Country Profile - PESTLE

P(political) - Vietnam is ruled by a party called, the Communist Party of Vietnam (CPV). CPV has been in Vietnam for a long time and has helped Vietnam gain its independence from western colonisers. Therefore, it is a trusted authoritarian figure by the Vietnamese.

 They believe in being a communist state. Where they believe in equality, but they still have a government that overlooks the country.

 According to the Human Rights Watch (2022), the CPV is limiting the freedom of speech and criticism towards the government. As they have seen a trend of activists be detained in the country and have limited freedom to go overseas.

The below two examples shows the extent of media manipulation by the CPV. 

1. There is also limited access to media, as the CPV does not allow independent or private owned media outlets to be able to control tv stations or radio.

2. In October of 2022, a new law was introduced where technology companies had to have physical stores in the land to store users’ data.

Lastly, over the past decade, many politicians have been arrested in an anti-corruption campaign dubbed as the "blazing furnace". According to CNA, both Vuong Dinh Hue and Vo Van Thuong whom are the chairman and Vietnam's president has been removed due to accusations of misconduct and corruption. Which are the most recent high profiled arrests of political figures.

E(economical) - Vietnam's economic growth has increased rapidly due to growing Gross Domestic Product (GDP) from factors such as foreign direct investments (FDI), exports of goods, and domestic consumption. Their FDI grew due to its international relations with Western countries and China. (Abdul Momin,2024) Vietnam is also one of the most open economies to international trade, representing 186% of Vietnam's GDP. Hence, high exports of goods are led by external demand, mostly from main export partners such as the United States, China, South Korea, Japan, and Hong Kong, ranging from low to high-value products. Vietnam heavily depends on foreign investments and exports to maintain its economic growth. Hence, Vietnam signed a Free Trade Agreement (FTA) with ASEAN countries and the United States to maintain good ties and show a strong commitment to trading. Exports provide an increasingly significant contribution to Vietnam's GDP. Hence, Vietnam implemented new policies such as curbing prices of goods to stimulate domestic consumption. Other finance strategies initiated by the government were strengthening the capabilities of tax authorities and offering electronic and digital services to taxpayers.  The increase in domestic consumption led to a drastic increase in retail sales, further boosting Vietnam's economy. Vietnam's economy also consists of large state-owned industries which make up 38.35% of Vietnam's GDP. (Credit Agricole, 2024)

Vietnam PESTLE Analysis: An Attractive Destination for Businesses 

S(social) - Vietnam participated in PISA in 2012, and outscored the Organisation for Economic Co-operation and Development (OECD) average as well as many developed economies. (Asia Society, n.d.)

Some key factors that contributed to Vietnam surprising results are as follows:

• Commitment to education: Vietnam’s commitment to education is visible through private and public investments, and rising attainment levels. In Ho Chi Minh City, where there is a societal belief that hard work and education leads to success, children can be seen always going to school or supplemental classes.

• Quality of school and teachers: Vietnam has expanded the enrolment on teachers while setting and enforcing minimum requirements of the job and school environment countrywide. Professionalizing the teaching force mean setting a standard around the teacher’s knowledge of subject, skills and disposition. 

• Outward orientation to keep the system evolving: Vietnam’s experts regularly study the curriculum of other countries such as Singapore and Korea to seek inspiration of how they can tweak and better theirs. The country also participates in initiatives and seminars that focuses on coming up with innovative teaching methods, for example, Escuela Nueva pilot from Colombia) and deeper learning skills. K-12 and higher education reforms also includes lessons learned from previous years. 

However, despite Vietnam’s success, they still face challenges, some of which are: 

• Out of school children: Nearly 37% of children are not enrolled in upper secondary (Asia Society, n.d.). As PISA only assesses 15 year olds, their scores might be because of the lack of representation of those from the low income and disadvantaged group. Vietnam faces a challenge in preventing low-income and disadvantaged children dropping out of school early on. 

• Changing skill needs: With the evolving economy, basic numeracy and literacy would no longer suffice and the labour market has increased it demands in cognitive, behavioural, and technical skills, which is not something that can be taught in books.

Singapore can look at Vietnam's advancements as a way for them to further strengthen and improve the quality of education provided by teachers. By doing so also gives Singapore the opportunity to ensure that its education system remains competitive to  continue producing students with the necessary skills needed in the workforce. 

T(technological) - Vietnam's business landscape has been significantly affected by technology. Specifically through substantial investments in modern communication infrastructure and a strategic focus on emerging technologies. Vietnam's technological infrastructure such as digital infrastucture and the subtantial investments has led to international collaboration and widening of technolodgy-driven operations (Bocasay, 2023). Additionally, Vietnam attempting to tap into emerging technologies like artificial intelligence and blockchain positions it as a key player in the global tech arena, promoting their innovation and growth (Bocasay, 2023).

Vietnam's supportive government policies, such as tax incentives and investments in education, further motivate technological development and innovation, reinforcing the country's commitment to a technological ecosystem (Bocasay, 2023). This combination of factors including a skilled workforce and favorable economic conditions such as competitive costs, contributes to Vietnam being an attractive leading destination for technological innovation and growth on the global stage (Bocasay, 2023).

