2. Outline of the Presentation
ACHIEVEMENTS
Relatively stable macroeconomic conditions
Strong external balance
Mixed signals from foreign investors
CHALLENGES
Longest spell of slow growth since the onset of economic
reforms in the late-1980s
State’s Finances are Under Stress
Slow progress on structural reform and limited results
NEAR-TERM OUTLOOK AND RISKS
Slow growth phase to persist in the medium-term
2

3. Relatively Stable Macroeconomic
Conditions
MODERATE
INFLATION
INCREASE IN
RESERVES
STABLE
EXCHANGE
RATE
REDUCED
SOVERIGN
RISKS
3

4. Relatively Stable Macroeconomic
Conditions
Inflation rate (y/y, in %)
25
Exchange rate (VND for 1 US$)
22000
20
15
20000
10
18000
5
Resolution 11
Resolution 11
3
International reserves (in months of imports)
2.7
2.2
2
1.9
2.3
2.8
M-13
M-13
J-13
N-12
S-12
J-12
M-12
M-12
J-12
N-11
S-11
J-11
Cost of borrowing in the international capital markets
700
Sovereign spreads
600
2.3
500
1.8
1.6
M-11
J-11
J-11 A-11 J-11 O-11 J-12 A-12 J-12 O-12 J-13 A-13 J-13
M-11
16000
0
400
1.6
300
200
1
100
Resolution 11
CDS, 5 years
Resolution 11
M-13
J-13
S-12
J-12
J-12
S-11
J-11
M-13
Q1-13
N-12
Q3-12
M-12
Q1-12
M-12
Q3-11
N-11
Q1-11
M-11
0
M-11
J-11
0
4

5. Strong External Accounts
INCREASING
STRONG
GROWTH
DIVERSIFICATION
RECORD
TRADE
SURPLUS
HIGEST EVER
CURRENT
ACCOUNT
SURPLUS
5

6. Strong External Accounts
Vietnam’s Exports Basket has Changed Considerably in the Past Ten Years
2002
Crude oil
20%
Other
26%
Electronic
s&
computer
s
3%
Footwear
11%
15
5
Garments
16%
Trade
15
External Accounts (% of GDP)
Crude oil
7%
Rice
3%
Agriculture
9%
Garments
13%
Electronics
&
computers
7%
Footwear
7%
Balance (in US$ billion): Domestic Vs. Foreign
12.3
10
5.8
12.6
11.1
6.1
0
-6.0
-5
Machinery
and parts
4%
Tranport
vehicles
and parts
4%
Phones and
parts
11%
Agricultur
e
20%
10
Surplus
Plastic
products
3%
Rice
4%
2012
Other
32%
5.3
0.2
5.9
-10
Current account
Overall balance
-15
2008
2009
2010
-0.1
-2.7
-4.0
-2.4 -2.7 -1.4
2011
2012e
6.3
4.3
3.6
2.2
-3.6 -3.0 -4.2
-4.3
-6.4
-10
Capital account
Deficit
2.5 1.8
1.2 1.3
0.2 0.0 0.6 1.2
6.5 6.1 6.6
4.9
0
-5
-3.8
-11.0
5
3.4
Domestic sector
-8.9 -9.4
FDI sector
-20
-14.8
-16.1
-17.2
Total
-20.2
-24.7
-25
1995
1997
1999
-11.5
-11.6
-15
2001
2003
2005
2007
2009
2011 4m-13
6

7. Foreign Investors: Worried, But Remain
Optimistic About the Future
FDI/GDP
DECLINING
EXISTING &
NEW
COMPETITORS
VIETNAM
REMAINS AN
ATTRACTIVE
DESTINATION
7

8. Foreign Investors: Worried, But Remain
Optimistic About the Future
FDI Implemented (in USD Billion)
14
14%
11.5
12
11.0
11.0
10.0
10.5
10
FDI Implemented (% of GDP)
12%
10%
10%
8.0
8
4%
2
10%
6%
4
10%
8%
6
12%
2%
8%
7%
0%
0
2007
2008
2009
2010
2011
2012
Source: 2012/13 ASEAN Business Outlook Survey by AmCham
Singapore and US Chamber of Commerce
2007
2008
2009
2010
2011
2012
Source: 2012/13 National Business Survey of the Singapore
Business Federation
8

9. ACHIEVEMENTS
Relatively stable macroeconomic conditions
Strong external balance
Mixed signals from the foreign investors
CHALLENGES
Longest spell of slow growth since the onset of economic
reforms in the late-1980s
State’s Finances are Under Stress
Slow progress on structural reform and limited results
NEAR-TERM OUTLOOK AND RISKS
Slow growth phase to persist in the medium-term
9

10. Longest spell of slow growth since start
of Doi Moi
SLOW
GROWTH
RELATIVE TO
PAST
SLOW
GROWTH
RELATIVE TO
REGIONAL
PEERS
FALLING
INVESTMENT
RATE
DECLINING
RETAIL SALES
GROWTH
10

