VIETNAM BUSINESS NEWS AUGUST 1215:28 Interbank interest rates cool down thanks to good liquidity The liquidity of the banking system has risen recently, helping cool interbank interest rates. According to the State Bank of Vietnam (SBV), the average overnight interest rate in the trading session ending last week was only 0.92 per cent per year, against 1.21 per cent in May. The rate for one-week loans was 1.16 per cent, compared with 1.35 per cent in May. The good liquidity was thanks to a large amount of money the SBV pumped into the market through the purchase of US dollars from commercial banks. In a recent money market report, Saigon Securities Incorporation (SSI) reported about 75 per cent of foreign currency sales contracts have expired to date this year and the remaining contracts will expire in August. Accordingly, the SBV will have to pump about VND157 trillion into the market to buy foreign currency. According to SSI's estimates, commercial banks sold a foreign currency amount of nearly US$7 billion with a 6-month term to the SBV at the beginning of this year. A recent report of Vietcombank Securities Company (VCBS) also stated that the liquidity of the banking system in this period is expected to be more abundant than in the previous quarter when the SBV purchases the dollars following the expiry date of foreign currency contracts. According to VCBS, the bright spot at this time continues to come from the fact that capital flows choose Viet Nam as an investment destination with the registered and disbursed FDI capital still on an increasing trend. The Government’s target of stabilising inflation is being met, and there is still room for controlling inflation. These factors would help increase interbank liquidity, thereby bringing interest rates down again in August, VCBS said. While the liquidity of the banking system is abundant, lending is showing signs of slowing down due to the impact of the COVID-19 pandemic, with many cities and provinces having to implement social distancing measures. According to a report of the SBV’s HCM City branch, credit last month only increased by about 0.56 per cent compared to the previous month. The average credit increase in the previous months was more than 1 per cent. The city's total outstanding loans at the end of July was estimated at VND2.69 quadrillion, up 6.2 per cent compared to the end of 2020. The deposit growth at the city’s banks in the period also showed signs of slowing. The total mobilised capital of banks in the city at the end of July was estimated at more than VND3.02 quadrillion, up only 0.5 per cent compared to the previous month and 4 per cent compared to the end of 2020. As the latest outbreak of COVID-19 is causing many difficulties for production and business, SSI believes the SBV would continue to maintain the current monetary policy in the direction of supporting growth and firms. “The monetary policy might be continually loosened if the pandemic becomes more complicated and lasts longer than expected,” SSI noted. Banks continue to cut interest rates for pandemic-hit clients The State Bank of Vietnam (SBV) will continue directing commercial banks to reduce interest rates for customers affected by the COVID-19 pandemic, said Deputy Governor Dao Minh Tu at the Government’s press conference on August 11. Tu noted that recently, 16 major commercial banks have committed to cutting interest rates for specific groups with a total reduced amount until the end of this year estimated at about 20.3 trillion VND (891.8 million USD). Alongside, four state-owned commercial banks,
Vietcombank, Viettinbank, BIDV, Agribank, have agreed to cut an additional 1
trillion VND worth of interest rates each for cities and provinces
undertaking social distancing measures. The SBV Deputy Governor affirmed that the bank will strengthen supervision to make sure the commitments are realised until the end of this year. At the press briefing, Deputy Minister of Finance Nguyen Duc Chi said that affected businesses and people are expected to benefit from 118 trillion VND (5.18 billion USD) resulting from support related to taxes, land rent as well as charge and fee reduction to them overcome difficulties caused by COVID-19. The ministry is making revisions to propose a number of additional solutions, including a 30 percent reduction in corporate income tax for firms with total revenue of less than 200 billion VND in 2021. Business households and individuals will enjoy a tax cut of 50 percent, while COVID-19 hard-hit groups will enjoy reductions in added value tax, along with exemption of late tax payment fines and decreases in land rent, with an expected value of over 20 trillion VND. For his part, Deputy Minister of Industry and Trade Do Thang Hai said that the ministry is working with the Ministry of Health to design more optimal conditions for the “three-on-site” scheme applied in Ho Chi Minh City and southern localities, with guidances to be issued soon to ensure the efficiency of pandemic control and production at the same time. Regarding the circulation of goods, Hai said that the issue has basically been solved thanks to the government's approval of its proposal on allowing the circulation of all goods excepting for banned goods. At the same time, the ministry has suggested prioritising vaccination against COVID-19 for drivers and cargo loaders, while designing traffic regulating plans to avoid congestion, he added./. Online consultation supports agro-aquatic product exports to Netherlands The Viet Nam Trade Promotion Agency (Vietrade) and the Vietnamese Trade Office in the Netherlands on Tuesday organised a virtual consultation on the export of agro-aquatic products to the European market. As part of the online conference on export and distribution of farm produce and aquatic products in the southern and Central Highlands regions, the event attracted over 100 representatives from Vietnamese agencies, organisations and exporters. According to Nguyen Thi Thu Thuy, deputy head of Vietrade’s export assistance centre, key products listed by Vietnamese exporters include fresh and processed fruit, mushrooms, processed cashews, and shrimp. At the consultation, Vo Thi Ngoc Diep, Vietnamese Trade Counsellor in the Netherlands, and Pham Van Hien, Director of the LTP Import Export B.V., answered more than 20 questions raised by Vietnamese firms. Diep stressed the European market is open without any priorities and restrictions on agro-aquatic products, adding the country’s willingness to import those meeting European and its requirements, and local demand. Since August 