Moreover, Vietnam's advancements in technology not only enhance its business landscape but also shows economic growth and international collaboration. By embracing emerging technologies like artificial intelligence and blockchain, Vietnam positions itself as a significant player in the global tech arena, attracting investments and talent from around the world.

Influence on Singapore: Vietnam's technological advancements present opportunities for collaboration and competition with Singapore. As Vietnam becomes a hub for tech innovation, Singapore could benefit from partnerships, knowledge exchange, and potential market expansion opportunities. However, it can also pose as a challenge to Singapore's as Vietnam becomes competition they need to keep up with, urging the country to innovate and stay ahead in the rapidly evolving tech landscape.

L(legal) - Vietnam has recently developed their legal systems in commercial regulation and investment. Vietnam signed some trade agreements, including the EVFTA and the CPTPP, to lower trade barriers and improve the business climate for foreign investors. The legal system lacks transparency, which makes it challenging for businesses to operate in the legal environment. In Singapore, the legal system is recognized for its fairness and efficiency making it one of the best countries to run a business in. The Labor Code of Vietnam states that an employee works under an employment contract and is paid and managed by the employer. Vietnam's labor laws apply to employees and trainees. Businesses must be aware of the most recent laws and license requirements and be ready to make changes when necessary. Businesses must also be careful when making contracts with independent contractors whom they do not intend to employ as regular employer. Employment contracts and employer control of employees are required by Vietnam's Labor Code. Respect for changing legal requirements and licensing standards is essential. Engaging independent contractors should be done carefully to prevent accidental employment relationships. Keeping up with law changes guarantees compliance and promotes a favorable business climate. In conclusion, Vietnam has a developing legal system. (Multiplier, 2024)

E(environmental) - Vietnam is currently facing critical issues regarding its environment namely due to factors such as resource depletion, water pollution and air pollution (Pham, 2022). In order to combat this, the government had issued Decision 450/QD-TTg in April 2022, which is a strategy aimed to improve Vietnam's environmental cleanliness and health through a circular economy. By 2050, Vietnam wishes to reach its goal of becoming carbon neutral and develop a sense of harmony between its society and their environment. Some of the key points highlighted in the decision was that with the way Vietnam is moving forward in using more organic products or recycled materials instead of raw materials, there is an open market for future businesses to invest in providing these services to the nation. The decision had also brought up how Vietnam will be improving its waste management and water pollution by developing its recycling facilities with modern technology and relinquishing the use of single-use plastic and non-biodegradable products after 2025 to more eco-friendly solutions, such as bamboo and seaweed. Additionally, this gives investors an opportunity to begin investing in the waste-to-energy sector in Vietnam as another way to help in mitigating the overabundance of waste in the area. In regards to the air pollution, Vietnam is ranked the 36th most air polluted country across 118 other countries. To combat this, the government will implement more green spaces in urban areas and that the citizens are encouraged to use public transportations or electric vehicles instead of fossil fueled vehicles. However in regards to the electric vehicle industry, the government has yet to implement beneficial policy incentives as it is still in its early stage.

Current affairs ( 3 article summary and analysis )

Vietnam's businesses slow in using technology  

Summarisation: 

Vietnam's innovative ecosystem is still young but has been recognized as one of the dynamic countries in international innovation indexes. Vietnam has also been recognized as one of seven average-income countries that have made the biggest improvements in innovation in the last decade.

The government has been working to develop the ecosystem by creating attractive policies and removing difficulties to encourage enterprises to apply new technologies. However, Vietnam faces challenges in arranging resources to keep pace with rapid innovations.

Binance Vietnam Country Director, Lynn Hoang, believes that Vietnam is at the same starting point with other countries in terms of technology application, but still needs solutions for long-term competition and a long-term strategy for technology development.

Many businesses delay technological application and only use them if crises occur. Vietnamese technology firms are confident in technology advancements, but many fail to see the benefits. For instance, TMA's smart camera, which uses AI to analyze videos, is used by few businesses, despite its potential for public and private affairs. 

The country's ability to keep up with the world will depend on policies and legal frameworks. 

Analysing:

Vietnam’s emerging innovative ecosystem intensifies the competition, and Singapore would need to step up on their efforts to attract and maintain its appeal as a tech hub. Singapore’s business could also face the pressure to adopt new technology to remain competitive, to not fall short against Vietnam’s counterparts.

However, Vietnam’s approach on policies may offer valuable lessons for Singapore to refine its support for the industry. Additionally, Singapore also leverage Vietnam’s advancements by collaborating and investing, strengthening and expanding market opportunities for Singapore.

Vietnam economy expands 5.66% in first quarter as exports boom 

Summarisation: 

Vietnam, a manufactory and key exporter of electronics and smartphones as well as a top garment industry seeks to spike up business activities after not hitting last year's growth target, setting this year's target to 6.0-6.5% GDP growth. Last year's growth target was not met due to weak global demand and brief power shortages. Prime Minister of Vietnam, Pham Minh Chinh, ensured foreign investors that the power shortages in factories would not occur similar to last year as they increase imports of coal. 

