Briefing MONTHLY #87 | August 2025

It’s a confusing time to be in Vietnam if you’re trying to look up an address. Or fill in a visa form. Sweeping reforms have radically overhauled the country’s dividing lines, cutting the number of provinces from 63 to just 34, and removing a layer of administration. In Ho Chi Minh City, this means the long-used divisions that split up the city are gone, re-organised into a smaller number of wards.

Official forms have been updated to reflect the changes that took effect in July. Google Maps and some hotels are still catching up. Reconciling the two forms of address can be a challenge, especially if you are trying to enter hotel details into the visa form.

There are some big, audacious goals behind these changes that are part of what’s been dubbed Doi Moi 2.0, harking back to the 1986 reforms that ushered in a unique mix of communism and private enterprise and fostered rapid economic growth. But Hanoi is acutely aware of the middle-income trap. If the country is to get rich before it gets old, it needs to transform while reducing corruption. Infrastructure plans include a high-speed rail project to cut travel time from Hanoi to HCMC from 30-plus hours to just six. Given it took 12 years to build HCMC’s first metro line, the 2035 start date for the fast train seems optimistic. (See NEIGHBOURHOOD WATCH).

Elsewhere in the region, there’s been an unexpected pardon in Indonesia, China courts a “perplexed” India, and coffee prices give caffeine addicts the shakes.

Thanks for reading.

Emma Connors
Briefing MONTHLY acting editor

Bureaucratic reforms mean different things in different countries. In Vietnam, they could mean a lot.

The restructuring of provinces, removing the district level of government, and the merging of ministries could mark a turning point. Or, as has happened before, the bureaucracy could successfully fight back and retain its ability to stifle and stymie. Old hands are becoming more optimistic as the changes roll out.

ISEAS visiting fellow Nguyen Khac Giang provided an excellent summary of what he describes as the “most ambitious bureaucratic restructuring since the 1986 Doi Moi reforms began” in this post on ISEAS Perspective.

The way forward was outlined by To Lam, general secretary of Vietnam’s Communist Party, in a speech given in April to mark 50 years since the end of the American War. The goal is to become “a developing country with a modern industrial base and upper-middle income by 2030, and a socialist-oriented, developed high-income country by 2045”. To Lam, who led a crackdown on corruption before securing the number-one party position last year, promised decentralisation and bureaucratic delegation to address barriers to development. The speech identified the private sector as a “most important driver of the national economy”.

“When I first heard the Liberation Day speech, I thought ‘let’s wait and see if actions will follow the words,’” said Mark Fraser, managing partner of Frasers Law Company, who has been advising clients in Vietnam since 1994.

As the months have gone on, Fraser has become more optimistic about the goals set out in the Liberation Day speech. He cites the resolution passed by the National Assembly to establish an international financial centre (IFC) in HCMC. This will stretch across almost 800 hectares of precious land.

The language of the IFC will be English and there will be substantial tax breaks for both companies and individuals involved. There is also talk about setting up an arbitration centre and possibly a specialised court as well.

Fraser says the country’s regulatory reform trajectory continues to arc upwards. “Every now and then there’s a speed bump – the regional financial crisis in 1997, SARS in 2003, the GFC in 2008, the pandemic .... But in five years’ time, I am sure there will be a lot more development. The IFC will be flourishing. The government is so determined to make it work.”

Foreign investment is key to keeping the economy moving ahead at a fast clip. Foreign direct investment (FDI) in Vietnam rose 8.4 per cent year-on-year to $US13.6 billion from January to July 2025 – the highest level for a seven-month period in at least nine years. FDI pledges, indicating future disbursements, reached $US24.09 billion, up 27.3 per cent from the same period last year. Yet barriers remain. Transparency International scores Vietnam a lowly 40 out of a possible 100 and it’s ranked 88 out of the 180 countries in the Corruption Perceptions Index. Some spectacular white-collar crime – led by property tycoon Truong My Lan who was convicted of the country’s largest financial fraud last year – point to systemic weaknesses. A major overhaul of the central bank is required to bolster monetary policy effectiveness.

