Vietnam 20240919: Galvanized, Retro, Resourceful
Vietnam 20240919: Galvanized, Retro, Resourceful
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Headlines:
Economic Growth Projections Strengthening
Trade Expansion Drives Business Growth
Energy Strategy Diversification Ongoing
Real Estate Price Hikes, Investor Shifts, Scrutiny
Retail Rents Surge On Limited Supply
New Rules for Foreign Electronic Signatures
SBV Cuts Open Market Operation Rate
Foreign Businesses Propose WP Solutions
U.S. Pressure to Keep Chinese from Cable Projects
Businesses Battle Demographic Shifts
Metro's Success Sign of a Sustainable Future
HCMC as SEA Logistics Hub by 2030
International Ties: IT, RU, ID, US
Cashless QR Code Payments Booming
VN Airlines and Vietjet Expand to Italy and India
Da Nang Complex Invests in $15,000 Hotel Robot
Economic Growth Projections Strengthening
Vietnam's economy is projected to grow between 6.5% and 7.5% in 2025, with drivers including export recovery, tourism, and investment. The Ministry of Planning and Investment has outlined two potential growth scenarios for the country, saying that public investment and foreign direct investment (FDI) will be important factors in success. In August 2024, Vietnam's trade turnover grew 15.5%, mostly on the back of strong export performance. Legislative efforts are underway to amend laws to further support growth as the government continues to try and balance growth with inflation control.
Read more: Xinhua (Economic Outlook), VnEconomy (Trade), Nhan Dan (Economic Outlook), Nhan Dan (Legislation), Vietnam Economic News (Growth Scenarios)
Trade Expansion Drives Business Growth
Foreign trade is expected to set a new record in 2024, with export-import turnover possibly surpassing $790 billion. August 2024 saw exports reach an all-time high of $37.59 billion, driven by demand in markets like the U.S. and the EU. Bilateral trade with the U.S. approached the $90 billion mark in the first eight months of 2024. Vietnam-Laos trade hit $1.1 billion over the same period, with both nations committing to annual trade growth of 10-15%. Thai bank Krungsri and VietinBank signed a partnership to help Thai firms enter the Vietnamese market.
Read more: Vietnam Economic News (Record Trade), Vietnam Economic News (Export Momentum), Vietnam Economic News (U.S. Trade), Nhan Dan (Vietnam-Laos), Dan Tri News (Trade Targets), The Investor (Thai-Vietnam Partnership)
Energy Strategy Diversification Ongoing
Vietnam is aggressively pursuing energy diversification, with Bac Lieu planning to become a renewable energy export hub and a re-evaluation of nuclear power to ensure long-term energy security. Obstacles remain, especially in offshore wind, where regulatory delays and unclear policies have led some big investors to pull out. To support energy goals, Vietnam is also exploring energy storage solutions like battery systems. Addressing these regulatory and technical challenges will be necessary to meeting 2030 targets for clean energy development.
Read more: Vietnam Economic News (Bac Lieu Energy Hub), Vietnam News (Storage), Nuclear Engineering International (Nuclear), Vietnam Investment Review (Wind)
Real Estate Price Hikes, Investor Shifts, Scrutiny
The real estate sector is seeing rising prices with Hanoi’s high-end property prices climbing by as much as 30%, and Ho Chi Minh City’s market pricing itself out of reach for many buyers. Foreign direct investment in real estate grew to $2.4 billion, while Ho Chi Minh City’s market showed signs of recovery with a 6% revenue increase this year. Due to concerns over “abnormal” price increases, the Ministry of Construction has called for tighter controls on property pricing to ensure market stability.
Read more: Vietnam Investment Review (High-End), Vietnam News (Foreign Investment), VnExpress (HCMC Apartments), Dan Tri (Recovery), Vietnam News (Regulation)
Retail Rents Surge On Limited Supply
Retail rents in Ho Chi Minh City have soared to a record $280 per square meter due to limited supply and high demand from international brands, a 60-70% increase over the past five years. Hanoi’s prime retail sector has also seen growth, with rents at $96.4 per square meter, thanks to urbanization, a rising middle class, and a recovery in tourism. Both cities are pulling in interest from global retailers, with high occupancy rates and limited new supply expected to drive prices even higher.
Read more: VnExpress (HCMC), Vietnam Economic News (Hanoi)
New Rules for Foreign Electronic Signatures
The Ministry of Information and Communications introduced new regulations, effective August 2024, for recognizing foreign electronic signature providers. The regulation outlines procedures, timelines, and compliance requirements for foreign service providers, and mandates regular audits and status reporting.
