Vietnam 20241226: Passionate, Articulate, Effervescing
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Headlines:
Global Economic Powerhouse Emerges
Defense Modernization Draws Global Players
Digital Banking Revolution
Infrastructure Push Accelerates
Real Estate Market Evolution
Tech Sector Security in Focus
Agricultural Export Records
China Relations in the Spotlight
Investment Process Streamlined
Coffee Sector Growth as Prices Spike
Middle East Relations On The Upswing
Stock Market in Twenty-Year Struggle
UK-Vietnam Trade Expansion
Nuclear Power Development
A Push for More English Language
Global Economic Powerhouse Emerges
The economy did very respectably in 2024, with GDP growth passing 7%. Import-export turnover reached $745 billion through December, generating a $23.4 billion trade surplus. The World Bank has ranked Vietnam among East Asia-Pacific's fastest-growing economies. Total retail sales hit $232.89 billion, up 8.8% year-over-year. HSBC is expecting 7% growth for 2024 and 6.5% for 2025, thanks to manufacturing strength and expected FDI inflows of $21.68 billion.
Read more: World Bank Report (Economic Growth), VN Express (Trade Data), VN Economy (Growth Forecast)
Defense Modernization Draws Global Players
Vietnam's defense modernization program is pulling in some of the biggest aerospace companies. Defense spending grew at a 4.9% annual clip from 2020-2024, and is expected to accelerate to 5.6% through 2029. Israel Aerospace Industries plans a 2025 joint venture for military equipment development. Airbus Defense and Space is looking for a partnership expansion while Boeing looks into local collaboration opportunities. More than 200 exhibitors from 30 countries participated in Vietnam Defence Expo 2024.
Read more: Vietnam News (Industry Overview), Bloomberg (IAI Joint Venture)
Digital Banking Revolution
Local banks say they are leaders in digital innovation through blockchain, AI, biometrics and data analytics adoption. Beginning January next year, customers will be required to complete biometric verification for digital transactions. BIDV is putting blockchain tech to use for letters of credit while VIB says it is integrating AI with Big Data for credit processes. The changes come in the wake of the government’s Banking Digital Transformation Plan through 2025, with major banks including MB, VPBank, and Vietcombank planning to deploy blockchain tech.
Read more: VN Economy (Digital Innovation), VEN (Biometric Requirements)
Infrastructure Push Accelerates
Transport infrastructure development, targeting 3,000km of expressways by 2025 and 5,000km is being put into motion before 2030. The $15 billion Long Thanh International Airport project is moving forward alongside rail sector reforms. Ho Chi Minh City says it needs $35 billion for metro network expansion. Construction faces challenges from land acquisition and material shortages, particularly sand. Rail operators are merging to improve efficiency and there is exciting news about the launch of a new luxury train route.
Read more: VN Economy (Infrastructure Plans), Vietnam News (Project Updates), Tuoi Tre (Luxury Train)
Real Estate Market Evolution
Real estate transactions have been healthy with $5.6 billion in capital contributions and share purchases, up 89% year-over-year. MSCI Real Capital Analytics recorded more than 20 public transactions in nine months. M&A activity remains strong across residential, retail, and logistics sectors. Foreign investments appear to be diversifying into new asset types with a growing focus on sustainability. Housing affordability challenges persist in Ho Chi Minh City, where average families can afford only 50% of the home that they want.
Read more: VIR (Market Activity), VN Express (Affordability Study)
Tech Sector Security in Focus
Cyberattacks intensified in 2024, targeting major organizations including VNDirect, PVOIL, and Vietnam Post. More than 659,000 attacks occurred, with nearly half of all agencies seeing at least one incident. New internet regulations require tech companies to store user data locally and provide it to authorities upon request. The Department of Cybersecurity issued 74,000 warnings to critical units, including 83 APT campaign alerts.
Read more: VN Economy
Agricultural Export Records
Agricultural exports hit $62.4 billion in 2024, up 18.5% from 2023, generating an $18.6 billion trade surplus. Seafood exports surpassed the $10 billion mark, with shrimp reaching $4 billion (up 16.7%), tra fish $2 billion (up 8.9%), and tuna $1 billion (up 18%). Success is reportedly a result of sectoral restructuring toward value addition. As a result, Vietnam is able to hold on to its position as world's third-largest seafood exporter after China and Norway.
Read more: Nhan Dan (Export Performance), Vietnam News (Seafood Sector)
China Relations in the Spotlight
Vietnam and China have brought a new "3+3" dialogue mechanism into play which is to encompass diplomacy, defense, and public security. Trade cooperation expansion is underway with a smart border gate at Huu Nghi-Youyi Guan. Vietnam wants more Chinese expertise in the rare earth industry while keeping control over domestic operations. Chinese satellite imagery shows aircraft carrier CNS Shandong operating near Vietnamese waters during military exercises.
Read more: SCMP (Strategic Dialogue), Newsweek (Naval Activity)
Investment Process Streamlined
A special investment procedure launching January 15, 2025, will simplify processes for high-tech and semiconductor projects. The framework shifts most of the work from pre-audit to post-audit, allowing for a 15-day investment certificate issuance. Project implementation timelines are apparently reduced by 260 days. Industrial zone management boards are in place to oversee compliance and coordinate with agencies on implementation issues.
Read more: Vietnam News
Coffee Sector Growth as Prices Spike
Processed and instant coffee exports grow during a period of record raw material prices. Vietnam Coffee Corporation has exported its first processed products to China under the Vietnam Coffee brand while the Miss Ede brand has sent roasted and ground coffee to the US. Arabica prices rose to $3.44 per pound, up 80% this year. Coffee exports reached $5.4 billion in 2024, leading agricultural exports with 56.9% growth.
Read more: VIR
Middle East Relations On The Upswing
Prime Minister Pham Minh Chinh has pushed forward agreements with Saudi Arabia, UAE, and Qatar. The planning and Investment Ministry will oversee cooperation through a new joint working group. The Foreign Affairs Ministry is putting the pedal to the metal with visa exemption negotiations.
Read more: VEN
Stock Market in Twenty-Year Struggle
Despite decently-paced economic growth, the local stock market has stagnated with the VN-Index hanging around 1,200 points for nearly two decades. The market lacks new products to attract foreign investors, and high volatility driven by individual investors (who make up 90% of transactions) keeps many at bay. Finance, banking, and real estate sectors make up between 60-80% of market capitalization, and it might be time to bring a magnifying glass to the issues.
Read more: Tuoi Tre News
UK-Vietnam Trade Expansion
The UK officially joined CPTPP on December 15, allowing for greater trade opportunities with Vietnam. Full implementation, of course, will require collaboration between governments, private sector, and trade associations. but expected benefits include tariff reductions, rules of origin modifications, and simplified digital trade.
Read more: VIR
Nuclear Power Development
Vietnam is exploring the potential of small modular nuclear reactor technology with partners in the UK. Nuclear power development is in alignment with the nation’s net-zero emissions strategy. The nation has advantages in sustainable energy development and research infrastructure, but faces challenges in securing investment capital, technology expertise, and operational experience.
Read more: VEN
A Push for More English Language
The government has put its stamp on an international education cooperation plan through 2030, targeting the gradual establishment of English as second language in schools. The plan would look for UNESCO Global Network of Learning Cities membership expansion from five to ten cities. Goals include improving university programs to meet international accreditation standards and bringing in a bigger number of prestigious foreign institutions.
Read more: VN Economy
That’s it for this week!
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