Vietnam

Redazione published in Economy and trade, Vietnam

Vietnam journey towards wealth

The Southeast Asian country is one of those best positioned to increase its benesse

By Tommaso Magrini

Vietnam's growing geopolitical relevance is based on its strong economic performance as well as geography. When Vietnam began to open up in the mid-1980s, annual per capita income was half that of Kenya. Thanks to pragmatic and increasingly business-friendly policies, it has since grown six-fold to $3,700. Today, the government's ambition to turn Vietnam into a wealthy country by 2045 is plausible, the Economist argues. Economically, Vietnam has probably never faced a more favorable global environment. Geopolitics is driving investment toward this goal as America seeks to disengage from China and private companies of all nationalities sense the direction in which the wind is blowing. Most manufacturers simply cannot withdraw from China. But to mitigate the cost of current and future trade barriers, they can hedge their bets by doing things elsewhere as well (a strategy known as "China + 1"). Companies that export to the West are shifting production to Vietnam. Brands such as Samsung and Apple are making gadgets there. Around them are tightening suppliers, including Chinese ones. In the first three quarters of 2023, foreign direct investment inflows to Vietnam as a percentage of GDP were twice as large as to Indonesia, the Philippines or Thailand. According to the Economist, Vietnam's many young manufacturing workers are diligent, reasonably educated and cost half as much as those in China's coastal areas. Also good on the security front. Vietnam, unlike Indonesia and the Philippines, has no problems with Islamic terrorism. It also offers big incentives to foreign investors, starting with tax breaks, cheap land.

0 Share
Redazione published in Politics and strategy, Vietnam

Apple, another decisive step in Vietnam

Global technological giants are increasingly present in and around Hanoi

Article by Tommaso Magrini

Vietnam is preparing for a crucial development in its economic and technological ambitions. Apple is, in fact, allocating resources for iPad product development to the Southeast Asian country for the first time, an important step toward strengthening the Southeast Asian country’s position as an alternative manufacturing hub outside China. Apple is collaborating with China’s BYD, a leading iPad assembler, to move resources to Vietnam for new product introductions. This is the first time this happens for such a major Apple device. Engineering verification for trial production of an iPad model will begin in the middle of February next year, says Nikkei Asia. The model will be available in the second half of next year. BYD was also the first supplier to Apple to help the U.S. tech giant move iPad assembly to Vietnam for the first time in 2022. The move requires substantial resources both for the tech company and its suppliers, such as engineers and investment in lab equipment to test new features and functions. Most of Apple’s new product introduction is done in China, in collaboration with Cupertino engineers, to take advantage of the country’s decades of experience in hardware production. But the geopolitical uncertainties are forcing the company to rethink this approach. Apple also has plans to send some iPhone trials to India. Vietnam has emerged as Apple’s most important technology manufacturing hub outside of China. The Cupertino-based tech giant has asked suppliers to build new manufacturing capacity for almost all of its products except for iPhone, from AirPods to MacBooks, Apple Watch to iPads. Apple will continue to work closely with Chinese suppliers in its supply chain shift, but Vietnam is becoming increasingly central.

0 Share
Redazione published in Economy and trade, Vietnam

Foreign investment boom in Vietnam

Hanoi's role is also gradually strengthening on the electronics and high-quality technology front

By Tommaso Magrini

Vietnam continues to attract international interest. Foreign investment in the South-East Asian country soared in October, when the manufacturing hub attracted more than double the financial commitments received monthly this year, in a context of strong growth in expenditure on new plants. In October, Vietnam received foreign investment commitments worth $5.3 billion, against a monthly average of $2.2 billion in the rest of the year. About 90% of the inflows in October were driven by factory-building projects, according to data from the Vietnamese Investment Ministry. Since the beginning of the year, the country has received foreign investment commitments for 25.76 billion dollars, 14.7% more than the same period of the previous year. Manufacturing industry remains a stronghold of investment in Vietnam. In the first ten months of 2023, foreign companies invested nearly $18.84 billion in manufacturing projects, accounting for 73.1% of total FDI inflows in the same period. But the role of Vietnam is gradually strengthening also on the front of high-quality electronics and technology. Foreign investors are increasingly turning to Vietnam to diversify their supply chains.Some of the most recent examples include September 23, when Japanese technology company Kyocera Document Solutions announced plans to invest $237 million to expand its machine and equipment factory in Hai Phong. Commitments from mainland China and Hong Kong together were the highest this year, followed by Singapore and South Korea. The data show that actual investments in the first ten months of 2023 increased by 2.4% compared to the same period of the previous year, reaching 18 billion dollars.

