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Here is your Mekong Memo Vietnam for January 11, 2024.
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European Business Confidence on the Rise
European business confidence in Vietnam is showing rising, with the Business Confidence Index reaching 46.3 points in Q4 of 2023. The trend is driven by increased satisfaction among businesses and a rise in Vietnam's status as a global investment destination. Challenges remain, including administrative burdens and the need for workforce skill upgrades. Although some obstacles remain, The EU-Vietnam Free Trade Agreement is reportedly increasingly benefiting businesses, which augurs well for continued growth and investment.
Ag Exports Growing Unevenly
Last year seven commodities exceeded $10 billion in export value, with coffee exports reaching nearly $4.2 billion despite a decrease in volume. The country aims for farm produce exports to surpass $26 billion by 2030, focusing on modernizing farming practices. Seafood exports faced challenges, leading to a lowered target of $9.5 billion for 2024. Pepper exports also increased in volume but fell in value due to lower export prices.
Growth Outlook Sees Diverse Predictions
GDP growth in 2024 is projected to vary between 5.5 and 6.7% depending on who you ask. The United Nations predicts a growth of 6%, while Standard Chartered Bank estimates a higher rate of 6.7%. VinaCapital's chief economist anticipates a growth between 6-6.5%, driven by a recovery in exports. Shinhan Bank projects a more conservative growth rate of 5.5%, attributing it to public spending and tourism recovery.
Cashless Transactions Spike 50% in 2023
Non-cash transactions increased by nearly 50% in 2023 as compared to the previous year, totaling 11 billion transactions. The total value of these transactions was a stunning $8.2 trillion. Internet payments alone accounted for nearly 2 billion transactions, valued at $2.1 trillion. QR code payments also saw a substantial rise. In contrast, ATM transactions declined by over 9% in value, apparently as a result of lower demand for cash. The Mobile Money service, a pilot for telecommunication account-based payments, gained over 6 million users, and all signs are that Vietnam is quickly moving towards a cashless economy.
One in Five Still Not Connected to Internet
The most interesting thing we found about this article is that nearly 20% of the population remains unconnected to the internet. According to the article, in 2023, telecommunications services generated revenue of $5.8 billion, a slight increase from the previous year, nearly meeting the annual target. The country experienced a growth in internet users, with 78.59% of the population now online. Mobile phone subscriptions linked to smartphones exceeded 100 million, while mobile broadband subscriptions stood at 84.9 million. Vietnam's mobile broadband internet speed ranked 57th globally, with an average speed of 44.92 Mbit/s. The country also saw significant adoption of IPv6, with a rate 1.6 times higher than the global average.
Read more: VnEconomy
Industrial Parks Greener, More Competitive
Vietnam's industrial parks (IPs) are becoming increasingly competitive and tenant-friendly, according to Knight Frank Vietnam's managing director, Alex Crane. In 2023, IPs in Hanoi and Ho Chi Minh City maintained high occupancy rates, and the market is expected to remain favorable for tenants due to an increase in supply and resulting developer incentives. The adoption of the Global Minimum Tax in 2024 will impact foreign firms, bringing the country more closely into alignment with other regional markets. Crane also mentions how the greening process in IPs is intensifying, with sustainable development becoming a growing factor for prospective investors.
Read more: The Investor
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