2020, Viet Nam and the EU, of which the Netherlands is a member, have implemented their Free Trade Agreement (EUVFTA), offering many tax incentives and opportunities for Vietnamese exporters. Diep said a large number of Vietnamese firms have utilised certificates of origin (C/O) issued for exports to the EU to access the Netherlands’ preferential import tariffs. Highlighting advantages of Vietnamese aquatic products in the Netherlands, the official pointed to the products’ competition against those from Bangladesh, India and Ecuador, among other nations, in recent years. She said the Netherlands now mainly imports fresh fruit from South America thanks to advantages in terms of transport duration and prices. Diep advised Vietnamese firms to seek ways to compete and boost the quality of their products. Hien said 50 per cent of his company’s total imports are from Viet Nam and expressed his wish to increase the proportion. He recommended Vietnamese enterprises use environmentally friendly packaging, as the Dutch market refuses those made of plastic. He also underscored the need to ensure food safety and pesticide residues within the allowable limits for fresh and dried fruit and vegetables. Vietnam looks to bolster agricultural, seafood exports to Algeria, Senegal A consultation session about agricultural and seafood exports to Algeria and Senegal was held on August 11, with the participation of over 100 Vietnamese firms. The event was jointly arranged by the Department of Trade Promotion at the Ministry of Industry and Trade (MoIT) and the Vietnam Trade Office in Algeria and some African nations. Vietnamese Trade Counsellor Hoang Duc Nhuan briefed the participants on potential as well as challenges of exports to Algeria and Senegal, especially in agriculture and seafood. He also introduced ways to seek partners and do transactions and payments in the two African markets, as well as responded to queries of businesses. Vietnamese export firms are advised to study taste and consumer culture in Muslim countries, and pay attention to a certificate confirming that their products do not contain prohibited ingredients in regards to foodstuff made from cattle and poultry. The session was part of a webinar hosted by the MoIT to promote agricultural and seafood exports of Vietnam’s southern and Central Highlands localities, and update information on the two potential markets of Algeria and Senegal./. Canada gives final conclusion on anti-dumping duty to upholstered seating from Vietnam The Canada Border Service Agency (CBSA) has made the final determination on its investigation into the dumping and subsidising of certain upholstered domestic seating from China and Vietnam, according to the Ministry of Industry and Trade’s Trade Remedies Authority of Vietnam (TRAV). Accordingly, out of eight Vietnamese enterprises who cooperate in the investigation, only one is subjected to the anti-subsidy tax of 3.7 percent and the rest don't have to pay this tax. The anti-subsidy tax rate for non-cooperating businesses is 5.5 percent. The Ministry of Industry and Trade attributed the positive result to the close cooperation between the ministry and relevant agencies and People's Committees of provinces and cities to collect information and answer questions from the Canadian side. The fact that Canada believed that the majority of Vietnamese enterprises do not receive subsidies from the Government shows the transparency of the country’s policy and law enforcement. It also reflected that Vietnam's economic sectors are operating in an equally competitive market, said the TRAV. Regarding anti-dumping behaviour investigation, in the CBSA’s final conclusion, most of the enterprises that cooperate in the investigation receive duty rates ranging from 10 to 20 percent, compared to preliminary levels of 20-90 percent. The duty rate for those who didn’t cooperate in the investigation is up to 179.5 percent. Meanwhile, Chinese enterprises are subject to anti-subsidy tax from 1.1 percent to 81.1 percent and anti-dumping duty of between 9.3 and 188 percent. In addition to the CBSA's investigation into dumping and subsidising, the Canadian International Trade Court (CITT) is investigating to determine the damage to the domestic industry. The Canadian International Trade Tribunal (CITT) is reported to continue its inquiry to determine whether the imports are harming the Canadian producers. It is expected to issue a decision by September 2. According to the Canadian data, during the investigation period of the case from June 2019 to the end of September 2020, the export turnover of upholstered seats from Vietnam to Canada reached approximately 135.6 million USD, accounting for 10.08 percent of Canada's total imports of this item. The TRAV has urged the concerned exporters to keep a close watch on the case and fully cooperate with the CBSA during its investigation. They must also closely coordinate with the TRAV to receive timely support./. Corporates seek more flexibility in COVID-prevention measures
Business executives have called on the Government to issue “resolute but flexible” prevention measures to help them survive the COVID-19 pandemic and keep the economy afloat. Speaking last week at a meeting held to discuss ‘Sustainable Production during the Pandemic: Problems and Solutions,’ Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry, said businesses were facing unprecedented challenges from the current wave of pandemic. “The challenges include significant drops in demand [and] revenues, and lack of funds to keep going.” Many businesses wanted the Government to address the problems related to the movement of goods, provide vaccines for manufacturing workers and roll out preferential policies to reduce their costs and taxes, he said. It was important to simplify the procedures for disbursing its VND26-trillion (US$1.13 billion) support package meant for individuals and businesses affected by the pandemic, he said. “Other recommendations are interest rate reduction and debt payment rescheduling, and support for businesses to retain their workers.” Banks should cut loan interest rates and create favourable conditions for businesses to borrow, he said. “Improving the business environment and promoting public investment are also needed to support businesses and the economy.” Vu Duc Giang, president of the Viet Nam Textile and Apparel Association, said the industry’s exports topped $22.86 billion in the first seven months, up 50.22 per cent year-on-year, to surpass Bangladesh and rank second only behind China. Since the fourth outbreak began in April