News Bulletin 57 - Week 1, April 2021

The first quarter of 2021 is now closed at economic numbers are starting to come in. GDP growth, foreign direct investment and trade numbers all showed positive growth.

GDP growth was at 4.4% at the end of the first quarter, trade surplus registered at usd2 billion while foreign direct investment was up 18% compared to same time in prior year. Vietnamese exporters led the way as they exported a total of usd77.34 billion of good, with the biggest market being the USA. With all the positive economic news coming in, last week Fitch Ratings upgraded Vietnam's outlook to positive from stable and keeping its credit rating at BB.

One of Vietnam's biggest retail foreign investors, the Thai retail giant Central Retail Corporation plans to invest an additional usd1.1billion for expansion in Vietnam, fueled by strong wholesale and retail growth of 7% this year.

The past week spotlight

Vietnam-UK trade deal to officially take effect from May

Vietnam will announce to the UK side its ratification of the UK-Vietnam Free Trade Agreement (UKVFTA) this month, so the deal can officially come into force from May 1.

According to the European-American Market Department under the Ministry of Industry and Trade (MoIT), the ministry has promptly and closely coordinated with the UK in the signing and completion of necessary procedures in order to put the pact in place as soon as possible.

See full details here

Let’s look at some other related financial and business news during the past week:

1. Austrian $1.8 billion high-tech deal utilises EVFTA edge

More Austrian investors are expected to pour billions of US dollars in high-tech projects in Vietnam which they consider a new investment base with numerous opportunities from the EU-Vietnam Free Trade Agreement.

See full details here

2. Thai retail giant to invest $1.1 bln for expansion in Vietnam

Thailand’s Central Retail Corporation plans to invest $1.1 billion in Vietnam in the next five years to expand its stores network.

It said Vietnam’s wholesale and retail sector grew 7 percent year-on-year in the last quarter of 2020, and growth is likely to be strong this year, making it one of the most attractive markets in the world.

See full details here

3. Vietnam exports to US surge

Vietnam’s economy is returning to solid export-fueled growth that is likely to continue thanks to the U.S. fiscal stimulus, according to the Wall Street Journal.

See full details here

4. Vietnam’s manufacturing sector strengthens in March

Vietnam’s manufacturing sector gained growth pace at the end of the first quarter, with marked increases in output, new orders and exports, leading to stronger rises in employment and purchasing activity, according to a report by tIHS Markit.

See full details here

5. Many Vietnamese exporters see profit soar during COVID-19

Many Vietnamese exporters have seen a sudden increase in profits during the COVID-19 pandemic.

VRG Khai Hoan JSC said it was in a state of full capacity and often had to refuse orders. The company's orders were only enough to run 70-80 per cent of factory capacity before 2019. When the COVID-19 pandemic started last year, the company's traditional foreign partners quickly ordered a large number of medical gloves for storage, along with orders from new customers.

See full details here

6. Việt Nam's aviation authority proposes resumption of international flights

The Civil Aviation Authority of Vietnam (CAAV) has submitted a plan on the reopening of international flights in three stages to the Ministry of Transport (MoT)

Only ‘combo’ flights for Vietnamese citizens will resume in the first phase. Vietnamese carriers will work with partners, diplomatic missions, and localities arranging quarantine areas. A combo ticket includes a flight ticket, COVID-19 testing, quarantine, living cost, and vehicle to pick passengers up from the airport to hotels for quarantine.

See full details here

7. Economy off to positive start

Vietnam has begun 2021 with improved GDP growth, foreign direct investment and trade, but the number of suspended businesses remains high.

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8. Gov't needs to provide more support for SMEs in taking advantage of the EVFTA

The Government should develop more policies for Vietnamese small and medium enterprises (SMEs) to help them take advantage of the EU–Việt Nam Free Trade Agreement (EVFTA), according to experts.

See full details here

9. Government options to offset rising rents

The significant increase in land prices and industrial park rentals in Vietnam is being described as a major cause for concern. Jack Nguyen, partner from Mazars, shares his viewpoint on the impact of the rent hikes on both investors and tenants.

See more details here

10. Fitch Ratings revises Vietnam's outlook to positive

Fitch Ratings has upgraded Vietnam’s outlook to positive from stable and retained its credit rating at BB.

The upgrading of the outlook indicates the country’s ability to recover from the pandemic sine Vietnam was one of the few countries in the Asia-Pacific region to achieve positive economic growth last year.

See full details here