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Vietnam News Roundup: July 12 to July 18


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In case you missed it…

Last week, Vietnam issued Decree 80 creating a mechanism by which private enterprises and power generators can enter into direct power purchase agreements or DPPAs. Exactly how impactful this decree might be, however, is difficult to determine at this early stage with a lot of moving parts and a number of obstacles to be overcome. This article breaks down and puts into context the key components of this new piece of legislation: Vietnam’s New Direct Power Purchases Decree: Unpacked.

Banking and Finance News

State Bank short-term lending hits US$1.73 billion

The State Bank of Vietnam has continued to issue treasury bills to suck up excess liquidity in the economy. There are currently US$3.85 billion worth of T-bills outstanding as of the close of business on July 18. Also of note, the State Bank has outstanding loans to local banks to the tune of US$1.73 billion.

See also: Vietnam Dong Tracker: Daily Updates

Outstanding loans

Issued Days Maturing VND US$ % p.a.
11-Jul 7 18-Jul 15,000 $592,472,050 4.50
12-Jul 7 19-Jul 552 $21,818,916 4.50
15-Jul 7 22-Jul 3,000 $118,491,250 4.50
16-Jul 7 23-Jul 8,896 $351,364,337 4.50
17-Jul 7 24-Jul 13,573 $536,130,742 4.50
17-Jul 7 24-Jul 2,915 $115,125,197 4.50
Total 43,936 1,735,402,492

*billions

Outstanding T-bills

Issued Days Maturing VND US$ % p.a.
4-Jul 14 18-Jul 9,550 $377,209,720 4.50
5-Jul 14 19-Jul 12,000 $473,980,405 4.50
8-Jul 14 22-Jul 2,300 $90,846,320 4.50
9-Jul 14 23-Jul 4,500 $177,742,800 4.50
10-Jul 14 24-Jul 5,050 $199,466,920 4.50
11-Jul 14 25-Jul 7,050 $278,463,720 4.50
12-Jul 14 26-Jul 14,750 $582,601,400 4.50
15-Jul 14 29-Jul 5,950 $235,015,480 4.50
16-Jul 14 30-Jul 11,200 $442,382,080 4.50
17-Jul 14 31-Jul 8,100 $319,937,040 4.50
17-Jul 14 31-Jul 17,100 $675,422,640 4.50
Total 97,550 3,853,068,525

*billions

Car news

Vietnam car sales up in June, but commercial vehicle sales fall

The Vietnam Automobile Manufacturers’ Association June sales report found that vehicle sales of the group’s members increased only marginally in June over May–about 1 percent. That growth was confined to passenger vehicles with commercial vehicles–trucks and buses–both recording falls.

Year-on-year sales are also down which is in line with broader economic challenges, however, car imports in Vietnam have averaged 12,317 units a month so far this year which is up from an average of 10,559 in 2023.

See also: Vietnam’s Automotive Industry 2024: Foreign Investor Cheat Sheet.

Vietnam’s VinFast delays North Carolina factory, status of tax incentives unknown

In what has come as a shock to no one, Vietnam’s most talked about electric car maker, VinFast, has delayed the opening of its North Carolina factory. It had originally planned to start production at the site next year but says this now won’t happen until 2028. 

Of note, Vinfast was given a number of tax breaks and incentives by the North Carolina government to encourage its investment in the state. These amounted to a combined US$1.25 billion with the understanding that the firm would create 7,500 jobs and invest US$4 billion in its factory.

This included US$325 million in funds provided upfront for site preparation and the upgrade of infrastructure to service the plant, as well as training programs, with the rest tied to key milestones in construction and hiring. It’s not clear what will happen to these incentives in the context of the three-year delay that has just been announced.

Concerns raised Vietnam car registration fee cut could breach trade agreements

Vietnam’s Ministry of Finance earlier this year proposed reinstating a 50 percent cut in registration fees for new cars made in Vietnam, however, it has now raised concerns that this may create legal problems. Specifically, the policy could be seen to be discriminating between locally made and imported vehicles which would put it in breach of EVFTA rules. 

Economy news

Business confidence in Vietnam falls in second quarter: EuroCham

The European Chamber of Commerce in Vietnam’s latest Business Confidence Index survey, has recorded a fall in business confidence of 1.5 points. The results reflect the responses of  212 survey respondents out of EuroCham’s 1,400 members.

Key takeaways

  • 45 percent of respondents believe the economy will stabilise and improve next quarter;
  • 13 percent of respondents believed the economy is likely to deteriorate in the next quarter;
  • Optimistic respondents cited improved consumer spending, increased demand for services, improved import/export activities, and improved industry trends; whereas
  • More pessimistic respondents cited: weak domestic demand, weak export demand, and global economic factors.

See also: Vietnam’s Economy in the First Half of 2024: Unpacked.

ADB holds steady on Vietnam GDP growth at 6 percent in 2024

The Asian Development Bank has left its forecast for Vietnam’s GDP growth unchanged at 6 percent in its latest, Asian Development Outlook July 2024. The bank has also forecast that inflation in Vietnam should be around 4 percent for the year.