Those trying to encourage Vietnam’s equity markets hope September will bring a significant milestone with global index provider FTSE Russell tipped to upgrade Vietnam’s stock market from frontier to emerging market (EM) status. This will bring new money into the country, though it’s unlikely to be enough for Australia’s $4.2 trillion superannuation sector, which will wait for an EM upgrade from the MSCI Index. This is still years away.

Dragon Capital, the biggest fund manager in the country, anticipates the FTSE upgrade will immediately result in a “passive” inflow of up to $US1 billion from funds linked to the Index. The “active” money increase should be much more.

“The challenge with Vietnam is information asymmetry,” says Dragon Capital executive director Will Ross. “There's parts of the world that see a lot of what's happening here, there’s parts who see less, and there are those that have no visibility at all. For institutional investors, Vietnam represents a benchmark bet; the career risk is too high if you or your stakeholders don’t have visibility."

“The majority of money is still managed by MSCI, but having a FTSE Russell upgrade helps with that visibility issue … Australian super funds have signalled they need an EM upgrade to put Vietnam on their radar.”

Vietnam is a big food producer (see DATAWATCH for a coffee harvest update), and anyone involved in the sector will tell you it would benefit greatly from better logistics and fewer power outages. This is also part of the government plan with plenty of new infrastructure on the way.

In air-travel, international arrivals and departures at HCMC will begin to shift to the new Long Thanh International Airport next year and a high-speed train, dismissed as unfeasible in 2010, is firmly back on the agenda.

The National Assembly’s appetite for more private investment will be tested by its views on funding possibilities for this hugely ambitious, $US60 billion high-speed rail running 1500 kilometres to link Hanoi to HCMC.

Vietnam’s Deputy PM Nguyen Hoa Binh has said the government would welcome private sector involvement, saying the project “must be fast-tracked to serve as a national economic catalyst”. Two home-grown conglomerates, Thaco and VinGroup have signalled their interest proposing a mix of equity funding, foreign and domestic loans. Three other private companies are also keen to get involved. Insiders say no Vietnamese company has a big enough balance sheet to take on the project alone. China is an obvious partner. It has an impressive bullet-train network at home, built the high-speed China-Laos rail link, and was the chief funder via a $US4.5 billion loan of the Jakarta-Bandung “Whoosh” train. But as always in Vietnam, there is a wariness about its northern neighbour and the debt-trap consequences of Beijing funding.

In HCMC, where it seems everyone has at least one side hustle, it’s hard to imagine the energy contained in this city of 9.6 million people not propelling further development. But while Vietnam’s expansion is compelling, there are no guarantees it will continue. In May The Economist warned rising wages threatened Vietnam’s status as a desirable manufacturing hub, observed there had been little spill over from foreign-owned factories, and stated the country “risks becoming stuck as an assembly hub”. The analysis appeared to touch a nerve, with reports that the print issue of the magazine was banned.

And then of course there are Donald Trump’s tariffs. Around one third of Vietnam’s exports go to the US. Trump took to social media in July to announce Vietnam had negotiated a 20 per cent reciprocal tariff. However, it’s widely rumoured the terms he spruiked were higher than what Vietnam’s negotiators thought they had agreed to, and there is no clarity on how an additional 20 per cent impost on transhipments will work. This is clearly pointed at China but at what point does it kick in? Would a single Chinese component used in a Vietnamese factory tip an export into 40 per cent tariff territory and how damaging could that be? The Lowy Institute’s Roland Rajah delves into this here.

As the tariffs come into effect, word on the street is factory managers in Vietnam are talking of “a third, a third and a third”. The theory is individual factories will absorb one third of the tariff, the factory another third, and hopefully American consumers will keep buying if they only have to pay the remainder.

Vietnam’s success in large-scale manufacturing has helped the country prosper in recent decades. Now it needs to shift again, to more value-add in finanical services, ag-tech, energy transformation and high tech. This shift provides a chance for Australia to regain the level of partnership and commercial links that faded as the manufacturing push took hold, according to Andrew Goledzinowski who served as Australia’s ambassador to Vietnam from 2022 to 2024. “They will co-operate with us if we have the wit to co-operate with them,” Goledzinowski told an Australia Vietnam Policy Institute event.

