Letters from Vietnam: Winter 2025 edition
Letters from ...Facts and information about business and investments in Vietnam
What effects will the sweeping changes in the White House have on Vietnam's economy? Could the current administrative reforms have negative implications for foreign investors? These topics and more will be discussed in the latest Letter from Vietnam.
Huong Thi Hoang, Director of our Bremeninvest office in Ho Chi Minh City, sends regular reports with the very latest overviews of trends, opportunities and new developments in the country.
Our topics for Winter 2025:
Administrative reforms are putting Vietnamese Government ministries under scrutiny and testing the patience of investors
To Lam, who took up post as State President and General Secretary of the Communist party in 2024, has introduced a wide-ranging programme of administrative reforms. This will involve four Government ministries, four |Government agencies and five state-owned television broadcasters. In total, 20 percent of all Government employees will lose their jobs. Current analyses estimate that up to 100,000 people could be affected.
According to the Vietnamese Government, the aim is to streamline administrative structures, eliminate duplication and introduce more efficient processes. It is also hoped that these measures will release funds for investments, especially for long-term infrastructure projects such as ports, the rail network and road-building.
These reforms have been met with mixed reactions. Although some investors have welcomed these efforts to increase efficiency, others have a more critical view of the Party leadership's "slash and burn" policy. Some are now worried about potentially seeing increasing chaos, a lack of clarity about areas of responsibility and longer administrative processes until the dust created by this wrecking ball approach to bureaucracy settles and new processes have been put in place.
Against the background of Vietnam's opaque and unwieldy laws and administrative processes, these are realistic apprehensions, as also confirmed by, among others, the Business Confidence Index issued by EuroCham (the association of European Chambers of Commerce). A survey sent out to members in the fourth quarter of 2024 revealed that, although negative effects on working processes were to be expected in the short term, the long-term effects of the reforms were viewed as potentially positive.
Vietnam reinforces its financial sector and opens two financial centres
For a nation like Vietnam, with a growing economy, the banking sector is a key industry for providing the capital needed to achieve that growth. However, this industry is hallmarked by significant differences when it comes to its ability to cope with future developments.
On one hand, the banking industry is very closely connected to the state. The majority of the largest financial institutions are state-owned and there are strict regulations governing acquisitions and international relations. For example, until now, foreign institutions have only been allowed to acquire up to 30 percent of domestic banks.
At the same time, there has been a great deal of dynamic movement in recent years, especially when it comes to digitalisation and start-ups. The fintech sector is growing rapidly and attracting huge numbers of customers in this young nation. Vietnam's stock market is also enjoying solid growth and, thanks to the many free-trade agreements, conditions for investors have also improved considerably. In an effort to further optimise the financial sector, Vietnam's Central Bank also aims to relax regulations and reduce state ownership of selected banks to 51 percent.
A major forward-looking project has also got under way in two cities: Ho Chi Minh City (HCMC) and Da Nang. New financial centres will be established in these two locations. An international financial centre will be built in District 1 in Ho Chi Minh City and a regional financial hub will be created on a 6-hectare site in Da Nang, in a 62-hectare industrial estate.
The two financial centres will have different aims. In HCMC, with its millions of inhabitants, the focus will be on the international financial industry, in particular expansion of the stock markets and development of the currency and raw materials markets. The aim is also to attract internationally active fintech companies to this location. In the long term, the Government plans to relocate more than 100 global financial institutions to this centre.
In contrast, the regional financial hub in Da Nang will concentrate on niche markets and make a name for itself through specialisation. There, the primary goal is to bring in innovative financial technologies such as blockchain and attract investors in green finance and artificial intelligence, whose focus is on technology-driven developments. This financial centre will also benefit from support from Europe, among others. For example, former Vice Chancellor Philipp Rösler's company has helped with developing the financial centre.
USA–Vietnam relationships: between commercial advantage and the risk of tariffs
In recent years, Vietnam has reaped significant benefits from the trade conflicts between China and the USA. Many companies from both China and the USA have relocated their production facilities to Vietnam or expanded their operations there to get round the trade restrictions imposed during Trump's first term in office. The result of this policy was a marked increase in Vietnam's trade surplus with the USA, which rose to more than 110 billion dollars in 2024. At present, around one third of all Vietnamese exports are to the USA. These developments have also played a major role in Vietnam's buoyant economic growth in the past few years.