textile and garment enterprises were facing huge challenges due to the social distancing under Directive 16 while the entire production system in the 19 southern provinces had been disrupted, he said. “Disruption in the supply chain, consumption and exports are a major hurdle.” A number of cities and provinces failed to apply Directive 16 in a flexible manner, he said, pointing out that for instance all businesses, including those without infected workers, still had to close. Others were those related to goods circulation and delivery across the country due to inconsistency in prevention measures adopted by various localities, he said. “The stringent restrictions on movements make it extremely challenging for companies to sustain production, especially specialised units.” The Government should provide more specific guidance on how to implement Directive 16 in a flexible manner so that businesses that do not have infected employees could continue to function, he said. Vaccination priority should be given to textile enterprises since less than 1 per cent of their workforce had been immunised so far, he added. Ly Kim Chi, chairwoman of the HCM City Food and Foodstuff Association, said having workers live in the workplace is “not working well and should be stopped so that production can be restored to meet consumer demand.” She pointed out it was only a temporary measure for two to three weeks for medium-sized enterprises and four to five weeks for large enterprises. “Essential food makers have to bear too many costs, including for weekly COVID testing, workers’ board and lodging at the workplace and overtime payment among others.” Many wanted two-thirds of their employees working at their factory and going home directly after work and nowhere else, and staff to buy food for them, she said. Others wanted half their workforce to work at the factory for 15 days, be furloughed for a week, and be tested before re-entering the factory afterwards, she said. The city should assist food firms with carrying out medical screening and surveillance at factories and workers’ homes, she said. “The city should give priority to vaccinating workers at factories that are required to keep production going such as those in the medical and food production sectors.” Dr Nguyen Dinh Cung, a former director of the Central Institute for Economic Management, said it was important to redefine “essential products” since currently the Government only treated food and medicine as such. The fourth outbreak was worse than the previous ones, and many businesses might not be able to survive it, he warned. “The Government should have a comprehensive economic recovery programme, with solutions to stimulate the economy. We need to have a longer-term solution to enable businesses to recover.” Speaking at a recent meeting with business representatives from across the country, PM Pham Minh Chinh promised continued support for those affected by the pandemic, and encouraged everyone to stay positive and “strong.” Despite the outbreak, businesses had done well to keep their employees safe and keep production chains intact, he said. He emphasised that the goals were to prevent a medical or economic crisis, ensure public safety and bring life back to normal by no later than the beginning of next year. But for now all preventive measures, especially social distancing, must be strictly complied with to tackle the highly contagious Delta variant, he warned. “We are willing to sacrifice a few months to have more safe zones, and to sacrifice our needs for peace and health.” Solutions sought for soaring fertiliser prices Amid soaring fertiliser prices compared to early this year, the Ministry of Agriculture and Rural Development proposed the Ministry of Industry and Trade plan a comprehensive inspection on fertiliser production, business, import and export activities in southern provinces. Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said that fertiliser prices in the country and around the world have continuously increased since the beginning of the year. Specifically, Ca Mau urea increased by 72 per cent from VND6,800 per kilo to VND11,700 per kilo. DAP Dinh Vu fertiliser rose by 67.3 per cent from VND8,550 to VND14,300 per kilo. Explaining the reason for the increase in fertiliser prices, experts said prices of input materials for fertiliser production has risen. Sulfur rose over 200 per cent compared to the lowest point of 2019; ammonia increased by nearly 200 per cent, followed by single fertilisers such as urea, DAP, superphosphate and others. In addition, global oil, gas and fuel prices increased, resulting in soaring prices for transportation. Due to the COVID-19 pandemic, there was a serious shortage of containers, meaning the cost of transporting containers increased by up to five times. Those are the main reasons for increasing fertiliser prices. Additionally, China has restricted exports, therefore, there has been a partial lack of fertiliser for some periods. In agriculture, the summer-autumn crop is the period requiring the most fertiliser, pushing up demand. As prices of domestically produced and imported fertiliser increase by 50-73 per cent, it is giving rise to the risk of rampant speculation in fertiliser, as well as declining quality. In order to stabilise fertiliser prices, Team 970 of the Ministry of Agriculture and Rural Development proposed that its counterpart at the Ministry of Industry and Trade direct market management departments of southern provinces to regularly inspect and review stores of agricultural materials to clamp down on speculation and stockpiling to create artificial scarcity. It also proposed the co-ordination with inspectors of the Plant Protection Department and members of the provincial steering committee 389 to step up inspections of fertiliser production, business and import and export activities in the southern area, ensuring the quality and price of fertiliser products in accordance with the State's regulations. Fertiliser is a commodity subject to price stabilisation, but the stabilisation would be difficult when the price increase was mainly due to the increase in raw material prices, said Deputy Minister of Industry and Trade Tran Quoc Khanh at a meeting with the Ministry of Agriculture and Rural Development on Wednesday. It was even more difficult to apply administrative regulations to the market when Viet Nam had made international commitments, he noted. Therefore, he emphasised the view that the two ministries would agree on solutions to propose to the Government. At the same time, it is suggested that production enterprises continue to provide adequate sources of goods to the market, rationalise costs and try to have a lower selling price than import prices, giving priority to fertilisers for domestic agricultural production and not export. Vietnam, Tanzania seek to increase
