KTFA:

Samson:  Creating a legal corridor for blockchain development in Việt Nam

8th August, 2022

In the face of the explosive wave of global technology, with increasingly favourable policies and rising interest of businesses, the Vietnamese blockchain market is forecast to continue to develop positively.

The Foreign Affairs Committee of the National Assembly in collaboration with the Việt Nam Blockchain Association held a seminar on international experience in blockchain technology development and recommendations for Việt Nam last week.

The conference aims to learn and enhance experience, standardise solutions for the development and application of blockchain technology, towards perfecting the legal system, and building institutions and policies to create a legal corridor for technology-related activities.

Phan Đức Trung, permanent vice president of Việt Nam Blockchain Association, said: "Blockchain technology is a kind of database, information is stored in blocks and linked together."

Blockchain could be likened to a ledger that records all data in the system. Blockchain differs from conventional data in the data storage structure. Blockchain collects data information and groups them into blocks containing a lot of information. Blockchain is being applied in 65 fields such as banking, securities and funds, insurance, state management, and infrastructure.

In the opening speech of the seminar, deputy chairman of the Foreign Affairs Committee of the National Assembly Nguyễn Mạnh Tiến emphasised that blockchain technology was increasingly attracting the attention of socio-economic and political sectors around the world as this technology had revolutionised traditional commerce due to the ledger feature. "Every record in this ledger is secured by cryptographic rules that keep the information safe and not able to be faked," he added.

The application of blockchain technology created many benefits in increasing the efficiency of work processes, storing data, managing the supply of goods, reducing errors in the document flow and duration, and reducing logistics time, said Tiến. The deputy chairman also noted that the blockchain "big playground" needed direction and guidance.

With the goal that Việt Nam will not be "left behind" in the technological development of many countries, the Document of the 13th Party Congress for the first time emphasised digital transformation and digital economic development, which emphasises the need to "develop the digital economy on the basis of science and technology and innovation".

The document, at the same time, set requirements for growth innovation, economic restructuring, and making good use of opportunities of the Fourth Industrial Revolution, towards the goal "the digital economy will contribute about 20 per cent of GDP by 2025, about 30 per cent of GDP by 2030".

In order to carry out the above task, Tién said that in addition to the efforts of the Government and related agencies and organisations, it was necessary to have companionship and experience sharing from countries in the digitisation process as well as businesses in building and perfecting a system of legal documents related to this field, and monitor for the Government's implementation of the budget and international commitments, resolutions, documents and other legislation of the National Assembly on policies to develop the digital economy. LINK

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Samson:  Việt Nam's economic growth forecast at 7.5 per cent in 2022: World Bank

8th August, 2022

Việt Nam’s GDP growth is forecast to surge from an estimated 2.6 per cent in 2021 to 7.5 per cent in 2022, with resilient manufacturing and a robust rebound in services serving as the driving forces for economic recovery. 

According to the latest economic update by World Bank (WB) for Việt Nam, the country’s economy expanded 5.2 per cent in Q4 of 2021, and respectively 5.1 per cent and 7.7 per cent in Q1 and Q2 of 2022. 

Inflation is projected to average 3.8 per cent over the year. 

Carolyn Turk, WB Country Director for Việt Nam, said that the bi-annual report “lays out a set of policy recommendations that could help mitigate the impact of these risks and make the economy more resilient going forward.”

Titled “Taking Stock: Educate to Grow”, this edition underlines transforming the higher education system as the key to boosting the country’s productivity and achieving its development goals, in the context where the country re-emerges from the pandemic and into a challenging global environment.

The report’s co-author Dorsati Madani said that while Việt Nam’s economic recovery had been relatively stable, not all sectors witnessed the same situation. 

The impact on workers and households during the crisis was serious and lasting, with about 45 per cent claiming lower incomes in December 2021 than the previous year. The impact of the pandemic is still present with businesses reporting broad-based labour shortages as of March 2022, which were felt more acutely in services and manufacturing, and in the HCM City area.

This, in addition to growth slowdown or stagflation in main export markets, further commodity price shocks, continued disruption of global supply chains, or the emergence of new COVID-19 variants, are hindering Việt Nam’s full recovery. 

Statistics revealed that Việt Nam’s population has an average 10.2 years of schooling, second only to Singapore among the Association of Southeast Asian Nations (ASEAN) countries.

Việt Nam’s human capital index is 0.69 out of a maximum of 1, the highest among lower middle-income economies. However, low skills relevance of the university graduates put the country in the bottom third of the 140 countries listed in the 2018 Competitiveness Index on skills relevance of university graduates. 

