Impact of US Tax Rate Increase on Vietnam's Textile Industry

Key pointsDisruptions in oil supply from Saudi Arabia have led to record-high oil prices in China. This situation may impact Vietnam's economy, which relies heavily on energy imports, raising concerns about increasing energy costs.
Business impactFor Japanese companies, rising oil prices could lead to increased production and logistics costs. Particularly in the manufacturing supply chain, higher fuel costs may pressure profit margins, necessitating caution.

Key pointsVietnam's textile industry may be affected by an increase in the export tax rate to 12.5% in the US starting in the second half of 2026. Although many textile companies recorded double-digit growth in the second quarter, concerns arise over Vietnam's competitiveness due to competing countries having a tax rate of 10%. The tax rate difference is expected to significantly impact Vietnam's textile sector, which heavily relies on the US market.
Business impactJapanese companies need to consider the increased costs associated with the tax rate change and review their pricing strategies and supply chains. Cost management will be crucial, especially as price competition intensifies with rival countries.

Key pointsMBS Securities has analyzed that Vietnam's economy may face heightened inflation pressure in the remaining four months until the end of 2025. Factors such as rising oil prices, increased construction material costs, currency fluctuations, and expanding credit growth rates are expected to influence prices, raising concerns about upward pressure on the Consumer Price Index (CPI) and potential impacts on investment decisions.
Business impactFor Japanese companies, rising construction material and fuel costs could contribute to increased manufacturing and logistics expenses. Companies building supply chains within Vietnam need to be vigilant about fluctuations in raw material procurement costs.

Key pointsOn September 17, 2026, the Vietnam Post and Telecommunications Institute of Technology and Italy's Temex established the Vietnam-Italy Space Technology Center (VISTC) in Hanoi. This center aims to develop satellite technology and avionics research for the international market. Within a year of its establishment, over 30 young engineers have gathered to develop high-tech products such as satellite communication systems and specialized equipment for drones. The Italian side intends to link Vietnam's academic capabilities with its industrial base to advance local technology development.
Business impactThis new center may promote self-sufficiency in space technology in Vietnam and provide new business opportunities for related Japanese companies. Companies involved in space-related projects should consider opportunities for training engineers and collaborative research.

Key pointsThere has been little listing of FDI companies in Vietnam's stock market. Since Siam Brothers Vietnam went public in 2016, there have been no new listings for nearly a decade, with only 10 out of 11 FDI companies currently listed. In the first eight months of 2026, registered FDI capital reached $40.62 billion, a 55.4% increase year-on-year, but the capital of listed companies accounts for only 0.15% of the total. Factors hindering listings include obligations under investment contracts, governance and transparency requirements, and business reviews for IPO preparations.
Business impactIt is important for Japanese companies to understand the background of the slow listing of FDI companies. Particularly, they need to consider legal obligations and governance requirements when aiming for a public listing, which can broaden future funding options.

Key pointsOn September 17, 2026, Vietnam's Prime Minister Le Minh Khai met with the CEO of FTSE Russell and representatives from global financial institutions to discuss plans for the development of Vietnam's securities market. The upgrade decision by FTSE Russell and commitments for direct investment from Vanguard are expected to bring billions of dollars into the Vietnamese market, enhancing the reliability of its capital market and increasing interest from foreign investors.
Business impactFor Japanese companies, FTSE Russell's support could expand funding options. Companies considering fundraising through the capital market should closely monitor future developments and approach at the appropriate timing.

Key pointsFTSE Russell has committed to fully support the development of Vietnam's capital market. Notably, Vanguard announced it will add Vietnamese stocks to its portfolio starting September 21, which is expected to lead to increased capital inflows. FTSE Russell's CEO Fiona Bassett positioned Vietnam as a noteworthy growth story in Asia and expressed intentions to enhance the depth and liquidity of the capital market.
Business impactJapanese companies need to leverage FTSE Russell's support to maximize investment opportunities in the Vietnamese market, particularly to capitalize on capital inflows associated with the transition to emerging markets.

Key pointsHo Chi Minh City aims to become a large-scale experimental hub utilizing technology to achieve double-digit growth. There is a demand for solutions leveraging AI and DeepTech, and companies need to demonstrate effectiveness in the actual market. The city is seeking specific problem-solving from technology firms to create new growth opportunities.
Business impactJapanese companies are encouraged to pay attention to the technology adoption trends in Ho Chi Minh City and explore new business models utilizing their technologies, particularly focusing on efficiency through AI and automation technologies.