VIETNAM BUSINESS NEWS MAY 26
15:53 Vietnamese economy to do well in 2022:
experts  The Vietnamese economy recovered more slowly than the world economy last year, but the reverse is likely to be true this year. BIDV Chief Economist Can
Van Luc made the forecast at the conference “Vietnam financial market 2021
and outlook 2022” on May 25. Luc had three possible
scenarios for the Vietnamese economy in 2022. In the best-case scenario, the
economy is expected to rebound strongly with an annual growth rate of 6-6.5
percent. The figure is adjusted
down to 5.5-6 percent in the base-case scenario, and to 4.5-5 percent if
things do not turn out well. Meanwhile, inflation is believed to rise
steadily due to global inflationary pressures. “I’m
quite sure that Vietnamese inflation will rise to around 3.8-4.2 percent this
year. It’s inevitable amid rapid-rising global inflation,” he added. Additionally,
Luc was optimistic that the securities market is likely to become more sound
and stable after several corrections. The VN-Index is forecast to rise
slightly by 7.7 percent to reach 1,614 points in the best-case scenario. Regarding
the banking system, credit growth is expected to hit 14-15 percent while the
non-performing loan ratio would be kept at around 2 percent. Pre-tax profits
of credit institutions are estimated to grow by 20-25 percent against
2021. The insurance market is also expected
to do well in 2022 profit-wise with a growth of 18-20 percent. However,
profits from investment activities are likely to stay lower than in 2020 and
2021. Economic expert Le Xuan Nghia believed
that the corporate bond market is a capital-raising channel more important
than medium- and long-term bank loans. It is the case because corporate bonds
are more flexible than bank loans. The
expert feared that the currently-stagnated bond market would hold back
ongoing bond-financed projects and stifle new projects, putting firms at risk
of defaults. He was
also concerned that the stagnation would freeze the realty market and drive
many banks to a critical situation. He called for transparency and
accountability in the bond market to solve the problem. Pham
Xuan Hoe, Secretary-General of Vietnam Financial Leasing Association,
estimated total financial assets in the economy at over 300 percent of GDP.
The ratio was so high that it signalled a structurally-problematic real
economy. The
secretary-general also highlighted asset leasing as an effective financial
channel for firms, notably small- and medium-sized businesses. However, legal
frameworks for the channel have been outdated and need to be replaced to
unlock its potential. Pham Thi
Hoang Anh, Director of Research Institute for Banking, Banking Academy of
Vietnam, opined that the State Bank of Vietnam had managed central exchange
rates with much success. Notably, foreign reserves reached 114 billion USD by
late 2021. The
director also revealed that total credit to commercial real estate hit 783
trillion VND by late March 2022, higher than the same period in previous
years but still in the safe zone. Vu Nhu
Thang, Vice Chairman of the National Financial Supervisory Commission, was
concerned that risks in the realty market might spill over into the banking
system and securities market, putting firms on the line. He also
underlined Circular 16 issued by the SBV in 2021 as a timely regulation that
constrained banks’ privately-placed bond ownership, effectively curbing the
spillover. UK attaches importance to agriculture
cooperation with Vietnam Minister
of State at the Department for Environment, Food and Rural Affairs (DEFRA) of
the UK Victoria Prentis on May 25 highlighted the importance of the
Vietnam-UK agriculture and rural development cooperation, especially now that
the UK government considers Vietnam as a vital partner in the Indo-Pacific
region. During
talks with visiting Deputy Minister of Agriculture and Rural Development of
Vietnam Phung Duc Tien at the headquarters of DEFRA, Prentis affirmed her
country’s commitment to strongly support the transformation of Vietnam's
agriculture towards green, low emission and sustainable development. For his
part, Tien proposed specific cooperation, including in the field of policy,
to develop green and low-emission agriculture, promote the opening of
agro-forestry-aquaculture markets, and strengthen cooperation in sustainable
development, climate change adaptation and biodiversity. He
expressed his hope that the two sides will soon sign a Memorandum of
Understanding (MoU) on cooperation in agriculture and rural development, thus
promoting and realising priority cooperation programmes and activities in
