GLOBAL PERSPECTIVE OF INSURANCE

(TRIMESTER- 5)

ASSIGNMENT-1

SUBMITTED TO:
Proff: K.K Krishnan

SUBMITTED BY:
SIDAK SINGH SALUJA
18IN653
PGDM-IBM

1|Page
 MAJOR RISKS FACED BY VIETNAM

Background:

 GEOGRAPHY:

A) Country's official name : Vietnam

B) Capital: Hanoi
C) Area: 330,967 km²
D) Type of Climate: Vietnam has a tropical climate. There are four seasons within
north (spring, summer, autumn and winter) however solely 2 seasons in the south
(designated as rainy and dry season). In the north, temperatures varies from 5°C in
December, and above 37°C in April. They average temperature within south
throughout the year is 28°C.
E) Official Language: Vietnamese
F) Other Languages Spoken: English, Chinese
G) Business Language(s): Vietnamese and English. Japanese, Korean, Chinese, German,
French and Russian are used sometimes.

 DEMOGRAPHY:

H) Total Population: 95,540,800

I) Natural Increase: 1.0%
J) Urban Population: 35.2%
K) Medium Age: 25.0 Years
L) Life Expectancy in Years : Men: 71.5 And Women: 80.9
M) Labour Force: 54,930,000 (Source: CIA – The World Factbook, 2015)
N) Religion: Buddhists 85%, Christians 8%, Others 7%.

 POLITICS:

O) Type of State: Single Party Socialist Republic.

P) Current Political Leaders:
President: Nguyen Phu TRONG (since 23 October 2018)
Prime Minister: Nguyen Xuan PHUC (since 7 April 2016)
Q) Next Election Dates : Presidential: 2021 (exact date to be confirmed)
National Assembly: May 2021

2|Page
  ECONOMY: (all figures in million USD)

R) National Currency: Vietnamese Dong (VND)

S) Exchange Rate on November 17, 2019:
1 VND = 0.0000 USD, 1 USD = 23,263.9 VND
1 VND = 0.0000 EUR, 1 EUR = 25,714.6 VND

T) Type of Economy: Developing economy

One of the fastest-growing economies of South-East Asia. The second largest rice
exporter in the world.
U) GDP: 266.24 (Source: IMF – World Economic Outlook Database, 2019)
V) GDP: 6.5 (Source: IMF – World Economic Outlook Database, 2019)
W) GDP per Capita: 2,788 (Source: IMF – World Economic Outlook Database, 2019)
X) Unemployment Rate: 2.2 (Source: IMF – World Economic Outlook Database, 2019)
Y) Inflation Rate: 4.0 (Source: IMF – World Economic Outlook Database, 2019)
Z) Employment By Sector: Agriculture (39.6), Industry (25.3), Services (34.1) (Source:
World Bank, Latest available data.)
Value Added: Agriculture (15.3), Industry (33.4), Services (45.5) (Source: World Bank)

 TRADE: (all figures in million USD)

A) Imports of Goods: 211,518 (Source: WTO – World Trade Organisation, 2017)

B) Exports of Goods: 214,323 (Source: WTO – World Trade Organisation, 2017)
C) Imports of Services: 16,793 (Source: WTO – World Trade Organisation, 2017)
D) Exports of Services: 12,986 (Source: WTO – World Trade Organisation, 2017)
E) Trade Balance:11,495 (Source: World Bank, 2017)
F) Foreign Trade: 200.3 (Source: World Bank, 2017)

Main Partner Countries:

Main Customers
2015
(% of Exports)

United States 20.7%

China 10.2%

Japan 8.7%

South Korea 5.5%

Hong Kong 4.3%

3|Page
 Main Suppliers
2015
(% of Imports)

China 29.8%

South Korea 16.6%

Japan 8.6%

Thailand 5.0%

United States 4.7%

1. STRENGTHS

 Development strategy based on openness, upscaling and diversification of the economy

 Availability of huge labour force with low wages
 Strong agricultural potential and natural resources
 Economy unaffected by Chinese slowdown
 Potential benefactor of US-China trade war

