Vietnam outlines new financial reforms in bid for emerging market status
Vietnam has been on global index provider FTSE Russell's watchlist for an upgrade since 2018. It is currently classed as a frontier market, limiting the investment it can attract from funds, investors, and family offices in the nation's listed companies.
An upgrade to emerging market status could rapidly channel $5 billion into Vietnam's financial markets, according to World Bank estimates.
The government released a four-phase plan running through 2027 to secure the upgrade during a visit to Hanoi by FTSE Russell's global head of equity and multi-asset, Gerald Toledano.
The roadmap includes finalising the legal framework and establishing a Central Counterparty-operating subsidiary under the Vietnam Securities Depository and Clearing Corporation.
In a meeting with Toledano late on Thursday, Prime Minister Pham Minh Chinh expressed his hope FTSE would support a classification upgrade for Vietnam, state-broadcaster Voice of Vietnam reported.
Toledano highlighted Vietnam's strong liquidity, which he said surpassed regional peers Thailand and Singapore, VOV added.
Vietnam's financial markets are small in comparison with regional peers. As of Thursday's close, the main benchmark stock index had a market valuation of around $245 billion, compared to around $455 billion for the main Thai index and around $490 billion for Singapore's STI Index, LSEG data showed.
The CCP will act as an intermediary between buyers and sellers in the equity market, ensuring trades are honoured even if one party defaults.
The country has already introduced other measures, such as a new transaction settlement system and the removal of a requirement for overseas investors to fully pre-fund equity trades, to address obstacles to its potential reclassification.
Foreign investors have increased purchases of Vietnamese stocks following the announcement of a trade agreement between the United States and Vietnam. The benchmark VN-Index has risen 7.22% so far this month. FTSE Russell is set to release a review in September. If Vietnam secures the upgrade to secondary emerging market status, the reclassification process could take six to 12 months, consistent with the agency's procedural guidelines.
Vietnam had previously targeted 2025 for achieving the upgrade.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bangkok Post
6 hours ago
- Bangkok Post
Five pillars for the digital economy
Thailand must reinforce five strategic pillars — technology, SME participation, digital skills and talent, financial inclusion and innovation, and cybersecurity and data governance — to secure long-term, sustainable growth in its digital economy, according to Maneerut Anulomsombut, chief executive of Sea (Thailand). Speaking on the topic 'Unlocking Thailand's Potential: Digital Ecosystems for Sustainable Growth' at the 2025 Bangkok Post Forum, Ms Maneerut said Thailand is among the three fastest-growing digital economies in Southeast Asia, alongside Indonesia and Vietnam. She highlighted four core sectors driving this growth: e-commerce, online travel, online media and transport/food delivery. E-commerce tops the table, accounting for 56% of Thailand's gross merchandise value (GMV), bolstered by frequent purchases and the rise of video commerce. Over 40% of consumers now rely on video content to guide their purchases, with some sellers reporting exponential growth: one saw orders multiply 84 times in a single day through video commerce. This boom also fuels demand for logistics and fulfilment, where rapid delivery is becoming standard, said Ms Maneerut. Online media, particularly gaming and local content, accounts for 13% of the digital economy. With esports now recognised as an official sport in Thailand, locally developed games will be featured at the 2025 SEA Games. Ms Maneerut described digital content as a powerful form of soft power, helping promote Thai culture and festivals globally. Digital payments also play a pivotal role. Thailand's gross transaction value (GTV) stood at $141 billion (4.6 trillion baht) in 2024 and is expected to reach $310 billion by 2030. Services like ShopeePay and Scan & Pay help ensure seamless digital transactions both online and offline. Despite global challenges, Ms Maneerut sees opportunities for transformation. 'Thailand's digital economy is still in its early phase,' she said, calling for urgent focus on five key areas: technology, SME participation, digital skills development, financial inclusion and cybersecurity. Technology must be applied strategically to support core sectors such as tourism, hospitality and manufacturing, she said. Generative AI and research and development can enhance service quality and productivity, but solutions must fit Thailand's specific context rather than copy global trends. SME participation is vital, as small and medium-sized enterprises make up 99.5% of all businesses and employ 71% of the workforce. Yet only 3.4% are considered digital champions, according to a 2023 survey by the Electronic Transactions Development Agency. Shopee, the e-commerce flagship of Singapore-based Sea, has been offering tools and training to help SMEs sell online and expand internationally, but more work is needed to close the gap. According to Ms Maneerut, Thailand ranks 37th in the IMD World Digital Competitiveness Ranking 2024. She called for more investment in education and practical, business-driven tech skills to keep pace with the AI era.
