EXECUTIVE SUMMARY

• International trade agreements, especially the ASEAN Free Trade Area, are making cars more accessible to Vietnamese consumers and reshaping the country’s transportation landscape.

• The pace and sequencing of mobility transitions are a concern given limitations in Vietnam’s transportation infrastructure, planning coordination and environmental and safety management.

• Future mobility solutions and sustainability models that are being developed by automakers in conjunction with research labs in Singapore for application across Southeast Asia are insufficient to address Vietnam’s particular transportation needs.

• Given impending congestion problems, the completion of public transportation systems in Vietnam’s major cities should precede the removal of non-tariff barriers to automobile imports.

• How the Vietnamese government coordinates with stakeholders in the auto industry as well as trade and urban planning authorities will have an impact on the growth and expansion of cities. With proactive planning and foresight, Vietnam can reduce the primacy of cars while developing effective multi-modal transportation networks.

* Ivan V. Small is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute and a sociocultural anthropologist and Associate Professor at Central Connecticut State University.

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INTRODUCTION

Vietnam, which attained lower-middle-income status in 2009, has grabbed global attention as an emerging hub of international supply chains. One of the metaphors for the increasing circulation of capital that has characterized Vietnam’s now highly global economy is the expansion of road traffic since the 1990s, often embodied by the seemingly ubiquitous motorcycles on its streets.[1] In recent years, however, motorbike sales have started to flatten, while automobile sales have been increasing. Vietnam is expected to reach per capita GDP of US$5,000 in 2025[2] (up from $2,700 in 2019), which market analysts consider an important threshold that will fully launch the nation into the “next stage” of widespread car consumption, or “motorization”.[3]

Over 17 auto makers have built factories or entered into joint ventures with Vietnamese companies to build cars since 1995, although the vast majority of output comes from plants that assemble cars from mostly imported components. Market leaders such as Toyota, Thaco and Thanh Cong assemble and distribute a variety of foreign brands like Toyota, Mazda, Peugeot, Kia and Hyundai, while emerging local companies such as VinFast hope to build a national car brand that will extend its presence to the global market.[4] The Vietnamese auto market has therefore been driven by not only the increasing wealth of Vietnamese consumers and the removal of tariff barriers under free trade agreements, but also by investments from foreign car companies and the Vietnamese government’s ambition to develop a native automotive industry. However, a relatively underdeveloped road infrastructure and poor urban planning are constraining the growth of Vietnam’s auto market.

This article examines how the Vietnamese auto market has been shaped by industrial development policies, and how these are shifting with the implementation of international free trade agreements, particularly the ASEAN Free Trade Area (AFTA). It then considers Vietnam’s mobility infrastructure and urban planning shortfalls, and whether multi-modal transport models and technologies, such as those developed in Singapore, can be implemented in Vietnam. The article concludes by interrogating the automotive inevitability assumed in future mobility research agendas and car companies’ market strategies.

EFFECTS OF TRADE AGREEMENTS ON VIETNAM’S AUTO MARKET

Car sales in Vietnam, which has a population of 96 million but a relatively low car ownership ratio, have soared in recent years. In 2019, for example, over 300,000 cars were sold in the country, nearly a tenfold increase from 2006. Vietnam’s participation in free trade agreements (FTAs), which has reduced trade barriers once designed to protect Vietnam’s emerging automotive sector, is a major driver behind this trend.

In 2007, Vietnam joined the World Trade Organization, which required a phased reduction of the 90% tariff previously imposed on most automobiles. Of greater significance for the Vietnamese car market, however, is the country’s membership in the ASEAN Free Trade Area (AFTA). AFTA’s ASEAN Trade in Goods Agreement (ATIGA) imposed on Vietnam a complete elimination of tariffs by 2018 on automobiles assembled in any ASEAN member state. While lower prices on imports have been offset by consumption taxes, registration and license fees as well as other non-tariff measures such as inspections to maintain elevated car prices, the inevitable erosion of added costs that made cars unaffordable in the past now contribute to the emergence of an automobility society.[5]

AFTA is causing many automotive companies to rethink their manufacturing and market strategies across the region and in Vietnam. This has been especially the case for Japanese car manufacturers that made significant investments in Thailand and until recently maintained a dominating market share in Vietnam as well as the region.[6] Many expected that the AFTA would encourage Vietnam to focus on light truck and van building, drawing on its comparative advantage in this segment, rather than passenger cars.[7] Yet anticipated manufacturing shifts away from passenger cars remain in play. Non-tariff barriers, such as the requirement issued in 2018 for completely built-up (CBU) cars to undergo tests in a Vietnamese lab to ensure that they met environmental and emissions standards, slowed the expected flood of cars manufactured in other ASEAN countries into Vietnam.[8]

While some companies scale back their production in Vietnam, Hyundai, which surpassed Toyota to become the best-selling car brand in Vietnam in 2020, has opted for an expansion strategy by increasing production capacity at its joint venture with Thanh Cong in Ninh Binh Province. With the EU-Vietnam Free Trade Agreement opening up cost-efficient supply chains for parts, and with the Regional Comprehensive Economic Partnership (RCEP) on the horizon, Vietnam is still considered by some companies as an attractive car market and production hub.[9]

What remains to be seen is how the implementation of the latest regional trade agreements, such as the RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will further reshape Vietnam’s auto industry as regional supply chains become further integrated. The CPTPP took effect in Vietnam in 2019; and the RCEP, which Vietnam signed in November 2020, is expected to be ratified in 2021. Adaptations to trade agreements’ provisions will be gradual but will most likely further connect the supply chains and consolidate the production strategies of automotive companies. Against this backdrop, and together with the increasing income of Vietnamese consumers, it is likely that Vietnam’s auto industry and car market will continue to expand.

INFRASTRUCTURE AND URBAN PLANNING LIMITATIONS

While many Vietnamese are generally excited about the prospect of car ownership, the country’s poor transportation infrastructure – including roads and alternative public transportation options –  remains a challenge to expanding automobility.[10] Urban planning in Vietnam remains weak and uncoordinated compared to more developed countries in the region such as Singapore,[11] which has become a hub for designing mobility solutions for Southeast Asia.[12] Many of the solutions developed in Singapore through grants from auto companies project technologically sophisticated multi-modal mobility models intended for not only Singapore but also densely populated mega-cities throughout the region.[13] One such future urban mobility research group’s stated goal is to “develop, in and beyond Singapore, new paradigms for the planning, design and operation of future urban mobility systems.”[14] For another, “a key focus will see how research outcomes can benefit the Asian market based on the needs of the region”.[15]

For most Vietnamese living in major cities like Ha Noi, Ho Chi Minh City and Da Nang, the motorcycle remains an essential part of life. Yet the use of motorbikes has also led to congestion, pollution, traffic fatalities and other growth dilemmas.[16] Many interlocuters that I interviewed feel that given the uncontrolled growth of cities, cars offer mobility as a valuable escape to more sustainable and safe suburban lifestyles.[17] They also map their previous experiences with motorcycles onto their future expectations of cars. Some signed up for driving lessons even before owning cars, and bought land and houses in suburban satellite districts as they prepare for an inevitable lifestyle shift.

Although the Vietnamese government has declared that the positive effects of “modernization and industrialization” brought by the auto industry’s expansion must be synchronized with “traffic infrastructure development, consumption policies, environmental protection requirements and energy saving trends”,[18] most interlocuters have little faith that local or national authorities will effectively implement sustainable urban development plans. Consequently, many residents have been anticipating and building alternative living spaces, often piecemeal. Among the growing middle class, there is a strong desire for “civilized”, safe, and pollution-free living environments, as anthropologists have discovered in recent studies of new urban districts in Ho Chi Minh City such as Saigon South.[19] In other mid-sized cities like Da Nang, residents watch as an urban landscape designed for future automobility efficiency rapidly unfolds, featuring multi-lane highways, bridges, and new suburban zones, in anticipation of increased car ownership and the metro area population doubling by 2030.[20]

Mobility futures attached to the automobile can excite or terrify, depending on one’s vantage point. Spectral to Vietnam’s automobility horizons are cautionary tales of regional cities such as Jakarta or Manila that suffer under the congested weight of poorly-planned urban expansion and motorization. Tran Bao Ngoc, a general director at Vietnam’s Ministry of Transport, identifies the following challenges to urban transportation in Vietnam: slow road and public transport infrastructure development, high growth of personal vehicles, inadequate planning and management, and no targeted control of personal vehicles to manage traffic.[21] Studies of Ho Chi Minh City’s infrastructure planning and development, including its subway system, warn of generally weak and uncoordinated responses by urban planners that if left unaddressed will have long-term congestion consequences.[22] A city and regional planner analyzing conflicting transit plans in Ho Chi Minh City identified competing and fragmented regimes of legal and regulatory frameworks, grant incentives, and planning principles that act as barriers to a more streamlined and effective development approach to the metropolitan public transport system.[23] The first subway line in Ho Chi Minh City, financed by Japan, and Ha Noi’s first metro line, financed by China, are well behind schedule. The former was supposed to open in 2018 and the latter in 2017, coinciding with the drop in auto tariffs imposed by AFTA, but by mid-2021 both remain uncompleted. Meanwhile, in Ha Noi, Da Nang, and Ho Chi Minh City, bus public transit accounts for less than 10% of commuter transportation, a small proportion compared to other major cities in the region.[24]

On the other end of the Southeast Asian city traffic spectrum, Singapore has invested heavily in car-lite city planning and its Land Transport Authority has emphasized technological innovation and transportation engineering to discourage widespread individual car use.[25] The automobile has come to co-exist with a variety of other mobility options, especially trains and buses, producing a city that remains surprisingly mobile for its size. The ease and connectivity of multiple modalities of transportation in Singapore have made it a test-bed, model and hub for developing and exporting mobility solutions for cities across the region.[26] A number of mobility labs funded by corporate and government grants at Singapore University of Technology and Design, Nanyang Technological University, National University of Singapore, and TUMCREATE[27] have been conducting research on the “future of mobility” from various urban planning, technology and engineering perspectives. These include investments in areas of environmental sustainability and first- and last-mile connectivity. Collaborative industry grants from companies such as Daimler, BMW, Volvo, Hyundai, Grab and Huawei which fund these labs are highly technology-centred, and generally revolve around key research areas such as autonomous vehicles, electromobility, traffic modeling, connectivity and vehicle sharing. According to one researcher, mobility solutions developed in these labs can be applied in Singapore and used as “models” for cities across the region.[28]

While these mobility futures under development sound promising, lingering within them are some of the very problems they purport to address. Central is the issue of sustainability. Across the board, technology is promoted by mobility service providers as a requisite solution to address problems of emissions, environmental degradation and climate change. In particular, electrification, car sharing, and multi-modal links to public transport are seen as progressive measures that can help tackle these issues. Yet, electrification often depends on energy generated by traditional power sources such as coal-fired power plants. Electric cars themselves still take up more space than is available on narrow Vietnamese city streets, requiring a continuous expansion and upgrading of infrastructure. Their batteries require many rare earth minerals, and are still not widely recycled. New car models that are technologically connected will also have shorter life spans and faster replacement rates, which produce more expenses and waste.

