Vietnam News in Brief: Weekly Roundup March 17

Vietnam Briefing keeps track of what’s happening in Vietnam business and economic news so that you don’t have to. Here’s what happened this week.

Economic News

SBV cuts interest rates up to 100 basis points

This week, the State Bank of Vietnam (SBV) lowered interest rates up to 100 basis points. (Note: the SBV sets different interest rates for different products.) This is the first rate cut for the bank after inflationary pressure saw the bank lift interest rates twice last year. This was, at least partially, driven by a request from the Prime Minister to stimulate economic growth, though it may come at the cost of higher inflation, according to Bloomberg.

See also: How Federal Reserve Interest Rate Hikes Affect the Vietnamese Dong

Vietnam’s GDP growth likely 6.3% for 2023: World Bank

In June last year the World Bank forecast 6.7 percent GDP growth for Vietnam this year. In the World Bank’s March 2023 Taking Stock report, however, it revised that figure down to 6.3 percent. The report says domestic demand will be a key driver of growth but notes this may be impacted by higher inflation, that lower demand in key markets may see Vietnam’s exports slow, and that global financial developments, specifically tightening of fiscal policy, may weigh heavily on Vietnam’s financial sector.

Vietnam’s two-way trade reaches US$49.3 billion

Trade figures for February have been released revealing a modest increase on January’s figures – a little under US$3 million. There is a lot to unpack in the data but of note is that exports to the US were up 11.84 percent to US$6.9 billion. This was almost double what Vietnam exported to China (US$3.6 billion) in the same period. Vietnam, however, was far more dependent on China for imports, buying US$6.7 billion worth from its neighbor to the north. This was almost seven times what it received from the US (just under US$1 billion).

See also: Vietnam Import Export Tracker: February 2023 Data

Tax News

Personal income tax due date has been moved back

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Personal income tax finalization will be due Wednesday, May 4 this year with the traditional due date, April 30, falling on a weekend. The traditional due date also coincides with the International Labour Day, Victory Day, and Hung Kings Commemoration Day public holidays, which will see the last weekend of April last for five days this year.

See also: Vietnam’s Public Holidays in 2023 and Compliance, Labor, and Tax Due Dates in Vietnam (2023)

Sugar tax may be on the cards

The beverage sector has come out against a proposed tax on sugary drinks. The tax has been proposed to curb the growing consumption of unhealthy beverages. This is on the back of a surge in obesity in Vietnamese young people as well as a consumer market that is becoming increasingly health conscious. In a country where even cow’s milk has sugar added, this could have far reaching implications.

Tourism News

Tourist visa requirements to be relaxed: PM

The recovery of Vietnam’s tourism sector is well behind that of its regional peers. Key industry players have been calling for reform to tourist visa requirements for some time and the authorities appear to have now somewhat acquiesced. Exact changes have not been announced, but the Prime Minister has called for the visa-free list to include more countries and visa free visas to last for longer than the typical two-weeks.

Investment News

15 percent stake of Vietnam’s VP Bank headed to Japan

Bloomberg reported earlier this week that Japan’s Sumitomo Mitsui Financial Group, Inc. was in the final stages of purchasing a 15 percent stake in Vietnam’s VP Bank for US$1.4 billion. VP Bank is one of Vietnam’s biggest private banks and is currently listed on the Ho Chi Minh Stock Exchange. This is in line with growing interest in mergers and acquisitions in Vietnam’s banking sector.

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Dutch firm considering semiconductor plant in Vietnam

Semiconductor chip production in China has long been a point of contention for chipmakers. Notably, a number of countries are restricting the export of chip manufacturing equipment to the world’s second biggest economy. Dutch chip maker ASML is reportedly the latest chip manufacturer to start looking at alternatives to China, according to Reuters, and is considering Vietnam as one of its options.

See also: Vietnam’s Semiconductor Industry: Samsung Makes Further Inroads

German firm to build second US$18 million plant in Vietnam

With funding from Deutsche Bank, Germany’s Pepperl+Fuchs is building a new plant in HCMC’s Tan Thuan Export Processing Zone. The German firm’s first plant in Vietnam has been operational since 2009 and currently employs 1000 workers. Pepperl+Fuchs currently makes a broad range of industrial sensors and explosion protection devices.

Japanese electronics manufacturer to open factory in central Vietnam

A subsidiary of Japan’s Sumida Corporation has expanded its factory in Quang Ngai province raising its total investment in Vietnam to US$38.5 million. The new, expanded factory is set to produce inductors, reactors, and transformers for industries from consumer electronics to health care. Vietnam’s central provinces are becoming increasingly popular for firms looking to eschew the more established manufacturing hubs around HCMC and Hanoi in search of better value for money.

See also: The Performance of Vietnam’s Key Economic Zones in 2022

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