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.

Vietnam Country Risk

BMI View:

Core Views

  • The PCA's ruling on the Philippine arbitration case on July 12 will have wider implications for other claimant countries in the South China Sea, particularly Vietnam, as the conclusions that were drawn will help to set legal precedent for similar maritime disputes in the region. We believe that Vietnam will likely stand to benefit vis-a-vis China by using the ruling to clinch concessions from Beijing as a counterbalance to nationalist domestic sentiment.

  • We maintain our expectations for the SBV to lower its benchmark refinancing rate by a relatively shallow 50 bps to 6.00% by the end-2016 as a disappointing GDP growth figure in Q116, subdued inflationary pressures, and a relatively stable currency will provide impetus for the central bank to act. However, concerns over reigniting the housing bubble will likely temper the bank's easing bent.


Vietnam Operational Risk Coverage (9)

Vietnam Operational Risk

BMI View:

BMI View: Vietnam's labour market offers a number of notable advantages for firms looking to invest. 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 a 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 receives a score of...

Vietnam Crime & Security

BMI View:

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 Outlook And Overview...

Vietnam Labour Market

BMI View:

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...

Vietnam Logistics

BMI View:

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...

Vietnam Trade & Investment

BMI View:

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...

Vietnam Industry Coverage (20)

Vietnam Agribusiness

BMI View:

BMI View: Recent developments in the country's economic and business environments 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, economic and financial integration in South East Asia will benefit Vietnam's exports of rice, dairy and coffee. However, Vietnam is facing growing competition in its key markets. The fulfilment of its promising potential will only be achieved if the country steps up its competitiveness and improves both product quality and supply chain efficiency. Vietnam will have to significantly ramp...

Vietnam Autos

BMI View:

BMI View: This quarter, we maintain our forecast for at least 12.8% growth in Vietnamese new vehicle sales in 2016, with risks to the upside given strong domestic demand.

Industrial Growth Favouring Commercial Vehicle Segments
Vehicle Sales By Segment, Units
f= BMI forecast. Source: VAMA, BMI

Key Views

  • Cuts to the tax rates levied on smaller cars introduced in July 2016 should provide fresh impetus to Vietnam's new vehicle sales market over H216.

  • ...

Vietnam Commercial Banking

BMI View:

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

Vietnam Consumer Electronics

BMI View:

BMI View: Vietnam's consumer electronics market has huge potential for growth as incomes rise. We have a positive outlook for broad based economic growth that should sustain increases in device spending over the medium term as vendors will be able to tap into existing low device penetration rates. There is however, some uncertainty around the PC market, where sales dived in H116, which has increased concerns that the proliferation of smartphone ownership could see consumers bypass the PC era. Our core scenario is for total device spending to increase at a CAGR of 5.9% over 2016-2020.

Latest Updates And Industry Developments

  • Computer Hardware Sales: USD1.4bn in 2016 to USD1.7bn in 2020, a compound annual growth rate (CAGR) of +4.1%. Outlook...

Vietnam Defence & Security

BMI View:

BMI View: Growth in Vietnam's defence expenditure over the coming years is all but assured owing to increasing tension in the South China Sea. The China challenge in these waters has and will continue to necessitate investment into strengthening the country's deterrence capabilities and its overall asymmetrical defence strategy - especially in terms of its naval and air forces. The domestic industry remains under-developed and incapable of providing for the technologically advanced requirements of its armed forces, meaning the country will remain heavily dependent on foreign defence companies for supply in the coming years. Further, a growing but still limited budget will restrain the country from making...

Vietnam Food & Drink

BMI View:

BMI View: Vietnam is one of the most promising consumer markets in Asia, benefitting from favourable demographic dynamics, rapid economic growth fuelling household incomes and sustained levels of investment. Reflecting this positive view, all categories within the food, drink and mass grocery retail sectors will grow at a rapid pace throughout our forecast period to 2019.

Headline Industry Data (local currency)

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

  • 2015 alcoholic drinks value sales growth: +8.0%; CAGR to 2019: +10.0%.

  • 2015 soft drinks value sales growth: +5.7%; CAGR to 2019: +8.4%.

