Vietnam 20250227
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:
Thailand-Vietnam Partnership Targets $25B Trade
South China Sea Outposts Reach Milestone
Fertility Rate Plummets to 1.91
Digital Banks Reach Profitability Milestone
Economic Ascent Tests Diplomatic Balance
Power Sector Expansion Gets Reality Check
Tech Evolution Draws Global Interest
E-commerce Growth Meets New Regulations
Journalist Trial Tests Economic Narrative
Twin Financial Hubs Aim For Regional Influence
Housing Market Approaches Breaking Point
ASEAN Strategy Targets $10 Trillion Economy
Ag Exports Face Regulatory Hurdles
Business Exits Signal Economic Pressure
US Aid Freeze Tests War Legacy Progress
Thailand-Vietnam Partnership Targets $25B Trade
Thailand and Vietnam are aiming for a $25 billion bilateral trade target, as Thai corporations have already deployed $14 billion across Vietnam. The relationship spans retail, manufacturing, energy and real estate, with Thailand's "Big Five" investors - including Central Group, SCG, and ThaiBev - setting Thailand up as Vietnam's ninth-largest foreign investor.
Read More: The Nation (trade partnership), Tuoi Tre News (Thai investment landscape), Viet Nam News (Vietnam-Thailand trade aims)
South China Sea Outposts Reach Milestone
Vietnam's expansion of South China Sea outposts has reached a crescendo, with satellite data showing 2,360 reclaimed acres across multiple features - roughly half of China's total - including a deep-water port capable of hosting major warships. The development at Barque Canada Reef, featuring an 11.37-meter-deep channel and potential two-mile runway, is a shift in regional maritime infrastructure capabilities, though Hanoi is keeping a much lower profile than Beijing's island-building campaign.
Read More: World Politics Review (South China Sea), Militarnyi News (Island Dispute), EurAsian Times (Maritime Infrastructure)
Fertility Rate Plummets to 1.91
The domestic fertility rate has dropped to 1.91 children per woman, placing it among Southeast Asia's five lowest birth rates. Urban centers like Ho Chi Minh City report rates as low as 1.39, while even traditionally fertile rural areas have dipped below replacement levels. The Ministry of Health's pro-natalist policies have struggled against work-life balance challenges, financial constraints, and changing social preferences.
Read More: VnExpress International (Declining birthrate)
Digital Banks Reach Profitability Milestone
The digital banking continues to grow quickly, with AI-driven platforms like MoMo, VNPay, ZaloPay, and Cake by VPBank expanding services to underserved segments such as gig workers and online sellers. Cake has become the first Vietnamese digital-native bank to reach profitability in 2024, securing a spot in the World’s Top 100 Digital Banks and earning recognition as Best Digital Bank in Vietnam. traditional banks under special control—DongA Bank, OceanBank, and CBBank—have rebranded into digital banks to try and stay competitive, but regulatory constraints require digital banks to operate under traditional bank sponsorship, limit their independence.
Read More: VnEconomy (Digital economy growth), Vietnam Investment Review (Digital banking evolution)
Economic Ascent Tests Diplomatic Balance
Vietnam's rise to ASEAN's fourth-largest economy with $476.3 billion GDP comes with scrutiny of its $104 billion trade surplus with the United States. While the country's 7+% growth in 2024 has drawn praise from some quarters, President Trump's renewed tariff threats and fears of Chinese firms using Vietnam to circumvent US duties cast a shadow over its 8% growth target for 2025. Foreign direct investment continues to do well, with Chinese companies now accounting for nearly one-third of new projects, even as the Vietnamese government balances these inflows against Washington's growing unease.
Read More: VNeconomy (ASEAN ranking), Nhan Dan (growth target), Tuo Tre (business environment)
Power Sector Expansion Gets Reality Check
Officials are revising the national power development plan, looking for a 35% capacity increase to 211.8 GW by 2030 while shelving previously planned offshore wind projects. The Ministry of Industry and Trade's updated roadmap raises solar targets to 34 GW while emphasizing "reasonable" electricity prices to pull in as much as $172 billion in private investment through 2030. Despite the private sector already controlling more than 50% of current capacity, investors continue wrestling with regulatory uncertainty and rigid pricing mechanisms, even as international partners offer $15.5 billion in transition financing through the Just Energy Transition Partnership.
Read More: Reccessary (power plan update), VnEconomy (energy optimization), Solar Quarter (solar expansion)
Tech Evolution Draws Global Interest
A push into advanced technology will take center stage as the country hosts its first International AI-Semiconductor Conference in March 2025, pulling in approximately 1,000 experts from tech giants including Google, IBM, and Samsung. The timing is strategic, as Vietnam posts Southeast Asia's fastest digital economy growth rate at 22% in early 2024, while exceeding its digital business target with over 50,000 firms. Several initiatives support this transformation, from Google's commitment to AI-powered education tools to Huawei's anticipated semiconductor investments in Bac Ninh province. While government support appears to be firm and international interest seems strong, success will hinge on developing skilled human resources and creating / supporting innovation ecosystems.
Read More: Cong Thuong (AI education support), VnEconomy (Digital economy growth), Tuoi Tre News (AI semiconductor conference)
E-commerce Growth Meets New Regulations
The e-commerce market saw great growth of 37% in 2024 but beneath the headline numbers lie a more murky picture. While consumers increasingly are taking advantage of online shopping, spending VND874 billion daily, new tax regulations are going to drop exemptions for low-value imports, directly challenging cross-border sellers who accounted for VND14.2 trillion in sales last year. The policy shift comes as domestic retailers struggle, with 165,000 online shops exiting the market in 2024, even as the grocery and food segments saw 76% growth. As sellers adapt to the new regulatory landscape, the market appears set for realignment, with foreign sellers looking at local warehousing solutions while domestic manufacturers are hoping for opportunities in what they say will be a more level playing field.
