Here is a presentation on Vietnam that looks at the economy, tax policies, housing market, GDP, retail sales, etc.

1. Economy and Government
Policies –Vietnam– June 2016
By: Paul Young, CPA, CGA

2. Disclaimer
• This presentation discuss government and economics policies for
Vietnam.

3. Paul Young - Presenter
Bio
• CPA/CGA
• 25 years of experience in Academia, Industry and Financial solutions
• Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda
• Debt to GDP
• Budget Deficits
• Economic Forecast
• GDP Analysis
• Retail Sales
• Tax policies
• Banking Sector

5. Government Debt to GDP
• However, this emphasis on stability in part reflects the
fragility of Vietnam’s macroeconomic boom.
• Official figures show that the economy continues to grow
at more than 6 per cent a year, making Vietnam a rare
bright spot in Asia. Interest among foreign investors in
Vietnamese real estate, equity, debt and consumer
markets is at its highest level in a decade.The problem is
that recent growth has to a large extent been driven by
an expansion of domestic debt at a rate that has
exceeded GDP growth for the past three years.
• Similarly, nearly two-thirds of the growth in exports that
has provided crucial support to the economy has been
driven by foreign-invested manufacturers rather than
domestic companies.
• With bank lending rates having fallen by half since 2011,
from about 15 per cent to about 7.5 per cent, credit
growth has resumed, especially to sectors such as real
estate.
• This has helped drive a boom in share prices of
developers such as Vingroup, as the first chart
shows.Although risk management in Vietnam’s banking
sector has generally improved, particularly among the
bigger banks, there have been few incentives to adopt
more prudent lending standards among smaller banks.An
urgent priority is to manage the country’s delicate fiscal
balance. The government’s budget deficit remained at th
equivalent of over 6 per cent of GDP in 2015, while public
debt is equal to more than 62 per cent of GDP.

6. Vietnam – Deficit/Surplus
• In the coming years, most taxes and
tariffs will be reduced considerably
as many Free Trade Agreements in
which Việt Nam is a signatory will
come into effect. As a result, the low
tax revenues from import-export
duties will affect our State revenue
collection.
• To fill in the gap, we will have to
increase the revenue collection from
other types of fees or charges, for
example, the environmental
protection tariff levied on diesel and
petrol, the increase in electricity
tariffs, and the imposition of a
special consumption tax on imported
cars and other items. I should say
that the change in the current
Insurance Law has become a burden
to both employees and employers as
the insurance fund accounted for
over 30 per cent of the salary fund

7. Vietnam – Income Growth
•

8. Vietnam GDP – Growth - 2016
• The World Bank (WB) on Tuesday forecast that
Việt Nam would grow at an average of 6.3 per
cent in 2016-18.
• In the latest update of its Global Economic
Prospects report, the WB predicted that Việt
Nam’s growth in 2016 would be 6.2 per cent
and then expand to 6.3 per cent in 2017 and
2018.
• This trend stems from rising foreign direct
investment, growing exports and solid labour
markets, according to the WB.The WB also
forecast that among the large developing
ASEAN economies, Việt Nam and the Philippine
have the strongest growth prospects.
• According to the report, State-owned enterprise
(SOE) reforms in Việt Nam, which include
improving transparency and governance, could
reduce drains on fiscal resources.
• Banking sector reforms would be priorities for
improving efficiency and the allocation of
capital in Việt Nam, according to the WB.
• hRecently, the Hong Kong and Shanghai Banking
Corporation (HSBC) also kept its GDP forecast in
2016 for Việt Nam unchanged at 6.3 per cent.

9. Vietnam / GDP

10. Vietnam Housing Market
• The changing nature of buyers and the diversity and quality of developments
have developers and brokers in Vietnam feeling more confident that this
renaissance is not another property bubble in the making.
• In addition to owner-occupiers buying with mortgages, another new addition to
the housing market has been foreign owners. On 1 July 2015, Vietnam’s housing
laws were updated to allow overseas investors to own up to 30 percent of units in
an apartment complex and 10 percent in villa and townhouse complexes.
• “With the amendment to Vietnam’s Housing Law, the country’s property market
offers long term growth potential and opportunities for foreign investors,”
notes Linson Lim, president of Keppel Land Vietnam. “This is an important step
towards opening up the Vietnam real estate market to overseas investment.”
• Hard numbers are difficult to come by, but Le Hoang Chau, chairman of the Ho
Chi Minh City Real Estate Association (HoREA), said they had counts of roughly
700 foreigners purchasing apartments in Ho Chi Minh City (HCMC) since the law
came into effect.

11. Vietnam – Banking Sector
• Vietnam’s banking sector suffers from problems of inefficiency,
undercapitalisation, and increasing cross-ownership among banks, all of which
have been escalating the potential of contagion in the past few years. However,
considerable changes have also taken place in the banking sector. State-owned
commercial banks have maintained their dominance in Vietnam while joint stock
commercial banks are also on the rise.
• After the recession in 2012, Vietnam’s banking sector underwent restructuring as
well as mergers and acquisitions. The State Bank of Vietnam (SBV) adopted a
series of policies to stabilise the macro economy and inflation rates. SBV has
forced lenders to merge and others to go bankrupt as it plans to reduce the total
number of banks to as few as 15 by 2017 from almost 40. It also played an
important role in reducing bad debt and the nonperforming loan (NPL) ratio,
bringing it down to under 3% by the end of 2015. At the same time, net profit and
other indicators improved (Figure 1).

12. Vietnam / Tax Policies
• Vietnam ranked 168th in terms of taxpaying, up four notches from the
2015 survey, as it managed to cut the time businesses have to spend
on paying taxes to 770 hours a year, 102 hours fewer than the
previous survey, according to the report.
• Vietnam was ranked 90th out of 189 economies measured in the
“Doing Business 2016: Measuring Regulatory Quality and Efficiency”
report, the 13th edition of the World Bank’s flagship publication.

13. Vietnam Retail Sales
• Vietnam's retail market posted sales of more than VND2.46 trillion (US$108.8 billion) in a
"quite busy" year with the entry and expansion of many foreign and local retailers.
• According to the General Statistics Office, that was an increase of 10.6 percent and
surpassed most projections. Local and international market forecasts earlier suggested
retail sales could only reach $109 billion in 2017.
• Home appliances recorded the highest rise of 15 percent, followed by food and clothing
with growths of 14.8 and 13.3 percent, according to the official figures.
• Many foreign retailers have either broken into the market or announced plans to do
so, including South Korean discount store chain E-mart and Japan's biggest convenience
store chain 7-Eleven.
• Those who are already present here have been gearing for expansions, such as Japan's
Aeon with a plan to open 200 stores around the country and France's AuchanSuper
expecting to open 17 supermarkets by the end of next year. Aeon does not provide a
timeframe for its plan.

14. Sources
• Contact: paul_young_cga@Hotmail.com