Read more: Vietnam Briefing
SBV Cuts Open Market Operation Rate
The State Bank of Vietnam (SBV) has reduced the open market operation rate from 4.25% to 4%, its second rate cut in over a month. This move should ease liquidity in the banking system and lower interbank interest rates. The SBV’s actions also address foreign exchange headwinds, with the USD/VND exchange rate having fallen markedly. Analysts expect the SBV may also attempt to boost foreign reserves by increasing its dollar buying price.
Read more: Vietnam News
Foreign Businesses Propose WP Solutions
Ahead of a policy dialogue, foreign employers in Ho Chi Minh City have raised issues with the current work permit application process. Concerns include delays caused by the batch application system, the requirement to interview candidates selected by authorities, and challenges faced by graduate students seeking internships. Nike and KPMG, among others, requested more efficient processes to reduce administrative backlogs, calling on local authorities to adopt simpler, more flexible work permit rules.
Read more: Vietnam Investment Review
U.S. Pressure to Keep Chinese from Cable Projects
The United States is putting the heat on Vietnam to avoid Chinese firms, particularly HMN Technologies, in its plans to develop 10 new undersea cables by 2030. Claiming concerns over espionage and sabotage, U.S. officials have held multiple meetings to try and influence Vietnam’s decision-making, warning that using Chinese companies could discourage American investment. While Vietnamese officials have so far been open to working with China, the U.S. continues its efforts to steer the country toward alternatives.
Read more: Reuters
Businesses Battle Demographic Shifts
As the population ages ever more quickly, businesses must adjust to new demographic realities. Vietnam’s fertility rate has dropped, and by 2039, the aging population is going to be bigger than the working-age group, putting pressure on social services and workforce planning. Companies are being called on to target underserved markets, particularly older adults who still control significant wealth.
Read more: Vietnam Investment Review
Metro's Success Sign of a Sustainable Future
Hanoi’s Metro Line No. 3 has seen over a million passengers in its first month of operation, a demonstration of success in Vietnam's green transport infrastructure. Funded by France, with companies like Alstom and Thales involved, the metro line is an achievement in reducing urban congestion and lowering carbon emissions. Achieving 2050 net-zero goals remains financially challenging, with experts saying further investment in public transport and green infrastructure will be required to meet these targets.
Read more: Vietnam Economic Times (Hanoi Metro), Vietnam Investment Review (Green Transport Financing)
HCMC as SEA Logistics Hub by 2030
Ho Chi Minh City has unveiled a plan to develop a world-class logistics infrastructure to position itself as a regional logistics service hub by 2030. The strategy includes increasing port handling capacity, encouraging private investment, and taking advantage of Industry 4.0 technologies for a green, sustainable supply chain.
Read more: Vietnam Economic News
International Ties: IT, RU, ID, US
Relations with Italy are expanding, with Vietnam Airlines planning a direct route to Italy and Italian financial institutions establishing a presence in Vietnam. Vietnamese top legislator Tran Thanh Man recently met with Russian President Vladimir Putin to discuss strengthening legislative cooperation and achieving a trade target of $10 billion by 2030. Vietnam is also set to elevate its partnership with Indonesia, as part of a broader "enemy to none" security strategy. Party chief To Lam is rumored to have meetings with Google and Meta representatives during his upcoming U.S. visit, to talk on economic and technological collaboration.
Read more: Vietnam Economic News (Italy), Tuoi Tre News (Russia), SCMP (Indonesia), SCMP (Google and Facebook)
Cashless QR Code Payments Booming
QR code payments in Vietnam saw a 172% increase in 2023, as cashless transactions hit 11 billion, a 50% lift over the previous year. Mobile payments dominated with 7 billion transactions. The total value of cashless payments reached VND200,000 trillion ($8.12 trillion). The number of card acceptance points grew to 1.8 million, with QR code adoption expanding quickly.
Read more: The Investor
VN Airlines and Vietjet Expand to Italy and India
Vietnam Airlines will launch nonstop flights between Milan and Hanoi, on December 2. Vietjet will start direct flights between Da Nang and Ahmedabad beginning October 23. This new route is Vietjet’s eighth connection with India, offering 60 flights per week. Both airlines want to improve tourism and economic cooperation between Vietnam, Europe, and South Asia.
Read more: TravelMole (Milan), Vietnam News (Ahmedabad)
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. In other news, Oliver Stone and Phillip Noyce say they will promote Vietnamese tourism and cinema in the United States, a group of foreign contestant arrived to compete in the “Miss Cosmo 2024” pageant, n . Here’s an interesting one about professionals doing what was necessary to get the job done:
Da Nang Complex Invests in $15,000 Hotel Robot
The Furama-Ariyana Danang International Tourism Complex has invested $15,000 in a hotel service robot, a first for Da Nang City. The robot is expected to help guests at the resort, recently showing off its abilities during the HORECFEX Vietnam 2024 event. This robot may be a sign of things to come and a possible reminder that the real minimum wage is zero.
Read more: Tuoi Tre News
That’s it for this week!
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