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Vietnam News Roundup: January 17 to January 23

In case you missed it…

What Recent Traffic Reforms Say About Doing Business in Vietnam

Change is afoot on the typically chaotic streets of Vietnam with significantly increased fines introduced at the start of the year for a myriad of traffic violations. These changes can in many ways be seen as a proxy for Vietnam’s economic development more broadly… Read More »

Banking and Finance News

State Bank continues open market operations

The State Bank of Vietnam has continued to carry out open market operations. Specifically, there were US$4.3 billion worth of reverse repos outstanding as of close of business January 23 and US$1.67 billion in treasury bills outstanding. This is a significant shift from this time last week when there were US$2.63 billion worth of reverse repos outstanding and US$3.19 billion in treasury bills outstanding.

See also:  The Vietnamese Dong’s Wild Ride: Unpacked

Insurance news

Pushback on compulsory motorbike insurance surfaces

Vietnam’s Ministry of Finance has received pushback on compulsory motorcycle insurance which was codified in Decree 67 back in 2023. The pushback has centered around challenges getting paid out in the event a claim is made, according to a write-up in VietnamNet.

VN Express also notes that just 6.5 million motorbikes were insured in the first six months of last year or about 9 percent of motorbikes on the road. It notes that motorbike insurance over the same period generated revenue of VND 430 billion on which payouts were made to the tune of VND 41.9 billion.

Ngoi Sao, on the other hand, tackles questions about motorcycle insurance sold on the streets for only VND 10,000 a year, and points out that this is voluntary insurance and is not sufficient to satisfy the compulsory insurance requirement. It says the minimum insurance requirement costs around VND 66,000 for a year.

See also: Vietnam’s Auto-Insurance Industry

Logistics news

New Vietnam traffic law causing productivity concerns for logistics industry

A 48 hour limit on driving hours for truck drivers outlined in the 2024 Law on Road Traffic Order and Safety is gaining traction as an issue among local logistics firms. 

The Hanoi Logistics Association has argued that this limit, lower than those in the EU and US, will reduce drivers’ income by 20-30 percent, decrease transport productivity, and push up freight rates by 20-25 percent, according to comments cited by VN Express.

Similarly, Dien Dan is carrying comments from Phan Thanh Uy, General Secretary of the Vietnam Automobile Transport Association, who suggests this might exacerbate the current driver shortages. The publication also points out that a 10 hours a day driving limit is also insufficient to cover the distance of many key routes. For context, it notes that a distance of 300 kilometres can take up to 10 hours.

Concerns have also been raised with respect to container shipping. VOV has comments from an anonymous source in the container shipping industry as saying that, at least in southern Vietnam, this could significantly increase costs.

See also: Logistics in Vietnam

Real estate news

Vietnam’s Novaland delays interest repayment on US$300 million SGX bond lot

Vietnam’s embattled real estate developer Novaland has advised investors via a disclosure to the Singapore Stock Exchange (SGX) that a bond interest repayment due January 16 will not proceed as scheduled. The firm has said it has insufficient resources to make the repayment because “… the progress in resolving the legal obstacles for real estate projects has not proceeded as planned, substantially affecting cash collection of the company…”

The bonds in question were restructured in mid-2024 in what was seen as a precedent setting move by the Singapore International Commercial Court. This was designed to give the firm some breathing room to get back on its feet, however, it is looking increasingly like not much has changed over the last half year or so. In fact, the company’s position seems to have deteriorated.

Of note, in late 2024 the company changed its auditor from Price Waterhouse Cooper to a local firm. It claimed the former had caused delays in its disclosures to the Ho Chi Minh City Stock Exchange, however, this came just weeks after a dispute between the auditor and Novaland had been made public. Specifically, PWC had revised what Novaland’s internal tax agents had found to be a profit of VND 3.5 trillion or US$142.2 million to a loss of VND 7.3 trillion or US$296.6 million.

This all stems from a broader breakdown in the local real estate market which has only barely scratched the surface of a recovery.

See also: Vietnam’s Real Estate Market Recovery 2024: Unpacked

Stock market news

Foreign traders continue market-exit, net-sell US$39.32 million

Over the last five trading sessions to the close of business on January 23, foreign investors net-sold US$39.32 million worth of HCMC Stock Exchange stocks. This brings the total net-sold since the start of the year to US$283.4 million. This is a considerably bigger sell-off compared to the same period last year in which foreign investors net-sold just US$5.1 million worth of stocks.

See also: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked

Foreign trader activity, last five trading days

VND = billions; US$ = millions

BuySellChange
DateVNDUS$VNDUS$VNDUS$
17/11,725$68.642,200$87.54-475-$18.90
20/1802$31.911,050$41.78-248-$9.87
21/11,484$59.051,648$65.58-164-$6.53
22/1906$36.051,155$45.96-249-$9.91
23/11,641$65.301,493$59.41148$5.89
Total6,558$260.967,546$300.28-988-$39.32

Source: Vietnam Stock Market Tracker

Tax news

Trump has rolled back the Global Minimum Tax, implications for Vietnam

On his first day in office, President of the United States Donald Trump issued a memorandum in which he effectively withdrew the United States from the Global Minimum Tax agreement. The agreement requires countries to tax corporations making over €750 million a year a minimum of 15 percent. If they fail to do so, the corporation’s home country can collect the difference.

In Vietnam, tax incentives that have sometimes allowed multinationals to operate tax free for years have been a huge draw card. However, when the GMT came into force in several key FDI source countries, like Japan and South Korea, last year, Vietnam responded by passing a top-up tax that would see that any extra tax collected, up to that 15 percent minimum, stayed in Vietnam instead of going off shore.

In turn, a Investment Support Fund was established designed to set that extra tax collected aside to finance training and research and development carried out in Vietnam for large multinationals. This was passed at the end of last year.

Of note, the memorandum mentions retaliatory measures for countries that ‘disproportionately affect American companies’ and seems to imply that this is what the GMT would do. However, at least in Vietnam, the top-up tax is applied evenly to everyone. Moreover, with the GMT it would seem that any tax incentive below the 15 percent threshold would now be redundant but at this stage it’s kind of difficult to draw any definitive conclusions.

See also: Tax in Vietnam

The week ahead

Next week should be pretty quiet for the Lunar New Year break.

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