2022-2025. Regarding
future orientations for cooperation, the Vietnamese official suggested the UK
government to soon consider opening the market for fresh fruits such as
mango, passion fruit, grapefruit, litchi, and longan; and processed pork and
poultry products, poultry eggs, and milk and dairy products, from Vietnam. To
increase trade in livestock products between the two countries, Deputy
Minister Tien proposed the UK side to provide veterinary hygiene and food
safety requirements. Prentis
agreed on Tien’s assessment of the cooperation potential between the two
ministries in the near future, and noted proposals of Vietnam to promote the
opening of the market. She
suggested Vietnam consider to soon import some pork and chicken products of
the UK, and affirmed her country’s commitment to strongly support the
transformation of Vietnam's agriculture towards green, low emission and
sustainable development. Forum promotes application of int’l
financial reporting standards in Vietnam A forum
discussing the application of international financial reporting standards
(IFRS) in Vietnam took place in Hanoi on May 25. Jointly
organised by the Japan International Cooperation Agency (JICA) and the
Accounting and Auditing Supervisory Department (AASD) under the Ministry of
Finance, the event gathered over 600 delegates from agencies, units, listed
businesses, auditing companies and universities. The
second event of its kind is within the framework of the technical cooperation
project between AASD and JICA on “strengthening the capacity of the
AASD to promote the application of financial reporting standards in Vietnam”
funded by the Japanese government. The
forum is expected to help agencies of the Government, private sectors and
training institutions in Vietnam understand the differences between
Vietnamese accounting standards (VAS) and IFRS; as well as promote the
exchange of views on the roadmap for applying IFRS. Quang Ninh to host Vietnam Real Estate
Brokerage Day 2022 The
Vietnam Real Estate Brokerage Day 2022 will take place in Ha Long city in the
northern province of Quang Ninh from June 24-25. According
to Nguyen Chi Thanh, vice chairman of the Vietnam Association of Realtors
(VARS), Vietnamese real estate brokers have played an important role in the
rapid, strong and sustainable development of the property market over the
last two decades. He underlined
the impressive change to Vietnam's property market with thousands of new and
modern urban areas, adding that tens of thousands of people have been able to
buy new houses every year. Thanh
attributed the results to the significant contribution of real estate brokers
in Vietnam, noting they have helped stimulate demand and create motivation
for property developers to promote investments. The
event is hoped to attract about 1,000 participants from the real estate
investment and business community and brokers across the country. It will
offer a venue for brokers and businesses to share experience and set up
partnerships. The
event will also see the participation of representatives from the Government,
local authorities, and from ASEAN, Asia and the US, among others. Vietnam Electricity gearing up to keep
lights on for dry season Vietnam
Electricity (EVN) said it will make adjustments to the power grid to ensure
power supply for daily public energy use in the second quarter - the peak of
the dry season, when power generation becomes a serious issue. Daily
consumption in April was estimated at 779 million kWh while load power stood
at about 42,124 MW, rising 5.3 percent year on year. Difficulties
are likely to linger on this season in terms of coal supply for thermal power
plants. The
State-owned group said coal shortages were recorded in Q1, at 1.36 million
tonnes lower than the contracted volume, forcing thermal power plants to cut
turbines, reducing output by 1.365 billion kWh. Facing
that reality, the firm worked with coal suppliers to find solutions and
reported the problem to authorities. EVN
flexed its fleet of hydropower plants so as to guarantee both power
generation and water for downstream agriculture. Vietrade consultation to spur exports
to Kuwait A
consultation will be held by the Ministry of Industry and Trade’s Department
of Trade Promotion (Vietrade) on June 1 to boost export to Kuwait where
demand for agricultural, industrial and consumer products are on a rise. Economic
relations between Vietnam and Kuwait have grown constantly over the years,
with the bilateral trade exceeding 4.78 billion USD in 2021, up 49 percent
from the previous year. However,
Vietnam has registered a significant trade deficit with Kuwait as it only