Future mobility projections that rely on automobile companies’ research grants are also likely to produce new dilemmas down the line. While many policy and industry efforts have been taken to make cars more energy-efficient and mega-cities more car-lite, such visions are still based on the assumption that the car must be here to stay, even if produced and used in modified and interconnected forms. While reinvented mobility services are meant to help expand automotive companies’ revenue in the global North, targeting emerging markets like Vietnam that are reaching the profitable stage of “motorization” for legacy car sales remains an important parallel strategy for many car companies.

Widespread motorization has not yet happened in Vietnam, partly because the country is still relatively low on the development ladder. Another reason is that the Vietnamese government has managed to maintain their own version of “car-lite” cities through taxation. However, this planning and revenue tool is being eroded. The 90% tax rate on automobiles sold in Vietnam just 15 years ago made car ownership a rare luxury and mostly prohibitive. But since Vietnam is now a member of the WTO and 15 free trade agreements, tariffs on automobiles are being removed and markets are being pried open. A former luxury is likely to eventually become a necessity.

Unlike Singapore where research institutions are working in greater tandem with urban planners, the government, and industry to get ahead of the problem and maintain a mobile and environmentally friendly city, the coordination between local stakeholders to improve Vietnam’s urban planning and to facilitate a car-lite future does not necessarily exist to the same extent.[29] The mandatory elimination of tariffs on cars in Vietnam and elsewhere in the region through trade agreements does not bode well for cities that are already congested and polluted and where strong planning mandates or alternative transportation infrastructures are lacking.[30]

If imported mobility solutions are limited in their applicability to the Vietnamese context, and the country’s infrastructure to support widespread automobility remains insufficient, what alternatives are there to address Vietnam’s expanding mobility needs?

CARS AS VIETNAM’S INEVITABLE FUTURE?

Vietnam’s automobile consumption has recently slowed. The closure of borders and the disruption of economic activities during the COVID-19 pandemic saw car sales in the country decline 8% in 2020. Disrupted supply chains have also constrained automobile production.[31] Special consumption taxes, vehicle certification requirements and other protective measures, although being challenged, are also temporarily decelerating the flood of imported cars into Vietnam.

Nonetheless, many potential problems associated with capitalist hyper-mobility await on the post-pandemic horizon. Now is perhaps the time to rethink what future mobilities should realistically look like over the longue durée, and how to more holistically project and extend the collective “profit” of sustainable living to future generations. Interrogating assumptions about the inevitability of Vietnam’s auto market expansion is a good starting point.

The post-automotive future has already been anticipated by the auto industry. Vietnam should avoid becoming a dumping ground for legacy car sales – the primary profit area that car companies focus on in emerging markets without having to take responsibility for associated problems. For Vietnam’s densely populated cities, it is urgent that the national and local governments coordinate to prioritize the rapid completion of essential transportation infrastructures, especially highways and city metro systems. Until then, authorities should continue to stave off widespread auto consumption with short term non-tariff barriers – as they have tried to do since 2018. Such barriers will inevitably be challenged, but even a short extension of Vietnam’s public infrastructure development timeline will help prepare the country for more seamless and appropriate mobility solutions.[32] In the interim, targeted qualitative studies that emphasize user needs, experiences and constraints in Vietnam’s rapidly changing urban and transportation ecosystems are also required to effectively inform the implementation of sustainable urban development plans. Being proactive, rather than reactive to the transportation challenges facing Vietnamese cities, is critical.

As Vietnam tweaks its national industrialization and urban planning priorities and policies, it should encourage some leapfrogging within assumed transportation development trajectories. Most studies anticipate an influx of cars in the near future, but given Vietnam’s late start in motorization, they also hold out the possibility of alleviating if not bypassing the presumed inevitability of mass automobility. If approached with creative foresight and planning, automobiles and their associated problems may not necessarily have to dominate the future of mobility in Vietnam and elsewhere.

ISEAS Perspective 2021/83, 18 June 2021

ENDNOTES

[1] Allison Truitt, “On the Back of a Motorbike”, American Ethnologist 35 No. 1. (2008): pp. 3-19.  

[2] Hai Hong Nguyen, “Vietnam’s Frontrunner for Prime Minister”, Fulcrum, 29 March 2021, https://fulcrum.sg/vietnams-expected-next-prime-minister/

[3] Joyce Dargay, “Income’s Effect on Car and Vehicle Ownership” Transportation Research Part A Issue 33 No. 2. (1999): 101-138.

[4] VinFast bought General Motor’s Vietnam manufacturing and distribution operations in 2018. On VinFast, see Le Hong Hiep, “Vietnam’s Industrialization Ambitions” ISEAS Trends in Southeast Asia No. 2 (2019).

[5] On automobility and society, see Mimi Sheller and John Urry, “The City and the Car”, International Journal of Urban and Regional Research Vol. 24 Issue 4 (2000): pp. 737-757.

[6] Kaoru Natsuda and John Thorne, Automotive Industrialisation: Industrial Policy and Development in Southeast Asia,(London: Routledge, 2021).

[7] Prime Minister Decision No. 229/QD-TTG (2016) incentivizes manufacture of priority vehicles including trucks and 9-seater vans.

[8] Thailand, dubbed the “Detroit of Asia” for its efficiency of scale in auto manufacturing, is Vietnam’s primary concern within ASEAN and the target of protective trade barriers against imported CBUs. Lamonphet Apisitniran and Piyachart Maikaew, “Heat on Vietnam Car Barriers Rises”, Bangkok Post 12 June 2018. https://www.bangkokpost.com/business/1483213/heat-on-vietnam-car-barriers-rises. Non-tariff barriers have been identified “as causing the most problems to free trade”: see “ASEAN – an Emerging Global Automotive Hub in the Making”, EU-ASEAN Business Council (2015).

[9] Under the EU-VN FTA, tariffs on auto assembly components drop from 32% to zero by 2025.

[10] Urban planner Danielle Labbe points out that “transportation planning experts generally agree that a city with a moderate density of 30 persons per hectare needs about 25 percent of its surface devoted to road space to support car traffic. Hanoi not only has three times that density, but its roads represent less than 20 percent of its surface”. Labbe, Danielle. “Urban Transition in Hanoi”. ISEAS Trends in Southeast Asia Issue 2 (2021) pg 10.

[11] Labbe also points out that in Vietnam “there has long been a need to integrate the mission of the institutions responsible for land-use development with other transport and infrastructure plans”. Ibid pg. 12.

[12] Glenn Van Zutphen, “Singapore’s Race for Mobility Solutions”, (2015), https://www.mobility.siemens.com/global/en/portfolio/road/stories/singapores-race-for-mobility-solutions.html

[13] Technology and planning solutions include the development of green and AI technologies for autonomous, connected, electric and shared vehicles, and of well linked multi-modal public transport networks, traffic engineering, electronic road pricing and routing algorithms to reduce personal car traffic.

[14] Singapore-MIT Alliance for Research and Technology, Future Urban Mobility Research Cluster, https://smart.mit.edu/research/fm/about-fm

[15] “BMW Group and NTU set up first joint research lab in Southeast Asia”, 23 April 2013, https://www.bmw-sg.com/local-news/bmw-group-and-ntu-set-up-first-joint-research-lab-in-southeast-asia/2013/04/23/

[16]Arve Hansen, “Transport in Transition: Doi Moi and the Consumption of Cars and Motorbikes in Hanoi”, Journal of Consumer Culture 17 No. 2. (2017): pp 378-396.

[17] Between 2013 and 2019, the author interviewed current and potential motorcycle and automobile users as well as auto sales, manufacturing and marketing representatives in Ho Chi Minh City, Da Nang, and Ha Noi. See Ivan V. Small, “Anticipating the Automobile”, Consumer Culture Theory 19 (2018): 145-161.

[18] Prime Minister Decision No 1211/QD-TTg 2014 “On the Approval on the Master Plan on Vietnam Automobile Development to 2020 with a Vision to 2030”.

[19] Erik Harms, Luxury and Rubble, (Berkeley: Univ of California Press, 2016).

[20] Ichiro Kutani and Yasutomo Sudo, “Case Study of Da Nang City”, in Addressing Energy Efficiency in the Transport Sector Through Traffic Improvement, Economic Research Institute for ASEAN and East Asia Research Project Report FY 2015 No. 10, 2016, https://www.eria.org/research/addressing-energy-efficiency-in-the-transport-sector-through-traffic-improvement/

[21] Tran Bao Ngoc, “Challenges and Solutions for Sustainable Urban Transport in Cities of Vietnam” UNESCAP, 2016, https://www.unescap.org/sites/default/d8files/Country%20Report_Viet%20Nam_SUTI.pdf

[22] T.H. Truong, T. T. Truong and S.T. Tung, “Housing and Transportation in Vietnam’s HCMC”, Friedrich Elbert Stiftung, 2017, https://asia.fes.de/news/housing-and-transportation-in-vietnams-ho-chi-minh-city; Jessica Lockrem, “Moving Ho Chi Minh City: Planning Public Transit in the Motorbike Metropolis”, Ph.D. dissertation, Rice University, 2016, https://scholarship.rice.edu/handle/1911/96259

[23] Hun Kee Kim, “Speculating on World Class Transportation Infrastructure in Ho Chi Minh City”, Trends in Southeast Asia, no. 11, 2017, /images/pdf/TRS11_17.pdf.

[24] Pham Minh Hai, “Ho Chi Minh City Sustainable Urban Transport Index”, UNESCAP, 2018, https://www.unescap.org/sites/default/files/SUTI%20%20Mobility%20Assessment%20Report%20%20-%20Ho%20Chi%20Minh%20City.pdf

[25] Singapore Ministry of Foreign Affairs and Centre for Liveable Cities, “ASEAN Smart Cities Network”, 2019; Urban Land Institute Asia Pacific and Centre for Liveable Cities, “Urban Mobility: 10 Cities Leading the Way in Asia Pacific”, 2017.

