News of many banks planning to pay dividends, especially cash dividends, have attracted attention from investors in the first month of the new year.

Techcombank proposed an annual cash dividend payment of at least 20% of total profit, equivalent to 4-5% of the bank's equity at the beginning of the year, an estimated 1,500 VND a share for 2024.

Techcombank performed strongly in the last quarter of 2023 and delivered on all components of our full-year financial guidance, said Jens Lottner, Techcombank CEO.

"I am confident that our transformation strategy and established market-leading digital capabilities mean that Techcombank is well-placed for the future. We will submit to the upcoming AGM the proposal for a cash dividend policy, as a part of our continued long-term value creation for shareholders," he added. 

In 2023, Techcombank's profit before tax reached 22.9 trillion VND (930.3 million USD), exceeding the plan of 22 trillion VND approved by the General Meeting of Shareholders in April 2023.

Previously, the Vietnam International Commercial Joint Stock Bank (VIB) was the first bank to announce cash dividends this year. 

VIB has decided to spend more than 1.5 trillion VND to advance the cash dividends in 2023 for existing shareholders at a rate of 6%. Accordingly, shareholders who own 1 share will receive 600 VND. The expected dividend payment time is February 21, 2024.

The bank's leaders at the 2023 Annual General Meeting of Shareholders said that if there are no restrictions from competent authorities, VIB expects to be able to pay dividends of over 30% of the profit after tax achieved in 2023.

According to the financial model and feasibility forecast, VIB is expected to achieve profit after tax of 8.64 trillion VND last year, while its undistributed profits as of December 31, 2023 are expected to reach nearly 9.2 trillion VND.

Last year, VIB had two dividend payments in March and May with dividend rates of 10% and 5%, respectively. It also paid stock dividends to increase charter capital at a rate of 20%.

The bank issued an additional 7.6 million ESOP shares to employees in June 2023. VIB's charter capital accordingly increased to nearly 25.4 trillion VND.

Similarly, Ngo Chi Dung, Chairman of the Board of Directors of VPBank, said at the 2023 annual general meeting of shareholders that with VPBank's potential, the bank will pay cash dividends for five consecutive years and be allowed to pay at the rate of 30% of annual after-tax profits to shareholders.

In 2023, VPBank spent nearly 8 trillion VND to pay dividends to shareholders. The lender plans to carry out cash dividend distributions in the upcoming years earlier, specifically in the first half of the year, in order to meet the shareholders' desires for the bank's profit allocation plan.

Chairman of the Board of Directors of Tien Phong Commercial Joint Stock Bank (TPBank) Do Minh Phu stated that if business operations are favourable and achieve significant growth, the bank will continue to pay cash and stock dividends to shareholders in the future.

"The dividend payout ratio will be considered by the Board of Directors from time to time, but the cash portion will account for a significant amount," Phu said.

Last year, TPBank disbursed about 4 trillion VND to pay cash dividends to shareholders at a rate of 25%.

HDBank, Asia Commercial Joint Stock Bank (ACB) and MBBank also distributed a portion of cash dividends in 2023.

For shareholders, the cash dividend distribution reflects the strength of the banks, indicating a solid capital foundation and translating into tangible returns on their long-term investments.

However, banks are also encouraged to distribute dividends in the form of shares to bolster their capital and strengthen their financial resilience against future risks.

Petrol prices edge up on January 25 afternoon

The petrol prices were revised up from 15:00 on January 25 by the Ministry of Industry and Trade, and the Ministry of Finance.

Accordingly, the price of popular RON95-III stood at 23,407 VND (0.95 USD) per litre, up 925 VND, while E5RON92 was raised 753 VND to cost 22,171 VND per litre.

The prices of diesel oil 0.05S and kerosene were capped at 20,376 VND and 20,544 VND per litre, up 182 VND and 8 VND, respectively.

Meanwhile mazut oil 180CST 3.5S was sold at no more than 15,494 VND per kilogramme, a fall of 14 VND.

During this fuel price adjustment, the two ministries decided to use the petrol price stabilisation fund for mazut oil only.