generated over 60 million USD from the export of mainly mobile phones,
electronics, aquatic products, wood and timber products and farm produce to
the Middle Eastern country last year. Its
import from Kuwait totaled more than 4.7 billion USD in 2021, a year-on-year
increase of 49 percent, a majority of which was crude oil to be used as input
for Nghi Son Oil Refinery. Vietnam Dairy 2022 to be held in Hanoi The
third Vietnam International Milk and Dairy Products Exhibition (Vietnam Dairy
2022) will take place at Hanoi International Exhibition Centre from May 31 to
June 4, the event's organisers have announced. Co-organised
by the Vietnam Dairy Association (VDA) and Vietnam Advertisement and Fair
Exhibition JSC (VIETFAIR), the upcoming exhibition will have 200 booths from
150 domestic and foreign exhibitors. Among them will be Vinamilk, Friesland
Campina, Nestle, Nutifood, Abbott and Vinasoy. Participated
firms will showcase milk and dairy products, ingredients and technology in
the dairy industry, processing and packaging lines in the industry, animal
feed and veterinary machines, dairy cattle breeds, environment treatment
technology, food safety standard management system and other services in the
dairy sector. Despite
the prolonged pandemic, the domestic dairy industry still produced over 1.76
billion litres of fresh milk in 2021, up 3.5 percent year-on-year. Powdered
milk production volume also saw positive growth of 14.5 percent year-on-year
to 150,000 tonnes, congthuong.vn reported. In 2021,
the sector had a turnover of nearly 300 million USD. Among its export outlets
last year, Iraq was the largest one, accounting for over 50 percent of the
sector's total export value. Shrimp exports reach peak, higher
value expected in Q2 Vietnamese
shrimp exports hit a record high of US$1.4 billion in the opening four months
of the year, rising by 45% against the same period from last year, according
to the Vietnam Association of Seafood Exporters and Producers (VASEP). The top
five consumers of local shrimp include the United States, Japan, the EU,
China, and the Republic of Korea, with their growth rates ranging between 15%
and 91%. The
steady growth in shrimp exports can largely be attributed to high market
demand and strong export prices, according to local export enterprises. Most
notably, Vietnamese shrimp products received due attention at a number of
international aquatic trade fairs, such as the Seafood Expo North America and
the Seafood Expo Global held in March and late April. According
to details given by the VASEP, shrimp exports during the second quarter of
the year are projected to see an upward trajectory of approximately 12% to
US$1.2 billion. However,
experts have outlined that a number of factors, such as unusual weather, as
well as high input costs of gasoline and production materials, are likely to
impact the supply source of raw shrimp, thereby eroding any profits made by
enterprises. Vietnamese firms show off food,
beverage products at Thai fair They are
showcasing some unique and healthy products that meet consumers’ evolving
post- COVID-19 pandemic such as lotus seed milk, lotus tea, dried lotus
seeds, fruit jam pie, organic mango, coconut candy, bottled fresh coconut
water with strawberry and salted lemon flavours, coconut butter, green skin
pomelo, Habanero chilli sauce, fresh freeze-dried celery juice, eggplant
products, pennywort powder, and others. According
to the association, the Vietnamese products exhibited at the event meet
international standards and are especially good for health. Besides
taking part in the fair, the Vietnamese businesses will also take part in a
study tour, visiting large factories, wholesale market and farms, and meet
Vietnamese businesses in Thailand and local ones. They
will also call on the Vietnamese ambassador and trade office in Thailand and
interact with the Thai Food Processing Association to learn about consumer
trends, innovations in food processing and trading, difficulties faced by
Vietnamese agricultural products in penetrating the Thai market and long-term
solutions to enable them to get a firm foothold there. Ample room for Vietnamese plastic
exports to Australia The
Vietnamese Trade Office in Australia (VTOA) reported that Vietnamese plastic
exports to the country grew by over 11 per cent between 2017 and 2021. In
2021, Viet Nam took revenue of nearly US$87 million in plastic trade with
Australia, up 28.5 per cent year-on-year. Since
the changing consumption habits in Australia are associated with a greater
preference for convenience and ready-to-eat foods, the demand for plastic
