Vietnam 20240829: Cohesive, Unorthodox, Zeitgeisty
Vietnam 20240829: Cohesive, Unorthodox, Zeitgeisty
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Headlines:
New Leadership and Anti-Corruption Campaign
Record Trade Surplus, Strong Export Performance
Diplomatic Strategy Milestones and Positioning
FDI Boom: Opportunities and Challenges
Diplomatic and Trade Ties: AU, CN, HU, CL, AE
Stock Market Tapped for EM Status by 2025
Control of Social Media with Anti-Fake News Law
Philippines and Vietnam to Sign Defense Pact
Gov’t Intervenes to Support Struggling Businesses
Exports and Investment to Drive 6.1% Growth
F&B Sees Thousands of Stores Shuttered
New Air Connectivity Routes to KH, KR
Uni Enrollment Down, Foreign Students Up
Road and Rail Infrastructure Projects
VN Airlines Launches Rare Status Match Program
New Leadership and Anti-Corruption Campaign
We are watching some important political changes as the government prepares to elect a new president in October, following the death of former leader Nguyen Phu Trong. The recent period has seen the replacement of two deputy prime ministers and the appointment of three new ones, all within the context of an ongoing and intense anti-corruption campaign. This crackdown, led by the ruling Communist Party, has already claimed numerous high-level officials, a rare period of turbulence in Vietnam's typically (relatively) stable political landscape.
Read more: Straits Times (New President), Straits Times (Deputy PMs Appointed)
Record Trade Surplus, Strong Export Performance
The nation’s trade surplus reached $15.49 billion by mid-August 2024, driven by growth in export markets including the U.S., Japan, and Russia. Exports to Russia saw a 45% lift year-on-year, while Japan trade has totaled $25.87 billion for the first seven months of this year. Overall, export value for the first seven months hit nearly $227 billion, a 15.7% increase from last year. The government remains optimistic about reaching a new record of $380 billion in total exports by year-end.
Read more: VnEconomy (Trade Surplus), VnEconomy (Russia Trade), VnEconomy (Japan Trade), Nhan Dan (Export Growth)
Diplomatic Strategy Milestones and Positioning
Vietnam's 79-year diplomatic journey has solidified its global standing, driven by policies focused on independence, multilateralism, and global integration. The country has established strong diplomatic ties with 193 nations, inked 16 free trade agreements, and contributed to global peace and development. Experts talk about the importance of Vietnam’s "bamboo diplomacy," which is designed to balance relationships with major competing powers while protecting Vietnamese national interests.
Read more: VietnamPlus (Bamboo Diplomacy), Vietnam Economic News (79-Year Diplomatic Achievements)
FDI Boom: Opportunities and Challenges
There has been heady growth in foreign direct investment, with a 38.6% lift so far in 2024. Chinese firms are leading the charge, especially in the high-tech arena. Overseas Vietnamese are also getting in on the action, reportedly investing $1.72 billion so far into 421 projects. While opportunities are plenty, legal system gaps and infrastructure underdevelopment remain problematic. The government is working to improve the business climate through transparency initiatives, workforce development, and infrastructure investments to build on this growth and to keep the investment floodgates open.
Read more: Vietnam Briefing (Investment Trends), Vietnam Investment Review (FDI Challenges), VN Economy (Overseas Vietnamese Investment)
Diplomatic and Trade Ties: AU, CN, HU, CL, AE
Recent initiatives include targeting $20 billion in trade with Australia, deepening partnerships with China and Hungary, and exploration of new opportunities with Chile and the UAE. Vietnam is using its position to balance relationships while chasing economic growth. The diplomatic offensive is showing Vietnam's ambition to become a bigger player in regional trade and investment networks, making room for new business opportunities for foreign companies throughout Southeast Asia.
Read more: Tuoi Tre News (Australia), China Daily (China), Vietnam Investment Review (Hungary), TV BRICS (Chile), Vietnam Economic News (UAE)
Stock Market Tapped for EM Status by 2025
The local stock market may be upgraded from "frontier" to "emerging market" status by FTSE Russell in September 2025. This potential upgrade comes on the heels of regulatory changes intended to facilitate foreign investment, including easing pre-funding requirements and improving English language information disclosure. The Ministry of Finance's draft circular covers the biggest concerns, potentially attracting even more foreign investment, with inflows projected to reach $25 billion by 2030 if reforms continue. The upgrade could also trigger increased investment from global and exchange-traded funds.
Read more: The Investor
Control of Social Media with Anti-Fake News Law
Vietnam's Decree 117, introduced under the guise of combating disinformation, has been used to suppress dissent and control public discourse. The law has been applied to fine individuals for online comments deemed to undermine the government, particularly during sensitive political events like elections. Critics argue that the decree further restricts freedom of expression and tightens state control over the internet, as authorities use it to silence independent voices and maintain the Communist Party's dominance.