[26] Enterprise Singapore, Urban Solutions, https://www.enterprisesg.gov.sg/industries/type/urban-solutions/industry-profile

[27] A research platform founded in 2010 to foster research collaborations between Singapore and the Technical University of Munich.

[28] In 2013 and 2021, the author interviewed mobility lab researchers and auto corporate executives in Singapore about their designs for the city and region. See Ivan V. Small, “Affecting Mobility: Consuming Driving and Driving Consumption in Southeast Asian Emerging Markets”, Journal of Consumer Culture 18 No. 3. (2018): 377-396.

[29] Danielle Labbe and Clement Musil, “Periurban Land Redevelopment in Vietnam Under Market Socialism”, Urban Studies 51 No. 6. (2014): pp. 1146-1161.

[30] In 2017, air pollution in Ho Chi Minh City was more than double the levels recommended by the World Health Organization. Hanoi was rated the seventh most polluted capital in the world by IQ AirVisual in 2019.

[31] Ben Shepherd and Anita Prakash, Global Value Chains and Investment: Changing Dynamics In Asia,  Economic Research Institute for ASEAN and East Asia Research Project Report 2021 No. 01, https://www.eria.org/publications/global-value-chains-and-investment-changing-dynamics-in-asia/

[32] Do Mai Lan and Hoang Oanh, “Vietnam’s Tentative Approach to Regional Infrastructure Initiatives”, Perspective No. 71, 2021, /articles-commentaries/iseas-perspective/2021-71

EXECUTIVE SUMMARY

• The Vietnamese government is encouraging financial technology or fintech to promote a cashless society and extensive financial inclusion in the country.

• The fintech market is subject to multiple regulations issued by the State Bank of Vietnam for finance matters and the Ministry of Public Security (MPS) for data privacy and cybersecurity matters. The Steering Committee on Financial Technology is the centralized State authority for fintech management.

• Existing regulations neither provide a definition of fintech nor a single comprehensive instrument regulating fintech activities. The government is developing projects and drafting rules to regulate this largely unregulated industry.

• Government plans to promote modern technologies such as e-KYC, Open API, big data, artificial intelligence, blockchain and cloud computing, which supports local fintech development.

• To ensure that fintech promotes financial inclusion and a cashless society, the Vietnamese government needs to design a regulatory framework that is well-balanced to support innovation and ensure consumer protection and financial stability.

* Dang Linh Chi is a Special Counsel based in Baker McKenzie’s Hanoi office and Pham Mai Nhu Thuy is a Legal Assistant, also based in Baker McKenzie’s Hanoi office. [1]

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INTRODUCTION

Financial technology, or fintech, has transformed financial services and introduced ample opportunities for economic development. Vietnam’s share of regional fintech investment rose from only 0.4% in 2018 to 36% in 2019, placing it second only to Singapore (51%) in the ASEAN region. Despite this achievement, the financial areas transformed by fintech in the country are quite limited, with 98% of the funding being concentrated in the payment sector and 1% in blockchain.[2] Also, Vietnam is still considered as having limited range of fintech activities, with fintech in the payment industry accounting for 31%, P2P lending for 17%, and blockchain/crypto for 13% of the market.[3] One of the main factors hindering fintech growth and development is the under-developed regulatory framework where most regulations revolve around fintech activities in the payment industry.

Generally speaking, the fintech regulatory landscape in Vietnam is still at an early stage of development. Traditionally, the government had been quite conservative in terms of currency control. However, to promote financial inclusion and a cashless society via fintech, the government has been willing to allow more relaxed regulations to create more space for innovation. At the same time, the legal framework has also been designed to ensure consumer data privacy and cybersecurity.

This paper discusses the current fintech regulatory development in the country, from fintech development policy, key fintech regulators, regulations on specific forms of fintech and fintech-enabling technologies. It also discusses personal data protection and data localisation requirement, which are important issues relevant to fintech companies and fintech-enabling technology developers. The key challenge for the local government is to design a regulatory framework that is well-balanced and that allows innovation while ensuring consumer protection as well as financial stability.

FINTECH DEVELOPMENT FOR FINANCIAL INCLUSION

Currently, Vietnam has a large proportion of individuals and small- and medium-sized enterprises which remain unbanked or underbanked. For example, only 30% of adults (15 years and above) have accounts with financial institutions in 2018.[4] Also, the rate of cash transactions is high, i.e., 80 % as at 31 December 2019.[5] Meanwhile, the population’s access to information technology and telecommunications (ITC) services is quite impressive, with mobile phone connection at 150%, internet penetration at 70%, and 3G&4G registration at 45% in 2019.[6]

In that context, to promote greater financial inclusion, the government has set the following targets by 2025:[7]

• non-cash payment transactions will increase at the annual rate of 20-25%,
• at least 80% of adults will have accounts opened at banks or other authorised organisations,
• at least 25-50% of adults will have deposit at credit institutions;
• at least 250,000 small- and medium-sized enterprises will have debt balance at credit institutions;
• at least 70% of adults will have credit history information in the credit information system of the SBV.

Fintech development is considered an important strategy to achieve the above targets. More specifically, fintech is included in the government’s plan for regulatory improvement, expansion of financial supply chain channels, diversification of basic financial services, enhancement of the financial infrastructure, and protection of financial consumers. For example, fintech companies are encouraged to actively participate in the financial service supply chain and partner with credit institutions, especially micro-finance organizations and programs.

That is to say that for fintech investors, Vietnam remains largely an untapped market offering an attractive customer base as well as policy incentives. However, such an untapped market poses great challenges for the government in its ambition to use fintech to achieve financial inclusion goals.

FINTECH REGULATORS

As fintech involves both elements of finance and technology, the industry is subject to multiple regulations issued by a number of key regulators. The country’s central bank, the State Bank of Vietnam (SBV), regulates finance-related matters, while the Ministry of Public Security (MPS) oversees data privacy and cybersecurity-related matters. Both the SBV and the MPS are specialised governmental agencies that can directly issue regulations (i.e., in the form of circulars). They can also propose draft regulations to be approved and issued either as decrees (which are of higher order of application than circulars) by the government or as laws (which are of higher order of application than decrees) by the National Assembly. For example, intermediary payment service (IPS), which is the dominant form of fintech activity in Vietnam, is subject to regulations on the establishment and operation of IPS providers, and regulations on anti-money laundering/KYC (Know-Your-Customer). Both are basically designed by the SBV. At the same time, IPS providers that participate in the collection, exploitation, analysis, and/or processing of personal information are also subject to the regulations on personal data protection and cybersecurity. These are basically designed by the MPS.

Among the regulators, the Steering Committee on Financial Technology, which was established by the SBV in March 2017, is the designated centralised state authority for implementing State management of fintech. The Department of Payment under the SBV is the standing unit responsible for implementing tasks assigned by the Committee.[8] The Committee is positioned to, among other functions, develop and complete the fintech ecosystem (including a regulatory framework), and create opportunities for fintech companies following the policy and strategy of the government. So far, the Committee has set targets to research fintech in five services: e-payment, e-KYC, P2P lending, Open API and blockchain application. Also, it has established direct dialogue channels with fintech firms to facilitate active problem solving.[9]

REGULATION ON CERTAIN FINTECHS

At present, Vietnamese laws provide neither a definition of fintech nor a single comprehensive instrument for regulating fintech activities. Current regulations mostly evolve around fintech in the payment industry. That said, the government has been developing projects and draft regulations to regulate thus far unregulated fintech forms.

Intermediary payment service providers

Fintech in the form of IPS is governed by the Decree 101 on non-cash payment[10] and Circular 39 on IPS.[11] IPS includes financial switching service, electronic clearing service, payment gateway service, support service for money collection and payment, support service for electronic money transfer, and e-wallet service.

IPS providers must be locally established enterprises that have obtained a license to provide IPS (“IPS License”) from the SBV. Basically, in order to obtain an IPS License, the applicant must satisfy conditions such as those on the charter capital (i.e., VND 50 billion, approx. USD 2,145,000), service provision plan (which includes processes such as those on technical processes, payment guarantee mechanism and internal control), personnel (e.g., the qualifications of the legal representative and key managerial positions) and technical infrastructure (e.g., those for security of information technology system). After being issued an IPS License, an IPS provider must provide services in accordance with its IPS License and relevant laws. One key operational requirement is that the IPS service provider must implement anti-money laundering measures (e.g., KYC/e-KYC and transaction reporting) in accordance with the laws on anti-money laundering.

Currently, the government is drafting a decree that will replace the Decree 101 on non-cash payment. This is expected to provide more details on IPS, allow outsourcing of certain functions to agents, and release or remove certain licensing requirements to facilitate market access to fintech investors.

Mobile money service providers

In March 2021, the Prime Minister issued Decision 316 on a pilot programme for mobile money service, allowing the use of telecommunications accounts to make payment for goods and services of small value (i.e., the total transaction value limit of VND 10 million (approx., USD 434) per month per mobile money account).[12] The pilot programme will operate for two years from the time the first enterprise is approved to pilot the mobile money service. The result of the pilot programme will be used by regulators to design specific regulations.

Enterprises eligible to apply for the pilot programme must either be (i) a qualified enterprise that has a license to provide e-wallet IPS and a license to establish a ground public telecommunication network using radio frequency bands, or (ii) a subsidiary that is allowed to use telecommunications infrastructure, network and data by its parent company which has a license to establish a ground public telecommunication network using radio frequency bands.

 P2P lending service providers

For the lending industry, the SBV is currently working on a pilot programme for P2P lending as part of the Plan on Promoting Sharing Economy.[13] So far, the SBV has confirmed that P2P lending is currently unregulated by Vietnamese laws. There are some P2P lending platforms operated by companies who have registered for the business lines of financial consultancy and financial brokerage.[14] Also, the policy considers P2P lending as a civil transaction rather than a business activity.[15]

REGULATORY SANDBOX FOR UNREGULATED AND UNDER-REGULATED FINTECH

Apart from specific regulations, the government is making efforts to develop a regulatory sandbox as a catch-all instrument for all forms of fintech. This sandbox is currently included in many master plans such as the Strategy for developing information technologies in the banking sector,[16] the Scheme for promoting a sharing economy[17] and the Strategy for national financial inclusion.[18]

In early June 2020, the government issued a draft decree providing for a fintech regulatory sandbox (the “Draft Sandbox Decree”) in the banking sector. Generally, the Decree provides for the sandbox’s purpose, conditions and application procedures, test run requirements and extension/exit scheme, and the obligations of related parties.

