Deputy Minister of Defence Lieutenant General Nguyen Chi Vinh said in December 2009 that, as part of its modernisation drive, Vietnam's military is considering many possible purchasing sources. In December, Vietnam ordered from Russia six diesel-electric Kilo-class Project 636 submarines (at US$2bn in total) and 12 Su-30 fighter jets. This is in addition to an earlier contract for another 12 Su-30MK2 fighter aircraft, signed in January 2009. Also, Vietnam's Ministry of Defence signed a contract this year with Viking Air of Canada to purchase six DHC-6 Twin Otter Series 400 aircraft for Vietnam's navy. Further, Vietnam's Defence Minister Phung Quang Thanh announced on December 17 2009, while visiting France, that Vietnam wishes to purchase helicopters and army transport aircraft from France, as part of its modernisation drive for the military.
The government announced in December 2009 that it plans the 'rapid development' of its domestic, stateowned defence industries to supply the armed forces with the most modern military equipment. No further details have been revealed. Although the 'rapid development' effort is part of Vietnam's aim to become a fully industrialised nation by 2020, the announcement is unlikely to affect procurement policy for many years.
Vietnam is experiencing a slowing economy. The 5.8% y-o-y GDP growth rate in Q110, as estimated by the General Statistics Office, is down from the stimulus-driven strong growth rates of H209. Exports are sluggish (-1.6% y-o-y in Q110) and domestic demand is likely to suffer from higher lending rates and double-digit inflation. The service sector, which grew 6.6% y-o-y in Q110, continues to be the main contributor to growth. We forecast a real GDP growth rate of 4.4% y-o-y for 2010, which is considerably lower than the government's 6.5% growth target.
Politically, we expect public resentment towards China to remain a concern for the government leading up to the Communist Party of Vietnam's National Congress in January 2011. With China increasingly using its expanding naval muscle to assert its claims in the South China Sea, the government has sought the means to counter Beijing without causing an escalation in tensions, which could potentially lead to an armed confrontation. Vietnam is trying to 'internationalise' the issue of the disputed islands in the South China Sea, while it holds the chairmanship of ASEAN in 2010. However, this is unlikely to quell nationalistic sentiment. Further, we believe the potential for Vietnam to mould a unified ASEAN stance against the Chinese claims for sovereignty over large parts of the South China Sea is limited, given that Brunei, Malaysia and the Philippines are the only other member countries with claims on the disputed islands. Moreover, China's increasing importance as an economic partner means that many ASEAN nations are unwilling to confront Beijing politically on the issue.
Regardless of the ongoing disagreements with China, in the longer term our core political scenario is for the Communist Party of Vietnam (CPV) to shift increasingly towards a technocratic form of government, aimed at maintaining high economic growth levels and an acceptable distribution of wealth across the population. We thus foresee a continuation of economic reforms despite criticism from more traditionally-
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Partial Table of Contents:
Executive Summary
SWOT Analysis
- Vietnam Security SWOT
- Vietnam Defence Industry SWOT
- Vietnam Political SWOT
- Vietnam Economic SWOT
- Vietnam Business Environment SWOT
Global Political Outlook
- United States: Major Tests for Obama In 2010
- Table: Election Timetable, 2010
- Western Europe: Fiscal Austerity Will Be Unpopular
- Central And Eastern Europe: New Governments, Old Problems
- Middle East: Ongoing Challenges
- Africa: The Election Conundrum
- Asia: Broadly Stable, But 'Rogues' Need Vigilance
- Latin America: Political Risks Contained, But Watch Cartels
- Wild Cards To Watch
South East Asia Security Overview
- South East Asia In A Global Context
- Challenges And Threats To Stability And Security
- Main Islamist Militant Groups In South East Asia
- Piracy In The Malacca Strait
- The South China Sea/Spratly Islands
- Other Regional Threats
- Sino-US Rivalry In South East Asia
- The Outlook For South East Asia
Security Risk Ratings
- BMI's Security Ratings
- Table: Asia Pacific Regional Security Ratings
- Table: Asia Pacific State Vulnerability To Terrorism Index
- Vietnam's Security Risk
- City Terrorism Rating
- Table: BMI's Asia City Terrorism Index
Political Overview
- Domestic Politics
- Long-Term Political Outlook
Security Overview
- Internal Security Situation
- External Security Situation
- Bilateral Relations
Armed Forces And Government Spending
- Armed Forces
- Weapons Of Mass Destruction
Market Overview
- Industry Trends And Developments
- Arms Trade Overview
- Procurement Trends And Developments
Industry Forecast Scenario
- Army
- Table: Vietnam's Armed Forces, 2007-2014 ('000 personnel)
- Government Expenditure On Defence Industry
- Table: Vietnam's Government Defence Expenditure, 2007-2014
- Macroeconomic Forecast
- Table: Vietnam - Economic Activity, 2007-2014
Country Snapshot: Vietnam Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
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