investment cooperation Tien suggested the two sides soon complete the legal framework for bilateral investment activities and set out orientations as well as some specific cooperation proposals between the two countries in agriculture, education and infrastructure. In the context of the COVID-19 pandemic spreading far and wide, the two countries’ partners should maintain online meetings to share and exchange information and strengthen connectivity, he said. For his part, Minister Mwambe voiced his support for Ambassador Tien’s cooperation proposals and affirmed Tanzania will continue to work alongside Vietnam to improve the legal framework for investment. Mwambe highly appreciated the fact that Viettel-invested Halotel has provided telecom services, helping to boost socio-economic development in remote areas of Tanzania. He also expressed his desire to learn from Vietnam’s experience in developing the garment, footwear, rice, aquaculture and seafood processing industries. Tanzania will act as a gateway for Vietnamese businesses to access the East African Community (EAC) market, the Southern African Development Community (SADC) market, and above all, the 55 African countries in the African Continental Free Trade Agreement (AfCFTA), said the minister. Buffer zones around industrial areas can protect supply chains With demand for essential goods skyrocketing in many provinces and cities amid tightening social distancing requirements to tackle the surge in COVID-19, ensuring their supply to the market is an urgent task. In a report sent to the Prime Minister, the Ministry of Agriculture and Rural Development’s southern working group said at some factories with a large workforce, only 30-40 per cent of workers are vaccinated. The risk of people who ensure long-term supply of food and foodstuffs contracting the infection is thus very high. Many factories, supermarkets, and wet markets are closed after people were found there with infection, reducing supply, causing local shortages and affecting social security. Large manufacturing and retailing enterprises play an important role in ensuring the supply and distribution of goods to consumers. Masan, whose core businesses are the production of essential consumer goods and retail, has more than 30 plants and a number of hi-tech livestock and crop farms in most of the country’s key economic regions. Its VinMart/VinMart+ supermarket and store chains are the largest modern retail chain in the country with nearly 2,500 outlets. To enable more consumers to access its modern retail channel, Masan plans to open another 750 VinMart+ stores this year, taking the total number of outlets across the country to more than 3,000. Masan sells essential items such as rice, instant noodles, soy sauces, fish sauces, beverages, pork, chicken, eggs, green vegetables, and so on. As one of the few enterprises in the country capable of integrating the entire chain comprising production, supply, distribution, and retail, Masan serves the essential needs of a large number of customers nation-wide at steady prices. Thanks to scrupulously implementing COVID-19 prevention and control measures, Masan's factories have functioned normally since the pandemic broke out, ensuring uninterrupted supply of essential goods. With more than 40,000 employees working in its manufacturing and retail operations, Masan's top priority is protecting their health and that of customers, and preventing any disruption of the supply chain. Right from the early days of the COVID-19 outbreak, its factories and retail systems have tightened anti-epidemic measures, including the implementation of 5K and the ‘3 on-site’ requirements. Implementation of the latter is a big challenge for many businesses since some do not have enough employees while many women workers are unable to stay at the worksite since they have to take care of their children and other family members. Moreover, the cost of having workers stay on site is too high since businesses have to set up facilities for staying, provide food and periodically have the workers tested for COVID. Many business owners said due to the large number of cases in the southern provinces and cities, infection could sweep across enterprises at any time. The Delta variant causes more infections and spreads faster than earlier ones. With the high density of factories in the southern region and very large number of workers, it is extremely difficult for businesses to find sufficient accommodation space for them. Speaking at a national online meeting chaired by Prime Minister Pham Minh Chinh on August 8, Nguyen Thi Phuong, permanent deputy general director of VinCommerce (an affiliate of Masan Group and owner of VinMart supermarket and VinMart + store chains), said though the ‘3 on-site’ model is appropriate, actual implementation shows it can only be effective for a short period of one to two weeks. In the longer term, if there is an infection, it would create a large pool of infection, she pointed out. To preclude this, she called for setting up "buffer zones" around factories for workers to eat, rest, social distance, and fulfil other personal needs while ensuring full compliance with pandemic prevention and containment regulations. “Enterprises will actively search for buffer zones, which can be schools, vocational schools, warehouses, stadiums, and unused arenas. “But this solution can only be successful with the support of the Government and local authorities. Therefore, businesses expect the Government to approve the buffer zone solution and replicate the model.” To help customers shop without apprehension, VinMart/VinMart+ chains have adopted strict epidemic prevention measures comprising three lines of protection. Line 1 – Their employees, partners and customers are required to mandatorily comply with the Ministry of Health’s 5K message. Line 2 – The chains scrupulously comply with epidemic prevention and containment regulations in each locality and Line 3 – They deploy internal epidemic prevention measures. Before beginning their shift all supermarket and store employees must have their temperature checked and disinfect their hands, and they are provided with protective equipment including face masks, gloves and hand sanitisers. The internal inspection team regularly checks, reminds and ensures