bags used in the food industry is expected to hold steady, creating more room
for Vietnamese plastic. Additionally,
Australian agricultural and food exports are forecast to continue to climb in
the short term thanks to free trade agreements, raising the demand for
plastic bags in packaging. Vietnamese plastic is believed to benefit
significantly from this upward trend. The VTOA
underlined trade fairs as an effective channel allowing Vietnamese firms to
reach out to Australian partners. The organisation said it would help firms
stay well-informed about Australia's trade fairs and trade opportunities. It also
said that it promoted Vietnamese firms to Australian partners and developed
plans to help these firms look for exclusive distributors in the market. HCM City annual agriculture fair opens The
products on the display at 160 booths include orchids, bonsai plants,
vegetables, mushrooms, seeds, fertilisers, garden accessories, and packaged
foods. The fair
is aimed at promoting agricultural products and creating a platform for the
promotion of agriculture and rural development. It seeks
to connect farmers and agricultural businesses with consumers in the city. The
event at the Thu Duc City Children's House will run until Sunday. False declaration of prices in
transferring real estate cause losses The tax
industry has implemented many solutions, recommending that taxpayers need to
be honest in declaring actual prices to protect their own interests. In real
estate transfer activities, there are still cases in which the house prices
declared on real estate transfer contracts with notarised certification, are
much lower than the actual prices. There
are also contracts of purchase and sale of houses and construction works
which are formed in the future. The value of the future house is somehow
equal to the purchase price of the initial investor. In other case, after
receiving the certificate of land use right, when the ownership of house and
other land-attached assets has been granted, the taxpayer is willing to
declare lower selling price. This does not reflect the true value of real
estate transactions, and causes a loss of revenue for the State budget. To
promote the management of real estate transfer activities, the Ministry of
Finance has sent an official dispatch to the People's Committees of the
provinces and centrally-run cities, police and Ministry of Justice to
co-ordinate and implement solutions to prevent losses. The
Ministry of Finance and tax authorities at all levels have guided people and
businesses to properly declare the transfer price as a basis for tax
calculation in accordance with the law. The Ministry of Finance has also
directed the General Department of Taxation to request tax authorities
strengthen co-ordination with local agencies and departments in the
management of real estate transfer activities, especially strengthening
criminal handling for acts of tax evasion related to business activities and
real estate transfer. The
General Department of Taxation has taken a number of measures to collect
evidence to verify the transfer price such as verifying with the Notary
Offices about the deposit contract, the contract appendix with the adjusted
price, verifying through the banks about transactions related to real estate
transfer and loans to buy real estate. US institutions here to help local
leverage A number
of US-headquartered investment funds and financial institutions are displaying
a growing appetite for Vietnam’s market, but regulatory bottlenecks must be
expeditiously addressed to realise their ambition. Following
the visit by Vietnam’s Prime Minister Pham Minh Chinh to the United States
last week, a number of American business leaders have expressed their
confidence in Vietnam as a compelling story for them to generate alpha. Charles
R. Kaye, CEO of private equity firm Warburg Pincus, highlighted interest in
Vietnam’s policy of restricting foreign ownership limits (FOL) in banking,
set at 30 per cent for private commercial banks and 20 per cent for
state-owned banks. The FOL barrier, consequently, could hamper international
financing sources flowing to Vietnamese banks. With a
diverse portfolio, Warburg Pincus is now a prominent US backer, spending over
$2 billion on a range of companies and joint ventures such as Techcombank,
MoMo, Vincom Retail, BW Industrial, Lodgis, and The Grand Ho Tram Strip,
among others. He also
suggested that Vietnam’s stable macroeconomic and business environment is a
huge impetus for foreign investors, and some challenges still need to be
further improved, such as FOLs in the banking sector and infrastructure.
