Good morning! Hello to all new readers, and welcome to the latest edition of the Vietnam Weekly, written by Ho Chi Minh City-based reporter Mike Tatarski.
On Tuesday, I published a ‘state of the newsletter’ after belatedly realizing that the Vietnam Weekly turned six in April. Thanks to everyone who shared ideas for me to pursue, and to those of you who signed on for a paid subscription.
Next week I’ll publish a year in review (so far) for Vietnam - upgrade below to receive that and all future exclusive newsletter editions. Group subscriptions are available at a 30% discount per person.
Quick reminder that there won’t be a new podcast episode on Monday - the show returns July 8th.
On to the news.
The Bending Bamboo
Are you tired of the phrase ‘bamboo diplomacy’ yet?
I hope not, as this strategy was on full display over the past week. (If that term is new to you, I recommend my podcast episode on the topic with
of ASEAN Wonk.)Immediately after Russian President Vladimir Putin’s brief visit, U.S. Assistant Secretary of State for East Asian and Pacific Affairs (and former ambassador to Vietnam) Daniel Kritenbrink arrived in Hanoi.
Minister of Foreign Affairs Bùi Thanh Sơn told Kritenbrink that “Vietnam always considers the U.S. as a strategically important partner.”
The American diplomat also reportedly met with an official from Myanmar’s military, though little information is available.
For its part, the Vietnamese government rarely comments on the situation in Myanmar. Military-owned Viettel runs Mytel, one of Myanmar’s largest telecommunications firms, in a joint venture with the Burmese army.
So that’s Russia and the U.S. attended to.
Prime Minister Phạm Minh Chính then flew to China for the World Economic Forum Dalian Summit where he met executives from China’s railway industry, assured investors that Vietnam will not have power shortages this year, outlined three ‘growth-boosting factors,’ and - here comes the bamboo - met President Xi Jinping in Beijing while stating that the two countries should partner on major transport projects.
Sơn, the foreign affairs minister, also met Wang Yi, his Chinese counterpart, in Beijing.
But wait! We’re not done with the U.S.
At the same time, Minister of Planning and Investment Nguyễn Chí Dũng traveled to Washington D.C. to co-chair the first U.S.-Vietnam Comprehensive Strategic Partnership Economic Dialogue.
Progress on renewable energy and other regulatory issues is a sticking point for American investors, while the Vietnamese government is pushing hard for the U.S. Commerce Department to recognize Vietnam as a market economy.
A decision is due by July 26 and could have major implications either way.
Dũng also visited Silicon Valley, where he met representatives from Google; the semiconductor design company Arm; and Marvell, a semiconductor firm which recently opened its third office in Vietnam.
Meanwhile, I got a ride this week from a Grab Bike driver practicing his own curious form of ‘bamboo diplomacy.’
Another Government Salary Raise
On July 1, the base salary for government employees will rise from VND1.8 million per (US$71) month to VND2.34 million (US$92) per month, a 30% increase.
This follows a 20% increase on the same date last year.
To quote Vietnam Briefing: “Base salary…is a monthly rate on which public sector wages are based. Essentially, the law stipulates a salary coefficient for various roles in the public service by which the base salary is multiplied to determine a government worker’s monthly wage.”
Minister of Home Affairs Phạm Thị Thanh Trà told the National Assembly that this will impact over 50 million people. This is confusing as last year the same ministry said the state payroll included around 2 million people at the end of 2022.
In any case, a 50% base salary increase over two years is significant, and further increases are planned for next year and 2026 at a total cost of about US$35 billion.
Frankly, I don’t know how this all translates into an actual salary, but I’m interested to see how this interacts with the anti-corruption campaign. One (sometimes understandable) justification for petty graft is that low-level officials don’t make enough money to live off of - this is accurate if your official salary is just a few million VND, especially in expensive urban areas.
There’s also the issue of private-sector jobs frequently offering far better pay, making it difficult to recruit people to the public sector.
Việt Nam News published an interview with Minister Trà on the topic for anyone wishing to read more.
Aviation’s Ongoing Struggles
Vietnam’s aviation sector remains a mess, in part due to circumstances beyond its control.
The ongoing global recall of about 3,500 Pratt & Whitney engines means Vietnam Airlines (VNA) will ground up to 15 aircraft.
VietJet has been quiet on this issue, but the domestic airline situation is fairly dire: Bamboo Air is barely hanging on, while VNA subsidiary Pacific Airlines resumed operations after a restructuring (everyone’s favorite business euphemism) with one plane. It stopped flying back in March thanks to financial problems.
Domestic airfares, as a result, remain high, a factor which contributed to VNA’s record pre-tax profits - US$178 million - in Q1.
At the same time, Reuters reported this week that VNA faces insolvency as early as next month if a US$157 million government-backed loan from 2021 cannot be refinanced.
Sticking with VNA, the aircraft shortage is hitting them particularly hard, while no Airbus or Boeing deliveries are expected until 2030 at the earliest. The airline canceled plans to sell six Airbus A321neo planes and is also studying the licensing process for the Comac C919, China’s first domestically produced airliner.
Thus far that plane has only been licensed for operations in China, though one visited Vietnam in February.
Some are pushing for the government to ease restrictions on foreign ownership in the aviation sector to increase competition. Such ownership is currently capped at 34%, compared to 49% in Thailand, Indonesia, and Cambodia.
In recent years Qantas and ANA Holdings have reduced investments in Vietnamese aviation or exited entirely, while Vingroup and Imex Pan Pacific Group scrapped plans for a passenger airline and a cargo airline, respectively.
Data Corner
Here’s something new based on a great reader suggestion: each week, I’ll include a few notable statistics on the economy, society, or whatever else catches my eye. I’ll keep these brief.
According to the cryptocurrency payment gateway Triple-A, Vietnam has the second-highest crypto ownership rate in the world - 21.2% - behind the United Arab Emirates.
The English Premier League team Crystal Palace announced a “record” two-year sponsorship deal with an unknown Vietnamese sports gambling company called Net88. The deal places Net88’s logo on the front of Crystal Palace’s jerseys, a location that commanded US$8.3 million annually from the previous sponsor. Last week, police in Da Nang busted a football betting ring that was bringing in around US$8 million/month. Sports betting is illegal in Vietnam.
Hanoi disbursed just 21.2% of its US$3.1 billion public budget through June 15. The municipal government’s target for the year is 95%.
Extra Links:
Vietnam’s VinFast looks to tiny EV, priced at less than $10,000, to change its fortunes (Associated Press)
Nuclear Power in Vietnam: Unpacked 2024 (The Shiv)
Couchfish: A Journey Along The Camel’s Back. Part 4
When the longing hits home (A story from Connla)
Vietnam’s proposed South China Sea talks with Philippines raises hopes of resolution pathway (South China Morning Post)
Have a great weekend!
The increase in public base salary will at least affect ~8 millions people as retirees will also enjoy the raise. But that’s still far from the number 50 million - perhaps she included all the indirectly affected people?
Ideology versus pragmatism : frankly speaking : all the countries that followed a realistic diplomatic strategy tend to be more successful (look at China Pre-Xi Jinping)
Net88’s news is hilarious 😂