0 Share
Redazione published in Politics and strategy, Vietnam

Italy and Vietnam strengthen ties

In recent days, Undersecretary Maria Tripodi has co-chaired the 8th Mixed Economic Commission between Rome and Hanoi

High-level diplomatic exchanges between Italy and Vietnam continue, in a particularly important year also at a symbolic level for bilateral relations, which in 2023 celebrate their first 50 (fruitful) years. On 25 October, in fact, Undersecretary Maria Tripodi co-chaired the Farnesina, together with the Deputy Minister of Industry and Trade of Vietnam Nguyen Sinh Nhat Tan, the VIII Mixed Economic Commission, in the presence of ministries and representatives of the private sector. This year’s edition takes place in a very positive and constantly growing phase of collaboration with Vietnam, key partners in the Indo-Pacific region and in the ASEAN area. This year is not only the 50th anniversary of diplomatic relations, but also the tenth anniversary of the strategic partnership between Italy and Vietnam. The work allowed to renew the commitment to strengthen the already excellent relations between the two countries, also in the light of the success of the state visit to Italy of the President of Vietnam, Vo Van Thuong, last July. Particular attention was given to the main sectors of common interest, including: trade and investment, industry, energy, environment, infrastructure, health, agriculture, science and technology, culture and tourism. Undersecretary Tripodi and Deputy Minister Tan have met next year in Hanoi for the IX edition of the Joint Economic Commission. The meeting was preceded by a brief bilateral meeting in which the opportunity was taken to promote Rome’s candidacy for EXPO2030. Italy and Vietnam are experiencing steady growth in bilateral trade. In 2022 there were 6.2 billion dollars of interchange, an increase of 11% compared to the previous year, with Vietnam which is currently the first trading partner of Italy in the ASEAN region, while Italy is one of Vietnam’s main partners in Europe. In the specific one, the exports of Vietnam towards Italy last year were at 4,4 billion dollars, an increase of 14% regarding the year precedence, and its imports from Italy were at 1,7 billion dollars, an increase of 3.6%. To date, Italy also occupies 33 places out of 143 countries and territories that invest directly in Vietnam, while Vietnam is one of the ten main destinations of Italian investment among developing countries. The bond seems destined only to strengthen.

0 Share
Redazione published in Culture and society, Vietnam

The Italian language in Vietnam

Busy schedule of events in Hanoi for Italian Language Week. Particularly significant edition given the 50th anniversary of bilateral relations

From October 14 to 20, the XXIII Italian Language Week in the World was celebrated in Hanoi, dedicated this year to the theme "Italian and Sustainability." The event, which is held under the High Patronage of the President of the Republic, had a rich program of events and initiatives aimed at promoting the knowledge and dissemination of Italian in Vietnam, organized in collaboration with the Department of Italian Studies at the University of Hanoi and Uni-Italia Vietnam. The official opening of the event was held on Monday, October 16. During the ceremony, Italian Ambassador to Vietnam Marco della Seta, Chancellor of Hanoi University Nguyen Van Trao and Director of the Department of Italianistics Pham Bich Ngoc spoke. Vietnamese media gave extensive coverage to the event. "There are few high schools in Vietnam that teach Italian. I hope in the coming time we will promote more high schools to teach this language," Ambassador Della Seta told Dan Tri. But Italy has planned support packages that will include scholarships for students, teaching materials and professional courses for teachers teaching Italian in Vietnam. The University of Hanoi currently has 500 students studying Italian and 50 Italian students studying in Vietnam.According to the Ambassador, the two countries still have a lot of room for development cooperation in this field. The previous 2019-2022 agreement on the education front is set to be further strengthened. According to Dan Tri, in the coming years, along with the transformation of the country's economy, the school and the Italian Language Department will continue to provide professional training geared to international standards. "It is hoped that in the future the Italian Language Department will continue to be supported by the Embassy and Italian government agencies in Hanoi in its professional activities, especially in carrying out the mission of dissemination and development of teaching and learning," said Rector Nguyen Van Trao. "Objective: to learn the Italian language, known as the language of love, in Vietnam."

