Vietnam 20240905: Metamorphic, Fugacious, Esoteric
Vietnam 20240905: Metamorphic, Fugacious, Esoteric
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Headlines:
Corporate Giants Post Strong H1 Profits
Tech Sector Bets Big on Semiconductors
Economic Stimulus Trio: Rates, Wages, Fuel Prices
Bamboo Diplomacy Balances Relations—For Now
Renewable Energy Gears Up for Growth
Currency Swings Batter Corporate Bottom Lines
Gojek Bows Out of Ride-Hailing Market
Hanoi Sets Ambitious Growth Targets
Car Registration Fees Slashed to Grow Sales
Export Powerhouses Flex Muscles
Real Estate Faces Rising Inventories and Prices
HCMC AirBnB Investors Face Regulatory Squeeze
New Air Routes: China, Bhutan, Indonesia
Drones Transform Mekong Delta Farming
Vietnam Tops Affordability Chart for Expats
1,200 DUI Violations Over National Day Holiday
Corporate Giants Post Strong H1 Profits
Petrolimex has doubled earnings to VND1.53 trillion, while PVN surpassed targets by 75% with an impressive VND29.6 trillion in profit. Retail behemoths Central Retail and Aeon joined the growth parade, alongside domestic firm Bamboo Capital's 137% profit surge. Industrial park titan VSIP saw earnings skyrocket 146%. Analysts are forecasting more upward momentum going into the second half, buoyed by favorable fuel prices, consumer incentives, and rebounding demand.
Read more: Vietnam News (General Growth), The Investor (VSIP), VEN (Bright Outlook)
Tech Sector Bets Big on Semiconductors
A push to generate $10 billion in international tech revenue by 2024 is gaining traction. Government sweeteners, including tax breaks and expedited export processes, have caught the eye of global semiconductor players Nvidia and Intel. Ho Chi Minh City's educational institutions are teaming up with Taiwanese partners to grow a new crop of chip engineers, setting the country up as an ever bigger force in the global tech arena.
Read more: VietnamNet (Tech Revenue Target), Nikkei Asia (Chip Incentives), Tuoi Tre News (Semiconductor Training)
Economic Stimulus Trio: Rates, Wages, Fuel Prices
The State Bank has eased monetary policy, slashing interest rates and pausing treasury bill issuance to boost liquidity. Gasoline prices have hit a 15-month low, helpfully dampening inflationary pressure. A 30% wage hike that came into effect in July was intended to help support domestic consumption, though experts are warning of potential year-end inflationary ripples.
Read more: Vietnam News (Wage Pressure), VnExpress (Monetary Easing), VnExpress (Gasoline Price)
Bamboo Diplomacy Balances Relations—For Now
The strategy of nurturing relations with both China and the U.S. continues to bear fruit, but challenges are ever-present. Deepening economic ties with China with major trade and infrastructure deals coexist with strong U.S. trade links, but South China Sea territorial disputes and shifting geopolitical sands could test this equilibrium, particularly if U.S. policies take a protectionist turn after the next U.S. election.
Read more: South China Morning Post (Payoff), VEN (Russian Praise)
Renewable Energy Gears Up for Growth
Vietnam continues its shift toward renewable energy to meet energy demands and climate goals. By 2030, renewable energy is expected to make up 27% of the country’s electricity mix, with wind and solar power leading the way. Industrial parks are adopting rooftop solar power to meet green energy standards and pull in investors. The country’s infrastructure projects present investment opportunities, particularly in green and clean energy initiatives, as Vietnam continues toward achieving net-zero emissions by 2050.
Read more: Vietnam Economic News (Power Capacity Goals), Vietnam Economic News (Rooftop Solar), Vietnam Economic News (Opportunities in Green Energy)
Currency Swings Batter Corporate Bottom Lines
Several listed firms reported substantial forex losses in H1 2024 due to dollar-denominated debts. Vietnam Airlines took a VND1.2 trillion hit, while Novaland absorbed VND834 billion in losses. Companies including FPT Corporation and Hoa Sen Group managed to eke out exchange rate gains. Analysts say that they are expecting an easing of currency pressures as the USD/VND rate stabilizes in the second half of the year.
Read more: Vietnam News
Gojek Bows Out of Ride-Hailing Market
Indonesian firm Gojek will stop operations on September 16, 2024, as part of parent company GoTo's growth optimization strategy. Despite holding a 7% market share since its 2018 entry, Gojek has struggled against dominant players like Grab. The exit's financial impact on GoTo looks like it will be minimal, with Gojek Vietnam accounting for less than 1% of Q2 2024 transaction value.