Many Australians who count themselves as friends of Indonesia will know Tom Lembong, the urbane technocrat and Harvard graduate who was Indonesia’s trade minister from 2015-16, and then led the nation’s Investment Co-ordinating Board till October 2019.

In February 2022, Lembong contacted journalists to tell them he had joined “Team Anies”. At the time, Anies Baswedan was still Governor of Jakarta. Lembong, always a planner, was looking ahead to the presidential election scheduled for mid-February, 2024. Ultimately Anies would run second to Prabowo Subianto in that race but before then, investigators advised Lembong they were examining whether he misused his ministerial powers to import sugar back in 2015, imports that ended up costing the government. Last October he was arrested and imprisoned while he waited for the case to be heard.

On July 18 this year, the Jakarta Corruption Court sentenced Lembong to 4.5 years in jail. Two weeks later, he was pardoned.

The decision to prosecute and the Court’s finding that Lembong was guilty of “prioritising capitalist interests” over Indonesia’s economic systems raised eyebrows. Why prosecute 10 years after the event? Moreover, there was no suggestion Lembong had financially benefited from the sugar imports. Others who had were not charged. It also came to light that, contrary to the prosecutors’ claim that there was excess sugar in the country at the time, there was no such surplus. Lembong remained defiant, saying the imports were a policy decision and noting that from the “charges to the sentencing” it was never stated that he had “criminal intent”.

His supporters maintained the prosecution was politically motivated. Nevertheless, the decision to cut short the sentence with an amnesty and to issue an abolition – which goes a step further by quashing the conviction – has also been criticised. The government has given no legal reasons for its actions, stating only that the decision was taken for the sake of national unity, especially nearing the 80th anniversary of Indonesia's Independence Day.  

Many surmise that Lembong’s pardon is also politically motivated. It has even fuelled speculation Prabowo could follow the example set by his predecessor by making his enemy his friend and bringing Anies into Cabinet, just as former president Jokowi invited Prabowo in as defence minister in 2019.

In public appearances after his release, Lembong followed the expected script by thanking God, Prabowo and his family. The proudly pro-market figure was opaque about his future. “Life is long,” he told journalists in Jakarta, as reported in Tempo. “And politics is longer”.

Direct flights between China and India will resume after a long hiatus and India’s Prime Minister Narendra Modi has travelled to China for the first time in seven years as the world’s two most populous companies continue to mend fences.

India has also pledged to keep buying Russian oil, defying Washington’s efforts to crimp the trade with punitive tariffs. As India’s Minister of External Affairs S. Jaishankar recently pointed out, these efforts have been selective.

In a press conference, Jaishankar said the country was “very perplexed” by the pressure from the US. “We are not the biggest purchasers of Russian oil. That is China.”

Under former President Joe Biden, Washington was keen to get Modi onside, offering access to military hardware that was previously out of bounds. India, in a tense border standoff with China, saw plenty to like about a closer relationship with the US. But much has changed since Donald Trump returned to the Oval Office, particularly since his tirade on July 30 when he declared the Indian economy was dead. Indian media have reported Modi has refused to take Trump’s calls after the doubling of the planned 25 per cent tariff on goods – including clothes, diamonds and shrimp – that the US imports from India. The ruckus over the tariff that came into force on August 27 has plunged relations between the world’s two biggest democracies to their lowest level in decades.

Contrast this strained relationship with the growing détente between the world’s two most populous countries. During a visit to India in August by China’s Foreign Minister Wang Yi, India and China agreed to explore the possible demarcation of the disputed border in the Galwan Valley region in Eastern Ladakh where thousands of troops have faced off since deadly violence in 2020. This is an easily reversible first step. However, Wang’s visit did clear the way for Modi to attend the Shanghai Cooperation Organisation Summit in the northern China city of Tianjin from August 31 – September 1. He will join Russian President Vladimir Putin and China’s Xi Jinping at the annual event.

Removing any impediment to trade as the White House imposes tariffs is clearly in China’s interests, given lukewarm domestic demand for products churned out by its factories. These still account for about one third of the world’s total manufacturing capacity.

In April, Xi stressed the mutual benefit of cordial China-India ties which he memorably framed as a “dragon-elephant tango”, language repeated in August. There are too many long-nursed grievances and profound differences between the two countries for that dance to ever be smooth.

