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Reuters
4 hours ago
- Business
- Reuters
Vietnam Q2 GDP growth estimated at 7.6% y/y, deputy PM says
HANOI, June 20 (Reuters) - Vietnam's gross domestic product is expected to have grown 7.6% in the second quarter from a year earlier, Deputy Prime Minister Nguyen Hoa Binh told parliament on Friday. Binh said annual growth for the first half is estimated at 7.3%, adding it would be a "big challenge" to reach this year's growth target of 8%. He said Vietnam is seeking to maintain harmonious trade relations with the United States and China, its two largest trading partners. Vietnam has been holding negotiations with the U.S. to strike a deal that would allow Vietnamese goods to avoid a 46% tariff rate, imposed largely as a result of its big trade surplus with Washington. "Vietnam is doing its best to avoid the U.S.'s 46% reciprocal tariffs on its products," Binh said. "We don't assume that the tariff will take effect." To meet this year's GDP target, Vietnam has been seeking to "renew" its existing growth drivers, including exports, manufacturing, public investment and foreign direct investment, Binh said. He added that Vietnam is also seeking new growth drivers, including green investment as well as high-tech industries like semiconductors.
Times
5 hours ago
- Business
- Times
Is it a good time to invest in Vietnam Enterprise Investments Ltd?
When President Trump announced his 'liberation day' on April 2, one unexpected country that took a huge hit was Vietnam. He imposed 46 per cent tariffs on its exports to the United States, which account for nearly 30 per cent of the country's GDP. This includes a big share of Nike's footwear production, as nearly half of all Nike trainers are made in Vietnam. On April 30 the country celebrated the 50th anniversary of 'Reunification day'. To investors of a certain age, Vietnam is synonymous with the 20-year civil war between the victorious communist north and the capitalist south, backed by the US army. Vietnam then largely dropped out of the headlines in the West, but the one-party government has used the past 50 years to transform the country, including a paradoxical campaign promoting private industry. From a low base the economy has been growing at 8 per cent a year since the advent of private enterprise in 1986, one of the fastest rates in the region. Free enterprise was first officially permitted in 1986 and last month the politburo formally declared the private sector to be 'the most important driving force of the national economy', targeting it to rise from 51 per cent to 60 per cent of GDP by 2045. Among the earliest foreign entrepreneurs to see the country's potential was Dominic Scriven, an Englishman, who emerged from the M&G investment group and the now-defunct London stockbroking firm Vickers da Costa to land in Vietnam in 1991. Scriven, who collects Vietnamese propaganda art and lives in a palatial riverside house, said: 'After I drove from north to south, it was pretty obvious to me the general direction in which Vietnam would go, so I went to university in Hanoi to learn the language.' The upshot in 1994 was Dragon Capital, now the country's biggest private investor. Its banner fund is Vietnam Enterprise Investments Ltd (Veil), which soon gathered heavyweight followers. The biggest shareholders, the Bill & Melinda Gates Foundation and the family office of the Ikea founders, each have 15 per cent, along with City of London Investment Management. The financial and property sectors account for 54.2 per cent of the fund. This is because banks fill the capital vacuum between demand and the still-limited capacity of the stock market and they are at the forefront of digitising financial transactions. Hanoi market stalls increasingly accept plastic payments and property is booming as cities sprout commuter suburbs. Veil's total income rose by $17.1 million last year to $216.9 million, fuelled by a $16.9 million increase in gains from asset sales and $3.5 million more dividend income. Fair value of financial assets fell by $3.2 million. After a $1 million rise in expenses and a $1.5 million increase in foreign exchange losses, profits rose by $16 million to $177 million. On the back of that, net asset value per share rose 12 per cent to $9.73. There is still huge scope. Vietnam has 100 million people, with a median age of 33.4. More than a third of them were born in the 21st century. Average GDP per head is almost $4,500, compared with $13,300 in China. The biggest infrastructure project is to upgrade the rail link between Hanoi and Ho Chi Minh City by 2032, slashing the 1,000-mile journey time from 32 to 6 hours. To Lam, general secretary of the country's communist party, has obtained a delay in implementing the Trump tariffs and the hope is that the average rate will come down to 20 per cent or 25 per cent. That