PM orders sufficient petrol supply during Tet

Prime Minister Pham Minh Chinh has recently signed an official dispatch, ordering competent ministries, sectors and corporations to fully and drastically roll out measures to ensure sufficient petrol supply for production, business and consumption during the Tet (Lunar New Year) holiday which lasts from February 8 to 14 this year and the time ahead.

The official dispatch was issued amidst complicated and unpredictable developments across the globe with the risk of energy supply disruptions and rising energy prices.

Accordingly, the Minister of the Industry and Trade was asked to keep a close watch on the domestic and global petrol markets, enhance examination and direction to make timely adjustments to the petrol allocation in line with the market situation.

The minister should work to prevent supply disruption, while joining hands with relevant ministries and agencies to impose strict punishment on any organisations and individuals who violate petrol business activities. Besides, the ministry should coordinate with the Ministry of Finance to adjust petrol prices in accordance with the current regulations and market, and ensure the harmonised benefits of the State, enterprises and people.

Meanwhile, the Minister of Finance was requested to work with the Ministry of Industry and Trade and traders to consider the adjustments of related costs that are used in calculating the prices of petrol products, and strictly carry out the regulations on electronic invoice issuance for each sale and data connection with the tax authority.

The Chairman of the Commission for Management of State Capital at Enterprises and the Ministry of Industry and Trade must direct the Vietnam Oil and Gas Group (Petrovietnam) and the Vietnam National Petroleum Group (Petrolimex) to pen rational production and distribution plans.

The Minister of Information and Communications is responsible for working with the Ministries of Industry and Trade, and Finance to direct press agencies to provide the public with official, timely and accurate information on petrol supply.

Five Vietnamese agricultural and food products brought under EU control

A total of five Vietnamese agricultural and food products are now subject to EU control when being exported to this highly lucrative market, including bell peppers, instant noodles, durian, okra, and dragon fruit.

Ngo Xuan Nam, deputy director of the Vietnam Sanitary and Phytosanitary Notification Authority and Enquiry Point (SPS Vietnam), said the SPS Vietnam Office has received notification of the EU from the WTO Secretariat on the temporary strengthening of official controls and emergency measures governing the entry of certain goods from some third countries into the bloc.

Regarding this announcement, the nation has five agricultural and food products which are subject to the EU control when exported to this market.

Compared to the announcement in the second half of 2023, the country has four items, including okra, instant noodles, bell peppers, and dragon fruit, which still maintain the same inspection frequency as the previous period. Only durian products require an additional inspection frequency of 10%.

According to statistical data compiled by the Vietnam SPS Office, in the last six months of 2023, the nation only had three shipments of durian that violated EU regulations. Therefore, the EU has moved to put this item under control.

Nam said that the fact that durian is subject to a 10% inspection frequency will not have great impact on exports as in agricultural trade it is normal to be controlled at border areas for agricultural products. Agricultural and food products imported into the nation are also controlled in accordance to Vietnamese law, he added.

According to the General Department of Customs, as of November, 2023, Vietnamese durian exports reached nearly US$2.2 billion, an increase of 4.8 times compared to the same period from 2022. In addition to China, the country’s durian exports to the EU recorded a drastic upturn.

Specifically, fresh durian exports to the Czech Republic soared by more than 28,000%, ranking fourth among the countries importing the most durians from Vietnam. Elsewhere, exports to France surged by 32%.

According to EU regulations, every six months, the European Parliament and the European Council will meet to consider making rules related to temporary increases and decreases in official control measures when importing certain foods and feeds of non-animal origin from certain third countries into the bloc.

SSC fines individuals, organisations for violating securities activities

Since early this year, the State Securities Commission (SSC) has fined individuals and organisations for administrative violations, including illegal trading and securities manipulation.

On January 19, the SSC sanctioned Nguyễn Thị Mỹ Hạnh (residing in An Khánh Ward, Thủ Đức City, HCM City) with an administrative fine of VNĐ1,014,160,000 (US$41,200) for not reporting large transactions beforehand.

