[Round-up] Vietnam Economic Growth Hits 5-Year High, FDI Soars

Tuan Minh

18:11 28/12/2015

BizLIVE - Vietnam’s GDP has expanded 6.68% in 2015, the fastest pace in the past five years, and FDI commitments have increased 12.5% year-on-year to $22.76 billion.

[Round-up] Vietnam Economic Growth Hits 5-Year High, FDI Soars

Vietnam's economic growth has hit a five-year high in 2015 thanks to rising foreign investment and manufacturing.

Vietnam Expects Investment Waves from South Korea, Japan, U.S.
Investment from South Korea, which is the top foreign investor in Vietnam now, is poised to increase as relations between the two countries are now very good and Korean businesses have been prospering in the Southeast Asian country, said Hoang Thi Chinh from the Ho Chi Minh City Economics University.
Japanese investment in Vietnam, which now ranks second in terms of scale, is also believed to increase sharply in the time to come, empowered by the good relations between the two countries and the Japanese appreciation about Vietnam as an investment destination.
Meanwhile, the U.S. can see long term benefits in Vietnam, especially as Vietnam and the U.S. are both members of the Trans Pacific Partnership Agreement (TPP).
Vietnam Launches Safeguard Probe into Imported Steel
The Vietnamese Ministry of Industry and Trade has initiated a safeguard investigation into imports of steel billets and bars after four local manufacturers lodged filed complaint.  
The probe is carried out to determine whether Vietnam should take a safeguard action, such as levying higher duties on the imports, according to the ministry.
Vietnam Ministry Rejects Rumor of Car Prices Surging Next Year
Vietnam’s Ministry of Finance has denied rumors that retail prices of automobiles will jump at the beginning of next year given a new taxation regime, local media reported.
At many dealerships, salespeople have told their customers that a special consumption tax mechanism, which will take effect on January 1, 2016, will trigger a retail price hike of 15%-30%, news website VietNamNet said.
However, an expert from the Ministry of Finance told VietNamNet that there will be no such price surge.
Given the new special consumption tax rate, the retail price of imported cars, or CBUs, from the start of 2016 will only be 1.2%-5% higher than the wholesale price, excluding value-added tax, he added.
Overseas Vietnamese Investments Important for Development: Official
Investments by overseas Vietnamese in Vietnam play an important role in the development of the domestic economy, said Duong Phuong Thao, deputy head of the Export Import Department under the Ministry of Industry and Trade.
Overseas Vietnamese have invested in 52 out of 62 provinces and cities in Vietnam, and currently run about 3,600 businesses nationwide, with some 2,000 projects valued at a combined $8.6 billion.
Overseas Vietnamese enterprises and entrepreneurs have stakes in domestic banks, such as Techcombank and VPBank, and major property and tourism businesses, such as Vingroup and Sun Group.
Foreign visitors to Vietnam are estimated to total 7.94 million in 2015, slipping 0.2% from 2014, marking the first decline in the last six years, according to official statistics.
The global tourism industry has been hard hit by a large number of hardships in 2015, ranging from economic turmoil to aviation accidents, and epidemics such as the SARS.
Vietnam’s gross domestic product (GDP) has grown an estimated 6.68% in 2015, marking the highest growth rate since 2011, the government-run General Statistics Office said at a press meeting on December 26.
The growth is driven by the industry and construction sector, which has increased 6.64% year-on-year (y-o-y), and the service sector, which has grown 6.33% y-o-y. The agriculture sector has expanded 2.41% y-o-y, the lowest in five years, due to natural calamities.
Total profits of credit institutions in Vietnam were estimated at 30.35 trillion dong ($1.4 billion) in the first ten months of this year, slipping 0.21% from the same period of 2014, according to data of the State Bank of Vietnam (SBV).
The Return-on-Assets (ROA) and Return-on-Equity (ROE) on the local banking system slid to 0.52% and 5.79%, respectively, local newswire VnExpress.net reported, citing SBV data.
Vietnam’s inward remittances are predicted to increase 2% year-on-year to $12.25 billion in 2015, being the 11th-largest remittance-receiving country, after China and the Philippines in the East Asia-Pacific region, says the Migration and Remittances Factbook 2016 of the World Bank Group’s Global Knowledge Partnership on Migration and Development (KNOMAD) initiative.
Vietnam’s imports from China increased 12.9% year-on-year to $49.3 billion in 2015, while its exports to China expanded 13.7% year-on-year to $17 billion, resulting in a trade gap of $32.3 billion with China.
Vietnam attracted a total of $22.76 billion worth of committed foreign direct investment (FDI) in the year to December 15, rising 12.5% from 2014, the General Statistics Office (GSO) has said in a report.
Foreign investors registered to put $15.58 billion in 2,013 newly-licensed projects, down 0.4% in value, and another $7.18 billion in 814 operational ones.
Disbursements of FDI grew 17.4% year-on-year to $14.5 billion in the year to December 15, higher than a range of $11 billion-$13 billion in the previous three years.