More specifically, under the Draft Sandbox Decree, a fintech regulatory sandbox in the banking sector is defined as a legal mechanism established by the government that allows credit institutions, fintech solutions providers, and other innovative organizations to directly test fintech products and services in a closely-controlled environment supervised by relevant State bodies. Fintech areas that can be test run include payment, credit, P2P lending, KYC supports, Open API, solutions applying innovative technologies (e.g., blockchain), and other services supporting banking activities (e.g., credit scoring, savings, fundraising).

In the Draft Sandbox Decree, fintech organisations are organizations that are (i) not banks, (ii) established in Vietnam in accordance with the Law on Enterprises, and (iii) directly providing some banking-related services based on fintech solutions and/or fintech solutions supporting the activities of credit institutions. Fintech organisations must obtain a certificate of registration to participate in the sandbox by submitting a dossier to the Department of Payment of the SBV, which is the standing unit of the Fintech Steering Committee. The SBV will issue the certificate upon approval by the government.

The Draft Sandbox Decree also assigns the SBV with the responsibility to provide further detailed guidance for the implementation of the draft decree. However, it appears that the government’s current focus is on developing a regulatory sandbox for fintech in the banking sector, which will be managed by the SBV. Seeing that fintech could disrupt financial services other than banking activities (e.g., insurance with insur-tech), it is expected that there will be more regulatory development for Vietnam to welcome fintech investors from more diverse financial subsectors.

REGULATIONS ON AND SUPPORT FOR FINTECH ENABLING TECHNOLOGY

Fintech development is enabled by technologies such as e-KYC (electronic Know-Your-Customer), cloud computing, API, IoT (Internet-of-Things), big data, artificial intelligence, and blockchain. Development of such technologies is central to the SBV’s plan on banking digitalisation. SBV has set the goal of issuing a regulatory framework by 2025 for the application of key 4.0 technologies. These technologies include, among others, e-KYC, Open API, big data, artificial intelligence, blockchain, and cloud computing.[19]

The e-KYC is now further enabled by the National Database of Citizen, which was put into operation in late February 2021. It allows the collection and use of basic information on all Vietnamese citizens, which is standardised, digitalised, stored, and managed by an information technology infrastructure that supports State management and transactions of agencies, organisations and individuals.[20]

For cloud computing, banks are allowed to outsource information technology/cloud computing services to third-party service providers upon satisfaction of certain requirements. These cover obligations of the service user, criteria for selecting the service provider and the compulsory contents of the service contract.[21] The SBV expects the number of local banks using cloud computing to reach 60% by 2025 and 100% by 2030. However, currently, local cloud service providers account for only 20% of the market, and the majority are offshore entities.[22] With possible data localisation requirements being imposed on data-based service providers, partnerships with offshore cloud service providers to facilitate widespread use of cloud computing will be challenging.

Aside from the above regulatory initiatives, the Ministry of Science and Technology is also implementing Plan 844 to promote innovative start-ups that have the ability to grow rapidly via exploitation of intellectual property assets, technology, and new business models. The incentives include, among others, support for expenses regarding infrastructure, capital, training and marketing.[23]

PERSONAL DATA PROTECTION AND DATA LOCALIZATION

Fintech companies and fintech-enabling technology developers involved in data-related activities may be subject to regulations on data privacy, data protection, and data security/cybersecurity.

On the issue of data privacy, Vietnam does not have a single comprehensive law that addresses individual and organisational privacy rights. Instead, relevant provisions are contained in various legal instruments such as the Civil Code, the Law on Information Technology, the Law on Protection of Consumers’ Rights, the Penal Code, and the Law on Cyber Information Security. That said, a recent development is the Draft Decree on Personal Data Protection (the “Draft PDPD”), issued by the government in February 2021. Notable proposals under the Draft PDPD include a broad definition of personal data, restrictions on processing of sensitive personal data and cross-border transfer of personal data (which includes data localisation in certain cases). Under the Draft PDPD, the PDPD will take effect on 1 December 2021 with no grace period available.

Regarding data localisation, under the Law on Cybersecurity,[24] both local and offshore enterprises providing services on the telecom network, the Internet, and value-added services on cyberspace (herein referred to as “Cyberspace Service Providers”) which are involved in the collection, exploitation, analysis, and/or processing of personal information, data about users’ relationship and/or data generated by users in Vietnam, are required to store those data in Vietnam for a period specified by the government. Offshore entities will be required to open a branch or a representative office in Vietnam. That said, the data localisation requirement has not been implemented due to lack of details and guidance. Cyberspace Service Provider is yet to be more specifically defined, and it is uncertain whether data must be stored exclusively in Vietnam (i.e., no cross-border transfer) or whether only a copy of the data must be stored in Vietnam.

The data localisation requirement as proposed in the Law on Cybersecurity [24] and the Draft PDPD has generated heated debates in the private sector. A key concern raised is that the requirement of storing data in Vietnam will increase costs and reduce efficiency for businesses, especially for multinational companies. Another key concern is that companies located in Vietnam may become easy targets of cyberattacks, which may increase exposure to significant data loss, and with the risk of the attackers gaining access to a huge amount of information stored in Vietnam. In addition, the data localisation requirement is regarded by certain market participants to be potentially violating Vietnam’s international commitments under Article 14.11 and Article 14.13 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (or the CPTPP).[25]

CONCLUSION

Digital payment and e-commerce activities are booming in Vietnam amidst the COVID-19 pandemic. These are driven by an increased demand for low-value transactions at low costs as well as the government’s policy to promote financial inclusion and a cashless society. The fintech industry is expected to grow further in the country. Investors, especially foreign ones, should stay updated with regulatory developments in the industry, especially possible restrictions regarding data privacy and cybersecurity. For fintech to enhance financial inclusion and promote a cashless society, the Vietnamese government will need to design a regulatory framework that is well-balanced and that allows innovation while ensuring consumer protection as well as financial stability.

ISEAS Perspective 2021/75, 7 June 2021

ENDNOTES

[1] Dang Linh Chi is a special counsel based in Baker McKenzie’s Hanoi office. Linh Chi focuses her expertise heavily towards the corporate, and banking and financial services sectors. She has substantial experience in and regularly advises on a broad range of banking and finance regulatory matters, capital market transactions, insurance, securities and funds. With fintech as part of her specialised expertise, Linh Chi frequently advises fintech companies, bank card organisations, and providers of payment services and intermediary payment services on their products and operation in Vietnam. Her capabilities also extend to advising domestic and international banks and financial institutions on their investment products. Over the past years, she has been actively participating as a contributor to legal reform efforts and as legal advisor on banking and financial services issues to business and professional associations. Pham Mai Nhu Thuy is a legal assistant based in Baker McKenzie’s Hanoi office. Thuy primarily focuses on banking and financial services, finance and projects, and corporate sectors. She helps the team in preparing regulatory advice, transactional documents and due diligence works for clients in several industries, including fintech.

[2] UOB, PwC and SFA, FinTech in ASEAN – From Start-up to Scale-up, 2019, p. 7 and 9.

[3] Fintechnews Singapore, Vietnam Fintech Report 2020, 2020, https://fintechnews.sg/wp-content/uploads/2020/11/Vietnam-Fintech-Report-2020.pdf

[4] World Bank (2018). The Little Data Book on Financial Inclusion 2018. Washington DC.

[5] Tapchitaichinh.vn, ““Thanh toán không dùng tiền mặt tại Việt Nam: Thực trạng và giải pháp”“, [Noncash-payment in Vietnam: Current situation and solutions] November 2020, https://tapchitaichinh.vn/ngan-hang/thanh-toan-khong-dung-tien-mat-tai-viet-nam-thuc-trang-va-giai-phap-329639.html#:~:text=Theo%20T%E1%BA%ADp%20%C4%91o%C3%A0n%20D%E1%BB%AF%20li%E1%BB%87u,l%C3%A0%20giao%20d%E1%BB%8Bch%20r%C3%BAt%20ti%E1%BB%81n.

[6] Vnetwork, ““Các số liệu thống kê Internet Việt Nam 2019”“, [Statistics on Internet in Vietnam] November 2019, https://vnetwork.vn/news/cac-so-lieu-thong-ke-internet-viet-nam-2019.

[7] Decision No. 149/QD-TTg dated 22 January 2020 of the Prime Minister on approving the Strategy for a national financial inclusion towards 2025, with a vision towards 2030 (the “Decision 149”).

[8] Decision No. 328/QD-NHNN dated 16 March 2017 of the State Bank of Vietnam on the establishment of Fintech Steering Committee and the supporting units from the Fintech Steering Committee of the State Bank of Vietnam (the “Decision 328”).

[9] The State Bank of Vietnam, “Hợp tác Ngân hàng – Fintech – Góp phần thúc đẩy phổ cập tài chính” [Bank and fintech partnership – contributing to the promotion of financial inclusion] August 2019, https://www.sbv.gov.vn/webcenter/portal/m/links/cm255?dDocName=SBV400234.

[10] Decree No. 101/2012/ND-CP dated 22 November 2012 of the Government on non-cash payment, as amended by Decree No. 80/2016/ND-CP and Decree No. 16/2019/ND-CP (the “Decree 101”).

[11] Circular No. 39/2014/TT-NHNN dated 11 December 2014 of the State Bank of Vietnam on guiding the intermediary payment service, as amended by Circular No. 20/2016/TT-NHNN, Circular No. 30/2016/TT-NHNN, and Circular No. 23/2019/TT-NHNN (the “Circular 39”).

[12] Decision No. 316/QD-TTg dated 9 March 2021 of the Prime Minister on Approving the implementation of piloting the use of telecommunications account for payment of small value goods and services (the “Decision 316”).

[13] Decision No. 999/QD-TTg dated 12 August 2019 of the Prime Minister on approving the Plan on Sharing Economy (the “Decision 999”).

[14] Official Letter No. 5228/NHNN-CSTT dated 8 July 2019 of the State Bank of Vietnam to credit institutions and branches of foreign banks regarding peer to peer lending (the “Official Letter 5228”).