Hạnh is the wife of Đặng Quang Hạnh, who is the Permanent Deputy Chairman of the Board of Directors of Tân Tạo Investment and Industry Joint Stock Company (stock code ITA).

Hạnh traded 5,795,200 shares (buying 1,104,700 ITA shares and selling 4,690,500 ITA shares) in June 2022 (corresponding to VNĐ57.9 billion at par value of ITA shares); selling 520,000 ITA shares (corresponding to VNĐ5.2 billion at par value of ITA shares) in July 2022; and selling 88,000 ITA shares (corresponding to VNĐ880 million at par value of ITA shares) in September 2022, but did not report these transactions before they occurred.

In addition to administrative sanctions, Hạnh is also suspended from securities trading activities for three and a half months.

The SSC also sanctioned administrative violations of 12 organisations and individuals that lent their accounts to Chairman of Louis Holdings Đỗ Thành Nhân to trade securities, leading to stock market manipulation for stock codes BII and TGG.

Specifically, 12 organisations and individuals were sanctioned, including Louis Holdings Joint Stock Company; The Golden Group Joint Stock Company (formerly known as Louis Capital Joint Stock Company) and 10 individuals: Hà Nguyễn Uyên, Huỳnh Nguyễn Hương Trà, Ngô Thị Hoài Thanh, Ngô Thị Hoài Thương, Nguyễn Thị Kiều Liên, Nguyễn Thị Minh Hiệp, Phan Thị Nga, Phan Thị Thanh Sen, Phan Thị Thương and Lê Quang Nhuận (all living in HCM City).

The SSC decided to apply preventive measures to prevent violations of laws on securities and the stock market for the 12 organisations and individuals. Accordingly, the 12 organisations and individuals are prohibited from trading securities for two years from January 19, 2024. They are also prohibited from holding positions at securities companies and securities investment fund management companies, branches of securities companies and foreign fund management companies in Việt Nam, and securities investment companies for two years from January 19, 2024. 

Halong casino reports losses for 17th straight quarter

Royal International Corporation (RIC), which owns Vietnam’s biggest casino in the northern city of Halong, reported losses of over VND18 billion (USD 731,350) for the fourth quarter of 2023, its 17th loss-making quarter in a row. 

In its newly-released financial report, RIC said that the VND18 billion-loss showed a sharp fall compared to the loss of VND24 billion reported during the same period of 2022.The company recorded revenues of nearly VND24.80 billion during the period, an increase of 21 percent compared to the same period of 2022. However, revenue for the whole year stood at VND 111 billion, a 5 percent fall on-year. It only fulfilled 45 percent of its revenue target for 2023.

RIC said that it faced total losses of nearly VND73 billion in 2023, an increase of 20 percent on-year.

According to RIC's deputy director, Tran Thi Hong Lieu, the tourism industry faced a difficult year in 2023 as a result of the economic downturn. Moreover, China applied restrictions on their tourists, resulting in the shortage of Chinese customers.

RIC also said that the increasing number of casinos in Cambodia, the Philippines and Myanmar had increased competition in the region.

RIC laid off 80 staff in 2023 and now has 455 workers.

The company expects tourism to recover soon.

RIC was established in 1994 with charter capital of USD15 million as a hotel operator, and eight years later received permits to operate a casino for foreigners.

Since 2016, the company has only posted a profit once, in 2018.

Consumption rise uncertain until general recovery appears

Vietnamese consumers continue to be mindful of their spending in 2024 in anticipation of the challenging outlook in the short and medium term.

According to a report released by Infocus Mekong Research last week, consumer confidence has dropped somewhat in the past 12 months, fuelled by the real estate bubble burst, reduced exports, increased unemployment, reduced wages, and inflation.

The biggest concerns for consumers in 2024 are inflation, unemployment, and Vietnam’s economic slowdown, followed by pollution. New fears include global economic slowdown and bankruptcy. It is worth noting that all concerns seem to be increasing compared to a year ago.

