Vietnam Country Risk Report

Published 27 May 2015 | Quarterly

  • 52 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Vietnam Country Risk Report

Core Views

  • Despite increasing political and international pressures, China will continue to hold a firm stance on its nine-dash line claims to the South China Sea. Therefore, there remains no end in sight to the ongoing maritime dispute between Vietnam and China. That said, we believe Vietnam will not want to strain ties with China given the latter's increasing economic importance.

  • We hold a positive view of the Vietnamese economy on the back of rising foreign investor interest, continued efforts by the government to improve the country's business environment, and the potential for greater private sector participation. As such, we maintain our forecast for real GDP growth of 6.4% in 2015, up from 6.0% in 2014.

  • Following the devaluation of the Vietnamese dong by 1.0% for the second time in 2015, we do not expect the State Bank of Vietnam (SBV) to lower the dong reference rate any more this year. We expect strong economic growth, manageable inflation and an improving external position to provide structural support to the currency, and are forecasting the dong to end the year at VND21,550/USD before appreciating to VND21,350 by end-2016.

  • Falling inflation has provided increasing room for the State Bank of Vietnam (SBV) to ease policy rates further. While the economy has been on a strong growth uptrend, and therefore is not badly in need of further monetary stimulus, we nevertheless forecast the State Bank of Vietnam (SBV) to cut its benchmark interest rate by another 50 basis points (bps) to 6.00% in 2015 in order to provide greater support to ailing businesses and unlock private savings.

  • While the minimum public sector wage hike at the start of 2015 will be a drag on Vietnam's fiscal position, continued positive developments on the revenue front inform our expectations for the country's budget deficit to narrow gradually over the coming years. As such, we forecast Vietnam's budget deficit as a share of GDP to narrow to 4.1% and 3.8% in 2015 and 2016,...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Foreign Policy
8
Maritime Dispute Resolution Hard To Achieve
8
TABLE: Political Ove rvie w
8
Long-Term Political Outlook
10
Key Political Challenges Over The Coming Decade
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Ongoing Economic Reforms Inform Positive Growth Outlook
14
TABLE: Economic Activit y
14
Fiscal Policy
16
Gradual Improvements To Fiscal Health
16
TABLE: Fiscal Polic y
16
Monetary Policy
18
Further Rate Cuts Amid Inflation Declines
18
TABLE: Moneta ry Polic y
18
Exchange Rate Policy
19
No More Devaluation, Strength Ahead In 2016
19
TABLE: CURRENCY FORECAST
19
TABLE: Current Account
20
Chapter 3: 10-Year Forecast
23
The Vietnamese Economy To 2024
23
2015-2024: A New Focus On Quality Growth
23
TABLE: Long-Term Macroeconomic Forecasts
23
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
TABLE: Operational Risk
28
Legal Environment
30
TABLE: Asia - Legal Risk
30
Costs Of Labour
33
TABLE: Asia - Labour Cost Risk
34
TABLE: Average Annual Wage By Sector (VND)
35
TABLE: Regulations Governing Flexibility Of Workforce
36
Chapter 5: Key Sectors
37
Freight Transport
37
TABLE: Air Freight
38
TABLE: Road Freight
39
TABLE: Rail Freight
40
TABLE: Major Ports Data
41
Retail
42
TABLE: Retail Sector Spendi ng, % Of Total
44
Other Key Sectors
47
Table : Infrastructure Sector Key Indicators
47
Table : Food & Drink Sector Key Indicators
47
Table : Telecoms Sector Key Indicators
47
Table : Oil & Gas Sector Key Indicators
48
Table : Autos Sector Key Indicators
48
Table : Pharma Sector Key Indicators
48
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
EMs Still Slowing
49
Table : Global Assumptions
49
Table : Developed States , Real GDP Growth , %
50
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table : Emerging Markets , Real GDP Growth, %
51

The Vietnam Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Vietnam. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Vietnam's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Vietnam's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Vietnam's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Vietnam, including currency volatility, the commodity price boom and protectionist policies.

The Vietnam Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Vietnam' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Vietnam through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Vietnam Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Vietnam and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Vietnam, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Vietnam over the next 5-years?

BMI's Vietnam country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Vietnam Market - Political Strengths, Weaknesses, Opportunities and Threats facing Vietnam.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Vietnam's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Vietnam’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Vietnam's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Vietnam?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Vietnam against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Vietnam’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Vietnam will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Vietnam's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express