Vietnam has rich natural resources: rice (world's second largest exporter), fruit, coffee (world's third largest producer), tea, cashew nuts, marine produce, coal, off-shore oil and gas, hydro-electricity; and a well-educated and diligent population of 81.6million.

Vietnam 's small economy, non-convertible currency and its then lack of a stock exchange sheltered it from the worst of the Asian financial crisis. Between 1992 and 1997 GDP growth did not fall below 8% per year but in 1998 economic growth slowed sharply and decelerated further in 1999.

The Vietnamese economy performed reasonably well in 2002 with GDP growth of 7.0% according to the Vietnamese Government. Strong domestic demand in 2002 drove up the Consumer Price Index (CPI) to 4.3% growth compared to 0.8% in 2001. Given the global situation, 10% export growth has been a considerable achievement. The high price of oil and the massive increase in exports to the US (from US$900 million in 2001 to US$2.2 billion in 2002) were the main contributory factors. The fact that 2002 was the first full year of the Bilateral Trade Agreement (BTA) with the US was also significant.

The economy during the first half of 2003 also performed well. Export earnings increased by 17%. GDP continued to grow at 7%. The value of industrial production also rose by 15% during this period. All this was achieved despite the SARS crisis that hit the country.

Domestic private investment is a key element in Vietnam's long-term economic growth and can be gauged by looking at figures for newly registered enterprises. Last year an impressive 22,000 were established with investment capital estimated at US$3 billion. The number of Foreign Direct Investment projects (licensed) has increased to 669 in 2002, up from 458 in 2001. The amount of capital pledged however, has only reached US$1.3 billion, just 60% of the 2001 total. It is estimated that through increased investment in ongoing projects, the actual FDI in 2002 was approximately 10% up on 2001.

FDI should also benefit from the signing of the much delayed Vietnamese and US Bilateral Trade Agreement (BTA) which was finally ratified in December (2001) by the Vietnamese National Assembly. The effects are now being noticed, textile exports up 37.2%, handicraft exports up 39.1% and footwear up 17.2% in 2002. There remains a growing interest from US businesses and an increase in the number of trade missions both ways. The Vietnamese have pledged to reduce import tariffs on goods and services from the US and other foreign countries - a key requirement before Vietnam can join the World Trade Organisation. Negotiations are currently being held on WTO Accession. Under the deal, tariffs on Vietnamese products would fall from an average of 40% to 3%. The trade agreement could be extended to benefit other countries and will strengthen Vietnamese exporters and the country's economy generally.

On the 1 August 2002, the Charge d'Affaires Mac McLachlan from the British Embassy in Hanoi and Mr Gia the Vietnamese Minister for Planning and Investment formally signed the Investment Promotion and Protection Agreement (IPPA). The agreement was previously initialled by Minister Gia and Alan Johnson (the Minister for Regions and Employment) on 1 July 2002 during his visit to Vietnam.

Government-led improvements to the business environment in Vietnam have created many opportunities. In a bid to double Vietnam's GDP and become an industrialised nation by 2020, government reforms include abolishing price control, devaluing the Dong, legalising private ownership, withdrawing support from several loss-making state enterprises, opening up the country for foreign investment, and introducing a modern legal framework.

Trade integration has been at the centre of Vietnam's economic development recently. Following the US-Vietnam Bilateral Trade Agreement (BTA) signed in December 2001, Vietnam added another string to its economic bow in February 2003, engaging in a three-year trade agreement with the European Union. Another step toward Vietnam's hoped-for WTO accession, the agreement could be worth ?200m a year through increased Vietnamese textile and clothing quotas to the EU, on the proviso of reduced custom duties.