that all employees strictly comply with regulations. Suppliers coming to the supermarkets must also strictly comply with regulations such as making health declarations, washing hands with antibacterial soap /liquid and having their temperature checked. All these measures are aimed at providing safe shopping space and ensuring the smooth operation of the retail system to fulfill the role of providing essential goods to consumers. Masan Group has written to the Ministry of Health and Ministry of Industry and Trade asking for favourable conditions to vaccinate its sales staff at supermarkets and stores and workers at factories producing essential goods against COVID-19. More than 10,000 employees of Masan have so far been vaccinated. Banking fees reduced to help customers overcome pandemic effects Many banks have reduced or even waived fees for interbank transfers and ATM withdrawals for the rest of the year following similar cuts by the National Payment Corporation of Viet Nam to support customers hit by the latest COVID-19 outbreak. The Bank for Investment and Development of Viet Nam (BIDV) said it would fully exempt online and ATM transfer fees and reduce ATM withdrawal fees by 5 per cent. Its ‘Stay at home with you programme increases the interest rate on online savings by 0.2 per cent, refunds online payments by 6 per cent and 10 per cent when they pay at supermarkets. The Bank for Foreign Trade of Viet Nam (Vietcombank) has cut intra-bank money transfer fees by 80 per cent and inter-bank transfer fees by 25 per cent, and other service fees by 33 per cent. It has reduced cash withdrawal fees at non-Vietcombank ATMs by 17 per cent. For institutional and corporate customers, it has cut inter-bank money transfer fees by 50 per cent. The National Payment Corporation of Vietnam (NAPAS) announced a 50-75 per cent reduction in its service fees on electronic switching for credit institutions, which means the banks’ profits will not be affected by the cuts. This is the second fee reduction by NAPAS this year. Last year it had made three cuts totally worth VND530 billion (US$23 million). The central bank requires credit institutions and foreign banks based in Viet Nam to reduce transaction and transfer fees by the same rate as NAPAS. NAPAS encourages large banks to reduce service fees by even higher rates. Automobile companies report positive earnings despite COVID-19 pandemic Automobile trading companies listed on the stock market reported positive earnings results in the first half of this year compared to the same period last year despite the impacts of COVID-19 pandemic. The Saigon General Service Corporation (SVC), earned VND141 billion (US$6.3 milllion) in after-tax profit in the first half of this year, six times higher than the first half of 2020. SAVICO said that the auto market had recovered since the fourth quarter of 2020 and that demand had increased while the supply was limited. The whole market's automobile output in the second quarter of 2021 increased by more than 20 per cent compared to the same period in 2020. Automobile trading companies took full advantage of the market opportunities making good gross profits, SAVICO said, adding that they also continued to maintain sales promotion programmes, and adapt cost-saving controls. Despite the impact of the COVID-19 pandemic, SAVICO is targeting 2021 revenue of VND17.2 trillion, up 7 per cent over the same period last year. They expect profit before tax of VND287 billion, up 11 per cent year-on-year. Although second-quarter profit decreased by 26 per cent year-on-year, Hang Xanh Motors Service Joint Stock Company (Haxaco) still reported a rise in six-month profit of VND61.5 billion, 5.4 times higher than the same period last year. City Auto Corporation (CTF), a unit specialising in distributing Ford luxury cars, reported Q2 after-tax profit of more than VND8 billion, 16 times higher than the same period last year. In the first 6 months of 2021, profit reached nearly VND14 billion, 7.8 times higher than the same period last year. CTF is aiming to earn revenue of VND7.38 trillion, up 130 per cent and profit after tax of VND80 billion, up 5.6 per cent. Although six-month business results increased sharply compared to the same period last year, CTF only achieved 13 per cent of its revenue target and 17.5 per cent of the year's profit plan. The Viet Nam Automobile Manufacturers Association (VAMA) announced that sales of its member units in June 2021 reached nearly 23,600 vehicles of all types, down 8 per cent compared to the previous year. However, in the first 6 months of 2021, total vehicle sales reached 150,500, up 40 per cent over the same period last year. According to experts, Vietnamese auto sales dropped 15 per cent in May and June partly due to the impact of the COVID-19 pandemic resurging in many localities around the country. Chip shortage A semiconductor chip shortage has caused a global crisis for major automobile producers, forcing them to suspend production and extend the time it takes to deliver their products. For Vietnamese manufacturers, however, the impacts are relatively minor as they can still ensure normal production and business activities, according to insiders. Daiki Mihara, General Director of Honda Vietnam, told the Viet Nam News Agency that the scarcity of the component currently had no impact on the company's production or assembly operations and that it would try to minimise the impact, continue to monitor the situation, and protect the interests of its customers. A representative of Toyota Vietnam also said the impact of the shortage is insignificant as orders are accepted and delivery is made on time. General Director of Suzuki Vietnam Co Ltd Toshiyuki Takahara said domestic models were affected by the shortage, but the company is trying to meet demand by ensuring the sources of raw materials for future supply. Meanwhile, a Honda official said this is a global issue and Honda Vietnam will deal with it with appropriate countermeasures. Pham Nhat Vuong, Chairman of the newcomer Vinfast, said Vingroup planned to sell about 56,000 electric cars next year but the shortage had forced it to lower the number to 15,000. According to experts in the automotive industry, each car has on average about 1,400 chips in hundreds of semiconductor parts and the number can amount to 3,000 in high-tech vehicles such as electric or hybrid cars. Meanwhile, there are now almost no domestic enterprises capable of making a fully functional semiconductor chip. The heavy reliance on overseas spare parts manufacturers, the disruption of the supply chain due to the COVID-19 pandemic, the US-China trade war have all contributed to the shortage, they said. In Viet Nam, the size of the auto market is only one-third of Thailand's and a quarter of Indonesia's, and as a result, the impact is not as visible as in other countries. According to experts, the shortage of spare parts, especially semiconductor chips, could last until the end of this year or even into the first half of 2022. The activities of car manufacturers in the future will certainly feel the impact. Moreover, this shortage will make it difficult for the auto industry worldwide. Vietnam export performance soars after two years into CPTPP Vietnam has expanded trade in goods and foreign direct
