VIETNAM BUSINESS NEWS MAY 24
15:28 Tight material supply
impedes textile exports
Although
the demand for Vietnamese textiles is forecast to rise steadily in the short
term, firms are concerned that tight material supply will impede their export
plans. According
to the Vietnam Textile and Apparel Association, export prospects for the
industry are getting better as major importers have reopened their economies
and various free trade agreements have begun to take effect. Under a
likely scenario, Viet Nam's textile export is expected to reach up to US$43.5
billion in 2022. VITAS
said Vietnamese textiles are urging the Government to soon approve the
Development Strategy for Textile and Footwear by 2030 to make the industry
self-sufficient in material production and compliant with rules of origin as
stated in free trade agreements. Decree on 2 percent interest rate
support package officially issued The
Government has officially issued Decree 31/2022/ND-CP on interest rate
support from the State budget for loans of enterprises, co-operatives and
business households. This
decree provides interest rate support for loans in Vietnamese dong arising
from lending activities of commercial banks to customers that are
enterprises, co-operatives and business households according to Resolution
43/2022/QH15 dated January 11 of the National Assembly and Resolution
11/NQ-CP dated January 30 of the Government. The
State budget shall fully and promptly allocate funds for interest rate
support for commercial banks to provide interest rate support to customers.
Commercial banks provide interest rate support to ensure compliance with
regulations, creating favourable conditions for customers. The
interest rate support applies to interest payment obligations at interest
payment terms that arise during the period from the effective date of this
decree to December 31 next year. Commercial
banks will stop supporting interest rates after December 31 next year or when
the funding source runs out, whichever comes first. The loan
with interest rate support is a loan in Vietnamese dong, with loan agreement
signed and disbursed in the period from January 1 this year to December 31
next year, using the capital for the right purpose under the provisions of
Clause 2, Article 2 of this decree and have not yet received interest rate
support from the State budget according to other policies. The
interest rate support period is from the date of loan disbursement to the
time when the customer pays off the loan principal and/or interest as agreed
between the commercial banks and the customers, in line with the funding
source for interest support rates announced, but not exceeding December 31
next year. The
support interest rate for customers is 2 percent per year, calculated on the
loan balance. Hanoi strengthens consumption stimulus
programmes The
capital city of Hanoi plans to strengthen promotion programmes to stimulate
consumption, thereby supporting businesses and enhancing economic growth. Hanoi is
implementing a series of promotional programmes for 2022, focusing on May,
July and November at more than 2,000 sales points of businesses. Notably,
the businesses have registered more than 10,000 promotion programmes with the
Department of Industry and Trade in May, worth nearly 20 trillion VND. In
July and November, Hanoi expects to have about 25,000 promotion programmes. In
addition, many trade promotion activities will be implemented to support
connections, brand promotion and product consumption for Vietnamese
businesses. Hanoi
will also organise a supporting industry fair to display key industrial
products; and an exhibition for the introduction and sale of handicraft
products manufactured under the One Commune, One Product (OCOP) programme. Hanoi
will create favourable conditions for businesses and cooperatives of other
provinces and cities in supplying agricultural products and food, and
carrying out trade promotion activities in the city. Green Economy Forum and Exhibition to
be held in HCM City in November The
Green Economy Forum and Exhibition (GEFE 2022) is scheduled to take place
from November 28-30 in Ho Chi Minh City, with conferences, exhibitions and
dialogues, the European Chamber of Commerce in Vietnam (EuroCham) announced
on May 24. GEFE
2022 aims to help Vietnam fulfill its commitments made at the 26th UN Climate
Change Conference of the Parties (COP26) in the UK last year, and its
socio-economic development targets set in the national strategy on green
growth for 2021-2030. It will
bring together experts, scientists, students and governmental representatives
from Europe, Vietnam and other Southeast Asian nations. GEFE
2022 will also feature EuroCham Vietnam’s Green Business Awards and annual
Gala Dinner. The
event will be organised by EuroCham’s Green Growth Sector Committee with the
support of the Delegation of the European Union to Vietnam, EuroCham’s nine
affiliated European business associations, European embassies and