Read more: DTiNews
Hanoi Sets Ambitious Growth Targets
The capital wants to boost gross regional domestic product by 6.5-7% in 2024 while keeping inflation below 4%. Growth drivers of focus include industry, services, construction, and agro-forestry-fisheries. City leaders have directed departments to prioritize monetary policies, tackle business bottlenecks, and accelerate public capital disbursement. The plan also targets a 7.4% export growth and a 10.73% industrial production increase in the third quarter.
Read more: Vietnam News
Car Registration Fees Slashed to Grow Sales
A temporary 50% cut in registration fees for domestically produced cars will run from September to November 2024. The reduction is intended to counter a 15% drop in domestic auto sales during H1 2024. While the policy is expected to cost the state 867 billion VND monthly in lost revenue, the losses should be counterbalanced by a revitalization of the local auto industry in the face of stiff import competition.
Read more: DTiNews
Export Powerhouses Flex Muscles
Goods exports hit $227 billion in the first seven months of 2024, cementing their role as an economic cornerstone. Agricultural exports like coconuts are set to boom as China trade expands, potentially reaching as much as a billion USD this year. Shrimp exports grew nearly a fifth in July, particularly to the U.S. and China, while pepper exports are forecast to grow past $1 billion. The World Bank has crowned Vietnam as the new low-cost manufacturing champion, taking the place of India.
Read more: Vietnam Economic News (Overall Exports), Fresh Plaza (Coconuts), Nhan Dan (Shrimp), Nhan Dan (Pepper), VOV World (Low-cost Manufacturing)
Real Estate Faces Rising Inventories and Prices
Developers are juggling nearly $20 billion in unsold inventory, threatening macroeconomic stability and creating liquidity issues for banks. Housing demand is reportedly currently outstripping supply however, particularly in Hanoi and Southern Vietnam. Apartment prices continue their upward march due to this imbalance, with affordable housing becoming increasingly scarce. Industry experts see market stabilization by 2025, but near-term price pressures remain unabated.
Read more: Vietnam News (Real estate inventory issues), VNEconomy (Hanoi housing projects), The Investor (Southern market projects), The Investor (Rising apartment prices)
HCMC AirBnB Investors Face Regulatory Squeeze
Airbnb investors in Ho Chi Minh City are navigating treacherous waters as apartment complexes clamp down on short-term rentals. Many buildings have prohibited Airbnb guests, claiming disruptions to long-term residents. Investors who bet on Airbnb operations now face increasing losses, with some struggling to repay loans used for property purchases and furnishings. The regulatory vacuum has created uncertainty, forcing many hosts to reassess their strategies.
Read more: Tuoi Tre News
New Air Routes: China, Bhutan, Indonesia
A new direct route between Hanoi and Guiyang has been launched. Bhutan Airlines will begin direct flights between Ho Chi Minh City and Paro, Bhutan, in 2025, while Da Nang will see new charter flights to Indonesia by December 2024.
Read more: Vietnam Economy (Guiyang), Tuoi Tre News (Bhutan), Vietnam News (Indonesia)
Drones Transform Mekong Delta Farming
Farmers in the Mekong Delta are increasingly turning to drones for pesticide spraying, fertilizing, and rice sowing. The technology helps to address rural labor shortages, slashes operational costs by 10-15%, and boosts crop yields. As drone services become more affordable and accessible, farmers are taking advantage of this modernization to increase productivity and reduce their exposure to harmful chemicals.
Read more: Tuoi Tre News
Vietnam Tops Affordability Chart for Expats
For the fourth year in a row, Vietnam has clinched the title of most affordable country for expats in the InterNations Expat Insider survey. A staggering 86% of expats praised the low cost of living, far surpassing the global average. Job satisfaction and work-life balance also scored high marks. On the downside, environmental concerns pulled down Vietnam's ranking in the Quality of Life Index, but overall it’s a good showing.
Read more: Forbes
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. This article reflects the sad state of affairs that still remains in the country as it relates to a culture of drinking and driving.
1,200 DUI Violations Over National Day Holiday
During the National Day holiday from August 31 to September 3, 2024, the nation recorded about 1,200 alcohol-related traffic violations. Traffic police handled 7,500 traffic cases in total, leading to fines exceeding VND14.6 billion ($587,241). Despite the violations, traffic accidents this year resulted in fewer deaths and injuries measured against 2023’s dismal performance, with seven deaths and 18 injuries tallied this year. More than 1,500 driver’s licenses and 1,500 vehicles were confiscated during the period.
Read more: VnExpress
That’s it for this week!
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