The good exports grew sharply in the first quarter of the year due to major shipments of electronics rising a year earlier. The industrial productions also ramped up leading in an increase in retail sales. The recovery of demand increased manufacturing and exports of goods which allowed Vietnam to achieve its economic growth target.

However, Vietnam still faces external risks such as tensions with other countries, terrorism, Red Sea shipping and climate change. The Government adviser Can Van Luc, stated that there is a need for the government to improve on the business environment 

Analysing:

In regards to trading of goods, Singapore is heavily reliant on their partner, Vietnam, in terms of their exports such as electronics and food. Being that Vietnam is Singapore's 11th largest trading partner, it it important to note that the increase of manufacturing and good exports in Vietnam will directly affect the demand of Vietnamese goods in Singapore. With the power outages that occurred during the summer of Vietnam in 2023, the government was forced to cut nearly 50% of power used in factories in order to combat another risk in power outages in the nation. This meant that the production of goods had to be suspended for a period of time and Vietnam had to lessen their trade in good exports with their prominent trading partners. 

Additionally, this meant that many foreign businesses like Singapore, are perturbed as they grew concerned whether the power outages would continue on in 2024, thus affecting the trading business in Vietnam which ultimately led to not meeting its GDP growth target. With that in mind, the positive news of Vietnam now being able to reach its economic growth target lessen the concern of traders and partners of Vietnam to now trade more securely.

3 reasons to work/live in Vietnam

1. Vietnam has lower cost of living compared to Western countries and Singapore. Cost of living index in the captial of Vietnam, Hanoi is approximately 62.2% lower than in Singapore (Numbeo, 2024). Vietnam offers an affordable lifestyle, with lower expenses for housing, transportation, and food. Residents have more spending power, enjoying activities like exploring street food scenes or speedboating in places like the Mangroves in Ho Chi Minh City. Vietnam's an attractive destination for a better quality of life and financial stability.

2. Vietnam has many natural beauties compared to Singapore. Example, the limestone karsts of Ha Long Bay, terraced rice fields of Sapa, and  floating markets of the Mekong. These places provide opportunities for outdoor activities such as sightseeing and encouragung an adventurous lifestyle. Additionally, this can support an active and healthy lifestyle for an individual.

3. Vietnam's economic growth in recent years has led to a boost in multinational companies and investors, this fuels job creation and economic growth. In the span of 5 years, the country's GDP went from 310.1 billion to 408.8 billion from 2018 to 2022 (World Bank, 2024), Vietnams economy is expanding. This corelates to job opportunities, offering individuals advancements in their careers and valuable international experience. 

References:

Asia Society. (n.d.). Education In Vietnam. Retrieved May 24, 2024, from https://asiasociety.org/global-cities-education-network/education-vietnam 

CNA. (2024, May 4). Vietnam police arrest former head of government office amid anti-graft crackdown. CNA. https://www.channelnewsasia.com/asia/vietnam-corruption-mai-tien-dung-arrested-former-head-government-office-4313216 

Credit Agricole. (2024). Vietnam Economic and Political Overview. https://international.groupecreditagricole.com/en/international-support/vietnam/economic-overview 

Julien. (2023, September 27). New Technologies: Vietnam’s key strengths and assets. Bocasay_ https://www.bocasay.com/vietnam-tech-assets/ 

Momin, A. (2024, April 9). Vietnam PESTLE Analysis: An attractive destination for businesses. PESTLE Analysis. https://pestleanalysis.com/vietnam-pestle-analysis/ 

Multiplier. (2024, April 16). Employment Act and Labor Laws in Vietnam | Multiplier. https://www.usemultiplier.com/vietnam/employment-laws 

Ngo, T. (2024, April 24). CNA Explains: How a death sentence in Vietnam links to a massive anti-corruption drive. CNA. https://www.channelnewsasia.com/asia/truong-my-lan-vietnam-death-sentence-fraud-corruption-graft-communist-party-4282521 

Numbeo (2024). Cost of living. Cost of Living Comparison Between Singapore And Hanoi, Vietnam. https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Singapore&country2=Vietnam&city1=Singapore&city2=Hanoi 

 Pham, S. (2022, June 1). Vietnam approves long term strategy on environmental protection: Decision 450. Vietnam Briefing.

https://www.vietnam-briefing.com/news/vietnam-approves-long-term-strategy-on-environmental-protection-decision-450.html/

Reuters. (2024, March 29). Vietnam's economy expands 5.66% in the first quarter as exports boom. https://www.reuters.com/world/asia-pacific/vietnam-reports-q1-gdp-growth-566-2024-03-29/ 

The World Bank. (2024). GDP (current US$) - Vietnam. World Bank Open Data. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2022&locations=VN&start=2018 

Times, V. (2020, March 15). Communist Party of Vietnam: History, organization and structure. Vietnam Times. https://vietnamtimes.org.vn/communist-party-of-vietnam-history-organization-and-structure-18334.html 

Vietnam. (2023, January 20). Human Rights Watch. https://www.hrw.org/world-report/2023/country-chapters/vietnam