Read more: Radio Free Asia
Philippines and Vietnam to Sign Defense Pact
The Philippines and Vietnam are set to sign a defense cooperation agreement, a notable step in advancing military ties between the two nations as tensions remain in the South China Sea. The agreement, expected to be signed by Vietnamese Defense Minister General Phan Văn Giang during his visit to the Philippines, is expected to build momentum for increased collaboration on defense and military issues. This move come along with broader ASEAN attempts to manage security challenges in the region.
Read more: Manila Standard (Pact details), ABS-CBN News (Strategic Significance)
Gov’t Intervenes to Support Struggling Businesses
Facing a wave of business closures, the government is unleashing a flurry of lifelines to keep companies afloat. Measures being introduced include the easing of access to credit, tax reductions, and more support for exports. The Ministry of Planning and Investment is working with industry to identify and address the biggest problems in order to stabilize the business environment and maintain growth in the face of uncertainty.
Read more: Vietnam Investment Review
Exports and Investment to Drive 6.1% Growth
The domestic economy is projected to grow by 6.1% in 2024, with expectations of further growth to 6.5% in 2025 and 2026, according to the World Bank. The growth is supported by a rebound in manufactured exports, tourism, and recovering consumption and business investment. challenges like infrastructure gaps and rising non-performing loans remain problems. The World Bank recommends increasing public investment and capital market development to sustain growth and help Vietnam achieve long-term economic goals.
Read more: Vietnam Economic Times (Outlook), VnExpress (Investment)
F&B Sees Thousands of Stores Shuttered
In the first half of 2024, over 30,000 food and beverage (F&B) stores in Vietnam shut down, reducing the total number of operational stores to approximately 304,700, a 4% year-on-year reduction. Despite the closures, the industry saw revenue grow to over VNĐ400 trillion (US$16 billion), thanks to inflation and increased consumer spending on dining out. Spending on cafes dropped sharply, with consumers apparently opting for more affordable options. F&B businesses have responded by cutting costs and launching new products to keep customers spending.
Read more: Vietnam Economic News
New Air Connectivity Routes to KH, KR
Vietnam Airlines will launch direct flights between Hanoi and Phnom Penh, starting October 27, 2024, the first direct route between the two capitals. The route will feature four weekly flights. Binh Dinh province in central Vietnam is inviting Korean Air to establish direct flights to Quy Nhon, a rising tourist destination. The province is building out its airport infrastructure to support the invitation, which is expected to help lift the number of South Korean tourist arrivals.
Read more: DTiNews (Hanoi-PP), The Investor (Korean Air)
Uni Enrollment Down, Foreign Students Up
So far, 122,107 students who passed university entrance exams in 2024 have opted not to enroll in university, despite being offered placements. This accounts for about 18% of the 673,586 students accepted in the first round of admissions. The Ministry of Education and Training (MOET) reported a slight increase in enrollment rates compared to last year, but the number of students declining admission is causing growing concerns about the perceived value of higher education in the current job market. Contrasting this trend, the number of foreign students has reached a new high of about 22,000 - mostly in undergraduate and short-term courses.
Read more: DTiNews (University Enrollment), DTiNews (Foreign Students)
Road and Rail Infrastructure Projects
Vietnam is pushing forward with plans to develop two new expressways as well as extensive rail projects as part of its infrastructure strategy. The proposed Ca Mau-Dat Mui and Quang Ngai-Kon Tum expressways, expected to be completed before 2030, will improve connectivity in the southern and central regions. The Ministry of Transport is prioritizing railway expansion, saying it will need nearly $152 billion by 2030 to build the North-South express railway, urban rail routes, and connections to main ports and airports in support of development and green transition goals.
Read more: Vietnam Economic Times (Expressways), Vietnam Economic Times (Railways)
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.
VN Airlines Launches Rare Status Match Program
Vietnam Airlines has introduced a rare status match program through the Lotusmiles loyalty program, allowing frequent flyers from other airlines to apply for equivalent status. Eligible members from airlines like THAI, American Airlines, Delta, and others (check the eligibility table) can match their status for a fee, in order to gain benefits like priority boarding, lounge access, and more for 12 months. The offer targets residents of specific regions and is available to Lotusmiles members. The application process requires verification of current status, with decisions made within five business days. If you have status on another airline and plan to travel on Vietnam Airlines this year, the program is well worth checking out.
Read more: View from the Wing (Program Details), Vietnam Airlines (Eligibility and Application Process)
That’s it for this week!
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