[15] The State Bank of Vietnam, “Ý kiến của NHNN về lĩnh vực cho vay ngang hàng tại thời gian gần đây”, [Opinions of the State Bank of Vietnam on peer-to-peer lending in recent period], December 2018, https://www.sbv.gov.vn/webcenter/portal/vi/menu/trangchu/ttsk/ttsk_chitiet?centerWidth=80%25&dDocName=SBV355385&leftWidth=20%25&rightWidth=0%25&showFooter=false&showHeader=false&_adf.ctrl-state=3u8h33nbo_14&_afrLoop=6460897095115211#%40%3F_afrLoop%3D6460897095115211%26centerWidth%3D80%2525%26dDocName%3DSBV355385%26leftWidth%3D20%2525%26rightWidth%3D0%2525%26showFooter%3Dfalse%26showHeader%3Dfalse%26_adf.ctrl-state%3Da9bxu47t5_4.

[16] Decision No. 2655/QD-NHNN dated 26 December 2019 on approving the Strategy for developing information technologies in the banking sector by 2025, with a vision towards 2030 (the “Decision 2655”).

[17] Decision No. 999/QD-TTg dated 12 August 2019 of the Prime Minister on approving the Scheme for promoting a sharing economy (the “Decision 999”).

[18] Decision No. 149/QD-TTg dated 22 January 2020 of the Prime Minister on approving the Strategy for a national financial inclusion towards 2025, with a vision towards 2030 (the “Decision 149”).

[19] Decision No. 2655/QD-NHNN dated 26 December 2019 on the Strategy for developing information technologies in the banking sector by 2015, with a vision toward 2030 (the “Decision 2655”).

[20] VNExpress, “Khai trương hệ thống cơ sở dữ liệu quốc gia về dân cư” [Commencement of the national database on citizen], 25 February 2021, https://vnexpress.net/khai-truong-he-thong-co-so-du-lieu-quoc-gia-ve-dan-cu-4239980.html

[21] Circular No. 18/2018/TT-NHNN dated 21 August 2018 of the State Bank of Vietnam on the security of the information system in banking activities (the “Circular 18”).

[22] Opengovasia, “Vietnam launches digital transformation campaign”, June 2020, link https://www.opengovasia.com/vietnam-launches-digital-transformation-campaign/.

[23] Decision No. 844/QD-TTg dated 18 May 2016 of the Government on approving the plan of “Supportive policy for national innovative start-up ecosystem to 2025”, as amended by Decision No. 188/QD-TTg (the “Decision 844”).

[24] Law on Cybersecurity No. 24/2018/QH14 adopted on 12 June 2018 by the National Assembly (the “Law on Cybersecurity”).

[25] Under the CPTPP: Article 14.11: “each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person”; Article 14.13: “no Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory”.

EXECUTIVE SUMMARY

• Vietnam’s digital subprime lending industry is rapidly growing amidst public concern for reckless lending and aggressive and unregulated debt collection practices.

• Disgruntled, harassed and vengeful digital borrowers express their discontent about predatory lending apps on social media platforms including Facebook groups.

• These Facebook groups function as: a) forums where members coalesce for guidance on navigating the expanding and labyrinthic landscape of lending apps; b) milieus of expression and comfort for over-indebted, isolated and harassed members; c) and spaces where members express their desire to challenge and take revenge against digital lenders and debt collectors that victimise them.

* Nicolas Lainez is Visiting Fellow at ISEAS – Yusof Ishak Institute and an Adjunct Faculty at NUS in Singapore; Tô Thu Phuong lives in Hanoi and holds a Bachelor in Human Rights and Political Science from Columbia University and Sciences-Po Paris; and Bui Thi Thu Doai lives in Hanoi and is studying towards a BA in Development and Economics at the London School of Economics.

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INTRODUCTION

Consumer finance is rapidly growing in Vietnam, a country undergoing financial transformation.[1] Digital subprime lending is a thriving new market,[2] and dozens of lending apps are available for download on smartphones.[3] These allow borrowers to enjoy a ‘fast and easy’ credit experience and obtain subprime unsecured loans with high interest rates within minutes. This expanding lending landscape stirs ambivalent emotions. On the one hand, it generates excitement over the prospects for accelerating financial inclusion, formalising lending practices and repelling ‘black credit’—a catch-all for unlicensed moneylending, high interest rates, and strong-arm collection practices.[4] On the other hand, it raises public concern over unlawful lenders who promote reckless and predatory lending and use harsh recovery methods that create grounds for debt entrapment and social discontent.[5]

This article examines how disgruntled, harassed and vengeful borrowers express their discontent in Facebook groups that antagonize over digital subprime lending. It shows how, for mainly young and active working-age borrowers, participating in these groups constitute a politicisation from below of digital subprime lending. These borrowers’ groups do not challenge dominant narratives about credit liberalisation as vectors for progress, neither do they promote the emancipatory ideology that anti-debt movements spread in Europe[6] and North America[7] in the aftermath of the 2008 financial crisis. Instead, they reflect the need for a newly formed community of borrowers to assist each other and share practical knowledge on how to navigate lending apps, express frustration about abusive practices, and beat ‘predatory’ lenders at their own game. Their posts and micro-actions make practical knowledge accessible to large communities of borrowers and lenders who monitor discussions, thereby encouraging collective action and reaction.

But even if these micro-actions reflect public discontent and trigger regulatory changes, it is unlikely that they will reverse the growth of digital subprime lending and financial transformation all-together. Be that as it may, these social media groups provide insights into under-regulated digital subprime lending in Vietnam, and highlight the need for will, leadership and direction in facing the challenges of financial transformation and fostering political change.

Findings for this article were retrieved by surveying posts across three private Facebook groups dedicated to digital borrowers in Vietnam.[8] Due to technical constraints associated with data processing limits, five days’ worth of user posts were sorted from most to least recent, and exported for thematic analysis. Each of the groups surveyed harbours around 12,000 members, and there are hundreds more of smaller and bigger, active and inactive groups available through a keyword search on Facebook. They carry similar names, usually with the expression ‘evading debt’ (bùng app) incorporated. Members are mainly borrowers who use lending apps from banks, financial companies (such as FE Credit), p2p platforms, dubious loan companies and moneylending gangs, lenders who advertise their products, and debt collectors who seek defaulting borrowers.

NAVIGATING APPS: GROUPS AS SPACES OF GUIDANCE

The borrowers’ groups primarily function as a forum where members come together to seek advice and encouragement on how to navigate the expanding and labyrinthic landscape of lending apps. To start with, these groups provide guidance for borrowers to access ‘easy money’ from digital lenders. Newcomers will commonly seek advice on which apps are easier and safer to borrow from, what personal data to provide or give access to in order to reassure lenders while protecting borrowers’ privacy, and how to fulfil requirements to ensure approval. Generally, application requirements are more stringent for banks and p2p platforms, and minimal for financial companies and illegitimate lenders. Experienced borrowers often address practical and technical requests, such as how to check and improve one’s credit record. Notably, these groups do not deter but encourage mass digital borrowing. The reason is that by repeatedly borrowing, maximising, and repaying their credit, borrowers are able to build trust and credit history with lenders, giving them access to cheaper, larger and more flexible loans. Therefore, instead of informing about the dangers of digital subprime lending in terms of over-indebtedness, group members share tricks on how to take full advantage of the system or ‘exploit the apps’ (cày app).

A popular topic of discussion is over-indebtedness, especially debt entrapment and heavy harassment. Many members invite over-indebted borrowers to dip their feet further into the mud, borrow more, default and hope for resolution through debt restructuring. By doing so, they promote further entrenchment with digital lending schemes, encouraging juggling – borrowing here to repay there – instead of steering away from mass-borrowing. Some members advertise side-services, advice and collaboration on how to borrow more and engage deeper with lending behaviours, especially to new members who have had their loan application rejected. They offer personal document fraud and fake identities to borrow under a different name, referees-for-hire or the provision of a reference number for borrowers to put forward in their loan apps, and surrogacy services whereby members offer to borrow for borrowers in exchange for a percentage of the debt payment. Some members also publicise their desire to cooperate and ‘build a good record together’. In these arrangements, a creditworthy borrower cooperates with a non-creditworthy borrower to take a high loan to be split and then default together. One of these posts reads: “Hi everyone, I’m holding a ‘good profile for borrowing purposes, inbox me if you want to participate, we will split 5/5”.

Discussions about over-indebtedness also deal with default and debt evasion. Tips and methods for how to stifle debt collectors’ harassment and evade loans are passed along from more experienced members to newcomers. To prevent or put a stop to threatening messages and cyber-bullying tactics used by debt collectors, borrowers are advised to meticulously erase their phone and social media data, as well as tighten and reduce their online presence to a minimum to stop the flow of information supplied to their harassers. In addition, experienced members classify lenders based on how easy it would be to default them. Traditional banks are the hardest to default because of their stringent application demands. Financial companies such as FE Credit come second due to their well-developed pressuring methods and large networks of debt collectors. Ranking last in members’ implicit difficulty scale are dubious lending apps – the most cited are Doctor Đồng, Tamo, VDong, and Cash24 – that have limited resources to persecute late borrowers. These illegitimate lenders are preferred and most-recommended because, as one user writes, they “won’t go to your homes or collect your debt in real life. Apps only text and call to threaten you. All their staffs bluff and pretend to be gangsters. They only scare women and little children”. In any case, close observers note that debt collectors stop harassing late borrowers with phone calls and social media smear posts two or three months after the latter defaulted. In a last recourse, experienced members advise harassed and over-indebted borrowers to ‘evade their debt’ (trốn nợ). Extreme techniques of loan evasion involve moving away from one’s old place of residence and faking one’s own death.[9] In short, borrowers’ groups play a vital function for sharing practical and vital knowledge to navigate lending apps.

LAMENTING OVER APPS: GROUPS AS SPACES OF COMFORT

Beyond sharing advice and guidance, borrowers’ groups form much-needed milieus of expression and comfort for members who lack experience in dealing with digital lenders and debt collectors and are isolated from their usual support systems. Many members show apparently genuine concern, solidarity and compassion for over-indebted borrowers who share their ‘harassment journeys’. Members publish posts that profess struggle, pain and desperation resulting from heavy indebtedness and cyber-bullying from collectors. In one of the groups surveyed, multiple members expressed being reputationally isolated and persecuted by their families for falling into debt. These groups and the illusion of collective understanding therefore become a source of social support for lost and isolated borrowers who share their story to seek uplift and encouragement. Across the litany of posts detailing harassment journeys can be found posts such as one by a member professing to have reached an end point:

Is anyone else here also like me? I was caught in a financial bind, so I took out high-interest loans. Then I borrowed from lending apps to get rid of those debts, and I wound up with more debt. I can’t tell my family. I am blacklisted by the banks. Now neither my brothers and sisters nor my friends will lend me money. I am losing 30 million in daily interests, and there’s no way for me to escape or get a fresh start in life. I can’t sleep most nights because I feel as humiliated as a tramp. I am constantly worried about debt collection.

