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EU non-tariff barriers becoming key obstacle for Vietnamese goods

Vietnamese okra is at risk of being banned from entry into the EU due to high levels of pesticides found in recent imports. As a first step, the European Union has increased inspections of the okra coming from Vietnam. Similar action has been taken for instant noodles, dragon fruit, and durian.

The European Union-Vietnam Free Trade Agreement, known by the acronym EVFTA, has opened up trade between Vietnam and the EU, however, the EU market has proved challenging for local agricultural producers. In many ways, this is a good thing in that it is forcing local producers to reduce their use of pesticides and produce safer, better products. On the other hand, however, it can make the benefits of the trade deal lopsided in favour of the EU. 

For context, the EU benefits largely from the trade deal through imports of manufactured goods with reduced or zero tariffs. The manufacturing sector in Vietnam, however, is dominated by foreign firms. That said, the aforementioned agricultural products are generally produced by local farmers with the financial benefits going to Vietnamese producers, often in rural areas. Moreover, it’s the export of Vietnamese fruits and vegetables to the EU that has been used to sell the trade deal to the Vietnamese people. In this light, these barriers could prove problematic in terms of attitudes toward and acceptance of the trade deal as well as morale among Vietnamese farmers.

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Vietnam’s adds US$2.8 billion in registered FDI, July [data set]

Vietnam added another 278 foreign direct invested projects to its 2024 tally in July, along with just over US$2.8 billion in additional capital commitments, according to data from Vietnam’s Ministry of Planning and Investment. The biggest gains were in manufacturing and processing which added 96 new projects and US$1.97 billion.

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Vietnam credit growth reaches 6 percent to June

Of note, last year, credit growth limits languished for the better part of the year. In October, however, when it became clear that the same 14 percent credit growth target would not be hit, Vietnam’s banks embarked on some very aggressive marketing campaigns. Rising bad debts in the first six months of this year, however, could suggest there were some quality issues with these loans.

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US logistics, supply chain management firm opens Vietnam office

Of note, in 2023 Vietnam’s transportation and storage sector surpassed VND 502.56 trillion or US$19.807 billion, constituting 4.92 percent of the country’s total GDP.  This could represent broad opportunities for foreign firms, however, foreign ownership limits in logistics services can be very restrictive. For example, foreign firms are prohibited from owning more than 34 percent of an airline…

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Vietnam News Roundup: July 19 to July 25

This week’s Vietnam news roundup covers foreign trader stock market activity, bad debts, GDP targets, offshore wind developments, a new waste-to-energy plant in HCMC, soft drink market forecasts, and the latest developments in Vietnam’s quest to have its designation as a ‘non-market’ economy revoked by the US Department of Commerce, and more…

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Vietnam bad debt hits 6.9 percent

Of note, pursuant to amendments to Circular 39 made in June, loan applications for less than VND 100 million or about US$4,000 no longer need to detail a plan for the borrowed funds. Also back in November and December of last year, to meet annual credit growth targets, Vietnam’s banks embarked on some pretty aggressive lending campaigns that saw credit growth jump considerably but in what looked like mostly consumer loans. It could be that some of these loans are now turning bad…

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