0 Share
Annalisa Manzo published in Culture and society, Vietnam

On the wave of K-Pop: the influence of South Korean culture in Vietnam

Since Vietnam and South Korea established formal diplomatic relations in 1992, however, popular culture has proven to be Seoul's best ambassador to the Southeast Asian country

By Annalisa Manzo 

The so-called "Korean Wave"-hallyu in Korean-the increase in the global spread of South Korean culture has now reached all corners of the globe, and in Vietnam it extends to a wide range of sectors: entertainment, business, fashion and even soccer. Economic ties between the two countries run deep. South Korea has been the largest or second largest investor in Vietnam almost every year for more than a decade. Choi Bundo, president of the Korean Chamber of Commerce and Industry for Central and South Vietnam, told Nikkei Asia that tax and trade agreements have helped nurture economic ties between the two countries. In addition, high satisfaction with Vietnam's high-quality workforce and expectations that it can take over the role currently held by China-because of unstable U.S.-China relations-are equally important reasons why Korean companies choose Vietnam, Choi said.

Since Vietnam and South Korea established formal diplomatic relations in 1992, however, popular culture has proven to be Seoul's best ambassador to the Southeast Asian country. It all started in the late 1990s, when Korean TV series-so-called K-dramas-began to be broadcast on local television thanks to sponsors from some Korean companies, sparking public interest in pop music, K-pop and other Korean cultural exports such as movies, food, travel, fashion and cosmetics. Now, after more than two decades, this "Korean wave" continues to be very popular in Vietnam and throughout Southeast Asia.

Many scholars believe that this is partly the result of the Korean government's policy of promoting South Korea as "a dream economy of icons and aesthetic experience." The aesthetic traces of Korean pop culture in Vietnam are tangible. Images of Korean artists pervade public places, decorating billboards, department stores and beauty salons.

The popularity of all things Korean-food, cell phones, and cosmetics brands in particular-reflects a general attitude that sees South Korea as a modern and intriguing culture. Although the Vietnamese are also very open to Western culture, underlying cultural differences remain. In contrast, South Korea turns out to be a closer model of Asian modernity, the development of which thus seems more within the reach of the Vietnamese public. After all, South Korea's miraculous economic growth is quite recent, and Korea shares clear cultural similarities with Vietnam, including a Confucian cultural heritage, an emphasis on family ties and respect for elders, and a collectivist value that emphasizes conformity.

Many Vietnamese see in the metropolitan and glamorous lifestyles embodied by Korean stars on screens an alluring and desirable future. The success stories put forth by K-dramas serve as an inspiration to reflect on one's life and strive for success. The portrayal of the tireless pursuit of status and money by K-drama characters resonates with many Vietnamese viewers who are encouraged to be self-sufficient by the Vietnamese government's recent neoliberal social policy. Decades after the 1986 Doi Moi ("renewal"), marked by Vietnam's transition to a market economy and integration into global trade, the government has transferred some welfare responsibilities to the market and now promotes self-generated wealth and success as patriotism. In addition, some have noted that the dominance of South Korean pop culture in Vietnam is joining recent socio-cultural developments in the country. Romantic K-dramas and sentimental K-pop ballads, which emphasize pure and ideal romantic love, self-love, and self-awareness, have touched the chords of a changing Vietnamese society, which is bringing in its media a turn toward the ordinary and private.

In the spread of Korean pop culture, K-pop music plays a predominant role. From a local trend to a global phenomenon, K-pop has spread worldwide since the early 2000s, starting in the Japanese music market and spreading to East Asian countries until the mid-2010s. Notably, 2012 saw the genre make its debut in the global music industry. Indeed, in the summer of 2012 Psy set unprecedented records on the music charts, gaining international fame with his mega hit "Gangnam Style." Later, the word "K-pop" was included in the Oxford English Dictionary to designate "Korean pop music."

A decade has passed and K-pop is no longer considered just a regional music genre that has temporarily captured the attention of a global audience. It has taken root as an important subcultural genre and is gaining prominence on the international stage as a new standard for the industry. One of the key defining factors of K-pop, and one that continues to show the growth potential of this genre, is its receptivity to change and new sources. Indeed, it has shown exceptional vigilance in adapting and using technological advances to develop a highly profitable business model. Just as the recent concert by the world-famous South Korean girl group Blackpink demonstrated, one of the many ways in which South Korean influence has swept the country. The superstar concert gave Vietnam its biggest dose of K-pop to date, much to the delight of the rapidly growing local fandom.

According to data from the Korea Foundation, which conducts annual hallyu surveys around the world, Vietnam had 13.3 million fans of the culture in 2022, the third highest in the world, after China and Thailand.

The price of tickets did not help deter fans, even though the average monthly salary of a Vietnamese worker is around seven million dong, although the number of wealthy Vietnamese increased 110 percent from 2016 to 2021, the fourth highest growth in Asia, reports the Knight Frank Wealth Report.

