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Here is your Mekong Memo Vietnam for December 7, 2023.
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Navigating the Middle-Income Trap with Technology
Vietnam's economic development, driven by three decades of growing agricultural and manufactured exports, is now shifting towards high-tech industries like electronics and semiconductors. The Vietnam Economic Pulse, a forum by UNDP and the Central Institute of Economic Management, explored the nation's shift towards technological innovation. Despite a post-pandemic slowdown, long-term economic outlook remains favorable, backed by consistent GDP growth and a good position in East Asian supply chains. To avoid the middle-income trap faced by countries like Malaysia and Thailand, however, Vietnam needs to transition to more technology-intensive production. The country's focus on developing technological and managerial capabilities, especially in export industries, will be crucial. With a young, educated population and a strong secondary education system, Vietnam has the potential for technological advancement, yet its tertiary education and research spending lag behind regional standards. Government leadership in high-tech sectors and effective collaboration with the private sector are vital for building a national innovation system and achieving sustainable economic growth.
Read more: Nation Thailand
Energy Transition Plan to Net-Zero
Vietnam's $15.5 billion energy transition blueprint, announced by Prime Minister Pham Minh Chinh at the COP28 climate talks, is expected to reduce coal dependency and achieve net-zero carbon emissions by 2050. The plan, part of the Just Energy Transition Partnership, is supported by wealthier nations to expedite clean energy adoption in developing countries. Environmentalists express concerns about the plan due to the expected continued use of coal-fired plants and the limited civic engagement in policy formulation. With the third-largest pipeline of new coal power projects globally, Vietnam's balancing act between economic growth and environmental sustainability remains complex and challenging.
Read more: Jordan Times
E-commerce Poised for $20.5 Billion Milestone
Vietnam's e-commerce industry is projected to hit $20.5 billion this year. The Vietnam E-commerce and Digital Economy Agency, under the Ministry of Industry and Trade, discussed this growth at a recent conference in Hanoi. Deputy Minister Do Thang Hai spoke of the development of a supportive secondary services system for e-commerce, including technology platforms and delivery services. Challenges such as goods traceability, personal data security, and logistics remain. Efforts are underway to develop sustainable e-commerce strategies, with a focus on enhancing the digital ecosystem and consumer protection in online transactions.
Read more: Nhan Dan
Trade Dynamics: Durian and Coffee Strong
Vietnam has enjoyed a trade surplus of $24.44 billion by November 15. The nation's durian exports (mostly to China) soared to a record $2.1 billion in the first 10 months of 2023 and coffee exports are expected to break the previous year's $4 billion record. Total trade volume dipped to a three-year low at $620 billion due to reduced operations amidst order shortages. Seafood exports, while recovering, face hurdles such as disease in the shrimp sector and strict international market requirements.
Economic Push to Finish the Year Positive
Vietnam's economy is regaining momentum but faces three critical challenges: international trade difficulties, constrained capital flows, and cumbersome administrative processes. While the consumer price index and net exports show positive trends, a decline in exports and imports raises concerns. Export sectors including phones and machinery are experiencing downturns. Credit access remains limited due to administrative hurdles, and the real estate and bond markets require monitoring.
Read more: VNExpress
Exports to CPTPP Markets Face Rising Trade Defense Measures
Exports to CPTPP countries have boomed, but are increasingly encountering trade defense measures. In 2021, exports to four CPTPP American countries exceeded $12 billion, with notable growth in Canada and Mexico. These gains are challenged by rising trade defense investigations, particularly from Australia, Canada, and Malaysia. Experts emphasize the need for Vietnamese businesses to diversify markets and understand export market regulations to mitigate risks. The government aims to support enterprises while ensuring compliance with legal trade practices.
Read more: Vietnam News