"Vietnam News" Posted by Henig at KTFA Monday 1-23-2023

KTFA:   Vietnam

Vietnamese economy greatly open, full of vitality: Chinese ambassador

January, 21/2023 - 15:23

In terms of trade ties, the ambassador said despite impacts of the COVID-19 pandemic, bilateral trade in the first 11 months of last year exceeded $210 billion, and the whole year’s figure is expected to surpass the $230 billion recorded in 2021, which is a highly encouraging result.

HÀ NỘI — Chinese Ambassador to Việt Nam Xiong Bo has highlighted the significance of the Lunar New Year (Tết) festival, the comprehensive strategic cooperative partnership between the two countries, and their cooperation prospects for 2023.

In an interview granted to the Vietnam News Agency on the occasion of New Year 2023, he quoted late Vietnamese President Hồ Chí Minh as saying that Việt Nam and China are “both comrades and brothers”.

 “We are comrades who share the same sense of purpose and also close brothers,” the ambassador said, stressing the profound meaning of the word “brothers” thanks to cultural similarities, including Tết customs, between the two peoples.

Xiong found Tết, a traditional festival of the Vietnamese and Chinese peoples, and the two countries’ Tết celebrations highly similar. Whenever the Lunar New Year comes, the Tết atmosphere will spread across Hà Nội, from big streets to small alleys, bringing about close and familiar feelings to him through similar customs: family reunion with year-end parties and New Year visits to pagodas.

However, there are also some differences as 2023 is the Year of the Rabbit in China but the Year of the Cat in Việt Nam.

The rich histories and special traditional cultures of China and Việt Nam have contributed to the Eastern culture and civilisation, according to the diplomat. Likewise, New Year celebration customs in Japan and the Republic of Korea are also part of the Eastern culture, and it is necessary to treasure and further bring into play the role of the Eastern culture in the world's civilisation.

Mentioning Việt Nam’s economic recovery results in 2022, Ambassador Xiong highly valued the GDP growth of over 8 per cent, the highest in the region and the world, saying the Vietnamese economy is now full of vitality, attractive to foreign investors, and boasts vibrant external economic activities with trade value topping US$700 billion.

He held that the abovementioned achievements were attributable to the clear-sighted leadership by the Communist Party of Việt Nam (CPV), headed by General Secretary Nguyễn Phú Trọng, and the Government along with efforts by the Vietnamese people.

The economy of Việt Nam had been comprehensively integrating into the world and now had great openness, he went on.

Regarding the COVID-19 combat, the diplomat said the Party and Government of Việt Nam had effectively combined the pandemic fight with socio-economic development and obtained great successes. In the most trying times of the pandemic, the country made all-out efforts in promoting vaccination and seeking vaccine supply sources, including from China.

In its capacity, China provided 52 million COVID-19 vaccine doses, including 7 million doses in non-refundable aid, for Việt Nam, helping set up a line of defence against the pandemic amid the most trying times in Việt Nam.

In terms of trade ties, the ambassador said despite impacts of the COVID-19 pandemic, bilateral trade in the first 11 months of last year exceeded $210 billion, and the whole year’s figure was expected to surpass the $230 billion recorded in 2021, which was a highly encouraging result.

A highlight of relations between the two Parties and countries last year is the official visit to China by CPV General Secretary Nguyễn Phú Trọng in late October.

The visit had great influence, Xiong affirmed, adding that leaders of the two countries once again reached strategic common perceptions and agreed that Việt Nam and China would support each other along their path to socialism, stay steadfast in the strategic leadership by the two Parties’ top leaders, and advocate cooperation in all fields.

During the trip, the two sides also adopted a joint statement of extreme political significance that touched upon many areas and created favourable conditions for the two countries to continue cooperation in different spheres, including economy and trade.

China and Việt Nam hold good conditions for strengthening partnerships in investment, economy, and trade since they share a borderline and boast highly complementary advantages, according to the ambassador. China supports businesses with good strength, reputation, and high technology coming to Việt Nam to invest in potential areas such as developing digital economy, green economy, and new energy.

China is ready to enhance economic, trade, and policy cooperation with Việt Nam, the diplomat said, noting his country may fully resume air routes connecting with Việt Nam this year so as to facilitate bilateral mobility and economic activities.

Speaking highly of Việt Nam’s efforts to combat corruption and negative phenomena, Xiong underlined the similar policies and determination of the Communist Party of China and the CPV in this regard.

He underlined that General Secretary Nguyễn Phú Trọng and the CPV Central Committee had attached great importance to the corruption combat. Việt Nam had taken drastic actions with a strong resolve and dealt with many law-violating cadres. The CPV had also issued many documents and unceasingly perfected regulations to augment the corruption fight.

The ambassador applauded Việt Nam’s establishment of anti-corruption steering committees at the central and provincial levels. He noted China was ready to cooperate with Việt Nam in corruption prevention and control in line with the common perceptions between their top leaders.

In the interview, he offered greetings to the Vietnamese people and expressed his hope that in the New Year, Việt Nam would obtain brilliant achievements in socio-economic development under the leadership of General Secretary Nguyễn Phú Trọng and the CPV Central Committee.

— VNS   LINK

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Henig:  Việt Nam values development of friendship with Portugal: PM

January, 19/2023 - 13:13

PM Chính suggested both sides facilitate visits, especially those at high level to raise mutual understanding and political trust, as well as fully and effectively tap existing cooperation mechanisms and build new ones to step up collaboration in promising areas that match their interests.

HÀ NỘI — The Vietnamese Government always values the development of traditional friendship with Portugal, Prime Minister Phạm Minh Chính told Portuguese Minister of Foreign Affairs João Gomes Cravinho during a reception in Hà Nội on Wednesday.

PM Chính suggested both sides facilitate visits, especially those at high level to raise mutual understanding and political trust, as well as fully and effectively tap existing cooperation mechanisms and build new ones to step up collaboration in promising areas that match their interests.

On multilateral cooperation, he proposed working closely together and offering mutual support at multilateral forums and international organisations, making active contributions to dealing with regional and global issues.

About economic ties, the host asked Portugal to create favourable conditions for Vietnamese farm produce to navigate the country. He wished the two nations would continue taking advantage of opportunities from Việt Nam-EU Free Trade Agreement to raise two-way trade, toward lifting it to US$1 billion in the near future.

On the occasion, he suggested Portugal soon approve the EU-Việt Nam Investment Protection Agreement (EVIPA) to facilitate fair and win-win investment relationship between the two nations, urge the European Commission’s early removal of yellow card warning on Việt Nam’s aquatic products to meet interests of Portuguese and EU consumers as well as ensure livelihoods for hundreds of thousands of workers in the Vietnamese aquaculture industry.

Cravinho, who is on Việt Nam visit from January 17-19, affirmed that Portugal always considers Việt Nam an important partner in the region and expects to further develop all-around ties with the country.

He agreed to enhance collaboration in fields of Portugal’s strength and Việt Nam’s demand such as marine economy, maritime, renewable energy, circular economy and digital transformation.

The FM vowed to continue realising contents of Việt Nam-Portugal tourism cooperation agreement and sharing experience in tourism development, boost sport exchanges, particularly football training and increasing scholarships to students specialised in tourism management, and discuss the signing of labour cooperation deals.

He expressed his support for Vietnamese PM’s proposals related to joint work to fight climate change toward fulfilling goals set at the 26th United Nations Climate Change Conference.

Portugal will create favourable conditions for Vietnamese community living in the country, open the market for Vietnamese farm produce and have a say with the EC on the IUU yellow card, he said.

Regarding the South China Sea (known in Việt Nam as the East Sea) issue, host and guest underscored the importance of maintaining peace, stability, security, safety and freedom of navigation and overflight in the South China Sea, settling disputes by peaceful means in line with international law, especially the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

— VNS   LINK

Henig:  Politburo resolutions give boost to regional growth

January, 21/2023 - 10:11

The Politburo issued six resolutions on socioeconomic development and defence safeguarding six regions, a judicious move to optimise each area's potential and promote national development.

In 2022, the Politburo issued six resolutions on socio-economic development and ensuring national defence and security in six key regions, a necessary and judicious move to optimise each one’s potential and promote national development.

The 13th National Congress of the Communist Party of Việt Nam held in early 2021 devised the socio-economic development strategy for 2030 with a vision to 2045. Accordingly by 2030, Việt Nam will have become a developing country with modern industry and upper-middle income, and a developed and high-income country by 2045.

The strategy also identified the direction for the development of the regions – fully capitalising on each region’s advantages in terms of infrastructure, natural conditions, geopolitics, geography, and human resources, along with enhancing connectivity within each region to help participation in global value chains and create new development spaces.

The six resolutions were made for six regions: the midland and mountain region of the North; the Red River Delta, the North Central and Central Coast region, the Central Highlands, the eastern region of the South (or Southeast), and the Mekong River Delta.

Each region has its own characteristics, potential, advantages, and challenges. To utilise their potential, aside from common development policies, it is necessary to issue specific and appropriate policy for each region.

Regional development

Developing regions is a consistent policy of the Party to fully tap into the advantages of regions and localities nationwide to serve socio-economic development, ensure security, and improve people’s lives.

As soon as the resolutions were passed, the Politburo and the Party Central Committee’s Secretariat held conferences to study and publicise the issues among ministries, sectors and localities.

Addressing those events, Party General Secretary Nguyễn Phú Trọng stressed the resolutions’ importance, noting the foremost task of effectively implementing them to translate guidelines and policies into reality.

He emphasised that in addition to being aware of the resolutions’ purpose, it would be important to guarantee high consensus across the whole country at all levels; understand that this is the responsibility of the entire political system; deal with the relationship between regional and national development; and promote consensus on the importance of regional connectivity.

The building, issuance and implementation of the six resolutions hold great necessity for realising the goals set in the Resolution of the 13th National Party Congress, including turning Việt Nam into a developing country with modern industry and upper-middle income by 2030 and a developed and high-income country by 2045.

Northern midland, mountain region

The first resolution on regional development issued by the Politburo was Decree No 11-NQ/TW on orientations for socio-economic development, ensuring national defence and security of the Northern midland and mountain region by 2030, with a vision to 2045.

The Northern midland and mountain region consists of 14 provinces.

Earlier in 2004, the Politburo issued a resolution on the region’s development direction to 2020. After nearly two decades, major changes have been made. However, the region’s potential has not been fully tapped.

The region is still classified among poverty-stricken areas with a slow growth pace.

Decree No 11-NQ/TW targets turning the Northern midland and mountain region into a green, sustainable and comprehensive development zone and a role model of green development for the whole country.

About half of the provinces in the region are expected to be at a medium development level by 2045.

Other targets include preserving and promoting the cultural identities of ethnic minority groups, enhancing the quality of life, ensuring national security, building a strong Party system, and strengthening solidarity among ethnic groups.