Similarly, a Goldman Sachs representative also raised his concern FOLs as
well as accessibility to foreign currencies. Nevertheless,
Asian investors, especially from Japan and South Korea, are continuing their
buying spree in Vietnam’s banking landscape, with a handful of notable deals,
which bodes well for the resurgence of cross-border merger and acquisition
activity. US financiers, notwithstanding, have not been active in deploying
their capital into the Vietnamese banking M&A market. The
International Finance Corporation (IFC) under the World Bank Group has
partnered with HDBank to boost access for Vietnamese small- and medium-sized
enterprises to innovative funding, enabling them to take part in global
supply chains and expand into new markets. The collaboration is expected to
help HDBank build a supply chain financing portfolio of $1 billion by 2025. Besides
this, IFC will also support the State Bank of Vietnam in developing the legal
framework for environmental, social, and corporate governance standards in
the investment activities of Vietnamese credit institutions. Joseph
Y. Bae, co-CEO of Kohlberg Kravis Roberts (KKR), another prominent PE fund
from the States, also emphasised the fund’s interest in enhancing its
footprint in Vietnam. Vietnam’s
State Securities Commission and the New York Stock Exchange have also inked
an agreement to facilitate Vietnam’s forthcoming market status upgrade, from
frontier to emerging, and provide a mechanism for investors to engage in both
markets. Standard & Poor’s has also signalled its readiness to assist
Vietnam to be classified as an emerging market. JPMorgan Chase, N.A. Ho Chi Minh City
Branch announces capital injection into Vietnam JPMorgan
Chase, N.A. Ho Chi Minh City Branch announced a capital injection of $123
million into its branch entity on May 26. The
investment brings the firm’s total capital investment into the Vietnamese
market from $77 million to $200 million. The
capital will be used over the next few years to fund the expansion of the
bank’s onshore services and capabilities, support its fast-growing suite of
product offerings, and increase the hiring of local talent. Vietnam accelerates post-pandemic
economic recovery The
first year of the post-pandemic economic recovery journey has seen many
positive signals, with a boom in investment, manufacturing and business,
since COVID-19 was effectively put under control. In a
document sent to National Assembly deputies, the Government emphasised that
the epidemic has been put under control, the macroeconomy remains stable,
major balances of the economy have been ensured, key sectors are all recording
higher growth, and many large-scale infrastructure projects are being
implemented with strong determination. However,
the economic recovery path remains bumpy amid the uncertainties in the global
political situation and internal weaknesses of the economy. Controlling
inflation is a challenge amid rising fuel prices while public investment
disbursement remains slow. In such a situation, the goals of achieving 6-6.5%
economic growth and keeping inflation under 4% have become enormous
challenges. The National
Assembly adopted Resolution 43/2022/QH15 on fiscal and monetary policies with
the aim to support the socio-economic recovery and development programme,
with total funding of 347 billion VND (15 billion USD). The programme has
been promptly implemented by the Government by providing interest rate
support, reducing value added tax for enterprises, supporting house rent for
workers and constructing key transport projects. The
implementation of the programme is expected to raise GDP by 2.9% in 2022 and
0.2% in 2023, thus helping Vietnam to realise the growth target of 6.5-7%
during the 2021-2025 period, while ensuring stable jobs and income for
workers and keeping the unemployment rate at 2-3%. Recently
domestic and international research organisations have made optimistic
forecasts about Vietnam’s economic recovery prospects. The World Bank
predicts that Vietnam’s growth in 2022 will reach 5.3% and then stabilise at
around 6.5%. The International Monetary Fund sees Vietnam’s growth at 6% and
7.2% in 2022 and 2023 respectively, while the Asian Development Bank expects
Vietnam’s economy to recover to 6.5% in 2022 and 6.7% in 2023. Domestic
agencies also forecast that the economy will expand by 6-6.5% this year under
an optimistic scenario. In order
to accelerate economic recovery and fulfil the set targets, the Government
has identified 12 key tasks, with a focus on expediting the implementation of
support packages and public investment. The Government is also seeking new
growth drivers in science and technology, digital transformation, innovation,
and clean and renewable energy. On top of macroeconomic stability, such
measures are expected to help the Vietnamese economy speed up on the recovery
path and soon return to the growth orbit. Techmart introduces promising produce