In addition, the report indicates that 41 per cent of consumers loaned money in 2023, mostly from banks or friends. Around 44 per cent intend to take out a loan in 2024, and 62 per cent of all loans are for immediate survival and paying off debt, an increase of 12 per cent since 2021.

A key measure of consumer confidence is the ability to save money. Accordingly, 57 per cent of consumers noted a decline in savings and only 24 per cent experienced an increase in savings in 2023.

In terms of economic recovery, only 27 per cent of consumers believe recovery will happen in the first half of 2024, while 31 per cent believe it will occur in the second half of the year. The report noted that the figures suggest spending will be very conservative for most of this year.

Education and food and beverages shall see the biggest growth in spend for 2024, followed by household utilities and healthcare. Meanwhile, entertainment and dining out, home appliances, and personal electronics segments will suffer.

Last year revealed a few concerning trends in the market, including down-trading of both shopping venues and brands, reduction of shopping frequency, and a reduction in overall spending and savings.

Ralf Matthaes, managing director of Infocus Mekong Research, told VIR, “Since the late 1980s, Vietnam has experienced a tsunami of economic growth. However, the present recession has gauged into consumers earning and savings. Add to this the increased strains placed on consumers by inflation, consumers are acting with their wallets. Until we see a recovery in export orders, which drives manufacturing in Vietnam, a stabilisation of the real estate market from its present downfall, which also impacts the construction market, consumption growth looks gloomy, at best.”

One of the positives of Vietnam’s present predicament is land prices have decreased substantially, as have rents, and demand for commercial space, hence now is a perfect time to invest in commercial property such as supermarkets, Matthaes noted.

“Furthermore, many retailers without deep pockets, as well as smaller retailers, may be close to solvency, further opening up the field for bigger players,” he said. “Vietnam’s present predicament will not last forever. Based on both consumer and business executive sentiment, Vietnam should begin to right the economic ship of recovery by late 2024 to mid-2025, and opportunities still abound in so many sectors for Vietnam, including retail.”

According to the Infocus Mekong Research report, there are four critical elements to drive consumer confidence in 2024: stabilisation of real estate and construction, a rebound of exports and manufacturing, easier access to low-interest loans, and curbing inflation.

“At the end of other day, Vietnamese consumers need to see future earnings potential and savings potential to increase spend,” Matthaes explained.

Traders move online to drive holiday profits

Online shopping on e-commerce platforms is growing rapidly and boosting revenues for businesses during the Lunar New Year.

Sales revenue of Rhys Man, a personal care brand for men on TikTok Shop, has grown by about half over the past month, through a new TikTok shopping campaign.

Rhys Man joined TikTok about two years ago, hoping to increase business sales through affiliate marketing campaigns and shopping ads solutions such as livestreams and TikTok product shopping ads.

At the launch ceremony of the TETastic with TikTok campaign, which took place two weeks ago, Jason Song, a marketing head of TikTok Shop in the Asian-Pacific region, said that this e-commerce platform was trying to help businesses increase revenue.

“With 98 per cent of users expressing positive interaction with ads on TikTok and 94 per cent intending to shop on TikTok Shop ahead of the Lunar New Year, TikTok has awakened enticing business opportunities for small business through various effective marketing methods,” Song said.

TikTok Shop has become the second-biggest e-commerce platform in Vietnam with a total transaction value of nearly $227.8 million, ranked only behind Shopee with a total transaction value of more than $953.5 million, according to YouNet Group.

There are currently about 28 million businesses operating on this platform.

According to market research company NielsenIQ, Vietnamese consumers and businesses have concerns about the upcoming Lunar New Year.

NielsenIQ said that 63 per cent of consumers in Ho Chi Minh City and 53 per cent of consumers in Hanoi are struggling financially. Accordingly, the revenue of the fast-moving consumer goods industry in January and February only grew about 54 per cent compared to the period before the Lunar New Year holiday, and there was no change compared to last year’s break.

The company predicts that online shopping channels will contribute to stimulating the revenue of consumer businesses because more than 70 per cent of the customers of these platforms are young people aged 18-39, and usually office workers. The main factors that encourage online shopping are the shopping experience, a rich variety of products, and promotions.