These cri-de-coeur are more often than not met with compassion, and at times, sincere commiseration from other members. One user commented: “nobody living a happy, peaceful life would think to turn to borrowing from mobile apps and defaulting. In these groups, aside from loan sharks and scammers, everyone has had to live through the pressure of defaulting and evading debts from lending apps”. Members are open and candid about the cyber-harassment that results from defaulting and evading debts, often sharing screenshots of threatening text messages, recordings of threatening phone calls and instances of social media defamation by collectors. They do this to ask for advice, and at times to consult the group on the severity of the threats, some of which border on being death threats:

Warning to Debtor [name], National ID [ID Number]. We have bought back your debt contract, if we don’t receive the money today, we will send our gang down to your house, don’t blame us then for being heavy-handed.

These posts are often met with an outpouring of support and demonstrations of support whereby members would collectively insult and demean the lender and debt collector. Overall, these Facebook groups generate virtual – yet generous – social support to over-indebted borrowers who have become alienated from their families and society.

CHALLENGING THE APPS: GROUPS AS SPACES OF CONTENTION

Borrowers’ groups are also spaces where members express their desire to challenge digital lenders and collectors that victimise them. One way through which members do so is by classifying, analysing and dismantling their rhetoric and methods. Comments downplaying the legitimacy of a threat, such as “real gangs do not work like this, they don’t go around sending threatening paragraphs [of text] (…) These are little boys posing as gangs” abound under members’ posts on the harassment they suffer. If these comments provide some comfort, they also highlight an antagonising mindset of ‘us versus them’ which borrowers adopt against lenders and collectors, as well as debtors’ willingness to get beneath and dismantle creditors’ practices.

Borrowers’ primary method to contend and take revenge against lenders and collectors is by instrumentalising the act of mass-borrowing. To “relieve people’s suffering” and bankrupting lenders, borrowers must continually borrow and default and/or evade debt en masse. Advocates for this approach speak of “teaching the mobile apps a lesson”, and encourage other members to default as well: “exactly, evade the loan to show them how cutthroat interests work”, as one member puts it. Some members have articulated an ‘eye-for-an-eye’ desire to even things with digital lenders:

The apps are so stupid. Why didn’t they talk properly from the beginning? They’re calling and swearing at people in my contacts, now they’re turning to soft text messages asking me to repay the principal. What’s the point? You can redeem the money, but I can’t redeem my reputation. I’m not going to pay until you die.

This tendency towards borrowing to take revenge is spurred on further by collective action. More specifically, some members organise among themselves to share or buy into a profile or a SIM card with favourable scores. Members will often trade SIM cards with three months or more of call history to apply for loans and default collectively, hoping to put the lender under financial stress.

The desire to undermine lenders’ threats is taken to the extreme when members respond to debt collectors’ threats with taunts and provocations, by daring debt collectors to come to their residences or by sending condescending words to them. Some go so far as to call collectors to meet physically, to which the latter never show. One user writes: “does anyone know the working address for VDong? I want to come over to find them, so they wouldn’t waste their efforts on finding me, I’ve been waiting for so long”. Other group members organise among themselves to report debt collectors to the police. Most of the time, however, the majority of these reporting activities happen within the Facebook groups themselves. Members adopt a fiercely hostile and insulting attitude towards lenders and collectors, and threads reporting them often garner significant engagement in the form of outraged and angered comments such as: “loan sharks need to be boycotted immediately”.

Despite launching themselves into activities that could be considered controversial if not illicit, members view their actions in a Robinhood-esque narrative of rightfully taking from predatory digital lenders, their henchmen or debt collectors, and the ‘rich’ mobile apps to “fund their own livelihoods”, as expressed by several members. Members also justify their actions based on the mistreatment and harassment suffered at the hands of exploitative lenders. In brief, groups act as spaces for resisting and challenging lenders and collectors who are perceived as evil.

CONCLUSION

To sum up, the recent explosion of digital subprime lending in Vietnam is a double-edged sword. On the one hand, it democratises credit access in a country where 70 percent of the population is un(der)banked and consumer finance was non-existent until a few years ago. On the other hand, it fuels a traditional and digital lending market inhabited by old and new, lawful and unlawful, decent and predatory lenders driven by the demand for short-term profit-seeking and dubious practices. Facebook borrowers’ groups relay growing concerns about predatory finance as well as the financial insecurity of a young generation of tech-savvy borrowers in Vietnam. These groups provide a space where digital borrowers seek advice, services and comfort, and voice their anger and desire to undermine predatory lenders. The borrowers are confronted with a new era of financial transformation that is increasingly capturing aspects of their everyday life and transforming their borrowing practices and relationship to lenders, finance and technology. As their stories, testimonies and micro-actions show, digital subprime lending can also turn against abusive lenders and trigger a politicisation from below which may draw large support and prompt regulatory changes without challenging subprime lending and financial transformation. We can only hope that the Vietnamese government will continue to regulate consumer finance, including p2p platforms that operate in legal limbo, lending practices such as personal data collection, and the debt collection industry which will continue to grow despite the recent banning of the ‘debt collection business’. In the meantime, Facebook borrowers’ groups will continue to pop up and escalate the outcry against predatory finance.

ISEAS Perspective 2021/72, 28 May 2021

ENDNOTES

[1] Hong-Kong Nguyen et al., “The New Politics of Debt in the Transition Economy of Vietnam,” Austrian Journal of South-East Asian Studies 12, no. 1 (2019): 91–110.

[2] I borrow the term ‘digital subprime’ from Joe Deville, “Digital Subprime: Tracking the Credit Trackers,” in The Sociology of Debt, ed. Mark Featherstone (Bristol: Bristol University Press, 2019), 145–74. Digital subprime refers to “subprime, payday lending markets in various different countries [that] are lending at high rates of interest to borrowers who often have either poor credit histories or, in some cases, no credit histories at all” (p. 145).

[3] Nicolas Lainez, “Navigating Vietnam’s Lending App Maze,” Fulcrum, January 6, 2021, https://fulcrum.sg/navigating-vietnams-lending-app-maze/.

[4] Angela Di Rosa, “Vietnam Fintech Report 2020” (Singapore: Switzerland Global Enterprise, Fintechnews.sg, 2021).

[5] VietnamNet, “Chinese Lending Apps Leave Vietnam Quietly,” Intellasia, August 1, 2020, https://www.intellasia.net/chinese-lending-apps-leave-vietnam-quietly-797636; Tuoi Tre News, “In Vietnam, Instant Online Personal Loans a Poisoned Chalice for Borrowers,” March 18, 2019, https://tuoitrenews.vn/news/business/20190318/in-vietnam-instant-online-personal-loans-a-poisoned-chalice-for-borrowers/49318.html.

[6] Quentin Ravelli, “Debt Struggles: How Financial Markets Gave Birth to a Working-Class Movement,” Socio-Economic Review, August 3, 2019, mwz033, https://doi.org/10.1093/ser/mwz033; Marek Mikuš, “Contesting Household Debt in Croatia: The Double Movement of Financialization and the Fetishism of Money in Eastern European Peripheries,” Dialectical Anthropology 43, no. 3 (September 2019): 295–315, https://doi.org/10.1007/s10624-019-09551-8.

[7] Noelle Stout, “Indebted: Disciplining the Moral Valence of Mortgage Debt Online,” Cultural Anthropology 31, no. 1 (October 23, 2015): 82–106, https://doi.org/10.14506/ca31.1.05; Marcos Angelovici, Pascale Dufour, and Héloïse Nez, eds., Street Politics in the Age of Austerity: From the Indignados to Occupy, Protest and Social Movements 8 (Amsterdam: Amsterdam University Press, 2016).

[8] Hội bùng app vay tiền online (‘Online Lending App Evasion’), Bóc phốt tín dụng đen online-Chia sẻ Kinh nghiệm Vay App, Bùng App (‘Revealing the Faults of Online Black Credit and Experience-sharing for Online App Lending and Evasion’), Hội vay tiền App web Bị khủng bố-Tín dụng đen-Giúp đỡ ACE đối phó (‘Harassed Lending App/Black Credit Borrowers’ Support Group’).

[9] Tuoi Tre News, “Vietnamese Woman Stages Own Funeral to Evade Debt Collectors,” Tuoi Tre News, April 1, 2021, http://tuoitrenews.vn/news/society/20210401/vietnamese-woman-stages-own-funeral-to-evade-debt-collectors/60107.html.

EXECUTIVE SUMMARY

• Vietnam’s Socio-Economic Development Plan 2021-2030 highlights infrastructure development as one of the three strategic breakthroughs.
• However, financing for infrastructure development remains constrained. State resources fund approximately 90 per cent of the country’s infrastructure projects, and mobilising private capital has proven difficult.
• There are currently many foreign-financed connectivity initiatives in the region, such as China’s Belt and Road Initiative, Japan’s Expanded Partnership for Quality Infrastructure, and projects supported by America’s International Development Finance Corporation.
• While competition among these initiatives provides Vietnam and regional countries with more funding options, they also come with challenges. Vietnam therefore has approached them with some reservations.
• Moving forward, it is crucial for Vietnam to adopt stringent standards in approving new projects, improve the legal environment to attract private infrastructure investment, develop better national infrastructure master plans, diversify infrastructure investment sources, and refrain from taking sides in pursuing international infrastructure development cooperation.

*Do Mai Lan is Research Fellow at the Center for Regional Studies and Foreign Policy, Institute of Foreign Policy and Strategic Studies, Diplomatic Academy of Vietnam. Hoang Oanh is Deputy Director of the Center for Regional Studies and Foreign Policy at the same institute.

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HUGE DEMAND FOR INFRASTRUCTURE INVESTMENT

Infrastructure competitiveness plays a central role in attracting investment and promoting economic growth. However, Vietnam is lagging behind some regional countries in this regard. For example, the World Economic Forum’s 2019 Global Competitiveness Report ranked Vietnam 67^th out of 141 economies for national competitiveness and 77^th for infrastructure quality.[1] Only 20 per cent of the country’s national roads are paved,[2] much lower than neighbouring countries such as Malaysia (80.9%),[3] India (63.24%),[4] and Indonesia (89.7%).[5] Vietnam’s Ministry of Planning and Investment estimates that the country will need approximately US$480 billion in infrastructure investment from 2017 to 2030,[6] while the 2019 Global Infrastructure Investor Survey report ranked Vietnam, together with India, China, Brazil, and Indonesia, among the top five developing countries with the largest infrastructure markets in the next five years.[7]

Comprehensive infrastructure development has been highlighted as one of the three strategic breakthroughs for Vietnam’s 2021-2030 Socio-Economic Development Plan. The need to upgrade physical infrastructure and logistics services has become even more urgent due to increasing competition among regional countries to attract investors who wish to diversify their manufacturing base away from China. Post-pandemic economic recovery has also underscored the importance of infrastructure development as one of the most effective measures to stimulate economic growth. The Vietnamese government has targeted a growth rate of at least 6 per cent for 2021, with public spending on infrastructure development identified as one of the key measures to achieve this target.

