economic report vietnam 2015q1 presented by vu thi diep and bernhard kelkes netherlands embassy...

Economic Report Vietnam 2015Q1Presented by Vu Thi Diep and Bernhard Kelkes

Netherlands Embassy Hanoi | 14 April 2015

Content• Vietnam’s Economy

• Bilateral Trade and Investment

Netherlands Embassy Hanoi | 14 April 2015 2

Vietnam’s Economy

3Netherlands Embassy Hanoi | 14 April 2015 3

4

GDP Growth

Quarter 1 Quarter 2 Quarter 3 Quarter 44%

5%

6%

7%

4.75%

4.80%

5.05%

5.44%

4.76%

5.00%

5.54%

6.04%

4.96%

5.25%

6.19%

6.96%

2015Q16.03%

Quarterly GDP Growth

2012 2013 2014

2015

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

4%

5%

6%

7%

8%

9%

7.3%

7.8%

8.4%

8.2%

8.5%

6.2%

5.3%

6.8%

5.9%

5.0%5.4%

6.0%6.2%

Yearly GDP Growth

Highest first quarter growth in 4 years. Highest growth sectors:industry and construction (+8.35%; 34.8% of GDP), services (+5.82%; 42.23% of GDP) and agro-fisheries (+2.14%; 12.35% of GDP)


5

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

0%

5%

10%

15%

20%

25%

3.20%

7.80% 8.30%7.40%

8.90%

22.90%

6.90%

11.80%

18.60%

9.21%

6.60%

4.09%

5.00%

Consumer Price Index (CPI) per Year

Quarter 1 Quarter 2 Quarter 3 Quarter 40%

2%

4%

6%

8%

10%

12%

14%

16%

18%

15.95%

12.20%

9.96%

5.44%

6.91% 6.73% 6.83%6.04%

4.83%4.77%

3.62%2.56%

2015Q10.74%

Consumer Price Index per Quarter

2012

2013

2014

2015

Inflation

Low domestic demand led to an inflation increase of only 0.74% (compared to 2014Q1), which is the lowest increase since a decade. However, monthly inflation rates are increasing from 0.3% in February to 0.9% in March.


2015Q1

Newly Registered FDI267 projects

New and Additionally Financed FDI

Disbursed FDI

0

10

20

30

40

50

60

70

0

200

400

600

800

1000

1200

1400

1600

1800

4.556.84

12

21.35

64.01

21.518.6 14.7

16.3 14.3 15.6

2.93.3 4.1

811.6 10

11 11 10.46 11.5 12.3

811

970 987

1544

1171

839 833

1091

1287 1275

1588

Registered (USD bln.) Disbursed (USD bln.) Number of projects

USD

bill

ion

Num

ber

of p

roje

cts

auth

oris

ed

6

Foreign Direct Investment (FDI)

+40.6% -44.9%

Strong increase in newly registered FDI (40.6% from 1 Jan – 20 Mar 2015), but total amount of newly registered plus additionally financed projects decreased by 44.9%. Disbursed FDI increased by 7% (USD 3.05bn)

+7.1%


2015Q1

Export USD 35.7bn Import USD 37.5bn

Trade Deficit of which Foreign USD2bn surplus

Domestic USD3.8bn deficit(Gov.target <5% exports)

7

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

50

100

150

200

250

300

26.5 32.4 39.8 48.6 62.7 57.1 72.296.9

114.6132.2 150.0

32.036.8

44.962.8

80.769.9

84.8

106.7

114.3

131.3

148.0

58.569.2

84.7

111.3

143.4127.0

157.1

203.7

229.0

263.5

298.0

Export (USD bn) Import (USD bn)Trade volume (USD bn)

+16.3%+ 6.9%

Export and import (USD bn.)

-1.8bnUSD


8

Export and import

Foreign

70%

Foreign

62%Import

Export

Top 5 export destinations Top 5 export items Domestic/Foreign Invested

1. EU: USD 6.9bn. (+14.2%)

2. USA: USD6.9bn. (+12.5%)

3. ASEAN: USD4.5bn. (-1.4%)

4. China: USD3.5bn. (-6.2%)

5. Japan: USD3.3bn. (-10.9%)

1. Telephones and accessories: USD6.7bn. (+21.9%)

2. Textiles and garments: USD4.8bn. (+7,8%)

3. Computers and components: USD 3.6bn. (+65,4%)

4. Footwear: USD2.5bn. (+1.8%)

5. Machinery and spare parts: USD1.8bn. (+16,7%)

Domestic sector: USD 10.6bn (-5.1%)

FDI sector: USD 25.1bn (+12.9%)

Top 5 import destinations Top 5 import items Domestic/Foreign Invested

1. China: USD11.6bn. (+31.5%)

(trade deficit USD8.1 billion, +58.5%)

2. Korea: USD 6.2bn. (+12.1%)

3. ASEAN: USD5.4bn. (+2.3%)

4. Japan: USD 3.3bn. (+31.5%)

5. EU: USD 2.1bn. (+9.8%)

1. Machinery and spare parts: USD6.9bn. (+44,4%)

2. Computers and components: USD5.5bn. (+31.1%)

3. Telephones and spare parts: USD2.6bn. (+25.0%)

4. Fabrics: USD1.9bn. (+1.7%)

5. Steel: USD1.5bn. (+1.6%)

Domestic sector: USD 14.4bn (+5.7%)

FDI sector: USD 23.1bn (+6.6%)


9

Limited added value and no spillover foreign

companiesSlow SoE reform Slow financial sector reform Large public debt

Limited progress improving business climate and

tackling corruption

Vietnam imports around 90%

of its export value. The ratio

of micro businesses is around

97% and they are struggling

to access export markets (just

21% of Vietnamese SMEs

participate in global supply

chains). In Q1 19,049

companies were established,

against 16,175 which stopped

operations. Better education

and access to credit are key.