Read More: Nhan Dan Online (E-commerce Tax Enforcement), Tuoi Tre News (Import Tax Reform), DMNews (E-commerce Market Growth)
Journalist Trial Tests Economic Narrative
Vietnam's economic modernization agenda is under the spotlight as prominent journalist Truong Huy San heads to trial today, charged with "infringing upon the interests of the state" for his social media commentary. The case against San, who commands 350,000 Facebook followers and previously held fellowships at Harvard and the University of Maryland, is showing of Hanoi's stance toward online dissent, with charges carrying potential seven-year prison terms. While authorities point to 13 allegedly problematic posts between 2015-2024, the specific content remains undefined, adding to fears about regulatory transparency. As Vietnam appeals for international investment and tries to set itself up as a regional tech hub, the treatment of high-profile critics like San sends mixed signals about the government's commitment to the information environment typically associated with developed economies.
Read More: Human Rights Watch
Twin Financial Hubs Aim For Regional Influence
A push to set up twin financial centers in Ho Chi Minh City and Danang comes as capital markets are under strain, with market capitalization dropping to $279.2B and corporate bond issuance plummeting to just 268 deals by Q3/2024. The “hubs” strategy, backed by a proposed National Assembly resolution, is intended to create distinct ecosystems - with Ho Chi Minh City focusing on capital markets and Danang specializing in green finance and fintech innovation. International interest and support is forming around the project, with the UK offering expertise in financial center operations and Singapore sayin that it is willing to share its experience in industrial park development. While Vietnam's tech workforce of 530,000 IT developers provides a foundation, success will depend on regulatory frameworks and the address of structural challenges balancing international practices with local conditions.
Read More: VnEconomy (Financial Center Proposal), Vietnam Investment Review (Financial Hub Strategy), Vietnam Investment Review (Financial Ecosystem Development)
Housing Market Approaches Breaking Point
Price-to-income ratios in the local housing market have spiked to 23.7 times - well above the global average - forcing many young professionals back to their family homes despite steady incomes. The crisis is acute in Hanoi, now ranked as Asia's 11th most expensive rental market, where a modest two-bedroom unit commands $715 monthly, outpacing regional peers like Kuala Lumpur and Jakarta. While authorities are busy pushing social housing initiatives, market analysts say these efforts may take years to impact affordability. The government's intervention comes as traditional paths to homeownership slip further from reach, with entry-level apartments now starting at VND45 million a square meter - up 50% from previous benchmarks - suggesting the property sector may be approaching an affordability breaking point that could reshape both social norms and economic planning.
Read More: VnExpress International (Housing Affordability), Vietnam Investment Review (Market Stabilization), VnExpress International (Housing Crisis)
ASEAN Strategy Targets $10 Trillion Economy
Prime Minister Pham Minh Chinh's Future Forum 2025 roadmap for ASEAN, envisions a $10 trillion economic bloc powered by digital transformation. The three-pronged strategy emphasizes strategic autonomy, economic resilience, and tech innovation, while targeting a $1 trillion digital economy by 2030 – figures that will require unprecedented regional coordination to meet. Public-private partnerships will be a necessary lever, with some global tech giants including Intel and Huawei already saying they have an interest in the region's semiconductor and AI development plans.
Read More: Prensa Latina (ASEAN development), Vietnam Investment Review (Technology adoption), Tuoi Tre News (ASEAN growth)
Ag Exports Face Regulatory Hurdles
The target of $65 billion in agricultural exports by 2025 is seeing growing regulatory drag as expected export markets tighten food safety and sustainability requirements. The EU's stringent food safety controls and potential US trade measures are going to force a re-examination of export practices. The fragmented nature of agricultural production threatens market access even as demand for organic and sustainable products remains strong. To try and help, authorities are investigating support of traceability systems and sustainable farming practices, though industry experts suggest the path to compliance will test both producers' adaptability and the government's reform resolve.
Read More: Nhan Dan (export challenges), Vietnam News (EU regulations), Cong Thuong (Singapore market entry)
Business Exits Signal Economic Pressure
More than 52,800 businesses are said to have suspended operations in January 2025, a 20% year-over-year increase and a 5:1 ratio of exits to new business formations. The exodus comes alongside deteriorating FDI performance, where 16,292 foreign-invested enterprises reported combined losses of $8.52 billion in 2023, suggesting challenges beyond a normal cyclical downturn. While the government wants 8% GDP growth for 2025, businesses are seeing rising operational costs, tightening credit conditions, and looming US tariff threats (exports to America account for 30% of GDP).
Read More: Cong Thuong (market diversification), Nhan Dan Online (lending rates), Thanh Nien (business closures)
US Aid Freeze Tests War Legacy Progress
The Trump administration's 90-day suspension of USAID programs has upended decades of US-Vietnam reconciliation efforts, affecting US$730 million worth of war legacy initiatives addressing unexploded ordnance and Agent Orange contamination. While Vietnam still has several domestic programs, for example, investing US$400 million annually in Agent Orange victim support, the aid freeze has forced the layoff of 1,000 demining personnel and brought a stop to projects like the US$300 million Bien Hoa Airbase cleanup. Vietnamese officials have responded so far with measured concern, calling for continued cooperation through diplomatic channels while looking for alternative international partnerships. The disruption is a test of the foundation of US-Vietnam ties at a critical juncture. As regional dynamics remain, well, dynamic, Washington's handling of this aid suspension could change the trajectory of its strategic partnership with Hanoi, where war legacy cooperation remains a prerequisite for deeper defense ties.
Read More: Fulcrum
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!