governmental organisations, as well as the Vietnamese government and its ministries. Solutions sought to help Vietnam's
aviation industry take off Vietnam’s
aviation industry needs to improve to keep up with the global market as
flights resume following the pandemic, Deputy Minister of Transport Le Anh
Tuan said on May 24. He made
the remark at an international seminar titled “Vietnam aviation in a
post-pandemic world” organised by Tap chi Cong San (Communist Review) and the
Ministry of Transport. There
were 42 million international visitors out of 116 million air passengers in
Vietnam in 2019, before the pandemic broke out. About half of them came to
Vietnam to invest and seek business opportunities. The
volume of goods shipped by air reached 1.5 million tonnes in 2019, which was
rather low compared to other modes of transport but accounted for 25 percent
of the value of exported goods. With a
growth rate of over 15 percent per year in the 2010-2019 period, Vietnam's
aviation market is considered to be the fifth fastest-growing market in the
world and the fastest in Southeast Asia. Due to
the impacts of the COVID-19 pandemic, the aviation industry was severely
affected in 2020 and 2021 as domestic airlines stopped international flights,
which account for an average of 60 percent of their capacity, while the
domestic market has also suffered a serious decline. Nawal
Taneja, a senior adviser, said Vietnam can consider enhancing investment in
human resource development, and upgrading infrastructure to increase
productivity. He also
suggested expanding the national airline’s network and flight frequency as
well as promoting trade exchange with strategic partners. Professor
Tran Tho Dat from the National Economics University emphasised that it is
necessary for the State Bank of Vietnam to accelerate credit support for
businesses to allow the aviation industry to recover. He also
mentioned the need to consider reducing expenditure to lessen the negative
impacts of rising petrol prices through the adjustment of the import tax on
fuel, and removing the ceiling cap on air ticket, among others. Participants
at the seminar recommended continuing to invest in building, expanding and
harmonising aviation industry and systems infrastructure. Vietnamese goods make inroads into
Canadian market Vietnam’s
exports to Canada reeled in 2.04 billion USD in the first fourth months of
2022, up 31.77 percent on-year. Of the
total, the export value of apparel, phones and components, and seafood hit
392.278 million USD, 314.862 million USD, and 139.5 million USD, growing
57.59, 22.97, and 73.56 percent annually, respectively. In 2021,
despite COVID-19, Vietnam shipped goods worth 5.3 billion USD to Canada, an
annual increase of 20.8 percent. The
Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP), of which both nations are members, has been considered the leverage
behind such growth. The pact came into force in late 2018. Vietnam also
signed a free trade agreement with Canada, therefore enjoying tariff
reduction or elimination. Notably, since January 1, 2021, Canada removed a
total of 96.3 percent of the tax lines for goods originated from Vietnam. Supportive solutions needed for
enterprises Supportive
solutions for businesses need to be implemented faster and stronger to
improve the capacity of businesses and increase linkage among them, according
to experts. In the
context of a pandemic-disrupted supply chain and political conflict, support
from the Government and organisations for the linkage among businesses is
significant. According
to the Vietnam Association of Supporting Industries (VASI), to improve the
capacity of Vietnamese enterprises, it is necessary to have supportive
policies to reduce costs, easy access to credit and preferential interest
rates for businesses in investment activities and production. There are also
solutions for training and improvement of management. Many
parts suppliers for motorcycle production want to have new investment but
face large capital obstacles because there is no available collateral after
two years of fighting COVID-19. Ministries
and branches should also create favourable conditions to promote support and
linkages between Vietnamese manufacturing enterprises and foreign companies. According
to VAMI, the demand for Vietnam’s machinery and equipment is very large, with
a value of 300 billion USD by 2030. To
participate in this potential market, besides the business efforts, it is
necessary to have support from the State with a synchronous and stable policy
system for sustainable development. The business community has overcome the
pandemic. They have not recovered, so they need more practical and open
policies. The
Ministry of Industry and Trade said to support the enterprises, the ministry
would continue to strengthen and improve the operational efficiency of
centres on support for industrial development in the North and the South.
