Vietnam 20240822: Matutinal, Oneiric, Euphonic
Vietnam 20240822: Matutinal, Oneiric, Euphonic
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Headlines:
To Lam Navigates Geopolitical Tightrope
Chinese FDI Surges, Shifts to High-Tech Sectors
EuroCham Pushes for Green Transition Framework
Energy Sees Demand Surge and Coal Dependence
Real Estate Boom Prompts Intervention
Exports See Mixed Prospects
Aviation and Tourism Eye Growth
Energy Collaboration Talks with Canada
Online Public Services Struggle to Meet Needs
Forex Decline Opens Door for Monetary Shift
HCMC Pilots ESL in Public High Schools
Hanoi Expected to Become ASEAN Data Hub
'Silicon Valley' Project Stalls, Facilities Abandoned
MOIT Cracks Down on Counterfeit Goods
Hands-On Geology Broadens Perspectives
To Lam Navigates Geopolitical Tightrope
To Lam's inaugural international trip resulted in the signing of 14 agreements with China, an indication of how important China’s economic ties are to Vietnam. A planned U.S. visit also demonstrates that he will remain commitment to the government’s 'bamboo diplomacy' policy of recent years to attempt to keep a balance between superpower relationships. Lam's pragmatic approach seems intended to maximize economic cooperation while keeping a diplomatic equilibrium, though long-term impacts remain to be seen.
Read more: The Economist
Chinese FDI Surges, Shifts to High-Tech Sectors
China led new foreign direct investment projects in the first seven months of 2024, accounting for nearly 30% of the total. Interestingly, the data shows a pivot towards high-tech industries like electronics and renewable energy, getting away from traditional sectors like manufacturing and textiles. Major Chinese corporations are pushing forward with investments, helping Vietnam along with its goals for technology-driven development.
Read more: Nhan Dan
EuroCham Pushes for Green Transition Framework
The European Chamber of Commerce has recommended a full legal framework to support national green transition goals, particularly in renewable energy, transport, and finance. While acknowledging net-zero emission commitments, EuroCham is showing some concern with gaps in sector-specific regulations and financial mobilization strategies. The European business community has said that it stands by with expertise to bring Vietnam's green transition objectives into line with international standards.
Read more: VnEconomy
Energy Sees Demand Surge and Coal Dependence
Electricity output jumped 11.5% in the first seven months of 2024, mostly coal-powered, as energy demands continue to rise. A slow adoption of renewables and a lack of market-based pricing mechanisms are holding back sector investment. It is interesting to watch as the grid continues its reliance on coal imports, driven by extreme weather and reduced hydropower, despite ambitious national energy and environmental goals.
Read more: Asian Power (Electricity Output), VEN (Pricing), Energy Central (Coal Imports), VIR (Power System)
Real Estate Boom Prompts Intervention
Property prices are soaring in several major cities, triggering government action. Hanoi land auctions have seen prices up to 18 times initial valuations, while Da Nang new apartment prices rose 20% year-on-year. These shocking numbers have prompted enforcement of Decree 96, mandating market regulation for price increases higher than 20% in three months. The government has its hands full managing growth while preventing speculative bubbles.
Read more: The Investor (Land Auction Inspections), Vietnam Briefing (Decree 96), VnExpress (Da Nang Prices), VnExpress (Hanoi Prices)
Exports See Mixed Prospects
Timber and fruit exports are set for record highs in 2024, while the fish export industry battles rising transport costs and stricter regulations. These challenges are squeezing profit margins and holding back growth. Separately, Vietnam is reportedly backing China's bid to enter the CPTPP trade bloc.
Read more: The Investor (CPTPP), Nhan Dan Online (Timber), Vietnam Investment Review (Fish), Nhan Dan Online (Fruit and Vegetable)
Aviation and Tourism Eye Growth
Vietnam is pushing for more international flights to main tourist destinations as part of an effort to bring more cash into the tourism sector. While the aviation industry is still growing, progress is being held back by slow progress in supporting industries which remain dependent on foreign suppliers for maintenance and parts, thereby inflating costs. Ho Chi Minh City is piloting night flights to increase tourism, saying that the pilot will reduce daytime congestion, as well as give travelers cheaper options and extend economic benefits into the nighttime economy.
