Vietnam 20250605
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Headlines:
US Pushes on China Supply Chains
Economy Holds Strong Despite Global Churn
Population Policy Shift: No More Two-Child Limit
Ag Exports Humming Along and Diversifying
Big Green Push for Energy
Infra Boom Changes the Face of the Nation
Digital Push Reaches Its Stride
Global Ties: KZ, AZ, RU, BY, US, AU
Stocks Soar, Confidence Returns
Business Rules Get a Makeover
Manufacturing Momentum Faces Hurdles
AI Fuels a New Crime Wave
Crypto Rules Tight on Exchanges
Tech & Defense Alliances Grow
US Pushes on China Supply Chains
The United States has presented Vietnam with some pretty serious trade demands, trying to push the country to reduce its dependence on Chinese industrial inputs and supply chains. Vietnamese companies are staring down the barrel of 46% reciprocal tariffs, facing pressure to decrease reliance on Chinese materials and putting stricter controls on their supply chains in place. Exporters are trying to make hay while the sun shines during the current 90-day tariff suspension, rushing shipments out the door before the August re-evaluation. The electronics sector, a $47 billion powerhouse, is especially feeling the heat, as it saw $47 billion in export turnover and is heavily reliant on foreign-invested companies accounting for 85% of US exports.
Read more: Reuters (Trade Demands), Vietnam News (Electronics Challenges), VIR (Export Response)
Economy Holds Strong Despite Global Churn
The economy has so far this year been able to keep chugging along with a strong performance through the first five months. The PM says that inflation is in check at 3.21% CPI, and industrial production is growing at an 8.8% clip. Foreign direct investment has soared to $18.4 billion in registered capital, a whopping 51.1% increase. Tourism is also roaring back, pulling in 9.2 million international visitors. Trade remains healthy: exports are up 14% and the country is running a $4.67 billion trade surplus. As alluded to in the previous summary, though, it's not all sunshine and roses: trade tensions mean there’s still pressure on to find new markets.
Read more: Vietnam News (Economic Performance), Vietnam Insiders (FDI Growth), The Investor (Government Response)
Population Policy Shift: No More Two-Child Limit
The decades-old two-child policy from 1988 has finally been scrapped as the reality of demographic trends is starting to hit home. The domestic fertility rate has plunged, dropping from 2.11 children per woman in 2021 to 1.91 in 2024. Ho Chi Minh City is in even deeper trouble at a flaccid (?) 1.39. To try and shore up the population numbers, the government is rolling out the red carpet with incentives including cash bonuses, longer maternity leave, and free education all the way through high school. Current data shows the working-age population is expected to peak in 2042, and that has everyone worried about future labor shortages and the likely strain on social services that will come along with it.
Read more: Newslooks (Policy Change), TV47 (Birth Rate Decline), Vietnam Briefing (Demographic Shift)
Ag Exports Humming Along and Diversifying
The US remain the Ag sector’s biggest customer at $13.8 billion of exports in 2024, but producers are working hard to expand into European, Japanese, South Korean, ASEAN, and Middle Eastern markets, while trying to beef up domestic consumption. Strong performers putting up impressive numbers include pepper sales ($1.31 billion), frozen durian (US$31M / 8,710 tonnes - up 63% year-on-year by volume), and pangasius ($175 million in April). Border trade is humming now that agricultural products have hit peak harvest season; total import-export turnover has breached the $32 billion mark.
Read more: VN Economy (Market Diversification), Ven Congthuong (Durian), Baird Maritime (Pangasius)
Big Green Push for Energy
The Ministry of Industry and Trade has presented an ambitious energy plan that extends to the year 2030, packed with aggressive renewables targets: 73,416MW of solar capacity, 38,029MW of onshore wind, and 6,000MW of offshore wind power. They're also locking in power import deals up to 12,100MW from Laos and China, as well as eyeing exports of 400MW to Cambodia. We should also expect two major renewable energy industrial hubs to pop up - one each in the north and south. The optimistic plan comes even as the government has been forced to scramble this year to prevent power shortages - consumption this summer hit a record 51,672MW on June 2.
Read more: VIR (Energy Roadmap), Vietnam News (Power Crisis), The Investor (Policy Challenges)
Infra Boom Changes the Face of the Nation
Logistics, trade and tourism are all continuing to get a facelift thanks to big infrastructure plays. (By the way, if you’re into infrastructure and haven’t yet subscribed, do yourself a favor and pony up for one at Future Southeast Asia). Hoa Phat Group has hooked up with Germany's SMS Group to start churning out high-speed railway tracks, production is expected to begin Q1 2027. THACO has announced plans to contribute 20% toward the North-South high-speed railroad project, valued at a $61 billion. The Lao Cai–Vinh Yen 500 kV transmission line project continues to move along on the back of its VNĐ7.41 trillion investment. On the housing front, the government wants to set a target of a million social housing units by 2030, with Ho Chi Minh City alone planning more than 100,000, backed by a VNĐ145 trillion loan package.
Read more: Nikkei Asia (Railway Production), VN Express (THACO Investment), Asian News Network (Housing Development)
Digital Push Reaches Its Stride
Vietnam is pushing hard on its digital agenda. The national digital strategy is intended to boost the digital economy's GDP contribution from 16.5% to 20% by the end of this year. A new National Legal Portal has launched using VNeID digital identification. Vietnam Social Security has seen a full transition to digital health insurance, and now covers an impressive 94.2% of the population. E-commerce hit $25 billion in 2023, rising a solid 22% year-on-year.
