Vietnam Industry and Trade News Bulletin for JULY 2017 SPECIAL
A. KEY DIRECTIVES & CORPORATE GOVERNANCE1. MoIT Q2/2017 Press Conference Outcomes
- State Divestment: The Ministry confirmed plans to sell the entire state-owned capital in Sabeco and Habeco within 2017.
- Crisis Management: A decisive handling plan for 12 trillion-VND loss-making projects is scheduled for completion by late July 2017.
- Market Regulation: Authorities are intensifying oversight of multi-level marketing (Lien Ket Viet) and requiring ride-hailing services like Uber and Grab to strictly adhere to domestic law.
2. Financial & Trade Projections
- Trade Deficit: The full-year trade deficit for 2017 is forecasted at approximately $5 billion.
- Coal Market: EVN and TKV have been instructed to follow market-based rules for coal transactions to ensure transparency.
B. MACROECONOMIC OUTLOOK
1. Growth Scenarios & Global Assessments
- GDP Resilience: Following a 5.73% growth rate in H1 2017, the World Bank (WB) noted Vietnam’s resilience, with improvements expected in H2 driven by foreign investment and export-oriented manufacturing.
- Target Debate: Experts are currently debating the feasibility of reaching the ambitious 6.7% annual GDP target.
2. Fiscal Recommendations
- Health Taxes: The WB suggested increasing taxes on health-harming goods, specifically alcohol, beer, and tobacco, as a strategic move to boost domestic revenue.
C. ENERGY & INFRASTRUCTURE
1. Oil, Gas, and Biofuel
- PVN Performance: Revenue for the first six months reached 247.1 trillion VND, exceeding targets by 14% due to technical improvements and market conditions.
- E5 Biofuel: Experts emphasize that a price gap of 2,000 VND/liter compared to mineral gasoline is essential to make E5 attractive to the general public.
2. Power Grid & Hydropower
- Grid Modernization: EVN SPC launched its SCADA center in Ho Chi Minh City, enabling online management of the power grids across 21 southern provinces.
- Hydropower Divergence: While Quang Binh is refusing projects under 3 MW to protect the environment, Quang Nam faces public backlash for proposing new projects despite already hosting 42 existing plants.
- Thermal Power: Unit 2 of the Vinh Tan 4 plant successfully connected to the grid 32 days ahead of schedule.
D. INDUSTRIAL & TRADE DYNAMICS
1. Automotive & Export Shifts
- Breakthrough Solutions: MoIT proposed exempting special consumption tax for localized parts and attracting MNCs to produce models unique to the ASEAN region.
- The “Korea Shift”: For the first time in history, Vietnam’s trade deficit with South Korea has surpassed its deficit with China, marking a major shift in supply chain sourcing.
2. Agricultural Volatility
- Pork Rebound: High-quality live hog prices surged from 23,000 VND/kg to 40,000 VND/kg.
- Mekong Risks: Farmers are cautioned against the mass-planting of red-flesh dragon fruit based on rumors, which could lead to a future supply glut.
- UAE Warnings: Fruit exporters are advised to be vigilant against potential scams and price coercion in the UAE market.
E. INTEGRATION & TRADE PROMOTION
1. TPP-11 and Regional Ties
- Post-US Strategy: The remaining 11 TPP nations met in Japan, agreeing to finalize a framework by November (to be hosted in Vietnam) with minimal changes to the original agreement.
- Vietnam-Turkey Relations: Both nations have set an ambitious trade turnover target of $4 billion by 2020.
2. Brand Identity
- National Brand Concerns: Critics pointed out that many major enterprises are missing from the “National Brand” rankings, leading to questions about the registration and voting process.
Analogy: The Vietnamese economy in mid-2017 is like a high-speed train attempting a difficult transition; while it is successfully switching tracks to modern digital infrastructure (SCADA) and new trade partners (South Korea/TPP-11), it is still carrying the heavy weight of old “cargo” (12 loss-making projects) that must be offloaded to maintain speed toward the 6.7% growth destination.