This surplus might however come under pressure during Trump's second term as US President. Even before he was elected, he put a number of countries on notice that he would impose tariffs on them, to reduce the USA's dependence on foreign imports and boost domestic production. When the USA's considerable trade deficit with Vietnam is taken into consideration, Vietnam might be seen as the ideal target for this strategy, especially as its own options for counter-measures are limited.
Although the US Government has not yet made any official statements in this respect, the Vietnamese Government has already taken precautionary measures. Government representatives have announced an increase in imports of US products such as gas, oil, aircraft and medicines. Whether that will be enough to prevent the imposition of the threatened customs tariffs remains to be seen.
Yet another possible problem could be the continued fall in value of the Vietnamese Dong against the US Dollar. The US Government might well view this as currency manipulation and respond with additional trade policy measures. Washington's next moves are also keenly anticipated in this respect.
New Electricity Law opens the door to renewable energy
We've already reported about Vietnam's commitment to renewable energy. The country has now taken a decisive step in this direction and signed off a new Electricity Law to replace existing legislation in this area. You can find the details of this new legal framework in a number of places, such as on this link. In summary, the new law is about implementing new ways of generating, producing and selling electricity, increasing flexibility and establishing new mechanisms in the energy market.
International investors and Vietnamese companies in this sector are already eyeing up new business opportunities and actively working on establishing cooperative ventures, especially in the hydrogen sector. A good example of this is the "Vietnam ASEAN Hydrogen Club", which organised an ASEAN–German hydrogen conference in February in HCMC.
Alongside selling services and products or managing projects (such as a planned mega-project in Binh Dinh province with the potential to generate up to 2,000 MW of power for electrolysis, which is already under discussion with Siemens Energy), there are also interesting opportunities for education and further training in the hydrogen sector. This is where Germany can benefit from its exceptional reputation for training in every aspect of the engineering sciences.
Bremeninvest attracts interest in Hai Phong
The first "Bremeninvest Info Day" in Hai Phong, a North Vietnamese port city not far from the capital Hanoi, was held in Autumn 2024. Bremeninvest hosted more than 50 participants from a variety of industries. The purpose of Info Days such as this one is to encourage local businesses to find out more about opportunities for joint projects in, and options for relocation to Bremen. As a port, Hai Phong has many things in common with Bremen's strengths, especially when it comes to logistics and maritime trade. The SV Werder Bremen GmbH & Co KGaA football club also attended, both as a representative of the German Bundesliga in Vietnam and to inspire enthusiasm for the sport. The delegation from Bremen also accepted an invitation to meet Margarete Barth, the new German Ambassador to Vietnam.
Vietnamese football stars visit SV Werder Bremen
Inspiring enthusiasm for sport – this is the motto under which Werder Bremen and Bremeninvest have been working together in Vietnam for two years. The club is actively involved in Vietnam, as the "ambassador" for the German Bundesliga. This partnership has brought about a multitude of exchange projects in recent years.
As part of this cooperative venture, Vietnamese influencers Tuyen Van Hoa and Phat Freestyle visited Bremen in Autumn 2024, as guests of the football club. The purpose of the visit was to further increase awareness of the City of Bremen, the Bundesliga and Werder Bremen in Vietnam. The two Internet stars put their footballing skills to the test at half time, during the match against Leverkusen, and later shared their performance with their millions of followers. They subsequently invited members of the Vietnamese community in Bremen to a joint event at the SC Huchting football club. Bremeninvest actively supports international sporting connections by providing contacts and coordinating events.
Success Stories
The British company Clockwise has opened its first German location in Bremen. With locations in London, Belgium, The Netherlands, and now on Martinistraße in the city center, the company follows a clear vision: to create workspaces that are flexible, welcoming, and tailored to the needs of modern professionals.
Learn moreDespite the crisis, the real estate industry in Bremen is shining with numerous new construction projects. Showpieces such as the John & Will Silo Hotel top our list of eight new buildings.
Learn moreSo how do we find foreign companies that might be interesting for Bremen and are also planning to open a subsidiary in Germany?
Learn more