Vietnam 20240425: Maelstrom, Fortification, Kenny G
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Headlines:
Banking Sector Corruption, Policy Woes
Red Flags Over Cambodia's Canal Project
Growth Outlook Holds Strong
Energy Infrastructure Boosted as Demand Surges
Making Moves in Chips and AI
Property Market a Mixed Bag
Leading ASEAN's Intellectual Property Charge
Diplomacy: US, VE, KR, LA, BN
Infra Boom Drives Economic, Operational Gains
Magnet for Global Investors
Agri Exports Rise Across the Board
Kenny G's Hanoi Love Letter
Banking Sector Corruption, Policy Woes
The banking sector is still wrestling with corruption and other systemic vulnerabilities, even with harsh judicial penalties like the death sentence being handed down. The State Bank of Vietnam is rolling out a regulatory sandbox to nurture fintech innovation while trying to keep the sector stable and the central bank is also making moves to prop up troubled lenders and steady the forex rate, showing it's not afraid to step in to safeguard financial stability. The sector is working towards reform while still dealing with with deep-rooted corruption, fueled by low public sector wages that make bribery all too tempting.
Read more: The Conversation (Fraud Details), Global Compliance News (Regulatory Sandbox), The Investor (Central Bank Intervention), DTiNews (Foreign Exchange Stabilization), Voice of America (Corruption Analysis)
Red Flags Over Cambodia's Canal Project
Vietnam is sounding the alarm over Cambodia's planned Funan Techo Canal. As talks move forward, Vietnamese experts are calling for more assessments and transparency about the canal's impact on the Mekong Delta, a hugely important agricultural region for Vietnam (maybe the world). They worry the canal's design could drastically reduce water flow, jeopardizing Vietnam's food security and shaking up regional trade. geopolitical tensions are running high over the canal's strategic implications and its potential to give China's military a bigger foothold in Southeast Asia.
Read more: VietnamPlus (Workshop Insights), Radio Free Asia (Vietnam Concerns), Fulcrum (Geopolitical Anxiety), Khmer Times (Cambodia Stance)
Growth Outlook Holds Strong
The economy is set to keep humming along, with several groups seeing a bright future. The country is hailed as an ASEAN digital economy leader, with smartphone usage and digital tech adoption soaring and industrial, trade, and digital sectors are showing resilience and room for growth. Challenges like rising bad debts and the need for major public investment, however, can't be ignored. Ramping up support for startups and keeping the infrastructure development pedal to the metal will be crucial to meeting goals.
Read more: Vietnam Investment Review (Digital Growth), Vietnam Economic News (Determination), DTiNews (Digital Economy), Inquirer Business (Growth Forecast), Reuters (Revised Growth Forecast), Nhan Dan Online (Economic Recovery)
Energy Infrastructure Boosted as Demand Surges
Energy capabilities are being beefed up to keep pace with coming electricity needs and in order to stave off shortages. Japanese firm Vsun Solar has fired up a silicon wafer plant to boost solar capacity, while Thailand's Super Energy is pushing ahead with a wind power project despite regulatory hurdles. To ward off potential blackouts, Vietnam is ramping up coal production and renting diesel generators. The country is also importing more power from China and Laos and fast-tracking hydro and thermal projects to shore up the energy base.
Read more: The Investor (Solar), The Investor (Wind), Bloomberg (Coal), Vietnam Investment Review (Wind), Tuoi Tre News (Power Shortage Measures)
Making Moves in Chips and AI
Big strides are being made in tech, zeroing in on semiconductors and artificial intelligence. The government is laser-focused on building a semiconductor workforce, planning to train as many as 100,000 specialists by 2030 to fuel the sector. At the same time, Vietnam is also working on its AI game, pushing for new legal frameworks to turbocharge AI development.
Read more: Vietnam Economy (Chip Sector), VietnamPlus (Labor), Vietnam Economic News (AI Development), VietnamPlus (AI Legal)
Property Market a Mixed Bag
The property market is once again a tale of two cities (and then some). In Da Nang, unsold resort properties are gathering dust, while in Hanoi, new apartments are flying off the shelves despite rising prices. HCMC is seeing hot demand for prime retail space and steady high residential property prices, expected to climb even higher. Property brokers are flocking back to the industry as the market shows signs of life, with demand for brokerage services on the rise thanks to a major uptick in apartment prices and land rates in Hanoi.
