THE OBJECTIVE IS GROWTH

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Will the Year of the Pig Beat the Year of the Dog?
Business Briefing January 2007
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Agenda

• Vietnams Economic Performance 2006
• Trends and Events in 2006
• Outlook for 2007

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
GDP Growth
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
GDP Contribution

• GDP growth powered by industrial sector
• Industry construction rose by 10.37
• Service rose by 8.29
• Agriculture, forestry and fisheries rose by 3.4
• Trend in economic structure
• Relative share of industry, construction and
  service
• Relative share of agriculture, forestry and
  fisheries

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Poverty Reduction
Population below the poverty line 1998 37.4
2002 28.9 2006 19
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Non-Oil Import/Export
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Investments
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
FDI
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Remittances
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Trade between Denmark and Vietnam
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Trends and Events 2006
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Main Events in 2006

• April Tenth National Party Congress adops new
  Socio
• Economic Development Plan (2006-2010)
• June National Assembly approves the election of
  President
• Triet and Prime Minister Dung
• Outcome Economic reform strategy built upon
  continuing
• liberalisation and integration into the world
  economy is
• confirmed strengthened
• Long term goal Vietnam to become developed
  country in
• 2020

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Main Events in 2006, II

• November
• Accession to WTO (Formal membership January 2007)
• APEC Summit brings 21 leaders from Asia-Pacific
  to Hanoi
• December US Congress grants PNTR to Vietnam
• Outcome Final and full integration into the
  world economy, locking in further promoting
  economic reform, attracting more FDI

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Main Events in 2006, III

• Business legislation implemented
• Implementing decrees for Common Investment Law
  and Unified Enterprise Law
• Re-registration of Rep Offices
• Strengthened Fight against Corruption
• Implementation of Anti Corruption Law
• Establishment of Anti Corruption Commission
• Outcome Levelling of playing field, but still
  insufficient clarity in legal framework causing
  uncertainty among investors

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Main Events in 2006, IV

• Booming stock market driven by new listings
• Equitization and domestic listing of SOEs drive
  fast development of stock markets in Hanoi and
  HCMC, e.g. Vinamilk, FPT, Sacombank and Saigon
  Securities Inc. (SSI)
• Total market value jumping from USD 500 million
  in 2005 to USD 4.3 billion in November 2006
• IT Telecom Sector fueled by foreign giants
• Intels biggest ever investment brings 1 billion
  USD to establishment of semi-conductor facility
• Canon sets up worlds largest ink-jet printer
  factory in Vietnam
• Microsoft boss Bill Gates visits Vietnam
  emphasising Vietnam as key Asian market

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
DK-VN Events 2006

• Official Visits
• March
• HRH Prince Joachim visits Vietnam
• as protector for Care Denmark
• September
• Deputy Prime Minister Bendt
• Bendtsen heads a business delegation of 21
• Danish companies.

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
DK-VN Events 2006, Commercial

• February
• 21 Danish companies participate in VIETSHIP 2006
• Notio Direct A/S (DK) and TCT Company Limited
  (VN) initiate production of office furniture
• Danish delegation of SMEs visit Vietnam
• March
• Clipper signs contract with VINASHIN on building
  of 10 vessels
• Opening of GJ Vietnams new solar panels
  production facility
• May
• Aalborg Industries starts building marine boiler
  factory in Haiphong
• Hempel inaugurates new paint production plant

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
DK-VN Events 2006, Commercial

• September
• Business delegation of 21 Danish companies
  follows DPM Bendt
• Bendtsen to Vietnam
• Callenberg and Vinashin Electric JSC sign
  commercial agency agreement
• Sonion A/S hosts tree-planting ceremony
• BankInvest launches new office in HCMC
• CSR Vietnam inaugurates new office in HCMC
• Viking Vietnam JV hosts tree-planting ceremony
• Song Day and Pedershaab Concrete Technologies
  host inauguration of factory in Ha Tay Province

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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
DK-VN Events 2006, Commercial

• October
• Oil Gas delegation visits Vietnam in connection
  
• with Vietnam Oil Gas Expo 2006
• Mermaid Maritime (Vietnam) Ltd. hosts official
  opening ceremony at domicile in Vung Tau
• Business delegation from Skive Industrial
• Development Centre
• Scanmach Vietnam opens new production facilities
• in Binh Duong
• November-December
• Business delegation from the Danish Metal and
• Mechanical Engineering Industry visits Vietnam

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EMBASSY OF DENMARK, HANOI
Embassy Results 2006
Embassy Results 2006 Targets and Results for
Commercial Department

• Earnings
• Earnings target 1,033,600 DKK
• Result 1,382,572 DKK
• Earnings/target rate 134
• No. 3 globally within Trade Council of Denmark
• Customer Satisfaction
• Satisfied Target 95 Result 100
• Very satisfied Target 55 Result 65

