Vietnam 20250109: Idiosyncratic, Unfolding, Unctuous
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Headlines:
Economic Growth Targets Set High for 2025
Tech Manufacturing and AI Going Gangbusters
Banking Sector Wrestles Bad Debt
SOE Reform Push Intensifies
Energy Investors Want a Better Deal
Infrastructure Development by Road, Air and Sea
Tourism Recovery Continues
Digital Transformation Advances
Financial Center Development
Agricultural Innovation A Bright Spot for Growth
Pharmaceutical Sector Growing
Bac Ninh Industrial Park Expansion
Indian Weapons on Order
Tax System Trust Peaks
HCMC Metro Line Property Boom
Economic Growth Targets Set High for 2025
GDP growth targets of 8-10% have been set for the coming year, topping the National Assembly's mandated 7% cap. The government was able to oversee 7.09% growth in 2024, with especially strong performance in exports (up 14.3%) and foreign investment (up 9.4%). The economy reached $470 billion, ranking 33rd-34th globally, with per capita GDP hitting $4,600-4,700.
Read more: VnExpress (Growth Target), VnEconomy (Economic Indicators)
Tech Manufacturing and AI Going Gangbusters
Roughly $40 billion in FDI made its way to Vietnam’s shores in 2024, placing it among top 15 developing nations. High-value sectors including electronics, semiconductors, and green technology were the investment leaders. NVIDIA plans to establish R&D and AI centers, which will be a big help to establishing Vietnam as Southeast Asia’s leading AI hub. The government is putting up as much as 50% of the cost as support for initial investment costs in semiconductor and AI projects.
Read more: Asian News Network (Tech Hub), VEN (Investment Support)
Banking Sector Wrestles Bad Debt
The banking industry needs to control non-performing loan ratios and get them below 3% by the end of 2025. Credit growth reached 15.08% in 2024, with total outstanding credit at VND15.6 quadrillion. Banks are likely to have some issues as Resolution 42 expires, which could complicating debt recovery. (Quoting Vietnam News, directly, “[The] resolution piloted a programme that handled bad debt of credit institutions [that] created conditions for credit institutions to effectively manage bad debts […], especially collateral assets of real estate projects.”) The average bad debt coverage ratio fell to 83%, the lowest in five years.
Read more: Vietnam News (Bad Debt), VnEconomy (Credit Growth)
SOE Reform Push Intensifies
The government has mandated completion of State-owned enterprise restructuring plans in Q1 2025. Less than a fift of 667 SOEs have approved plans. SOEs generated revenues of VND2.76 quadrillion in 2023, a rise of a meager 1% from 2022. The Prime Minister has asked for clear separation between state management duties and state capital oversight.
Read more: VnEconomy (Restructuring Plans), Nhan Dan (Reform Focus)
Energy Investors Want a Better Deal
LNG power projects targeting 14.9% of total power capacity by 2030 are staring down the barrel of delays. Main obstacles include bureaucratic delays, financing difficulties, and unresolved power purchase agreements. Foreign investors want more/ better government guarantees for currency conversion and contract termination. Separately, the Ministry of Industry and Trade is making a proposal to reduce electricity price adjustment intervals from three to two months.
Read more: Vietnam News (LNG Projects), Vietnam News (Price Adjustments)
Infrastructure Development by Road, Air and Sea
The government is still putting completion of transport projects at the forefront of its agenda, saying it will wrap up 3,000km of expressways by 2025. Long Thanh International Airport's third component is likely to be delayed, with completion now expected by November 2026. The Vietnam Maritime Administration plans to upgrade port infrastructure for larger cargo vessels, responding to increasing Megamax vessel usage.
Read more: Tuoi Tre News (Airport Project), Vietnam News (Port Infrastructure)
Tourism Recovery Continues
Tourism sector players beat their targets last year, with 17.5 million international arrivals (up 38.9%) and 110 million domestic visitors. Revenue reached 840 trillion VND, up 23.8%. The sector should be fully recovered to pre-COVID levels by 2025, with 22-23 million international visitors in the industry’s sights.
Read more: VEN
Digital Transformation Advances
Digital initiatives including e-invoicing (92,080 businesses registered) and social media verification rules are so far being reported as successful. Da Nang Software Park No.2 is firing up operations, with plans for an international fiber-optic station and submarine cable system. The UN is promising support for Vietnam's digital transformation goals.
Read more: OpenGov Asia (E-invoicing), VEN (Digital Infrastructure)
Financial Center Development
International and regional financial centers are planned in Ho Chi Minh City and Da Nang. Stock market capitalization reached VND7.2 trillion, up 21.2% from 2023. The country's currently is tied into global trade via 17 FTAs with 65 leading economies.
Read more: VnEconomy
Agricultural Innovation A Bright Spot for Growth
Agritech startup enfarm has secured seed funding for AI and IoT-based fertilizer optimization technologies. Eight rice enterprises have received AUD200,000 for reducing greenhouse gas emissions. The coconut industry expects exports to exceed $1 billion in 2024.
Read more: VIR (Agritech), VEN (Coconut Industry)
Pharmaceutical Sector Growing
The local pharmaceutical market grew from $3.4B (2015) to $7.46B (2022). The amended Law on Pharmacy 2024 has introduced priority mechanisms for special drugs' marketing authorizations. Multinational companies are looking for more government support in technology transfer projects.
Read more: VIR (Legal Changes), VIR (Tech Transfer)
Bac Ninh Industrial Park Expansion
Bac Ninh Province approved 18 projects worth $1.8 billion, with FDI accounting for $1.67 billion. The government approved a $308 million investment for Vinh Thanh Industrial Park expansion in Can Tho. Japanese real estate developer Hulic said that it plans to invest in industrial projects in the region through joint ventures.
Read more: Nhan Dan (Bac Ninh Investment), VIR (Japanese Investment)
Indian Weapons on Order
Vietnam plans to purchase India's BrahMos missile system in a $700 million deal. The acquisition is a step towards more diversification from Russian weapons systems and is indicative of India's expanding appetite for a role in Southeast Asia.
Read more: SCMP
Tax System Trust Peaks
Vietnam shows exceptional trust in its tax system according to ACCA's Public Trust in Tax 2024 report. The survey reported that nearly 4 in 5 Vietnamese participants trust tax authorities - the highest among 26 surveyed nations. The government says that it is going to eliminate VAT waivers for low-value imports starting February 18.
Read more: VIR (Tax Trust), The Investor (VAT Changes)
HCMC Metro Line Property Boom
Property prices along HCMC's Ben Thanh-Suoi Tien metro line have risen 15-40% in 2024. The 20-kilometer line is home to 14 stations and more than 40 high-end property projects. Consultants are seeing 16-20% annual price increases in surrounding areas.
Read more: VnExpress
That’s it for this week!
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