HSBC’s Vietnam at a glance report titled “Reclaiming glory from the victory” remarks that Vietnam’s external momentum continues to shine thanks to the booming electronics industry and stable FDI inflows. The data shows that Vietnam is benefiting from the reopening strategy; Inflation pressure still remains under the control.
Since reopening, Vietnam’s external dynamics have been in full swing. Export growth in April was especially strong thanks to the booming electronics export. It can be seen that Vietnam has reached out, successfully transformed, become the world’s technology factory, and gained more market share in the export of phones and processors.
Despite the local disruptions caused by the pandemic, Vietnam continues to benefit from stable FDI inflows of the technology giants, both familiar corporations and new investors.
|Chart 2. Electronics export has made the most distribution to the total export turnover of Vietnam||Chart 3. Vietnam emerged as an export country of smartphones at the world’s second position|
HSBC acknowledges the most successful in the technology sector thanks to Samsung’s foreign direct investment (FDI) for many years, with the investment value flowing into Vietnam over the past two decades accounting for about $18 billion. As a result, Vietnam’s smartphone market share has significantly increased globally.
|Chart 4. Vietnam’s global laptop export market share has increased, etc.||Chart 5. Similar to the processors, especially in the recent years.|
In the context that 70% of the global finished computers are made in China, Vietnam’s global laptop market share is also gradually increasing, surpassing Malaysia to become the main producer in the ASEAN region.
Meanwhile, Vietnam has also emerged as a supplier of microprocessors/controllers (although products assembled in Vietnam are often lower value microprocessors used in many electronic products). This result is supported by Intel’s $1 billion investment in an assembly and testing facility in Vietnam since 2006. During the period of June 2009 to December 2020, Intel has invested an additional 475 million USD into the factory in Vietnam to strengthen the production of 5G products and core processors.
|Chart 6. US private consumption of goods slows down while the epidemic rises up.||Chart 7. China is Vietnam’s number one import market with 30% market share.|
HSBC also remarks that Vietnam should be careful with the strong winds that hinder trade from rising up. On the one hand, global consumption is shifting from goods to services.
On the other hand, supply chain disruptions in China make Vietnamese manufacturers more difficult to secure the input materials for future export activities. While Vietnam’s export is very good, this brilliant result reminds us not to forget that Vietnam’s manufacturing industry is highly dependent on imported raw materials.
About 30% of Vietnam’s imports come from China, mainly in the fields of electronics (30%) and equipment and machines (22%).
|Chart 8. Inflation in April is still relatively modest.||Chart 9. The rate of foreign tourists to Vietnam significantly rises up in April|
Vietnam’s inflation pressure remains low in the ASEAN region. Total inflation only increased by 0.2% month against the last month, leading to a modest increase of 2.6% in the same period of the last year, still within the market’s expectation rate.
Since officially opening the border on March 15, Vietnam has soon benefited from the return of tourism. Vietnam welcomed more than 100,000 tourists in April, three times higher than in March.
|Chart 10. Vietnamese people’s mobility is finally exceeding the rate before the epidemics||Chart 11. …..resulting in the recovery of the retailing industry|
In addition to tourism, domestic demand is also in a strong position thanks to the government’s lifting of domestic epidemic prevention and control restrictions. After a slight decline in the first quarter of 2022, people’s mobility has finally exceeded the pre-pandemic rate since early April.
This improvement has clearly contributed to the recovery of the retail industry, helping the industry grow 5.8% in April. Not only did merchandise sales increase 2% against the last month, but more importantly, even spending on services and travel-related segments rose 7% against the last month, signalling a bright start to the service sector recovery.
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