Vietnam Industry and Trade News Bulletin for July 20, 2017

A. Energy Price Management & Policy

1. Electricity Price Adjustment Strategy
   • Deputy Prime Minister Vuong Dinh Hue directed the Ministry of Industry and Trade (MOIT) to refine the electricity price adjustment plan, ensuring it accounts for impacts on inflation and economic growth¹.
   • Any necessary price increases must be kept to the lowest possible level and combined with other growth-support solutions to offset impacts on GDP².
   • New Authority for EVN: Starting August 15, Vietnam Electricity (EVN) will be authorized to decide on electricity price adjustments within a range of 3% to 5% (previously 7%) based on input cost fluctuations, under the supervision of MOIT and the Ministry of Finance³.
2. Coal and Petrol Management
   • Coal: The Ministry of Finance will preside over coal price negotiations for electricity production if parties cannot agree by August 31, 2017⁴.
   • Petrol: MOIT and the Ministry of Finance will continue to manage petrol prices using the stabilization fund appropriately to control inflation⁵.

B. Macroeconomic Indicators

1. GDP Growth Forecasts
   • HSBC Adjustment: HSBC lowered its GDP growth forecast for Vietnam in 2017 from 6.4% to 6.0% due to a slow start in the first quarter⁶⁶⁶⁶.+1
   • 2018 Targets: The Ministry of Planning and Investment has released guidance for 2018, targeting a GDP growth rate of 6.4%–6.8%⁷.
2. Public Debt Concerns
   • During discussions on the amended Law on Public Debt Management, warnings were raised that excluding State-Owned Enterprise (SOE) debt from public debt calculations could affect the national credit rating, as the state has previously had to repay debts on behalf of SOEs⁸.

C. Oil, Gas, and Industry Updates

1. Oil & Gas Sector Highlights
   • International Cooperation: Russian oil company Zarubezhneft and the National Iranian Oil Company (NIOC) signed an MOU to cooperate on extracting oil from two fields in Iran⁹.
   • Domestic Milestone: The Rong – Doi Moi gas compression platform reached a milestone of 2 billion cubic meters of gas transported onshore, confirming the effective cooperation between PV Gas and Vietsovpetro^10101010.+1
   • Global Market: World oil prices hit a six-week high on July 19 following reports of declining US stockpiles¹¹.
2. Industrial Developments
   • Automotive Policy: Electric and hybrid vehicles have officially been added to the list of import/export goods with specific codes, effective early next year¹².
   • Tobacco Industry: Vinataba has spent trillions of VND relocating factories but has notably not yet published its 2016 financial report¹³.

D. Import-Export and Market Integration

1. Trade Partners & Trends
   • South Korea: In the first half of the year, South Korea surpassed the US, EU, and ASEAN to become Vietnam’s second-largest trade partner, behind only China¹⁴.
   • ASEAN: Trade between Vietnam and ASEAN has grown from $19 billion in 2006 to over $41 billion in 2016¹⁵.
   • Cement: With a surplus of nearly 30 million tons and stiff competition from China, there are proposals to reduce export taxes to “rescue” the cement industry¹⁶.
   • Catfish: Facing technical barriers in the US market, Vietnamese catfish exporters are shifting focus to Asian markets¹⁷.
2. Trade Defense
   • There are concerns that if Samsung and LG face safeguard lawsuits in the US, Vietnam’s interests could be collaterally damaged¹⁸.

E. Domestic Market

1. Pork Price Fluctuations
   • Live pig prices have rebounded strongly to 38,000–42,000 VND/kg after a slump, allowing farmers to profit up to 500,000 VND per head¹⁹. However, many farmers remain cautious about restocking due to fears of price instability and rumors²⁰.+1
2. Retail Sector
   • 7-Eleven Entry: The Japanese chain 7-Eleven has entered Vietnam with plans for 300 stores in 3 years. Analysts are watching to see if it replicates its success in Thailand or faces difficulties like in Indonesia²¹.
   • Domestic Weakness: Local retailers are considered weak in capital, scale, and management, struggling to compete with foreign entrants²².