A report by Metric, an e-commerce data platform, said that the total market revenue of the Lunar New Year decorations market on Shopee, Lazada, Tiki, and Sendo reached $338,000. There were 1,763 shops with orders generated on the four e-commerce platforms with 427,000 product units successfully delivered, an increase of 56 per cent over the same period before the Lunar New Year last year.

Metric expects the Lunar New Year decorations market to earn $2.7 million in revenue on e-commerce platforms in the two months before the 2024 Lunar New Year season, with about 2.7 million products sold.

Consumer behaviour is shifting, with beer a good example. While it is experiencing negative growth on direct shopping channel, the number of orders for beer on e-commerce has increased significantly. Metric statistics showed that in December, beer revenue on e-commerce platforms reached $983,000, an increase of 16.5 per cent over the same period last year.

Dr. Le Thi Hai Yen, lecturer at the University of Economics and Law under Vietnam National University in Ho Chi Minh City, said that shopping behaviour is changing in many different aspects. “Online shopping helps consumers comfortably compare prices between many suppliers and save more money than shopping directly at markets and supermarkets, thanks to the application of many promotion codes,” Yen said

According to the Ministry of Industry and Trade, Vietnam had as many as 62 million consumers shopping online in 2023, accounting for more than half of the total population.

Statistics from the E-commerce Department under the Ministry of Industry and Trade also show that the total e-commerce value of the Vietnamese market in 2023 reached about $20.5 billion, up 25 per cent compared to 2022, an increase of more than $4 billion.

Many retailers are offering big Lunar New Year discounts

A source from southern food maker Vissan JSC revealed that the company has purchased food stock valued at $22.7 million to feed consumers during the Lunar New Year festivities, including nearly 1,100 tonnes of fresh food and 3,800 tonnes of processed food, similar to the volume sold last year.
On several peak days close to Lunar New Year's Day in early February, Vissan envisages offering 'last-minute' shoppers discounts ranging from 10 to 30 per cent.

In addition, to bolster consumer demands after the holiday, Vissan will continue to offer 10-20 per cent discounts at supermarkets and retail outlets selling its products.

According to a survey of local consumers from the end of last year conducted by market research firm Kantar, shoppers are not expected to spend as much over this festive period as in previous years. Around 28 per cent of households are facing financial constraints, compared to just 21 per cent the year before.

To stimulate consumption, businesses are offering generous promotions and price discounts covering essential consumer goods, particularly on days closer to New Year
Nearly half of households surveyed said they have had to tighten their budget by not eating out as much, as well curbing the use of entertainment services.

To stimulate consumption, businesses are offering generous promotions and price discounts that cover essential consumer goods, particularly on days closer to New Year.

Since early January, supermarkets belonging to the Thai-backed Central Retail system have been promoting pork discounts.

The scheme is applicable at GO!, Big C, and Tops Market in locations across the country, covering about 40 types of fresh pork products.

Nguyen Thi Bich Van, PR manager at Central Retail Vietnam, revealed, “Our pork promotion has been expanding to cover all pork products on sale throughout the Central Retail network and is expected to meet the demand for essential products over the holiday.”

Meanwhile, MM Megal Markets has been cooperating with several suppliers to ensure sufficient food supply and stable prices for over 1,000 essential items, along with applying a wholesale price scheme to fresh food.

Food sales usually spike in the two weeks coming up to Lunar New Year, with a focus on essential items.

Rubber firms look to rosier future

Rubber producers are anticipating a brighter future this year, leveraging a pickup in prices and consumer demand.

In the global market, the price of oil has been rising due to the ongoing Red Sea tensions, which have prolonged transportation time and driven up costs for oil tankers. 

This has in turn led to increased synthetic rubber prices, as crude oil is an input material in its production.

Similar to synthetic rubber, natural rubber has also seen favourable price movements.

Supplies have been tightened as Thailand – the world’s largest natural rubber exporter – has experienced adverse weather conditions. In addition, the expectation of a global auto industry rebound has warmed up the rubber market.

