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Commerce’s Findings from Vietnam’s Non-Market Economy Review: Unpacked
Last week, the United States Department of Commerce–the DOC–rejected Vietnam’s application to have its status as a non-market economy overturned. This came after a months-long review including thousands of pages of evidence and arguments, from both Vietnam and the United States, culminating in not just the aforementioned adverse findings but also a 284-page memorandum explaining the decision. This article breaks down the key points in said document.
How African Swine Fever is Reshaping Vietnam’s Pork Market
Vietnam has a bad case of African Swine Fever that it just can’t seem to shake. This is fundamentally reshaping Vietnam’s pork market, which has seen a huge increase in pork imports in recent years. This article looks at how this all started, what’s happening now, and what might happen next.
Agriculture news
Vietnamese monkeys have been approved for export to China
China’s customs department has approved Vietnam to export monkeys to its northern neighbour, VietnamNet has reported. The monkeys will reportedly be used for scientific research.
Vietnam hosts one of the biggest monkey breeding facilities in the world, Nafovanny. This is a subsidiary of Vietnam Forest which trades on the Hanoi Stock Exchange under the ticker VIF. The facility has been in operation since back in the 90s.
Banking and Finance News
Vietnamese dong undervalued by 33.3 percent: Big Mac index
The Economist’s Big Mac Index July update has found that the Vietnamese dong is undervalued when adjusted for GDP, against the US dollar by 33.3 percent. This represents a devaluation of 2.7 percent from its January update which reported that the dong was undervalued by 30.6 percent.
Of note, since the start of the year, the Vietnamese dong has devalued by about 4.5 percent. This has been on the back of efforts by the State Bank to keep the local currency ‘stable’ by issuing treasury bills and burning through its US dollar and gold reserves.
See also: The Vietnamese Dong’s Wild Ride: Unpacked 2024
Bad debts continue to skyrocket at most Vietnam banks
Of 29 of Vietnam’s biggest banks, 27 had recorded an increase in bad debt at the end of June, Mekong ASEAN has reported. Collectively they held VND 46,719 billion or US$1.86 billion in bad debts, an increase of 20.8 percent compared to the end of 2023.
State Bank continues T-bill issuances, US$4.27 billion worth outstanding
The State Bank of Vietnam has continued to issue treasury bills to suck up excess liquidity in the economy. There are currently US$4.27 billion worth of T-bills outstanding as of the close of business on August 8. Also of note is that the State Bank has outstanding reverse repos to local banks worth US$2.6 billion.
See also: Vietnam Dong Tracker: Daily Updates.
Outstanding loans
Issued | Length | Maturing | VND* | US$ | % p.a. |
1-Aug | 7 | 8-Aug | 6,000 | $238,625,002 | 4.50 |
2-Aug | 7 | 9-Aug | 6,338 | $252,067,964 | 4.50 |
5-Aug | 7 | 12-Aug | 13,669 | $543,610,137 | 4.25 |
6-Aug | 7 | 13-Aug | 12,000 | $477,249,607 | 4.25 |
7-Aug | 7 | 14-Aug | 13,949 | $554,767,466 | 4.25 |
7-Aug | 7 | 14-Aug | 14,000 | $556,791,805 | 4.25 |
Total | 65,956 | $2,623,111,981 |
*billions
Outstanding T-bills
Issued | Days | Maturing | VND | US$ | % p.a. |
25-Jul | 14 | 8-Aug | 1,300 | $51,702,170 | 4.50 |
26-Jul | 14 | 9-Aug | 5,500 | $218,739,950 | 4.50 |
29-Jul | 14 | 12-Aug | 10,850 | $431,514,265 | 4.50 |
30-Jul | 14 | 13-Aug | 22,050 | $876,948,345 | 4.50 |
31-Jul | 14 | 14-Aug | 9,600 | $381,800,640 | 4.50 |
31-Jul | 14 | 14-Aug | 9,400 | $373,846,460 | 4.50 |
1-Aug | 14 | 15-Aug | 9,400 | $373,846,460 | 4.50 |
2-Aug | 14 | 16-Aug | 6,850 | $272,430,665 | 4.50 |
5-Aug | 14 | 19-Aug | 3,250 | $129,255,425 | 4.25 |
6-Aug | 14 | 20-Aug | 9,250 | $367,880,825 | 4.25 |
7-Aug | 14 | 21-Aug | 10,000 | $397,697,069 | 4.25 |
7-Aug | 14 | 21-Aug | 10,000 | $397,701,046 | 4.25 |
Total | 107,450 | $4,273,363,320 |
*billions
Car news
Imported car sales poised to overtake locally made cars in Vietnam
Sales of imported cars hit 67,035 in the first half of 2024 in Vietnam, a 16 percent increase over a year earlier, VN Express is reporting based on data from the Vietnam Automobile Manufacturers Association. At the same time, just 67,849 locally assembled vehicles were sold.
Investment news
Japan, Vietnam firms partner up on new cinema chain
Vietnam’s Beta Media and Japan’s Aeon Entertainment, have announced that they intend to build a new, premium cinema chain in Vietnam, Variety has reported The total investment could be worth as much as VND 5 trillion or US$198.2 million.
Of note, for foreign firms, forming a partnership with a local business can reduce some administrative hurdles that go along with starting a business in Vietnam. Specifically, a joint venture will not require an Investment Registration Certificate or IRC.