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EMBASSY OF DENMARK, HANOI
Embassy Results 2006, II Results for B2B
Programme

• Granted over 34 mill. DKK
• Disbursed over 25 mill. DKK
• Launched 9 new projects
• Supported 28 study visits
• Establishment of 8 Joint Ventures
• Created 4082 jobs so far
• Transferred relevant technology and training
• Increased exports
• Improved environment and working conditions
• Raised awareness of HIV / AIDS

Number of jobs created since 2002
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THE OBJECTIVE IS GROWTH
EMBASSY OF DENMARK, HANOI
Outlook for 2007
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EMBASSY OF DENMARK, HANOI
Gazing into the crystal ball Growth will continue

• Vietnams strong economic growth will continue
  at 8 - 8,5.
• FDI resurgence will continue after WTO
  membership
• USD 10 billion in 2007
• Equitisation process of SOEs and banks will
  continue at accelerated speed
• Donor support to remain at high level
• Stock markets to continue expansion and growth

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EMBASSY OF DENMARK, HANOI
Equitization Process

• Since 1990 no. of SOEs reduced from 12,300 to
  2,600 (2006)
• New government has stepped up equitization
  process and aims at reducing SOEs to 1,800 at the
  end of 2007
• Key industrial groups (Petrovietnam, Vinashin,
  Vinacomin etc.) to remain predominantly
  state-owned, but their equitization and listing
  will boost market capitalization
• International Accounting and Auditing standards
  are being introduced as part of equitization

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EMBASSY OF DENMARK, HANOI
Banking Reform

• The State Bank of Vietnam is transforming into
  modern central bank with strengthened supervision
  role
• State Owned Commercial Banks will operate on a
  commercial basis and most of them will be
  equitized before 2008
• FDI in banks to be limited to 30 but a single
  individual investor is now allowed to hold max 20
  (previously, 10)
• Wholly Foreign Owned Banks and subsidiaries to be
  allowed from 2007
• Banking sector expected to be dominated by
  foreign banks before 2008

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EMBASSY OF DENMARK, HANOI
But Challenges Remain Big

• Infrastructure problems threaten economic growth,
  especially ports and power supply
• Human Ressources Education is key to the future
• Corruption is endemic
• Continuing poverty reduction and improving social
  security will be important to maintain social
  cohesion
• Environment is paying the growth bill who will
  pay for the environment?

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EMBASSY OF DENMARK, HANOI
But Challenges Remain Big, II

• Insufficient access to capital and land
• Lack of transparency in the legal system
• Poor implementation of reforms
• Need for taxation reforms
• Lack of market knowledge and access
• Risk of more anti-dumping cases

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EMBASSY OF DENMARK, HANOI
WTO Challenges

• Increasing competition will challenge Vietnamese
• companies, especially
• SOEs
• Agriculture
• Liberalised service sectors, e.g. banking,
  insurance, retail trade distribution
• But the opening of the Vietnamese market will
  also provide
• New market opportunities in overseas market that
  Vietnam can benefit from if restructuring is
  carried out
• Foreign partners contributing capital, management
  skills, technology and know how

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EMBASSY OF DENMARK, HANOI
Growth, but where?

• Well-known sectors will continue to be money
  makers
• Oil gas as well as mining
• Textiles garments as well as footwear
• Fishery / seafood
• Agricultural products, incl. rice, coffee,
  pepper, and rubber
• Furniture
• Look out for
• Shipbuilding industry
• IT Telecom
• Electronics
• Plastic industry
• Metal industry
• Fast Moving Consumer Goods (FMCG), incl. dairy,
  beverages, personal care
• Retail trade

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EMBASSY OF DENMARK, HANOI
Incoming Visits in 2007

• 25 Feb.-2 March 25 Danish companies participate
• in Danish Marine Delegation
• 28 Mar.-2 April Permanent Secretary of State and
• Head of Trade Council of Denmark visit Vietnam
• 16-20 April ICT Electronics delegation (B2B).

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EMBASSY OF DENMARK, HANOI
Incoming Visits in 2007, II

• 21-25 April Visit by Development Minister
• Autumn Oil Gas delegation
• Autumn Airport development delegation

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EMBASSY OF DENMARK, HANOI
Commercial Priority Areas in 2007

• Shipbuilding Industry
• Oil Gas / Offshore Industry
• Energy Environment
• Airport development
• IT Telecom

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EMBASSY OF DENMARK, HANOI
Embassy Targets 2007

• Earnings target Approx. 1.4 million DKK
• Targets on satisfaction, commercial lobbying
• efforts, identification of trade barriers, and
• services for SMEs
• B2B Targets
• Commit 36 mill. DKK
• Disburse 29 mill. DKK
• Launch 9 new projects
• Establishment of 10 Joint Ventures
• Create 900 jobs

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EMBASSY OF DENMARK, HANOI
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