In 2023: Bright Spots

Many forecasts indicate that Vietnam’s GDP growth in 2023 will only reach above 5%. The Central Institute for Economic Management (CIEM) (under the Ministry of Planning and Investment) predicts Vietnam’s GDP in 2023 to be around 5.19%. Recently, the Asian Development Bank (ADB) projected a rate of 5.2%, significantly lower than the previous estimate of 5.8%. Notably, Vietnam’s forecasted growth of 5.2% is equivalent to China’s projected growth for the current year – the world’s second-largest economy.

Despite being recognized as an extremely challenging year, 2023 has seen several “bright spots” in the economy. According to CIEM’s assessment, some macroeconomic indicators are moving in a positive direction, with GDP growth showing improvement, particularly in the later quarters. The estimated GDP growth for Q4/2023 is 7.72%, Q3/2023 is 5.23%, Q2/2023 is 4.05%, and Q1/2023 is 3.28%.

According to Dr. Can Van Luc, Chief Economist at BIDV, a member of the National Financial-Monetary Policy Advisory Council, Vietnam cannot escape the impacts of the world economic difficulties. However, signs of economic recovery are quite evident. The economy has multiple drivers for growth in both 2023 and 2024, such as the global shift in supply chains and capital flows, the reopening of the Chinese market, significant growth in services and consumption, increased public investment with moderate fiscal risks, ample policy space, decreasing inflation and interest rates, stable exchange rates, and controlled risks of bad debts.

Dr. Can Van Luc shared that despite Vietnam’s GDP growth in 2023 being lower than the target range of 6-6.5%, it remains one of the highest growth rates in the Asia-Pacific region. Notably, from June onwards, there have been clear signs of economic recovery. Analyzing specific economic indicators such as exports, industrial production indices, Dr. Can Van Luc believes that the economy is improving. “Clearly, we have recovered and are regaining positive growth momentum,” he asserted.

Especially noteworthy is the positive change in the institutional framework, with many important laws passed by the National Assembly and in the process of approval, such as the Land Law, Housing Law, Real Estate Business Law, E-Transactions Law, Credit Institutions Law, among others.

Furthermore, the entire set of policies (relief measures, tax and fee deferrals, reductions, etc.) issued by the government in recent times to support various markets, including the capital market, land, real estate, and tourism, has been unprecedented. Importantly, most of the policies implemented since the COVID-19 pandemic have been maintained.

Dr. Luc emphasized that diplomatic efforts in general and economic diplomacy in particular have been highly successful in the past year.

Which scenario for 2024?

At the recent Vietnam Economic Forum 2023 organized by the United Nations Development Programme (UNDP) and CIEM, CIEM announced the update of three economic growth scenarios for Vietnam in 2024. These scenarios include a low scenario with GDP growth of 5.5%, a baseline scenario with GDP growth of 6%, and a high scenario with GDP growth of 6.5%.

This forecast closely aligns with the latest predictions from some international financial institutions, such as the World Bank projecting 5.5% (August 2023), the IMF forecasting 5.8% (October 2023), and the ADB forecasting 6% (September and December 2023).

Recently, during the 6th session, the National Assembly passed Resolution 103/2023/QH15 on the economic and social development plan for 2024, with a target GDP growth range of 6-6.5%.

2024 is recognized as a challenging year for the Vietnamese economy due to lingering internal difficulties from 2023. Additionally, global political situations remain complex and unpredictable, with a mild decline projected in global economic growth, including several major trading partners of Vietnam. Inflation is expected to remain high, possibly surpassing 2023 levels, making the management of Vietnam’s monetary policy challenging and requiring greater flexibility.

Nevertheless, a positive aspect is the stable economic growth over an extended period, providing momentum for a more favorable recovery. Vietnam’s political and trade position is increasingly emphasized internationally, with upgraded relations with the U.S. and Japan and the activation of some new free trade agreements. The government focuses on supporting economic recovery, with certain support policies extended into 2024.

In the economic scenarios, CIEM predicts that GDP in 2024 could grow corresponding to the baseline scenario (6%). To achieve this growth, CIEM’s research team suggests focusing on several solutions, including stabilizing macroeconomic conditions, controlling inflation, especially focusing on economic growth drivers, improving institutions and the business environment, enhancing infrastructure for production, and supporting production entities while promoting the development of goods and services markets.