  • 2015 mass grocery retail sales growth: +10.7%; CAGR to 2019: +11.5%.

Vietnam Freight Transport

BMI View:

BMI View: Strong foreign direct investment (FDI), in addition to steady trade growth and the prospect of ongoing infrastructure development, both public and private, will impact favourably on the freight industry. Falling fuel prices will encourage road transport whilst rail transport will be spurred on by new investment both domestic and foreign. Government approval of the development project of Long Thanh Int'l Airport signals recognition of the need to strengthen Vietnam's credentials as an air transport hub for the Southeast Asian region.

We expect export growth in Vietnam to be maintained at a steady level in the medium term...

Vietnam Information Technology

BMI View:

BMI View: We do not expect there to be major disruption to the Vietnamese IT market growth story, or to the wider economy, from the regional decline in equity markets in August 2015. As a result, our core scenario for outperformance in 2015 and over the medium term remains in place in the Q415 update. Our bullish outlook is based upon our view that broad-based economic growth will substantially deepen the retail hardware market, as well as ensure a strong momentum for economic modernisation in the enterprise market, a trend illustrated through our household income growth forecast for Vietnam. We...

Vietnam Infrastructure

BMI View:

BMI View : Our outlook for Vietnam's construction and infrastructure sector remains positive, supported by strong economic growth, regulatory changes, large FDI inflows and strong project pipeline.

Latest Updates And Structural Trends

  • Our outlook for Vietnam's construction industry remains positive and we forecast real growth of 5.5% and 6.3% in 2016 and 2017, respectively.

  • We forecast transport infrastructure growth to peak at 6.8% in 2016. The Ho Chi Minh City People's Committee has submitted for a list of priority transportation projects to government, for approval, that will be developed in a public-private partnership (PPP) format between 2016 and 2020, including...

Vietnam Insurance

BMI View:

BMI View: Vietnam's insurance industry is growing rapidly, bolstered both by domestic economic growth and by a gradual improvement in terms of the range of products available in the market. The non-life sector is more established, with motor and health and personal accident insurance particularly popular. Life insurance is currently the smaller sector, and demand for long-term savings or retirement products continues to be hampered by low household income levels. Premiums across both life and non-life are expected to increase throughout our forecast period through to 2019. As the investment environment gradually improves, we expect to see more multinationals entering the market who are...

Vietnam Medical Devices

BMI View:

BMI View: We expect the Vietnamese medical device market to increase by 7.0% in US dollar terms in 2016, up from 4.4% in 2015, due to a smaller depreciation of the local currency against the US dollar. The market will remain one of the strongest performers in the Asia Pacific region, with Vietnam growing as a manufacturing location for medical device companies and exports posting consistent growth.

Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD) Total (Local Currency mn)

Vietnam Mining

BMI View:

BMI View: Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to fulfil its potential over the next few years. China's economic slowdown will remove a crucial outlet for raw material exports in the region and, more importantly, will impact the profitability of mining ventures, with high start up costs likely to deter new investment. While states such as Myanmar have made strides to relax the regulatory environment to encourage increased private sector investment, substantial obstacles remain across many parts of the region, including high levels of corruption and limited infrastructure. As such, many parts of the region continue to be perceived as frontier markets as far as mining activity is concerned.


SE Asia - Mining Sector Industry Values

Vietnam Oil & Gas

BMI View:

BMI View : Declining production and rising domestic consumption will end Vietnam's self-sufficiency in crude oil and natural gas by 2019 and 2017, respectively. Consumption growth will be driven by a more than threefold increase in the country's refining capacity over the next five years, as well as sizeable gains in gas demand from the automotive and power sectors - characterised by the growing proliferation of natural gas vehicles and gas-fired electricity generation.

Headline Forecasts (Vietnam 2013-2019)
2013 2014e ...

Vietnam Petrochemicals

BMI View:

BMI View: Vietnam is set for a surge in refining and petrochemicals capacities in the next five years as investors seek to establish new operations in the Southeast Asian country. Strong growth in end markets and Vietnam's position as a global manufacturing hub are driving production, although there are enduring risks associated with land acquisition and regulatory approval as well as regional market over-supply.

