Vietnam Industry and Trade News Bulletin for JULY 12, 2017
A. LEGISLATIVE AND POLICY UPDATES
1. Presidential Proclamation of New Laws
- 6 Strategic Laws: The Presidential Office officially announced six laws passed by the National Assembly, most notably the Law on Support for Small and Medium Enterprises (SMEs), the Law on Foreign Trade Management, and the Law on Technology Transfer.
- Environmental Protection: Under the new Technology Transfer regulations, the Ministry of Industry and Trade (MoIT) has implemented strict controls on machinery imports to block outdated and polluting technologies from entering the country.
- Administrative Reform: The Law on Foreign Trade Management aims to significantly slash “red tape,” enhancing legal efficiency for exporters and importers alike.
B. MACROECONOMIC OUTLOOK
1. Growth and Investment Resilience
- Q2 Recovery: Vietnam’s economy posted a strong 6.17% growth in Q2, bringing the first-half GDP growth to 5.73%.
- FDI Dominance: Foreign Direct Investment (FDI) enterprises continue to act as the primary engine for trade, accounting for 70.6% ($68.97 billion) of Vietnam’s total export turnover in H1 2017.
- Dutch Interest: Prime Minister Nguyễn Xuân Phúc met with Dutch investors, signaling a fresh wave of international capital interest in Vietnam’s emerging sectors.
2. Retail Finance Potential
- Mass Market Opportunity: With 30 million citizens earning below 10 million VND/month, the retail finance sector remains largely untapped, having served only 10 million customers in the past decade.
C. ENERGY SECTOR
1. Hydropower and Grid Stability
- Thác Mơ Expansion: The 1,500 billion VND Thác Mơ Hydropower expansion successfully connected to the national grid, with an expected annual contribution of 52 million kWh.
- Quang Nam Proposals: Despite earthquake risks in the Nam Trà My district, authorities have proposed adding four new hydropower plants to ensure local energy security.
2. Global Oil Dynamics
- The Shale Shadow: Global oil prices remain depressed due to consistent U.S. shale production. This competitive pressure is causing traditional oil fields worldwide to shut down at the fastest pace in 24 years.
D. IMPORT-EXPORT HIGHLIGHTS
1. Agricultural Breakthroughs
- Poultry Milestone: In a historic first, Vietnam is set to export 40 tons of poultry products to Japan, marking a major victory in meeting international sanitary standards.
- Rice & Fruit: The Vietnam Food Association (VFA) raised its 2017 export target to 5.7 million tons. Meanwhile, HAGL (Bầu Đức) launched its first banana exports from a massive 10,000-hectare plantation.
- U.S. Influx: Imports from the United States have seen a dramatic surge, with several commodity groups increasing by over 100%.
2. Industrial Imbalance
- Cement Glut: The industry faces a severe surplus, with a production capacity of 86 million tons dwarfing the domestic demand of only 60 million tons.
E. INDUSTRY AND DOMESTIC MARKET
1. Retail Competition and Consumer Trends
- Stationery War: Thailand’s Central Group is introducing the B2S brand to Vietnam, intensifying competition for local stationery manufacturers.
- Premium Noodles: The “Instant Noodle War” is pivoting toward premium, higher-priced segments as companies seek better profit margins.
2. Governance and Market Integrity
- SOE Divestment: Privatization plans for giants like Sabeco, Habeco, and Vinamilk are moving forward, while Vinataba and Hapro aim to complete equitization by year-end.
- Counterfeit Crackdown: Authorities in Trà Vinh discovered widespread sales of counterfeit fertilizer. Additionally, MoIT is tightening supervision on foreign traders (specifically from China) operating illegally under tourist visas.
Analogy: The 2017 economy at this stage is like a multi-speed engine; while the “FDI cylinder” is firing at full capacity (70% of exports), the “Domestic cylinder” is still undergoing essential repairs (restructuring SOEs and tackling counterfeit goods) to catch up with the overall recovery pace.
