Practically speaking, the implementation of Vietnam’s JETP agreement looks to have stalled. Reportedly, this is the result of the financing on offer being made up of mostly loans whereas Vietnam–which tends to have an aversion to borrowing money on international markets–had hoped for it to be made up of mostly grants. Of course, this could theoretically be remedied with further negotiation, however, negotiations take time and a positive outcome is far from guaranteed. That being the case, it might be time to start considering other options… Read More »

Automotive news

VinFast is set to start work on a new 300,000 unit capacity factory in Ha Tinh

Vietnam electric car maker VinFast is reportedly preparing to start work on a new EV factory in central Vietnam’s Ha Tinh province, according to its latest SEC filing. The factory is expected to have a capacity of 300,000 units a year and work is expected to start as soon as December this year.

This will effectively double VinFast’s production capacity in Vietnam with its Hai Phong factory reportedly capable of producing 300,000 units a year too. Notably, year-to-date VinFast has sold just 51,000 units, many of which it sold to its affiliated company, Xanh GSM, whose purchases of VinFast vehicles have started to taper off. With this in mind, it’s not clear what the business case for a new factory in Ha Tinh might be.

Banking and Finance News

State Bank continues open market operations

The State Bank of Vietnam has continued to intervene in the currency market with US$841.4 million in treasury bills outstanding as of the close of business Thursday. There were also reverse repurchase agreements outstanding to the tune of US$3.27 billion. This suggests the pressure on the local currency is substantial but also that local banks are still experiencing liquidity issues.

Of note, the Prime Minister sent an official dispatch to the State Bank on Wednesday insisting that the 15 percent credit growth target for the year is met. The State Bank subsequently raised the credit growth limits of several Vietnamese banks allowing more dong to flow into the economy.

Bitcoin price jump sparks flurry of interest in Vietnam

The price of Bitcoin has skyrocketed on the back of the election of Donald Trump in the United States. Cryptocurrencies have proven popular in Vietnam–though not to the extent some ‘studies’ might suggest–and this has sparked a flurry of media coverage.

An Nhin Tu Do, which cites several of the aforementioned ‘studies’, the most extreme of which estimates crypto ownership by 25.9 million Vietnamese or one in four people, has suggested the jump in price has made Vietnamese crypto investors ‘restless’. It goes on to cite Financial expert Phan Dung Khanh as saying that Vietnamese crypto investors tend to trade based on a fear of missing out (READ: buy into the hype).

Zing on the other hand has pointed out that the rise in value of Bitcoin has not necessarily translated to greater profits for Vietnamese investors on the grounds that Vietnamese investors tend to invest in layer 1 and layer 2 crypto assets citing a Coin 98 study.

Then there is Cafe F which has looked at the lack of regulation of the space in Vietnam. It notes that there is a May 2025 deadline in place for the Ministry of Finance to develop a framework for digital assets in Vietnam. The publication goes on to point out that currently traders have little experience and few legal protections and urges a faster regulatory process.

Bank at centre of Vietnam fraud case cuts withdrawal limits

Saigon Commercial Bank, which was put under ‘special administration’ by the State Bank of Vietnam in October of 2022, has announced it will be limiting withdrawals to VND 10 million or about US$393 a day. This is down from VND 100 million or US$3,930 a day.

Tien Phong points out that the bank has also discontinued a number of products and services and has closed 130 branches since June of last year. It also notes erratic changes in withdrawal limits at the bank in recent months: In August they were cut three times from VND 200 million to VND 100 million, and then to VND 50 million. In September, they were then revised down again to VND 10 million before being increased at the end of the month to VND 100 million.

VN Express has covered this in much the same way, however, it also notes that the SBV is having challenges finding another bank to take over SCB which is generally the next step after a bank is placed under special administration. It suggests this is because SCB is much bigger than other banks that have been placed under special administration in the past.

Notably, SCB was at the centre of a scandal believed to be Vietnam’s biggest in which real estate developer Truong My Lan used funds from the bank which she indirectly controlled to buy up land and real estate projects as well as allegedly pay bribes to government officials and appropriate for her own personal use.

Earlier this year, it was revealed that the SBV had pumped about US$24 billion into SCB to keep it afloat but this latest development would suggest the bank’s situation does not seem to have improved all that much, if at all.

Labour news

HCMC labour shortages ongoing concern in lead up to Tet

Reports of a possible labour shortage for Ho Chi Minh City are gaining traction and were picked up by the Malaysian press this week. Specifically, The Star republished a Vietnam News article on the issue from the weekend.

The article carries interviews with several migrant workers that have complained costs are too high in the city and highlights satellite industrial hubs like Binh Duong as more affordable with a better quality of life. The publication goes on to point out that between 2015 and 2021 HCMC was growing in size by 170,000 to 180,000 workers a year, however, last year that number was just 65,000. It also concludes that this ‘raises questions about the sustainability of HCM City’s growth model’ and calls for ‘bold policy decisions and a renewed focus on improving living conditions for all residents’.

For another point of view, local news outlet Thanh Nien, has also tackled the issue but from the recruiters perspective noting that wages of about VND 10 million (about double the minimum wage) have not been successful at bringing in new workers. The publication is carrying comments from Luong Thi Toi, Deputy Director of the Department of Labor, Invalids and Social Affairs of Ho Chi Minh City, who suggests the labour shortage is because: worker are holding onto their jobs in order to receive their Tet bonus, increased demand for workers in the lead up to Tet, and the mismatch between salary expectations of workers and employers.