Read more: VnExpress (Resort Market Freeze), VnExpress (Apartment Sales), VnExpress (Retail Demand), VnExpress (Stable Prices), VnExpress (Brokerage)
Leading ASEAN's Intellectual Property Charge
Vietnam is taking the lead in pushing intellectual property (IP) rights in ASEAN, hosting meetings to boost regional cooperation and innovation. Recent sit-downs in Da Nang and Hue hashed out strategies to up ASEAN's global IP plans, zooming in on the ASEAN Action Program on Intellectual Property. In parallel, Vietnam is cracking down on online piracy, scoring a win with its first ever criminal conviction in this arena, showing a commitment to improving its lackluster enforcement reputation.
Read more: Vietnam Investment Review (Regional IP Meeting), Advanced Television (Piracy Conviction), Vietnam Economic Times (IP Cooperation)
Diplomacy: US, VE, KR, LA, BN
The diplomacy mission continues, with the government shaking hands left and right. The Foreign Affairs Ministry has been burning the midnight oil, inking cooperation deals with Venezuela and Brunei in oil, gas, and telecoms. Vietnam is tightening bonds with Laos and South Korea, focusing on broad economic cooperation and national defense.
Read more: CSIS (U.S.), Tuoi Tre News (Venezuela), Vietnam Plus (Venezuela) VietnamPlus (South Korea Defense Dialogue), Vietnam Economic Times (Laos), VietnamPlus (Brunei), VietnamPlus (South Korea Collaboration)
Infra Boom Drives Economic, Operational Gains
Big-ticket infrastructure projects are giving its economy and operational prowess a lift. The Dai Hung Phase 3 construction kick-off is ramping up oil production while hitting a major safety milestone. On the maritime front, the Can Gio project is set to turn Ho Chi Minh City into a regional transshipment heavyweight. Air travel is also getting an upgrade, with Da Nang Airport to become Vietnam's first smart terminal, streamlining ops and improving the passenger experience. To top it off, Noi Bai and Da Nang airports are basking in global glory, apparently ranking among the world's best.
Read more: Vietnam News (Oil and Gas Infrastructure), Vietnam Economy (Maritime Development), Nhan Dan (Airport Innovations), Vietnam News (Construction Industry), Vietnam Insider (Airport Accolades), Global Construction Review (Road Infrastructure)
Magnet for Global Investors
Vietnam is becoming the go-to spot for international investors, with pension fund managers, institutional investors, and wealth managers all wanting a piece of the action. An IMF expert is singing Vietnam's praises, pointing to its impressive economic growth, huge market, and talented workforce. Investors are planning to ramp up Vietnam allocations over the next three years, drawn by a strong track record and potential for juicy returns. As Vietnam inches closer to emerging market status, it is well positions to attract a flood of capital and offer some solid diversification opportunities.
Read more: VietnamPlus (Attractiveness), Money Marketing (Trends)
Agri Exports Rise Across the Board
Agricultural exports are crushing it, with big growth across multiple sectors. Chilli pepper exports have rocketed 53% in Q1, fueled by sizzling demand from China and Laos. Ag product prices have hit record highs in some sectors as supply tightens and demand soars. The fruit and veggie sector raked in $1.8 billion in just four months, with even more growth expected through the end of the year. Pepper prices are set to top 100,000 VND/ kilo, thanks to global demand and tight supply.
Read more: Vietnam News (Chilli), VnExpress (General Prices), Vietnam News (Fruit and Vegetable), VietnamPlus (Pepper)
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. This week saw other cool stories about discovery of a new creature, sidewalks turned red in service of processing the mighty chili, and a video about Vietnamese youth working to preserve traditional outfits. We couldn’t resist this story to wrap things up today, however:
Kenny G's Hanoi Love Letter
Grammy-winning sax legend Kenny G's new music video "Going Home" is a showcase of Hanoi landmarks, from Hoan Kiem Lake to the Temple of Literature. The production, the first-ever outdoor shoot for the song, is part of a push by Nhan Dan newspaper and IB Group Vietnam to harness pop culture to boost tourism (subscribers to the Thailand edition of The Memo will be very familiar with this idea of trying to manufacture “soft power”). If you like Kenny G, you’ll find the video delightful. If you’re not a fan, we expect you’ll find it hilarious. The photos in the article are great.
Read more: Vietnam Economic News
That’s it for this week!
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