Vietnam 20240801: Superior, Endogenous, Reciprocal
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Headlines:
Leadership Shift Signals Steady Course
EU-Vietnam Trade Pact Lures Investors
Ports Get Cash Injection to Unclog Trade Arteries
Inflation Heats Up as Living Costs Climb
Global Brand Push Gains Traction
Australia Urged to Press Vietnam on Human Rights
VPAF Eyes Acquisition of F-16 Fighters
Coal Imports Rise, Renewables Gain Ground
Banking Profits Showing Backbone
5G Connectivity Rollout Continues, 3G to Sunset
Impressive Export Growth Continues Apace
Sin Tax Proposals Ruffle Feathers, Stir Debate
Leadership Shift Signals Steady Course
Nguyen Phu Trong's passing marks the end of an era defined by anti-graft crusades and deft diplomacy. Trong's tenure saw unprecedented economic growth and a successfully delicate dance between global powers. His anti-corruption drive reshaped party dynamics but also went some way to gumming up the bureaucratic works. Despite the changing of the guard, Vietnam looks set to maintain its pragmatic foreign policy and friendly ties with China. The transition may ruffle some feathers, but Vietnam's economic and geopolitical strategies appear to remain on track.
Read more: The Guardian (Legacy and anti-corruption), Foreign Policy (Political impact), South China Morning Post(China relations)
EU-Vietnam Trade Pact Lures Investors
The EU-Vietnam Free Trade Agreement has turned heads in Europe, with €28 billion poured into nearly 2,500 projects. Vietnam's exports to Europe grew 37% from 2019 to 2023, but it's not all smooth sailing. European firms are hampered with regulatory red tape, technical barriers, and a lack of international standards recognition. EuroCham is beating the drum for streamlined procedures and full ratification of the EU-Vietnam Investment Protection Agreement to unlock the pact's full potential.
Read more: Vietnam Economic News
Ports Get Cash Injection to Unclog Trade Arteries
Vietnam is shoring up its weak logistics infrastructure, which hampers trade in the southeast region with hefty investments in port development. Nghe A province plans a $288 million deep-water port, expanding capacity for larger vessels, and Indian conglomerate Adani Group is looking at a $2 billion investment in Danang's coastal port.
Read more: Vietnam News (Logistics challenges), Vietnam Economic Times (Nghe An port), AJOT (Adani investment)
Inflation Heats Up as Living Costs Climb
The Consumer Price Index jumped 4.12% in the first seven months of 2024, with petroleum, healthcare, and electricity leading the way. July alone saw a 0.48% uptick as power demand surged and health insurance premiums followed base salary hikes. While most goods and services saw price bumps, transportation and food costs were notably throwing extra fuel on the inflationary fire. Hanoi remains focused on keeping inflation within the 4-4.5% target for the year.
Read more: Nhan Dan Online (CPI increase), Vietnam News (July CPI details), DTiNews (Inflation pressures)
Global Brand Push Gains Traction
The value of Vietnam’s national brand has more than doubled between 2019 and 2023, almost touching $500 billion. Telecom, banking, and food sectors are at the tip of this spear. Even still, few Vietnamese products have made a global splash, often tripping over intellectual property hurdles and brand management hiccups. Efforts are underway to beef up brand building through storytelling, tech innovation, and local cultural flair to try and gain a sharper product edge, more investment magnetism, and a further boost to export trade.
Read more: Vietnam Economic Times
Australia Urged to Press Vietnam on Human Rights
Australia should press Vietnam for concrete human rights reforms during the upcoming 19th Human Rights Dialogue, says Human Rights Watch. Vietnam continues to detain and prosecute peaceful activists, with more than 160 political prisoners and a noteable crackdown on environmental activists and journalists. The HRW wishlist includes the release of political prisoners, respect for labor rights, ensuring due process, and an end to religious persecution.