As such, in 2024, Vietnam Rubber Group (VRG) is set to count $1.05 billion in revenue, $173 million in pre-tax profit, and $145 million in post-tax profit. These figures are all higher compared to 2023 levels.

Macro factors and rallying rubber prices are underpinning rubber firms' performance. Last year, VRG produced an estimated 445,000 tonnes of rubber, up 3.5 per cent on-year. Sale surpassed 520,290 tonnes, up 3.8 per cent.

Its consolidated revenue hit $1.03 billion, equal to 101 per cent of its full-year projection, and consolidated pre-tax profit reached $169.4 million, surging by 1.4 per cent on-year.

This year, Danang Rubber JSC anticipates robust growth after its third-phase radial tyre plant came on stream in December 2023, providing solid prospects for its PCR tyres, which are used for trucks and passenger cars.

The global demand for tyre products saw improvement from the third quarter of last year, particularly in Vietnam’s key export markets such as Brazil and the United States.

New car supply in the US is expected to return to pre-pandemic levels of around three million cars, nearly triple the figure seen in the period that faced the toughest impacts due to chip shortages.

Vietcombank Securities forecasts that this year, Danang Rubber could count $241 million in revenue and $13.6 million in post-tax profit, up 25 per cent and 43.8 per cent on-year, respectively.

Natural rubber is currently the main driver of Dong Phu Rubber's business outcomes.

Last year, the company saw a drop in its business results due to falling consumption and lower than expected product prices.

Consequently, the company posted $32.4 million in revenue and $8.9 million in accrued profit, down 13 per cent and 15 per cent on-year, respectively.

This year, Dong Phu expects to see a better performance thanks to the positive rubber price movements.

According to Vietnam Construction Securities JSC, Dong Phu Rubber possesses more than 16,000 hectares of rubber fields in total, of which over 9,000ha are based in Binh Phuoc province.

Binh Phuoc has a plan to take back 2,000ha from Dong Phu with compensation approximating $40,000 per ha.

This year, the company is expected to receive about $5 million in compensation from Binh Phuoc People’s Committee.

'Unfair' competition practices in postal service sector

The presence of multiple postal service providers, including several from abroad, is creating increasingly stiff competition, with many firms alluring customers through constant promotions and price discounts.

In addition, as there are currently no regulations on the floor price for postal services, including e-commerce services, it is proving impossible to control such radical price discounts.

Nguyen Truong Giang, of the Member Council at Vietnam Post Corporation (VNPost), said that during the five years from 2018 to 2022, the number of postal services had nearly doubled from 410 to more than 800, attracting both local and foreign players.

“Competition, however, has become increasingly stiff, leading to signs of unhealthy competition and division in the domestic postal market, and causing negative impacts on business performance, the quality of service provision, and customer benefits,” said Giang.

La Hoang Trung, director general of the Department of Posts under VNPost, noted that firms have consistently lowered prices, offering promotions, gifts, vouchers and even free shipping.

Even major businesses in the market face multiple challenges when competing with large postal businesses with abundant investment capital from abroad. “Even though the service quality has been markedly improved, given the soaring number of parcels each day, now at nearly seven million, underperforming units do still persist,” said Trung.

Statistics from the Department of Posts show that the top 10 postal units in terms of market share have taken part in goods transportation for leading e-commerce sites.

The VPA reports that local postal companies are facing a wave of franchising and indirect investment expansion by cross-border e-commerce platforms and delivery companies, meanwhile, foreign-invested enterprises are constantly seeking ways to grow their market share by reducing shipping prices below cost, offering promotions, and increasing discounts.

Giang believes that local postal businesses will find it difficult to compete with these global delivery businesses.

Even major businesses in the market face multiple challenges when competing with large postal businesses with abundant investment capital from abroad.

The Ministry of Information and Communications (MIC) said that in its 2024 agenda that the Postal Law should be amended to regulate the new reality in the provision of postal services with a view to ensuring healthy competition and the sustainable development of the market.