Now, these centres were actively cooperating with FDI companies in Vietnam,
such as Toyota, Mitsubishi and Canon, in finding suitable suppliers to
participate in the value chains of these firms. According
to VASI, about 300 enterprises are participating in the production supply
chain for foreign companies in Vietnam, of which the motorcycle industry has
a high rate of localisation, while the electronics and automobile industries
have a low rate of localisation. Vietnam
is still importing about 90 percent of electronic parts. For the automobile
industry, the country has 60 enterprises as part suppliers at level 1 for
foreign partners and approximately 145 enterprises as part suppliers at level
2. It must import more than 70 percent of components for the supporting
industry. Industrial real estate recovery to be
fueled by new investment wave The
recovery of the industrial real estate sector will be fueled by new
investment waves, according to the Vietnam Association of Realtors (VARS). Vinhomes
IZ, an industrial property arm of developer Vinhomes, has raised its charter
capital from 70 billion VND (3.02 million USD) to 18.5 trillion VND over the
last two years. VARS
said Prime Minister Pham Minh Chinh had meetings with numerous major US
corporations during his visit to the US last week which provided positive
feedback. Meeting
with the Vietnamese PM, Apple CEO Tim Cook said his company is planning to
expand the supply chain and hopes more eligible firms from Vietnam will
integrate into its global value chain, VARS noted. The
global economy has been severely hurt by the Russia-Ukraine crisis, worsened
by China’s “Zero COVID” policy, triggering supply chain disruptions and surging
costs and transportation time. As a result, demand for storages, warehouses
and factories is rising in large consumer markets like Vietnam. Last
year, the total FDI flows into Vietnam exceeded 31 billion USD, up 9.2
percent compared to 2020. Of the figure, 2.6 billion USD worth of FDI was
poured into industrial properties, VARS reported. By the
end of this year, two new industrial parks, namely Vietnam – Singapore
Industrial Park (VSIP III) and AMATA Long Thanh, will be put into operation.
Work on VSIP III, where the one-billion-USD Lego project will set up base,
started at the end of March. Many
more ready-built factories, including those provided by SLP, BWID and Vietnam
Industrial Park, are expected to be available in southern Vietnam this year,
supplying about 800,000 sqm of warehouses and factories. Southern industrial
parks have sustained a relatively high occupancy rate (about 90 percent) and
a stable level of rental thanks to growing demand. Cargo throughput via seaports sees
modest growth Cargo
throughput across seaports nationwide hit 241 million tonnes in the first
four months of 2022, rising 2 percent year-on-year, according to the Vietnam
Maritime Administration. The
volume, excluding transited goods not unloaded at seaports, included 61.95
million tonnes of exports (up 2 percent), 67.49 million tonnes of imports
(down 9 percent), and 110.99 million tonnes of domestic goods (up 10
percent). Container
throughput also increased 2 percent to over 8.3 million TEUs during the
period. The administration
said 2 percent is the slowest growth in recent years though Vietnam has
entered the post-pandemic new normal. Seaports
in many localities have recorded a sharp decline in volume, such as Binh
Thuan down 28 percent from a year earlier, Can Tho 25 percent, and Kien Giang
12 percent. Major
ports also witnessed drops from 0.5 - 4 percent, including Hai Phong down 0.5
percent, Ho Chi Minh City 2.8 percent, and Vung Tau 4 percent. Over 100 tonnes of Son La plum sold on
Postmart e-commerce platform During
the first half of May, Vietnamese e-commerce platform Postmart supported the
consumption of more than 100 tons of Son La plums, thereby helping farmers to
bring their products to consumers across the country. Boasting
a wide network that is capable of providing products to communes and wards,
along with thousands of specialised means of transport, Vietnam Post has
delivered and helped the payment for all orders on the e-commerce platform
Postmart.vn. This can
be seen during the upcoming “One Commune, One Product” (OCOP) Vietnam Nam
Fruit and Product Festival, which will open in the northern province of Son
La on May 28 and will last until June 1. As a result, Vietnam Post will carry
out many preferential and support freight support for orders at the OCOP Vietnam
Fruit and Product Festival via the digital environment and the OCOP Fruit and
Product Festival in Son La province. Vietnamese economy facing new
challenges amid global uncertainties The
Economic Daily of China has recently published an article stating that the
Vietnamese economy is currently enjoying rapid development, although it is
facing new challenges amid the constantly fluctuating international
situation. According
to details outlined in the article, recent years has seen the local economy
capture the attention of the international community. The
national economy can be viewed as resilient, especially in terms crisis