Read more: Human Rights Watch
VPAF Eyes Acquisition of F-16 Fighters
Vietnam is kicking the tires on a purchase of F-16 fighter jets from Lockheed Martin to support defense capabilities, but concerns over China’s response to such a move have stalled negotiations. In parallel, talks are apparently also ongoing with Uncle Sam to acquire a C-130 military transport aircraft, with potential financial support from the U.S. to cover maintenance and related costs.
Read more: Bulgarian Military
Coal Imports Rise, Renewables Gain Ground
Vietnam is set to become the world's fifth-largest coal importer by 2024, driven by ever increasing electricity demand and hydropower shortfalls. The country is also focused on improving its green energy credentials though, through new direct power purchase agreements outlined in Decree 80. The DPPA policy opens the door for private firms to develop, own, and run renewable energy projects, reducing reliance on state utility EVN. By rolling out the red carpet for private green energy investment, Vietnam hopes to stabilize energy costs, woo international investors, and hit its net-zero targets.
Read more: Vietnam News (Coal), National Law Review (DPPA), IEEFA (Renewables Growth)
Banking Profits Showing Backbone
The banking sector seems to be doing well, with VIB and Vietcombank posting profit upticks for H1 2024. VIB's profits hit $55.3 million, lifted by non-interest income and digital banking pushes. Vietcombank saw a 2% profit bump to $660.8 million, thanks to cost-cutting measures. A separate report says that Korean financial firms are thriving post-pandemic, due to efforts at localization and innovation in diverse financial products. On the regulatory front, the nation continues to move towards a cashless society with new e-money rules to grease the wheels of digital transactions and compliance.
Read more: Vietnam News (VIB), The Investor (Vietcombank), The Investor (Korean Financial Firms), Vietnam Investment Review (Cashless Society)
5G Connectivity Rollout Continues, 3G to Sunset
Major telecom operators MobiFone, VNPT, and Viettel spearheading 5G infrastructure rollouts. The country expects to pull the plug on 3G by 2028, forcing millions of subscribers to 4G and 5G networks. Mobile internet subscriptions have now, for the first time, surpassed 90% of the population.
Read more: Vietnam Investment Review (5G Infrastructure), Mobile World Live (3G Shutdown), VnExpress International(Mobile Internet Growth), RCR Wireless News (Global 2G/3G Shutdown Trends)
Impressive Export Growth Continues Apace
The export engine continues to purr, with trade value approaching $450 billion and a more than $14 billion trade surplus in the first seven months of the year. Sectors like industrial production, fruit and vegetable exports, and shrimp exports have posted the biggest gains despite global competition and logistical hurdles. Efforts to boost sustainable agricultural exports are also in full swing, taking advantage of free trade agreements to crack open new markets and polish product quality.
Read more: Vietnam News (Trade Value Growth), Asia Financial (Industrial Production), Vietnam News (Fruit and Vegetable Exports), Vietnam Economic News (Shrimp Exports), Vietnam News (Sustainable Agricultural Exports)
Sin Tax Proposals Ruffle Feathers, Stir Debate
The Ministry of Finance has floated hefty tax hikes on tobacco and alcohol, sparking enthusiastic debate. The proposed fixed tax on cigarettes, potentially reaching VND10,000 per pack by 2030, is intended to curb consumption but has raised eyebrows over its impact on businesses and potential smuggling. The World Bank is calling for a 155% tax on alcoholic beverages to dampen rising alcohol-related health issues, though the Ministry of Finance says it is in favor of a more gradual approach.
Read more: Vietnam Economic News (Tobacco), VnExpress International (Alcohol)
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap with a less business-focused article.
No closing article this week, but few links today, including two videos. China has made some approvals that now make it possible for Vietnam to export live monkeys for scientific research. This video shows some of the environmental challenges facing Vietnam along with ongoing conservation efforts. This headline makes a an entertainingly bold claim about Hoi An basket boat rides, but we liked the photos. Finally, this video features Nguyen Van Cuong, a man famed for his love and restoration of brass instruments.
That’s it for this week!
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