A report from the MIC shows that last year, postal service revenue came to around almost $2.5 billion, up over 9 per cent on-year, of which e-commerce parcel service revenue surpassed $1.6 billion, accounting for about 64 per cent, and budget contributions approximated $243 million, up 0.5 per cent on-year.

2023 saw an estimated 2.5 billion postal items being delivered, up over 32 per cent compared to 2022, of which the volume of e-commerce parcels fetched around 1.85 billion, accounting for about 75 per cent.

EU-Vietnam Free Trade Agreement implementation kicks into higher gear

Vietnam and the EU are amplifying investment and trade ties seconded by a bilateral free trade deal, with the latter committing to assist the former in implementation.

Bernd Lange, chairman of the European Parliament’s (EP) Committee on International Trade, last week came to Vietnam for the sixth time in four years in order to oversee the country’s deployment of the EU-Vietnam Free Trade Agreement (EVFTA) and evaluate the operations of local organisations in charge of supervising the implementation of FTAs and Vietnam’s related policies.

“Vietnam is the EU’s most important partner in the ASEAN. The impressive trade growth backed by the EVFTA reflects their huge potential for development cooperation. The EVFTA has had positive effects on both sides, with larger trade and investment flows recorded,” Lange told VIR, confirming that the EP will continue supporting Vietnam in EVFTA deployment.

He said that since the EVFTA took effect in August 2020, bilateral trade between Vietnam and the EU soared by 20 per cent, with Vietnam having increased its exports to the EU.

“About 71 per cent of tariff lines for Vietnamese exports to the EU have been removed so far, while 65 per cent of tariff lines for EU goods exported to Vietnam have also been liberalised,” Lange said.

Julien Guerrier, Ambassador and Head of the European Delegation to Vietnam, told VIR that the EVFTA has contributed to improving Vietnam’s attractiveness in the eyes of EU and non-EU investors. The EU is the sixth-biggest foreign direct investment partner of Vietnam out of 144 countries and territories.

“Despite the global nearshoring trend where investors tend to reduce their geographically distant investments and bring them back closer to their home countries, EU investors continued to pour an additional $810 million into Vietnam during January-September 2023,” Guerrier said.

“The EVFTA enforcement has also been successful in creating spill-over effects, turning Vietnam into a regional production hub by attracting a large number of investors from non-EU countries,” he continued.

“Based on this factual trade and investment development, we can predict a stable growing trend for the bilateral EU-Vietnam trade and investment flows in the coming years, even if we could witness a deceleration in growth or even some minor decreases after the miraculous expansion over the past few years,” he continued.

Data from the Ministry of Planning and Investment indicates that the EU has a total stock of investment of approximately $28.3 billion, with around 2,450 projects. Total trade between Vietnam and the EU is estimated to hit $59.1 billion last year, with the country’s export and import turnover of $44.1 billion and $15 billion, respectively.

Confidence among European businesses operating in Vietnam is showing signs of resilience as the latest Business Confidence Index, released two weeks ago by the European Chamber of Commerce in Vietnam (EuroCham) and conducted by Decision Lab, reached 46.3 in Q4 of 2023.

In Q4 2023, Vietnam’s investment hotspot status increased significantly. An impressive 62 per cent of those surveyed ranked Vietnam among their top 10 global investment destinations, with 17 per cent placing it at the very top. This strong endorsement is matched by 53 per cent of respondents anticipating increased foreign investment in Vietnam by the end of Q4.

The survey also highlights Vietnam’s strategic position in the ASEAN region. While only 2 per cent consider it an “industry leader”, 29 per cent rank it among the “top competitive countries” in ASEAN. The majority (45 per cent) view Vietnam as a competitor, albeit acknowledging certain challenges.

“This perspective emphasises Vietnam’s growing influence and potential for further advancement within the ASEAN economic landscape,” a EuroCham report said.

Marko Walde, chief representative of AHK in Vietnam, Myanmar, Cambodia, and Laos, said that Vietnam has emerged as a dynamic destination for foreign investors, and German companies are increasingly recognising the vast opportunities it offers.