Investing in socio-economic infrastructure and human resources will be the two driving forces of the region’s development, focusing on traffic infrastructure attached to economic corridors and training high-quality labour forces.

Mekong River Delta

The Politburo’s resolution on the Mekong River Delta’s development was issued on April 2, 2022.

The Mekong River Delta is home to 13 provinces.

As a rice- and fruit- producing centre, the region has maintained economic growth at a medium rate with an increasing proportion of industry and services.

Several processing centres for agricultural and fishery products with advanced technology have been established in the region. It has also focused on the marine economy, developing fisheries into a spearhead economic sector.

According to Resolution 13, by 2045, the Mekong Delta’s development will be “comprehensive, ecological, civilised and sustainable, preserving the cultural identity of the community living by the river”.

The Mekong Delta will become a sustainable, dynamic and highly efficient agricultural economic centre of the country, the Southeast Asia region and the world.

To realise these targets, the region will develop a system of agricultural centres, economic corridors and infrastructure systems to adapt to climate change and develop marine and tourist economies.

Southeastern region

Home to HCM City and five central-level provinces, the Southeastern region contributed 32 per cent of GDP in 2020. The region’s income per capita in 2020 was the highest nationwide.

In 2020, the Gross Regional Product of the Southeastern region increased by almost five-fold compared to 2005 and 2.6 times compared to 2010, exceeding the target.

The Politburo’s resolution on developing the Southeastern region was issued on October 7, 2022.

By 2030, the region will become a dynamic development area with a high economic growth rate and the country’s driving force of growth. It is set to become a developed region with strong economic potential and a modern economic structure by 2045.

It will become a hub of science–technology, innovation, logistics and high-tech industry, as well as an international financial centre of the Southeast Asian region and the world.

HCM City will serve as a nucleus and a magnet for growth in the region.

Central Highlands

With five provinces, the Central Highlands has a strategic position in terms of economy, politics, culture, society, environment, national defence, security and foreign affairs.

The Politburo resolution issued on October 6, 2022, pointed out that development of the Central Highlands region must find a balance between economy, culture, social development, and protection of natural resources and environment, associated with national defence, security and foreign affairs.

The key target of regional development is to restructure the economy and turn it into a green economy, with a circular economy as the focus.

The region will shift from agricultural production to an agricultural economy based on high-technology applications and digital transformation.

The Central Highlands will also focus on protecting, restoring and developing forests and improving local residents' livelihoods associated with them.

The development of renewable energy, the agricultural product processing industry and the mining and processing industry of bauxite and aluminium are key for the region.

The region is set to develop tourism hubs and products linked with the cultural identity of local ethnic minorities.

The resolution also highlights the close association between the Central Highlands with the Southeastern region and Central coastal provinces.

The Central Highlands will speed up the connection with major economic centres of the country, with countries in the Mekong Sub-region, ASEAN, especially within the Greater Mekong Sub-region Cooperation, and the Development Triangle Area (Việt Nam-Laos- Cambodia).

North Central and Central Coast region

The North Central and Central Coast region consists of 14 provinces from Thanh Hóa to Bình Thuận.

Positive changes have been made in the region over the past 20 years.

With dynamic development, the region has played an important role in the international cooperation and integration of the country. However, it still has several growth indicators lower than the national average.

The Politburo resolution issued on November 3, 2022 identifies the strategic position and role of the North Central and Central Coast region.

The resolution highlights that the region needs to make more drastic and innovative changes for rapid and sustainable development to fully tap the potential of every locality and the whole region.

The region needs to shorten development gaps among localities to improve the capabilities and incomes of local residents so that the region will catch up with other developed regions. This is a key task for local authorities.

Red River Delta

The latest Politburo resolution on regional development for the Red River Delta issued on November 23, 2022. The region consists of 11 central-level provinces and cities, divided into two sub-regions: northern and southern.

The northern sub-region, known as the northern key economic region, has seven provinces and cities. The southern sub-region consists of four provinces.

In 2015-20, the regional growth rate reached 7.49 per cent per year, higher than the national average.

In 2020, the region’s economic development contributed 29.4 per cent of the national GDP. The GRDP per capita in 2020 was VNĐ103.6 million, 1.3 times higher than the national average.

According to the Politburo resolution, the Red River Delta is set to develop sustainably, at a rapid pace, with a focus on economic structure and preservation of national cultural identity.

The region will develop modern industry, services and high-tech, with an organic, green, circular, and agricultural economy of high value.

The region is expected to be a hub of high-quality education and training, a leading science-technology centre, and to lead the country in innovation, digital economy and society, with modern socio-economic infrastructure and a focus on smart and highly connected cities.

Long-existing problems such as pollution, traffic congestion and flooding are to be solved.

The capital Hà Nội will be developed into a modern civilised city, becoming the centre and driving force for regional and national development, striving to be on par with other capital cities of developed countries in the region.

By 2045, the Red River Delta will be a major regional and global economic and financial centre and the country's leading hub of culture, education-training, science-technology, innovation, and public healthcare, while having a modern and smart socio-economic infrastructure.

— VNS   LINK

"Vietnam News" Posted by Henig at KTFA Sunday 1-22-2023

KTFA: Vietnam

Henig:  Colours of Vietnamese economy in 2022 and 2023 outlook

January, 22/2023 - 07:36

In 2022, Việt Nam has emerged as a stronger, more resilient economy. It recovered strongly from the low "base" two years ago to shine a light in a world of challenges and uncertainties.

Võ Trí Thành*

Despite the negative impact of the COVID-19 pandemic, Việt Nam has seen an economic growth trajectory different from the general picture of the world economy over the past years.

In 2020, when the pandemic started causing devastating effects on a global scale, Việt Nam was among the few economies with positive growth (2.9 per cent) while major economies of the world witnessed a severe recession. In 2021, bucking the world’s strong recovery, the economy’s growth rate only reached 2.6 per cent.

Việt Nam has emerged as a stronger, more resilient economy over the past years. It recovered strongly from the low "base" two years ago to shine a light in a world of challenges and uncertainties.

The country’s gross domestic product grew at 8.02 per cent in 2022, the fastest pace over the past 25 years, backed by retail sales (reflecting final consumption), investment (especially FDI disbursement), and impressively increased exports.

We, however, cannot rest on our laurels. Global economic and political uncertainties, challenges and difficulties that have appeared since the end of the third quarter last year are likely to remain for this year. There are several factors that need to be taken into account.

First of all, aggregate demand is driving growth. Total retail sales last year increased by 19.8 per cent thanks to domestic consumption and tourism exceeding 2019 levels before COVID-19.

This increase will be difficult to maintain for this year when outbound tourism accelerates (actually seen by the end of last year), unless the attraction of international tourism is highly effective (it did not reach the target of attracting five million foreign visitors last year, and was much lower than 18 million visitors in 2019).

In late 2021 and early 2022, Việt Nam had high hopes that public investment would be the driving force for post-pandemic recovery. That's not to mention a two-year Socio-economic Recovery and Development Programme from 2022-2023 with support money amounting up to VNĐ350 trillion (US$15.4 billion), approved by the National Assembly from the beginning of 2022.

Investment disbursement and programme implementation were, however, slow despite a little improvement in the fourth quarter of 2022. By the end of November, less than 60 per cent of the public investment plan had been implemented. About VNĐ60 trillion from the economic recovery and development package was actually spent. Private investment was also stagnating; except for foreign direct investment (FDI) disbursement which was quite good, reaching nearly $19.7 billion, an increase of 15.1 per cent compared to 2021.

Building public confidence, promoting public investment disbursement and the Recovery and Development Programme will have great implications for growth in 2023 and beyond.

Commodity exports last year also had a 10.6 per cent jump, fetching more than $372 billion. The downward trend was clearly seen when in the first nine months of the year, exports surged by 17.3 per cent. The significant drop in orders of manufacturing and processing firms in the last three months indicated an uncertain and lacklustre future.

In the last quarter of last year, S&P Global Vietnam Manufacturing Purchasing Managers Index declined to below the crucial break-even point of 50. In November and December, it hit 47.4 and 46.3 respectively, down from 50.6 in October. This indicates that Việt Nam’s manufacturing sector can be in a contraction.

This is understandable when inflation in key markets, including the US and EU, was stemming consumer spending. In addition, as Fitch Solutions suggests, a likely rebound in demand from China after its zero-COVID policy was eased and the country reopened its economy on January 8 will not be enough to offset the impact of a further weakening in global demand.

Lessons learned during the pandemic such as closely monitoring the situation, being flexible in product transformation, taking advantage of FTAs, diversifying markets/partners, transforming governance methods, even restructuring, still have the same value.

The recovery and development programme has taken into account macro risks (inflation, public debt, financial speculation). But until the second quarter of 2022, the financial-monetary pressure was fully recognised. The pressure had been mounting since the end of the third quarter. Average inflation was low, but inflation still rose rapidly compared to the same period in the previous year. Consumer prices in December increased by 4.55 per cent from a year earlier.

The VND/USD exchange rate in October depreciated nominally by 8.9 per cent. The State Bank of Việt Nam was forced to widen exchange rate band from 3 per cent to 5 per cent and raise the operating interest rate twice, 1 percentage point each time. Little liquidity is left for economic recovery due to maturity mismatch problem in banking system and monetary tightening. Market confidence was eroded when many legal violations were discovered, further heightening stock and corporate bond market volatility.

Looking to the bright side, it can be said that many positive expectations are not baseless.

Many forecast that the world economy and many of Việt Nam's main partners will experience a mild recession. The US economy may have a soft landing and China's economy this year will grow better than last year (4.4 per cent compared to 3.2 per cent) due to easing the zero-COVID policy and stabilising the real estate market.

Financial-monetary pressure from outside is likely to ease. The Fed's policy will be more dovish, both in terms of intensity and frequency of interest rate hikes. High global inflation will peak and gradually decline this year. Liquidity tension in the Vietnamese financial and monetary market at the beginning of December last year was relieved by the central bank lifting the credit room by 1.5-2 percentage points. Monetary policy response led to the ease of pressure in foreign exchange market. At the end of 2022, nominal depreciation of VND/USD exchange rate was down to only about 3.5 per cent.

Disbursement of public investment and the recovery programme is expected to be accelerated. Along with it, substantial improvement in the investment environment and a commitment to structural reform will restore market confidence, thereby boosting investment and consumption.

Last but not least, Việt Nam still has a lot of potentials to attract quality FDI, especially when FDI flows to each country are highly selective and often characterised by comparative advantage, business environment, market connectivity and access (such as FTAs), trust in cooperation, and the guarantee of intellectual property rights.

It is believed that the ratio of realised FDI capital to registered capital increased from 54.3 per cent to 82.3 per cent between 2019 and 2022, and the rising proportion of FDI destined to high-tech and high value-added activities are signs that Việt Nam is capturing an increased part of global value-added manufacturing. This would be great growth momentum for the country in the future by creating jobs and making spillover effects to the whole economy.

In a world full of uncertainties and challenges, it is very necessary to "rethink, redesign, rebuild", and "take actions more decisively, wisely and flexibly” as stated by the Prime Minister.

Hopefully, Việt Nam can continue its path to success in 2023 like what it generally did last year. VNS

*Võ Trí Thành is a senior economist at the Central Institute for Economic Management (CIEM) and a member of the National Financial and Monetary Policy Advisory Council. A doctorate in economics from the Australian National University, Thành mainly undertakes research and provides consultation on issues related to macroeconomic policies, trade liberalisation and international economic integration. Other areas of interest include institutional reforms and financial systems. He authors Việt Nam News column Analyst’s Pick.   LINK

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Henig:  Industry and trade sector drives development

06:00 | 22/01/2023

(VEN) - Minister of Industry and Trade Nguyen Hong Dien, a member of the Central Committee of the Communist Party of Vietnam, spoke with Vietnam Economic News about the 2022 industry and trade sector achievements and its 2023 plans.

Could you tell us about the industry and trade sector’s 2022 achievements and contributions to Vietnam's economic development?

In 2022, despite major adverse impacts and the COVID-19 pandemic, Vietnam experienced strong economic recovery and reached its macroeconomic targets.The country maintained macroeconomic stability, ensured major economic balances and reached high gross domestic product (GDP) growth.

The industry and trade sector contributed significantly to those achievements by realizing or exceeding targets set by the National Assembly and the Government. Vietnam reached an Index of Industrial Production (IIP) of nine percent (almost double that in 2021), and a 21-percent increase in total retail sales of goods and service revenues (almost triple the 8-percent target). In the first 11 months of 2022, the country’s budget revenues were 16.1 and 17.4 percent higher than the target and the same period of 2021, respectively.

Industry continues to be a major driving force of the country’s economic growth. Vietnam has maintained its leading position among countries and territories in terms of international trade while ensuring smooth supply chains of goods for the domestic market. The Ministry of Industry and Trade overcame difficulties and suggested solutions to ensure petroleum supply.

Vietnam has renovated trade promotion and improved the operational efficiency of its trade offices abroad.

The industry and trade sector has ensured sufficient power supply for people’s daily life and production in the post-pandemic period, contributing to production resumption and economic recovery.

Implementation of free trade agreements (FTAs) that Vietnam has signed contributed to the country’s foreign trade, while trade remedies reached outstanding achievements, protecting domestic production and markets.

Vietnam reached a record high foreign trade value of US$732.5 billion (up 9.5 percent from 2021) and exported US$11.2 billion more than it imported in 2022 (almost triple that in 2021), contributing to the country’s trade balance, foreign reserve, and interest rate and macroeconomic stability. This is the seventh year in a row that Vietnam has logged a trade surplus.

What were 2022 domestic market highlights?

In the post-pandemic period, the domestic market has recovered quickly and has done better than it did in the pre-pandemic period.

Domestic trade and shopping demand have grown well, while consumption stimulation programs, including trade promotion events, were held simultaneously throughout localities nationwide. Supply-demand connection was implemented efficiently, while goods prices were kept relatively stable, and domestic manufacturers were connected with leading distributors nationwide.

In 2022, Vietnam's e-commerce market value was estimated at US$16.4 billion, accounting for 7.5 percent of the country's sales of goods and service revenues. With an annual increase of 20 percent, Vietnam was ranked fifth among countries worldwide in terms of e-commerce growth by eMarketer.

The industry and trade sector are assisting businesses in different localities to promote supply-demand connections and find new product sources. Many large distribution systems have increased goods stockpiles and launched trade promotion programs to meet the growing demand for goods in the final weeks of the lunar year.

What are the industry and trade sector’s 2023 tasks, targets and solutions?

In the context of the complicated and unpredictable international situation, the Ministry of Industry and Trade will focus on the following key tasks.

The ministry will further efficiently follow and realize guidelines and policies of the Party and the State, especially those related to industrial and trade development, renovate and improve institution building (focusing on industrial development and policies), prepare action plans for and realize socioeconomic development and investment environment and national competitiveness improvement, while keeping eye on international and domestic situations to suggest relevant responses.

The sector will accelerate its restructuring based on science, technology, innovation and digitalization, speed up key infrastructure projects, simplify administrative procedures for new production and mining projects, provide suggestions for international economic integration, especially policies on foreign direct investment (FDI) attraction in the industry and trade sector, encourage FDI enterprises to support, transfer technology and share management expertise with domestic enterprises, and form supply chains of materials, improving the competitiveness of Vietnamese enterprises and their participation in global production and supply chains.

The ministry will consistently and efficiently implement free trade agreements, increase cooperation with potential neighboring markets, and assist localities and businesses to expand and diversify markets, supply chains, imports and exports, and focus on branding and sustainable export development.

Other tasks and solutions include developing domestic trade, combining traditional with modern trade, efficiently exploiting the potential of the country’s 100 million domestic consumers, closely monitor supply, demand, prices and markets of essential commodities, improve market inspection and control, combat smuggling, trade fraud, origin fraud, and unfair competition, better trade remedies, ensure a healthy and equal business and production environment for enterprises, and protect production and consumer interests in compliance with international commitments.

The sector will strengthen administrative disciplines, improve management and administration efficiency, innovate working styles and methods, accelerate administrative reform to encourage investors, producers and traders, promote information technology application, and continue building its e-government.   LINK

Henig:  Company bosses share outlook on economy in 2023

January, 22/2023 - 09:39

2023 is predicted to be a tough year due to various factors like inflation, high interest rates and the Ukraine-Russia conflict. But companies in Việt Nam say they have various strategies in place to overcome the challenges. Việt Nam News reporter Thu Ngân asks senior executives at a number of companies about the strategies and where they think the Vietnamese economy and their own sectors are headed.

2023 is predicted to be a tough year due to various factors like inflation, high interest rates and the Ukraine-Russia conflict. But companies in Việt Nam say they have various strategies in place to overcome the challenges. Việt Nam News reporter Thu Ngân asks senior executives at a number of companies about the strategies and where they think the Vietnamese economy and their own sectors are headed.

Trang Bùi, General Manager Cushman & Wakefield Vietnam

The mild recession in the last quarter of 2022 will continue into the first quarter of 2023. Việt Nam has gone through four real estate cycles, and Cushman & Wakefield anticipates that the real estate industry will go through the current economic downturn more quickly than in previous crises, allowing for recovery in the real estate market in the second half of 2023. In the process of working with domestic and foreign investors, we have noticed there is still strong demand for residential, industrial, retail, and logistics properties.

The major office-based organisations appear to be especially reticent about the hybrid workplace strategy and are taking more time to properly understand its impact on the organisation. Next year we estimate about 140,000 square metres of new grade A & B office space will enter the HCM City market, and this is expected to ease tension related to rents and supply.

The Government is focusing on regulating middle renting and encouraging home ownership in combination with a strong push for social housing. Increasing housing stock in the mid- and lower-priced sectors should promote flow and be a crucial link in the housing stock between social and owner-occupied housing. Therefore, even in 2023 we expect the housing market to remain under tension.

Despite an uncertain economic outlook, retailers continue to seek new physical retail space on sought-after high streets. Investor portfolios are being optimised through relocation and consolidation. This leads to relatively stable retail rents, especially in larger shopping cities. The demand for logistics real estate has remained high despite the current tight market situation and restrictions on new project developments due to the shortage of lands, building materials and administrative support. We forecast the industrial sector will become the next market leader in 2023.

Cushman & Wakefield’s business in Việt Nam has grown considerably in recent years, and 2022 marked our 15th year in Việt Nam.

We have a stable and growing business in Southeast Asia and Việt Nam is an integral part of this growth trajectory. Despite some volatility in the market, our regional and local leaders are excited by the bright prospects of the Việt Nam’s property market.

Kiệt Phạm, Vice President & Country Head of Zoomcar Vietnam

Being open to global trade, Việt Nam's economy is greatly influenced by the international context. There are many forecasts of an economic recession in 2023, but in my opinion we will not quite see a recession next year, though growth will be lower than in 2022. The pandemic is basically under control, and even though the war between Russia and Ukraine will continue to cause unpredictable fluctuations in food and energy prices, we are prepared and have countermeasures in place. Businesses should not lose trust in our economy.

In Việt Nam, we have done very well in controlling the pandemic as well as inflation, thanks to the great efforts from the Government and authorities at all levels. Besides, we have a very strong domestic market with nearly 100 million people, which is a great driving force for the development of the local economy in terms of consumption, investment and tourism. Earlier, Việt Nam's economy was mostly relying on exports and FDI, but that has changed. We are a developing country with a flourishing domestic market, grown and mature local businesses, a young population, and a growing middle class. We can completely rely on our inner strength to grow the economy.

This also bodes well for the services sector. According to market research by Mordorintelligence, Việt Nam's car rental market was valued at US$463 million in 2021 and is expected to reach $884 million in 2027 with a compounded annual growth rate of about 14 per cent in the period from now to 2027. On the other hand, the car ownership rate in Việt Nam is now reaching 23 cars per 1,000 people, which is still low compared to the region, while demand for transportation is high. These are bullish factors for the self-driving car rental industry in Việt Nam.

Despite the great potential, Việt Nam’s car-sharing market also faces challenges. A big challenge is the perception of car owners who still consider their vehicle first and foremost as a great asset that they don’t want to rent. But in fact, an owned car is also a liability, as its value decreases over time. We always tell our hosts that the car is an investment that they should optimise for the best benefit. 

Besides that, the self-driving car rental service relies too much on seasonal occasions and typical use cases of leisure trips due to the legacy of traditional car rental practices such as: high deposits, lengthy and inconvenient renting process, and high pricing.

We believe that overall local consumers still do not fully understand the benefits of car-sharing platforms like Zoomcar, which are convenience, much better security/safety protection, affordability and transparency. In the initial days, the Zoomcar team had to meet and talk to car owners individually, convincing them of the benefits of the platforms for both car owners and users in Việt Nam. Thanks to the non-stop efforts and the team's hard work, we have gradually won the trust of Vietnamese users. 

Despite a difficult 2022, Zoomcar Vietnam achieved the remarkable milestone of closing in on breakeven at the transaction level after just one year of operation.

In our first year, there were zero major accidents/incidents in the tens of thousands of bookings served. We also secured strong positive feedback from guests who love the experience of using Zoomcar as well as from hosts who have been earning extra income from their idling cars.

In 2023, we will continue to stay laser-focused on improving our products and services. We plan to expand to Hà Nội and then Đà Nẵng. This will bring us a step closer to our mission of creating localised solutions that address pressing challenges linked to urban mobility in Việt Nam. Our goal is that by the end of 2023 Zoomcar will be the largest self-driving car rental e-commerce platform in Việt Nam. This is quite a challenging goal, but I strongly believe we can do it.

Dane Fort, CEO of FLG Vietnam

The forthcoming inflationary environment impacts every business like ours in Việt Nam as it puts pressure on our costs and pressure on our members' and potential members' discretionary spending. 

Still, we have seen similar pressures before, and the key to weathering the storm is the same now as it was then: sound financial management practices. We demonstrated this during the global financial crisis of 2008 and more recently during COVID-19 pandemic. Some of our competitors have failed to do so, and we see them starting to falter now - with some of the boutique gyms in the fitness sector proving unable to continue to attract and service their members in this environment, and some of the larger companies in fitness either closing their doors or drastically scaling back expansion plans.  

Conversely, we are launching a new brand which we think fits the tighter times well with California Active. It replaces our Jetts brand with an affordable entry point to Cali's services as well as an upgrade path to broader Cali membership, and this is one key way that we are adapting our business to ensure we have competitive service offerings for the market against a backdrop of reduced spending and higher inflation.  

In the end, the key to success in 2023 is going to be focusing on what we have always done best: providing an amazing member experience nationwide to people looking to improve their health and improve their lives - and doing so at a scale, which no one else in our industry can rival.

— VNS   LINK

Some "Vietnam News" Posted by Henig at KTFA 1-21-2023

KTFA: Vietnam

Henig:  Vietnam’s top 10 socioeconomic developments in 2022

06:00 | 21/01/2023

(VEN) - Vietnam overcame difficulties induced by COVID-19 and achieved significant economic growth in 2022. Vietnam Economic News has compiled a list of the country’s 10 most outstanding socioeconomic developments of the year.

1. GDP grows an estimated 8.02 percent – a 10-year record

According to a General Statistics Office of Vietnam report, Vietnam’s gross domestic product (GDP) reached US$409 billion, an estimated increase of 8.02 percent compared with 2021 – a record annual GDP growth of the 2011-2022 period.

The economy grew in all three major sectors: agro-forestry-fishery: 3.36 percent; industry and construction: 7.78 percent; and services: 9.99 percent.

2. Inflation kept under control

While the world was struggling with growing inflation, Vietnam successfully curbed the domestic inflation rate at lower levels compared with most other countries in the region. The consumer price index (CPI) grew 3.15 percent compared with 2021, with the core inflation rate curbed at 2.59 percent (the National Assembly-set target was below four percent).

Vietnam’s inflation control efforts were praised by international organizations and experts.

3. FDI attraction reaches nearly US$27.72 billion

Vietnam attracted nearly US$27.72 billion of foreign direct investment (FDI) through new projects, capital increases of ongoing projects, capital contributions and stock purchases by foreign investors.

Foreign investment covered 19 of 21 sectors of the Vietnamese economy, focusing on processing and manufacturing industries, real estate, and electricity generation and distribution. Currently, 108 countries and territories invest in Vietnam. Singapore takes the lead with nearly US$6.46 billion, accounting for 23.3 percent of total FDI in Vietnam; the Republic of Korea ranks second with nearly US$4.88 billion; and Japan ranks third with more than US$4.78 billion.

4. Major policies foster economic growth

Resolutions adopted by the Communist Party of Vietnam had a significant impact on Vietnam’s socioeconomic situation.

These include Resolution 18-NQ/TW on further efforts to accelerate institutional and policy improvements, aiming to enhance the effectiveness of land use management, and striving to turn Vietnam into a high-income developed country; Resolution 19-NQ/TW on agricultural and rural development until 2030, with a vision to 2045; Resolution 20-NQ/TW on further innovation and development of the collective economy in the new period with a vision to 2035 and 2040; and Resolution 06/NQ-TW regarding sustainable urban development until 2030, with a vision to 2045.

5. Import-export value hits record, with strong trade surplus increase

Total import-export value reached an estimated US$732.5 billion, an increase of 9.5 percent compared with 2021. The export value was estimated at about US$371.5 billion, up 10.6 percent (the target set by the National Assembly and the Government was eight percent).

The list of goods with export value exceeding US$1 billion each consisted of 39 products, an increase of four products compared with 2021. These included nine products with export value of more than US$10 billion each, an increase of one product compared with 2021.

Trade surplus reached US$11.2 billion, marking 2022 as the seventh consecutive year of Vietnam’s trade surplus.

6. Vietnam ranks fifth among e-commerce markets worldwide

The Vietnamese e-commerce market continued to develop and has become an important distribution channel. In 2022, the market value reached an estimated US$16.4 billion, accounting for 7.5 percent of total consumer goods and services’ sales nationwide. With an annual growth rate of 20 percent, Vietnam was listed by eMarketer among the world’s five fastest-growing e-commerce markets.

7. Outstanding results of external relations

This was a busy year for Vietnam’s external relations, after two years of interruptions due to COVID-19. Party Chief Nguyen Phu Trong’s visit to China in late October following the success of the 20th National Congress of the Communist Party of China was of special significance. President Nguyen Xuan Phuc visited Singapore, the Republic of Korea, Indonesia, and attended APEC 2022 meetings in Thailand. Prime Minister Pham Minh Chinh visited the US, Cambodia, European countries, and attended ASEAN summits and related summits in Cambodia. National Assembly Chair Vuong Dinh Hue visited Laos, the Philippines, Australia and New Zealand. External relation activities continued strengthening Vietnam’s position and role in the international arena.

8. Effective control of COVID-19

This was considered the most impressive success resulting from major efforts of the Vietnamese people, the political system and particularly the health sector. The government changed its pandemic prevention policy toward safe, flexible adaptation to and effective control of COVID-19, aiming to protect at a maximum level people’s health and minimize new infections and deaths. It also promoted socioeconomic recovery and development and ensured social security.

9. Vietnam hosts SEA Games 31

The 31st Southeast Asian Games (SEA Games 31) took place in Vietnam from May 12-23, 2022, following a delay due to COVID-19. The images of stadiums and sporting events attended by mass audiences impressed athletes and international friends.

The Vietnamese delegation came in first, with 205 gold medals, 125 silver medals and 116 bronze medals, making it the event champion for the first time in 19 years. The number of gold medals won by the Vietnamese delegation doubled that of the delegation that ranked second, Thailand. Vietnamese athletes broke SEA Games records in swimming, bike racing, and weightlifting. Both men and women’s football teams won gold medals.

10. Vietnam reopens for domestic, international tourism

On March 15, 2022, Vietnam reopened its borders to resume tourism after almost two years. The United Nations World Tourism Organization listed Vietnam among the countries with the most open tourism policies.

The Vietnamese tourism sector has prepared to serve visitors and adapted to post-pandemic changes in demand.  LINK

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Henig:  AMRO revises Việt Nam's 2023 GDP upward despite regional slowdown

January, 21/2023 - 07:54

In its January update, AMRO estimated ASEAN+3 growth for 2023 at 4.3 per cent, down from the 4.6 growth in the previous projection.

HÀ NỘI — Việt Nam’s GDP growth in 2023 has been adjusted upward to 6.8 per cent in the ASEAN+3 Macroeconomic Research Office (AMRO)’s January Update, up from 6.5 per cent in its October report.

This is in contrast to its downward projection for most economies in ASEAN+3.

In its January update, AMRO estimated ASEAN+3 growth for 2023 at 4.3 per cent, down from the 4.6 growth in the previous projection. The region’s growth in 2022 was also revised down from 3.7 per cent to 3.3 per cent. The downward projection is mainly due to the continuing weakness of Plus-3 economies, especially China, where growth has become much weaker.

China’s 2022 growth was estimated at 3 per cent and is forecast to grow by 5 per cent in 2023 (down from the 5.3 per cent in October projection).

Việt Nam’s economy meanwhile was projected to expand 8 per cent in 2022.

The 2023 growth outlook for ASEAN is forecast down from 4.9 per cent to 4.8 per cent, a slowdown compared to the 5.6 per cent growth of 2022.

According to AMRO, the drag on economic activity from aggressive monetary policy tightening in the United States and the Eurozone will be felt more fully this year, translating to softer export orders for the ASEAN+3.

However, the ongoing resumption of tourism — especially with the return of Chinese tourists — will provide a much-needed boost to growth.

“With recession risks still haunting the United States and Europe, China’s economic reopening cannot come at a better time for the region,” said AMRO Chief Economist Hoe Ee Khor. “China’s stronger economy will support regional activity while the border reopening will boost intraregional tourism.”

China’s economy is expected to rebound strongly, reflecting the removal of containment measures and reopening of its economy.

Inflation is moderating across ASEAN+3, tempered by sustained policy tightening by central banks and easing global supply chain bottlenecks. Oil prices have reverted to almost pre-pandemic levels, reflecting weaker global demand. Prices of key agricultural commodities — although remaining relatively high due to the prolonged war in Ukraine — have fallen from their 2022 peaks.

Việt Nam’s inflation is predicted to come in at 3 per cent in 2023 (down from 3.2 per cent in the previous forecast). Inflation for the ASEAN+3 region was revised down from 6.3 per cent in 2022 to 4.5 per cent in 2023, and for ASEAN at 5.4 per cent in 2023 from 7.7 per cent in 2022.

— VNS   LINK

Henig:  Đà Nẵng to build duty-free zone

January, 21/2023 - 09:36

Đà Nẵng’s people’s committee has submitted a plan for a duty-free zone.

ĐÀ NẴNG – Đà Nẵng’s people’s committee has submitted a plan for a duty-free zone.

The area will cover 151ha at the end of Bà Nà-Suối Mơ Road – 30km southwest of the centre and near the Bà Nà Hills resort.

The city’s planning and investment department said the zone, which was sent to the ministry of planning and investment for review, would include a trade complex, with entertainment sites, duty-free shops, a logistics hub, warehouses, healthcare services, an R&D centre, international education centre, medical school and exhibition centre.

It said the project would be completed by 2027.

The department said the free-duty zone would attract investors with land-rent exemptions for three years of construction, and another 11 years land-rent free in the operation of investment projects.

Investors would also enjoy a 10 per cent tax rate for 15 years, a four-year tax exemption and a 50 per cent cut in income tax for the following nine years.

Despite ranking top in the Provincial Sustainable Development Index in 2021, Đà Nẵng is still seeking economic growth and investment in the post-COVID-19 period as the city’s key tourism industry has not yet fully recovered.

The city said the zone would be a magnet for global trade and service providers and developers.

The first downtown duty-free shop was launched at the beach-front Crowne Plaza Đà Nẵng resort in Ngũ Hành Sơn District at the end of last year.

The city plans to raise more than VNĐ7.9 trillion ( $316 million) for public investment projects in 2023.

— VNS   LINK

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Henig:  Developing mechanical industry top priority for VN

January, 20/2023 - 14:43

Developing the country's mechanical industry sector is a top priority for Việt Nam in the coming decades, said industry insiders and experts.

HÀ NỘI Developing the country's mechanical industry sector is a top priority for Việt Nam in the coming decades, said industry insiders and experts.

While the sector's technical capacity has made leaps and bounds in recent years, gradually becoming a major supplier for highly advanced domestic industries, a key issue remained as it has not been able to utilise economies of scale to bring down costs and further integrate into the global supply chain.

Đỗ Quang Hòa, leader of a mechanic team in one of many factories located in the northern industrial hub of Bắc Ninh Province said his company's biggest fear is not having enough work.

It usually takes a huge amount of investment to build a factory, set up machines, and train skilled mechanics, he said. Not having enough work makes everything expensive for the company and hurts its ability to compete in the market.

In addition, small and medium-sized companies such as Hòa's were almost entirely dependent on larger companies. It has resulted, according to him, in mechanical firms willing to sell at lower-than-cost prices just to maintain production.

He said it's likely the single most important hurdle to overcome for hundreds of mechanical companies in Việt Nam, holding them back from reaching their full potential.

Hòa's opinions echoed a report on the sector by the Ministry of Industry and Trade last year, in which the ministry highlighted major barriers to overcome for mechanical firms including higher set-up costs, longer cashflow cycles, advanced technologies, and very high cost of training.

In addition, the sector's products were typically difficult to sell compared to consumer products. The difficult environment resulted in just a handful of Vietnamese brands, which were mostly small-to-medium in size, unable to compete with larger international brands even with home-ground advantages.

The ministry said the sector's major weaknesses were subpar product quality and a lack of core technologies. In the absence of large mechanical firms, capable of leading and improving the industry's standards, Vietnamese firms have been falling behind in the research and development game, leaving them entirely dependent on foreign inventions and technologies.

According to the ministry, the country's domestic mechanical firms only accounted for 32 per cent of Việt Nam's market share. In addition, they accounted for even less share in the sector's output value at just 18 per cent and declining by the year, showing major shortcomings and limitations in their operations.

To add insult to injury, the government has been slow, or inefficient, in implementing support policies to speed up the industry's growth, according to the Vietnam Association of Mechanical Industry (VAMI).

VAMI urged the government to play a more active role in supporting Vietnamese firms including lowering the barrier of entry to participate in domestic projects and setting a quota for made-in-Vietnam products, to be used in such projects.

"We have observed a lack of collaboration and connection among governmental ministries, science and technology institutes, and universities in training a skilled workforce for the sector." said a spokesperson from VAMI.

The association said while many State-owned companies enjoy key advantages such as infrastructure, financial capital and skilled workers, management has often been found inadequate, causing waste and inefficiencies.

Meanwhile, private-sector companies lacked a clear development path and often failed to communicate or collaborate with their peers, leading to several firms investing in producing the same products, with little added value to compete with imported rivals.

Huỳnh Quang Nhung, deputy director-general of THACO Industries, one of the country's leading mechanical companies, said most Vietnamese firms have not met the standards to supply parts to major manufacturers operating in Việt Nam.

"Our approach to solving this issue is to actively seek capable partners, which allows us to not have to invest in parts they can already make. Our job is to build a strong brand, find new markets and come back to work together with them to grow." Nhung said.

VNS   LINK

"Vietnam News" Posted by Samson Thursday 5-13-2021

KTFA: Vietnam News

Samson:  Foreign investors will soon return to Việt Nam's stock market: HSBC

10th May, 2021

Việt Nam’s stock market is expected to continue to grow, helped by strong economic growth and increasing local liquidity. The positive outlook will attract foreign investors back to the market, according to HSBC.

In the Asia Frontier Insight - Việt Nam report, the research team from HSBC believe that foreign investors cannot ignore Việt Nam’s market any longer as it offers a favourable risk-reward opportunity in one of the most resilient growth economies and the market’s liquidity is rising.

Foreign ownership limits are the main problem for foreign investors but the bank believes that it is not a deal-breaker. Of 30 biggest companies in the VN30 basket, 24 still have room for foreign investors. 

Another supporting factor is stocks that have already reached FOL can be bought by paying the difference in prices. HSBC reports that as these stocks generated strong profit growth but are traded at cheaper prices compared to other Asian peers, the gap between prices is not big. And even though they're slow, policy reforms are underway which has a positive effect on the market. 

Lastly, valuations are attractive, the report says. The VN-Index is trading at a 12-month forward price-to-earnings ratio (P/E) of 15.1x, a 5.3 per cent discount on its five-year average, and at a 12-month forward price-to-book ratio (PB) of 2.5x, a discount of 2.9 per cent.

The effective containment of COVID-19 has led to a strong rebound in economic growth and continued strong domestic liquidity, boosted by new individual investors. "While this increases volatility risk, we do not see a major correction risk. With deposit rates falling and gold prices under pressure, there are not many alternatives for this volume of liquidity,” says the report. The bright outlook of the stock market on economic recovery was also confirmed by strong corporate results in the first quarter of 2021, with revenue rising 24.8 per cent year-on-year and net profit up 51.8 per cent. 

As of April, the market benchmark VN-Index jumped 12.4 per cent compared to the beginning of the year, outperforming all the major regional benchmarks. The index also broke the psychological barrier of 1,200 for the first time, a level it failed to reach during previous bull markets in 2007 and 2018, the report says.  Despite the strong growth, foreign investors kept fleeing from the country's stock market since early 2021.   LINK

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Samson:  US firms interested in Vietnamese supply chain

9th May, 2021

A new report has found 43 per cent of US-based respondent companies cited Việt Nam among their top three buying geographies as of early 2021, doubled from 2019, according to the Q1 2021 report from QIMA, a US provider of supply chain compliance solutions.

The report surveyed more than 700 businesses with international supply chains.

The data shows a 16 per cent year-on-year increase in demand for inspections and audits in Việt Nam in the first quarter of this year, which represents a third consecutive quarter of growth that had initially begun as a post-lockdown rebound in mid-2020, the article cited a report from QIMA, a provider of supply chain compliance solutions.

This growth is more than just a return to pre-pandemic levels, as Q1 2021 inspection demand has, on average, doubled compared to Q1 2019.

The appetite for Việt Nam sourcing is far from satisfied and is poised to redefine the sourcing landscape in 2021: around a third of buyers globally and 38 percent of US-based buyers name it among countries from where they plan to buy more in 2021.

The website says Việt Nam was not the only country in the region to benefit from expanded business volumes, as data on inspection and audits demand in Southeast Asia show double-digit growth across the board, fueled by the renewed interest from American and European brands alike.  LINK

Samson:  Việt Nam should continue support for vulnerable groups to ensure growth: IMF official

8th May, 2021

Việt Nam will record positive economic growth in 2021, at about 6-7 per cent, if the country continues to support vulnerable groups in the economy and carries on its vaccination campaign, said Jonathan Ostry, Deputy Director of the Asia and Pacific Department of the International Monetary Fund (IMF).

The Southeast Asian country needs to lay a foundation for strong growth in the mid-term, including ensuring sufficient revenue resources for infrastructure development and implementation of public investment, he said. It is necessary for the nation to ensure a resilient financial system, and continue efforts to improve the investment climate, Ostry added.

Regarding a plan being drafted by the Vietnamese Government to assist enterprises during the pandemic, the IMF official said the country’s fiscal policy should be loosened to support economic activities, and limit negative impacts from the pandemic. Policy adjustments depend largely on the speed of economic recovery at the global level, which faces a lot of uncertainties, he said.

Pointing out the weak uptake of tax deferrals in Việt Nam, particularly in the hardest-hit sectors of the economy, the IMF recommended the introduction of temporary corporate income tax (CIT) loss-carry backwards to improve firms’ cash flows, better targeting of temporary CIT reductions to benefit distressed but viable small and medium-sized enterprises, and the introduction of temporary provisions for accelerated depreciation or investment tax credits. He said Việt Nam’s economic growth story in the past three decades is notable since it is sustainable and inclusive growth that helps improve local livelihoods.

Thanks to market-oriented reforms which enable improvements in the business climate, and the attraction of huge amounts of foreign direct investment, Việt Nam has risen from being in the group of the world’s poorest countries to gaining “middle-income” status.

The country should work to improve the business environment and ensure an equal playground, he said, adding this includes reforms geared towards simplifying and reducing the regulatory burden for domestic firms, easing entry costs for enterprises, continued reform of State-owned firms, and enhancing good governance.

Additionally, he suggested Việt Nam enhance human capital and technology access to boost labour productivity, which facilitates investments in more complex products that can gain a better competitive edge in the international market.   LINK

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Samson:  Confidence in Việt Nam’s business environment continues to rebound

May, 06/2021 - 08:30

European business leaders began the year positive and optimistic about Việt Nam’s trade and investment environment, according to new data from the European Chamber of Commerce in Việt Nam (EuroCham).

EuroCham’s Business Climate Index (BCI) hit 73.9 points in the first quarter of 2021. This is the highest score recorded since the third quarter of 2019, before the COVID-19 pandemic hit global trade and investment. This continues a positive upward trend, with the score rising more than 47 points over the last 12 months.

It comes after Việt Nam recorded strong economic growth at the start of 2021, and this is reflected in the optimistic outlook of European enterprises. When asked about the prospects of Việt Nam’s business environment in the next quarter, 67 per cent predicted either ‘excellent’ or ‘good’ – a 12 per cent increase compared to the previous quarter. Business leaders are also more optimistic about their own companies. More than two-thirds (68 per cent) predict that orders and revenue will ‘maintain or increase’ over the next three months. That’s a 25 per cent increase compared to the fourth quarter of 2020.

EuroCham members are also seeing positive effects from the EU-Việt Nam Free Trade Agreement (EVFTA) which came into force on August 1, 2020. Since it was implemented, more than 60 per cent have benefitted from the agreement. However, business leaders continue to report that ‘administrative procedures’ are the biggest hurdle for them to utilise the EVFTA.

The BCI is a regular barometer of EuroCham members and their perceptions of the business environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Việt Nam. The fieldwork and data collection for the BCI is conducted by YouGov Vietnam.

Commenting on the BCI, EuroCham Chairman Alain Cany said: “The Business Climate Index confirms once again that Việt Nam is open for business. While countries continue to struggle with the impact of COVID-19, Việt Nam has ensured that companies here can continue their operations as close to normal as possible. This is helping to drive economic growth and fuel the confidence of European business leaders.

“Therefore, it is no surprise that EuroCham members are positive about the future of their own companies and optimistic about the prospects for Việt Nam’s trade and investment environment. The BCI has now almost climbed back to pre-COVID levels – this is a remarkable achievement and further evidence that Việt Nam is on the right path to achieving its twin goals of protecting health and promoting economic growth.”