Currently, 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.

The main risks will...

Vietnam Pharmaceuticals & Healthcare

BMI View:

BMI View: Ongoing regulatory reform and the relaxation of the 49% cap on foreign ownership will continue to increase the appeal of Vietnamese pharmaceutical equities to foreign investors. This trend will reflect the government efforts to attract foreign investment in order to develop the pharmaceutical sector as well as foreign companies aim to gain a competitive edge in the domestic market. However, due to public procurement bias towards local producers, the rise of domestic pharmaceutical companies will also present competitive threats to multinational drugmakers operating in the country, eventually leading to variations in their business models.

Headline Expenditure...

Vietnam Power

BMI View:

BMI View : There are significant opportunities for independent power producers (IPPs), turbine manufacturers and private investors in Vietnam's thermal power generation sector - particularly the coal segment. A flurry of private sector activity in the coal sector will be supported by rapid growth in electricity demand and market deregulation, as well as delays to nuclear expansion and insufficient domestic gas supplies.

Headline Power Forecasts (Vietnam 2014-2020)
2014e 2015f ...

Vietnam Real Estate

BMI View:

BMI View: Strong economic growth is resulting in higher levels of take-up from tenants. Combined with the small amount of development activity in all three sub-sectors we cover, this is resulting in falling vacancy rates. Higher household spending will drive the growth of the retail real estate sector, although in absolute terms incomes will remain low. The sub-sector will also be boosted by Vietnam's growing tourism industry, while overall economic growth will support the commercial real estate industry in general and in particular demand for office and industrial space. Demand for industrial space will also be created by rising foreign investment in Vietnam and growing export volumes.

Vietnam's real GDP growth for the first three quarters of 2015 came in at an impressive 6.5% y-o-y, beating the Bloomberg consensus estimate of 6.4%. The strong economic showing is due in part to...

Vietnam Retail

BMI View:

BMI View: The Vietnamese economy is facing headwinds associated with harsh weather as well as adverse conditions in global commodity trade. Nonetheless, we expect the situation to improve gradually over the next year, mostly on the back of steady foreign direct investment inflows, robust domestic demand, growing tourism and a resilient export sector. This bodes well for Vietnam's retail sector, which continues to attract new international retailers and develop its infrastructure.

Headline Household Spending

Vietnam Telecommunications

BMI View:

BMI View : Vietnam has experienced strong uptake of 3G and fibre broadband in recent quarters, demonstrating the rising inclination towards both mobile and fixed data use. We now hold a more positive outlook on the adoption of premium services and advanced networks, although the government's restrictions on 4G rollouts could restrict operators' abilities to meet rising data needs in the short term.

4G Rollout Restrictions - A Downside To Technological Infusion
Vietnam Mobile Market Forecsts

Vietnam Tourism

BMI View:

BMI View: Visitor numbers have been strong in 2016 after a below-average 2015, and major international hotel groups have initiated new developments. This expansion, by both international and domestic chains, is expected to continue as companies look to capitalise on increasing arrival figures and up-and-coming areas. We expect very strong growth in the value of the hotel and restaurant industry over the forecast period. Tourism arrivals will be boosted by the increasing interest from the Asia Pacific region, most notably China and Japan, and by a greater number of European tourists. This in turn will increase international tourism receipts, encouraging further investment from the government and private groups. It should be noted, however, that many tourism providers in Vietnam are run by foreign companies, exploiting the lack of regulation on foreign-...

Latest Vietnam Articles

Latest Vietnam Blogs

  • Emerging Market (EM) currencies remain under pressure. We warned two weeks ...

  • Rising geopolitical tensions in the South China Sea and East China Sea betw...

  • Recent months have seen several setbacks to the United States' foreign poli...

Latest Vietnam Podcasts

  • The Trans-Pacific Partnership is a proposed trade agreement which woul...

  • BMI expects global mining M&A to pick up over the coming quarters....

  • Several Asian countries are set to see their telecoms industries exper...


Download PDF

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

You will shortly receive your free executive summary by email.