Read more: Vietnam News (AI Development), Biometric Update (Government Digital), Vietnam News (E-commerce Growth)
Global Ties: KZ, AZ, RU, BY, US, AU
Communist Party General Secretary To Lam has been on a whirlwind diplomatic tour, completing a diplomatic mission through Kazakhstan, Azerbaijan, Russia, and Belarus. His travel is part of Vietnam's play to keep its foreign policy multi-directional. Vietnam and the United States have inked new deals, signing agreements on chemical, biological, radiological, and nuclear threat preparedness. Australia and Vietnam have made their fintech collaboration official, formalized through the Vietnam Banks Association.
Read more: Think China (Diplomatic Mission), Vietnam Plus (US Partnership), VIR (Australia Cooperation)
Stocks Soar, Confidence Returns
The stock market is in fuego. The VN-Index has shot up to 1,347.25 points – a three-year high – after bottoming out at 1,090 points in April. VNDirect Securities is forecasting 1,400-1,520 points, supported by easing US trade tensions and pro-growth policies like Resolution 68 at home. Several Vietnamese banks are preparing for new stock exchange listings in 2025, with VietABank planning a Q3 HOSE debut. This rally is getting a tailwind from government support, expected MSCI/FTSE market upgrades, and decent corporate earnings. The P/E ratio is sitting pretty at 12.9x, better than it has typically been historically.
Read more: Vietnam Insiders (Market Rally), Vietnam News (Banking IPOs)
Business Rules Get a Makeover
Resolution 198, a potentially game-changing piece of legislation has just dropped. Under the resolution, government inspections and audits are now capped at once a year, unless there's a clear legal violation. This regulatory reform isn't a tweak; it's a big shift from a control mindset to one of facilitation, complementing Resolutions 68 and 139. The Prime Minister has personally said that he expects a two-week response time for all business proposals made to the government. Hopefully this leads to a reduction in waiting around for approvals. It's not all smooth sailing, though: there are still about 2,200 stalled projects, valued at $235 billion on the books. The overhang is cause for calls to further streamline administrative processes, settle on a unified innovation strategy, and basically just make it easier for the private sector to get things done.
Read more: Vietnam News (Reform Implementation), VIR (PM Directive), Vietnam News (Project Challenges)
Manufacturing Momentum Faces Hurdles
Despite gains in traction as a manufacturing hub, bringing global firms like Samsung, Apple, and Toyota, as well as more than $500 billion in foreign direct investment, domestic companies are struggling to capitalize on the momentum. A recent survey shows that almost two thirds of Vietnamese companies are not ready to integrate into global supply chains. Only a small proportion of them have concrete plans. Localization rates remain low, especially in electronics and automotive, where high-value components are still by and large imported. To solve this problem, experts say there’s a need for closer collaboration between local firms and multinational corporations, as well as more investment in technology and infrastructure.
Read more: Vietnam Economic News (FDI Opportunities), The Investor (Supply Chain), Vietnam News (Multinational Partnerships)
AI Fuels a New Crime Wave
Authorities have just busted 21 in the country's first AI-enabled money laundering operation. The gang was tied to the 'Kubet' gambling platform, which processed more than $39 million in illegal transactions. The big shocker was how the criminals used AI-generated deepfake videos to bypass bank security systems, allowing for unauthorized account access and money transfers across more than a million gambling accounts. The news hits hard right after the recent biometric verification mandate for digital transactions has seen a 72% drop in fraudulent accounts. In another big bust, 141 people were charged in Hanoi's $111 million 'King Club' gambling scandal. Seems like authorities are cracking down on financial crimes with more enforcement.
Read more: Vietnam Insiders (AI Crime), Biometric Update (Biometric Fraud), Vietnam Insiders (Gambling Investigation)
Crypto Rules Tight on Exchanges
A regulated cryptocurrency exchange platform is finally in the cards, and authorities are not messing around. The requirements demanded from those who want to set one up include a minimum capital threshold of VND 10 trillion ($390 million). Ownership rules are tight too; the ownership structure requires 35% institutional investor capital, with 65% coming from legal entities, and a prohibition on individual ownership. Again: no individual shareholders are allowed. It's starting as a pilot program, with the exchanges to operate under the supervision of the State Securities Commission, which promises to keep a close eye on things.
Read more: Vietnam Insiders
Tech & Defense Alliances Grow
John Cockerill Defense and Viettel Group say they’ve teamed up, inking a partnership to develop next-generation armored vehicles, taking advantage of Belgium's vehicle systems expertise and Vietnam's defense electronics capacity. Thales Group is planning to grow, saying it wants to work on space technology development with the Vietnam Space Committee Office, while also stepping up efforts in telecommunications, aerospace, and cybersecurity. Apple has given a shout-out to Vietnamese workers for their reportedly stellar performance, praising them for exceptional work. Apple plans to nearly double training capacity in 2025 with 45 technical courses.
Read more: Army Recognition (Defense Partnership), VIR (Thales), Vietnam Insiders (Apple Investment)
That’s it for this week!
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