CONSTRAINED BUDGETS

However, Vietnam is facing difficulties in mobilising infrastructure investment from the private sector, causing it to rely heavily on state resources, which currently fund about 90 per cent of its infrastructure projects.[8] According to the World Bank’s Private Participation in Infrastructure (PPI) database, Vietnam has approved only 116 public-private partnership (PPP) projects totalling US$19.4 billion since 1990, accounting for less than 10 per cent of the country’s total infrastructure investment during the same period.[9] Private infrastructure investment remains limited, at less than 1 per cent of Vietnam’s GDP in the past decade.[10] By 2020, although several road-building PPP projects have been implemented, some of them were later renegotiated and eventually converted to public-invested ones due to project delays, incompetent investors, or financial irregularities. Recently, two North-South Expressway component projects have also been converted from PPP to public investment due to the lack of interest from private investors.[11]

Be that as it may, according to the Asian Development Bank (ADB), Vietnam is the biggest infrastructure spender in Southeast Asia. Between 2010 and 2014, infrastructure spending from both the public and private sectors made up 5.7 per cent of the country’s GDP, compared to the 2-3 per cent of its neighbouring countries.[12] In Asia, Vietnam ranks second only to China (6.8 per cent). The large infrastructure spending puts Vietnam under significant fiscal pressure as its tax base weakens due to the Covid-19 pandemic.

In addition, as Vietnam officially graduated from the International Development Association (IDA) in 2017, it has lost access to IDA concessional financing. IDA loans and grants previously financed a majority of Vietnam’s infrastructure projects.[13] The need to diversify financial resources for infrastructure development in Vietnam is therefore urgent, causing the country to welcome regional infrastructure initiatives.

PRUDENT APPROACH TO REGIONAL INITIATIVES

Many significant infrastructure development initiatives have been introduced in recent years. For example, China introduced the ambitious US$1 trillion Belt and Road Initiative (BRI) in 2013 to support “affordable infrastructure” in developing countries, primarily in transportation and power.[14] Japan quickly responded with its “quality infrastructure” drive and ramped up lending under its 2015 Partnership for Quality Infrastructure (PQI) campaign. Accordingly, Japan pledged to increase its investment in Asian infrastructure to roughly US$116 billion for the period 2016-2020, a 30 per cent increase compared to the previous five years. In 2016, Japan announced the Expanded Partnership for Quality Infrastructure, the High-Quality Infrastructure Export Expansion Initiative, as well as reforms to improve its loan-granting process and to provide additional guarantees against risks, to encourage private sector investment. The annual budget for Japan’s infrastructure exports has since 2017 nearly doubled from ¥110 billion to ¥200 billion (approximately US$1.8 billion).[15]

In order to operationalise the economic dimension of the Free and Open Indo-Pacific (FOIP) strategy, the US Congress passed the Better Utilization of Investment Leading to Development (BUILD) Act in October 2018. Under the Act, Washington established the US International Development Finance Corporation (DFC) and doubled its development finance capacity to US$60 billion worldwide.

Other notable initiatives include the EU Strategy for Connecting Europe and Asia (2018), Russia’s Trans-Eurasian Belt Development (2015), the India and Japan-led Asia-Africa Growth Corridor (2017), and South Korea’s New Southern Policy (2017). ASEAN, together with the ADB, also established the ASEAN Infrastructure Fund (AIF) to mobilise capital for infrastructure development in Southeast Asia.

Competition among these initiatives brings Vietnam and regional countries more funding options for infrastructure projects. But although Vietnam has expressed its support for these initiatives, it approaches these initiatives with some reservations.

First, different regional infrastructure development initiatives have been launched for some time but all revealed significant limitations. Despite its impressive promises, the BRI faces two main challenges: (i) In many BRI projects, China’s ambition to build connectivity corridors might not always align with the interests of local communities living along these corridors. For instance, in Laos, criticisms have been levelled at the relocation of villages to make way for railroads and dams which are believed to benefit Beijing more than locals.[16] (ii) The initiative has generated debt concerns. According to one study, among 68 countries that are hosting BRI-funded projects, 23 of them are at risk of high debt stress.[17] Eight of them, namely Djibouti, Tajikistan, Laos, Maldives, Mongolia, Pakistan, and Montenegro, are marked as “highly vulnerable”.[18]

The second-largest infrastructure initiative in the region is Japan’s Quality Infrastructure in Asia (PQI). The initiative promotes high-quality infrastructure partnerships and assistance in Asia through the collaboration between Japan International Cooperation Agency (JICA) and ADB to increase the supply of funding and promote relevant international standards. With the target of providing US$200 billion within the period 2015-2020, the scope of this initiative was extended from Asia “to the world,” and the range of projects went beyond infrastructure in a narrow sense to cover different projects, ranging from extracting natural resources to building hospitals.[19] Nevertheless, the PQI also has certain limitations. As PQI cannot compete with China’s BRI in terms of scale, and Japan cannot pursue low-cost projects the way China does, the country has to opt for a high-quality approach. However, the standards for high-quality infrastructure are still not clear while it is still questionable if developing countries can afford the high cost of Japanese projects.

Second,most current initiatives have often been associated with great power strategic competition, particularly between the US and China. For example, the BRI is considered a vehicle for China to expand its political, economic and security interests abroad, with many of its infrastructure projects having the potential for civil-military dual use.[20] On the other hand, US-led initiatives have been widely seen as a mechanism to offset Chinese influence.[21] There is thus a concern in Vietnam that its choices may be wrongly understood as picking sides in the current “alignments of force”.[22]

Third, Vietnam’s concerns about the BRI go beyond the common criticisms against this initiative such as debt burdens, lack of transparency or social and environmental problems.[23] In particular, given China’s maritime ambitions and its increasing aggression in the South China Sea, projects along the Maritime Silk Road have raised concerns over China’s intentions in the South China Sea. Vietnam also has some economic concerns regarding the BRI, including:

1. Unattractive commercial terms and conditions, especially the high interest rates of Chinese loans. According to a report by the Ministry of Planning and Investment, China’s ODA often carries an interest rate of 3 per cent per year, if Chinese contractors are used.[24] This rate is higher than Japan’s (0.4 to 1.2 per cent, depending on the loan terms), Korea’s (0 to 2 per cent, depending on bidding conditions), and India’s (1.75 per cent). Loans provided by the China Export-Import Bank are also subject to a commitment fee of 0.5 per cent and a management fee of 0.5 per cent, while loan terms and grace periods are both shorter than those of other capital markets by five to 15 years.[25]
2. Increased trade with China due to the implementation of China-funded infrastructure projects can exacerbate Vietnam’s trade deficit and economic dependency vis-à-vis China. In 2020, for example, Vietnam’s trade deficit with China amounted to US$32.5 billion. The large trade deficit with China has been increasingly seen by some Vietnamese policy makers as a security issue.
3. There have been many problems associated with China-funded infrastructure projects in Vietnam, including environmental pollution, project delays, cost overruns, low construction quality, outdated technologies, and the unauthorized use of Chinese labourers.[26] The Cat Linh–Ha Dong urban railway project in Hanoi is a case in point. The project, which started in October 2011 and was initially expected to be completed in November 2013, has been delayed for more than seven years. Its cost also doubled from VND 8,770 billion (US$552.86 million) to VND 18,002 billion (US$868 million) by the end of 2020.[27]
4. As Vietnam is speeding up reforms towards high-quality and sustainable growth, the non-transparent practices and relatively lax standards of the BRI[28] are seen as an impediment to such reform efforts.

Fourth, the availability of better alternatives, particularly from Japan, has dimmed the attractiveness of the BRI.

Japan is currently Asia’s biggest source of development finance, providing US$367 billion, compared to China’s US$255 billion.[29] As of June 2019, Japan’s infrastructure investments in Vietnam (including pending projects) amounted to US$209 billion, accounting for more than half of Japan’s total in the region.[30] In particular, between 2005 and 2016, Japan’s ODA to Vietnam surged by three times compared to the period 1993-2004, while its ODA to other Southeast Asian countries generally decreased. Notably, 46 per cent of Japan’s ODA to Vietnam has been channelled into transport infrastructure projects.[31] Some Vietnamese experts were of the view that the high quality of these projects, implemented by innovative companies with strong technical expertise and transparent business practices, adds to Vietnam’s overall reform efforts.[32]

These alternatives to the BRI, however, also present Vietnam with other challenges. Japanese funding comes with increased loan costs,[33] strict approval conditions, and higher spending for Japanese consultants. Projects under the Special Terms for Economic Partnership (STEP), for example, must engage a Japanese company as its general contractor, and source at least 30 per cent of its materials and equipment from Japan.[34]

Japanese ODA projects have also reported cost overruns and slow disbursement.[35] Moreover, high-quality initiatives by Japan, the US, and others mainly draw on the private sector. Vietnam, however, is struggling to create attractive conditions for private infrastructure investment. Although it has made some progress in streamlining regulations on the PPP framework to ensure investor rights, policies on risk-sharing mechanisms, exchange rates and revenue guarantees, which are top concerns among foreign investors, are still lacking.

RECOMMENDATIONS FOR VIETNAM

Vietnam’s participation in international mechanisms and initiatives is guided by its national interests. In addition to economic interests, national security, social stability, reform and innovation are also Vietnam’s priorities. With the labour- and resource-based growth model initiated in the 1980s having reached its limit, Vietnam currently aims to bring about a Doi Moi 2.0 that will lead to an innovation-based growth model. Vietnam thus prioritises sustainably planned FDI projects, especially those with high potential for hi-tech transfers and spill-over effects. It is therefore crucial for Vietnam to adopt more stringent standards in evaluating and approving new projects.

At the same time, Vietnam needs to improve its legal environment to facilitate high-quality partnerships. Vietnam’s new Law on Public-Private Partnerships, which came into effect on 1 January 2021, demonstrates the government’s commitment to attract high-quality PPP projects. However, there is still room for further improvement, such as by introducing regulations with credible penalties to deter offenders. The government should also formulate enforceable anti-corruption laws and implement prudent macroeconomic policies that promote financial prudence and discipline.

