Trade liberalization

As a key component of its reform policy, the Government has gradually been opening Vietnam to foreign investment and promoting the development of foreign trade over the past two decades. Foreign trade has increased significantly over the past few years in both absolute value and the range of products traded. Exports and imports have increased from 55.0% and 57.5%, respectively, of GDP at current prices in 2000 to 69.0% and 73.6%, respectively, of GDP at current prices in 2005.

In order to promote international trade, Vietnam has recently implemented a number of trade liberalization measures including a series of tariff reductions and other measures designed to relax import restrictions. The import and export of the majority of goods, including imports of fertilizers and exports of rice, no longer required import/export licenses form the Ministry of Trade or other ministries, while restrictions and conditions applying to the import and export of specified goods are set forth more clearly than previously. The effect has been to reduce non-tariff barriers to trade (including the reform of customs laws and procedures, the abolition of import-export licenses and the reduction of a number of goods subject to quotas), thereby making Vietnam’s import and export restrictions more transparent. In addition, tariffs are not computed based on actual costs rather than imputed costs.

To encourage investment in certain sector and designated regions, Vietnam grants investors in such sector and/or region, an exception from import duties for goods imported to form fixed assets or a five year exemption form import duty for raw materials, components, and spare parts.

Major global exporter

Vietnam has proven competitiveness as a global exporter across a range of products. Through a combination of market access events in the international trading community and various domestic legal and market infrastructure reforms, we believe Vietnam has substantial potential to gain further market share in export industries where it is already a leader and to break into new industries through sector and product expansion. The Fund intends to invest in companies in these sectors and benefit from Vietnam’s global export competitiveness.