Plus banner 2022 economic growth
Good morning! Welcome to the latest free-to-read edition of the Vietnam Weekly. I’m back in Ho Chi Minh City after an extended visit to the US - it was great seeing friends and family for the first time since mid-2019, but I’m happy to return to my regular schedule. Next week, I’ll send out a feature for paying subscribers - you can become one for US$5/month or US$50/year by clicking the button below.
This will be a grab bag of news from the past month, and next Friday, I’ll follow up on the incredible resignation of Nguyễn Xuân Phúc (which I covered a couple of weeks ago).
On to the news.
VinFast’s Rough American Month
Last month I discussed the arrival of VinFast’s first cars in the US and a damning Jalopnik feature on the company’s America-bound VF8 electric SUV. The ensuing weeks haven’t been much better in terms of coverage.
On January 5, Autoblog ran a piece accusing VinFast of a bait and switch. Before the VF8 arrived in the US, the carmaker claimed it had a 260-mile range on a full battery charge. However, when those 999 cars landed in California, VinFast said they were all the ‘limited release’ City Edition, which had never previously been mentioned and only had a range of about 180 miles.
At the moment, it’s not clear how many of those cars have been delivered to customers, and there is no word on when more EVs will be shipped to the US. Keep in mind that VinFast says it has received roughly 65,000 global orders.
Meanwhile, there is confusion over the state of VinFast’s battery subscription plan, which had been pitched as a way to make their cars more affordable since customers wouldn’t have to buy a battery outright. Information regarding this plan has vanished and reappeared on VinFast’s US website several times, and the official line at the moment is that its deployment is ‘delayed.’
At the same time, Tesla seriously undercut VinFast’s pricing - battery subscription or not - by reducing the starting Model Y price to US$52,990 (from almost US$66,000), while the VF8 currently starts at US$59,000. VinFast officials have said they will respond by launching promotions, but these haven’t been outlined in detail. (As mentioned before, Teslas are eligible for a tax credit, while VinFasts are not.)
There’s plenty of grumbling on VinFast’s official message board. At the same time, a prominent automotive YouTuber from the US claimed the company offered to pay him US$10,000 to visit Vietnam, on top of the all-expenses-paid trip they gave to dozens (hundreds?) of other influencers and writers. (He declined.) That behavior is normal here in Vietnam but won’t fly with American journalists.
Finally, work on VinFast’s US$2 billion factory in North Carolina hasn’t moved beyond land clearance, as concerns over its environmental impact and other regulatory issues are holding it back. Some residents are also unhappy with plans for new roads to facilitate access to the plant. The company still says the facility will open mid-2024, but that will be difficult. These are hurdles that VinFast (and its parent, Vingroup) can plow through with ease in Vietnam thanks to its power and influence.
I want to clarify again that I’m certainly not rooting for VinFast to fail - far from it, but they’re off to a rough start overseas (which, to be honest, had to be expected).
For a view from the top of the company, check out this interview of VinFast Global CEO Lê Thị Thu Thủy, written by friend-of-the-newsletter Lam Le for Rest of World.
2022’s Economic Growth
Vietnam’s GDP growth for 2022 was 8.02%, the highest rate since 1997 and a significant rebound from 2021’s lockdown-hit 2.58% growth.
Exports were a major driver, something that will continue this year - though, as discussed multiple times here before, any significant slowdown in major markets like North America or the European Union will reverberate here.
In the meantime, more high-tech manufacturing is on the way, but in my entirely non-expert view, the economy appears somewhat imbalanced. Some manufacturing sectors are roaring, but property developers have laid off huge numbers of staff, half of real estate agents in HCMC have reportedly lost their job, the country’s largest steel companies reported record Q4 losses, and countless blue-collar workers decided against returning home for Tet since they couldn’t afford the trip.
Barring a global recession, Vietnam’s economic growth will remain robust this year, but keep an eye on sectors that struggled in 2022 - including international tourism, which continues to face unfriendly (and completely unchanged) visa policies.
A Quick Infrastructure Update
We can’t go a month without discussing infrastructure!
After months of delays and multiple ultimatums from Prime Minister Phạm Minh Chính, work finally began on Tan Son Nhat’s desperately needed third terminal on December 24.
The airport is painfully over capacity, with a record 137,000 passengers transiting through it on Wednesday, a figure likely surpassed yesterday.
I arrived on Thursday afternoon, and we had to take a bus to the terminal (for an international flight!), and the immigration lines were backed up to the wall. Getting through didn’t actually take too long, but nothing about TSN is pleasant.
I also saw the T3 construction site from the plane, and I must say it doesn’t look like much progress has been made - yet the terminal is supposed to open next year.
Meanwhile, the area in front of Ben Thanh Market here in HCMC has been cleared of metro construction fencing and turned into a confounding intersection - though this is temporary until the city builds a planned pedestrian plaza atop the metro station. (As for the first metro line itself - maybe it will open by the end of this year?)
The Erosion Of A Dream (Couchfish)
Why did Lego choose Vietnam, not China, to build first carbon-neutral factory? (South China Morning Post)
Vietnam places market logic above workers’ rights (East Asia Forum)
Have a great weekend!