Vietnam also needs to develop medium- and long-term national infrastructure master plans that thoroughly assess its needs, priorities and projects in order to make optimal use of its limited fiscal resources. It should also diversify its infrastructure investment sources by encouraging financing from private and foreign investors, as well as by tapping personal savings. It is estimated that the Vietnamese people possess some 500 metric tons of gold as personal savings, which would provide a massive boost to the economy if brought into circulation.[36]

As far as international funding initiatives are concerned, given the intensifying great power competition, Vietnam should refrain from taking sides. Instead, it should maintain a neutral stance and uphold its principles in a consistent manner. It should support open, transparent, inclusive and non-discriminatory cooperation mechanisms and proactively work with regional countries to shape the rules for regional infrastructure initiatives.

Finally, some Vietnamese experts have pointed out several potential benefits that the BRI can bring Vietnam, such as strengthening connectivity and facilitating Vietnam’s access to the Chinese market, or helping Vietnam make the most of its long coastline by connecting Southeast Asian ports to enhance intra-ASEAN trade.[37] Joining the BRI also gives Vietnam opportunities to actively take part in the shaping of rules governing international cooperation. However, when taking part in the BRI, Vietnam should adopt proper management mechanisms to avoid potential problems, such as the transfer of outdated technology, project delays and cost overruns.

ISEAS Perspective 2021/71, 27 May 2021

ENDNOTES

[1] World Economic Forum, The Global Competitiveness Report 2019, http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.

[2] Ministry of Industry and Trade, “Accelerating Vietnam’s infrastructure development for Sustainable Growth,” Infrastructure Vietnam, 2019, http://infrastructurevietnam.com.

[3] ASEAN, ASEAN regional road safety strategy, 2016, https://asean.org/storage/2016/10/ASEAN-Road-Safety-Strategy_full_24Oct16_rev_clean.pdf

[4] Ministry of Road Transport and Highways, Basic Road Statistics of India 2016-177, 2017, https://morth.nic.in/sites/default/files/Basic%20_Road_Statics_of_India.pdf

[5] ASEAN, ASEAN regional road safety strategy, 2016, https://asean.org/storage/2016/10/ASEAN-Road-Safety-Strategy_full_24Oct16_rev_clean.pdf

[6] Oxford Business Group, “Vietnam looks to the private sector to fund infrastructure,” Vietnam News, 9 June 2017,https://vietnamnews.vn/economy/378057/viet-nam-looks-to-private-sector-to-fund-infrastructure.html.

[7] EDHEC Institute for Infrastructure Research and the Global Infrastructure Hub, The Global Infrastructure Investor Survey 2019, https://www.gihub.org/resources/publications/global-infrastructure-hub-investor-survey-report-2019/.

[8] “90% du an co so ha tang o Viet Nam do nha nuoc dau tu: Khong du nguon von tu nhan?”, Vietnambiz,  5 June 2020, https://vietnambiz.vn/90-du-an-co-so-ha-tang-o-viet-nam-do-nha-nuoc-dau-tu-khong-du-nguon-von-tu-nhan-20200604215244655.htm

[9] Ibid.

[10] “Vietnam eyes private investment in infrastructure projects,” Vietnam Investment Review, 17 January 2019, https://www.vir.com.vn/vietnam-eyes-private-investment-in-infrastructure-projects-65317.html.

[11] “Chuyen doi 2 du an tren cao toc Bac – Nam phia Dong sang dau tu cong”, Dang Cong san Viet Nam, 11 January 2021, https://dangcongsan.vn/thoi-su/chuyen-doi-2-du-an-tren-cao-toc-bac-nam-phia-dong-sang-dau-tu-cong-572662.html.

[12] ADB, “Meeting Asia’s Infrastructure Needs”, 2017, https://www.adb.org/sites/default/files/publication/227496/special-report-infrastructure.pdf.

[13] “Financing for development in Vietnam,” Oxfam discussion papers, Oct 2019, https://oxfamilibrary.openrepository.com/bitstream/handle/10546/620879/dp-financing-development-vietnam-ida-graduation-251019-en.pdf.

[14] Jonathan Hillman, “How Big is China’s Belt and Road?”, Center for Strategic and International Studies, 8 April 2018, https://www.csis.org/analysis/ how-big-chinas-belt-and-road.

[15] Tobias Harris, “Quality infrastructure: Japan’s robust challenge to China’s Belt and Road,” War on the Rocks, 9 April 2019, https://warontherocks.com/2019/04/quality-infrastructure-japans-robust-challenge-to-chinas-belt-and-road/.

[17] John Reed and Kathrill Hille, “Laos’s Belt and Road project sparks questions over China ambitions”, Financial Times, 30 October 2019, https://www.ft.com/content/a8d0bdae-e5bc-11e9-9743-db5a370481bc

[18] John Hurley, Scott Morris, and Gailyn Portelance, “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective.” Center For Global Development, 04 March 2018, https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf

[19] Amar Diwakar, “China’s Debt-Trap Diplomacy Along the Belt and Road,” The Wire, 10 August 2018, https://thewire.in/world/china-debt-trap-diplomacy-bri

[20] Werner Pascha, “The quest for infrastructure development from a “market creation” perspective: China’s “Belt and Road”, Japan’s “Quality Infrastructure” and the EU’s “Connecting Europe and Asia”, International Economics and Economic Policy 17, 687–704, 5 May 2020, https://doi.org/10.1007/s10368-020-00468-0

[21] Shaun Turton, “China’s Belt and Road ports raise red flags over military plans,” Nikkei Asia, 23 July 2019, https://asia.nikkei.com/Spotlight/Asia-Insight/China-s-Belt-and-Road-ports-raise-red-flags-over-military-plans

[22] Jennifer Lyn, “US Blue Dot Network to counter China’s BRI,” Asia Times, 21 May 2020, https://asiatimes.com/2020/05/us-blue-dot-network-to-counter-chinas-bri.

[23] Le Hai Binh, Tap hop luc luong trong the ky XXI: Xu huong, tac dong va doi sach cua Vietnam (Hanoi: Chinh tri Quoc gia Publisher, 2020), p. 298.

[24] Prashanth Parameswasan, “The real trouble with China’s Belt and Road,” The Diplomat, 11 May 2017, https://thediplomat.com/2017/05/the-real-trouble-with-chinas-belt-and-road.

[25] Ministry of Planning and Investment, “The Management and Usage of ODA 2018-2020 With a Vision to 2025”, 2018, http://vanban.chinhphu.vn/portal/page/portal/chinhphu/hethongvanban?class_id=2&_page=1&mode=detail&document_id=195225   

[25] Nguyen Mai, “Bay no tu cac du an co so ha tang cua Trung Quoc”, Nha dau tu, 18 June 2020, https://nhadautu.vn/bay-no-tu-cac-du-an-co-so-ha-tang-cua-trung-quoc–bai-cuoi-bai-hoc-dat-gia-voi-viet-nam-d38760.html

[26] Nguyen Thi Thuy Ha, “Tac dong tu nguon von cua Trung Quoc qua sang kien Vanh dai va Con duong den cac nuoc dang phat trien,” Ly luan chinh tri,  25 October 2019, http://lyluanchinhtri.vn/home/index.php/quoc-te/item/2957-tac-dong-tu-nguon-von-cua-trung-quoc-qua-sang-kien-%E2%80%9Cvanh-dai-va-con-duong%E2%80%9D-den-cac-nuoc-dang-phat-trien.html

[27] “Gan 10 nam Du an duong sat Cat Linh – Ha Dong: Xuan nay tau se chay?”, Voice of Vietnam,  1 January 2021, https://vov.vn/xa-hoi/gan-10-nam-du-an-duong-sat-cat-linh-ha-dong-xuan-nay-tau-se-chay-827868.vov.

 [28] “China’s flexible belt and road approach leads to ambiguity,” South China Morning Post, 22 April 2019,https://www.scmp.com/news/china/diplomacy/article/3006898/chinas-flexible-belt-and-road-approach-leads-ambiguity.

[29] Eduard Fernandez, “Japan still reigns in South East Asian infra,” Infrastructure Investor, 16 July 2019, https://www.infrastructureinvestor.com/japan-infra-player-in-south-east-asia-china-belt-and-road-initiative.

[30] “China no match for Japan in Southeast Asia infrastructure race”, Bloomberg, 23 June 2019, https://www.bloomberg.com/news/articles/2019-06-23/china-no-match-for-japan-in-southeast-asia-infrastructure-race.

[31] “Nhat Ban – nha cung cap ODA hang dau ho tro phat trien giao thong Viet Nam”, Vietnam Business Forum, 12 November 2018, https://vccinews.vn/news/21064/nhat-ban-nha-cung-cap-oda-hang-dau-ho-tro-phat-trien-giao-thong-viet-nam.html.

[32] “Nhat Ban: Tang cuong dau tu cac du an co so ha tang trong khu vuc,” Banking Plus, 30 January 2019,https://thoibaonganhang.vn/nhat-ban-tang-cuong-dau-tu-cac-du-an-co-so-ha-tang-trong-khu-vuc-84628.html

[33] Japan increased its loan interest rates from 1.2 to 1.5 per cent per year for regular loans and from 0.3 to nearly 1 per cent per year for preferential loans, effective 1 October 2017.

[34] Ministry of Foreign Affairs of Japan, Japan’s Official Development Assistance White Paper 2013, 

[35] “Vay ODA lam duong sat do thi, doi von ty USD, 15 nam bat dong”, Vietnamnet,  2 November 2019, https://vietnamnet.vn/vn/kinh-doanh/dau-tu/loat-du-an-duong-sat-do-thi-doi-von-may-chuc-nghin-ty-cham-tre-trien-khai-584144.html; “Vi sao Metro so 1 doi von 30.000 ty, cham tien do?”, Dai doan ket, 26 October 2017, http://daidoanket.vn/vi-sao-metro-so-1-doi-von-30000-ty-cham-tien-do-383816.html.

[36] “Vietnam’s central bank contemplates ‘mobilizing’ gold from public,” Tuoi Tre News, 7 December 2017, https://tuoitrenews.vn/news/business/20171207/vietnams-central-bank-contemplates-mobilizing-gold-from-public/43027.html.

[37] See, for example, Le Hai Binh, Tap hop luc luong trong the ky XXI, p. 299.