As costs mount in China; location, low costs and a booming economy are transforming Vietnam into an attractive place for a growing number of petrochemical projects, as per ICIS. Success in conversion from paper to reality will depend on the outlook for its domestic market, the quality of its infrastructure, the skills of its workforce, and the willingness and ability of the government to liberalize the economy.
Corruption is a serious problem in the country, coupled with erratic progress toward a free market. A free trade agreement with the US in 2000, and the 2007 accession to the World Trade Organization indicate the government's commitment to economic transformation, but the country remains a one-party communist state. State-owned enterprises continue to dominate the economy, and equitized (Vietnam’s version for private) enterprises account for only about 15% of total SOE capitalization. Vietnam's first refinery at Dung Quat, went on stream only last year, but the country has at least five other major refinery projects on the planning board.
Labor costs in Vietnam are about half of China, with a literacy rate of 95%. However, higher education of the level required to support technology-based industries is not well developed. The overall outlook is nonetheless positive: In its World Investment Prospects Survey 2009-2011, the UN Conference for Trade and Development found Vietnam to be the world's 11th most attractive destination for foreign direct investment (after ranking 6th in 2007-09). One of Vietnam's advantages vis-a-vis other competitors for petrochemical projects in this region is the centralized nature of its project-approval process. The people tasked with implementing fortunately seem to have achieved better understanding of the projects and of management pitfalls.