Credit growth 2015Q1 just

1.25% (but expected 15-17%

in 2015).

Slow SoE reform in 2015Q1

with 29 SOEs equitised (target

2015 is 289, in 2014 143 SoEs

were equitised). However,

some major IPO’s and M&A’s

expected this year (20%

Vietnam Airlines, M&A’s in

banking sector, etc.).

Investment Law requirements

for foreign investors eased as

from 1 July 2015.

NPL ratio stood at 3.25% at the

end of 2014 according to SBV (but

NPL rate according to international

standards is probably much

higher). Total number of banks to

be reduced from 40 to 15 by 2017

and for this year 6 bank mergers

expected.

Budget deficit expected to be

around 5% at the end of 2015.

Public debt may reach 60% at

the end of 2016 according to

ADB as the Gov. tax base is

eroding due to reductions in

corporate income tax rates, the

removal of tariffs, exemptions

for favored firms and lower oil

prices.

Vietnam fell 6 places in World Bank’s

Doing Business 2015 report (78/189)

on ‘ease of doing business’,

compared to 2014 and is falling

behind regional countries like

Malaysia and Thailand. Vietnam’s

score in Global Corruption

Perception Index (31/100, ranking

119 globally) remains unchanged for

three consecutive years (2012-

2014).

Macroeconomic stability must be remained and there is urgent need to accelerate the pace of structural reforms and the fight of red tape and corruption to fully reap Vietnam’s growth potential…

Other Economic Issues


10

Bilateral Trade and Investment


11

Top 10 Investors in Vietnam

Newly registered FDI 2015Q1(USD million)

Cumulative FDI as of March 2015(USD billion)

No Country Registered FDI Projects No Country Registered FDI Projects

1 Korea 314.2 89 1 Korea 38.1 4279

2British Virgin Islands

306.4 5 2 Japan 37.5 2584

3 Japan 136.9 53 3 Singapore 33.1 1392

4 Singapore 114.8 24 4 Taiwan 28.5 2401

5 USA 67.8 8 5British Virgin Islands

18.3 556

6 Hongkong 45.1 13 6 Hongkong 15.7 896

7 Thailand 43.6 6 7 USA 11.1 735

8 Taiwan 42.3 14 8 Malaysia 10.8 491

9 India 24.6 2 9 China 8.0 1112

10 UK 20.9 5 10 Thailand 6.8 385

17 Netherlands 5.7 3 11 Netherlands 6.6 233


12

Newly registered FDI 2015Q1(USD million)

Cumulative FDI as of March 2015(USD billion)

No CountryRegistered FDI

(mn.)Projects No Country Registered FDI Projects

1 UK 20.9 5 1 Netherlands 6.6 233

2 Germany 12.4 3 2 France 3.4 429

3 Netherlands 5.7 3 3 UK 3.2 204

4 France 2.4 2 4 Switzerland 1.9 104

5 Italia 0.7 3 5 Luxembourg 1.6 32

6 Switzerland 0.6 2 6 Germany 1.4 250

7 Denmark 0.4 1 7 Cyprus 0.96 13

8 Ukrain 0.05 1 8 Denmark 0.7 113

9 Belgium 0.05 1 9 Belgium 0.4 57

10 Poland 0.02 1 10 Italy 0.38 64

Top 10 EU Investors in Vietnam


Ger-many

Nether-lands

UK

Italy

France

Austria

Spain

Bel-gium

Sweden

Poland

0 200 400 600 800 1000 1200 1400

375.3

64.3

88.4

200.8

190.1

93.0

55.3

57.7

34.6

23

914.9

630.4

568.6

1689

413.7

351.5

366.4

262.2

139

92.8

1290.2

694.7

658.2

636.7

603.8

444.5

421.7

319.9

173.6

115.8

Export to VN Import from VN Total tradeUSD million

Market share

11.9%

13

Trade | Main EU Trading Partners


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000

3500

4000

4500

130 150 230 320 400 430 317 481704 678 504387 400

490600

700976 1,017

1,546

2,4762,937

3,348

517 550720

9201,100

1,406 1,334

2,027

3,180

3,615 3,852

Export to Vietnam Export to the Netherlands Total trade

14

Trade | Bilateral Trade (USD million)

2015Q1 vs. 2014Q1

USD 630M USD 64M

Export VN to NL

+50%Export NL to

Vietnam

-33%


15

Trade | Bilateral Trade

Machinery and spareparts

Textile

Footwear

Telephones and spare parts

Computers and spare parts

31

66

78

104

149

USD million

Machinery tools and spare partsAutomobile accessorises and spare

partsChemical products

Milk and dairy products

Plastics

13.5

6.7

6.2

5.4

2.9USD million

Total Trade: USD 695M

+35%


16

Thank you!

16

© Embassy of the Kingdom of the Netherlands BIDV Building, 7th Floor, 194 Tran Quang Khai StreetHoan Kiem District, Hanoi, [email protected]

Sources:Statistics: Vietnam General Statistics Office, GSOVietnam Foreign Investment Agency, FIAMaps: www.freevectormaps.com, Pictures: Holland Branding

economic report vietnam 2015q1 presented by vu thi diep and bernhard kelkes netherlands embassy...

Documents

gdp netherlands embassy

bn netherlands embassy

registered fdi

financed fdi disbursed

gdp growth highest

bn trade deficit

2015q1 export usd

bn deficit gov