investment attraction after two years into the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP). In 2018, 11 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) came together to sign the CPTPP, hailed at the time as the gold-standard deal that would uphold free trade in the Asia-Pacific region amid the US-China trade war. In 2019, the first year of the CPTPP’s implementation, members’ trade in the CPTPP region dropped by 4 per cent, with the exceptions of Vietnam (7 per cent growth) and Australia (0.5 per cent export growth), and signatories that had not ratified the deal, Brunei (27 per cent) and Peru (24 per cent). Vietnam gained in manufactured exports to the CPTPP, especially to Japan. In 2020, amid COVID-19, all CPTPP members’ exports to the bloc declined, though Chile and Vietnam managed to grow their global exports by about 6 per cent, with Vietnam benefiting from global demand for phones, electronics, and computers. CPTPP members’ intra-bloc export performance mirrors their overall export performance: from 2017 to 2020, the ups and downs of CPTPP members’ trade with each other have followed the patterns of their trade with the rest of the world. Australia, Brunei, Malaysia, and Vietnam expanded their exports both to CPTPP members and the world during this period, while Canada’s and Japan’s exports to CPTPP members and the world dropped. In general, CPTPP members’ intra-bloc export gains from 2017 to 2020 were nonexistent or lackluster, except for Vietnam (4 per cent export growth into CPTPP per annum) and Brunei (15 per cent growth, albeit from a low base). Indeed, the CPTPP was built on the extensive network of bilateral and regional trade agreements among member economies. It could be expected to increase the trade flows of partners without extensive trade agreement networks – such as Vietnam, for which the CPTPP represented the first flagship FTA, with deep liberalisation both for outbound and inbound trade. According to a 2019 World Bank estimate, Vietnam will have gained deep market access to CPTPP members and eliminated tariffs on them by 2030. New Zealand and Singapore will also gain significant new access, Brunei will liberalise, and Japan and Singapore will bring down non-tariff barriers. Brunei and Vietnam are expected to score the greatest GDP growth gains, at 1.9 and 1.1 per cent, respectively, by 2030. Unprecedented financial scheme proposed for building
Dong Dang-Tra Linh Expressway In a dispatch to the Government Office late last month, the MoT stated that as the national highway planning for 2021-2025with orientation to 2030 is still being considered by relevant bodies, Cao Bang's proposal (which is based on the draft planning) is legally unfounded for now. "In principle, Dong Dang-Tra Linh Expressway and other highway projects that are in the preparation phase need to follow existing regulations," said Deputy Minister of Transport Nguyen Ngoc Dong. In the draft national highway planning, the MoT proposed allowing local governments to issue bonds to mobilise capital for handling clearance work at highway projects, with the outstanding loan balance not counting towards the loan balance limit of local governments pursuant to Article 7 of the Law on State Budget. Additionally, the draft proposed establishing a separate sub-project for site clearance and assigning local governments to allocate the budget and oversee the implementation of sub-projects. It also suggested setting up a preferential credit package (with coupon rates similar to 10-year government bonds) to lend for highway projects prioritised in 2021-2025. In June 2021, Cao Bang People’s Committee sent Dispatch 1510/UBND-GT proposing the prime minister to approve a specific scheme for the implementation of Dong Dang-Tra Linh Expressway. The province asked for approval to split the VND1 trillion($43.4 million) site clearance work into a separate project using the local budget that would not be calculated as state capital. In addition, to mobilise credit sources for the
project, Cao Bang People’s Committee requested authorising the project's
investor to borrow from the government's preferential credit package for
transport infrastructure. Additionally, to ensure the project will stay on schedule, attract investors, and boost investment efficiency, the People’s Committee also proposed adjusting forest land and agricultural land in areas where the highway passes through. According to Cao Bang Party Secretary Lai Xuan Mon, the investment proposal of Dong Dang-Tra Linh Expressway was approved by the prime minister in 2020 and was included by the MoT among the 15 priority highway projects for investment in 2021-2025. “Dong Dang-Tra Linh Expressway would require significant investment due to the difficult terrain and the forecast low traffic volume in the initial period would make it hard to attract investors. It would then be extremely hard to deploy the project in a conventional way,” said Mon. Phase 1 of the expressway project will have a total investment value of around VND10.642 trillion ($462.7 million). The section connecting to Cao Bang city will form a separate sub-project and use infrastructure items like mountain tunnels and bridges/flyovers to pass valleys will help drive down the project’s total investment value to VND23 trillion ($1 billion) from VND47 trillion ($2.04 billion). Cao Bang People’s Committee also proposed allowing the project investor to raise capital through business cooperation contracts (BCCs), issuing bonds or stocks, instead of just taking up loans from commercial banks. The coupon rate for these bonds would be around 13 per cent a year. “13 per cent is a fair coupon rate, helping the project to raise capital other than bank loans. For successful bond issuance, support from relevant ministries, sectors and Cao Bang People’s Committee is important,” said Tran Tho Dat, a member of the Economic Advisory Group to the prime minister. Dong Dang-Tra Linh Expressway would be 115km in length, with a 52km section crossing Lang Son province, and a 63km section crossing Cao Bang province. It will accommodate average speeds of 80kmh, and 60kmh over difficult terrain. Long An calls investment in logistics centre in Ben Luc Long An Department of Planning and Investment is
