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Here is your Mekong Memo Vietnam for November 9, 2023.
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PM Targets Bureaucracy to Spur Growth
In a bid to juice economic growth, Prime Minister Pham Minh Chinh has committed to overhauling outdated regulations and simplifying administrative processes. Acknowledging the drag of bureaucracy on businesses and the economy, Chinh emphasized the urgency of streamlining procedures to ease the burden on enterprises and citizens. This push for administrative efficiency comes as the country faces the likelihood of not meeting its annual growth target, prompting a review of business conditions and investment project approvals in an attempt to develop a more proactive and innovative administrative culture.
Read more: The Investor
Energy: International Investment and Green Transition
Vietnam's energy sector is undergoing a transformation, with a push towards renewable sources. The electricity industry saw a dip in performance in Q3, prompting a push to green energy, which is still “hot.” International collaborations are at the forefront, with a $1 billion contract awarded to McDermott for a gas development project and Denmark's CIP planning large offshore wind power projects. A proposal to shift from coal to LNG for a $2.3 billion power plant and the need for a legal framework to boost rooftop solar energy show the appetite for sustainable energy solutions. A recent group of British businesspeople came to eye Vietnam's renewable sector, recognizing its potential and the government's policy advancements towards a greener future.
Read more: Vietnam News (Industry Performance), The Investor (Gas Development), The Investor (Wind Power), The Investor (Energy Transition), The Investor (Solar), Eco-Business (Offshore Wind), Vietnam Investment Review (International Interest)
A Flurry of Diplomatic Activity
Vietnam recently marked diplomatic engagements with multiple countries. High-level discussions with the Netherlands during the Dutch Prime Minister’s visit were aimed at economic partnerships and a reaffirmation of a shared interest in collaboration. Joint commitments with Mongolia are expected to enhance bilateral cooperation. An event in Hanoi has acknowledged the strength of Vietnam-Canada ties, emphasizing Canada's view of Vietnam as a significant trade ally. Vietnam is also seeking to enrich trade and cooperation with Croatia and Tunisia, as well as legal ties with Hungary, reflecting a push to solidify its economic and diplomatic presence in Europe.
Aviation Ambitions Take Flight with Expanded Global Connections
Vietnam's aviation sector is expanding with new international routes. The government plans to invest $16.3 billion in airport network development, while airlines like Vietjet are nearly doubling flights to Australia and launching new routes to cities like Shanghai and Ulaanbaatar. This growth is intended to support tourism appeal, with a focus on accommodating the increasing demand for travel to and from the country.
Rosen Partners Look to Open New Park
New York-based Rosen Partners is in discussions to invest in a world-class entertainment park in Hanoi, with a goal to integrate a global brand with the city's cultural tapestry. The firm's managing director, Daniel Rosen, emphasized the importance of cultural respect and the potential for boosting tourism. Deputy Prime Minister Le Minh Khai welcomed the investment, highlighting Hanoi's suitability for a facility of this type and promising government support.
Read more: Vietnam Investment Review
Telecom Sector Robust
Vietnam is moving further along the path of its telecom evolution, with projections indicating a rise in mobile subscriptions and a further increase in fixed broadband users by 2030. The industry is expected to see a transition to higher data services, with 5G subscriptions predicted to constitute a substantial portion of the market. This growth is supported by investment in infrastructure, emphasizing the expansion of fiber broadband and the groundwork for 5G wireless technology.
Consumer Finance: A Magnet for Asian Banks
Vietnam's consumer finance market is attracting interest from major banks in Asia, with Thailand's KBANK and SCB X PCL, and South Korea's KB Kookmin Bank emerging as final bidders for Home Credit Vietnam. The potential $700 million deal reflects a trend of Asian financial conglomerates acquiring stakes in Vietnamese consumer finance companies, showing confidence in Vietnam's growing economy and the sector's potential.
Monitored, Not Marked: U.S. Eyes Dong Moves
Vietnam finds itself on the U.S. Treasury's currency monitoring list, reflecting a watchful eye on its trade and currency practices. It has, however, avoided the label of a currency manipulator for now. The U.S. Treasury's decision acknowledges Vietnam's significant trade surplus and foreign exchange policies but also recognizes progress in addressing these issues. The move shows the importance of Vietnam's economic actions while maintaining a collaborative stance for future monetary policy and trade relations.
Visa Update: Opening Doors for Global Travelers
Vietnam introduced a new visa policy effective August 15, 2023, extending the e-visa duration from 30 to 90 days and increasing the visa exemption stay to 45 days for certain countries. This policy is a step towards facilitating international relationships and travel, allowing a broader global audience to explore Vietnam for tourism, work, or family visits through multiple entry points. Under the new policy, Phu Quoc island also benefits from a unique visa exemption, hopefully sparking more interest in visitors to the destination.
Read more: Vietnam News
FDI and Growth on Track
Vietnam's economy is being pushed towards a 5% growth target in 2023. The government is focusing on administrative reforms to shore up business, with an emphasis on fiscal and monetary policies to support enterprises. Investment, consumption, and exports are recovering, with FDI showing a 15% increase and a trade balance surplus of $24.6 billion. Challenges in market development and administrative obstacles for businesses persist, but market participants are cautiously optimistic.
Read more: Vietnamnet (Challenges), Dtinews (Regional Comparison), Vietnamnet (Digital Economy), Xinhua (Strategies), VietnamPlus (FDI Ranking), VietnamPlus (Government Solutions), Hanoitimes (Growth Engines)