Vietnam's State Treasury achieved a significant milestone in its weekly government bond auction on Wednesday, raising 13 trillion dong ($496 million) compared to just $70.4 million raised the previous week. The substantial increase demonstrates renewed investor confidence in Vietnamese government securities.

Auction Performance Details

The Wednesday auction showed marked improvement in investor participation, with 60% of bonds on offer successfully sold compared to only 14.8% uptake the previous week, according to Hanoi Stock Exchange filing data. This performance brought total government bond sales for the year to 16 trillion dong.

Bond Sales Breakdown

The treasury achieved varying success across different bond maturities. The 10-year bonds dominated the auction, with 12 trillion dong sold out of 18 trillion dong offered at a 4.02% coupon rate. Both 5-year and 15-year bonds saw 50% of their offerings sold, with coupon rates of 3.30% and 4.12% respectively. However, the treasury failed to sell any of the combined 1.5 trillion dong worth of 7-year, 20-year, and 30-year bonds offered.

Corporate Bond Market Activity

Vietnamese companies have raised 1.49 trillion dong through bond issuances in January, according to bond market association data. This figure represents a significant portion compared to the 621.7 trillion dong raised by corporations throughout the previous year.

Economic Impact

Proceeds from government bond sales primarily fund Vietnam's public investments, which serve as key drivers of economic growth. The successful auction performance indicates strong domestic and international investor appetite for Vietnamese government securities, supporting the country's infrastructure and development financing needs.

Vietnam will introduce an absolute excise tax on cigarettes starting in 2027, with rates increasing incrementally to 10,000 dong ($0.38) per pack by 2031 as part of a comprehensive campaign to curb smoking, according to state media reports.

New Tax Structure Implementation

The amended Special Consumption Tax law, passed last year, will adopt a mixed tax regime starting from 2027. This new structure combines the existing 75% base rate with an absolute levy that will be implemented progressively over four years.

"The tax on tobacco for the 2012-2025 period is very low and had no impact on reducing consumption, while Vietnam's per capita income has steadily increased every year," stated Phan Thi Hai, deputy director of the Tobacco Harm Prevention Fund, as quoted by Suc Khoe Doi Song, the official newspaper of the health ministry.

Current Tax Burden Analysis

Vietnam has raised tobacco taxes twice since 2013, but officials indicate these increases have had minimal impact on smoking rates. The health ministry reported significant gaps in the current tax structure compared to international standards and regional peers.

The current tax burden on tobacco represents only 36.8% of retail prices, substantially below the 70-75% level recommended by the World Health Organisation and significantly lower than rates in neighboring ASEAN countries.

Additional Regulatory Measures

The health ministry proposed further changes to the Tobacco Harm Prevention Law on Tuesday, introducing comprehensive measures to restrict tobacco access and usage:

• Expansion of smoke-free areas
• Tightening of retail restrictions
• Enlarging health warnings to cover 85% of cigarette packets
• Imposing advertising and marketing bans to restrict youth access

Public Health Impact

Vietnam faces significant health challenges related to tobacco consumption. Health officials estimate approximately 100,000 deaths occur annually as a direct or indirect result of smoking. The health ministry reported that Vietnam had more than 15 million smokers in 2024, ranking it among the world's top tobacco-consuming countries.

The ministry identified the affordability of cigarettes as a significant barrier to reducing tobacco use, particularly among men, highlighting the importance of the upcoming tax reforms in addressing this public health concern.