Thue Quist Thomasen, CEO of YouGov Vietnam, added: “Beyond the headline figure, the data in our latest BCI tells us a lot about Việt Nam’s business environment. For instance, the fact that more business leaders are anticipating a rise in their headcounts and investment plans is – in itself – a vote of confidence in Việt Nam’s long-term prospects. It shows that companies are investing in their workforces and their businesses now in anticipation of a strong and prosperous 2021.”   LINK

"Vietnam News" Posted by Samson Friday 6-12-2020

KTFA:

Samson:  Vietnam : Central bank plans to pilot fintech regulatory sandbox

6th June, 2020

The State Bank of Việt Nam is planning to pilot a regulatory sandbox which would allow fintech companies to participate in providing some banking services starting from 2021.

The seven sectors fintech would participate in within the sandbox were payment, credit, peer-to-peer lending, customer identification support, open application programming interface (open API), tech-based solutions and other banking support services, according to the draft decree which the central bank made public for comment this week.

The central bank said that there was a lack of a legal framework to regulate the operation of fintech companies in Việt Nam, which created risks such as financial exclusion, security and data breach, money laundering and financing of terrorism, high intermediary fee and lack of transparency.

Meanwhile, fintech is developing rapidly in Việt Nam.

The central bank said that the past three years saw a rapid increase in the number of fintech start-ups, from 40 in 2016 to more than 150 currently. Of them, 34 operate in payment, 40 in P2P lending while others provided banking support services without directly collecting fees on end-users. More than 80 per cent of fintech companies in Việt Nam had operation related to banks.

The fintech sector also attracted significant attention of tech giants in Việt Nam like FPT, Viettel and VNPT through the foundation of fintech solution companies, investment funds and incubators to support fintech start-ups.

The central bank cited United Overseas Bank’s Fintech in Asean – From Start-up to Scale up Report 2019 that Việt Nam saw an investment inflow worth US$400 million into fintech last year, accounting for 36 per cent of the total investment poured in fintech in ASEAN and ranking second in ASEAN, only after Singapore. The rapid scale-up and operation expansion of fintech companies could have negative impacts on the stability of the financial and banking system, the central bank stressed.

The participation of Uber and Grab in the transportation market of Việt Nam was an apparent lesson for the financial and banking sector about how to respond to the rapid development of technology, the central bank said.

It was necessary for Việt Nam to have a legal framework for the operation of fintech companies amid Industry 4.0 and the country’s rapid international integration, the central bank said, adding that if the management agency was not active in monitoring the development of fintech from the early stage, their out-of-control development might pose threats to financial and banking stabilities.

The central bank’s task was to promote innovations in the banking sector, at the same time, ensure the financial safety and stability and promote economic growth. The central bank said that a regulatory sandbox would be suitable in the early stage before the issuance of the official legal framework. The decree was expected to be submitted to the Government for approval this month.

The central bank planned to allow banks and fintech companies to apply for the participation in the sandbox from 2021 and the sandbox would be piloted in one or two years, depending on each field.

LINK

Samson:  Vietnam : Digital economy hoped to make up 20% of Việt Nam's GDP by 2025

9th June, 2020
A customer services centre which provides information and guidelines for customers to use online services of the electricity sector

Prime Minister Nguyễn Xuân Phúc has given the green light to a new digital programme to increase economic growth over the next five years.   The plan is to develop a digital government, economy, and society and create digital technology businesses capable of extending their reach to the world. It is hoped this will account for 20 per cent of the country’s GDP by 2025 and at least 10 per cent of each sector.

Việt Nam also expects to be among the top 50 countries in the ICT Development Index and the Global Competitiveness Index, and one of the 35 leading countries in the Global Innovation Index (GII).

Eighty per cent of online public services at Level 4 – the highest level where every procedures from submitting information to payment will be fully available on the internet – will be provided via different devices, including mobile devices, while 90 per cent of dossiers submitted at the ministerial and provincial levels, 80 per cent of those at the district level, and 60 per cent of those at the communal level will be handled online by 2025.

All national databases that create the foundation for e-government development, including those on population, land, business registration, finance, and insurance, will be completed, connected, and shared nationwide. It is hoped this will help secure one of the top 70 positions in the E-Government Development Index (EGDI) over the next five years.

All Level 4 online public services will be available via multiple devices by 2030, which is also the deadline for all dossiers at the ministerial and provincial levels, 90 per cent of those at the district level, and 70 per cent of those at the communal level to be resolved online. The country is also looking to secure a place among the top 35 in the EGDI rankings over the next decade.

In the national programme, Việt Nam also plans to universalise broadband internet and 5G services, have over 80 per cent of its population using e-payment accounts, and become one of the top 30 countries in the Global Cybersecurity Index.   LINK

Samson:  PM welcomes energy giant Exxon Mobil’s investment in Việt Nam

12th June, 2020

Việt Nam welcomed the world’s energy giant Exxon Mobile’s plans of investing in Việt Nam, Prime Minister Nguyễn Xuân Phúc told president of Exxon Mobil LNG Market Development Inc Irtiza Sayyed during a phone conversation on Thursday.

He said Việt Nam was among countries that were able to contain the COVID-19 pandemic early and was striving to seize the opportunity for development. During the process, the country had great demand for power, so the Vietnamese Government welcomed Exxon Mobil’s investment in a complex of ports, LNG storage facilities and LNG-fuelled power plants using advanced technology in the northern port city of Hải Phòng.

Exxon Mobil was exploring the possibility of investing in new projects to develop LNG-to-power plants in Việt Nam, including a 4,000MW LNG-to-power plant in Hải Phòng which could start generating power between 2025 and 2030 and a 3,000MW gas-fired power complex in the Mekong Delta province of Long An.

The PM said the former project would help boost the development of not only Hải Phòng but also the entire northern key economic zone. Regarding the latter, Exxon Mobil would ensure stable LNG supply for the power complex imported from the US and other countries. The import of LNG from the US would contribute to a more harmonious trade balance between Việt Nam and the US, Phúc said.

Sayyed praised Việt Nam for containing the COVID-19 pandemic with effective measures, which he said would create a safe and reliable environment for international investment and trade in the country.

LINK

"Vietnam News" Posted by Samson at KTFA Friday 11-8-19

KTFA:

Samson:  Việt Nam, France hold high-level dialogue to promote economic co-operation

5th November, 2019

The sixth Việt Nam-France high-level economic dialogue took place in Paris on Monday under the co-chair of Vietnamese Deputy Minister of Planning and Investment Vũ Đại Thắng and French Secretary of State to the Minister for Europe and Foreign Affairs Jean-Baptiste Lemoyne.

Both sides expressed their delight at trade ties between the two countries, with two-way trade reaching 6.65 billion euros (US$7.24 billion) in 2018.

They underlined the opportunities created by the EU-Việt Nam Free Trade Agreement (EVFTA) to bolster economic and trade partnerships between Việt Nam and France as well as facilitate market penetration for businesses on both sides.

The two sides discussed a number of joint projects, and showed their readiness to strengthen bilateral economic cooperation.

Over the past decade, a number of projects have received French ODA with committed capital of over two billion euros, including the Hà Nội urban metro line No 3 – a symbol of the Việt Nam-France partnership, they noted.

The projects using French ODA are in the fields of transport, energy, environment and food, which are strategic sectors for Việt Nam. France has shown a willingness to share experience in these areas.

In recent years, Việt Nam and France have strengthened their bilateral partnership through high-level visits, including a visit to France by Party General Secretary Nguyễn Phú Trọng in March 2018 and a Việt Nam visit by French PM Eduoard Philippe in November the same year.

The annual dialogue aims to promote economic co-operation between the two countries, while creating chances for businesses from both sides to meet and exchange.  LINK

Vietnam : RCEP talks make breakthroughs, leaders eye signing in 2020

5th November, 2019
There have been a number of breakthroughs during the latest round of negotiations for the Regional Comprehensive Economic Partnership (RCEP) at the third RCEP leaders' meeting.

Leaders from ASEAN+3, 10 ASEAN countries plus China, Japan and South Korea, met on Tuesday in Bangkok to discuss RCEP's terms and conditions. 

The trade deal, initiated by ASEAN in 2012 which includes Australia, China, India, Japan, South Korea and New Zealand, is expected to be ratified in 2020. 

RCEP, with a market of 3.5 billion consumers and a total GDP of US$49 trillion that accounts for nearly 40 per cent of global GDP, forms the largest free-trade bloc the world has ever seen. Member countries are to join the open market for goods and services, investment opportunities, facilitated trade and simplified customs procedures. 

Minister of Industry and Trade Trần Tuấn Anh said joining RCEP will mark an important milestone in Việt Nam's global integration efforts, especially against a backdrop of increasing protectionism around the globe. 

"After seven years of talks, we have seen significant breakthroughs made thanks to efforts from all parties involved, especially at the 28th round of talks recently in Đà Nẵng, Việt Nam," Anh told Vietnam News Agency.  "We are pleased to see countries have reached an agreement to a final draft of the trade deal and nearly finished talks to open their respective markets to RCEP with the only exception of India."

The trade deal is expected to give a boost to the region's value chain and the development of ASEAN economies and its partners. RCEP, alongside with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Việt Nam Free Trade Agreement (EVFTA), will give Vietnamese businesses unprecedented opportunities to find markets for their products and services. 

Việt Nam, as a member of ASEAN, has been working closely with ASEAN countries as well as the bloc's partners to address concerns from all sides.  "As ASEAN chair of 2020, Việt Nam has an important role to play in supporting ASEAN members and its partners to resolve a number of remaining issues. Việt Nam is fully committed to maintaining co-operation, finalising and preparing for the trade deal's ratification," said the Vietnamese trade minister. 

Chinese Premier Li Keqiang called upon participating countries of RCEP to conclude talks on remaining issues and ensure the signing of the pact at its leaders' meeting next year.  LINK

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Vietnam a magnet for investors: economist

6th November, 2019

The industrial production and logistics sectors in Vietnam have great potential field, according to experts

Việt Nam is an attractive market for investment, Dr Võ Trí Thành, former deputy director of Central Economic Management and Research Institute told a conference in HCM City on Tuesday.

According to the US News and World Report, Việt Nam has risen 15 places this year to eighth in the list of the world’s best countries to invest. In Asia, it ranks fourth behind Saudi Arabia, India and Qatar. 

Thành said Việt Nam enjoys advantages like being located in a dynamic and cohesive area of global visible commerce, a young population, competitive labour costs, having a cogent investment strategy, and commitment to stability, reform and integration. But it also has some disadvantages, such as lack of consistency, quality human resources, infrastructure and competitive salaries, he said. He forecast a good future for manufacturing, services, logistics, the digital economy, infrastructure, and real estate.

Michael Paul Rio, chief operations officer of Indochina Capital Corporation, said hospitality, high-end housing, manufacturing, and logistics market are promising sectors in the Vietnamese economy.