processing, preserving technologies More
than 200 technological products of 87 businesses have taken part in the
recent Techmart with the theme Agriculture and Post-Harvest Technology, held
by the Ho Chi Minh City Department of Science and Technology. At this
Techmart event, certain products and solutions for post-harvest produce
processing and preserving like innovative produce dryers have attracted much
attention of visitors since they can help to reduce processing time while
increasing product quality and preservation time compared to traditional
drying methods. Vietnam’s
agriculture lately has achieved many impressive results, and its export
turnover continuously increases year by year. However, during the harvest
season, farmers still encounter trouble processing and preserving their crops
owing to a lack of advanced technologies. The products and solutions
exhibited in this Techmart are, therefore, expected to become a great aid to
farmers and produce processing factories. HCMC announces 6 key
scientific-technological programs The Ho
Chi Minh City Department of Science and Technology has just held a conference
to announce ‘Innovative, Scientific-Technological Research Programs and
Directions from 2021-2025’, and the project ‘Introducing the Task of
Managing, Using, and Handling Assets from Implementing
Scientific-Technological Missions with State Capital’. Accordingly,
HCMC is going to launch the 6 key scientific-technological programs: _Research
and development of technologies for smart urban area and digital
transformation; _Research
and development of industrial technologies; _Research
and development of healthcare technologies _Research
and development of hi-tech agriculture; _Research
and development of applications for urban management and growth; _Youth
Science and Technology Incubator. HCMC to develop urban area around Tan
Son Nhat Airport Chairman
of the HCMC People’s Committee Phan Van Mai has directed the planning and development
of an urban area around Tan Son Nhat Airport, according to the Office of the
municipal People’s Committee on May 25. Under
the direction, the Department of Planning and Architecture will cooperate
with the People’s Committee of Tan Binh District to study the airport-based
urban area planning and assess the adjustment of the HCMC Master Plan by
2040, with a vision to 2060. The
People’s Committees of Tan Binh, Go Vap and Tan Phu districts have been
required to consider solutions for the planning and development of an urban
area around Tan Son Nhat Airport to make zoning plans and propose appropriate
models of business and service development. Transport Ministry announces projects
with slow disbursement The
Ministry of Transport announced that at the end of May, there are nine
projects with slow disbursement. The
projects invested by the ministry include the transport project connecting
mountainous Northern provinces, the Tan Van - Nhon Trach section of Ho Chi
Minh City's Ring Road No. 3 project, the construction of Dien Chau-Bai Vot
section of the North-South expressway, My Thuan – Can Tho Expressway,
construction of the Interconnecting Road to National. Highway No 91 and Long
Xuyen City bypass, the subproject on upgrading and renovating National Highway
279B, construction of the National Roads of 21B and 15, and the project to
upgrade the runways at Tan Son Nhat International Airport. Hanoi accelerates construction of
smart urban projects To date,
the progress has been encouraging as contractors are speeding up the
completion of the site clearance process. According
to a recent report, site clearance for the construction of the new
residential project Tay Mo – Dai Mo – Vinhomes Park in Nam Tu Liem District
has almost concluded, with the 70% of the work volume completed. Around
80% of the land for the projects in the communes of Xuan Canh, Dong Hoi, and
Mai Lam (Dong Anh District) have been cleared, and the authorities are
handing over clear sites to contractors. The
local authorities are also working on investment procedures for the
construction of the smart city project in Dong Anh District, with an
investment capital of US$4.2 billion from the joint venture of Sumitomo
Corporation and BRG Group. Secretary
of the Hanoi Party Committee Dinh Tien Dung in a recent meeting with Japan’s
Ambassador to Vietnam Yamada Takio pledged to complete the site clearance on
time for the construction to start in June 2022. Under
the municipal Party Committee’s program No.03 on urban renovation and
development of urban economy in Hanoi in the 2021-2025 period, the city is
tasked with building 2 to 3 new smart urban areas. This
would help ensure the city’s rapid and sustainable development towards green,
smart, and modernization while maintaining the harmonization between rural
and urban areas. Source:
VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes |
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