Under the pressure of the economy sinking into the economic crisis, the Party and the government of Vietnam decided to initiate an economic renovation policy in 1986. After more than 15 years of economic reform, Vietnam has obtained important advances and achievements which are widely recognized both nationwide and worldwide.

Overall, Vietnam has transformed from a subsidized bureaucratic centrally planed economy to a market oriented one; from an economy with the massive development of state-owned and collective   economic sectors to a diverse, multilateral open one; from an economy prioritizing heavy industries to an economy focusing on 3 strategic economic programs: food and foodstuff, consumer goods and export goods.

The economic growth progress over the least 15 years can be divided into the following periods:

The period of 1986-1991

This is a transitional period which has the most decisive significance in the transformation from the centrally planed mechanism to a market one in thee context of severe socio-economic crisis since the early 1980s.

In this period, Vietnam had to face with many difficulties and challenges. Despite Vietnam’s relatively open foreign investment environment, some provisions in the law on foreign investment ware still inadequate, did not meet the demands of foreign investors. The infrastructure of Vietnam was still backward and not suitable for Vietnam to integrate into the regional and global economy. The management apparatus of Vietnam was still burdensome and cumbersome with spreading bureaucracy, which was one of the big obstacles to the investors. Although the domestic currency of Vietnam was stable, it was still inconvertible. Vietnam’s banking system was still backward and ineffective.

In this period, the government implemented a series of market oriented macro reform measures such as liberalizing prices of most consumer goods, removing subsidies through state budget to consumer goods, floating exchange rate closer to market rate, practicing financial autonomy in state-owned enterprises.

The most important turning point in this period was the promulgation of the Law on foreign investment in 1987. Since then, this law has been amended twice to create more favorable opportunities for foreign investors. Together with the LFI, Vietnam also renovated regulations on customs, immigration, export and import to create advantageous conditions to expand economic relations with foreign countries.

The period of 1992-1997

This was the period in which Vietnam’s economy reached the highest growth rate and was relatively stable. The annual average GDP growth increased to 8.9%. The inflation rate in this period decreased considerably in comparison to that in the previous one. These results were completely comparable with the achievements of East Asian newly industrialized countries (NICs) in the period of 1970-1980, or China and some other dynamic growing Asian economies over the past time.