Vietnam has been one of the fastest-growing economies in Asia in recent years, with the economic boom lifting many of the Vietnamese out of poverty. The country has been strengthening its trade and aid ties in a bid to increase foreign direct investment into the manufacturing sector, and to diversify its exports away from lower value products. Vietnam’s relations with the US have witnessed a marked improvement, with Washington seeing Hanoi as a potential geopolitical ally in South East Asia.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 20 of Vietnam’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our results-proven research teams. We aim to keep you ahead of the curve, so you can operate with confidence in Vietnam.

Country Risk

Vietnam Country Risk

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Core Views

  • The Communist Party of Vietnam (CPV)'s 12th National Congress, which will convene in January 2016, will maintain current pro-growth economic policies, but eschew political liberalisation. One of the CPV's biggest challenges will be cracking down on corruption. Meanwhile, the emergence of a new generation of CPV officials could lead to rifts with the old guard over the pace of reform, leading to policy confusion.

  • We expect continued strong foreign direct investment (FDI), healthy export growth and ongoing efforts by the government to improve macroeconomic fundamentals to keep the Vietnamese economy growing strongly in 2015. Consequently, we forecast Vietnam's real GDP growth to accelerate to 6.4% in 2015, from 6.0% in 2014.

  • We expect the State Bank of Vietnam (SBV) to devalue the Vietnamese dong by another...

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Vietnam Operational Risk Coverage (9)

Vietnam Operational Risk

Vietnam Crime & Security

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BMI View: Oman's transport sector has been experiencing a significant expansion. The government has a five-year spending plan (2011-2015), which foresees OMR30bn (US$78bn) of expenditure, the majority of which is allocated to social and transport infrastructure. In addition, the participation of Oman in one of the biggest infrastructure projects in the Gulf - the inter-Gulf Cooperation Council rail network - will greatly enhance the country's transport links.

Transport Infrastructure...

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Vietnam Labour Market

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Vietnam offers a number of notable advantages to firms in the national labour market. Companies enjoy access to a competitive and available workforce characterised by high rates of literacy and numeracy for Vietnam's income level and an increasingly skilled and well-educated graduate population, suiting the needs of firms engaged in a diversity of activities. However, the cost of labour represents the largest source of risk to companies due to a difficult labour-management environment, troubles in hiring foreign workers, and a high rate of labour strikes, increasing firm costs and threatening business activities. Taking these factors into account, Vietnam received a score of 49.3 out of 100 for its labour market risk, meriting a rank of 14 th regionally out of 29 Asian countries. The country therefore falls in the middle of the sub-regional pack, between Southeast Asian leaders such as Singapore (second), Malaysia (ninth) and Thailand (10 th...

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Vietnam Logistics

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While Vietnam's logistic infrastructure is basically sound, its rapid rate of economic growth, export-focused industrial base and ambitious economic goals have meant that constant improvements are required to keep pace. Logistics operations are still costly relative to key regional peers such as China, Malaysia and Thailand, primarily because of unpredictability in supply chains, which increases costs by making it necessary for businesses to carry more inventory than they would otherwise need to manage their everyday operations. We give Vietnam a score of 64.3 out of 100, in 11 th place in the 30 Asian countries and territories we assess in our Logistics Risk Index.

According to the World Economic Forum's Global Competitiveness Survey, inadequate supply of infrastructure is ranked as the fifth most problematic factor for firms doing business in Vietnam.

The key causes of supply chain unpredictability are...

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Vietnam Trade & Investment

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Vietnam falls in the middle of the regional pack for its level of Trade And Investment Risk, offering both major advantages and drawbacks to foreign investors and businesses. Firms benefit from a high level of economic openness, which has enabled an impressive expansion in both trade and foreign investment. However, firm productivity and competitiveness are hindered by a diversity of factors, including high levels of government intervention in the economy, pervasive corruption that adversely impacts the efficacy of the legal system, an underdeveloped banking system, and a limited playing field for private companies vis-à-vis public firms. Taking these factors into account, Vietnam received a score of 43.1 out of 100 for Trade And Investment Risk, placing 16 th out of 29 Asian countries, between excellent sub-regional performers such as Singapore (2 nd), Malaysia (5 th), and Thailand (9 th), and underdeveloped countries...

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Vietnam Industry Coverage (20)

Agribusiness

Vietnam Agribusiness

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Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)

BMI View: Recent developments in the country's economic and business environment outlooks add further weight to our positive view on Vietnam's agribusiness sector. The industry holds strong growth opportunities in terms of production, exports and retail sales, particularly with regard to the rice, coffee, livestock and dairy sectors. Moreover, the upcoming economic and financial integration in South East Asia will benefit...

