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Here is your Mekong Memo Vietnam for February 8, 2024.
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Proactively Keeping Prices in Check
While Vietnam rang in 2023 with consumer prices largely under control, rising 3.25% on average, the world economy still poses plenty of question marks. So even as January saw a mild 0.31% inflation uptick, experts say—don't relax just yet.
With potential hikes looming for electricity, medicine, school fees and wages come July, prices remain tricky to predict. The government is getting ready to respond to several scenarios. The goal is to stick within the National Assembly's inflation targets using flexible policies and close market monitoring.
By planning ahead for instability, Vietnam hopes to maintain price stability this year. Staying proactive now can help ensure global drama doesn't drive up costs across the board later. So amid the uncertainty, keeping calm—and inflation in check—is key.
Read more: VietnamPlus
Real Estate Magnetism in the Spotlight
Overseas investors seem to be unable to quit Vietnam, especially its sizzling property market. Even with 2022's speedbumps, foreign capital keeps flooding in, according to Savills, who say that Q4 saw a 32.1% year-on-year jump in registered foreign direct investment, approaching $36.61 billion.
The main factors drawing in the big money are upgraded credit ratings, rosy GDP forecasts, and new laws sweetening the investment climate. Beyond the numbers, however, there seems to be a gutsy faith that the nation can power through challenges. So, despite the turbulence, foreign financiers seem to remain eager to plant roots for the long run.
Geopolitical Tug-of-War: Dance between Giants
Vietnam is attracting significant interest from both the US and China, due to its strategic location and economic potential. Vietnam is walking a fine line as it navigates its relationships with both, leveraging economic opportunities while maintaining sovereignty, even as US-China tensions boil. But government foot-dragging on infrastructure and energy projects signals trouble. Indecision could starve key sectors of funding, even as foreign cash piles in. Vietnam must therefore move decisively to capitalize on its economic potential. The balancing act is precarious, no doubt. But if Vietnam makes the right choices now, it could skillfully play one power against the other - and propel itself to prosperity.
Read more: The Economist (Audio)
Relaxing Rules Could Unlock Tourism Potential
Thailand, Malaysia, Singapore - Vietnam’s neighbors are outshining it on the tourism scene. Experts finger stiff regulations as the culprit. With entertainment venues shuttered early and visas highly restricted, Vietnam lags behind regional hotspots.
The remedy may lie in relaxing rules to energize nightlife and welcome more visitors. But so far Vietnam appears reluctant, despite the tactic’s success elsewhere. The tourism sector thus suffers from this resistance to liberalization.
Still, potential abounds if Vietnam embraces reform. By observing neighbors’ booms and benchmarking best practices, the country could unlock major tourism revenue streams.
Read more: Nikkei Asia
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