Revised Vietnam Law on Trade Unions passes NA, impact re: Convection 87 unclear

Vietnam’s National Assembly has passed a revised Law on Trade Unions. This has a number of key reforms though it is not clear if this will meet Vietnam’s labour union commitments under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement.

Specifically, to be compliant with these agreements Vietnam needs to ratify the International Labour Organisation Convention 87. This would require allowing trade unions to be established independent of the Vietnam General Confederation of Labour with which all labour unions must currently be affiliated.

That said, the Ho Chi Minh City Police Department news outlet Cong An has interpreted at least part of the law thus:

“…the conditions of voluntariness, approval of the principles and purposes of the Trade Union or the length of residence in Vietnam… will be specifically stipulated in the Charter of the Vietnam Trade Union and will be specifically guided by the Vietnam General Confederation of Labor.”

This would suggest the VGLC would still play a key role in the labour union process.

Also, the new law will allow foreign workers on labour contracts that run for a minimum of 12 months to join trade unions in Vietnam.

‘Foreign workers can share their knowledge, skills, and experiences, help enhance the unions’ ability to integrate internationally and foster stronger connections between domestic and foreign workers, and facilitate the adoption and development of advanced operational models,” VietnamNet has explained as justification for the change.

The aforementioned Cong An article, however, on the same issue, stresses that though foreign workers can join trade unions they will not be allowed to run for any elected positions.

Real estate news

Vietnam real estate developer Novaland drops PWC as tax agent

Vietnam real estate developer Novaland has announced that it is ending its relationship with tax agent Price Waterhouse Cooper. The company has said this is because the firm has been slow auditing financial statements which has seen Novaland reports to the Ho Chi Minh Stock Exchange delayed though it seems to be a lot more nuanced than that.

Of note, in September, Novaland recorded its worst half year on record after audited financial reports found huge discrepancies from what was earlier reported by the company. Specifically, the company’s own financial statements reported a profit of VND 3.5 trillion or US$142.2 million, however, an audit found the company had actually made a loss of VND 7.3 trillion or US$296.6 million. This the company largely blamed on its auditors being overly cautious.

Dan Tri has also picked up a slew of other conflicts between the developer and its accountants over the last couple of years. These have mostly stemmed from Novaland making a number of assumptions that PWC has rejected.

PWC will be replaced by Moore AISC Auditing and Informatics Services. This is a local firm at which, CafeF notes, at least three auditors have been suspended this year from auditing public interest entities by the State Securities Commission.

Stock market news

Foreign traders return to market, net-buy US$27.5 million

Over the last five trading sessions to the close of business on November 28, foreign investors net-bought US$27.5 million worth of HCMC Stock Exchange stocks. This was a welcome change for local traders after US$258 million was withdrawn last week. That said, it still leaves foreign funds in the Ho Chi Minh City Stock Exchange well below where they were just a year ago.

Specifically, foreign traders this year have net-sold just shy of US$3.5 billion or nearly US$3.95 billion since this time last year.

Foreign trader activity, last five trading days

	Buy		Sell		Change
Date	VND	US$	VND	US$	VND	US$
22/11	1,556	$61,325,072	1,526	$60,142,712	30	$1,182,360
25/11	1,689	$66,566,868	1,634	$64,399,208	55	$2,167,660
26/11	1,511	$59,551,532	1,283	$50,565,596	228	$8,985,936
27/11	1,669	$65,778,628	1,329	$52,378,548	340	$13,400,080
28/11	1,164	$45,875,568	1,119	$44,102,028	45	$1,773,540
Total	7,589	$299,097,668	6,891	$271,588,092	698	$27,509,576

*billions

Source: Vietnam Stock Market Tracker

Tax news

Vietnam excise tax debate goes big and broad

Vietnam’s Special Consumption Tax or SCT, an excise tax on luxury goods, is currently being reviewed before Vietnam’s National Assembly. This has seen broad media coverage in recent days, with opinions and ideas varying between delegates and news outlets.

Local news outlet Lao Dong, for example, has reviewed the suggestion that votive papers and plastic bags be added to the tax. It asserts that this is ‘reasonable’ citing the environmental benefits. It also applauded a decision made to exclude air conditioners from the tax with the view that considering air-conditioning a luxury is ‘outdated’.

The SCT on gasoline has also had a run. Thanh Nien is carrying comments from Dau Anh Tuan, the Deputy General Secretary, Head of the Legal Department of the Vietnam Chamber of Commerce and Industry, who has argued that gas is being double taxed, attracting both an Environmental Protection Tax and the SCT. The article also has inputs from several academics and business leaders that suggest the SCT on gasoline should be removed to promote economic growth.

There have also been further comments made with respect to increasing the SCT on beer and also adding sugar to the items taxed. Little new information or analysis, however, has been provided with these two issues covered at length for years now.

The week ahead

There are a handful of events coming up this week. For more information see the: Doing Business in Vietnam: Events Directory 2024

Also, Vietnam is a dynamic market that is changing rapidly. To keep updated to date with the business environment and how it is evolving make sure to subscribe to the-shiv.

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