The Director of the Monetary Policy Department at the State Bank of Vietnam, Pham Chi Quang, has denied rumours that the State Bank is considering changing tact in terms of monetary policy.

With Forex reserves being spent hand over fist trying to keep the dong from devaluing, there has been speculation that greater intervention may be needed, specifically an interest rate hike.

This denial from Pham, however, would suggest the bank intends to burn through its US dollar reserves a while longer.

State Bank open market operations as of COB May 30

The State Bank of Vietnam has continued to issue treasury bills to suck up excess liquidity in the economy. There are currently US$2.36 billion worth of T-bills outstanding as of the close of business on May 23. Also of note, the State Bank has outstanding loans to local banks to the tune of US3.2 billion.

Outstanding loans

Issued	Length	Maturing	VND	US$	% p.a.
23-May	14	6-Jun	43,064	$1,691,593,420	4.50
24-May	14	7-Jun	27,019	$1,061,339,921	4.50
27-May	14	10-Jun	6,557	$257,573,506	4.50
28-May	14	11-Jun	2,017	$79,241,965	4.50
29-May	14	12-Jun	3,110	$122,149,998	4.50
Total			81,767	$3,211,898,810

*billions

Outstanding T-bills

Issued	Length	Maturing	VND	US$	% p.a.
03/05	28	31-May	4,600	$180,693,520	3.50
06/05	28	3-Jun	11,990	$470,981,588	3.75
07/05	28	4-Jun	7,200	$282,824,640	3.75
08/05	28	5-Jun	5,500	$216,046,600	3.75
08/05	28	5-Jun	5,550	$218,010,660	3.75
09/05	28	6-Jun	3,700	$145,340,440	3.75
10-May	28	7-Jun	3,700	$145,340,440	3.75
13-May	28	10-Jun	1,500	$58,921,800	3.75
14-May	28	11-Jun	550	$21,604,660	3.75
15-May	28	12-Jun	200	$7,856,240	3.75
16-May	28	13-Jun	650	$25,532,780	3.75
17-May	28	14-Jun	3,100	$121,771,720	3.75
20-May	28	17-Jun	800	$31,424,960	3.85
21-May	28	18-Jun	500	$19,640,600	3.90
22-May	28	19-Jun	650	$25,532,780	4.00
23-May	28	20-Jun	750	$29,460,900	4.20
27-May	28	24-Jun	200	$7,856,240	4.20
29-May	28	26-Jun	5,150	$202,298,180	4.25
30-May	28	27-Jun	4,900	$192,477,880	4.25
28-May	35	2-Jul	3,700	$145,340,440	4.20
Total			64,890	2,548,957,068

*billions

Car news

How Vietnam feels about imported Chinese cars: insights from local media

Imported electric vehicles from China are struggling to sell in Vietnam because “Vietnamese consumers don’t favour Chinese products”, according to an article in VietnamNet.

They are not big fans of traditional vehicles from China either.

“The internal combustion engines of Chinese manufacturers are unreliable, lack durability, and consume too much fuel, they believe,” the publication says.

Furthermore, problems for China’s EV makers in overseas markets are causing concern among Vietnamese consumers.

“…Recent information about quality problems of BYD’s EV exports to Europe, when they could not get customs clearance, are causing potential Vietnamese buyers of low-cost Chinese cars to rethink their decision.”

Of note, it’s not clear how the author of this article drew these conclusions with no sources listed. These observations, however, could just as easily be applied to consumers in developed markets of Vietnamese electric vehicles–see: Vietnam’s Vinfast runs into more trouble in the US over unpaid rent.

Electricity news

Vietnam sets price bracket for LNG power negotiations

The Ministry of Industry and Trade–the MoIT–has set a maximum price the state power provider Electricity Vietnam–or EVN–can pay for power generated by LNG power plants at VND 2,590.85 per kilowatt. There is no minimum price.

