Vietnam Industry and Trade News Bulletin for JULY 11, 2017
A. MAJOR PROJECT RESTRUCTURING & RECOVERY
1. Bankruptcies and Strategic Exits
- Official Approvals: The Ministry of Industry and Trade (MoIT) has officially approved bankruptcy proceedings for two major “trillion-VND” failures: the Dung Quat Shipyard (PVN) and the Ethanol Phu Tho project. Despite massive investments, these projects were deemed unsalvageable.
- Root Causes: Analysts point to a lack of market realism and “paper-based” planning as the primary drivers behind the failure of 12 major struggling projects under MoIT supervision.
2. Success Stories
- Alumina Progress: In a positive turn, the Alumin Tan Rai project in Lam Dong reported a profit of 60 billion VND in H1 2017.
- Nhan Co Startup: The Nhan Co project in Dak Nong is finalized and set to enter commercial operation this month.
B. MACROECONOMIC & INDUSTRIAL OUTLOOK
1. Growth and Dependency
- GDP Targets: The National Financial Supervisory Commission remains optimistic, forecasting GDP growth between 6.5% – 6.7% for 2017.
- FDI Warning: Experts caution that the national economy is becoming increasingly reliant on the Foreign Direct Investment (FDI) sector, which may mask underlying domestic weaknesses.
2. Sector Highlights
- Automotive Boom: Vietnam and the Philippines are projected to be the fastest-growing automobile markets in Southeast Asia over the next five years.
- Textile Resilience: Export turnover for the textile and garment industry hit $14.58 billion in the first six months, marking a robust 11.3% year-on-year increase.
C. ENERGY & PETROLEUM DEVELOPMENTS
1. Corporate Performance
- Petrolimex (PLX): The group announced a significant cash dividend of 32.24%, amounting to over 3,700 billion VND in payouts.
- TKV Power: H1 revenue reached 6,169 billion VND, successfully crossing the halfway mark of its annual target.
2. Environmental & Social Scrutiny
- Waste Disposal Debate: Public outcry has intensified over a proposal to dump one million cubic meters of waste from the Vinh Tan coal-fired power plant into the sea.
- Hydropower Review: Nghe An voters have formally requested a re-evaluation of 33 planned hydropower projects, citing ecological damage and low operational efficiency.
D. INTERNATIONAL TRADE & MARKET INTEGRATION
1. Regulatory Hurdles
- US Farm Bill: Starting August 2, 2017, the U.S. will move from random checks to 100% inspection of all Vietnamese catfish shipments, creating a significant logistical barrier for exporters.
2. Export Strategies
- Rice 2030: The Prime Minister has greenlit a new rice export strategy through 2030, prioritizing brand value and quality over sheer volume.
- Footwear in Australia: High purchasing power and a preference for high-quality, fast-delivery fashion make Australia a primary target for Vietnamese footwear brands.
E. DOMESTIC MARKET & CONSUMER PROTECTION
1. Market Shifts and Volatility
- Auto Price War: Mazda, Honda, and Toyota have triggered an aggressive discount cycle, with price cuts reaching up to 170 million VND per vehicle to capture market share.
- Pork Price Rebound: Driven by high demand from China following natural disasters there, domestic live hog prices have climbed back toward 30,000 VND/kg.
2. Fraud and Counterfeiting
- Food Mislabeling: Authorities exposed a major fraud where “Giò me” (veal specialty) was found to be produced from 100% pork. Similarly, Chinese plums are reportedly being sold as Sapa or Moc Chau specialties.
- Brand Protection: Electric bike manufacturer PEGA has sought MoIT intervention against a flood of low-quality counterfeits that are eroding consumer trust in the brand.
Analogy: The government’s decision to allow the bankruptcy of failing trillion-VND projects is like a surgeon removing a non-functional organ; it is a painful but necessary procedure to stop the loss of resources and ensure the rest of the economic “body” can thrive.