response. In 2020, amid the initial break out of the COVID-19 pandemic,
Vietnam was one of the few countries enjoying GDP growth. The
first quarter of the year witnessed Vietnamese GDP soar by 5.03% over the
same period last year, with inflation initially contained. Furthermore,
consumer price index (CPI) in the first four months of the year grew by 2.1%,
while financial, monetary, and credit indexes remained stable amid the
national budget revenue growing steadily. Although
the Vietnamese economy is in the process of gradually recovering and traffic
in major cities has almost returned to normal as it was before the pandemic,
it is also facing a "headwind" from the outside, the article said. Economic
globalisation is confronting a range of difficulties and challenges, such as
the development trend of regionalisation gradually appearing, inflation is
increasing, and the Russia-Ukraine conflict is seriously impacting global
economic development. These factors have started to affect the development of
the Vietnamese economy. Vietnam represents bright spot in FDI
attraction Vietnam
remains a bright spot in terms of foreign direct investment (FDI) attraction,
despite the negative impacts of geopolitical factors globally and the
COVID-19 pandemic, according to insiders. Experts
made this assessment at the Vietnam Industrial Property Forum 2022 which is
being co-organised by Dau Tu (Investment) newspaper and the BW Industrial JSC
on May 24. At the
event, Deputy Minister of Planning and Investment Tran Duy Dong emphasised
that although the pandemic has disrupted the global supply chain and the flow
of goods, investors from Asia, Europe, the US, and ASEAN have continued
injecting money into the Vietnamese market. Last
year saw FDI inflows into the country surge by 9.2% to US$31.15 billion
compared to 2020, while financers also injected US$10.8 billion into the
nation during the four-month period, with the additional investment capital
soaring by 92% to reach US$5.29 billion against the same period from last
year. These
positive figures have highlighted investors' confidence in the business
climate and the Government’s policies regarding economic recovery moving into
the post-COVID-19 period. Deputy
Minister Dong pointed out that Vietnam is becoming an attractive destination
for foreign investors, proving the Government’s effective solutions for
COVID-19 containment in order to restore production activities and reboot the
local economy. Furthermore,
these positive signs can also be attributed to rapid vaccination coverage and
the Government’s bailout packages for socio-economic recovery and
development, he noted. Through
consistent political stability and the Government's determination to carry
out these drastic measures, Vietnamese GDP in the first quarter of the year
grew by 5.03% on-year, higher than last year’s growth rate of 4.7%. Most
notably, the country’s total trade turnover throughout the reviewed period
edged up 15.9% to reach US$242.43 billion, of which FDI-invested firms
continued making significant contributions, with import and export value
increasing by 14.9% to US$168.37 billion. Experts
analyzed that new-generation free trade agreements (FTAs) such as the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
and the EU-Vietnam Free Trade Agreement (EVFTA) have become a driving force
behind economic growth, as well as the country’s international trade
activities in the post-pandemic period. Work begins on 40-million USD thin
film project in Binh Dinh province Kurz
International Holdings GMBH from Germany held a groundbreaking ceremony to
build a thin film factory at the Becamex Vietnam-Singapore Industrial Park
(VSIP) in the south central province of Binh Dinh on May 24. Kurz
International is the first European investor to invest in the 1,425 ha park
as well as in the south central province. The
40-million USD project covers 12,000 sq.m. It is the third invested by Kurz
International in Asia. The first
phase of the project is expected to be operational in the third quarter of
2023, with a total production capacity of 15 million sq.m of hi-tech film and
coating products a year. Depending on operations in Vietnam, the total
investment for the project is expected to be up to 100 million USD in 10-15
years. Government urged to complete Ho Chi
Minh Road project by 2025 About
86.1 percent of the Ho Chi Minh Road project has been completed, and the
Government is working on the remaining sections so as to finish the entire
project by 2025, Minister of Transport Nguyen Van The said on May 24. Reporting
on the project implementation to the National Assembly (NA), he said under a
resolution of the NA, this project, stretching 2,744km in total from Pac Bo
in northern Cao Bang province to Dat Mui in the southernmost province of Ca
Mau, should have had at least two lanes and been completed by 2020. So far,
2,362km of the road, equivalent to 86.1 percent, along with about 258km of
access roads, has been completed. About 211km is current under construction
while capital hasn’t been allocated for building the remaining 171km. The said