The growth of domestic and international tourism and low-cost carriers, airport expansion, and highway development are creating opportunities for investors in the hospitality sector, he said. The number of domestic and international tourists has been growing at annual rates of 20 per cent and 18 per cent in the last five years, he said. The capacity of the country’s airports has been increasing at 20 per cent.

Since 2015 three new terminals have been built while numerous airports have been expanded, he said. New highways have helped increase the number of domestic tourists travelling by road by 60 per cent, he said. Apartment prices in Việt Nam remain regionally competitive and attractive to foreign investors, he said. The rates per square metre in HCM City and Hà Nội are US$3,800 and $3,200 compared to $4,500 and $25,600 in Bangkok and Singapore, he said.

He said logistics sector growth, FDI inflows, infrastructure development, and retail sales are key factors in attracting investors to the industrial and logistics sectors. “Vietnamese Economy 2020-2030: Recession or Resurgence” was attended by more than 300 company CEOs and leading experts in various sectors. LINK

Foreign insurers eye promising Vietnamese market

7th November, 2019

The World Bank predicts that by 2026, 26 per cent of Vietnamese will be middle class, double the number today

Growing demand for health care and disease prevention in Việt Nam offers great opportunities for life insurers, especially foreign firms, to develop.

Better income has led to more attention on health among many Vietnamese. The World Bank predicts that by 2026, 26 per cent of Vietnamese will be middle class, double the number today. The average growth rate of the insurance market in Viet Nam in 2012-2017 was 21.4 per cent, much higher than the Philippines (14.4 per cent) and China (14.4 per cent).

Along with expansion strategies, life insurance firms have entered a fierce race to increase charter capital to improve their financial strength to attract customers. Among 18 life insurers in Việt Nam, Bảo Việt Life is the only domestic firm.

This year, Manulife has increased its charter capital to nearly VNĐ9.7 trillion (US$418.6 million), Hanwha Life Vietnam increased its charter capital to VNĐ 5 trillion ($215.7 million) from VNĐ 1.89 trillion ($81.5 million), Generali Việt Nam injected additional capital, bringing the current charter capital to VNĐ4.85 trillion ($209.3 million).

Compared to most of the mentioned foreign insurers, Bảo Việt Life has lower charter capital of VNĐ 4.15 trillion ($179 million).

In the field of newly exploited contracts, considered one of the most important categories for life insurers, Manulife leads with revenue from new customers of VNĐ2.72 trillion ($17.3 million). Bảo Việt Life was second with revenue of VNĐ2.64 trillion ($113.9 million).

Notably, the number of newly exploited contracts via bancassurance in 2019 increased by 180 per cent year-on-year while the new premium revenue of this channel accounted for 17.8 per cent of the total newly exploited revenue of the entire market.

Lots of potentials

Despite spectacular growth in the past few years, according to experts, Việt Nam's life insurance market remains relatively untapped.

Experts are upbeat about the Vietnamese insurance industry’s health in the coming years, forecasting it would maintain an annual double digit growth rate. The insurance industry expects a growth rate of 20 per cent this year.

The growth potential is great as the country has one of the world’s lowest life insurance penetration levels at less than 1 per cent of GDP. The average insurance premium in Việt Nam stands at $30, much lower than the global average of $595 and Southeast Asia’s average of $74.

Data of the Việt Nam Insurance Association showed 8 per cent of Việt Nam’s population currently has life insurance. Though there is no updated data, the number of insurance contracts signed via bancassurance in the first half of last year grew by 89 per cent year-on-year, reaching nearly 857,000 contracts. "The potential for further development is enormous, especially as the middle class continues to expand rapidly and awareness of risks such as increased cancer," said the CEO of a foreign insurance firm in the market.

Bloomberg reported on September 23, billionaire Richard Li's FWD Group Ltd. was nearing an agreement to pay about $400 million for the purchase of Vietcombank's Cardif Life Insurance.

There are also domestic insurers which have launched life insurance products like Bao Minh or PVI however, a report of Rồng Việt Securities Company said: “The products of domestic companies are relatively similar. Foreign companies, thanks to their ability to provide differentiated products with better profitability, are targeting the Vietnamese market. There, the direction to buy shares of domestic firms is the fastest way to penetrate the young and highly competitive Vietnamese market."  LINK

"Vietnam News" Posted by Samson Monday 10-7-19

KTFA:

Samson:  World Bank signs $2.2m project to strengthen Việt Nam’s banking sector

2nd October, 2019

The World Bank (WB) and the State Bank of Việt Nam (SBV) on Tuesday signed a financing agreement for a grant worth US$2.2 million to implement a project aimed at strengthening the soundness and resilience of Việt Nam’s banking sector.

Sponsored by the Swiss Government, the grand is designed to improve SBV’s capacity in removing bottlenecks in the banking system.

Under the agreement, the WB will provide technical assistance to launch reforms set in the Restructuring Plan of the Financial System 2016-20 and the Development Strategy of Việt Nam Banking Sector to 2025. At the ceremony, WB Country Director for Việt Nam Ousmane Dione said a sound banking system is of great significance to the sustainable economic development of a country.

By sharing experience in the development of the system, the WB could help the SBV to successfully launch its structural reforms, he added. The WB will team up with the SBV to strengthen legal framework for the banking system, especially the Law on Credit Institutions and the National Assembly’s Resolution No. 42/2017/QH14 on tackling bad debts.

The project will also look to enhance SBV’s forecast and monitoring skills in line with global standards and practices, as well as develop bond market and raise the capacity of the Việt Nam Asset Management Company.

 The grant is part of the $8-million project titled “Strengthening banking sector’s soundness and development” managed by Switzerland’s State Secretariat for Economic Affairs and the WB. LINK

Samson:  Vietnam : Firms advised to use derivative instruments to minimise exchange rate risks

3rd October, 2019

Instead of borrowing foreign currency from banks, firms have to buy it from banks from October 1 this year

Experts suggested firms use more derivative instruments, such as futures and forward contracts, to minimise exchange rate risks when they can no longer borrow the US dollar from commercial banks, starting early this month.

According the central bank’s new regulation, banks have been banned from lending in foreign currency to pay for imports since October 1 this year in a bid to limit dollarisation in the local economy. From that date, instead of borrowing foreign currency from banks, firms have to buy it from banks.

The regulation applies to both domestic banks and branches of foreign banks in Viet Nam lending to anyone who is a Vietnamese resident. Previously, importers were allowed to take out loans in foreign currencies to pay for imports if they could prove they can generate enough foreign currency from their production and trading revenues to repay these loans.

Cấn Văn Lực, Chief Economist of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), said currently, many banks have provided derivative instruments so firms which want to buy foreign currencies in the future can use forward contracts. This tool helps reduce risks for firms because future exchange rates have been determined from the beginning.  According to Lực, the policy to stop foreign currency loans is in the anti-dollarisation roadmap and was announced early in the year so credit institutions have had time to prepare for the application of the new policy.

In general, he said, the relatively stable macro economy, low inflation and stable exchange rate have contributed to improving the confidence in the value of the Vietnamese đồng, which is expected to continually help reduce the hoarding of the US dollar.

The new policy thus will not cause difficulties for both banks and firms, but the central bank and commercial banks should still create a foreign currency trading market with better liquidity to further help firms and individuals in meeting their foreign currency demands. The ban on foreign currency lending also helps raise the competitiveness of domestic goods and firms, experts said.

Banking expert Nguyễn Trí Hiếu said the new regulation would level the playing field between enterprises producing for domestic consumption and those importing for export production. Earlier, only the latter was privy to dollar loans that generally have lower interest rates than đồng loans. Therefore, the ban would encourage production with domestic materials, he said. Besides, this will also help restrict the import of luxury goods, one of the main factors causing trade deficit and macro-instability, especially towards the end of the year when demand for import of consumer goods puts pressure on liquidity in the forex market.

The SBV aims to reduce the proportion of foreign currency in total outstanding debt to below 7.5 per cent in 2020, below 5 per cent in 2030, and to stop lending in foreign currency altogether by 2030. The ratio currently stands at 8.73 per cent, which the central bank estimates at around VNĐ176.47 trillion (US$7.59 billion).   LINK

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Samson:  Vietnam : Exchange rate management policy proves effective

2nd October, 2019

The State Bank of Việt Nam (SBV)'s exchange rate management policy has been appropriate and effective, creating benefits for the economy and confidence for the market.

Speaking at a press conference held in Hà Nội on Tuesday to review the performance of the banking industry in the third quarter of 2019, SBV’s Governor Đào Minh Tú said the assessment was made by members of the National Monetary Policies Council in its recent meeting.

While countries worldwide devalued or appreciated their currencies sharply, the SBV had kept the local currency relatively stable, with the management policy based on the overall balance of the economy such as import and export, public debt, balance of payments and current accounts, Tú said.

Reports from the SBV showed currently, the foreign exchange rate in the domestic market is relatively stable, increasing and decreasing slightly in comparison with the large fluctuations of currencies around the world.

Specifically, on the first two days of this week, the USD Index on the international market increased continuously to reach a two-year record high of 99.2 points. However, in the domestic market, the exchange rate at commercial banks only increased and decreased slightly.

According to the nine-month economic report by the General Statistics Office, despite big economic changes in many countries, including the US Federal Reserve (Fed)’s decision to cut interest rates by 0.25 percentage points in mid-September, the USD/VNĐ exchange rate did not fluctuate significantly thanks to the SBV’s flexible exchange rate management policy. Specifically, the dollar depreciated slightly by just 0.11 per cent against the previous month, 0.49 per cent against December 2018 and 0.39 per cent against the same period in 2018.

As a result, the domestic market liquidity has been ensured while foreign currency transactions have been conducted promptly and smoothly. It has also helped the central bank net buy dollars to build up the nation’s foreign reserves.

According to Tú, many people think that the Vietnamese đồng needs to be devalued to support exports as they are slowing. However, Tú said, the slowdown is seen with all countries and it isn’t feasible to use exchange rates as a tool to promote exports as import volume – mainly materials and equipment to produce goods for export – is also very large.

In the future, Tú said the SBV would conduct open market operations and regulate the credit institution's liquidity at a reasonable level to stabilise the monetary market. It would also combine other monetary policy instruments and take flexible market interventions to stabilise the foreign exchange market, which would contribute to stabilising the macro-economy and supporting reasonable economic growth and build up the nation’s foreign reserves when there are favourable conditions, Tú said.   LINK

"Vietnam News" Posted by Samson Friday PM 9-27-19

KTFA: Vietnam:

Samson:  Vietnam : Banks raise short-term deposit rates to more than 8%

September, 24/2019 - 15:34

Saigon Commercial Bank (SCB) has just announced interest rates of up to 8.21 per cent for six-month online deposits

HÀ NỘI — Commercial banks have recently raised their interest rates for six-month deposits to a record high of more than 8 per cent per year. The rate was previously reserved for long-term deposits of more than a year.