What are the growth drivers?

According to the Resident Representative of UNDP in Vietnam, Ramla Khalidi, for Vietnam’s economy to strongly recover in 2024, flexibility in addressing existing challenges is crucial. Innovation, creativity, and energy transition present new opportunities for Vietnam to penetrate new markets, increase the value and quantity of goods, boost exports, attract investment, and leverage advanced technologies such as semiconductor technology and artificial intelligence.

Economic expert Nguyen Xuan Thanh, a lecturer at Fulbright University Vietnam, identifies the first driver for Vietnam’s economic growth in late 2023 and 2024 as exports. He suggests that Vietnam can achieve export growth ranging from 5-7% by exporting to the recovering U.S. market.

Dr. Can Van Luc predicts that global economic growth in 2024 may be flat or slightly reduced, but Vietnam is expected to recover at 6-6.5%, with inflation well within control at around 3.5-4%. To ensure this growth, fiscal policies from 2023 should continue to be applied. Monetary policies, such as interest rate reduction and debt restructuring, should also be extended throughout the year. For businesses, a strong restructuring, diversification of capital sources, and rapid transition towards green and digital directions are recommended.

“The target of 6-6.5% growth in 2024 is relatively challenging in the current context. However, many conditions and developments in the last months of 2023 support the growth prospects in 2024,” emphasizes Dr. Le Duy Binh, Director of Economica Vietnam.

Source: Phap Luat Viet Nam | Link

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1. Vietnam continues to be a global economic bright spot

The socio-economic trends continue on a positive trajectory, with each subsequent month surpassing the previous, the next quarter outperforming the last. The nation has essentially achieved its overall goals, attaining significant results in various sectors. Vietnam remains a bright spot in the global economy, surpassing 10 out of 15 set targets.

In 2023, Vietnam is acknowledged by many international organizations for achieving notable successes in economic and social development. The macroeconomy is fundamentally stable, with inflation lower than the National Assembly’s set target. Public debt, government debt, foreign debt, and the state budget deficit are under control. Growth is stimulated, and major economic balances are ensured. Achieving a GDP growth of around 5% for the year is a considerable effort amid challenging global conditions, positioning Vietnam as one of the high-growth countries in the region and the world.

The agricultural sector continues to be a strong pillar and a stable support for the economy during difficulties. The service sector is vibrant, and the industrial and construction sectors are gradually recovering.

Reputable international organizations highly evaluate the results and prospects of Vietnam’s economy, forecasting a rapid recovery in the near future. Fitch Ratings has upgraded Vietnam’s long-term credit rating to BB+ (from BB), with a “Stable” outlook. The national brand value of Vietnam has reached $431 billion, rising one spot to 32nd out of 100 powerful national brands worldwide.

2. In foreign affairs, integration has achieved historical milestones

Vietnam successfully hosts and welcomes the General Secretary and President of China, Xi Jinping.

Vietnam successfully hosts and welcomes President of the United States, Joe Biden

The foreign affairs and international integration efforts have been dynamic, comprehensive, and continuously successful in 2023. This has been a notable highlight, characterized by the harmonious, coordinated, and effective collaboration of the Party’s foreign affairs, State diplomacy, and people-to-people diplomacy.

Several historic achievements in foreign affairs have created new opportunities for the country’s development. Particularly noteworthy are the well-prepared and successfully organized official visits to Vietnam by General Secretary and President of China, Xi Jinping, and President of the United States, Joe Biden. A series of visits and work in foreign countries by Party and State leaders have deepened relations with many important partners. The image, stature, reputation, and position of Vietnam have been elevated to new heights.

To date, Vietnam has established comprehensive strategic partnerships or strategic partnerships with all five permanent member countries of the United Nations Security Council and many G20 countries. This has contributed to enhancing Vietnam’s position and reputation on the international stage, maintaining a peaceful and stable environment for nation-building and protection.

3. Remarkable Transformations in the Development of the Expressway System

From the beginning of the term until now, 729 kilometers of expressways have been completed and put into operation, bringing the total kilometers of operational expressways to 1,892 kilometers.

The strategic breakthrough in constructing infrastructure, particularly in transportation infrastructure, has witnessed remarkable transformations, especially in the expressway system.