would still be a headache and, although Veil has relatively little exposure to exporters, its shares plunged from 582p to 460p on the initial hit, recovering to 593p. Veil is not for everyone. There is little prospect of a dividend and some investors will jib at Vietnam's political slant, persistent reports of corruption and a poor human rights record, which all contribute to a steady emigration flow. On the positive side, rising living standards are creating a middle class that has hardly begun investing on the local stock market. The FTSE and other authorities still rate the country a frontier economy rather than a less risky emerging market. Scriven has no clear idea when that might change, but patience should be rewarded eventually. While the shares trade at a 20 per cent discount to net asset value, at this week's AGM investors gave the board unlimited powers to buy back shares. Advice Buy Why A well-managed way to tap into a fast-growing economy
Japan Times
5 hours ago
- Business
- Japan Times
Pentagon says Japan must meet ‘global standard' and spend 5% of GDP on defense
The Pentagon has set a 'global standard' for Japan and other U.S. allies to spend 5% of gross domestic product on defense, in the first official confirmation that Washington is asking Tokyo to pump up its defense budget even further. In a statement given to The Japan Times on Friday, Chief Pentagon Spokesman Sean Parnell pointed to a majority of NATO nations that have signed on to U.S. requests to boost defense spending to the 5% level, saying that 'European allies are now setting the global standard for our alliances, especially in Asia, which is 5% of GDP spending on defense.' Asked whether Parnell's remarks apply specifically to Japan, a U.S. defense official said it 'is inclusive for all of our allies across the Asia-Pacific region, including Japan.' Both allies had been mum on whether the U.S. would press Japan specifically to hit the 5% target, though Defense Secretary Pete Hegseth told a Senate panel Wednesday that there is now a "new standard for allied defense spending that all of our allies around the world, including in Asia, should move to." Ostensibly pacifist Japan has in recent years undertaken a dramatic transformation of its security policy, including a five-year plan to ramp up defense spending to 2% of GDP by 2027. Pouring even more cash into defense coffers would come with significant political costs as the government focuses on domestic economic priorities and amid growing uncertainty over how to secure funds. Japan is currently getting far less bang for its buck as inflation and the yen's diminishing value erode its plans for the country's largest military buildup in postwar history. Defense Minister Gen Nakatani said in April that defense spending was within striking distance of the 2% target, at 1.8% of GDP. A Defense Ministry panel of experts is reportedly set to recommend that the government consider hiking defense spending beyond 2%, and Prime Minister Shigeru Ishiba has said that future budgets "may top 2%, if needed,' depending on the security environment. However, Ishiba and senior Japanese officials have said that what is most important is the substance of strengthened defense capabilities — not arbitrary figures. The issue will be at the top of the agenda at next week's NATO leaders' summit at The Hague, which Ishiba is also set to attend. While most NATO members are on track to back U.S. President Donald Trump's demand that they invest 5% of GDP in defense, Spain on Thursday rejected the proposal, with Prime Minister Pedro Sanchez calling it 'unreasonable.' The disagreement could weaken the Trump administration's argument to Asian partners that European allies are falling in line with its demand, as any agreement to adopt a new spending guideline must be made with the consensus of all 32 NATO member states. Hegseth hinted at the U.S. push for allies to spend more during the Shangri-La Dialogue regional security conference in Singapore late last month, citing what he called an imminent and 'real' threat posed by China to democratic Taiwan — something Parnell also pointed to in his statement. 'Given the enormous military buildup of China as well as North Korea's ongoing nuclear and missile developments, it is only common sense for Asia-Pacific allies to move rapidly to step up to match Europe's pace and level of defense spending,' Parnell said. 'It is common sense because it is in our Asia-Pacific allies' own security interests, and in that of the American people's to have more balanced and fairer alliance burden-sharing with our Asian allies,' he added. Trump has railed against his country's alliance with Japan, calling the partnership — which turns 65 this year — unfair and 'one-sided,' while threatening Tokyo and other allies and partners with onerous tariffs on key sectors such as automobiles and steel.
Arab News
9 hours ago
- Business
- Arab News
Spain rejects NATO's anticipated 5 percent defense spending proposal as ‘unreasonable'
MADRID: Spain has rejected a NATO proposal to spend 5 percent of gross domestic product on defense needs that's due to be announced next week, calling it 'unreasonable.' Prime Minister Pedro Sánchez, in a letter sent on Thursday to NATO Secretary-General Mark Rutte, said that Spain 'cannot commit to a specific spending target in terms of GDP' at next week's NATO summit in The Hague, Netherlands. Any agreement to adopt a new spending guideline must be made with the consensus of all 32 NATO member states. So Sánchez's decision risks derailing next week's summit, which US President Donald Trump is due to attend, and creating a last-minute shakeup that could have lingering repercussions. Most US allies in NATO are on track to endorse Trump's demand that they invest 5 percent of GDP on their defense and military needs. In early June, Sweden and the Netherlands said that they aim to meet the new target. A NATO official on Thursday said that discussions between allies were ongoing about a new defense spending plan. 'For Spain, committing to a 5 percent target would not only be unreasonable, but also counterproductive, as it would move Spain away from optimal spending and it would hinder the EU's ongoing efforts to strengthen its security and defense ecosystem,' Sánchez wrote in the letter seen by The Associated Press. Spain was the lowest spender in the trans-Atlantic alliance last year, directing less than 2 percent of its GDP on defense expenditure. Sánchez said in April that the government would raise defense spending by 10.5 billion euros ($12 billion) in 2025 to reach NATO's previous target of 2 percent of GDP. On Thursday, Sánchez called for 'a more flexible formula' in relation to a new spending target — one that either made it optional or left Spain out of its application. Sánchez wrote that the country is 'fully committed to NATO,' but that meeting a 5 percent target 'would be incompatible with our welfare state and our world vision.' He said that doing so would require cutting public services and scaling back other spending, including toward the green transition. Instead, Spain will need to spend 2.1 percent of GDP to meet the Spanish military's estimated defense needs, Sánchez said. At home, corruption scandals that have ensnared Sánchez's inner circle and family members have put the Spanish leader under increasing pressure to call an early election, even from some allies. Increased military spending is also unpopular among some of Sanchez's coalition partners. In April, when Sánchez announced that Spain would reach NATO's previous 2 percent spending target, the move angered some coalition members further to the left of his Socialist Party. NATO allies agreed to spend 2 percent of GDP on military expenditure after Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022. But the alliance's plans for defending Europe and North America against a Russian attack require investments of at least 3 percent. The aim now is to raise the bar to 3.5 percent for core defense spending on tanks, warplanes, air defense, missiles and hiring extra troops. A further 1.5 percent would be spent on things like roads, bridges, ports and airfields so armies can deploy more quickly, as well as preparing societies for possible attack. Several allies have committed to reaching the new spending goal, even though other nations will struggle to find the billions required. Rutte had been due to table a new proposal on Friday aimed at satisfying Spain and trying to break the deadlock. European allies and Canada want to end the standoff before the leaders meet with Trump on Wednesday. Poland and the Baltic countries — Estonia, Latvia and Lithuania — have already publicly committed to 5 percent, and Rutte has said that most allies were ready to endorse the goal. But Spain isn't alone among NATO's low spenders. Belgium, Canada and Italy will also struggle to hike security spending by billions of dollars. A big question still to be answered is what time frame countries will be given to reach an agreed-upon new spending goal. A target date of 2032 was initially floated, but Rutte has said that Russia could be ready to launch an attack on NATO territory by 2030.
Yahoo
15 hours ago
- Business
- Yahoo
Spain rejects NATO plans for 5% defence spending target
Spain is opposing NATO's plans to increase defence spending to 5% of gross domestic product (GDP), public broadcaster RTVE reported on Thursday. Spanish Prime Minister Pedro Sánchez informed NATO Secretary General Mark Rutte of his country's opposition to the new target in a letter, according to reports from RTVE and other media outlets that have seen the letter. The government in Madrid confirmed the report to dpa upon request. Sánchez wrote that an increase in defence spending to a total of 5% of GDP by 2032, as proposed, was "not only unreasonable but even counterproductive" for his country. Therefore, he said, Madrid would "not be able to commit to a specific spending target" at the NATO summit next week in The Hague. The statement from Sánchez is not surprising. At the end of May, Foreign Minister José Manuel Albares stressed during a visit from his German counterpart Johann Wadephul at a joint press conference that Spain was making greater efforts in the defence sector than ever before. The existing NATO target of 2% of GDP was "realistic," he said. Defence Minister Margarita Robles even described the NATO plans as a "big mistake." "We believe that the process cannot consist of first setting a percentage and then determining the capabilities; it must be the other way around," she said. With military expenditure of around 1.3% of GDP, Spain is among the lowest spenders on defence in the alliance. However, in April, the left-wing government announced that it wanted to achieve the 2% target this year. Originally, this was planned for 2029. Madrid intends to spend an additional €10.5 billion ($12 billion), about 50% more than previously planned.