as the project holds great significance in terms of politics, economy,
defence - security, and poverty reduction, it has received great attention
from the Party and State. It was
carried out basically on schedule during 2000 - 2011. However, only few
sub-projects were implemented between 2011 and 2015 due to impacts of the
global economic crisis. Besides, since the size of the economy remained
modest and resources limited, there wasn’t enough funding for the project to
be completed by the end of 2020 as targeted by the parliament, according to
the minister. He
submitted the Government’s proposal for continued investment in the
uncompleted sections during 2021 - 2025, and about 634km of Ho Chi Minh Road
to be upgraded into expressways after that depending on demand,
effectiveness, and financial capacity. Plan of using State capital must be
realistic: NA The
committee’s Deputy Chairwoman Nguyen Thi Phu Ha said on Monday at the third
meeting of the 15th National Assembly that the plan of using the State budget
for development investment was not feasible, with incorrect capital demand,
forcing the plan to be adjusted three times. At the
meeting, Minister of Finance Ho Duc Phoc disclosed that the ministry’s report
on the budget in 2020 showed that collection totalled more than VND1.5
quadrillion, while spending reached VND1.7 quadrillion, 1.9 per cent and 3.6
per cent lower than the plans, respectively. The
public debt level fell significantly from 63.7 per cent of gross domestic product
(GDP) in 2016 to 55.2 per cent by the end of 2020, with debt maturities
extended and borrowing costs reduced, which helped strengthen the national
financial safety and security and create room to support growth and promptly
respond to the pandemic, Phoc said. According
to Ha, the committee’s verification report found some limitations in budget
collection in 2020, such as central budget revenue, tax and fee collection
failing to meet the plan. The collection of land use fees was much lower than
in previous years. The plan
for using State capital for development investment lacked feasibility and
localities did not register their capital demands correctly, which forced the
plan to be adjusted. There
was also a lack of observance in the implementation of the budget plan, such
as slow allocation and disbursement of public investment and violations in
allocating capital, she said. The
committee’s report also pointed out that the revenues from land lease and
mineral exploitation were mismanaged in some localities, causing losses to
the State budget. In addition, tax evasion remained an issue. She said
that accountability must be enhanced to increase discipline in the
implementation of the State budget plan. According
to the finance ministry, the COVID-19 pandemic heavily affected budget
revenue in 2021 as a number of industries suffered, such as aviation and
tourism, together with the implementation of a number of tax reduction and
exemption policies to promote economic recovery. From the
end of the third quarter, with the large-scale vaccination campaign coupled
with drastic measures to remove difficulties for businesses, economic
activities recovered and supported budget revenue. Budget
collection totalled nearly VND1.57 quadrillion in 2021, 16.8 per cent higher
than the plan. Phoc
said that some industries, such as construction, steel and automobile
manufacturing, generated high profits and contributed significantly to the
State budget. Budget
collection was estimated to be equivalent to 46.6 per cent of the plan for
this year, 15.4 per cent higher than the same period last year. The total sum
of VND16 trillion in tax reduction and exemption was provided to enterprises
and residents in the first four months of this year. SCIC posts lower profits due to
affiliated company losses Of the
amount, VND4.3 trillion came from dividends and distributed profits, VND1.9
trillion from capital sales and VND1.4 trillion from banking deposit and bond
interests. The returned provision for devaluation in investments also
contributed VND3.4 trillion to the figure. Despite
high revenue, SCIC earned a consolidated after-tax profit of just VND3.6
trillion last year, a 10-year low, due to losses from its affiliated
companies. Notably,
SCIC held 31.14 per cent ownership of the national flag carrier Vietnam
Airlines. By late Q3/2021, Vietnam Airlines equity fell to about VND1.5
trillion, leading to a shrinkage of SCIC’s capital. The
airline continued to make a loss of over VND1.1 trillion in Q4, resulting in
equity of VND507 billion. SCIC had to record an additional fall of VND300
billion to its consolidated profit in this regard. By late
2021, SCIC had a total asset of nearly VND57.7 trillion, down 9 per cent
year-on-year, and 145 affiliated companies in its portfolio with a total
state capital of VND46.5 trillion. SCIC is
expected to transform into a governmental fund in the near future with its
focus shifting from capital management to investment. Source:
VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes |
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