In 2023, numerous expressway projects have been completed and newly initiated, marking a significant development in over a decade. From the beginning of the term until now, 729 kilometers of expressways have been completed and put into operation, bringing the total kilometers of operational expressways to 1,892 kilometers. Simultaneously, approximately 1,700 kilometers of expressways are under construction, with the goal of completing around 3,000 kilometers by 2025 and 5,000 kilometers by 2030, exceeding the national targets.

In aviation, the completion and operation of Passenger Terminal 2 at Phu Bai Airport in Dien Bien represent substantial achievements. Vigorous efforts have been made to resolve issues and initiate the construction of Passenger Terminal 3 at Tan Son Nhat International Airport, as well as the Long Thanh International Airport project. These endeavors ensure quality and meet the required progress.

4. Constructing and Perfecting Institutions with Emphasis on Strategic Breakthroughs

Prime Minister Pham Minh Chinh chaired the Special Session on Legal Construction in December 2023

The work of constructing and improving the legal framework, mechanisms, and policies has been given due attention in line with strategic breakthroughs, featuring numerous innovations in guidance and approaches. The Government has received shared responsibilities, close collaboration, and coordination with the National Assembly and its Standing Committee. In 2023, the National Assembly passed 16 laws, 29 resolutions, and provided opinions on 18 draft laws. The Government held 10 special sessions on legal construction, obtaining feedback on 47 items, with a focus on refining and presenting to the National Assembly the draft Land Law (amended). The Government issued 86 decrees, and the Prime Minister issued 29 decisions with normative content. The comprehensive public administration reform program was vigorously implemented and proved effective, emphasizing the reduction, simplification, and decentralization of administrative procedures. There was a push for decentralization and delegation of authority, organizational restructuring, and rectification of the situation where officials and civil servants avoid responsibilities and fear making mistakes in performing duties. A Government decree was issued to encourage and protect dynamic, innovative, daring, and accountable officials who work for the common good.

Urban planning work progressed rapidly, with 108 out of 111 plans completed, reviewed, and approved, raising the overall quality. The National Comprehensive Planning and many sectoral, local, and provincial plans were also issued.

5. Agricultural product exports reach a peak, expanding into new markets

In the context of many market challenges, the overall import-export turnover is expected to reach 683 billion USD, with a trade surplus of about 26 billion USD. Notably, agricultural product exports, particularly in vegetables, fruits, and rice, have reached new peaks with many record figures.

Specifically, the agricultural group achieved 24.3 billion USD, a 17% increase compared to the previous year. There are 6 items with export values exceeding 3 billion USD, including coffee, rice, fruits and vegetables, cashews, aquatic products, wood, and wooden products.

Vegetable and fruit exports reached 5.6 billion USD, a record high and far exceeding the initial expectation for the whole year of “4 billion USD.” In the first 11 months, Vietnam’s rice exports also set a record with over 7.7 million tons of rice valued at over 4.4 billion USD, a more than 36% increase compared to the previous year. Vietnamese rice surpassed its competitors to claim the top position in the competition for the world’s best rice.

With the signing of the Vietnam-Israel Free Trade Agreement (VIFTA), Vietnam has now signed and participated in 16 FTAs, with ongoing negotiations for 3 more FTAs, namely Vietnam-EFTA (Switzerland, Norway, Iceland, Liechtenstein), ASEAN-Canada, and Vietnam-UAE.

6. Record-breaking FDI disbursement and establishment of new enterprises

As of December 20, 2023, the total registered foreign direct investment (FDI) in Vietnam reached nearly USD 36.61 billion, a 32.1% increase compared to the same period, marking the third-highest year in the period from 2008 to the present. The realized capital of foreign direct investment projects is estimated at around USD 23.18 billion, a 3.5% increase compared to 2022, setting a record for disbursement in the global investment landscape’s narrowed trade context. Vietnam’s business environment ranking has also improved by 12 places globally.

The business registration activities in 2023 were remarkable, with nearly 160,000 newly established enterprises, a 7.2% increase compared to 2022, exceeding the average for the 2017-2022 period and a 4.6% increase compared to the estimated figures for the entire 2023.

Additionally, over 58,400 businesses resumed operations in 2023. Therefore, the number of businesses entering and returning to the market continues to surpass 200,000, a 4.5% increase compared to the same period in 2022 and 1.3 times the number of businesses exiting the market during the year.