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Autos

Vietnam Autos

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Sales

According to the Vietnam Automobile Manufacturers Association (VAMA), auto sales surged towards the end of 2014 and increased by an eye-watering 41.1% year-on-year (y-o-y) in December 2014 to 16,413 units. This brought total sales for the year to 133,516 units, an increase of 38.0%. We forecast sales to continue their positive momentum in 2015 and expect sales of VAMA members (excluding sales of Mercedes-Benz, which reports combined sales of passenger cars and commercial vehicles) to grow 17.8% in 2015.

Sales experienced a strong surge after July 2014 and continued expanding at double-digit growth rates for the remaining months of the year. In 2015, we expect the buoyant auto market to continue exhibiting strong growth. Our Country Risk team forecasts the economy to expand by 6.4% in 2015 after growing by 6.0% in 2014, with accelerating state owned enterprise reform...

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Commercial Banking

Vietnam Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Vietnam Consumer Electronics

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BMI View: There is some downside risk to our consumer electronics spending outlook in 2015 due to an ongoing tightening of domestic credit conditions in the second half of 2014 due to a build of bad debts by Vietnamese banks. However, we maintain that Vietnam's consumer electronics market has a bright outlook as rising incomes and falling average device prices in key device categories over the medium term catalyse strong growth in spending. We maintain a positive outlook...

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Defence & Security

Vietnam Defence & Security

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We forecast that Vietnam will spend up to USD7.7bn on defence in 2015. This is a notable increase from the USD6.7bn which the country spent on defence last year. On average, Vietnamese defence expenditure has risen since the commencement of the decade. Up to and including 2019, we expect Vietnam to spend an average of USD9.3bn on defence annually, with defence spending reaching USD11.1bn in 2019.

We have given Vietnam an overall security risk index of 75 for Q115. On average, the country has scored an overall security risk index of 76 for the period February 2009 up to and including Q115. As the discussion below will illustrate, we believe that Vietnam faces a moderate risk of becoming involved in a major interstate conflict. That said, we believe that the country has a low risk of experiencing a major terrorist attack, although it does face a moderate risk of experiencing major criminal activity.

Key...

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Food & Drink

Vietnam Food & Drink

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BMI View: We hold a positive outlook for the Vietnamese consumer, as the government targets economic growth through public spending and promoting investment and exports. We forecast real GDP growth at 6.4% in 2015 and 6.6% in 2016, on the back of supportive government policies, as well as a strong outlook for foreign investment and exports. However, political risks remain in the form of Chinese tensions, which we believe will continue for some time.

Headline Industry Data (local currency)

  • 2015 total food consumption growth: +18.0%; compound annual growth rate (CAGR) 2014 to 2019: +18.6%.

  • 2015 per capita food consumption growth: +17.0%; CAGR to 2019: +17.6%....

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Freight Transport

Vietnam Freight Transport

Information Technology

Vietnam Information Technology

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BMI View: We maintain a positive outlook for the Vietnamese IT market in the latest update, but we highlight increased downside risk from a tightening of domestic credit conditions into 2015 as a result of a build up of bad debt. Credit markets could cause short-term disruption but our forecast for robust medium-term growth in Vietnamese IT spending remains in place, with a forecast for a compound annual growth rate (CAGR) of 12.6%...

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Infrastructure

Vietnam Infrastructure

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BMI View: Following an estimated performance of 1.8% in 2014, we forecast a modest pick-up to 4.3% real growth for Vietnam's infrastructure industry in 2015. While we note this rate remains well below the potential suggested by the country's strong foreign direct investment and improving business environment it is, nevertheless, reflective of an improving macroeconomic environment.

The major developments in Vietnam's infrastructure sector are:

While the infrastructure sector struggled in 2014, we expect growth to pick up modestly in 2015 as the macroeconomic environment improves. Nevertheless, we note there is a lack of upside in near-term spending from the domestic public and private sectors, which is brought on by the dominance and excessiveness of the country's state-owned enterprises (SOEs). While the existence of these SOEs makes it...

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Insurance

Vietnam Insurance

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BMI View: Vietnam's insurance sector is expansive and dynamic, and slowly continues to develop into a more sophisticated market. Slow economic growth and a harsh competitive environment have plagued the sector in the last few years; however, new innovation generated by multinational companies has had a positive effect on demand for insurance. In addition, considering Vietnam's changing demographic structure, we certainly have a favourable outlook for premium growth in the years to come.

Even though Vietnam's overall insurance sector had been lagging behind its counterparts across South East Asia, we believe that this trend will change drastically over the medium-to-long term following several structural changes in the country's insurance sector. This positive outlook is partly based on the fact that - since a few years -...

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Medical Devices

Vietnam Medical Devices

Mining

Vietnam Mining

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BMI View: The cooling of the Chinese economy will remove the shine off mining investment in South East Asia. Frontier regions will be the first places where miners pull back their investment as brownfield projects take precedence. Nonetheless, it is certainly not all gloomy in the mining sector. Resilient demand from the power sector will continue to support growth in coal production, while the positive development of the nuclear sector in South Korea fuels uranium mining production.

Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to uncover its potential over the coming years. The cooling of Chinese economic growth will remove a crucial pillar of support for mineral prices, particularly industrial metals such as iron ore and copper. For instance, we...

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Oil & Gas

Vietnam Oil & Gas

Petrochemicals

Vietnam Petrochemicals

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BMI View: The Vietnamese petrochemicals market continues to exhibit solid growth. While the domestic producers struggle to keep pace due to capacity constraint, Vietnam relies heavily on imports and we warn of project delays and heightened competition from US producers in the medium term, which could increase costs and undermine competitiveness.

Vietnam is growing rapidly in terms of chemicals and derivatives. Limited capacity leads to a reliance on imports for domestic conversion and end-product manufacturing. With refinery developments in the pipeline, Vietnam will be able to increase capacities, particularly for polypropylene and ethylene in the medium term. However, slow land clearance and financing problems delay these projects, postponing capacity increases by a number of years.

Aside from...

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Pharmaceuticals & Healthcare

Vietnam Pharmaceuticals & Healthcare

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BMI View: With a growing and ageing population, Vietnam plays host to an attractive target for pharmaceutical and healthcare growth. While per capita spending remains low, and current healthcare infrastructure appears strained, access to healthcare coverage is steadily increasing.

Headline Expenditure Projections

  • Pharmaceuticals: VND69,297bn (USD3.30bn) in 2013 to VND80,730bn (USD3.80bn) in 2014; +17.0% in local currency terms and +16.2% in US dollar terms. Forecast unchanged from previous quarter.

  • Healthcare: VND222,374bn (USD10.57bn) in 2013 to VND254,679bn (USD11.99bn) in 2014; +14.7% in local currency terms and +13.9% in US dollar terms. Forecast unchanged from previous quarter.

...

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Power

Vietnam Power

Real Estate

Vietnam Real Estate

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BMI View: All major metrics indicate that the commercial real estate market will grow in 2015. Growing yields and rental rates, particularly in the retail sector, support the argument that the real estate sector in Vietnam will be one of the fastest growing across the globe in the long term.

The growth of the commercial real estate sector is underpinned by a strong economy. BMI forecasts that Vietnam's GDP growth will average 6% a year over our forecast period to 2018. This, coupled with a large and growing population, indicates the opportunities for growth in the commercial property sector. Indeed, over the long term we expect strong growth in all three of the commercial real...

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Shipping

Vietnam Shipping

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BMI View: Our forecasts from the previous quarter remain in place; and we expect the port of Ho Chi Minh City to lead the way in terms of tonnage throughput handled in 2015. The port of Da Nang, however, is expected to outperform the larger Ho Chi Minh City port in terms of box sphere growth (10% compared to 8% respectively).

In terms of the wider economy, we expect strong foreign direct investment (FDI), healthy export growth and ongoing efforts by the government to improve macroeconomic fundamentals to keep the Vietnamese economy growing strongly. This will all bode well for the Vietnamese shipping industry going forward. Real GDP growth is set to accelerate to 6.4% in 2015, from 6.0% in 2014.

The potential for political tensions to flare up once again could arise from Vietnam's formal submission of its political stance on the South China Sea dispute to the...

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Telecommunications

Vietnam Telecommunications

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BMI View : Although the adoption rate of 3G has been strong and 3G accounted for estimated 21.2% at the beginning of 2015, the usage of data has been relatively low with less than 15% of 3G subscribers using data. That said, we have recently raised our outlook slightly for the country's broadband market, as telecom operator Viettel has made plans to roll out high speed internet service nationwide in 2014. This will help to increase Vietnam's broadband penetration from 5.6% in 2013 to 8.2% over the next five years. Meanwhile Pay-TV sector is plagued by low prices deterring investment.

Key Data:

  • We are forecasting 129.320mn mobile subscribers by end-2019, a 134.2% penetration rate. However, we highlight the figure is distorted by inactive prepaid subscriptions and multiple SIM ownership.

  • ...

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Tourism

Vietnam Tourism

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BMI View: Vietnam is a rapidly expanding tourism destination in a competitive region. The country is growing in popularity as a beach holiday destination, and could come to rival more established destinations such as Thailand. Extensive investments in transport and accommodation infrastructure are supporting growth, while market liberalisation will improve the investment environment for foreign developers.

We expect healthy growth in arrivals to Vietnam in 2015, to reach more than 8.3mn. Arrivals are expected to continue to grow throughout our forecast period to 2019. The country is broadening its range of air travel connections to reach new markets, including the introduction of direct flights to Kenya in 2015, and is also expanding domestic air travel capacity. The introduction of visa-free travel for visitors from Denmark, Finland, Japan, Norway, Russia, South Korea, and Sweden for holidays...

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