Read more: VnExpress (New Routes), VnExpress (Aviation Challenges), VIR (Night Flights)
Energy Collaboration Talks with Canada
Vietnam and Canada looked into opportunities to work together in energy, clean tech, and finance during a recent seminar in Toronto. The event, featuring state-owned enterprises from both countries, was organized to trade knowledge and see where potential partnerships, particularly in clean energy and decarbonization, might be found. With bilateral trade between the two reaching $10.4 billion last year, Vietnam has become Canada's top ASEAN trade partner, and is a focus of Canadian attention to develop the trade relationship.
Read more: Nhan Dan
Online Public Services Struggle to Meet Needs
Despite improvements, online public administrative services are still challenged. A review of 63 provincial e-service portals showed many outstanding issues with user-friendliness, accessibility, and transparency. Many users still rely on direct assistance thanks to complicated processes and technical limitations. The study calls for a Digital-First Approach to improve service delivery, particularly for vulnerable groups.
Read more: The Investor
Forex Decline Opens Door for Monetary Shift
August saw a big drop in foreign exchange rates, influenced by increased domestic dollar supply and reduced international demand. The central bank's zero percent interest rate on USD deposits has effectively curbed dollarization and (so far) maintained market stability. With exchange rate pressure easing, monetary policy loosening may be considered to improve banking system liquidity.
Read more: Vietnam News (Exchange Rate Trends), VEN (Exchange Rate Decrease), VEN (Dollarization Policy)
HCMC Pilots ESL in Public High Schools
Ho Chi Minh City is set to introduce English as a second language in select public high schools for the 2024-25 academic year. This pilot follows strong performance in national English exams and is expected to improve foreign language proficiency for international integration. The city's solid base of effective English programs and experienced teachers positions it well for this trial project.
Read more: Tuoi Tre News
Hanoi Expected to Become ASEAN Data Hub
Hanoi is expected to emerge as a major data center in ASEAN, thanks to its favorable geographical location, competitive construction and labor costs, and a suitably experience and educated IT workforce. With low risks of natural disasters and a growing cloud computing market, the city is reportedly drawing interest from several big international investors. (For perspective, also read the next article).
Read more: VnEconomy
'Silicon Valley' Project Stalls, Facilities Abandoned
Da Nang's ambitious Information Technology Park, once touted as Vietnam’s version of Silicon Valley, now stands largely abandoned. Despite initial investments and the completion of the first phase of the project, the project overall has faced repeated delays, leaving villas unfinished and facilities neglected. The area was supposed to be a hub for IT development, but now faces an uncertain future as the second phase remains stalled, turning the site into a grazing ground for cattle instead of a tech haven. (Also see article directly above this one).
Read more: Tuoi Tre News
MOIT Cracks Down on Counterfeit Goods
The Ministry of Industry and Trade (MoIT) is doubling down on efforts to combat counterfeit and smuggled goods in e-commerce. The crackdown includes stronger penalties, improved coordination with law enforcement, and better consumer education. The ministry is also looking into regulatory updates and better information-sharing mechanisms to track and eliminate fraudulent products. These measures have already led to an increase in enforcement actions, with thousands of violations already flagged and big fines collected.
Read more: Vietnam News
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.
Good news this week as a six-year old child was found after wandering the jungle for five days, here’s a porridge shop that we’ll be avoiding, maybe you’d like to visit, and a documentary film on Son Doong cave has been nominated for 2024 Emmy Award. We will leave you with this article about a project we found interesting:
Hands-On Geology Broadens Perspectives
Two Oregon educators expanded their geology expertise with an immersive two-week program in Vietnam. Organized by the Center for Geography Education in Oregon, the trip covered the country's varied landscapes from Hanoi to Ho Chi Minh City. Participants took part in several field studies, kayaking, and an exploration of historical sites like the Cu Chi tunnels. The hands-on experience not only deepened their understanding of Vietnam’s geography but also challenged their preconceived notions about the country’s development and economy. It seems like a great program that is showing foreigners Vietnam from a new perspective.
Read more: Polk County Itemizer-Observer
That’s it for this week!
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