Vietnam News in Brief: Weekly Roundup March 31
Vietnam Briefing keeps track of what’s happening in Vietnam business and economic news so that you don’t have to. Here’s what happened this week.
GDP growth has slowed considerably
The General Statistics Office has released its quarterly socio-economic report this week, which revealed GDP growth of just 3.32 percent for the first quarter of 2023. This was the lowest Q1 GDP growth in the last decade with the exception of 2020. This is likely the result of an 11.9 percent decrease in exports year-on-year and a general slowdown in Vietnam’s manufacturing sector due to softening global demand.
Industrial Production Index Down in March
Vietnam’s Industrial Production Index (IIP) was down 2.2 percent over the first quarter of last year. Though it jumped 7.2 percentage points in February, in March it slipped back 1.6 percent. Fewer orders from key markets in the EU and US are driving these somewhat haphazard movements as the manufacturing industry struggles to find stable ground amid a choppy global economy. This has been ongoing since the end of 2022 and looks set to continue for some time yet in 2023.
Banking and Finance News
Banks may have foreign ownership limits extended
The State Bank of Vietnam has proposed raising the foreign ownership limits on certain domestic banks. Currently, the banking sector has a 30 percent limit on foreign ownership. Nevertheless, the government has previously allowed individual banks to surpass this limit with prior approval. With various obstacles encountered in the bond market, especially in the real estate sector where many Vietnamese banks have significant investments, mergers and acquisitions in the banking industry are expected to be frequent this year.
Vietnamese conglomerate divests 100 percent out of bonds
The Leader is reporting that one of Vietnam’s biggest companies, Mobile World Group, has divested entirely out of bonds. The Leader article seems to suggest that this is due to a downturn in sales, with Mobile World looking to free up capital. It does come, however, in the context of low investor-sentiment toward the local bond market, which has frozen-up over the past twelve months.
Asia Bond Monitor March 2023 report has been released
The report says that the value of Vietnam’s local currency bonds increased from US$98 billion in Q3 2022 to US$106 billion in Q4 2022. However, it notes this growth was in government bonds with the value of corporate bonds slightly contracting. This reflects a decline in corporate bond issuances alongside a number of bond issuers buying back their bonds as the bond market weathers a number of regulatory changes amid increased government oversight.
Netherlands increases investment in Vietnam, this time in wood
Dutch firm vidaXL is planning to invest US$50 million in a wood factory in Quang Tri in central Vietnam, The Investor is reporting. The facility would be around 50 hectares in size and employ somewhere in the vicinity of 3000-4000 people. Exports of wood products from Vietnam are becoming increasingly popular. By some forecasts, this year Vietnam may export as much as US$18 billion worth of wood.
Dutch also consider moving on rooftop solar in Vietnam
Dutch development bank, FMO, is considering a US$6.8 debt pack for Vietnamese rooftop solar developer, GreenYellow. This is on the back of growing demand for renewables in Vietnam as the Southeast Asian nation endeavours to meet its commitment to carbon-zero by 2050.
See also: Progress Report: Vietnam’s Carbon Market, March 2023
Thai retailer in talks to buy share of Vietnam shopping centers
It has been widely reported this week that Thailand’s Central Group is in talks to buy a stake in Vietnamese retail behemoth Vincom, a subsidiary of Vietnam’s biggest conglomerate, Vingroup. Vingroup is reportedly open to selling a majority stake; however, no sources have been named and neither company has publicly commented. Note that it was reported last week that Vingroup was in talks to sell up to US$1.5 billion of retail assets to Singapore’s CapitalLand.
Japanese banks pitch in US$300 million for Vietnam’s energy transition
There will be up to US$300 million made available by Japanese banks to assist Vietnam in its energy transition, according to The Investor. The Japan Bank for International Cooperation (JBIC) alongside Japan’s Mizuho Bank, Joyo Bank, and Shiga Bank, will all take part. The funds will be distributed through a partnership with local bank Vietcombank.
See also: Unpacked: Vietnam’s US$15.5 Billion JETP Agreement
Vietnam to bring back 3-month e-visas for tourists
The government has announced that it intends to submit to the National Assembly a plan to reinstate three month e-visas and extend visa free periods for countries eligible for visa-waivers from 14 to 30 days. This is on the back of underperformance recorded by Vietnam’s tourism industry since reopening after COVID. Although a target of 5 million tourists for 2022 was set when the border reopened, Vietnam only managed to reach 3.5 million. Key opinion leaders in the tourism industry have repeatedly claimed a big part of the slow growth has been due to visa changes made during the pandemic.
Danes form partnership to extend Haiphong port
Denmark-headquartered Maersk, through its subsidiary, APM Terminals, is forming a partnership with Vietnam’s Hateco Group. Together the partnership intends to expand the capacity of Haiphong’s Lach Huyen port. This includes building two additional deep-sea berths.
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