Vietnam News in Brief: Weekly Roundup June 30
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.
First half GDP 3.72 percent: General Office of Statistics
The General Office of Statistics has released its June update in which GDP was found to have hit 4.41 percent in the second quarter of 2022. That’s up from 3.32 percent in the first quarter. This gives Vietnam a GDP growth rate for the first half of the year of 3.72 percent. This slight increase is good news, however, it still leaves Vietnam a long way from the 6.5 percent it had set at the beginning of the year. To meet this target it would need upwards of 9 percent growth for the last half of the year.
BlackPink to visit Hanoi
Jack White was in HCMC last year and with BlackPink now headed for Hanoi, the lure of the increasingly lucrative Vietnamese market for popular bands may be becoming too hard to pass up. On that note, the lure of economic stimulus that creative industries can bring may also be too good for Vietnam’s key decision-makers to pass up. Note that creative industries account for about 10 percent of the global economy whereas they represent just 3-5 percent of Vietnam’s economy.
Human resources news
Base Salary Increase: Social and Health Insurance Caps to Rise
Whereas changes to the base salary (not to be confused with the minimum wage) generally only impact government workers, there are some changes to social and health insurance payments that foreign firms should be aware of. Specifically, social insurance and health insurance caps for private firms will be revised up when the new policy takes effect on July 1.
Korea may be funding US$3 billion LNG power plant project
Vietnam’s VinaCapital Group and Korea’s GS Energy have signed a memorandum of understanding with Korea’s Eximbank regarding providing a credit facility for a 3 gigawatt LNG project in Vietnam’s Long An province. Per Vietnam’s Power Development Plan 8, LNG is slated to make up the lion’s share of Vietnam’s electricity supply by 2030. This will take considerable investment between now and then.
Singapore firm to make polymer food packaging south of Hanoi
Sunrise Material from Singapore has said it plans to invest US$100 million in a factory in Nam Dinh. About 80 kilometers southeast of Hanoi, Nam Dinh is about the same distance to the port at Haiphong but can be much cheaper than opening a factory in Hanoi which has made it an attractive alternative for many foreign firms.
Taiwanese textile and garment maker increases Binh Duong investment
Taiwan-owned Far Eastern Polytex Vietnam, plans to add an additional US$250 million to the US$1.37 billion it has already invested in Vietnam’s Binh Duong province. This is welcome news for the sector after a slowing of orders over the past year or so that has seen a huge number of layoffs in key garment-making regions. Despite short-term challenges, these sorts of large-scale investments suggest when demand does return the garment and textile sector will come back roaring.
Philippines’ purchase of Thai solar in Vietnam moves forward
AC Energy (ACEN) from the Philippines is in the process of buying Super Energy Corp’s solar power operations in Vietnam. It announced this week it has completed the first phase of the purchase. These intra-ASEAN transactions are becoming increasingly common as the bloc moves toward greater economic integration.
Domestically made car registration fees cut in half
Car manufacturing employs a lot of people both directly and indirectly hence slower than normal car sales have been a concern of late. It’s hoped this new policy will stimulate car sales and the economy more broadly. Currently, the policy is set to run from July 1 to the end of 2023.
German company partners with local firm to build electric cars
Germany’s Roding Mobility Company is reportedly partnering with Vietnam’s Thai Binh Hung Thinh Joint Stock Company to build and sell electric cars in Vietnam. This comes at an interesting time for the electric car market in Vietnam which is seeing an influx of market entrants–China’s Wuling has just launched a new ‘mini EV’ in the local market, for example.
Agritech startup nets US$1 million from Japan, Singapore, US investors
Beenext from Japan, Vulpes Investment Management from Singapore, and Wavemaker Partners with offices in both the USA and Singapore have come together to provide finance to Vietnamese agritech startup Foodmap to the tune of US$1 million. Foodmap connects farmers with buyers directly. This is just one in a string of Vietnamese apps that have received foreign funding in recent years.
See also: Investing in Vietnam’s Startup Sector
VAT cut from 10 to 8 percent
Normally levied at 10 percent, to the end of the year Vietnam VAT will be reduced to 8 percent. This should give consumers and businesses some reprieve from the broad economic challenges facing businesses and consumers in Vietnam.
E-visas extended to 90 days
E-visas for tourists have been extended to 90 days and visa-free entry has been extended to 45 days for select countries beginning August 15. This is a welcome change with Vietnam’s tourism industry still struggling to recover from the COVID-19 pandemic. It is hoped these changes will stimulate more international arrivals that stay in Vietnam for longer and spend more money.
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