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It’s Time to Talk About Vietnam’s Credit Growth Policy…
A credit growth limit policy put in place to keep inflation in Vietnam in check back in 2010 was last year, after uncharacteristically low credit growth, reframed as a credit growth target. Banks, subsequently, have been pushed to issue more loans than they otherwise might have, which could have broad economic implications… Read More »
Banking and Finance News
State Bank resumes open market operations to keep dong in check
After a brief hiatus in open market operations, the State Bank has returned to intervening in the currency markets issuing US$2.46 billion in treasury bills over the last five working days to reduce pressure on the dong. It has also issued US$315.5 in reverse repos pumping money back into the market at the same time. This comes just weeks after the bank, which had spent roughly US$9 billion worth of its US dollar reserves keeping the currency from devaluing, started buying up US dollars, although only relatively small lots.
Outstanding reverse repos, COB October 24
Issued | Length | Maturing | VND (billions) | US$ | % p.a. |
22-Oct | 7 | 29-Oct | 3,000.00 | $118,110,300 | 4.00 |
23-Oct | 7 | 30-Oct | 2,014.65 | $79,316,972 | 4.00 |
24-Oct | 7 | 31-Oct | 3,000.00 | $118,110,300 | 4.00 |
Total | 8,014.65 | $315,537,572 |
Outstanding treasury bills, COB October 24
Issued | Length | Maturing | VND (billions) | US$ | % p.a. |
18-Oct | 14 | 1-Nov | 4,400.00 | $173,228,440 | 3.74 |
18-Oct | 28 | 15-Nov | 7,900.00 | $311,023,790 | 3.74 |
21-Oct | 14 | 4-Nov | 3,900.00 | $153,543,390 | 3.74 |
21-Oct | 28 | 18-Nov | 17,750.00 | $698,819,275 | 4.00 |
22-Oct | 14 | 5-Nov | 3,600.00 | $141,732,360 | 3.70 |
22-Oct | 28 | 19-Nov | 8,850.00 | $348,425,385 | 4.00 |
23-Oct | 14 | 6-Nov | 3,300.00 | $129,921,330 | 3.70 |
23-Oct | 28 | 20-Nov | 9,500.00 | $374,015,950 | 4.00 |
24-Oct | 14 | 7-Nov | 600.00 | $23,622,060 | 3.60 |
24-Oct | 28 | 21-Nov | 2,650.00 | $104,330,765 | 4.00 |
Total | 62,450.00 | $2,458,662,745 |
Source: Vietnam Dong Tracker: Daily Updates
Economy news
Vietnam gains four places on Economic Freedom index but overall score falls
Vietnam has moved up four places on the Fraser Institute’s Economic Freedom of the World: 2024 Annual Report, ranked 99th alongside Namibia and Djibouti (Of note, this is based on 2022 data). Its overall score however recorded a slight fall from 6.24 to 6.23.
Vietnam Economic Freedom index ranking over time
Year | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
Overall Score | 6.23 | 6.24 | 6.16 | 6.17 | 6.12 | 5.93 | 5.86 | 5.78 | 5.66 | 5.60 |
Rank | 99 | 103 | 110 | 123 | 118 | 130 | 129 | 131 | 135 | 137 |
Size of Government | 106 | 87 | 82 | 98 | 107 | 134 | 129 | 120 | 125 | 135 |
Legal System & Property Rights | 78 | 77 | 82 | 88 | 88 | 83 | 86 | 85 | 85 | 86 |
Sound Money | 105 | 116 | 133 | 136 | 137 | 143 | 150 | 151 | 152 | 156 |
Freedom to trade internationally | 113 | 101 | 104 | 116 | 117 | 115 | 112 | 122 | 118 | 102 |
Regulation | 99 | 103 | 106 | 105 | 103 | 108 | 108 | 111 | 117 | 117 |
IMF Vietnam GDP growth forecast goes up for 2024 but down for 2025
The International Monetary Fund, in its October World Economic Outlook, has raised its growth forecast for Vietnam for this year to 6.1 percent up from 5.8 percent in its April report. It has, however, lowered its forecast for next year from 6.5 to 6.1 percent.