Joint ventures, however, can be risky. A mismatch in work ethics and management styles can cause conflict in the workplace, particularly in cross-cultural settings. Foreign businesses that pursue this route should prepare themselves accordingly.
See also: How to Start a Business in Vietnam: Ultimate Guide 2024
Vietnam outbound FDI falls 53 percent to July 2024
Vietnam invested just US$150.7 million abroad between January to July of 2024, a fall of 53 percent over the same period last year, according to PetroTimes. Only 64 foreign investment certificates had been granted by the end of the first half of the year, a fall of 18.2 percent year-on-year.
Manufacturing news
Hong Kong firm considers Vietnam-based phone component plant
Chung Nam Group, a Hong Kong-based technology manufacturer and retailer, is considering a US$50 million assembly plant in Nam Dinh province. The plant will make camera components for phones, according to The Investor.
In June, Vietnam’s phone and component exports surged 18.4 percent month-on-month, reaching nearly US$4.75 billion. This robust growth has solidified Vietnam’s position as the world’s second-largest exporter of smartphones and components.
Hong Kong-headquartered Apple supplier to build aluminium factory in northern Vietnam
Kam Kiu Aluminium Products Group, a Hong Kong-based supplier to tech giants Apple, Samsung, and Volkswagen, is set to invest US$100 million in a new aluminium factory in northern Vietnam, according to The Investor.
This move aligns with the rapidly growing demand for aluminium in Vietnam spurred by new factories belonging to major electronics manufacturers from Taiwan and South Korea, like Foxconn and LG.
See also: How to Open a Factory in Vietnam: Ultimate Guide 2024
Retail news
Vietnam retail sales jump 1.11 percent July over June
Retail sales revenue in July climbed 1.11 percent over June, according to data from the Ministry of Industry and Trade. Increases were seen across the board, with services, cultural and educational items, and travel and tourism recording the biggest increases.
See also: Vietnam Retail Sales Tracker: July 2024 Update [data set]
Stock market news
Vietnam’s Vinhomes jumps on buyback news but foreigners exit stock en masse
There was a spike in interest in Vietnam’s Vinhomes stock Wednesday after the firm announced it would buy back 370 million shares. The announcement saw shares in the firm hit their ceiling price.
Of note, Vinhomes made the decision reportedly because it believes its shares to be undervalued, Dan Tri reported. Foreign investors, however, did not seem to have agreed, using the increased local demand to net-sell 1,935,886 shares worth around US$72 million. This has further diminished foreign ownership in the firm–at the start of last year foreign investors held about 24.30 percent of Vinhomes shares; that number has since come down to just 15.08 percent.
Foreign traders net withdraw US$129.5 million from local bourse
Foreign traders have continued to sell down their positions in the Ho Chi Minh City Stock Exchange. In total, just over US$129.5 million was withdrawn from the market over the last five trading sessions to the close of business on August 1. This brings the total net withdrawn from the market by foreign traders to just over US$2.54 billion so far this year.
See also: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked 2024
Foreign trader activity, last five trading days
Buy | Sell | Change | ||||
Date | VND* | US$ | VND* | US$ | VND* | US$ |
2/8 | 2,076 | $82,564,388 | 1,331 | $52,935,068 | 745 | $29,629,321 |
5/8 | 2,010 | $79,939,509 | 2,748 | $109,290,433 | -738 | -$29,350,924 |
6/8 | 2,105 | $83,717,745 | 2,834 | $112,710,731 | -729 | -$28,992,986 |
7/8 | 1,450 | $57,667,805 | 2,808 | $111,676,687 | -1,358 | -$54,008,882 |
8/8 | 1,746 | $69,439,991 | 2,921 | $116,170,799 | -1,175 | -$46,730,808 |
Total | 9,387 | $373,329,438 | 12,642 | $502,783,718 | -3,255 | -$129,454,280 |
*billions
Source: www.hsx.vn
Tax news
World Bank recommends Vietnam raise alcohol excise tax to 155 percent
The World Bank has recommended Vietnam increase its excise tax, officially known as the Special Consumption Tax, to 155 percent on alcohol.
The World Bank reportedly does not believe the current tax increase slated for beer and wine in Vietnam is sufficient–The Ministry of Finance has a plan on the table to increase the SCT to 90 percent for beer and between 60 to 100 percent for wine and liquor. This would be an increase from 65 percent on beer and between 35 and 65 percent for wine and hard liquor depending on the alcohol content.
There has been some pushback from the beverage industry which has struggled in recent years. Beer in particular.
See: What’s Happened to Vietnam’s Beer Market? Unpacked 2024
Trade news
EU standards warnings on Vietnam produce exports jump
At the end of July the number of warnings regarding product standards on Vietnamese imports into the bloc had reached 72 for the year, nearly double the 40 warnings issued over the same period last year, according to the EU’s Rapid Alert System for Food and Feed. These were mostly due to chemical residues on Vietnamese fresh produce.
This jump is in line with increased trade between the EU and Vietnam on the back of the European Union Vietnam Free Trade Agreement, commonly known as the EVFTA. But though this agreement may have seen trade soar between the two partners it has also been somewhat challenging for Vietnam to implement. This is not just because of strict phytosanitary measures on produce entering the EU but a number of other stipulations in the agreement, particularly around workers’ rights.
For more information see: How is the EVFTA Working Out for Vietnam?
The week ahead
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