The World Trade Organization categorized services into 12 different branches (which consist of 155 sub-branches): business services, post and telecom services, construction and related technical services, education services, environmental services, financial services, social and health related services, tourism and travel related ervices, recreational, cultural and sports services, transport services and other services.

The service sector plays an increasingly important role in national economies. It contributes an important part to the growth of the world. In 2001 the service sector creates 27% of GDP in developed countries and about 52% of that in developing countries.

The state has issued many guidelines and policies, creating favourable conditions for the development of the service sector, thus, better meeting higher demands in production, comsumption and people's daily life, and contributing to accelerating economic growth.

The service sector recorded a considerable increase in 1991-1995 of 8.6%. But in the period of 1996-2000, the growth rate was down to 5.7% and has seen recovery in recent years (2001 at 6.1%, 2002 at 6.54% ).

The proportion of the service sector in Vietnam is not high, at 36 - 37% GDP (45% is common). Apart from that, this ratio declined from 37.1% in 1995 to 36.1% in 2002.

Vietnam's service structure comprises many different branches. However, at present, Vietnam focuses on the two stages of production: processing and assembling. Other services such as science research, style design, marketting or market research are only in the bud. Major service branches such as finance, telecommunication, and infrastructure are not strong enough. Up to date, both transportation and telecommunication service branches have accounted for merely 9.6% and finance service accounts for 5% of the whole service sector.

The service sector creates a lot of jobs but it is estimated that only 25% of the Vietnamese labour force work in this area. Vietnam is constantly under the pressure to provide jobs to 1.7 million more workers every year. As the industrial and agricultural sectors generate only 1.1 million jobs at maximum, the service sector should create annually 0.9 million other jobs. But at the current growth rate, the service sector can create just 0.5 million jobs.

The service sector in Vietnam has not created good environment for the development of the economy. Currently, service costs in telecommunication, ports and transportation in Vietnam are higher than the average level of other countries in the region (It is 30-50% higher in telecommunication and 40-50% higher in maritime-shipping).

Meanwhile, the pressure from the Vietnam - US Bilateral Trade Agreement and WTO in the future to liberalize Vietnam's service sector is huge. In the short term, abiding by the Vietnam-US Bilateral Trade Agreement, Vietnam pledges to open banking, telecommunication and insurance for US companies to do business according to roadmaps with limits set by the Vietnam side that depend on the sensitive of national or economic security in doing invesment and services in the fields. The service sector would be open for US invesment in 3 to 5 years after the BTA comes into effect. The US capital contribution should not exceed 49%, but can be up to 100% in banking area which is to be open after the 9^th year as the BTA enters into effect.

The Prime Minister ordered to establish Inter-sectorial Working Group on service. At the same time, the government issued a Directive on service development in the 5 year socio-economic development strategy 2006-2010.

According to the Directive, the role of the service sector should be enhanced in the 2005 plan and 2006-2010 strategy. The service sector should be considered a key sector in the national economic development. Its objectives are:

- Focus on developing service areas of good potential, such as tourism, air-transportation insurance, construction and labour export. Encourage the development of new services with high competitiveness, striving to attain a growth rate higher than that of the economy. Accelerate the shifting of sector structure of the economy and the service sector itsself, gradually increase the proportion of the service sector in GDP to achieve the target of 45% in 2010.

- Raise the quality of the services and competitiveness of service enterprises operating in domestic, regional and international markets. Promote the exploitation of the potential and advantages of each service sector. Intensify cooperation among service branches for more effective competition and mutual development.

- Step up service export and other services for foreign currency revenue in the country, including tourism, finance, banking, currency exchanges, retailing, post and telecommunication, air and sea transportation, and reduce the service balance deficit.

- Push forward socialization to develop services in culture, education, health, sports and jobs under market mechanism, meeting higher demand of the people and step by step integrate into the world economy.

- Carry out surveys to evaluate the service sector's competitiveness at present and in the future. Categorize services that need protection, sectors that are in the temporary and permanent exclusive list, and grant National Preferential Treatment and Most Favoured Nations status to foreign service providers.

This Directive also sets specific requirements to Ministries, Branches and localities about strategy building, service development planning as well as other activities to support policy-making for the service area.