What's going on? — VietEcon

I don’t have much time today, so here are a few stories that caught my eye, most of them positive!

Vietnam Airlines will provide two direct flights to the US in the next two weeks. Both will be from Hanoi with one going to San Francisco and one to Washington, DC. This will be the first direct flights from Vietnam to the US since the FAA allowed (see my post below from Sept. 11, 2019). Interestingly, Washington, DC wasn’t on the list of cities passed for flights. And I am surprised it is San Francisco rather than LA. These flight are meant to get US citizens back home. Passengers will have to pay, and the cost will depend on how many sign up.

IT engineers wanted! A survey by the recruitment firm Navigos showed that more than 90% of companies want to hire workers, with half of those saying that want to increase the number of IT engineers they employ between 11% and 20% next year. This is no surprise to me. I bet if you asked most IT companies in the US, they also want to hire more engineers, and Vietnam is growing much faster.

The interesting thing is that only 4% of employees spend less than a year at their employer. The 1-2 year figure is not great at 31%, but seems fairly normal for a growing economy with a lack of high quality employees. At my last job, we had some analysts working in India employed directly by the bank. These people would leave all the time and fairly quickly. And for all sorts of reasons. My associate left because he said that he couldn’t stay at the bank, because his wife was moving up faster than him. Really feminist there! At least he was honest.

Turnover is a real cost, though. It takes time to get people up to speed, to learn the systems, to figure out how the office works. If they leave after a few months, then it’s been a total waste. I would say if they leave after 12 months, it probably is almost as bad. Once they get to two years, then things get better. And 64% of employees stay more than 2 years. So Vietnam isn’t too bad.

Vietnam will start exporting rice normally. At least this is a request of Vietnam’s trade ministry. Last year, the country exported 6.4m tons of rice worth $2.8bn. Volume was up 4.2% while value was down 8.3%. We saw tons of improvement in 1Q: rice exports were up 9% in volume and 15.5% in value, as prices have risen.

April exports were capped at 500,000, which would be in line with the average of 1Q, but it seems like farmers could have sold more and at higher prices. If the government does open up, we could see a nice jump.

The country has about 1.4 million tons that can be exported between May and mid-June, according to the proposal. The agriculture ministry estimates the country can ship as much as 2.4 million tons of rice harvested from the summer-autumn season, the proposal shows.

Rice could be a bright spot for exports, if the government feels secure enough in the domestic food supply.

Domestic flight rebounding. Now that the most onerous of the social distancing requirements have been lifted, domestic flights are picking up. There are 18 flights a day between Hanoi and HCMC, with another 3 coming on line in May. It seems like we are only going to get up to about 50% of capacity in the near-term. It will be interesting to see how long it takes for the full complement of flights to be reached.

Of course most international flights are cancelled, and it is very hard to get a visa for Vietnam. Domestic demand is going to pick up much faster than international demand, which will have interesting effects. Tourism is going to be a mess, still, and remember that tourism is an export.

I have my fingers crossed for the Vietnamese economy, for whatever that’s worth.