Of note, the LNG price bracket is much higher than that of renewables. For wind power projects it’s between US 8.5 cents and US 9.8 cents per kilowatt-hour if they were online before November 1, 2021. If they went online after that, the bracket comes down to between US 6.42 cents and 7.34 cents per kilowatt hour.

Gold news

Vietnam gold auction alternative unveiled, SBV to supply gold through banks

The State Bank of Vietnam has said it will sell gold from its reserves directly to four majority state-owned banks from June 3. These banks will then sell gold directly to consumers with the theory that this will help to bring the local gold price down to be more in line with the world gold price.

This decision came about after a series of gold auctions, in which 47,000 taels of gold were sold to an assortment of banks and gold retailers but failed to impact the local gold price to the extent the SBV had hoped.

“This shows that, in addition to market factors such as supply-demand relationships, the possibility of illegal acts, manipulation, price manipulation, and destabilisation of the gold market cannot be ruled out,” Deputy Governor of the State Bank of Vietnam, Pham Quang Dung, told the local press.

The Deputy Governor did not say how much gold would be sold or over what time frame or for how much.

Investment news

Vietnam’s new FDI pledges almost US$1.8 billion in April

Vietnam added another 261 foreign direct invested projects to its 2024 tally in May, along with almost US$1.8 billion in additional capital commitments, according to data from Vietnam’s Ministry of Planning and Investment→see the data.

Labour news

Intel executive laments poor labour productivity in Vietnam

Mai Thien An, head of Intel Products Vietnam’s production department, told a forum on Sunday that employees often arrive at work on time but then have breakfast or take a break before they actually start working. He also said workers have been caught stealing, not following processes, and disregarding safety regulations, according to VN Express.

Labour productivity is a recurring theme in Vietnam with the country trailing in Southeast Asia. In 2021, it was fourth to last among ASEAN member states (excluding Brunei), ahead of only Myanmar, Cambodia, and Lao. According to the Asian Productivity Organisation, Vietnamese workers were productive to the tune of US$20,540 a year. For comparison, Indonesia and the Philippines, hit US$26,350 and US$23,600, respectively, on the same metric.

With this in mind, firms looking to enter the Vietnam market should keep in mind that there is a trade-off in labour productivity versus the low-cost.

Manufacturing news

Vietnam’sIndustrial Productions Index jumps 8.9 points in May

Vietnam’s Industrial Production Index recorded a jump of 8.9 points in May of 2024 over May 2023. By the same metric: services related to printing, mining other metal ores that do not contain iron, and production of batteries and accumulators have recorded the biggest increases. Conversely, natural gas exploitation, exploitation of crude oil and natural gas, and crude oil exploitation saw the biggest falls→see the data.

Stock market news

Foreign traders continue to withdraw from the HoSE

Foreign traders have continued to sell down their positions in the Ho Chi Minh City Stock Exchange. In total, just shy of US$245 million was withdrawn from the market over the last five trading sessions. This brings the total net-withdrawn from the market by foreign traders to US$1.34 billion so far this year.

Foreign trader activity, last five trading days

	Buy		Sell		Change
Date	VND*	US$	VND*	US$	VND*	US$
24/5	1,751	$68,781,381	3,285	$129,038,742	-1,534	-$60,257,361
27/5	1,219	$47,883,783	1,751	$68,781,381	-532	-$20,897,598
28/5	1,193	$46,862,472	2,343	$92,035,852	-1,150	-$45,173,380
29/5	1,856	$72,905,907	3,513	$137,994,856	-1,657	-$65,088,948
30/5	1,518	$59,628,862	2,869	$112,697,763	-1,351	-$53,068,901
Total	7,537	$296,062,404	13,761	$540,548,593	-6,224	-$244,486,189

Source: www.hsx.vn

Trade news

Vietnam-US Two Way Trade Reached US$8.98 billion in April

In April, Vietnam exported US$8,978,777,880 worth of goods to the United States. Conversely, it imported US$1,119,319,631 from the US giving Vietnam a trade surplus with the country of US$7,859,458,249→see the data.

The week ahead

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