Good morning! Hello to all new readers and welcome to the latest edition of the Vietnam Weekly. The Friday newsletter is always free, while this week’s article for paying subscribers analyzed the latest ‘State of Southeast Asia’ survey, conducted annually by the ISEAS-Yusof Ishak Institute - it contained some surprising shifts in attitudes toward the United States among Vietnamese elites.
To become a paying supporter of the Vietnam Weekly, click the button below
The agonizingly long heatwave finally broke here in Ho Chi Minh City, with the first major rains of the year arriving last weekend. Nationwide, 110 temperature records were broken last month.
On to the news.
Market Upgrade Roadblocks
On Wednesday, the U.S. Commerce Department held a virtual hearing to discuss changing Vietnam to a market economy status.
The department considers the country a non-market economy, a distinction shared with 11 nations including China, Russia, and North Korea.
According to Reuters, opponents of this move include a colorful collection of American steelmakers, Gulf Coast shrimpers (many of whom are likely Vietnamese), and honey farmers who fear cheaper Vietnamese imports.
On the other hand, supporters include business groups and companies with a manufacturing presence here who want lower tariffs.
One of the biggest issues is the tariffs that come with the non-market economy status: according to the newswire, anti-dumping duties from the U.S. on Vietnamese frozen farmed shrimp are 25.76%, while the duties on this product from Thailand (a market economy) are 5.34%.
Reuters has more on this issue in a separate story while noting that the topic - which the Vietnamese government is pushing hard on - risks getting sucked into the political vortex of the U.S. presidential election.
Meanwhile, Vietnam’s planned stock market upgrade - unrelated to the above but I’ll put it here since both topics involve the word ‘market’ - isn’t going well.
The Ho Chi Minh Stock Exchange (HoSE) planned to debut a new stock trading system provided by the Korea Exchange on May 2.
This would’ve been a key step in Vietnam’s ambition to be upgraded from a frontier to an emerging market by MSCI - the World Bank estimates such an upgrade could bring in US$25 billion in foreign investment to the HoSE, which saw a huge sell-off from foreign investors last year.
The State Securities Commission, however, refused to allow the new system to go online, and it sounds like this is a long way off: HoSE officials reportedly did not submit their launch plan to the Ministry of Finance and have not received the required approvals for information security.
Spotlight on UK Migrant Flows
Speaking of complex political debates in other countries: the United Kingdom’s Home Office said more migrants arrived by crossing the English Channel in the first three months of the year than in any previous year, and more of these migrants were from Vietnam than any other country.
The UK government has cited these figures as one reason behind its highly controversial plan to detain asylum seekers and deport them to Rwanda.
This comes after the number of Vietnamese migrants found crossing the Channel reached 1,323 last year, more than doubling the 2022 figure of 505.
Daniel Boffey of The Guardian reported an excellent story from Calais, noting that Vietnamese migrants waiting to cross to the UK appeared younger and more affluent than groups from other countries, such as war-torn Afghanistan.
I asked friend-of-the-letter and anti-trafficking expert Mimi Vu about this: “This isn’t a sudden ‘surge’ coming directly from Vietnam. From 2021 to 2023, hundreds of older Vietnamese teens and young adults from ages 15 to 24 crossed into the EU via English language schools in Malta, and then they’d go missing on their student visas to get to Germany or the United Kingdom.”
She added that these language programs were suspended late last year, “but by then up to 500 young Vietnamese already gone through. These current migrants may be from that group, and it’s all about logistics - there’s a long line and not enough boats.”
Illegal migration by Vietnamese has been an issue for years, though it gained international attention in 2019 when 39 Vietnamese were found dead in the back of a container truck in Essex.
Sen Nguyen and Seb Rumsby wrote about the impact of such migration - especially on Nghệ An Province - in an excellent opinion piece for Al Jazeera: “In contrast to the optimistic, government-backed vision of remittance-funded development, here we see the dark side of migration: the depletion of Nghệ An’s social fabric, which is replaced by rising inequality as remittances enrich some households but not others. Ironically, transnational migration threatens to undermine the very bonds of kinship which enabled it in the first place.”
FDI and Public Budget Disbursement
According to the General Statistics Office, disbursed FDI from January to April hit US$6.3 billion, the highest figure in five years. The vast majority went to the processing-manufacturing sector, accounting for 78.5% of this total, and much of this came from companies already operating in Vietnam.
Singapore, Hong Kong, and Japan accounted for the three largest FDI sources, while Hanoi and Bắc Ninh Province were the top investment destinations.
On the public sector side, state budget and disbursement are both a concern. In 2023, total state budget revenue hit US$68.7 billion - a decline from 2022 - while expenditures were US$67.9 billion.
Through Q1, public investment hit 14.7% of the annual target, though domestic reporting on this has been very poor so it’s hard to make sense of the overall picture.
Seven ministries and central agencies disbursed 0% of their allotted budget in the first four months of the year, while 25 provinces/cities saw rates below 15% - specific agencies and localities haven’t been named.
Ho Chi Minh City, which has struggled mightily in this area in recent years, saw a 30% increase in public spending in Q1 compared to the same period in 2023 - but this was still only enough to reach 10.1% of the total target for this year.
Maintaining that pace would mean disbursing 40.4% of the budget by year-end. The final figure will surely be higher than that since spending is often concentrated in Q4, but these slow starts remain baffling when the city has so many critical infrastructure needs.
Extra Links:
In a Dammed and Diked Mekong, a Push to Restore the Flow (Yale Environment 360)
Is Vietnam warming to Nato-style weaponry? A rugged South Korean howitzer holds clues (South China Morning Post)
E-waste is overflowing landfills. At one sprawling Vietnam market, workers recycle some of it (AP)
The Enduring Relevance of Vietnam’s “Three Nos” Policy (Fulcrum)
Have a great weekend!
Mike Tatarski
I scrolled right to the bottom of another excellent piece only to find a cat when I expected a dog Bugger
Glad to see con mèo in the end photo!