“For example, mergers and acquisitions have become a prominent strategy for German businesses seeking to enter and expand in the Vietnamese market,” Walde told VIR.

In a specific case, he cited STADA, a German pharmaceutical manufacturer, which has been strategically investing in Pymerphaco since 2008, assisting in the development of technology and the application of EU GMP standards.

“By 2021, STADA acquired the second-largest pharmaceutical company on the Vietnam stock exchange. With this transition, STADA is among the top three German companies investing in Vietnam,” Walde said.

Cumulatively, as of December 20, Germany had 464 valid projects in Vietnam registered at $2.68 billion. The sectors that attract German businesses most often include industrial production, machinery, and equipment.

“Numerous experts assert that Vietnam’s economic growth outpaces that of any other Asian nation. This signifies that German companies investing here present an advantageous prospect not only for the Vietnamese economy but also for German businesses seeking an appealing and secure location for their expansion endeavours,” Walde said.

Vietnam to enjoy standout growth in 2024

Vietnam’s economy is likely to continue to outperform its regional neighbours through 2024, with its manufacturing and export industries drawing significant inward investment thanks to the openness of its economy and the strength of its fundamentals.
 
The information was revealed in the Asia House Annual Outlook 2024 that was released on January 23. The report examines how Asia’s economies will power ahead in 2024.

According to this outlook, in the first ten months of 2023, foreign direct investment (FDI) in manufacturing projects in Vietnam stood at roughly $18 billion, or 73 per cent of the total FDI inflows registered in the same period. Additionally, foreign investors are increasingly turning to Vietnam to diversify their supply chains away from China.

The report points out that Vietnam’s digital transformation programme aims to situate its domestic tech firms as global players. Vietnam has a thriving tech startup environment and there has been significant public investment in AI.

The National Innovation Centre supports tech breakthroughs in multiple sectors, while the banking sector is very active in AI testing and application. VPBank has applied AI to currency transactions, personal credit, and digital banking, while Vietcombank has cooperated with FTP Smart Cloud to develop a customer chatbot platform, called VCB Digibot.

In 2024, AI will reshape multiple sectors in Vietnam’s economy and boost inward productive investment. By collaborating with educational institutions and participating in the development of AI infrastructure, inward investment can catalyse positive economic spill-overs – both horizontally and vertically.

As a major agricultural producer, Vietnam will benefit from inward investment in precision agriculture, AI monitoring, and analysis to optimise yields and fertiliser use. AI can also be used to collect data on soil conditions, weather, crop growth, and water usage, with sensors and drones also providing key insights. This can influence decisions on seed planting, fertilisation, pest management, and other agronomic procedures.

According to the Asia House Annual Outlook 2024, economic dynamism, resilient fundamentals, and the openness of Vietnam’s economy also augur well for its green finance ecosystem. Regulatory incentives to encourage a shift in the financing of the green economy will be key in 2024 and beyond.

The continued promotion and scaling of incentives to attract and channel green finance – with the engagement of domestic financial institutions – will spur Vietnam’s energy transition and help build resilience against climate shocks.

The Bank for Investment and Development of Vietnam became the first to issue green bonds, with the proceeds used to finance green, energy-saving, emission-reducing, and environmental protection projects. The first domestic green bond issuance in the Vietnamese capital market was scored by Moody’s.

This is also the first senior, unsecured, and unguaranteed green bond issued in Vietnam. Additional efforts to scale green bond issuance will create pathways for more issuances and deliver more depth and breadth in the green ecosystem.

Vietnam’s blended green finance initiatives – such as the Asian Development Bank blended finance loan supporting wind energy – are particularly effective in supporting Vietnam’s adaptation to climate risks and supporting renewable energy.

As is the case in neighbouring Southeast Asian economies, climate finance mechanisms need to be calibrated to mitigate risk and to promote risk-sharing, particularly when channelling sustainable finance to Vietnam’s smallholder farmers and small- and medium-sized enterprises.

Equity-based investments offer risk-sharing and risk mitigation, as well as give farmers greater financial flexibility during periods of low yields or unforeseen shocks.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes