Home > Blog >

Fitch Ratings Upgrades Vietnam - Vietnam Briefing News

By Edward Barbour-Lacey

HCMC – The credit rating agency Fitch Ratings has upgraded Vietnam to “BB-” due to improvements in the country’s economy and finances. The news comes at an opportune time as Vietnam is preparing for the issuance of a sovereign bond. Vietnam has already seen its credit rating upgraded by Moody’s Investor Services and Standard and Poor’s.

RELATED: Dezan Shira & Associates’ Global Services

In a statement explaining the upgrade, Fitch stated “Vietnam’s macroeconomic policy mix has moved towards policies aimed at achieving macroeconomic stability…Macroeconomic stabilization has contributed to a sharp turnaround in the current account from a deficit of 3.7 percent in 2010 to a projected surplus of 4.1 percent in 2014.”

Fitch also pointed to the Vietnam central bank’s policy of tightening its monetary stance, which has lead to a slowdown in credit growth, increasing economic growth, and moderate inflation.  In fact, inflation could be under four percent for this year.

RELATED: Vietnam-U.S. Relationship Shows Continued Signs of Improvement, TPP Progressing

Fitch has also upgraded the ratings of two Vietnamese banks: Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). These are the two largest banks in the country and are viewed as among the most systemically important banks in the domestic economy.

However, Vietnam still has much work to do in order to further upgrade its ratings. To their credit, the Vietnam government has clearly recognized this and is working hard to improve the investment environment. Last month, Prime Minister Nguyen Tan Dung told the National Assembly that “Vietnam’s economic growth and fiscal balances have not been sustainable” due to a high government budget deficit, rising debt, and slow growth in domestic demand and lending.

These problems have been largely hidden by Vietnam’s strong growth in manufacturing and exports, but to be truly competitive in the global market, the country will need to address these structural problems at the heart of their economy.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading

Vietnam: A Guide to HR in Asia’s Next Growth Market
In this issue of Vietnam Briefing, we attempt to clarify human resources (HR) and payroll processes in Vietnam. We first take you through the current trends affecting the HR landscape and then we delve into the process of hiring and paying your employees. We next look at what specific obligations an employer has to their employees. Additionally, we guide you through the often complex system of visas, work permits, and temporary residence cards. Finally, we highlight the benefits of outsourcing your payroll to a “pan-Asia” vendor.

Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.

An Introduction to Doing Business in Vietnam 2014 (Second Edition)
An Introduction to Doing Business in Vietnam 2014 (Second Edition) provides readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in the country.