7. Resolutely Promoting Emerging Industries and Sectors

Prime Minister Pham Minh Chinh and delegates cut the ribbon to inaugurate the National Innovation Center (NIC) at the Hòa Lạc facility. Designed in the shape of an eagle spreading its wings, the NIC serves as an iconic representation of the mission to bring creative ideas to life and propel innovative enterprises towards expansive development.

In 2023, new milestones were recorded in restructuring the economy, developing emerging industries and sectors, promoting science and technology, fostering innovation, digitization, green transformation, and advancing the digital economy, green economy, circular economy, knowledge economy, and sharing economy.

The national digital transformation was actively promoted, aiming for a digital economy accounting for approximately 15% of the GDP throughout the year 2023. The implementation of Project 06, which focuses on developing and applying population data, identification, and electronic authentication, was directed with determination and achieved impressive results, contributing to reducing negative impacts and saving time and effort for citizens and businesses, serving as a “bright spot” in the country’s digital transformation.

The science and technology market experienced significant development. The national innovation ecosystem for startup and innovation flourished, marked by the inauguration of the National Innovation Center (NIC) and the concentrated efforts in constructing and perfecting three National Innovation Support Centers in Hanoi, Ho Chi Minh City, and Da Nang. Vietnam’s global innovation index was ranked 46th out of 132 countries, a rise of 2 places compared to 2022.

The year 2023 also witnessed Vietnam’s leap in the semiconductor industry, with a series of agreements and collaborative projects with leading partners and gigantic corporations worldwide.

Vietnam vigorously implemented action programs to address climate change, reduce emissions, and transition to energy following the principles of the Just Energy Transition Partnership (JETP). It became the first time Vietnam issued carbon credits and green bonds, demonstrating its commitment to achieving net-zero emissions by 2050 in line with international community responsibilities.

8. Breakthroughs in overcoming difficulties, unlocking resources

Public investment has been restructured with a focus on key and focal points, concentrating on projects with high ripple effects to generate development momentum.

The government continues to direct ministries, sectors, and localities to focus on reviewing, detecting, and promptly addressing any shortcomings, difficulties, and obstacles, both in legal regulations and in the implementation mechanism, policies, and organizational aspects. This aims to unlock resources and support businesses in overcoming challenges, promoting growth, creating jobs, and ensuring livelihoods for the people, ensuring a stable life for workers.

The disbursement of public investment for the entire year is estimated at around VND 667.882 trillion, reaching 94.3% of the plan assigned by the Prime Minister. This is higher than the same period in 2022 by about 2.88% (91.42%), with an absolute amount higher by approximately VND 137.6 trillion. Public investment has been restructured with a focus on key and focal projects, concentrating on those with high spillover effects to create development momentum.

The government is determined to address and remove difficulties, limitations, and shortcomings, developing synchronized, safe, healthy, sustainable markets and integration. There has been positive development in stabilizing and growing the corporate bond market and the real estate market. Efforts are ongoing to deal with bad debts, restructure credit institutions, especially weak banks.

There is a focus on restructuring, improving, and enhancing the efficiency of state-owned corporations and groups. The effective resolution of the initial 8 out of 12 prolonged loss-making projects and enterprises is underway. Several large and critical power projects have been completed and put into operation after a prolonged hiatus.

9. Achieving and Exceeding All Planned Social Targets

The organization of the 80th-anniversary celebration of the Introduction to Vietnamese Culture and the National Conference on the Development of Vietnam’s Cultural Industries, held for the first time, are significant events aimed at concretizing and implementing the Party’s directives, policies, and laws regarding the cultural development of the state. Particularly noteworthy are the directives provided by General Secretary Nguyen Phu Trong during the National Cultural Conference in 2021.

 Cultural and social sectors continue to receive attention and investment for development, achieving more distinct results. All social planning targets have been met and exceeded, clearly demonstrating the admirable nature of our regime, which does not sacrifice progress and social justice to pursue mere economic growth.

Facing economic difficulties, the National Assembly and the Government continue to implement policies of exemption, reduction, and extension of various taxes, fees, and land rents. The total value of these policies is nearly 200 trillion VND, and as of November, over 172 trillion VND has been exempted, reduced, or extended (of which approximately 65 trillion VND is exempted or reduced). Increasing revenue, saving expenses, establishing salary funds (amounting to about 560 trillion VND by now) ensure sufficient sources to reform salaries over the 2024-2026 period.