IMF World Economic Outlook GDP growth forecasts, April vs October
April | October | April | October | |||
2024 | 2024 | Change | 2025 | 2025 | Change | |
Singapore | 2.1 | 2.6 | 0.5 | 2.3 | 2.5 | 0.2 |
Indonesia | 5 | 5 | 0 | 5.1 | 5.1 | 0 |
Thailand | 2.7 | 2.8 | 0.1 | 2.9 | 3 | 0.1 |
Vietnam | 5.8 | 6.1 | 0.3 | 6.5 | 6.1 | -0.4 |
Malaysia | 4.4 | 4.8 | 0.4 | 4.4 | 4.4 | 0 |
Philippines | 6.2 | 5.8 | -0.4 | 6.2 | 6.1 | -0.1 |
Electricity news
New Vietnam rooftop solar development Decree finally issued
Excess rooftop solar will be permitted to be sold to Vietnam’s state power provider Electricity Vietnam or EVN to a maximum of 20 percent of the installation’s capacity, according to Decree 135 issued Tuesday. Feed-in tariffs will be set at the average market electricity price of the previous year.
Originally the Ministry of Industry and Trade had been pushing for no feed-in tariffs on rooftop solar, however, at the request of the government, it reluctantly agreed to have feed-in tariffs but limited to just ten percent of the installation’s capacity.
This was then raised to 20 percent at the request of Vietnam’s Deputy Prime Minister Tran Hong Ha.
See also: Vietnam’s Solar Power Industry: Overview 2024
Food and beverage news
Vietnam dairy imports fall 21 percent September over August
Vietnam’s imports of milk and milk products fell by 20.83 percent in September over August from US$108.9 million to US$86.2 million. Vietnam’s milk and milk products imports for the year now stand at US$830.4 million which represents a decline of 4 percent over the same period last year.
See also: Vietnam’s Dairy Market 2024: Overview
Vietnam beverage maker to pay US$860K for North Korea sanctions breach
The US Treasury’s Office of Foreign Asset Control has reached a settlement agreement with Vietnam Beverage Company Limited–VBCL–for the latter to pay remuneration of US$860,000 for breaching US sanctions imposed on North Korea.
Specifically, two subsidiaries of the Vietnamese firm had sold alcoholic beverages to North Korean companies with invoices denominated in US dollars that had been paid through holding companies in various locations around the world using US banks.
The use of US dollars and involvement of US financial institutions led to violations of the North Korea Sanctions Regulations by causing U.S. financial institutions to export financial services to North Korea in violation of U.S. sanctions laws.
In total, between 2016 and 2018, the subsidiaries in question executed 26 contracts with North Korean entities and third-party companies, issuing 47 invoices and receiving approximately US$1,141,547 in payments. These payments came from various third-party companies located in Hong Kong, China, Turkey, Singapore, and Seychelles, making payments on behalf of North Korean entities.
Vietnam seafood exports down 6.23 percent September over August
Vietnam’s seafood exports fell 6.23 percent in September over August from US$983.2 million to US$921.9 million. Vietnam’s seafood exports for the year now stand at US$7.23 billion which represents an increase of 9.5 percent over the same period last year.
See also: Vietnam Seafood Processing: Industry Overview 2024
Steel news
Malaysia launches trade investigation in rebar from Vietnam, others
The Malaysian Ministry of Investment, Trade, and Industry has announced it has initiated an anti-dumping investigation into steel bars from Vietnam, China, and Indonesia per an announcement from Vietnam’s Ministry of Industry and Trade. The probe was prompted by a request from Malaysia’s domestic steel manufacturing sector, represented by Southern Steel Berhad.
Of note, this is the second anti-dumping probe into steel bars launched this week with Australia announcing a similar investigation. This is in line with a growing number of antidumping and circumvention investigations on steel products exported from Vietnam.
Vietnam’s steel exports fall 20.64 percent September over August
Vietnam’s steel exports fell 20.64 percent in value in September over August, according to data from Vietnam’s General Department of Customs. By the ton, they were also down 20.76 percent.
Of note, Vietnam’s steel industry has faced a number of challenges lately with respect to trade remedies investigations in several countries as well as an influx of cheap steel from China.
See also: Can Vietnam Survive the Steel-Trade Wars?
Stock market news
Vietnam stock exchange total market cap. reaches US$280 billion
The VN-Index reached 1,287.48 points as of September 25, 2024, marking a 0.3 percent rise compared to the previous month, and a 13.9 percent increase from the end of 2023, according to a press release from the Ministry of Finance.