The cheapest tickets started from 1.2 million ($68.30) up to 9.8 million Vietnamese dong for VIP seats. On the morning of the second concert on July 30, local media reported that some VIP tickets were being sold for up to 30 million dong each. As the last stop in Asia of their ongoing world tour, demand has been high since the dates were released. Some 67,000 spectators packed My Dinh Stadium for what industry insiders described as the "biggest music event" ever held in Vietnam.

Tran Tuan Tai, professor of finance at Massey University of New Zealand, noted that the cost of tickets in Vietnam, relative to GDP per capita, was the highest among the other Born Pink World Tour stops. Interestingly, the most expensive ticket in Vietnam - amounting to 9.8 million dong - was higher than a similar ticket in other countries such as Indonesia (3.8 million rupees - $335) and Singapore ($398), both of which have higher GDP per capita than Vietnam. According to Tai, fueling demand in Vietnam is the fact that the country is usually not a common destination for global music shows; the most popular Southeast Asian destinations remain Thailand and Singapore. Vietnam, with a population of 100 million, has a large and growing middle class that is eager to spend on cultural and entertainment activities such as K-pop concerts, Tai added. According to the World Data Lab, Vietnam's middle class population is estimated to be one of the fastest growing populations in the world between 2020 and 2030. "Paying high prices for concert tickets does not mean that Vietnamese people are rich, but rather underscores their willingness to spend," said Nguyen Cuong Bach, managing director of tourism-focused marketing agency Asia Lion. "This shows a more mature entertainment tourism market in Vietnam."

The two Blackpink concerts had a very positive impact on Vietnam's economy. The Hanoi Department of Tourism said the city received 170,000 visitors during the two days of the shows, including 30,000 foreigners. In all, they spent about 630 billion dong. The average hotel occupancy rate in Hanoi in July was estimated at 60.8 percent, an increase of 19.2 percent compared to July 2022. The number of visitors to Hanoi tourist destinations on the weekend of July 29-30 also increased by 15 to 20 percent compared with the previous weekend. In the weeks before and immediately after the concerts, a significant increase in bookings by South Korean and Chinese visitors was observed for cruises in Ha Long Bay, a UNESCO World Heritage site about 160 kilometers from Hanoi.

After Blackpink's performance, Tran Sy Thanh, chairman of the Hanoi People's Committee, sent a letter of thanks to the band, noting that their concerts had enhanced Hanoi's image and standing as a peaceful, safe and friendly destination. 

Lang Minh, professor of media and digital literacy and educational consultant at MindX, said the Vietnamese government's approach to the culture industry is a way to exercise "soft power"-the ability to influence others through non-coercive means. "Vietnam suffers from enormous horizontal pressures from surrounding countries with rapidly developing cultural industries, Thailand, South Korea, China and Japan. This pushes Vietnam to pay attention to improving its cultural industry, not only to earn money but also to emphasize its national values." Thus, some opinions are gaining ground that Vietnam wants to take advantage of the popularity of K-pop to leverage economic benefits-both soft and hard-with South Korea, one of its most important trading partners. Last December, the bilateral relationship between South Korea and Vietnam was transformed into a comprehensive strategic partnership. Riding the hallyu wave, the two countries are ready to write a new future.

0 Share
Redazione published in Politics and strategy, Vietnam

The significance of the US-Vietnam partnership

Scenarios and prospects on Washington-Hanoi relations after President Joe Biden's recent visit

By Tommaso Magrini

US President Joe Biden visited Vietnam on Sunday 10 September. ‘The strengthening of the Us-Vietnam partnership will partly redress the swing in the regional balance in South-East Asia and the South China Sea towards China that has occurred over the past decade’. This was argued in an analysis published in Nikkei Asia by Alexander L. Vuving of the Daniel K.Inouye Asia-Pacific Center for Security Studies in Honolulu and an expert mainly on Vietnamese foreign policy. Besides being a significant addition to the regional architecture, the elevated US-Vietnam partnership will be a critical component of Vietnam’s international ‘safety net’, Vuving argues. The thicker threads of this network include special strategic relationships with Laos and Cambodia ‘comprehensive strategic partnership’ with China, Russia, India and South Korea- and in the process of being defined with Australia and Singapore- and a ‘broad strategic partnership’ with Japan. But although the United States, like China, is regarded by Hanoi as an ‘indispensable nation’ in the Asia-Pacific region, Vuving emphasizes that so far it has been at the third level of Vietnam’s foreign relations as a mere ‘global partner’. According to Vuving, Vietnam must avoid taking sides in the rivalry between great powers, but must adhere to or even create mechanisms that promote its sovereignty, territorial integrity, prosperity and resilience. While maintaining the bilateral and multilateral relations it has cultivated in the past, it should not avoid participating in extemporaneous ‘mini-lateral’ groupings that could contribute to the country’s defence and development. There was also much talk of business and technology during the US President’s visit. Leading US semiconductor and digital product companies, including Intel, GlobalFoundries and Google, participated in a business meeting with the purpose of strengthening Vietnam’s global role in various segments of chip production.

