Vietnam Industry and Trade News Review – December 25, 2019
A. MACROECONOMIC OUTLOOK & ENTERPRISE DEVELOPMENT
1. 2020 Growth Optimism Financial experts are bullish on the coming year, projecting a 7.15% GDP growth, which exceeds the National Assembly’s conservative target of 6.6–6.8%. This optimism stems from Vietnam’s increasing geopolitical influence as the ASEAN Chair and a non-permanent member of the UN Security Council.
2. Institutional Reforms The Ministry of Industry and Trade (MoIT) is prioritizing ease of doing business:
- HS Code Updates: Circular No. 41/2019/TT-BCT was issued to align import-export codes with international standards, streamlining the National Single Window.
- Administrative Efficiency: A year-end review noted significant progress in cutting “red tape,” with MoIT now leading in the integration of digital services.
B. ENERGY SECTOR TRENDS & CHALLENGES
1. The Coal Power Paradox Vietnam is currently bucking the global trend of “decarbonization.”
- The Dilemma: While many nations are divesting from coal, it remains Vietnam’s primary energy source. Coal imports hit nearly $4 billion in 2019 to fuel domestic demand.
- Investment Risks: 10 of the 14 coal plants in the Mekong Delta are funded by Chinese capital, raising concerns over long-term technological and fuel dependency.
2. LNG and Digital Shifts To mitigate gas shortages in the South, EVN and PVGas are fast-tracking Liquefied Natural Gas (LNG) infrastructure. On the service front, EVN has successfully moved 12 “Level-4” digital services to the National Public Service Portal, allowing for completely paperless transactions.
C. INTERNATIONAL TRADE & IMPORT-EXPORT HIGHLIGHTS
1. Surging Surplus Vietnam is set to record a $9.11 billion trade surplus for 2019. The growth is fueled largely by the Computers and Electronics sector, which has become the backbone of the export economy.
2. Automotive & Chemical Dependency
- Cars: Import volume for CBU cars skyrocketed by 95.6% year-on-year, though a month-on-month dip in November suggests a slight year-end cooling.
- Chemicals: A strategic vulnerability remains in the chemical sector, where 70–80% of industrial chemicals and pesticides are imported, primarily from China.
3. The Seafood Slump The Pangasius (catfish) industry faced a “cold winter” in Western markets:
- US Exports: Dropped by 60.2% in November.
- EU Exports: Fell by 36%.
- Silver Lining: The China-Hong Kong market remains a critical “buffer,” helping to prevent a total price collapse for Mekong Delta farmers.
D. DOMESTIC MARKET & MARKET MANAGEMENT
- Pork Scarcity: Hanoi faces a massive supply gap for the Lunar New Year. The city has prepared 6,100 tons of pork, but monthly demand is estimated at over 44,000 tons, signaling potential “price fever.”
- Market Surveillance: Authorities have launched a “clean-up” of the functional food market, targeting false advertising and illegal multi-level marketing schemes that typically peak during the gift-giving season.
- Coffee Prices: A sharp drop in Arabica and Robusta prices at year-end has put pressure on Central Highland farmers, attributed to global exchange margin changes.
Analogy: The 2019 economy is like a high-performance engine running on heavy fuel; it is hitting record speeds (trade surplus and GDP), but the heavy reliance on imported coal and Chinese chemicals acts as a “thick smoke” that planners must clear to ensure environmental and strategic sustainability in the 2020s.