calling for investors in a logistics centre in Ben Luc district. The deadline
for submitting registrations is August 30. The centre is part of the master plan to build regional logistics centres and attract logistics companies to form an integrated chain of logistics services in the Mekong Delta, with Long An as the gateway to the entire region. Besides, the project will contribute to realising the development planning of a nationwide logistics centre system outlined in Decision No.1012/QD-TTg in 2015. Once completed, the centre will promote overseas trade and investment, supporting the province in attracting more investors and improve its provincial competitiveness index (PCI). The investor selected by Long An People's Committee will be required to sign an agreement to receive the transfer, capital contribution, and land use rights from current land users in the project area to implement the project. The investor will be allowed to operate the project for 50 years from the date the province approves them as the investor. Russia's Novatek enters LNG market in Vietnam Russian private natural gas producer and exporter
Novatek has established a representative office in Hanoi to sell liquefied
natural gas (LNG) in Vietnam. “Vietnam offers Novatek the prospects of developing gas-related energy projects in the dynamically growing Asian-Pacific region,” said Leonid V. Mikhelson, chairman of the Management Board, “and is of strategic importance for us in implementing our long-term aim of delivering affordable and secure natural gas for many decades in a sustainable manner.” Novatek is the largest independent natural gas producer in Russia. In 2017, it entered the global LNG market by successfully launching the Yamal LNG project. Founded in 1994, the company is engaged in the exploration, production, processing, and marketing of natural gas and liquid hydrocarbons. With the establishment of the representative office, Novatek aims to take an early position in the country's gas-fired electricity market. Specifically, Vietnam's draft Power Development Plan 8 has proposed a four-fold increase of the current gas-fired power capacity to 28GW by 2030, or 21 per cent of the system capacity. The majority of the new capacity is expected to be fuelled by imported LNG. IFC and two affiliate funds acquire 6.29 per cent in PVI Holdings Insurance In a move to expand insurance to people and businesses,
International Finance Corporation (IFC) and two investment funds it manages
are investing in PVI Holdings, one of the largest insurers in Vietnam. IFC and IFC Emerging Asia Fund and IFC Financial Institutions Growth Fund, two investment funds managed by IFC Asset Management Company, a division of IFC, will acquire 6.29 per cent stake of PVI Holdings from its major strategic shareholder, HDI Global SE. The investment will help PVI Holdings strengthen its position in Vietnam and support its expansion across Southeast Asia. IFC and its funds, together with HDI Global SE, will also assist in further developing global best practices in corporate governance, risk management, and compliance to PVI Holdings. “As a shareholder, IFC’s expertise and experience in improving standards, risk management, and governance of businesses in emerging markets will help PVI Holdings perform better, further establish itself in the region, and improve its access global capital markets,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao PDR. “Importantly, PVI Holdings’ continued growth will strengthen and deepen the Vietnamese insurance sector, a key financial infrastructure for the country’s further development.” Transforming from a wholly state-owned enterprise to a listed joint stock corporation in 2007, PVI Holdings is a holding company that owns PVI Insurance Corporation, the largest non-life insurer in Vietnam, and PVI Reinsurance, one of the only two local reinsurers in Vietnam. PVI Insurance provides a full range of non-life insurance solutions to commercial and industrial corporate clients as well as personal customers. PVI Holdings’ two major shareholders include the state-owned Vietnam Oil and Gas Group (PVN) and HDI Global SE, a leading industrial lines insurer worldwide. In 2020, only around 1.3 per cent of Vietnam’s nearly 100 million population was covered by non-life insurance products and the penetration rate of the non-life insurance sector was just 0.85 per cent of GDP. Expansion of non-life insurance products will help provide protective safety nets for Vietnam’s young population. The increased availability of commercial and industrial insurance services will equip investors with effective mechanisms to mitigate risks and uncertainties, helping Vietnam to achieve its goal of becoming a regional manufacturing hub and improving the competitiveness of Vietnam’s export-oriented manufacturing sector – a key economic driver to development, job generation, and shared prosperity. Following the sale of shares to IFC and its funds, HDI Global SE will continue to remain the largest shareholder in PVI Holdings with 48.1 per cent of the voting rights. Together, HDI Global SE and IFC and funds will hold more than 54 per cent of the voting rights in PVI Holdings. Pangasius exports hit US$931 million in first seven months According to the Ministry of Agriculture and Rural Development, seafood enterprises exported 70,000 tons of pangasius products in July, worth US$148 million. Pangasius exports exceeded 458,000 tons in the first seven months of this year, worth $931 million. Among the export markets of pangasius products, from the beginning of the year to now, the US, Mexico, and Brazil posted the highest increase while the EU, the ASEAN, and the UK markets saw a decrease compared to the same period last year. Seafood enterprises in the Mekong Delta said that the average export price of pangasius products in recent months reached about $2.11 per kilogram, slightly edging up compared to the first months of last year. According to forecasts, Vietnam's pangasius exports in the third quarter of this year will continue to post good growth, thanks to increasing global demand and a stable supply of pangasius fish in the Mekong Delta. Currently, enterprises continue to focus on promoting