based on the country’s political, economic, and legal analysis, Vietnam is a politically stable country. Political stability plays a significant role in attracting FDI. Similarly, the country’s steady economic growth is also playing a vital role in attracting FDI. Finally, the lenient legal system of the country is facilitating it to attract both foreign and domestic investors and organizations.

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References

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