0 Share
Redazione published in Economy and trade, Vietnam

Vietnam new rare earth mining hub

Not just the big international tech and electronics giants, now Hanoi is also aiming to expand its role in another ring of tech production: rare earth mining

By Tommaso Magrini

Manufacturing, assembling, producing products with increasing technological value. Vietnam is not content and aims to expand its role on a stage that lies at the root of energy transition and technological development: rare earth mining. In fact, Hanoi is ready to launch upcoming tenders for companies interested in investing in the Dong Pao mine. The site is located in northern Vietnam and is one of the largest rare earth deposits in the world. The timing of the auction could vary, but the government expects to restart the mine next year, Luu Anh Tuan, chairman of Vietnam Rare Earth JSC, the country's main refiner and Blackstone's partner in the project, told Reuters.

The move perhaps not coincidentally follows a recent visit to Hanoi by U.S. President Joe Biden, who also spoke of agreements on rare earths with his Vietnamese counterpart. Dong Pao's reboot proposal-whose timing, extent and degree of foreign financial support have not been previously disclosed-comes as many countries are concerned about their vulnerability to supply disruptions due to China's stranglehold on strategic minerals and its disputes with the United States and its allies. This year Beijing imposed limits on the export of minor metals used in semiconductors, which an influential Chinese policy adviser warned was "just a start." Especially should Washington expand the restrictions, as it is always destined to do come Oct. 7. 

According to the U.S. Geological Survey, Vietnam has the second largest deposits of rare earths. However, these deposits have remained largely untapped and investment has been discouraged by low prices, set de facto by China because of its near monopoly on the global market. In interviews with Reuters, 12 industry executives, investors, analysts and foreign officials described plans for Vietnam, including investments that they said demonstrate how talk of derisking supply chains to reduce dependence on China is translating into action. Some acknowledged the difficulties of creating a hub for rare earths, but said the strategy could make Vietnam a viable player and provide an important valve for investment and imports, even if the Chinese role remains dominant. 

A greater role on the rare earth mining front would also be of great interest to electric car manufacturers, including domestic champion VinFast, which is also aiming for a Wall Street listing in the next few months and is also entering the European market. The actual exploitation of Dong Pao-which has been idle for at least seven years, according to an official at state-owned miner Lavreco, which owns a concession-would propel Vietnam into the top rare earth producers. But rare earth refining is complex, and China controls many processing technologies. 

In any case, this is yet another confirmation of Vietnam's centrality in global technology production strategies. 

0 Share
Lorenzo published in Global Lens, Vietnam

Italy and Vietnam increasingly strategic partners

Vietnamese president's visit to Rome further strengthened relations between the two countries. Also closed an agreement between Hanoi and the Holy See

Editorial by Lorenzo Lamperti

The 50th anniversary of official diplomatic relations between Italy and the Socialist Republic of Vietnam experienced one of its most notable moments between July 26 and 27, when Vietnamese President Vo Van Thuong paid an official visit to Rome at the invitation of Italian President Sergio Mattarella. The meeting was the first official event between the heads of state of the two countries in seven years. But it was also an opportunity to celebrate another anniversary, the 10th, of the strategic partnership established in 2013. During the visit, the two sides discussed and strengthened the ties of political trust and strategic cooperation between Vietnam and Italy. The two countries are now important mutual partners in various fields, including economy, defense and security, education and training, science and technology, culture, tourism and more. Regarding political, diplomatic, defense and security cooperation, the two sides agreed to strengthen cooperation between their respective Ministries of Foreign Affairs and to maintain political consultations at the ministerial level between the Deputy Ministers of Foreign Affairs. They also stressed the importance of defense and security cooperation and agreed on the possibility of visits by the Italian Navy to Vietnam. In terms of economic, trade and investment cooperation, both sides pledged to fully and effectively implement the Vietnam-EU Free Trade Agreement and improve mutual market access by removing unnecessary and unjustified trade barriers. Vietnam welcomed the Italian Parliament's ratification of the EU-Vietnam Investment Protection Agreement, which will create favorable conditions for investors on both sides. Opportunities for cooperation in various areas such as infrastructure development, digital economy, advanced technologies, renewable energy, creative industries and smart agriculture were also discussed. Italy and Vietnam also aim to expand cooperation in science and technology, education and training, and encouraged cultural and artistic exchanges. The Vietnamese president's trip also produced an important announcement with the Holy See, with whom a historic agreement was reached to send a Vatican representative to Hanoi. Vietnam is getting closer and closer.