pangasius exports to large and traditional markets, such as the US, China, and the ASEAN, at the same time, accelerating the exploitation of markets in South America and North America. Aviation sector strives to serve 296 million passengers per year The Committee for Management of State Capital at Enterprises yesterday submitted to the Prime Minister the overall strategy on investment and development of enterprises, including Vietnam Airlines and Airports Corporation of Vietnam (ACV). Accordingly, Vietnam Airlines is about to develop its flight routes and infrastructures at the international airports of Noi Bai and Long Thanh, upgrading them to the main gateways of Southeast Asia with the performance of long-haul and inter-continental flight routes. To achieve the set targets, the national flag carrier has to reconstruct its airplanes and invest 50 single-aisle aircrafts, fulfill the reconstruction plans, innovate and improve business efficiency, prioritize digital transformation projects heading to become a digital airline by 2025. As for ACV, apart from the first phase completion of Long Thanh International Airport Project and preparedness for the second phase, the agency will continue to invest in the development, renovation and upgrading of 22 airports as approved plans. It is expected that the total designed capacity of the airports managed by ACV up to 2025 would reach 168 million passengers and 2.5 million tons of cargo per year and in 2030, the figures would reach 296 million and 3.5 million tons, respectively. Currently, the maximum capacity of Vietnamese airports has just reached around 100 million passengers a year. Policy rate cut not in sight at present: C.bank The timing and adjustment of policy rates must be decided based on the actual situation. The State Bank of Vietnam (SBV) does not consider lowering its current policy rates at present as such a move would depend on the economic performance. SBV’s Vice Governor Dao Minh Tu made the remarks in reference to recent rumors that the central bank may adopt a more easing monetary approach in the coming time. “The timing and adjustment of policy rates must be decided based on the actual situation, with the ultimate goal of keeping inflation under control and the stability of the exchange rate,” Tu said. Meanwhile, Tu expected any new changes to the policy rates have to stay in line with the goal of ensuring macro-economic stability, along with the interest of businesses, people, and the security of the banking sector in the short- and mid-term. In 2020, the SBV cut the policies rates three times for a combined of 1.5-2 percentage points per annum to support the economy amid Covid-19 impacts. Tu said, for the time being, the capital mobilization and lending rates of commercial banks are aligned with current economic indicators. “We have to take into consideration the rights of people depositing money in the banks,” Tu stressed. Moreover, given the abundant liquidity at banks and demand for credit is still low as the pandemic situation remains serious across the country, lowering policy rates or adjusting monetary instruments are “inappropriate” at this moment. “The SBV would continue to closely monitor the market situation for timely adjustment, if necessary,” stated Tu, adding the SBV’s main objective is to manage policy rates for the interest of the people and businesses in the short-term and supporting a speedy economic recovery in the post-pandemic period. For the last year and the first seven months of 2021, Tu noted the SBV has managed the monetary policy in a flexible manner and provide the legal framework for banks to restructure debts, waive or cut interest rates for customers affected by the pandemic. To date, nearly 800,000 customers have received banks’ support with total outstanding loans of VND2,000 trillion (US$87.73 billion), and another VND18.8 trillion in interest rates were foregone. In last month's meeting, 16 banks and credit institutions agreed to cut interest rates for total loans of VND20.3 trillion ($886.55 million) from now until late 2021. Electronics exports forecast to be
robust this year The Ministry of Industry and Trade said that as the COVID-19 pandemic has developed exports of many products saw significant drops although some key industrial products saw considerable increases in the first seven months of this year. Statistics showed that the export of phones and components brought in $29.35 billion from January – July, up 11.9 per cent against the same period last year. More than 128 mobile phones were produced in the period, up by 14.1 per cent. That Viet Nam’s phones and components exports kept growing was a good sign, signalling a year of strong growth for the electronics industry, which would contribute significantly to the country’s economic recovery and to achieving growth targets, the ministry said. Phones and components were the top export products of Viet Nam, which account for 15.8 per cent of the country’s total export revenue in the first seven months of this year, followed by electronic products, computers, and components with an export value of $27.4 billion. The ministry said that the electronics industry would continue to grow in the remaining months of this year, driven by the increase in demand for communication products. A number of companies that produce computer and electronics products in other countries had been forced to close down due to the impacts of the virus. The ministry predicted that the export value of computers, electronic components and other products of Viet Nam would hit US$50 billion this year, representing a rise of 13.5 per cent against 2020. Nguyen Thi Thu Thuy, Deputy Director of the Trade Promotion Agency’s Export Promotion Centre, said that the Vietnamese economy continued to see significant changes in the structure of export products. From a country with agricultural products and labour-intensive products being the main exports, Viet Nam was gradually transitioning to producing more high-tech export products with higher added value such as electronics and electronic components. The ministry said that Viet Nam's electronics products were exported to more than 100 countries including China, ASEAN, Japan and the Republic of Korea and were expanding their presence in EU markets. In the first quarter of this year, Viet Nam granted licences for capital increases for a number of electronic products, including Korea's LG Display Hai Phong and Singapore's Fukang Technology. Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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