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Vietnam top 10 economic events in 2019

Vietnam top 10 economic events in 2019

Wednesday 05, 02 2020
"A number of guidelines and policies to actively participate in the Fourth Industrial Revolution"

1. High GDP growth

In 2019, Vietnam enjoyed a GDP growth rate of 7.02% in the context of increasing regional and global strategic competition. This is the second year Vietnam has completed all 12 economic targets set by the National Assembly. In addition, trade surplus reached a record of USD 9.94 billion; registered FDI capital was USD 38.02 billion which is the highest level in 10 years; budget deficit was low, and inflation was below 3%. This is also the fourth consecutive year that Vietnam has controlled inflation below 4%.

2. Free trade agreements and investment protection with the EU after 9 years of negotiations

Free trade agreements and investment protection with the EU after 9 years of negotiations

On June 30, 2019, the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) between Vietnam and the European Union (EU) were officially signed in Hanoi. These are the two new major trade and investment agreements with the highest standards between Vietnam and the EU. Commitment to abolish import tax up to nearly 100% of tariff and trade value is the highest tax reduction rate in FTAs that Vietnam has ever signed. EVIPA is also important to ensure a more open investment and business environment for global investors.

3. Resolution on attracting foreign investment

On August 20, 2019, the Politburo issued Resolution No. 50-NQ/TW on “Orientations for perfecting institutions & policies, and improving the quality and effectiveness of foreign direct investment (FDI) till 2030”. This is first time the Politburo has issued a thematic Resolution on FDI, which has been highly appreciated by domestic and foreign investors. The Resolution specifies Vietnam's strategic priorities in attracting FDI in the coming period for projects with new technologies, high technologies, clean technologies, modern management, high value-added and effective spread, connecting production chains and global supply. The Resolution is a premise for Vietnam to attract higher-quality FDI capital.

4. Vietnam jumped 10 places in the Global Competitiveness Index

On October 9, 2019, the World Economic Forum (WEF) informed that Vietnam's Global Competitiveness Index (GCI) had increased by 10 places, from the 77th position in 2018 to the 67th in 2019. For the first time, Vietnam has risen to the top half of the world rankings among 141 ranked economies. Vietnam has also been recorded as the country with the highest increase in scores. This is the result of persistent efforts in the reforms that the Government of Vietnam is undertaking in the context of geopolitical and trade tensions that are making the world economy more unstable. Along with the evaluation of WEF, Vietnam's efforts to improve competitiveness have been highly appreciated by many international organizations with a series of positive information about Vietnam's investment environment.

5. African hog cholera appeared on a large scale

On February 19, 2019, the Ministry of Agriculture and Rural Development officially announced that African hog cholera had reached Vietnam. This is considered a dangerous epidemic, for which there is currently no preventive vaccine nor cure yet. According to the Ministry of Agriculture and Rural Development, there has been no such epidemic causing great harm and difficulty as African hog cholera. As of mid-December, the total number of sick pigs forced to be culled was nearly 6 million, weighing 342.802 tons, accounting for about 9% of the total pork yield of the whole country. The epidemic has made pork supply on the market scarce, increasing pork prices in the last months of the year.

6. Completing the National Target Programs for New Rural Development

On October 19, 2019, the Central Steering Committee of the National Target Program for New Rural Development held a National Conference to summarize 10-year implementation of the Program in the period 2010-2020. After nearly a decade, the Program has fundamentally changed the face of Vietnam’s rural areas. The status of farmers has been improved and their lives has become better, agricultural production continues to be structured in the direction of modernity and sustainability. In particular, the program has mobilized a great deal of resources with VND 2.4 million to develop infrastructure, production, life, culture and society in rural areas. By October 2019, the whole country had 4,665 communes recognized to meet new rural standards, accounting for 52.4% of the total number of communes nationwide, exceeding 2.4% compared to the set target.

7. Commercial banks raced to increase charter capital

Commercial banks raced to increase charter capital

2019 witnessed a huge number of commercial banks increasing their charter capital to ensure capital adequacy ratio in accordance with the State Bank's regulations in Circular 41/2016 / TT-NHNN stipulating the capital adequacy ratio for commercial banks and branches of foreign banks following the standard method of Basel II, which will come into effect on 1/1/2020. There are currently 18 banks in the system that meet Basel II standards, including 16 domestic banks and 2 foreign banks. Basel II is the highest standard applied in many countries to determine capital standards to limit business risks of banks and strengthen financial systems. This standard will help commercial banks ensure capital and liquidity requirements, international risk management standards, contributing to consolidating a solid foundation for the financial and credit system as well as the economy.

8. Boom of private air lines

On January 16, 2019, Bamboo Airways officially entered the aviation market with the first commercial flight from Ho Chi Minh City to Hanoi. After 8 years, Vietnam finally has another new airline, creating competition for domestic market share among airlines. Vinpearl Air Aviation Joint Stock Company, Viet Nam Travel Aviation Company Limited (Vietravel Airlines), Viet Star Aviation Joint Stock Company (Vietstar), Thien Minh Aviation Joint Stock Company (Kite Airlines), etc are completing the procedures for commercial exploitation. Along with that, many businesses have invested in training human resources for the aviation industry such as establishing Bamboo Airways Training Institute, Vinpearl Air Training High-tech Manpower Training School, and Vietjet Aviation Academy.

9. Opportunity for breakthroughs in the Fourth Industrial Revolution

On September 27, 2019, the Politburo issued Resolution No. 52-NQ/TW on "A number of guidelines and policies to actively participate in the Fourth Industrial Revolution". With the view to effectively taking advantage of the opportunities brought about by the Fourth Industrial Revolution to accelerate the process of renewing the growth model, restructuring the economy associating with implementing strategic breakthroughs and modernizing the country, the Resolution sets the goal that by 2045, Vietnam will become one of the leading manufacturing and service, start-up and innovation centers in Asia.

10. Commencement of the North-South Eastern highway project

On September 16, 2019, Prime Minister Nguyen Xuan Phuc issued an order to start the Cam Lo - La Son Expressway Project passing Quang Tri and Thua Thien - Hue provinces. This is the first of the 11 sub-projects of the eastern section of the North-South Expressway. The North - South Expressway Project’s eastern section is a national priority investment project in the period of 2017-2020 that has been approved by the National Assembly with a total investment of VND 118,716 billion, including VND 55,000 billion from State budget. With a total length of about 654 km, the Project plays an important role in relieving the pressure on Highway 1, completing the transportation infrastructure system, creating a driving force for socio-economic development.

Related: Vietnam 2019 - Major Economic Indicators In 2019 Compared To 2018

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