"Vietnam News" Posted by Samson 7-20-2021

KTFA:

Samson:  US, Vietnam reach deal on valuations of the dong

20th July, 2021

The US and Việt Nam on Monday reached an agreement regarding the US concerns about Việt Nam's currency practises

Việt Nam has pledged not to manipulate its exchange rate in order to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese đồng, the State Bank of Việt Nam has said in a joint statement with the US Treasury.

The US raised its concerns about Việt Nam’s currency practices in a virtual meeting on Monday between US Secretary of the Treasury Janet Yellen and the State Bank of Việt Nam (SBV) Governor Nguyễn Thị Hồng.

In the meeting, the US and Việt Nam agreed that the two sides were trusted partners with a friendship grounded in mutual respect that could effectively work together for the benefit of both sides. “In keeping with this strong partnership, the Treasury and SBV share the goals of maintaining the strength, stability, development, and resilience of each country’s economy and financial system,” the statement published on the Treasury’s website said.

The Treasury and the SBV have had extensive discussions in recent months and have reached an agreement to address the Treasury's concerns about Việt Nam’s currency practices.

This is described in the Treasury’s Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.

The SBV stressed that the focus of its monetary policy framework was to promote macroeconomic stability and control inflation.

“Việt Nam confirms that it is bound under the Articles of Agreement of the IMF to avoid manipulating its exchange rate in order to prevent effective balance of payments adjustments or to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese đồng,” it said.

The SBV was also making ongoing efforts to further modernize and make its monetary policy and exchange rate framework more transparent, said the SBV. It added that the SBV will continue to improve exchange rate flexibility over time, allowing the Vietnamese đồng to move in line with developments in financial and foreign exchange markets and in line with the fundamentals of economics while maintaining macroeconomic and financial market stability.

The SBV will continue to provide necessary information for the Treasury to conduct a thorough analysis and reporting on the SBV’s activities in the foreign exchange market for the Treasury’s semiannual Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.

The Treasury will inform other US government agencies that it had reached an agreement with the SBV to address US concerns about Việt Nam’s currency practices.

“The State Bank of Việt Nam will continue to manage exchange rate policy within its general monetary policy framework to safeguard the proper functioning of the monetary and foreign exchange markets, to promote macroeconomic stability and to control inflation, not to create an unfair competitive advantage in international trade,” Hồng said.

“I believe the State Bank of Việt Nam’s attention to these issues over time will not only address the Treasury's concerns but will also support the further development of Việt Nam’s financial markets and enhance its macroeconomic and financial resilience,” said Secretary Yellen in the statement.

The two sides also committed to maintaining close co-operation between Treasury and the SBV and said they look forward to addressing other shared challenges, such as supporting a strong and inclusive recovery from the COVID-19 pandemic.

Việt Nam had been under pressure from the US over its currency practices after the Trump administration, in December last year declared Việt Nam a currency manipulator.

The Treasury under Yellen in April removed the label of currency manipulator for Việt Nam.

The US was the largest export market of Việt Nam last year with a value of about US$77 billion, increasing by more than 25 per cent over 2019 and bringing the trade surplus Việt Nam ran with the US to nearly $64 billion, according to customs.   LINK

Samson:  Việt Nam named among world’s top 20 host economies for FDI for the first time

19th July, 2021

Việt Nam was named among the world’s top 20 host economies for foreign direct investment (FDI) for the first time in 2020 with an inflow of US$16 billion.

The country was up five places against last year’s ranking to reach 19th on the list, according to UN Conference on Trade and Development (UNCTAD)’s World Investment Report 2021. 

While global FDI flows fell by 35 per cent to $1 trillion amid the COVID-19 pandemic, the lowest level since 2005 and almost 20 per cent lower than the 2009 trough after the global financial crisis, the FDI in Southeast Asia, considered an engine of global FDI growth for the past decade, contracted by 25 per cent to $136 billion, said the report. 

It stated that Việt Nam remained among the three largest recipients in the region with a decline of only 2 per cent, while the remaining two of Singapore and Indonesia suffered drops of up to 21 per cent and 22 per cent, respectively.

According to UNCTAD, a slight decline in FDI to the country was due to significantly lower investment contractions in manufacturing and realty activities. However, thanks to the rise in investment in electricity projects, including a $5 billion gas-fired power plant proposed by ExxonMobil (US) and a $2.2 billion coal-fired power plant developed by Thai MNEs in the Quảng TRị Economic Zone, the flow of FDI was still okay.

As investors, Singapore and Japan topped the list of countries and territories having investment projects, in which Singapore’s reached $5.64 billion, 37 per cent of the total and Japan invested $2.44 billion, a surge of 67 per cent in investment compared to 2019.

UNCTAD pointed out local measures to promote investment, including the permission for certain disputes between foreign investors and the State to be taken to international arbitration, were keys to attract FDI inflows.

The report also said the Vietnamese government has expanded the list of business lines eligible for investment incentives, along with the publishing of a detailed list of conditions applied for businesses to be considered high-tech enterprises eligible for tax incentives as good points. “Việt Nam for the first time introduced a negative list on market access, affording foreign investors with national treatment (NT) except in the sectors included in that list. The country also raised the cap on foreign ownership in domestic airlines.”

According to the report released late June, the US continued to be the world’s largest FDI recipient, followed by China and Hong Kong (China).  UNCTAD expected global FDI flows to bottom out in 2021 and later recover some lost ground, with an increase of about 10-15 per cent.

The report said: “This would still leave FDI some 25 per cent below the 2019 level,” adding current forecasts show a further increase in 2022 when the upper bound of projections would bring FDI back to the 2019 level. The report concluded: “Prospects are highly uncertain and will depend on, among other factors, the pace of economic recovery and the possibility of pandemic relapses, the potential impact on FDI of recovery spending packages, and policy pressures.”

In the first six months of 2021, the total FDI commitments to Việt Nam declined by 2.6 per cent year-on-year to $15.27 billion, the FDI disbursement rate, however, rose by 6.8 per cent to stay at $9.24 billion. Currently, Việt Nam has totally 33,787 foreign investment projects with a combined registered capital of $397.89 billion, while the disbursed amount stood at US$241.1 billion, 60.6 per cent of the committed amount.   LINK