2. WEAKNESSES

 Shortcomings in the business climate

 Lack of infrastructure
 Incomplete reform of the public sector
 Increasing inequalities
 Fragile banking system
 Inefficient and indebted SOEs take up 28.4% of capital while representing 0.5% of total number of firms

Conservative Risks:

Vietnam's GDP developed at the pace of 6.6% in the FY 2018 and it is relied upon to develop at a
pace of 6.5% in the FY 2019 and 2020. This is an indication of quickening of financial pace as there is
a Labor Shift which occurred in Vietnam, from Agriculture to Manufacturing and Services segment,
Private Investments, Tourism, Higher Wages and quickening Urbanization. Low compensation, more
than sufficient Labor power, nearness of Natural assets and protection from China's monetary log
jam likewise bolster Vietnam's economy. Fares have a significant commitment to Vietnam's GDP. A
portion of the significant and developing parts of Vietnam are: Textile, Electronics, Seafood
generation and so on.

4|Page
As recommended by the IMF, government obligation arrived at 57.8% of GDP and will stay same in
2019 and 2020. The swelling rate was 3.8% in 2018 and is anticipated at 4% in 2019 and 2020.

The spending shortfall was evaluated at 4.65% in 2018 and 3.6% monetary deficiency in 2019.

The Economical difficulties incorporate absence of Infrastructure, inadequacies in the business

condition, open segment changes, developing imbalance, poor financial structure, state claimed
undertakings owning 28% of capital, which speaks to 0.5% of the considerable number of
organizations in the nation.

Assessment changes and privatization of state possessed organizations can help in lessening the
spending shortage in the coming years. The socialist party of Vietnam (CPV) has the power over
every one of the parts of life in Vietnam, political contradiction and focusing of social and web
activists is a typical lecture in Vietnam.

Government vision incorporates battling debasement and applying straightforwardness to pull in

remote direct venture. Credit limits for destitute individuals with no security will likewise be
expanded by the Government. A digital law went in January 2019 prompted fights and authority
access to client on-line information on Facebook, likewise restriction of hostile to government
content.

The joblessness level in Vietnam is especially low. It has arrived at 2.2% in 2018 and it is normal that
it will stay at same levels in 2019 and 2020.

A portion of the Social challenges are: decrease of neediness, improvement advanced education and
permitting opportunity of the press. Straightforwardness International has positioned Vietnam as
117 out of 180 nations in its Corruption Perceptions Index 2018.

Exchange Risks:

5|Page
In Asia, Vietnam is viewed as the most open monetary nation. Vietnam holds a high position on the
planet's biggest rice exporters, and a portion of different fares are: materials, dress and footwear,
innovation items and unrefined petroleum.

A portion of the significant Imports are apparatus hardware, refined oil and steel. The fares esteem
was assessed at USD 213.77 billion, which is a nonstop increment of 21% which is higher than the
yearly development pace of 9% in fare an incentive in 2016. The estimation of the fares over imports
came to USD 2.7 billion out of 2017, equivalent to the earlier year. Vietnamese exchange is affected
by solid geographic disparity: Vietnam has better exchange relations with Western nations, however
not as great with the Asian nations as there is a shortfall development. To advance, the estimation of
fares of the nation ought to be expanded and item broadening ought to be given significance.

The significant exchange accomplice nations are the U.S., Japan, China, South Korea and Singapore.
The Vietnamese monetary structure is reliant on outside speculation and fares, significantly from the
United States and Europe. Lately, Vietnam has demonstrated a solid promise to exchange
advancement. Vietnam has consented to Free Trade Arrangements (FTAs) with the ASEAN nations
and the United States. Vietnam has consented to a participation arrangement with the EU. There is
an expansion in the nature of traded materials due to FDI. Vietnam's has focused to expand its
material fares by 11.5% every year up to 2020. Vietnam has figured out how to build the fare of steel
to the U.S. in spite of taxes, a special case among Asian steelmakers. Vietnam is likewise a potential
champ of China-U.S. exchange strains.

Venture Scenario in Vietnam:

Vietnam's FDI in 2018 was USD 15.50 billion, there was an expansion from the earlier year (USD
14.10 billion out of 2017). Prior the focal point of FDI was towards the light business, presently, FDI
has immediately turned towards substantial industry, land and the travel industry. FDI is required to
increment later on, which is a marker that Vietnam will be an appealing nation as far as FDI in Asia.
Nations which are making the speculations are Japan, South Korea and Singapore, with the
assembling and preparing segments pulling in most of FDI which is trailed by land and expert
exercises/science/innovation.

6|Page
Vietnam got 69th situation in the 2019 Doing Business Report. Huge progress has been made in
securing minority investors and cross-outskirt exchange. There is a desire in the nation that FDI will
develop as the objective of the Government is to set up more plants in the nation. The Ministry of
Planning and Investment expects to draw more FDI into zones which incorporates trade situated,
vitality and high-innovation by building a more business-accommodating condition. FDI has enabled
Vietnam to make high esteem included items, for example, PDAs and tablets. The nation is happy to
make a progressively positive condition for outside financial specialists.

Political Scenario:

Political improvements in the course of the most recent years can be seen by the debilitating of
Nguyen Tan Dung's administration authority resulting from financial science bearing and a
progression of debasement embarrassments. Despite the fact that the predominance of the single-
socialist gathering framework stays up to now uncontested, the gathering (CPV) faces extending
discontinuity among traditionalist and reformist gathering groups. In addition, since 2013, for the
essential time ever, the nation's prime officials are dependent upon a yearly demonstration of
positive support from the National Assembly. This doesn't compromise medium-term political
dependability and coherence as demonstrated by the nonattendance of approvals for the decision
cabinet.

Additionally the tip top appearances have seen the weight – PM Dung was inadequately surveyed by
the Assembly – to dispatch basic changes, improve approach and administration to remain certainty
from the CPV by succeeding get together political decision in 2016, and fundamentally to save
authenticity beneath the CPV rule. Thereto finish, a correction of the constitution allowing a great
deal of monetary facilitating was casted a ballot at the tip of 2013 anyway didn't address the need of
political changes since it exclusively repeated the CPV political initiative. Elements of residential
unsteadiness lie a ton of in social agitation as a result of working conditions and fights against land
seizure, which got visit and involve worry for the CPV.

Vietnam's approach was checked a year ago by the most noticeably awful disintegration in many
years of relations with its monster neighbor China. Without a doubt, in an exceedingly stressed
provincial atmosphere around the South/East China Ocean, Sino-Vietnamese strains extraordinary in
might once the capital of Red China permitted state oil bunch CNOOC to bore waters in an area on
the purpose of the questionable Parcel Islands (seized by China forty years prior and asserted by
Vietnam). Helped by Hanoi's patriot position following conflicts between vessels, hostile to Chinese
uproars ejected against Vietnam-based Chinese (and acclimatized) organizations, harming very 200
plants, mainly Taiwanese, executing some ethnic Chinese and bringing about the homecoming of
thousands of representatives.

From that point forward, pressures have lessened as Vietnam has been endeavoring to make two-
sided ties. Last Gregorian schedule month, each Prime Ministers met while a Vietnamese military
assignment visited Beijing, any place each side promised to decide direct correspondence, to figure
at military participation and to forgo any provocative exercises in disputable territories.

7|Page
Especially in significance toward the South China Ocean, perhaps a significant international strategy
need for the CPV.

Psychological oppression Risks:

There is a nil danger to the extent psychological warfare is concerned, yet Vietnam is keeping it's
eyes and ears open to the worldwide danger of the fear based oppressor assaults which could be in
open territories, including those frequented by certain nations.

Protected innovation Risks:

When trading to Vietnam, it is basic to enlist your privileges there at the earliest opportunity to have
the option to guard and uphold them. Licensed innovation rights are regional which implies that
enrollments in the UK or another nation's purview are not consequently enforceable in others.

8|Page