The total capitalisation of ordinary shares hit VND 7,019.70 trillion or US$280.79 billion, a 19 percent surge from the end of last year, equating to 9.1 percent of Vietnam’s 2023 GDP. Vietnam’s stock exchanges now host 728 stocks and fund certificates, with an additional 878 stocks registered for trading on the Unlisted Public Companies platform or UPCom.
Foreign traders net-sell US$31.1 million in HoSE shares
Over the last five trading sessions, to the close of business on October 24, in total, foreign investors had net-sold US$31.1 million worth of HCMC Stock Exchange stocks. This raises the total net-sold from the market by foreign traders this year to US$2.69 billion or US$3.27 billion over the last 12 months.
See also: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked 2024
Foreign trader activity, last five trading days, billions of VND/US$
Buy | Sell | Change | ||||
Date | VND | US$ | VND | US$ | VND | US$ |
18/10 | 906 | $35,669,311 | 1,063 | $41,850,416 | -157 | -$6,181,106 |
21/10 | 1,227 | $48,307,113 | 1,498 | $58,976,410 | -271 | -$10,669,297 |
22/10 | 1,408 | $55,433,101 | 1,547 | $60,905,545 | -139 | -$5,472,444 |
23/10 | 1,143 | $45,000,024 | 1,133 | $44,606,323 | 10 | $393,701 |
24/10 | 1,372 | $54,015,777 | 1,606 | $63,228,381 | -234 | -$9,212,603 |
Total | 6,056 | $238,425,326 | 6,847 | $269,567,075 | -791 | -$31,141,749 |
Source: Vietnam Stock Market Tracker
Trade news
US DOC makes final determination on frozen warmwater shrimp from Vietnam, others
The United States Department of Commerce–the DOC–has made its final determination with respect to frozen warmwater shrimp from Ecuador, India, Indonesia, and Vietnam. This includes a subsidy rate for Vietnam exporters of 2.84 percent, except in the case of Thong Thuan Company Limited, which received a rate of 221.82 percent ‘based on adverse inferences’.
The DOC’s preliminary determination for Vietnam, notes that ‘one or more respondents did not act to the best of their ability to respond to Commerce’s requests for information’. This seems to apply to Thong Thuan with only two firms investigated from Vietnam, and the second, Soc Trang Seafood Joint Stock Company, receiving its own subsidy rate of 2.84 percent.
Of note, Vietnam is treated as a non-market economy in antidumping and countervailing duties investigations in the United States, which means that where adequate information is not provided by companies investigated, they are often determined based on the input costs of a third country.
See also: Vietnam’s Non-Market Economy Review: Unpacked
Vietnam non-wood furniture exports fall 4.6 percent September over August
Vietnam’s non-wood furniture exports fell by 4.6 percent in September over August from US$279 million to US$266.4 million. This has brought Vietnam’s total non-wood furniture exports to a total US$2.39 billion year-to-date. This represented an increase of 32.8 percent over the same period last year.
See also: Vietnam Furniture Manufacturing: Industry Overview 2024
Vietnam electronics fall 5.8 percent September over August
Vietnam’s exports of computers, electrical products, and spare parts and components thereof, fell by 5.8 percent in September over August from US$6.76 billion to US$6.36 billion. Vietnam’s electronics exports for the year now stand at US$52.76 billion which is an increase of 27.4 percent over the same period last year. Not that this data does not include mobile phones.
Of note, the USA remains Vietnam’s largest market, although exports to the USA dropped by 21.52 percent in September compared to August. This sharp decline brought the year-to-date total to around US$17.32 billion. China, on the other hand, saw a significant 24.81 percent increase in exports, amounting to US$1.24 billion in September, contributing to a year-to-date total of approximately US$9.1 billion.
See also: Vietnam Electronics Manufacturing: Industry Overview 2024
Vietnam ceramics fall 13.1 percent in September over August
Vietnam’s ceramics exports fell 13.1 percent in September over August from US$56.9 million to US$49.4 million. Vietnam’s ceramics exports for the year now stand at US$474.5 million which represents an increase of 7.9 percent over the same period last year.
See also: Vietnam Ceramics Manufacturing: Industry Overview
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.