Vietnam Economic News: 19.4 – 26.4.2025
Summary of Vietnam Economic News: 19.4 - 26.4.2025
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Summary of Vietnam Economic News: 19.4 - 26.4.2025 ---
USTR holds productive trade meeting with Vietnam
Reuters News – 24 April 2025
U.S. Trade Representative Jamieson Greer held a productive virtual meeting with his Vietnamese counterpart in which they agreed on the importance of making swift progress on reciprocal trade, his office said in a statement on Thursday. Greer and Vietnam's Minister of Industry and Trade Nguyen Hong Dien spoke on Wednesday and "instructed their teams to engage in technical discussions in the coming days to discuss efforts to expand market access and address unfair trade practices," it said. Vietnam has the fourth-largest trade surplus among all U.S. trading partners, worth $123.5 billion last year. It faces a whopping 46% U.S. tariff under reciprocal measures announced by U.S. President Donald Trump early this month. The U.S. has paused imposition of the tariffs until July to allow for negotiations, although a flat rate of 10% still applies. Vietnam is an important Southeast Asian industrial hub and has been an increasingly important security partner for the United States in standing up to China's growing power. Vietnam's Prime Minister Pham Minh Chinh on Tuesday instructed officials to combat trade fraud, counterfeiting and other issues of concern for the United States. He has also said Vietnam will buy more American goods, including defence and security products, and seek faster deliveries of commercial planes Vietnamese airlines have ordered from the U.S. Under U.S. pressure, Vietnam is tightening controls on some trade with China to make sure goods exported to the United States with a "Made in Vietnam" label have sufficient added value in the country to justify that.China's President Xi Jinping visited Hanoi last week and called for stronger ties with Vietnam on trade and supply chains.
Vietnam Airlines to finalise 50 Boeing narrow-body order soon
Reuters News – 24 April 2025
Flag carrier Vietnam Airlines is close to finalising a provisional order for 50 Boeing 737 MAX jets that it made in 2023, as it signed a funding arrangement for 50 single-aisle planes on Thursday. The airline said it had signed a memorandum of understanding with the country's top lender Vietcombank for funding to purchase 50 narrow-body planes. Vietnam Airlines signed an initial agreement with U.S. plane maker Boeing in 2023 for 50 of the firm's single-aisle 737 MAX aircraft. Vietnamese and U.S. officials have said repeatedly that purchases of U.S. planes would be crucial to reduce Vietnam's large trade surplus with the United States, which the Trump administration has said was a key factor in the 46% tariffs it initially imposed on the country. Vietnam Airlines' said the purchase was part of its fleet development strategy for the next decade. Boeing has been struggling to deliver aircraft to Vietnam and other countries on schedule due to a production slowdown and global supply chain bottlenecks. However, Boeing on Wednesday said it potentially had dozens of planes available for new customers because Chinese airlines were refusing to take delivery of them as a result of Beijing's heavy retaliatory tariffs against U.S.-made goods. Earlier in April, Vietnam Airlines announced a separate non-binding deal with Citibank worth more than $560 million aimed at "strengthening the airline's operational capacity and expanding its international route network in the years ahead". Embraer, the Brazilian plane maker is in talks for the possible sale of 10 E190 narrow-body jets to Vietnam Airlines, according to a Brazilian official.
Vietnam to finalise restructuring plan for troubled lender SCB
Reuters News – 21 April 2025
Vietnam's central bank is finalising a report, based on a plan from an unspecified investor, to restructure ailing Saigon Joint Stock Commercial Bank (SCB), the lender at the centre of the country's biggest financial fraud on record, local media reported. Last month, Vietnam developer Sun Group had proposed a rescue plan for SCB, which entailed the full reimbursement within 15 years of nearly $26 billion the central bank has pumped into SCB since October 2022 after a run on its deposits. The central bank has drafted a report about the rescue plan prepared by the unspecified investor, the finance ministry's Dau Tu newspaper reported during the weekend. The draft is subject to changes after opinions from relevant state bodies, the paper said, giving no details on the plan or a timeframe for its submission. The central bank, SCB and Sun Group did not immediately reply to requests for comment. The State Bank of Vietnam placed SCB under its supervision to stem a run on the bank sparked by the October 2022 arrest of real estate tycoon Truong My Lan, who was later sentenced to death over her role in siphoning off from SCB the equivalent of billions of dollars in loans to shell companies she controlled. In a separate trial over money laundering and the illegal issuance of corporate bonds, Lan had on Monday an additional life sentence reduced to 30 years on appeal, according to state media. SCB has been using cash injections from the central bank to cover cash withdrawals since October 2022. The central bank and government have repeatedly sought help for SCB from the private sector, specifically calling on foreign investors, according to state media, despite restrictions such as a 30% cap on combined foreign ownership of Vietnamese banks.
Vietnam ramps up bond sales, spending as export-led growth faces tariff risks
Reuters News – 25 April 2025
Vietnam has increased government bond sales by nearly 30% so far this year, data shows, as it bids to boost public spending to spur growth and shield the economy from the risk of crippling U.S. tariffs. The country industrial hub's economy has expanded rapidly in recent years - growing more than 7% in 2024 - thanks to foreign investment in export-oriented manufacturing plants powered by cheap labour and components often shipped from China. Exports accounted for 87% of gross domestic product last year, of which the largest share went to the United States, according to official data. But the country now faces tariffs of 46% from the Trump administration on goods imported into the U.S., much higher than most regional competitors, which economists at research firm BMI have estimated could reduce growth by up to 3 percentage points. Vietnam has kicked off trade talks with the U.S., and is trying to persuade Washington to reduce or eliminate the new tariffs, which have been paused until July. The country is also selling more bonds, despite a historic reluctance to increase low public debt levels. It has so far raised 130.8 trillion dong ($5.04 billion) from government bonds with different maturities this year, up by 26.7% from last year, according to data from the Hanoi Stock Exchange updated to April 23. The money is earmarked to boost public investment, mostly in railway and power infrastructure, and to spur domestic consumption to meet this year's GDP growth target of at least 8%. The government plans to raise around 500 trillion dong ($19.25 billion), or around 4% of GDP, in financing this year according to the finance ministry. Adam Samdin, from Oxford Economics, said that the government has ample space to raise public debt levels, given that debt is just 36% of GDP, well below the mandated ceiling of 60%. "Should growth be lower than expected from higher tariff rates, we think the government can afford to respond with more fiscal stimulus as well," he said. Earlier this week, Vietnam's prime minister outlined plans to boost public spending and "fully disburse" allocated funding for ministries and local authorities, having missed spending targets for years. About $19 billion in public funds was left uninvested from 2021 to 2023, about 25% less than planned, according to finance ministry data, and the government has forfeited billions of dollars in foreign aid. "In Vietnam, a 1% increase in public investment will boost GDP growth by 0.06 percentage point," Can Van Luc, a government adviser, said, adding growth was the objective. Bond issuances have continued despite higher rates. The coupon on 5-year government bonds is so far up almost 50% year-to-date, to an average of 2.17%, and nearly 25% higher on 10-year bonds, at 2.92%, according to stock exchange data.