The Doi Mo Report 30-Jun-2019

Top 3 Company Headlines
AEON plans to quadruple sourcing from Vietnam (Japan Times 14-Jun)
AstraZeneca plans $220m investment (Vietnam Economic News 04-Jun)
2 Vietnam startups plan $30m merge deal (Bloomberg 10-Jun)
Top 3 Macro and Risk Headlines
Vietnam & EU to sign EVFTA (Vietnam News 25-Jun)
Central bank unveils pro-active monetary policy Q2 2019 (Vietnam Economic News 20-Jun
Vietnam GDP grows on trade war gains (Financial Times 28-Jun)
The Doi Moi View
The EU has signed a free trade deal with Vietnam reducing tariffs on 99% of goods and services – their first with a developing country. We can expect a sustained increase in export demand from the EU, Vietnam’s second largest export market, as goods and services become more competitive. Increasing ties with the bloc will also signal the market that Vietnam’s economy is growing sustainably boosting FDI. As the US-China trade war continues, Vietnam is still benefiting from redirected investment.
The govt must be conscious that as the China situation cools down Trump’s administration is turning their protectionist focus to other countries in the region. The US is Vietnam’s largest export market.
Fun Fact: On 30-Jun, Hanoi hosted a cultural exchange with the Republic of Korea, aimed at boosting mutual understanding and friendship between the two nations. The event saw more than 80 artists from RoK dancing and performing rituals to express the philosophical message of Buddhism.

The Doi Moi Report 31-May-2019

Top 3 Company Headlines
Auchan's exit from Vietnam gets interest from potential buyers (Reuters 15-May)
Vietnam Airlines lists shares as state aims to revive divestment push (Nikkei Asian Review 05-May)
Equitisation of SOEs remains slow (Vietnam Economic News 11-May)
Top 3 Macro and Risk Headlines
Central bank to grant more autonomy to commercial banks (Vietnam Plus 16- May)
Drop likely in corporate income tax (Vietnam Economic News 29-May)
World Bank $125m for institutional reforms in HCM City (SGGP News 21-May)
The Doi Moi View
Following growth forecasts of 6.8% for 2019, DBS Bank has predicted that within the next decade Vietnam’s economy could overtake Singapore’s. This will rely upon on a continuation in the effective market centric reforms we’ve seen in recent years and sustained FDI inflows from North America, Europe and China. Whilst this report is promising, to affect the 6.4-6.5% GDP growth required year on year, the government will need to do more increase the contribution of private enterprise as a proportion of GDP. Vietnam SOEs, whilst profitable, currently dominate the country’s GDP with government being much slower to privatise than laid in out in their Q4 2018 economic strategy.
Fun Fact: On the 16-May, Vietnam celebrated the anniversary of the Buddah’s birthday, welcoming delegates from over 112 countries to partake in activities at the Tam Chuc Temple in Ha Nam province

The Doi Moi Report 30-Apr-2019
Top 3 Company Headlines
New incubator open in HCM City to facilitate German business in Vietnam (Vietnam Economic Times 03-Apr)
SK Group to buy $1bn stake in Vingroup (Vietnam Economic News 05-Apr)
Dung Quat refinery exceeds capacity by 7% earning $26mn in Q1 post-tax profits (Vietnam Plus 19-Apr)
Top 3 Macro and Risk Headlines
Hanoi reports 6.99% GDP growth in Q1 (Vietnam Economic News 02-Apr)
S&P raises Vietnam’s sovereign rating (Reuters 05-Apr)
CPI management poses challenge for state (Vietnam Economic News 19-Apr)
The Doi Moi's View
Vietnam’s economy finished Q1 with GDP growth slowdown amid softer global demand for manufactured products. FDI is still strong as the US-China trade war makes Vietnam an attractive regional alternative. One of the main challenges is administrative issues. HCM City and Hanoi have both announced administrative reform packages to further attract FDI through attractive regulatory environments and skilled labour pools. By targeting human capital these reforms aim to increase the size of the service sector in light of a pro-liberalisation April WTO report. Success will have long term supply side benefits. In order to sustain investment, the government must support business development in light of VIE critique. The govt must also address CPI and export demand shocks.
Fun Fact: On 30-Apr the Vietnamese celebrated Reunification Day, marking 44 years since the capturing of Saigon by North Vietnamese forces and the end of the Vietnam War