Foreign companies have benefited from various reforms in importing, including the decrease of import tariffs as Vietnam follows AFTA and the plan for future tariff reductions outlined in the 2002 agreement. This reduction has been crucial in assisting Vietnamese producers with their long-term planning.
Although various restrictions have been lifted, certain challenges remain. Currently, all businesses are permitted to import any goods that are not subjected to quotas (Mccargo 2004). However, the tariff system remains intricate, with a vast array of rates ranging from zero to 100 per cent. Rates for imported materials are lower, while those for goods meant to replace domestic products are higher (Mccargo 2004).
Various administrative measures have been implemented to limit the import of consumer goods, such as temporary bans. According to Mccargo's (2004, p. 126) trade policy review, this approach highlights the tendency for policy deci
...sions to address issues on a case-by-case basis instead of employing a harmonized and comprehensive approach. In addition, foreign trade transactions may be restricted by the allocation of foreign exchange.
Displaying the Vietnamese balance of payments from 1995 to 2000, Table 2 shows a significant increase in trade. Although Vietnam's export recovery stability is uncertain, hope for the future lies in discussed policy changes. The impact of international institutions on Starbucks's business connections with Vietnam will also be evaluated. Despite challenges faced, Vietnam is currently experiencing rapid growth.
Historically, Vietnam had not experienced a trade surplus until now. Despite facing reform challenges, the industrial sector bounced back quickly and is now a vital aspect of economic growth. Furthermore, progress has been observed in the construction industry. In recent years, gross fixed investment - which was previously restricted
grew by about 20%. (Abuza 2002, p.)
The gross fixed investment of Vietnam was comprised of about one third, equivalent to U.S. $33-35 billion, in foreign direct investment as reported by Business Monitor International 2000.
To attract more foreign investment, Vietnam needs to improve its domestic business environment by following various external agreements such as the Bilateral Trading Agreement with the US, IMF loan program and ASEAN Investment Area (AIA). These agreements advocate for the liberalization of businesses which could potentially lead to increased levels of foreign direct investment in Vietnam over the next ten years.
The Bilateral Trade Agreement (BTA) signed by Vietnam and the United States in 2001 was a significant milestone for Vietnam's entry into the World Trade Organisation (WTO), which occurred on January 11, 2007. According to evidence cited by ADB in 2000, Vietnamese exports have been positively trending since this development in their trade relations. The BTA is crucial for facilitating Vietnam's economic transformation and holds both countries accountable with stricter penalties compared to AFTA, which relies on mutual agreements without strict sanctions against non-compliant members. Enforced more rigorously than AFTA would be, this agreement helped strengthen Vietnam's reform process.
The favorable effects of the BTA on Vietnam's business climate have led to a steady increase in exports, demonstrating the growth of Vietnam's economy. This has resulted in an increase in foreign direct investments from the US, which directly benefited both countries in 2004.
Despite Japan, Korea, Singapore, and Taiwan commonly being viewed as the countries with the most significant investments in Vietnam, Vietnam's FDI exceeds that of all these nations.
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