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I. BUSINESS NEWS
1.1 Market Outlook
Minister of Planning & Investment: The economy is recovering, positively month by month
Vietnam's Minister of Planning and Investment, Nguyen Chi Dung, stated that the economy is recovering and expected to be more positive next month. Despite the unpredictable global situation in May due to political instability in the Middle East, US monetary policy contradictions, and competition in technology, trade, and resources, domestic production and business activities are improving.
1.2 Vietnam Indicators
Vietnam's Manufacturing Expands in the Second Month
Vietnam Manufacturing PMI stood at 50.3 in May 2024, marking the second consecutive month of increased factory activity. New orders and production expansion were strong, with foreign sales increasing. Despite a decline in employment, backlogs remained stable. Delivery times were slightly longer due to goods shortages and geopolitical issues. Input and output price inflation rose.
The highest rate of inflation in Vietnam in 16 months
Vietnam's annual inflation rate reached 4.44% in May 2024, marking the highest since January 2023. Prices accelerated for food, drink services, transport, and culture, entertainment, and tourism. Post & telecommunication costs decreased slower, while textile, footwear, hats, housing, construction materials, and education prices slowed. Core inflation slowed to 2.68%.
Vietnam FDI Is Still Growing
According to the Ministry of Planning and Investment, foreign direct investment into Vietnam increased by 7.8% annually to USD 8.25 billion in the first five months of 2024. FDI promises, which are a predictor of future FDI disbursements, rose to USD 11.07 billion, up 2% from the previous year.
1.3 Government Direction
Strengthen the prevention of tax loss in e-commerce
Vietnam's Prime Minister's Directive 18/CT-TTg has been implemented to improve tax management in e-commerce activities. The country's e-commerce is expected to reach 30.5 billion USD by 2025, making it a fastest-growing region in Southeast Asia. The Ministry of Finance has promoted and shared e-commerce data to prevent tax loss, with four content assignments achieving positive results.
1.4 Potential Industries
Samsung plans to invest an additional $1 billion annually in Vietnam
The company aims to boost Vietnamese businesses in its supply chain and enhance human resource training cooperation. With 4 large factories in Bac Ninh, Thai Nguyen, and Ho Chi Minh City, Samsung is the largest foreign direct investor in Vietnam. The company expects a 10% increase in mobile phone exports this year.
World Bank: Carbon credit market in Ho Chi Minh City is worth 790 million USD
Vietnam's voluntary carbon credit market, worth around 2 billion USD, has grown rapidly in recent times, with 43 registered projects participating in the market. However, there is no information on whether these projects have generated carbon credits. The Verra appraisal mechanism shows 43 projects registered, but no information on their credits yet. Vietnam also has 71 registered carbon credit generators, with 24 projects included, 20 certified in design, and 27 certified and possibly having carbon credits. Examples include Ea Nam wind power and Loi Hai wind power, which can generate 1.1 million and 0.8 million credits annually, respectively.
1.5 Big FDIs companies News
The world's largest jewelry company Pandora will start construction on a $150 million project in Binh Duong
Pandora, the world's largest jewelry brand, has built a $150 million factory in Binh Duong, Vietnam, operating from 2026. The factory, located in Vietnam Singapore Industrial Park 3, will create jobs for 7,000 craftsmen and increase production capacity by 50%. The factory is expected to start recruiting in the first half of next year and operate from 2026.
The LEGO Group wants to promote investment in green development in Vietnam
The LEGO Group plans to promote green development in Vietnam, with Deputy Prime Minister Tran Luu Quang stating the factory project will attract foreign investment. The company is collaborating with Binh Duong province to build a solar farm, and the factory is expected to operate in early 2025.
Three times more revenue was made on TikTok Shop than on Lazada.
In Q1 2024, e-commerce platforms Shopee, TikTok Shop, Lazada, and Tiki generated a total of 79,000 billion VND, with Shopee leading with 67.9% market share. TikTok Shop, second with 18,360 billion VND, accounted for 23.2% of the market. This increase was 15.5% compared to the previous quarter, making it 3 times higher than Lazada. However, most industries experienced a decrease in total transaction value, with high-value product groups like technology, electrical appliances, and housing and living experiencing a decrease. Fashion accessories and beauty were the leading transaction value groups, while high-value categories like technology and home appliances also experienced faster growth on TikTok Shop.
2.1 New E-Money Provisions Introduced in Decree 52/2024/ND-CP
On May 15, 2024, the Government promulgated Decree 52/2024/ND-CP concerning Non-Cash Payment Regulations, effective from July 1, 2024, without any grace period. This Decree supersedes the former regulations, Decree 101/2012/ND-CP and its amendments, introducing comprehensive updates and new regulations across various aspects of non-cash payment systems. Decree 52 is a crucial legal document in the banking sector, particularly impacting non-cash payment practices. It has broad implications for multiple stakeholders, including banks, financial institutions, and payment service intermediaries.
The Decree incorporates existing relevant regulations while codifying new provisions to align with the current development of the payment services sector. Notably, it introduces the concept and regulatory framework for e-money for the first time. The Decree defines e-money, clarifies its nature, and specifies its forms in payment activities, such as e-wallets and prepaid cards. It designates e-money providers, including banks, foreign bank branches, and payment service intermediary organizations.
2.2 Legal Alert: Cybersecurity Violations Subject to Fines Up to 10% of Revenue
In early May 2024, after multiple revisions since 2021, the latest version of the Draft Decree on Cybersecurity Administrative Sanctions, encompassing personal data protection, was released for public review. This draft is anticipated to be the final version before its official enactment by the Government of Vietnam.
The Decree introduces stringent legal frameworks for violations in the field of cybersecurity, with fines ranging from VND 10,000,000 to VND 500,000,000. Additionally, certain violations could incur fines exceeding VND 500,000,000, specifically up to 5% of the total revenue of the previous fiscal year for the following infractions:
1. Repeated violations of data protection regulations in advertising.
2. Repeated illegal collection, transfer, or purchase of personal data.
3. Non-compliance with personal data processing impact assessment requirements or outbound transfer of personal data impact assessment requirements, including late submission of such assessments to the competent authority, particularly when data loss or leaks affect five million or more Vietnamese citizens.
Moreover, offending parties may face additional sanctions, including the revocation of their business licenses for up to three months. It is important to note that these penalties will be doubled for companies and organizations.
This Decree underscores the Government’s commitment to strengthening cybersecurity measures and protecting personal data, setting a precedent for rigorous enforcement and compliance standards in the digital era. Organizations operating within Vietnam must ensure adherence to these regulations to avoid substantial penalties and operational disruptions.
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