Vietnam News in Brief: Weekly Roundup July 14
Vietnam Briefing keeps track of what’s happening in Vietnam’s business and economic news so that you don’t have to. Here’s what happened this week.
Further interest rate cuts on the horizon
The Vietnamese government has directed the State Bank of Vietnam to continue to lower interest rates by 1.5 to 2 percent. This is yet another in a long line of cuts to stimulate business borrowing and part of a raft of measures aimed at giving the local economy a much-needed boost. Alongside the interest rate policy change, the value-added tax (VAT) has been reduced from 10 to 8 percent, a number of industry related fees and charges have been cut by up to half, and car registration fees have been reduced by 50 percent.
Foreign direct investment news
Eurocham’s Business Climate Index (BCI) was released
The BCI for Q2 2023 was down 43.5, which is the lowest it has ever been outside of the two COVID lockdowns. The report cites challenges in the transportation and logistics, automotive, and energy sectors as pulling the index down.
That said, the report is still showing positive sentiment from foreign firms with respect to FDI. A total of 48 percent of respondents to the survey said they expected their firm’s investment in Vietnam to increase.
Two new Circulars have been issued for OTT service providers
The Ministry of Information and Communications has issued two new circulars related to providing over-the-top (OTT) services in Vietnam. These fit within the broader narrative of the authorities moving to exert greater control over OTT services in Vietnam.
Specifically, Circular No. 06/2023/TT-BTTTT outlines what firms need to do with respect to classifying programs along with a handful of technical requirements like storing content for 30 days after airing.
Circular No. 05/2023/TT-BTTT, on the other hand, updates a number of documents required for reporting and corporate establishment of OTT services in Vietnam.
Global Minimum Tax (GMT) will come before the NA in October
It has been announced that the government will make a submission on the global minimum tax to the National Assembly for approval in October. The submission will outline a combination of a minimum taxable income (IIR) and a qualified minimum additional tax (QDMTT). The GMT is a hot-button issue in Vietnam with a number of foreign firms paying less than the 15 percent tax it will mandate.
Japan’s Shogun Burger looking to enter Vietnam market
Shogun Burger, a popular burger chain headquartered in Japan, has opened its first store in Vietnam, in Ho Chi Minh City. This is another in a long line of fast-food restaurants to enter Vietnam’s lucrative quick-service restaurant sector. Notably, many have struggled to find success for a broad range of reasons, most notably the high costs compared to local street foods.
Singapore firm invests big in Ho Chi Minh City hospital
Singapore’s Thomson Medical Group is set to acquire FV Hospital in Ho Chi Minh City to the tune of US$381.4 million. Vietnam’s healthcare sector has become very attractive in recent years to foreign investors as a booming middle class becomes increasingly focused on their health and well-being. This is likely to be just another in a long line of investments in Vietnam’s healthcare as economic growth continues to boom.
Japan biomass fuel plant slated for Vietnam
Erex, a Japanese renewable energy firm, is building a biomass fuel plant in Yen Bai, in Northern Vietnam. They are teaming up with local firm Sakura Green Energy with a combined investment of US$19.99 million. Biomass features in the recently approved Power Development Plan 8, with a target of 2,270 MW of energy to be produced by biomass by 2030.
Taiwanese contact lenses to be made in Thai Binh
Taiwanese firm Pegavision, which makes contact lenses, is looking to build a US$200 million factory in Thai Binh in Northern Vietnam. Northern Vietnam is a popular location for manufacturing with a workforce well experienced in manufacturing work. This can largely be attributed to Samsung’s presence in the region along with a number of other tech manufacturers.
Singapore’s Keppel invests big in Hanoi retail properties
Urban development fund Keppel Land from Singapore has announced it will take a 65 percent stake in a joint venture with Vietnam’s Binh Minh Investment and Trading Development company. The joint firm will be called Project Co. Keppel has invested in a number of real estate projects this year as Vietnam’s real estate market has experienced a number of challenges that have created a unique acquisition environment for foreign real estate firms.
Singapore-based venture capital steers investment into local EdTech firm
Vietnam’s Vuihoc, an EdTech startup, has secured funding to the tune of US$6 million. The funding round was led by Singapore’s TNB Aura, a venture capital firm focused on the tech sector. EdTech in Vietnam is becoming increasingly popular as Vietnam’s economy grows and demands more high-skilled labor alongside growing internet penetration.
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