0 Share
Sabrina Moles published in Economy and trade, Vietnam

Vietnam, how hard it is to give up coal

Hanoi is facing one of the most critical periods for electricity supply in areas hit by heat waves. Fossil sources are again the first choice in a country considered among the most promising for clean energy production in Southeast Asia

In Vietnam it is not yet time to say goodbye to coal. The figure emerged last May 31 at a meeting of companies and institutions from the Esg (Environment, Society, Governance) world in Ho Chi Minh City and was reported by several Asian newspapers. But the problem has existed for some time, and is symptomatic of a rapid and haphazard development process. For the past few years the country has been at the center of a significant conversion to renewables never before seen in Southeast Asia, but the rush to green energy is still not enough to support an energy demand that has doubled in less than a decade.

As with China today - caught between promises of sustainable development and an energy system yet to be stabilized - the problem of balancing energy supply and demand is already a reality for Hanoi. And climate change adds an additional difficulty in holding the power grid and managing energy peaks. Starting in May, several industrial areas in the north of the country began experiencing an unprecedented series of power outages. "This is the first time this has happened in ten years," a worker in Bac Ninh province tells VnExpress. The manager of the plant, which assembles some telephone components, warned employees that they would not be able to work the next day due to a power outage lasting twelve consecutive hours.

Energy crisis and transition

Undoubtedly justifying the energy crisis in recent weeks is a record rise in temperatures, a factor that in turn is causing a spike in energy demand related to industrial cooling systems and use of air conditioners in buildings. But the supply side also lacks continuity. As many as 11 hydropower plants have been shut down due to water shortages, according to reports from the Ministry of Economy and Trade, while at least one million tons of coal would be needed to run thermal power plants in the north.

Last June 7, the director of the Ministry of Industry's Electricity Regulatory Authority, Tran Viet Hoa, had spoken of "serious shortages" in energy supply, saying that-including imports-the actual availability was only 18,000 megawatts, against a forecast of energy demand capable of touching peaks of 24,000 megawatts. By the end of May, dam output was capable of sustaining only four more days of peak energy; a few days later - on June 3 - major hydropower plants were unable to produce power for the entire day.

Dependence on coal

The hydropower crisis is undoubtedly a factor slowing Vietnam's advancement in the world of renewable energy, and it inevitably pulls the country back toward a source considered-at least in theory-more secure and available. While the collapse of hydropower production has brought out a deficit in the stock of coal for power generation, fossil sources have never left a gap in the national energy mix. On the contrary, they have simply increased to make up for the economic boom. As the International Energy Agency (IEA) reports, Vietnam is one of those countries that, while being one of the largest ASEAN investors in renewables, plans to double the output of coal-fired thermal power plants.

Moreover, "Vietnam's problem is that coal-fired power plants are very young, some are less than 10 years old," Tung Ho, national head of energy consultancy Allotrope, explained to Nikkei Asia. So much so that lawmakers are considering not so much abandoning this energy source but converting the plants to technologies that fall under the semantic umbrella of "clean coal technologies." These include the use of ammonia as a co-fuel to reduce harmful emissions, a technology that is still much debated because there is still no firm evidence of its effectiveness.

What is the future for Vietnam's energy transition?

Coal in Vietnam occupies more than 50 percent of the energy mix, surpassing all other countries in the ASEAN group. The second largest coal consumer in the region is Laos, a key country for supplies of this fuel to Hanoi. While the outlook of Power Development Plan 8 (PDP8) speaks of green transition as an opportunity to attract foreign capital and achieve carbon neutrality by 2050, the Vietnamese leadership continues to evaluate a number of ambitious coal-related infrastructure projects. Such is the case with a 160-kilometer highway that would connect the Lao provinces of Sekong and Salavan to the Vietnamese district of Hai Lang.

The PDP8 itself calls for the construction of new coal-fired power plants until 2030, a year that should mark the actual beginning of an exclusive transition-at least at the infrastructure level-to sustainable energy production facilities. These are therefore deadlines that do not include the closure of coal-fired power plants, but only a ban on new procurements. Although forecasts show a gradual decline in coal-related production (a 10 percent reduction over the next ten years), it is important to remember that the outlook for total production is ambitiously upward. In fact, according to the development plan, Hanoi aims to produce more energy than countries such as France and Italy.