Social security, care for the lives of laborers, especially vulnerable groups and policy beneficiaries, continues to be strengthened. People’s lives continue to improve, with an average income increase of 6.8% for workers; over 94% of households assess that they have stable or higher income compared to the same period in 2022. According to the World Happiness Report in March 2023 by the United Nations, Vietnam’s Happiness Index has risen by 12 places, from the 77th position to the 65th position in the global rankings.

The commemoration of the 80th anniversary of the Introduction to Vietnamese Culture and the National Conference on the Development of Vietnam’s Cultural Industries, held for the first time, is a significant event to concretize and implement the Party’s directives, policies, and laws regarding cultural development. Especially noteworthy are the directives provided by General Secretary Nguyen Phu Trong during the National Cultural Conference in 2021.

10. Intensifying and Enhancing Anti-Corruption and Anti-Negative Practices Work

The work of preventing corruption and negative activities continues to be intensified, affirming it as an inevitable trend that cannot be reversed, contributing to strengthening and enhancing the people’s trust in the Party and the State. There have been significant advancements in the investigation, discovery, and trial of numerous major cases. New prosecutions and investigations have been initiated in many cases of particularly serious and complex corruption and negative activities, attracting significant public attention, especially those occurring in specialized and secretive sectors, with intertwined activities between state and non-state areas that have remained unresolved until now. Examples include the ongoing expanded investigation in Phase 2 related to Viet A Company, the case at the Consular Department (Ministry of Foreign Affairs), cases within FLC Group, Tan Hoang Minh, such as the case at SCB Bank, Van Thinh Phat Group, An Dong Company, among others. Many high-ranking officials, both current and retired, are being prosecuted, adhering to the principle of “No restricted zones, no exceptions, regardless of who is involved.”

Source: Bao Chinh Phu | Link

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On January 3, producing one million vehicles in three months is an impressive production rate for BYD, especially considering that their one million vehicles include electric vehicles.

At the end of November 2023, BYD achieved the milestone of producing the world’s first six million electric vehicles. On average, the company manufactures over 11,000 vehicles per day.

The six million vehicles from BYD include pure electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV). Plug-in hybrid vehicles are classified under electric vehicles rather than gasoline vehicles because this category utilizes electric motors as the primary driving force, with the internal combustion engine serving to recharge the battery.

BYD’s main competitor, Tesla, currently stands at five million vehicles. It can be said that BYD, following its announcement to completely stop selling traditional internal combustion engine vehicles in April 2022, is experiencing its most explosive growth phase to date.

With a production rate of 1 million vehicles every 3 months, BYD’s annual production could soon reach 4 million vehicles per year, equivalent to Hyundai’s global output in 2022.

The 6 millionth vehicle produced by BYD is the relatively new Fang Cheng Bao Leopard 5, announced in August 2023. This model employs a plug-in hybrid structure centered around a 31.8 kWh battery pack. The electric-only range of the heart brings about 125 km of pure electric operation. This figure increases to a maximum of 1,200 km with support from the generator, which acts as an engine.

BYD currently sells electric vehicles in 58 countries and territories worldwide, despite their export volume being relatively limited (just over 200,000 vehicles). Including various urban public electric vehicle models, the company is present in more than 400 cities across 70 different countries.

The 6 millionth vehicle model from BYD, named Fang Cheng Bao Leopard 5, features a design that bears a resemblance to the new Toyota Land Cruiser Prado.

Nearly 30 years ago, BYD took its initial steps in electric battery production. It wasn’t until 2003 that their automotive division was established. Five years later, the company introduced its first electric vehicle lineup.

In 2021, BYD reached a milestone of producing 1 million electric vehicles. By 2022, they achieved the 3 million mark, and it took only 9 months to reach 5 million. On November 24, just three months after hitting the 5 million mark, BYD announced the production of their 6 millionth electric vehicle.

In Vietnam, BYD has plans to build an electric vehicle assembly plant. Vehicles manufactured in Vietnam will not only be used domestically but can also be exported to other countries in the region.

Source: CafeBiz | Link

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