Good morning! Welcome to the latest free-to-read edition of the Vietnam Weekly, written by Ho Chi Minh City-based reporter Mike Tatarski.
On Wednesday, I published a story for paying subscribers about the threat of significant power shortages in the coming months even after top officials promised the business community that this won’t happen.
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If energy interests you, don’t forget to check out the latest episode of The Vietnam Weekly Podcast, featuring a conversation with Trang Nguyen of the Climateworks Centre on the challenges and opportunities of financing the energy transition.
On to the news.
GDP off to a good start, maybe?
With Q1 in the books, it’s time for an economic check-in. The top-line official figure is that GDP growth hit 5.66% through the first three months of the year, compared to 6.7% growth in Q4 2022.
According to Nikkei Asia, exports grew 17% in dollar terms after falling overall in 2023, while “the industrial and construction sectors' overall growth slowed to 6.28%, compared to 7.35% in the prior quarter, with production of mobile phones and cars falling 13.3% and 11.3%, respectively.”
Domestic media portrayed the 5.66% figure as good news - and for many countries that would be exceptional growth - but it’s well behind the government’s goal of up to 6.5% for the year.
2023, for comparison, ended at just over 5%. Vietnam needs to hit a minimum of roughly 6.5% annual GDP per capita growth for each of the next 20 years if it is to hit the official target of becoming a high-income country by 2045, and each year that mark is missed only increases what ensuing years need to achieve.
The Ministry of Planning and Investment laid out goals for the remaining quarters of this year while noting that lack of demand and strong competition are the biggest obstacles facing the crucial manufacturing sector.
Worryingly, about 74,000 businesses - mostly SMEs - shut down in Q1, a 23% increase year-on-year. This feeds into the increasingly clear picture that a small group of major corporations (many in the FDI sector) are playing an outsized role in economic performance.
HCMC’s economy grew by 6.5% in Q1, its best rate since 2020, and a huge improvement on Q1 2023’s dismal 0.7% growth. It still doesn’t feel that way on the ground: major construction projects remain stalled; public disbursement is off target yet again; ‘for rent’ signs are all over high-profile commercial areas; and for every new local business that started over the last three months, one shut down.
Nationally, 57 out of 63 provinces and cities saw positive GRDP growth, with Bắc Giang (14.2%), Trà Vinh (13.9%), and Thanh Hóa (13.2%) forming the top three.
Those going in the wrong direction were Lai Chau, Bắc Ninh, Quảng Nam, Bà Rịa–Vũng Tàu, Sơn La, and - perhaps most worryingly - Đà Nẵng.
Also on the socioeconomic front, the Mekong Delta leads the country in rates of both job loss and underemployment, a deeply concerning preview of that region’s future.
The Sacombank-Bamboo imbroglio
Here’s your strange story of the week.
On Wednesday, the Ministry of Public Security (MPS) denied rumors that Dương Công Minh, chairman of Sacombank, had been banned from leaving the country. An exit ban is generally the first sign that someone is in serious trouble, such as the chairwoman of AISVN discussed last week (and below).
The bank - one of the 10 largest in Vietnam - also denied the rumor, which caused the Sacombank stock (STB) to fall 4% on Tuesday.
The MPS then went on to disclose the apparent source of this rumor: former Bamboo Airways CEO Đặng Tất Thắng, who now lives in Australia. The MPS spokesperson told state media that those “who violate the law will be dealt with according to the law, with no prohibited areas or exceptions,” but it’s unclear how that would happen in this case.
Bizarrely, this isn’t the first instance of Thắng commenting on Minh. In June 2023, the Hanoi Department of Information and Communications levied an administrative fine on Thắng for calling the bank chairman “incompetent” since Sacombank wasn’t paying dividends to shareholders despite being profitable.
If you’re wondering how these two corporations are even related, Minh became an advisor to Bamboo’s board of directors in 2022, while Sacombank is a major creditor for the embattled airline.
Parents dig a deeper hole with AISVN
The American International School Vietnam (AISVN) saga continues to unfold, and while I recognize this isn’t relevant to all readers, I think it’s important to cover.
Last Saturday Nguyễn Thị Út Em, chairwoman of the school’s board, met city authorities and parents. She apologized to the parents in attendance and, incredibly, asked them to pay a further VND125 billion (US$5 million) so the school could resume operations from April 1 through the end of the school year.
An official from the municipal Department of Internal Political Security said at the meeting that AISVN’s investors had no financial capabilities left while noting that meetings with remaining foreign teachers had been tense. (The fact that an official from that department is involved indicates what the city government is worried about.)
Em’s plan, meanwhile, is to “equitize” the school, with parents paying tuition as an investment and getting shares in AISVN in return.
By Monday, parents had contributed VND17.7 billion (US$712,000) to the school and classes resumed on Wednesday, though in a limited capacity. According to VnExpress, “foreign teachers have had their salaries paid for January and February, along with rent money for February. Vietnamese teachers and staff have been paid 50% of their salaries for February, and more money would be sent to them on Wednesday.”
Speaking of teachers (both foreign and Vietnamese), they’ve had no representation in local coverage, though that’s unsurprising given the ugly labor/legal issues at play. This post on the International Teachers subreddit is illuminating, and I’ll share one part:
“Moral[e] is dead. Trust is even worse. The director and owner convinced many that were considering departing in December that everything would be fine as a new investor was coming. That is why many of of stayed. That was dishonest and criminal. They told us that knowing that their [sic] was no investor in order to prevent a mass exodus of teachers.”
AISVN is not alone in offering so-called ‘education investment packages,’ with about 10 schools just in HCMC pitching these to parents. Presumably, they are all potentially ticking time bombs.
The situation over at Apax Leaders is no less ugly, with many teachers who previously worked there losing trust in Vietnam’s entire ESL center system.
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Extra Links:
Will Vietnam’s Political Turmoil Shake Up Foreign Investment? (Foreign Policy)
India wants to become the top manufacturing alternative to China. But first it needs to beat Vietnam (CNBC)
Vietnam’s flexible nonalignment (East Asia Forum)
ShopeeFood drops non-compete clause after Rest of World reporting (Rest of World)
Gaza war evokes Vietnam's own struggle, past unity with Palestine (Al Jazeera)
Have a great weekend!