With an annual economic growth (GDP) of 8.5% in 2006 , the Vietnamese economy is growing more than two times as fast as the world average (3.8%) . Vietnam’s rapid economic growth is largely associated with strong exports growth. Vietnam has managed to become a key player on the global market for a series of commodities and products, notably rice, coffee, pepper and cashew nuts. Vietnam is also a leading exporter of footwear. Some of the key factors behind Vietnam’s success in exports include the government’s efforts in shifting the economic policy from import substitution to export orientation, liberalizing the economy and embracing the market economy; and the rapid response by Vietnam’s farmers to the market liberalization of agriculture after the Doi Moi reform; the interest by the global market to tap Vietnam’s cheap, diligent labor. After Doi Moi, Vietnam emerged as an attractive region for outsourcing of labor intensive production such as garments, footwear and electronics from the newly industrialized countries with escalating labor costs in the region.

Nevertheless, Vietnam is facing several key challenges. The first challenge is that Vietnam remains a poor country, though it has been one of the most successful countries in the world in reducing poverty. Vietnam is a developing country with a population of 85.2 million and gross domestic product (GDP) of USD 61 billion, per capita GDP is about USD 715 . Secondly, Vietnam’s export of manufactured products is narrow and the transformation to a more diverse export structure is complex. Vietnam’s merchandise exports were, according to official Vietnamese trade statistics, USD 32.4 billion in 2006 (Table 1). Thirdly, Vietnam became the World Trade Organization’s (WTO) 150th member on 7 November 2006. Vietnam’s biggest