A World Bank skills and enterprise survey published in 2019 also said that 73 per cent of sampled Vietnamese firms report difficulties in recruiting employees with leadership and managerial skills, 54 per cent with socio-emotional skills, and 68 per cent with job-specific technical skills.

Focusing on tertiary and higher education, the WB’s report recommends reforming the education system to improve quality and access, and thus provide the necessary skills to the population. Reforms to Việt Nam’s higher education system could help support development objectives, the report says. 

The increasing financial costs of pursuing higher education and the perception of diminishing economic returns from pursuing higher education have weakened demand.  While efforts to enhance the business environment are crucial to enabling job creation, policymakers should also take steps to reduce skill-mismatches and improve the quality of Việt Nam’s labour force. 

Turk said: “To sustain economic growth at the desired rate, Việt Nam needs to increase productivity by 2-3 per cent every year. “International experiences have shown that higher worker productivity can be achieved by investing in the education system, as an important part of a basket of investments and reforms. A competitive workforce will generate much-needed efficiency for Việt Nam in the long term.” 

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Vietnam : Stock market to benefit from unexpectedly strong domestic growth: VinaCapital

8th August, 2022

“Việt Nam’s economy is even stronger than we had expected at the beginning of the year, but that strength is not reflected by higher stock prices due to the [US’s] aggressive rate hikes and the recent regulatory crackdown in Việt Nam,” Michael Kokalari, chief economist at VinaCapital, has said in a report. 

“That said, we expect over 20 per cent [company earnings] growth in 2022, which should support a recovery in the VN-Index by the end of 2022.”

July economic statistics have not only reinforced VinaCapital’s forecast of 7.5 per cent GDP growth in 2022 but also make it look like the economy would grow by a stunning 10 per cent year-on-year in the current quarter, he said.  “Our expectation that Việt Nam’s economy will grow by at least 7.5 per cent this year (and by at least 10 per cent in Q3) leads us to believe that the consensus forecast for 16 per cent [company] earnings growth this year in Việt Nam is too conservative. 

“We expect earnings growth to exceed 20 per cent this year, supported by Việt Nam’s solid economic performance – in stark contrast to the US stock market, where earnings growth expectations look unrealistically high, especially given that country’s deteriorating economic outlook.” 

Việt Nam’s retail sales have accelerated all year, illustrating that consumption is currently the main growth driver, he said.  In the first half of the year retail sales adjusted for inflation grew by 7.9 per cent, and surged to 11.9 per cent in the first seven months, far above the 7 per cent growth his company had previously forecast, he said. “This is important because we are often asked now whether the ongoing slowdown in the US economy, Việt Nam’s biggest export market, will weigh on Việt Nam’s economic growth.”

A slowing US economy is likely to temper Việt Nam’s export growth and economic growth, but that would be more than offset by Việt Nam’s strong domestic economy, he said. “The revenues and earnings of companies listed on Việt Nam’s stock market are primarily driven by the domestic economy, which is why we would have expected the stock market to benefit from the unexpectedly strong domestic growth.”

The stock market rose 37 per cent in 2021, driven by a 36 per cent rise in earnings. “All of this makes it somewhat surprising that the VN-Index is currently down 17 per cent year-to-date.”

The main reason for the recent dour sentiment among retail investors is the Government’s regulatory crackdown on illegal practices by certain companies that started at the end of March, he said. “But we believe the Government’s efforts to improve corporate governance and transparency in Việt Nam will ultimately benefit the stock market and the country as a whole.”

The issue has had less impact on the stock market in recent weeks, and Việt Nam already has the highest transparency and political stability ranking in Southeast Asia, according to a report from the Political & Economic Risk Consultancy, he said.

Coming Bounce in the VN-Index

VinaCapital expects another leg down in the US stock market, which could in turn drag Việt Nam’s stock market lower. 

Kokalari said: “However, at some point we expect the Fed to ‘pivot’ away from its aggressive rate hike plans. Việt Nam’s stock market should be one of the biggest beneficiaries of a Fed pivot because Việt Nam has the most attractive valuation in the region, and the second highest expected earnings growth next to Indonesia.

“Furthermore, the quality/visibility of Việt Nam’s corporate earnings is currently much better than that of Indonesia and other regional peers.” He also expects bank share prices to outperform in the second half of the year, as it becomes apparent that banks’ post-COVID asset quality issues are much less severe than many investors had feared, especially in light of Việt Nam’s very high GDP growth in 2022.   LINK