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Vietnam's Foreign Trade Development Issues:

Vietnam's Foreign Trade Development Issues:
Focus on Export Performance and Strategies

Hanoi, 10/2002
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I. An Overview of Trade Liberalization, Institutional Reforms and Export Encouragement:

The introduction in 1986 of doi moi policy has brought about profound changes in the policy environment for economic and trade development in Vietnam. The Government, in response to the needs of economic restructuring, has been considering and adopting various policies and measures to gradually liberalize trade and encourage the country's export. Economic entities, particularly those involved in foreign trade, have responded impressively to these changes.  

1. Trade liberalization

Trading rights

Prior to 1989, all foreign trade transactions were carried out by a limited number of specialized state-owned enterprises (SOE). As the result, exports could only grow at an average rate of 15 per cent per annum throughout the period of 1980-1988, much lower than the average growth rate seen in the 1990s. The first break-through took place in 1989 when producers of exportable goods, irrespective of their forms of ownership, were allowed to export their own products and import the inputs needed for their production. In order to control the set of commodities that a particular enterprise could trade, a system of business licensing was introduced. Despite the restrictiveness of this system, the number of foreign trade enterprises increased from less than 50 to over 100 right in 1989, of which more than 10 per cent were private production firms.

Business licensing requirement, with minor changes from time to time, lingered on for almost 10 years before full abolition in 1998, when the second break-through in trading rights took place. In that year, by virtue of a Government Decree, all legally established locally-owned enterprises were given the right to export and import goods that are consistent with the scope of...