11. Longest spell of slow growth since start
of Doi Moi
Real GDP Growth (%)
9.5
annual
3-year moving average
7.8
9
7
11.9
10
6.4
8
50
40
33.3
11.8
16.4
20
13.4
10.0
9.9
8.2
13.3
13.9
6.3 6.1 5.8 5.7
5.4
4.3
4.8
Pre-Crisis
Post-Crisis
Retail Sales and Services (in %)
36
38.5
10.4
5.2
0
2012
2010
2008
2006
2004
2002
2000
1998
1994
1992
1996
39.2
6.8
2
Investment by ownership (% of GDP)
38.2
5.9
Indonesia
Vietnam
Thailand
4
Global Economic Crisis
42.7
30
10
4.9
????
4.8
Break-up of Soviet Union
East Asian Crisis
1990
3
5.4
5.1
China
Philippines
Malaysia 8.8
12
6
5
Real GDP growth rate (in %)
14
12.8
30.5
29.6 Total
Real growth (%)
30
Nominal growth (%)
24
7.1
11.9
7.8 Foreign
10.9 Non-state
18
12
(domestic)
15.9
12.9
15.9
14.7
12.3
11.5
10.9
0
6
0
2007 2008 2009 2010 2011 2012 q1-13
M-08
M-09
M-10
M-11
M-12
M-13
11

12. State’s Finances are Under Stress
HIGH FISCAL
DEFICITS
DECLINING
REVENUE
INCREASING
DOMESTIC
DEBT/GDP
RATIO
FALLING
CAPITAL
SPENDING
12

13. State’s Finances are Under Stress
Deficits to GDP ratio (in %)
Debt to GDP ratio (in %)
22
18
17
18
16
13
23
20
Domestic
Debt
29
23
30
28
10
0
29
0.4
26
1.1
27
1.8
30
2.2
27
2
3.3
29
29
2.5 2.2
3.5
35
40
30
3.0
4.5
Total
Debt
52
External
8
4
3.6
47
48
9
4.8
26
Primary deficit
3.6
42 44 43 45 43
50
14
6.1
21
6
52
4
Fiscal deficit
20
60
7.2
19
8
0
-0.4
2001
-2
2003
2005
2007
2009
2011
2006 2007 2008 2009 2010 2011E 2012E 2013B
5
0
Tax
7.8
20.3
7.1
8.5
19.3
19.5
11.6
18.7
14.9
11.8
Capital
Recurrent
18.1
10
19.7
15
20.3
Fees, non
tax and
charges
20
9.1
25
Capital
9.1
24.3
22.8
1.6 1.2 22.1
1.4 1.0 1.1
1.2
30
18.5
2.4
1.9
Grant
9.4
2.2
2.5
27.3
Expenditure to GDP ratio (%)
17.9
25.8
35
9.2
24.4
23.5
10
24.3
20
15
Total
19.8
2.2
2.0
20.5
2.7
2.7
21.1
25
1.8
2.8
22.4
30
Revenue to GDP ratio (%)
29.4 29.3
20.6
29.7
16.9
35
5
0
13

14. Slow Progress on Structural Reform
and Limited Results
Banking Sector Restructuring
SOE Reforms
• Financial sector remains fragile, but
risk of a systemic crisis has receded.
• Restoration of macroeconomic
stability and tight credit policy of SBV
have prevented the vulnerabilities
from growing bigger.
• Establishment of the Vietnam Asset
Management Company (VAMC) has so
far been the most visible step on the
part of the Government to resolve the
NPL problems.
• Resolution of NPLs will, however,
require a proactive multi-pronged
approach.
• More than two years after the
government set out to reform the SOE
sector, progress has been limited.
• Work is ongoing to build on the
existing legislation to create a
comprehensive framework for the
management of SOEs.
• Successful restructuring of SOEs will
be difficult to achieve without strong
inter-agency coordination and
improved transparency.
14

15. ACHIEVEMENTS
Relatively stable macroeconomic conditions
Strong external balance
Mixed signals from the foreign investors
CHALLENGES
Longest spell of slow growth since the onset of economic
reforms in the late-1980s
State’s Finances are Under Stress
Slow progress on structural reform and limited results
NEAR-TERM OUTLOOK AND RISKS
Slow growth phase to persist in the medium-term
15

16. Slow Progress on Structural Reform
and Limited Results
Vietnam’s Key Economic Indicators
2010
2011
2012/e
2013/p
2014/p
6.4
6.2
5.2
5.3
5.4
Consumer price index (% change, year-end)
11.7
18.1
6.8
8.2
7.9
Government fiscal balance (% GDP)
-2.8
-2.9
-4.8
-4.0
-4.0
Public sector debt (% GDP)
51.7
47.9
51.3
50.4
50.5
Current account balance (% of GDP)
-3.8
0.2
5.9
5.6
3.3
Real GDP (% change, y-y %)
Near-term Outlook
Risks to the Outlook
The economy is grow at a moderate rate
Change in monetary and fiscal policy
of around 5.3 percent during 2013 and 5.4 stance risk stoking inflationary pressures
percent in 2014.
Delayed implementation of structural
Inflation is expected to increase to around reforms could undermine investors’
8.2 percent at the end of the year.
confidence and worsen growth prospects
further.
16

17. Thank
You