Vietnam 20250102: Conciliatory, Bucolic, Inclusive
Mekong Memo Vietnam Weekly: Business, politics, finance, trade & legal news.
Business stories from Southeast Asia directly to your inbox.
The Mekong Memo is proudly presented by:
Horton International is your premier partner for executive search in Southeast Asia. Whether you're a small startup or a global corporation, our reliable and effective recruiting solutions are tailored to meet your unique needs. With extensive experience and offices across the region, we excel at overcoming recruitment challenges and securing top talent for your organization.
Click here to learn how Horton can make your life easier.
Headlines:
Economic Growth Defies Global Headwinds
Real Estate Shows Signs of Recovery
Leadership Transitions Test Party Stability
Energy Grid Bottlenecks Hamper Growth
Digital Economy: A Year in Review
Software Outsourcing Hub Takes Shape
Food Safety Crisis Looms Large
Population Policies Target Drop in Birth Rate
Vietnamese AI to Reshape Business Landscape
Coffee Exports Hit Record Heights
Coastal Development Plan Underway
Economic Growth Defies Global Headwinds
Vietnam's economy grew 7% in 2024, powered by a solid base of exports and record foreign investment. Major tech players have doubled down on investment, with Apple committing $16 billion and Nvidia establishing a new AI center. The government is working towards 8% growth for 2025, though international institutions are a bit more cautious and say they are looking for only six and a half percent. Budget collection rose nearly a fifth in 2024. Domestic consumption remains subdued, infrastructure development is expected to be the big catalyst for revival though the rest of the coming year.
Read more: VnExpress International (Growth Review), The Investor (Resilience), VN Economy (ADB), Vietnam News (Revenue Data)
Real Estate Shows Signs of Recovery
Property market indicators point to improvement despite ongoing challenges. Developers face 20% revenue and 43% profit drops compared to 2023, with 60% struggling to meet financial targets. Q4 sales in Hanoi and HCMC increased 48% quarter-over-quarter. New regulatory changes in Q3-Q4 2024 addressed legal hurdles and improved transparency. The revised Land Law implementation in August should stimulate market activity.
Read more: VIR (Market Analysis)
Leadership Transitions Test Party Stability
Two presidential departures in twelve months and health concerns surrounding General Secretary Nguyen Phu Trong have tested Communist Party stability. The country's diplomatic game expanded through the year with new partnerships, including a Comprehensive Strategic Partnership with Malaysia. Bilateral trade with Malaysia reached $10.63 billion in the first nine months of 2024. Political transitions are keeping some investors awake at night over concerns about policy consistency.
Read more: Fulcrum (Leadership Changes), Eurasia Review (Strategic Partnership)
Energy Grid Bottlenecks Hamper Growth
Coal imports are working their way toward global top-five status as grid limitations bottleneck renewable energy expansion. Vietnam is home to Southeast Asia's largest array of installed solar capacity and has drawn $15.5 billion in green funding commitments. Grid modernization, however, is facing bureaucratic hurdles. The new Electricity Law, effective February 2025, introduces market liberalization measures and is expected to boost renewable energy share to 60% by 2050.
Read more: VIR (Infrastructure), ESG News (Reform)
Digital Economy: A Year in Review
Mobile wallet adoption hit 80% with contactless payments accounting for 75% of Visa transactions. The “digital economy” contributed 18.3% to GDP in 2024, targeting 20.5% by 2025. New regulations require social media account verification through phone numbers, affecting 313 million accounts. Major tech firms FPT, Viettel, and VinAI advance AI adoption across industries, with 32% of organizations facing accuracy challenges.
Read more: The Investor (Digital Payments), OpenGov Asia (AI Adoption)
Software Outsourcing Hub Takes Shape
The tech sector is setting itself up to capture a larger share of the global software outsourcing market, expected to be worth nearly $800 billion as of the end of last year. Vietnamese firms are taking advantage of their workforce's ability to deliver solutions at one-tenth of global salary rates. CMC Global's CTO has been talking up Vietnam's abundant, adaptable tech workforce as way to serve markets like Japan, US, and Europe. The global outsourcing market is expected to touch $1 trillion by 2030.
Read more: VN Economy
Food Safety Crisis Looms Large
Multiple food safety incidents are indicative of some long-standing agricultural challenges. The European Union has doubled inspection rates on Vietnamese durian exports after finding pesticide residues 63 times higher than allowed levels. Toxic chemical use in domestic bean sprout production has affected major retail chains, leading to health concerns and embarrassment. The Day River system is in danger of severe pollution problems with only a little over one fifth of Hanoi's wastewater receiving treatment. Regulators need to put stricter controls in place, but it remains to be seen if they have an appetite to do so.
Read more: Tuoi Tre News (Export Controls), Tuoi Tre News (River Pollution)
Population Policies Target Drop in Birth Rate
Aggressive policy responses are in the works to counter Vietnam’s lowest-ever birth rate: 1.91. Initiatives include a National Policy Communication Network and new population laws for 2025. Governments have lifted local funding by 50% in some regions. Demographic headwinds are not Vietnam’s problem alone as similar challenges are being seen in other Mekong-region nations as Vietnam starts transitioning towards a super-aged society by 2049.
Read more: Newsweek (Birth Rate)
Vietnamese AI to Reshape Business Landscape
Local tech giants FPT, Viettel, and VinAI are in the process of developing Vietnamese language models. Expected AI applications to result cover the gamut of business support needs including customer service, supply chain management, and finance needs. Challenges include accuracy issues (reported in 32% of organizations), cybersecurity risks (38%), data privacy, and workforce readiness.
Read more: OpenGov Asia (AI Development)
Coffee Exports Hit Record Heights
Coffee exports reached $4.84 billion in first 11 months of 2024. November prices hit record $5,818 per tonne. Domestic Robusta prices range 127,500-128,200 VND/kg. Average export price reached $4,838 per tonne, up 56.9% year-over-year. Vietnam maintains position as world's second-largest coffee exporter after Brazil.
Read more: Nhan Dan
Coastal Development Plan Underway
A master plan for coastal development sets a 2050 vision for sustainable economic hubs. Hai Phong has tied up $4.7 billion in FDI during 2024, with SK Group and Assa Abloy committing to green investments. The plan is aiming to target 6% marine territory conservation and zero untreated waste. The newly approved 20,000-hectare Southern Coastal Economic Zone is a sign that aggressive growth ambitions will get the support it needs to reach its potential.
Read more: Vietnam Briefing (Development Strategy), VEN (Investment Growth)
That’s it for this week!
Your voice matters to us. Feel we're missing something? Have additional sources to suggest? Don't hold back— hit reply and help us get better!
Thank you!