Bangkok Post
6 hours ago
- Bangkok Post
Tariff deal shows Thais ready for ‘new world order'
Economic and trade analysts have warned of a sluggish economy later this year as the impact of the 19% tariff rate imposed on Thailand by the United States takes hold. Nonetheless, there are silver linings as it could spur the country to diversify and be more innovative in order to stay relevant and competitive in the face of the overall contraction of global and US trade, experts said. The 19% tariff rate announced by President Donald Trump this week was lower than expected and would help Thailand avoid a technical recession, according to Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT). A technical recession occurs when a country's gross domestic product (GDP) contracts for at least two consecutive quarters. 'The US 19% reciprocal tariff on Thai exports is expected to enhance the competitiveness of Thai products. Sectors that will benefit include electronics, auto parts, tyres, processed foods and mobile phone components,' Dr Amonthep said on Friday on the sidelines of the 2025 Bangkok Post Forum panel discussion on 'Positioning Thailand in the New Global Economy: Trade, Investment and Strategic Resilience'. 'However, Thai export growth is still projected to decline in the second half of the year due to a broader slowdown in US imports — resulting from earlier stockpiling — and a weakening US economy driven by rising inflation,' he added. Dr Amonthep also noted that the better-than-expected tariff rate would likely encourage more foreign direct investment (FDI) in Thailand. He foresees more firms seeking to relocate production from China to Thailand, reducing direct competition with Vietnam and Indonesia. Industries such as electrical appliances, batteries and auto parts are expected to benefit the most. According to Dr Amonthep, Thai businesses will also gain from lower input costs due to reduced tariffs on US imports, including pharmaceuticals, food products, animal feed, corn, soybeans and more — supporting investment in these sectors. Thailand's economic outlook is expected to remain subdued, however, due to structural challenges, including an ageing population, declining competitiveness, and rising debt levels across public, corporate and household sectors, said Dr Amonthep. The US tariffs are expected to further erode the competitiveness of Thai small and medium-sized enterprises (SMEs). As a result, the government should adopt targeted measures to support vulnerable SMEs, he said. Nalinee Taveesin, President of the Thailand Trade Representative Office, said the government is preparing targeted support for SMEs and farmers likely to be affected by the new trade barriers. 'Despite challenges such as economic security concerns, US-China tensions and supply chain disruptions, Thailand remains resilient and ready to move forward,' she said. The new tariff rate could be interpreted as 'good news' as it is likely to encourage Thai exporters to pursue untapped markets to make up the shortfall. Thailand is currently pursuing free trade agreements (FTAs) with the European Union and South Korea, and is also working towards the Asean–Canada agreement. Recently, the country signed FTAs with Sri Lanka, Bhutan and the European Free Trade Association (EFTA) ahead of the expected US hikes. In addition to enhancing regional ties, Thailand is actively expanding into untapped markets in Africa, the Middle East, Central Asia and other emerging regions, she said. Pipope Chokvathana, vice-chairman of the Economic and Academic Affairs Department at the Federation of Thai Industries (FTI), has warned that Thailand will face double competition with goods from both China and the US flooding in amid the new US tariffs. 'In this so-called new world order, we woke up to this tariff news. Likely the GDP (growth) forecast for 2025 would be 2% if the tariff was at 10%,' Mr Pipope said. 'If the tariff is 19%, then GDP growth this year would be 1.5%. This picture is not totally positive. 'Ever since China faced higher tariffs, they have been planning to reduce exports to the US, and when it comes to competitiveness, a lot of products from China are coming to Thailand. So it becomes Chinese versus Thai goods,' he explained. 'And likely later, there are going to be floods of US goods to Thailand as well.' Mr Pipope said Thai manufacturers should strive to stay relevant and be innovative to deal with the dual threat posed by these superpowers. As the market evolves, companies must be agile and responsive to consumer preferences and international economic conditions. 'The FTI's guidelines are go digital/AI, go innovation, go green and go global,' said Mr Pipope. 'We need to get producers to learn how to use new technology, integrate it into the system and do it quicker, to increase our productivity. 'We need to diversify the market. The world order is changing.'
Bangkok Post
15 hours ago
- Bangkok Post
Industrial Estate Authority of Thailand focuses on South Korean investors
The Industrial Estate Authority of Thailand (IEAT) is encouraging investors from South Korea to expand their businesses into Thailand, as a proposal to build a new complex to serve only South Korean entrepreneurs is being considered. The new investment is being discussed among IEAT officials, South Korean authorities and representatives from the Thai Industrial Estate and Strategic Partner Association. "The government supports all foreign investors who want to invest here, with entrepreneurs from South Korea a target market," said Sumet Thangprasert, governor of the IEAT. South Korean executives want the government and private industrial estate developers to build a new industrial estate in the Eastern Economic Corridor. Often known as the EEC, spanning parts of Chon Buri, Rayong and Chachoengsao provinces, it is envisioned as a high-tech industrial hub, housing 12 targeted S-curve industries, including next-generation cars and smart electronics. The IEAT operates 68 industrial estates in 16 provinces across the country, including the Map Ta Phut industrial estate in Rayong. Last year, Thai officials organised an investment roadshow in South Korea to invite business people to invest in Thailand. They met representatives from companies in various industries, including electric vehicle, electronics, digital technology, renewable energy, bioscience and pharmacy. From January to March this year, South Korean firms submitted seven investment projects worth 1.2 billion baht to the Board of Investment (BoI) to apply for investment incentives. Businesses included electrical appliances, machinery and parts as well as cars, according to the BoI. South Korea is the 13th-largest trading partner of Thailand, with total trade value between the two countries tallying US$15 billion in 2024. Between 2020 and 2024, Korean firms seeking BoI investment incentive packages submitted 141 investment projects worth 63 billion baht. Among large South Korean companies in Thailand are Samsung, with 31 billion baht in investment value. Its subsidiary Samsung Electronics is known for its production of smartphones and home appliances.