Saigon Commercial Bank (SCB) has announced interest rates of 8.03 per cent for six-month online deposits, rising to 8.21 per cent for deposits valued at VNĐ10 billion (US$435,000) and above. This adjustment gives SCB the highest deposit rate for six month terms.

The bank's rate also rises to 8.76 per cent for 13-36 month deposits of VNĐ10 billion upwards. Nam Á Bank is also listing an 8 per cent rate for six month deposits. The bank’s rate for 7-9 month deposits is at 8.05 per cent per year, while its highest rate of 8.7 per cent applies for 36-month deposits.

Viet Capital Bank, Eximbank and VietBank have also set interest rates for six month deposits at 7.5-7.7 per cent per year. However, interest rates for six-month deposits at State-owned banks Vietcombank, Vietinbank and BIDV remain stable and low at 5.5 per cent per year. Rates for long-term deposits of 12-36 months stand at only 6.8 per cent per year.

It is estimated nearly 20 commercial banks, mainly small and medium ones, are listing deposit interest rates at more than 8 per cent per year in a bid to raise capital to meet international banking Basel II standards set by the State Bank of Việt Nam (SBV).

Viet Capital Bank, which has the highest interest rate on the market of 10.2 per cent per year for 60-month deposits, has asked the SBV for permission to apply for Basel II earlier than expected by the end of the third quarter this year. The SBV's deadline for all banks to apply Basel II is January 2020.

The SBV expects interest rates to remain stable until the end of this year after its decision to cut several key interest rates by 0.25 percentage points from September 16 to help credit institutions access capital at more affordable costs, in turn enabling the institutions to improve liquidity and keep interest rates stable.    LINK

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Samson:  Vietnam : Deputy PM holds talks with World Bank Vice President

24th September, 2019
Deputy Prime Minister Vương Đình Huệ held talks with Senior Vice President and chief economist of the World Bank Pinelopi Koujianou Goldberg in Hà Nội on Monday.

The economist is in Việt Nam to attend the Vietnam Reform and Development Forum 2019.

Deputy PM Huệ thanked the guest for promoting ties with Việt Nam and supporting its macro-economic development policies. Apart from policy consultation, the WB has provided Việt Nam official development assistance and preferential loans worth nearly US$24 billion, about $18 billion of which have been disbursed. He expressed his desire to discuss the strategic partnership between Việt Nam and the WB, priorities in socio-economic development strategy for 2021-25 and the impact of the global economy on Việt Nam, especially amid US-China trade tension.

As the Vietnamese economy is small, and its involvement in the global economy is limited, it is necessary to improve competitiveness and move up in the global value chain, he said, adding that he wished to listen to the WB’s forecasts on the issue and get suggestions to help Vietnamese firms join the global value chain more deeply. The host also sought the WB’s recommendations on issues regarding agriculture, rural development and farmers, urban and regional economic development, and regional economic co-ordination.

Goldberg suggested Việt Nam export processed and high-value products and focus on technological innovation to further join the global value chain. Another important point is reforming tertiary education and vocational training, with a focus on training soft skills for students and workers. Both sides also looked into opportunities and challenges arising from the Fourth Industrial Revolution, policies to facilitate the private sector’s involvement in sci-tech development and improving workers’ income.   LINK

Samson:  Việt Nam's growth moderate this year but remains robust in Asia
25th September, 2019

ADB representatives at the report launch on Wednesday. The bank retained its growth forecasts for Việt Nam at 6.8 per cent in 2019 and 6.7 per cent in 2020

The Asian Development Bank (ADB) forecasts a moderate deceleration for Việt Nam’s growth this year and next, but says Việt Nam is still a standout in Asia with stable development thanks to resilient domestic demand and sustained inflows of foreign direct investment (FDI).

In its Asian Development Outlook 2019 Update released on Wednesday, the bank retained its growth forecast for Việt Nam at 6.8 per cent in 2019 and 6.7 per cent in 2020, after exceptionally high growth of 7.1 per cent last year.

Việt Nam’s growth prospect outperformed ADB’s projection for the average growth of developing economies in Asia (excluding Hong Kong, Taiwan, Singapore and Republic of Korea), which was revised down from 5.7 per cent to 5.4 per cent in 2019, and 5.6 per cent to 5.5 per cent in 2020.

Forecasts for average inflation have been revised down to 3 per cent from 3.5 per cent for 2019, and to 3.5 per from 3.8 per cent for 2020. “Despite a slowdown in export growth due to the escalation of the trade conflict between the United States and the People’s Republic of China and the consequent downturn in global trade, the Vietnamese economy remains healthy thanks to continued strength in domestic demand and sustained inflows of foreign direct investment,” said ADB Country Director for Vietnam Eric Sidgwick.

Việt Nam’s GDP grew 6.8 per cent in the first half this year, slightly down from 7 per cent in the corresponding period of last year. Exports of goods and services slowed by more than half, from 15.7 per cent in the first six months of 2018 to 7.1 per cent this year, due to weakened external demand.

However, the adverse effect of the export slowdown was cushioned by continued strength in domestic demand. Private consumption expanded 7.2 per cent in the first half this year, the same rate as a year earlier. Meanwhile, domestic investment grew 7.1 per cent, bolstered by an improved business environment, strengthened investor confidence and strong FDI inflows. “[The] prospect for domestic consumption continues to be positive, supported by rising incomes, buoyant employment and moderate inflation,” Sidgwick said.

The report also upheld continued government efforts to improve the business environment, along with recent upward revisions to sovereign credit ratings, would spur both private and foreign investment.

If the US-China trade conflict continued to escalate, more manufacturers may consider Việt Nam as an alternative base, providing fresh impetus to FDI inflows, it said. Additionally, the regional Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the recent signing of the free trade agreement with the European Union promised to further open market access for trade and investment. “FDI inflows should therefore continue to be strong in the near term, as evidenced by US$13.1 billion in FDI commitments in the first eight months,” it said.

Nguyễn Minh Cường, principal country economist for Việt Nam at ADB, noted foreign capital had been pouring into domestic companies with foreign equity contributions rising 80 per cent this year. “It’s strong growth, indicating there may by a shift in foreign investment due to the impact of the US-China trade conflict. But we need more time to see the level of displacement and places where foreign capital is located, whether it runs into high quality, value added or labour intensive sectors,” Cường said.

Dim outlook for agriculture

In the first half, all sectors witnessed slower growth but agriculture fell hardest. Prolonged drought and a fresh outbreak of African swine fever dragged growth in agriculture down from 3.8 per cent in the first half of 2018 to 2.4 per cent this year.

The agriculture sector was important in Việt Nam, not in terms of its contribution to growth but its social impact, especially on farmers, Sidgwick said. “They [farmers] are worrying a lot more about farm production which is being affected by issues related to climate change… They find it hard to predict the weather; extreme weather such as floods and droughts make their lives much more difficult.”

Cường said Việt Nam was doing well to diversify its export markets but suggested farmers applied advanced technology in agriculture and improve product quality as the demand from consumers for safe products was rising and many countries were employing high safety standards as non-tariff barriers. Meanwhile, the outlook for industry and services remained positive, according to the report.

The manufacturing purchasing managers’ index remained above 50 in the first eight months, which bodes well for the industry. Services are seen to continue growing with further expansion in retail and wholesale trade to meet buoyant demand and higher tourist arrivals, assuming they reach the target of 15 million by year-end.

The report also highlighted significant risks to the forecast. Further escalation of the US–China trade tensions and the continuing global economic slowdown could shrink global trade, which would adversely impact Việt Nam’s trade performance and economic growth. “Việt Nam has done very well but looking ahead, I think the risk is much higher than it has been and continued resilience is required, but I think the Vietnamese Government is well aware of that,” Sidgwick said.

In the middle of this month, the ASEAN+3 Macroeconomic Research Office (AMRO) also released its forecast for Việt Nam’s growth, which it expected to expand 6.6 per cent in 2019.    LINK

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Samson:  Fitch Ratings gives Vietnam Electricity ‘BB’ rating
25th September, 2019

Electricity demand in Việt Nam is expected to continue to increase at an average rate of  9.5 per cent per year

Vietnam Electricity's (EVN) long-term foreign-currency issuer default rating stands at 'BB' with a positive outlook, according to Fitch Ratings.

The rating reflects the agency's outlook on Việt Nam (BB/Positive), which was revised to positive from stable on May 9 this year.

Fitch has also affirmed EVN's senior unsecured rating of 'BB' and standalone credit profile (SCP) of 'bb'.

EVN's ratings are equalised with those of the sovereign rating under Fitch's Government-related entities' rating criteria. This is due to Fitch's assessment of a strong likelihood of State support in light of the group's strategic importance to the power sector in Việt Nam.

EVN's SCP reflects its position as the owner and operator of Việt Nam's electricity transmission and distribution network, and its near 58 per cent share of Việt Nam's power generation capacity.

Fitch sees EVN's status, ownership and control as 'Very Strong'. The State fully owns EVN, appoints its board and senior management, directs investments, and approves tariff hikes in excess of 5 per cent.

“The support track record and our expectations of State support for EVN are 'Strong' as the company has received guarantees, step-down loans, loans from State-owned banks at preferential rates, subsidies for strategically important projects, and tax incentives. We expect support to be available if needed, even though the government intends to lower direct support for state-owned enterprises and contain sovereign debt levels," Fitch said.

According to Fitch, electricity demand in Việt Nam is expected to continue to increase at an average rate of 9.5 per cent per year, driven by rising industrialisation, urbanisation and affluence. Việt Nam has a solid national electrification ratio of about 99 per cent, with the ratio reaching almost 100 per cent in urban areas. Management has said all electricity consumers are billed regularly and collection rates are between 99 per cent and 100 per cent across EVN's five power-distribution companies.

Hydropower accounts for about 42 per cent of Việt Nam's power-generation capacity. Years with productive hydropower generation have lifted EVN's profit margin, but periods of lower rainfall have forced the company to rely excessively on expensive coal.

About 65 per cent of EVN's borrowings are denominated in foreign currency, exposing the company to substantial currency risk. Lower gains in electricity sales volume also subject EVN to financial stress due to the company's high capex plans. However, Fitch expects EVN to adjust its investments if there is a structural decline in demand. The rating agency believes EVN's financial profile could deteriorate rapidly in the absence of regular tariff increases.   LINK

.Vietnam’s GDP Growth Surpasses China’s

Vietnam’s GDP Growth Surpasses China’s

August 2019

By John Patrick Lee, CFA, Associate Product Manager, VanEck

Recently, Vietnam has attracted global investor interest as a potential beneficiary of the ongoing trade war between the U.S. and China, but investors have also taken notice of the country’s attractive long-term fundamental characteristics, including strong growth rates and attractive demographics.

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https://www.mvis-indices.com/mvis-onehundred/vietnams-gdp-growth-surpasses-chinas?utm_source=dianomi&utm_medium=native&utm_campaign=vth4