For starters, the border issue could easily blow up again with the two nations at the very beginning of negotiating their way through many “red lines”, warns Indian academic and veteran China watcher Srikanth Kondapalli.

But for now, China’s diplomacy is paying dividends. While those who describe SCO as an “anti-NATO” may be flattering the less-than-cohesive collective, the Summit will still communicate a powerful message. By bringing together Modi, Putin and Xi, the SCO Summit is a reminder there is some powerful competition to the US – with big markets to sell into.

Two days after the SCO Summit, there will be another photo opportunity in Beijing’s Tiananmen Square that few news editors will be able to resist. For the first time, North Korea’s Kim Jong Un is expected to stand alongside a clutch of other world leaders including host Xi and Putin at a massive military parade. The Victory Day event will mark the 80th anniversary of the end of World War Two. It will also be a show of strength from autocratic regimes as the liberal international order continues to contend with the vagaries of Donald Trump.

Fun fact: There were 25.9 million seats available on flights into Australia last year. That was up 14.7 per cent from 2023. The inbound tourism market has not fully recovered from the pandemic years but it is well on the way and the future looks bright. International visitor arrivals are expected to increase by 40 per cent from last year to 2029.

The latest breakdown of short-term visitors by source country shows how Asia’s growing middle class is changing the mix. New Zealanders still outnumber other tourists to Australia, but the rate of growth in trips made from our friends across the ditch is slowing. As is the annual increase in arrivals from Britain and the United States. We are going to have to expand our lexicon of affectionate nicknames from Kiwis, Poms and Yanks to accommodate the increasing numbers visiting from elsewhere.

The number of short-term arrivals from India has more than doubled in the last decade and South-East Asian countries are also advancing rapidly, albeit from a smaller base.

Looking forward, Tourism Research Australia predicts international arrivals from the seven largest ASEAN economies will increase by 614,400 between 2024 and 2029.

Arrivals from Vietnam, Philippines and Indonesia are expected to increase by a collective 40 per cent – or 261,500 over the five years. TRA also forecasts 107,400 additional visitors from Singapore and 180,000 from Malaysia.

With the recruitment of Chinese actor Yosh Yu for a new campaign that kicked off this month (you can see his ad for Sydney harbour here), Tourism Australia is hoping to coax back Chinese tourists who have been slow to return. In 2018 and 2019, China was our largest source market for short-term visitors.

ABS data shows in the last financial year, 953,200 Chinese tourists came to Australia. That was one third less than the 1.4 million who arrived in 2018-2019. Contrast that with the three of our top 10 source countries in 2024-25 that exceeded pre-pandemic levels. These were South Korea (373,540 arrivals, up from 280,710 in 2018-19) India (451,090 up from 372,04), and Indonesia (226,650 compared to 214,840 in 2018-19).

Australians are also changing their holiday destinations. The pull of Bali is still strong, with Indonesia our most popular destination. Japan and China have both shot up the list. Over the last decade, the number of trips to Japan has tripled. It is now our third most popular pick for an international holiday, bumping the United States down to fourth place. China moved up two spots to enter the top five in the last financial year.

In an intriguing development in the critical minerals space, the Albanese government is set to become a co-investor with a Chinese battery minerals supplier in a WA lithium miner. China’s Canmax Technologies has been given the green light to invest about $50 million in lithium producer Liontown Resources. The National Reconstruction Fund Corporation will hand over about the same amount to support the ramp up and underground transition of the Kathleen Valley Lithium Operation. The NRFC highlighted the mine’s “strategic importance” to Australia as a global, long-term supplier of lithium, a critical mineral “central to both decarbonisation efforts and the government’s Future Made in Australia strategy”.

That centrality could have been reason enough to block the Canmax investment, which gives the company almost 2 per cent of Liontown. About two years ago the Albanese government knocked back a China-linked company from taking over ailing lithium miner Alita Resources after advice from the Foreign Investment Review Board. The FIRB considers foreign investment into the critical minerals sector above certain thresholds as a national security matter which means heightened oversight for China investments. While this is a boon for US and UK investors, it creates problem for capital hungry projects. Overall, Chinese foreign direct investment totalled about $1.3 billion last year, way below the $12 billion plus reached in peak years that ended a decade ago.