Vietnam's plans will also have to reckon with international promises. As of 2022, the country has joined the Just Energy Transition Partnership. The scheme, adopted together with partners such as the U.S., Japan, the U.K. and the European Union, plans to unlock more than $15 billion to support member countries' energy transition. At COP26 in Glasgow, Hanoi also declared that it will stop using coal as an energy source by 2040. In 2022, the Economist had described Vietnam as "a bright spot on an otherwise black as night map" for its rapid development in solar energy. But it still has a long way to go.

0 Share
Lorenzo published in Politics and strategy, Vietnam

Vietnam's versatile political system

Hanoi is growing commercially and diplomatically, but it is at the center of the interests of global powers. Continuing to take advantage of this in a positive way will not be easy, , but Vietnam wants to continue the process that lifted millions of people out of poverty after the war

Almost two years before the 20th Congress of the Chinese Communist Party, the 13th Congress of the Vietnamese Communist Party was held. Almost two years before Xi Jinping won a historic third term as general secretary, so had Nguyen Phu Trong. It was there that the 19 members of the Politburo and, most importantly, the four crucial positions in the Vietnamese system were appointed: general secretary of the party, president of the Republic, prime minister, and president of the National Assembly (the unicameral legislative body). These are the figures on which the so-called "four pillars" principle is based, holding up the Vietnamese political system.

Yet, the number four has been in the recent past partially eroded. After Tran Dai Quang's death in 2018, Trong was president just until the January 2021 Congress. There he won confirmation as secretary-general on a historic scale. Trong, 76 years old and in health described by multiple sources as "precarious," is now Vietnam's longest-serving leader since Le Duan, Ho Chi Minh's successor, and since Doi Moi, the program of reforms and openings launched in 1986. Set aside the two-term limit, as Trong has been secretary-general since 2011. A sign that no agreement has been reached on a possible successor, but also the completion of a process of centralizing powers that began as early as the dawn of his first term, when the leadership of the Central Anti-Corruption Committee passed from the prime minister to the secretary. Trong, similarly to Xi Jinping, has built his reputation on an ostentatious inflexibility in security and anti-corruption matters, promoted through the ruthless "fiery furnace" campaign that enabled him to get rid of defeated political rivals at the 12th Congress in 2016. Instrument used by Trong immediately after the 2016 congress to launch the "fiery furnace" campaign, through which he increased his popularity and got rid of some political rivals.

The path continued in the past few months as well, when came the "guided" resignation of Nguyen Xuan Phuc, the former chairman lapped up by an anti-corruption investigation as part of the new momentum in the anti-corruption campaign. Phuc was the big disappointment of the 13th Congress, as he expected promotion from premier to party secretary. In his place was appointed Vo Van Thuong, who at "only" 52 years old is the youngest member of the Politburo. Thuong signifies continuity, since like Trong the new president takes a rather orthodox ideological line, cloaked in strong anti-corruption rhetoric but also a drive for business. Born in the southern province of Vinh Long, he interrupted an interlude in which all 4 pillars were expressed by the northern provinces. His appointment thus brings back a kind of regional balancing that had always characterized Vietnamese politics. There are also those who see the appointment of a politician at a still relatively young age as the first sign of a future succession to Trong, perhaps at the next Congress in 2026.

In the meantime, Hanoi will try to continue to attract foreign investment. Several international giants, starting with electronics, are choosing Vietnam to position themselves in Asia or diversify their production chains away from China. A phenomenon spurred by the free trade agreements signed by Hanoi with the European Union and the United Kingdom. But also by the side effects of tensions between China and the United States,which has led of the relocation of production lines to a less politically exposed country with lower labor costs than in the People's Republic. The Vietnamese economy grew by 8.02 percent in 2022, the fastest annual pace since 1997. This is higher than even the ambitious +6.%-6.5% that had been set by the government. Settling in Vietnam are not only low-quality production lines, but also productions of tech and electronics giants. A very long list that includes several Apple suppliers, among others.

But geopolitics is knocking at the door. Vietnam is increasingly the focus of U.S. attention, which is seeking to improve relations with an important player on the stage they care most about, the Asia-Pacific. Not surprisingly, an important visit by Antony Blinken to Hanoi took place in April. Not only that. On March 29, Joe Biden had a telephone conversation with Trong. Not such a usual move, since the U.S. president usually speaks with his Vietnamese counterpart. The timing was also interesting, since the talk took place in conjunction with the White House-organized Democracy Summit. The more malignant have pointed out that a political system that is certainly not democratic may eventually suit Biden if this is part of his strategy or calculation. As, moreover, is already the case with India. Blinken's visit served to lay the groundwork for the elevation of relations, which is expected to take place in July. But Vietnam has no intention of allowing itself to be "enlisted," on either side. To continue a historic process that brought millions of people out of poverty after the ravages of war.

