Vietnam News Roundup: March 8 to March 14

This week’s Vietnam news roundup covers February cars sales and customs data, gold prices, Vietnam’s stock market, and a range of other business news in Vietnam.

Economy news

UOB forecasts Vietnam GDP growth of 5.5 percent in Q1

This is an increase over the 3.3 percent Vietnam saw in the first quarter of last year, VN Express is reporting. The bank is expecting 6 percent credit growth for 2024. 

Of note in this article the bank predicts that:

• Inflation will hit 3.8 percent for the year;
• The State Bank of Vietnam interest rates will remain unchanged; and
• The Vietnamese dong will appreciate to 23,800 dong to the dollar by Q1 2025.

Vietnam C.bank has started issuing T-bills again

The State Bank of Vietnam had issued T-bills to the tune of almost VND 60 trillion or US$2.43 billion by close of business Thursday. This is part of a renewed attempt to halt the devaluation of the local currency, according to The Investor.

Key takeaways from the linked article include:

• Overnight loans account for 90 percent of transactions and were attracting an interest rate of 1.17 percent on March 7;
• By February 16, credit growth was negative 1 percent after a .6 percent decline in January; and
• The exchange rate has increased 1.4 percent since the start of the year.

T-bill issuances March 2024

Corporate bond issuances down on return of postponed regulations

There were just three corporate bond issuances in Vietnam in February to the value of VND 1.165 trillion (US$47.3 million), Tuoi Tre has reported. This brings the total number of bond issuances for the first two months of the year to eight valued at a collective VND 5.96 trillion (US$242 million).

The publication suggests this relatively low figure is partly due to Decree 65. Decree 65 was introduced in September of 2022 adding a number of criteria to bond issuance effectively designed to reduce risk in Vietnam’s corporate bond market. These restrictions saw the market more-or-less freeze up with bond issuances falling dramatically. To get capital flowing again, these new regulations were put on hold until the end of 2023. Now back in force, it seems that once again they have put the brakes on the corporate bond market.

Gold news

Vietnam gold price reaches new record high

Gold hit a record high earlier in the week of more than VND 82 million per tael or US$88.01 per gram. For comparison the world gold price was hovering around US$69.70 per gram. This puts the local gold price at a 26.83 percent premium to the rest of the world.

For an understanding of how these prices have grown so far apart see: The Gold Price in Vietnam: Explained 2024.

A local perspective on gold prices

Penned by Nguyen Huu Huan, an economist at the Ho Chi Minh City University of Economics, this piece in The Investor makes several points about US dollar and gold prices in Vietnam. These include:

• Gold fever is being driven by a lack of other investment options;
• The rising price of gold and US dollars will likely encourage more illegal imports;
• This may lead to exchange rate pressure;
• Using bonds and bills to manage cash in the economy may lead to short term shocks; and
• This will all likely impact growth and inflation targets set at the beginning of the year.

Stock market news

Foreign traders continue to net-exit the local bourse

By close of trade March 14, foreign investors had net-withdraw from the Ho Chi Minh City Stock Exchange a collective US$80 million over the last five trading sessions. This brings the total net-withdrawal of foreign traders since the start of the year to US$189.2 million.

Foreign trader activity, last five trading days

Source: www.hsx.vn 

Securities regulator comments on Vietnam stock market upgrade progress

Chairwoman of the State Securities Commission, Vu Thi Chan Phuong, has given an interview to Vietnam News regarding Vietnam’s quest for an upgrade of its stock market from frontier to emerging. Specific details are scant but she does note that the SSC is prioritising:

• Updating disclosure requirements to encourage firms to provide reports in English in order for “foreign investors to clearly understand the specific foreign ownership ratios in each sector”;
• Making it mandatory for stock market disclosures to be in both Vietnamese and English; and
• Enhancing market access for  foreign investors by providing time limits for firms to disclose their foreign ownership limits/ratios.

Note that Vu does address pre-funding requirements but only to say that the SSC has proposed amendments to securities legislation and that a Central Counterparty Clearing House will be key–to put these comments into some context see: Vietnam’s Stock Market Upgrade Opportunity: Unpacked.

Manufacturing

HCMC customs blocks imports, exports over unpaid taxes

Specifically, the Ho Chi Minh City Customs Department has stopped import and export procedures for Gia Dinh Textile and Garment Company over VND 100 billion (US$4 million) in unpaid taxes, VN Express is reporting. 

This is yet another instance of Vietnam customs being used to collect tax debts–at the end of February, the Ho Chi Minh City Customs Department took similar action against the Trung Nam Group.

This could be problematic in that firms need to be able to import and export goods in order to generate income to pay back these tax debts. At the same time, it’s not clear that debts of this size can be paid back in the immediate future, or ever, for that matter.

For a broader understanding of Vietnam’s manufacturing industry see: Manufacturing in Vietnam 2024: Ultimate Guide

Trade news

More support for market-economy status for Vietnam

John Borton, a non-resident senior fellow at Johns Hopkins/SAIS Foreign Policy Institute, has written an opinion piece for the Geopolitical Monitor in which he argues for making Vietnam a market economy.

Borton says that:

• There would be bilateral benefits in market access and export opportunities;
• Market-status recognition would contribute to a reduction in trade barriers;
• Other countries have already done it, including the United Kingdom, Canada, Australia, and Japan;
• Labour protections are not as bad as other countries with market economy status; and
• Environmental, economic, and security threats can be better addressed if Vietnam becomes a market economy.

For context see: Unpacked: Vietnam’s Non-Market Economy Review.

Official Vietnam import-export data released

Vietnam’s General Department of Customs has published its trade data for February. In the second month of the year, Vietnam’s exports fell just shy of US$24.7 billion. It also recorded imports worth US$23.3 billion giving the country a trade surplus of about US$1.4 billion. Per usual, Vietnam’s top exports were electronics and garments and its key markets were the United States, China, and Korea in that order.

See full customs data here: Vietnam’s Imports and Exports, February 2024: Snapshot 

Automotive news

Vietnam car sales fall 51 cent in February

A total of 10,017 cars were sold in February down from 20,536 in February of last year, according to data from the Vietnam Automotive Manufacturers Association and reported by Just Auto. 

This article says this was partly due to the Lunar New Year holiday. It also says that car sales received a bump in December and January as buyers rushed to make the most of a 50 percent cut to new car registration fees that came to an end at the end of last year. 

However, it’s also worth noting that in December, banks were lending money hand over fist in aggressive marketing campaigns trying to reach credit growth targets for the year. It looks a lot like a decent portion of these borrowed funds may have been channelled into buying cars

The week ahead

The Ministry of Planning and Investment is slated to release foreign direct investment data for the month ended February 20 on Wednesday. 

There should also be more detail as to why a trip to Vietnam by the Dutch royal couple was postponed. This was at the request of the Vietnamese authorities citing ‘domestic circumstances’ but few other details have been provided as yet.

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