Australia and many others are uneasy about China’ stranglehold on critical minerals processing – it processes roughly 85 per cent of the world’s cobalt and 75 per cent of lithium – but this dominance means it also has expertise, along with deep pockets.

Frank Ha who leads Chinese giant Tianqi Lithium told The Australian the company would consider topping up the $3 billion it has invested in Australia but “there was some uncertainty regarding FIRB approvals”. Tianqi Lithium is involved in a refinery at Kwinana, WA – the first of its kind to be built outside China – and the Greenbushes lithium mine. The refinery has struggled and Mr Ha told The Australian it was taking time to build the supply chains, technical know-how, and the skilled workforce that Tianqi Lithium has in China.

We do not want to go to war, but I think if there is a war over Taiwan, we will be drawn, we will be pulled in whether we like it or not, kicking and screaming.
       - Philippine President Ferdinand Marcos Jnr, Manila, August 11

From missing the bus to being in the driver’s seat, we’ve come a long way.
      - Indian PM Narendra Modi on X on August 24, along with a post of a speech noting India is the fastest-growing major economy and in the “near future” will account for nearly 20 per cent of global growth.

If caffeine addicts could just adjust their taste buds a little, we could benefit from a promising coffee crop in Vietnam this year. There have been many reports on how the high prices of coffee beans contribute to more expensive flat whites in Australia. But recently prices for robusta coffee beans fell thanks in part to a good harvest in Vietnam. Vietnam, along with Indonesia, is a big producer of robusta which as its name suggests, is a hardier crop than the arabica bean grown mainly in Brazil and Colombia. Robusta has a gutsy, earthy taste, perfect when paired with sweetened condensed milk and served over ice in a ca phe sua.

Both robusta and arabica beans are still historically high as the market waits for this year’s harvest to finish and some clarity on US tariffs. The White House has not yet exempted coffee from the 50 per cent tariff imposed on Brazilian exports. If it doesn’t get a carve out, Brazil might have more coffee to offload elsewhere. The good news for all coffee drinkers is that analysts expect both robusta and arabica prices to settle lower in coming years as global supply stabilises.

September 3: Kim Jong Un and Vladimir Putin are tipped to join leaders from Malaysia, Vietnam, Cambodia, Laos and Myanmar – among others – in Beijing for a 70-minute military parade in Tiananmen Square to mark the 80th anniversary of China’s triumph over Japan in the Second Sino-Japanese war. Xi is also expected to attend. Beijing has only staged one such Victory Day parade before, back in 2015.

September 9: 80th Session of the UN General Assembly opens in New York. First day of the high-level General Debate will be in Leaders’ Week, from 23 September 2025.

TBC: Quad leaders meeting. India was meant to host the leaders of Australia, the United States and Japan this year at a summit in September. But Indian officials have spread the word that PM Narendra Modi is no longer keen after the Trump imposed a brutal 50 per cent tariff regime on Indian imports – and as of August 30 had not chickened out. The four leaders could now gather on the sidelines of the UN meeting in New York. This is also when Australia’s Anthony Albanese could finally meet with Trump, if plans for a sideline meeting at a Quad summit get scuttled.

September 25: The 54th Pacific Islands Forum (PIF) Leaders Meeting will convene in Honiara, Solomon Islands. There will be fewer attendees than usual at the annual event after the host nation barred PIF dialogue partners – including China and the United States. Only the 18 PIF member countries, which include Australia, will be represented. Washington is reportedly among those unhappy with the exclusion from the annual gathering that it relies on to meet Pacific leaders en masse.

Briefing MONTHLY is a public update with news and original analysis on Asia and Australia-Asia relations. As Australia debates its future in Asia, and the Australian media footprint in Asia continues to shrink, it is an opportune time to offer Australians at the forefront of Australia’s engagement with Asia a professionally edited, succinct and authoritative curation of the most relevant content on Asia and Australia-Asia relations. Focused on business, geopolitics, education and culture, Briefing MONTHLY is distinctly Australian and internationalist, highlighting trends, deals, visits, stories and events in our region that matter.

Partner with us to help Briefing MONTHLY grow. For more information please contact [email protected].