Looking Ahead to 2024
The next 12 months are an important juncture for trade and investment in Vietnam. With an uncertain international political outlook and sluggish global economic growth, enterprises in a wide range of sectors and industries will hope that Vietnam continues to be an attractive market in which to invest and do business.
In this article, we look ahead to some of the upcoming issues that companies and investors should be aware of and prepared for in their commercial activities.
New Legislation Entering into Force
Over the next few months, several important new laws are set to enter into force. Enterprises and investors doing business in Vietnam should be aware of these and their potential impact on business and commercial activities.
- On 1 January, a ‘global minimum tax’ will enter into force in Vietnam. First ratified in the so-called ‘G7’ group of major economies in 2021, this measure aims to tackle the issue of large corporations shifting their profits around the world to minimise their tax obligations. This 15 per cent minimum tax rate will be applied to multinational enterprises with at least USD 800 million in revenue in two of the last four years.
- On 1 January 2024, the new Law on Bidding will come into effect. This new legislation, ratified in the National Assembly last June, outlines the subjects eligible to receive incentives in contractor and investor selection.
- On 1 July 2024, the new Law on the Protection of Consumer Rights will enter into force. The new law includes several important changes, including a dispute resolution mechanism for consumer transactions below 100 million VND and requirements on recalling defective or harmful products.
- Also on 1 July 2024, Vietnam’s new Law on Electronic Transactions will come into effect. This includes notable new requirements on the recognition of foreign e-signatures and digital platforms.
- Last, but not least, the new Law on Telecommunications will also enter into force on 1 July 2024. This important legislation aims to promote Vietnam’s digital infrastructure and covers critical issues such as the management of data centers, cloud storage, and internet services.
APFL & Partners will keep our clients informed about how these and other upcoming regulations could affect their investment plans and commercial activities. To find out more about these new laws, just contact our team on contact@apflpartners.com
Economic Outlook
Despite global uncertainties impacting demand for its exports, the International Monetary Fund (“IMF”) estimates that Vietnam will see GDP growth amount to 4.7 per cent in 2023. Looking ahead to 2024, the IMF predicts a more optimistic outlook, with GDP growth expected to reach 5.8 per cent. This would make Vietnam the 20th fastest-growing economy in the world, according to the IMF.
The government is even more optimistic, targeting GDP growth of between 6 and 6.5 per cent over the next 12 months on the back of increased public spending on major infrastructure projects and an improvement in global trade.
Meanwhile, the Asian Development Bank (“ADB”), in its latest Asian Development Outlook, states that “Vietnam’s prudent and proactive monetary policy, supported by price controls on gasoline, electricity, food, health care, and education should keep inflation in check.” The ADB forecasts a four per cent interest rate in 2024, up 0.2 per cent from 2023.
Looking ahead, a six per cent rise in the national minimum wage looks set to be implemented in July 2024, following a recommendation from the National Wage Council. This figure emerged as a middle-ground following a proposed 6.48 to 7.3 per cent increase from the Vietnam General Confederation of Labour and a 4.5 to 5 per cent rise from the Vietnam Chamber of Commerce and Industry (“VCCI”).
Pending final government approval, this could see the minimum wage rise by between VND 200,000 and VND 280,000 (USD 8.22 to USD 11.50) to between VND 3.45 and VND 4.96 a month, depending on the region.
Keep Up-to-Date and In Touch
APFL & Partners will closely monitor these and other legal, investment, and trade developments throughout 2024 and keep our clients informed and updated. Be sure to follow us on social media to get the latest insights from our team. Or, for more information about the regulations set to enter into force, just get in touch with us on contact@apflpartners.com
Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.