0 Share
Carola Frattini published in Economy and trade, Laos, Vietnam

Laos and Vietnam bet on wind energy

ASEAN countries are making progress towards their commitment to renewable energy. In this strategy wind energy is becoming increasingly important.

According to a report by the Southeast Asia Energy Outlook 2022, energy demand in Southeast Asia has been increasing by an average of 3% annually over the past twenty years. This trend is expected to continue until 2030. Although the Covid-19 pandemic has slowed down the economic development of the region, the report projects that the region's GDP will grow by an average of 5% annually until 2030 before dropping to an average of 3% until 2050. Energy plays a critical role in this economic growth. Since the mid-1990s, the region has heavily relied on oil imports from the Middle East and Africa. If current policies remain unchanged, oil imports will increase. However, the recent price hikes and the Ukraine crisis could have a long-term impact on how natural gas is used in the region by affecting public perception of affordability and government attitudes towards investing in gas import infrastructure.

In this context, ASEAN countries are making progress towards their commitment to renewable energy. Indeed, in 2020/2021, they updated their NDC targets and have plans to achieve them by specific years. For example, Thailand aims to reduce GHG emissions by 20-25%, while Indonesia aims for a 29-41% reduction by 2030. Other countries have set their targets and implemented strategies to achieve them. During COP26, 8 of 10 ASEAN countries announced their will to reach net zero targets, the earliest by 2050 and the latest by 2065. To reach these targets, ASEAN governments are diversifying their renewable energy resources. Among these, wind energy is becoming increasingly important.

Before COVID-19, the demand for electricity in Vietnam was projected to rise at a rate of 10% per year. Based on forecasts, this demand is expected to surge by five times its current level by the year 2050. Therefore, diversifying renewable energy technologies and engaging with local partners and governments is essential. At the moment, in Vietnam, the government is prioritizing wind power over solar. With a coastline of over 3,000 km, offshore wind power provides excellent opportunities. Vietnam has a technical potential of up to 599 GW, larger than other Southeast Asian peers. The government has taken prompt action to stimulate wind energy growth by updating supporting mechanisms and introducing a public-private partnership model. Vietnam's commitment to decarbonization is promising, and wind power has immense potential to thrive. 

However, for the moment Vietnam generation capacity is not able to satisfy its energy needs and the aim of net zero emissions by 2050. Indeed, Vietnam and Thailand have set goals to achieve net zero greenhouse gas emissions by 2050. Laos is looking to capitalize on this demand. The growing demand for renewable energy in neighboring countries has led Laos to turn to a wind power investment strategy. Laos exports approximately 80% of its electricity to neighboring Thailand and Vietnam, contributing 30% of its export value. Additionally, the country is building transmission infrastructure in order to supply power also to Cambodia. 

Indeed, Laos, a prominent hydroelectric power exporter in Asia, is diversifying its energy portfolio by venturing into wind power to reduce its reliance on water resources. In this context, Laos is making a significant effort to reduce its dependence on hydropower for electricity generation. While hydropower currently accounts for 70% of the country's total electricity generation, concerns about its dependence have prompted Laos to shift towards wind power generation. This shift is due to a couple of reasons. Firstly, Laos' hydropower production usually decreases during the dry season. Secondly, China's control of the upstream rivers poses a risk of sudden changes in water levels, which poses a threat to agriculture and fisheries. Furthermore, a hydroelectric dam built by South Korean and Thai companies in the Attapeu province of southeastern Laos broke out in 2018, resulting in at least 71 deaths and over 6000 homeless. Nowadays, wind power generation has become a promising option for Laos. Wind farms are more efficient than solar panels as turbines can work almost day and night. 

The country is currently constructing a wind farm in the scarcely populated mountainous region of southeastern Laos, which is slated to commence operations in 2025. The project involves several companies, including Mitsubishi Group (Japan) and BCPG Renewable Energy Company (Bangchak, Thai Energy Group). It will supply electricity to Vietnam for a period of 25 years. The Monsoon wind farm will occupy an extensive area of 70000 hectares and comprise 133 wind turbines, making it one of Southeast Asia's largest onshore wind farms, with a generation capacity of 600 megawatts. Laos' energy policy is export-oriented, and the country has already planned similar wind power projects.

0 Share