ADB, Southeast Asia GDP Growth, July 2024

2023 2024 2025
April July April July
Indonesia 5 5 5 5 5
Malaysia 3.7 4.5 4.5 4.6 4.6
Philippines 5.5 6 6 6.2 6.2
Singapore 1.1 2.4 2.4 2.6 2.6
Thailand 1.9 2.6 2.6 3 3
Vietnam 5.1 6 6 6.2 6.2
Southeast Asia 4.1 4.6 4.6 4.7 4.7

Energy news

Vietnam considering 2.6 cent feed-in-tariff for excess rooftop solar

State-owned Vietnam Electricity, commonly known as EVN, the nation’s sole power distributor, is considering purchasing excess rooftop solar power from homes and offices for VND 671 or 2.6 cents per kilowatt hour. This would be limited to a maximum of 10 percent of the total power generated by these small-scale rooftop solar projects.

This move aims to encourage the installation of rooftop solar power systems, but not for business purposes or to turn a profit.

Notably, in 2017, to encourage renewable energy, the government implemented a mechanism to buy excess rooftop solar power at a preferential feed-in tariff price of 9.35 cents per kilowatt hour. This policy led to a significant increase in investments in rooftop solar power systems but made power considerably more expensive than other forms of power and proved costly for EVN.

See also: Electricity in Vietnam: Foreign Investor Cheat Sheet 2024

Food and beverage news

Vietnam’s beer market to nearly double by 2032

Vietnam’s beer market could reach US$14.15 billion by 2032 according to a market report from Astute Analytica. The market intelligence firm says Vietnam’s beer market was worth US$7.5 billion last year and that it is expected to grow at a compounded annual growth rate of 7.27 percent from 2024 to 2032.

These estimates come just weeks after the closure of the Heineken plant in Quang Nam, in central Vietnam which was big news with the provincial government set to lose out on VND 500 billion–or about US$19.8 million–in tax revenue each year. 

This is off the back of slow growth in beer sales post-pandemic and in line with falling revenues among a number of Vietnam’s major beer brewers blamed on broader economic challenges and harsher drink-driving penalties.

See also: What’s Happened to Vietnam’s Beer Market? Unpacked 2024

Manufacturing news

Japan noodle firm to invest US$87 million in northern Vietnam in 2027

Acecook Vietnam, a subsidiary of the Japanese instant noodle firm Acecook, has said it will begin operating a VND 2,200 billion or US$ 86.6 million facility in the northern province of Hung Yen in the second quarter of 2027. 

Of note, Acecook entered the Vietnamese market in 1993 and has become one of the country’s leading noodle businesses. Currently, the firm owns 11 factories across the country with its 12th factory, worth $200 million, currently underway in the Mekong Delta province of Vinh Long.

See also: How to Open a Factory in Vietnam: Ultimate Guide 2024

China textile firm kicks off construction of US$71 million factory in northern Vietnam

BP Textile Vietnam, a subsidiary of Chinese textile firm Black Peony, has kicked off construction of a US$71.1 million factory in the northern coastal province of Quang Ninh, according to The Investor. This is in line with a return to growth for Vietnam’s garment and textiles sector after a challenging few years.

Notably, Vietnam’s textile and garment industry experienced strong growth in the first six months of 2024 with exports reaching approximately US$16.5 billion, an increase of 4.6 percent over the same period in 2023. 

See also: Vietnam Garment Manufacturing 2024: Ultimate Guide.

Stock market news

Finland’s PYN Elite fund names embattled Vietnam Airlines stock pick of the month 

Finland’s PYN Elite Fund, which has extensive investments in the Ho Chi Minh City Stock Exchange–or the Hose–has named Vietnam Airlines, which trades under the ticker HVN, as its stock pick of the month for June. The fund doesn’t really give any clear reasons for making this call and instead points out that:

“The State still owns over 86 percent of HVN and recently allowed HVN to extend a state-backed loan repayment of $160m for three more years at favourable conditions.” 

That US$160 million loan, however, was to avoid insolvency with the airline currently operating on negative equity. It also should have been delisted from the HoSE years ago, however, the government intervened to stop that from becoming a reality. That is not to mention that broadly speaking, Vietnam’s airline industry is not particularly healthy with a number of challenges facing Vietnam’s major airlines (see: Vietnam’s Airline Industry Turbulence: Unpacked). 

It’s also worth noting that PYN Elite said earlier this year that it believed the HoSE could hit 1,700 points by the end of the year, which would be an increase of 34 percent–in the first six months of this year the VN-Index climbed just 10.27 percent. This too seems somewhat optimistic.

See also: How to Open a Trading Account in Vietnam: Technical Guide 2024

Foreign traders net withdraw US$46.6 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$46.6 million was withdrawn from the market over the last five trading sessions to the close of business on July 18. This brings the total net withdrawn from the market by foreign traders to just shy of US$2.35 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$
12/7 1,198 $47,319,083 1,960 $77,416,864 -762 -$30,097,781
15/7 1,257 $49,649,489 2,876 $113,597,398 -1,619 -$63,947,910
16/7 1,483 $58,576,127 1,719 $67,897,750 -236 -$9,321,622
17/7 2,694 $106,408,690 2,170 $85,711,528 524 $20,697,162
18/7 3,448 $136,190,483 2,535 $100,128,444 913 $36,062,039
Total 10,080 $398,143,872 11,260 $444,751,984 -1,180 -$46,608,112

*billions

Source: www.hsx.vn 

The week ahead

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