VIETNAM BUSINESS NEWS MAY 7
15:22 Vietnam has
huge biomass power potential, but more incentives needed  Vietnam
expects to add 9,600 MW of power from biomass by 2030, but that will need
added incentives. Shrimp, pangasius exports enjoy April
surge Pangasius and shrimp represent two key
Vietnamese export items that maintained high growth in April, according to
the Vietnam Association of Seafood Exporters and Producers (VASEP). The export turnover of pangasius in
April reached US$297 million, a twofold increase compared to the same period
from last year. The April figure raised the four-month
export value of pangasius to more than US$950 million, representing a
year-on-year rise of 94% and meeting 60% of this year’s export target. Meanwhile, the country’s shrimp export
value in April reached US$406 million, up 35% compared to the same period
last year. In total, the four-month export value of shrimp rose 41.5% year on
year to US$1.36 billion. According to the VASEP, Vietnam’s
seafood exports in the first four months of the year reached approximately
US$3.6 billion, up 44.5% year on year. China and the United States continue
to be the two largest importers of Vietnamese seafood. The past four months
saw the US and China consumed US$842 million and US$578 million worth of
Vietnamese seafood, up 74% and 94% respectively. Shipments to China have also bounced
back after months of decline due to its “Zero-COVID” policy, while the
positive growth in exports to the US comes following a zero anti-dumping duty
imposed in the 17th review (POR17) of the US Department of Commerce. Pangasius exports to US enjoy record
prices The average price of Vietnam’s tra
fish (pangasius) exported to the US increased sharply in the first quarter of
this year to the highest ever level of US$4.5 per kilogramme, according to
the Vietnam Association of Seafood Exporters and Producers (VASEP). Exports to the market grew by 123%
year-on-year to US$160 million since demand was high and supply was modest.
Increased transportation costs due to the impact of COVID-19 was a
contributing factor to the increase in prices, not only to the US but to all
markets. Exports to the EU market fetched
US$2.9-3.45 per kilogramme. Total exports topped US$646 million,
year-on-year growth of 88%, according to VASEP. The high global demand drove up the
average export price of frozen pangasius fillet to US$3.4, US$0.25 higher
than in January this year. After falling for many exports to the
EU jumped by 86.2% in the first quarter of 2022 to US$46.7 million, with huge
increases seen in shipments to all the major markets in the bloc like the
Netherlands (86%), Germany (97%), Belgium (120%), and Spain (67%). It is forecast that the demand for
essential goods, including food and seafood, will increase sharply in the EU
providing a good opportunity for Vietnamese companies to export frozen
pangasius, VASEP said. In the second quarter too exports to
these major markets are likely to rise sharply due to a shortage of cod and
pollock supply from Russia. Norwegian energy firm eyes offshore
wind power project in Vietnam Norwegian energy company Equinor have
outlined their desire to invest and develop offshore wind power in Vietnam,
with the international company viewing the nation as a promising market. This point of view was shared during a
recent meeting held between Deputy Minister of Industry and Trade Dang Hoang
An, Norwegian Ambassador to Vietnam Grete Lochen, and Equinor representatives
to discuss a host of issues related to offshore wind power in the country. Ambassador Lochen hailed the strong
developments in the friendship and multifaceted co-operation between both
sides over the years, especially in terms of the marine economy, renewable
energy, climate change response, and sustainable development. With longstanding expertise in marine
and offshore operations, Norway can be viewed as being in a unique position
to contribute to the growing offshore wind market. Norwegian companies and industrial
clusters are in the process of utilizing their offshore expertise, especially
their experience, skills, and knowledge of offshore construction in order to
assert their position in the global offshore wind market. Jens Økland, senior vice president for
business development in renewables, said that Equinor had officially opened a
representative office in Hanoi. This demonstrates the Norwegian Government's
long-term support for the nation in fulfilling its commitments on climate
change response at the 26th session of the UN Conference of the Parties
(COP26). The opening of a representative office
in Hanoi by Equinor is a good signal aimed at supporting the Vietnamese
Government in policy making to realise its commitments to climate change
adaptation and green transformation. This also represents an important
milestone in the agenda of business co-operation between both sides, the
Norwegian Ambassador emphasized. Economist Intelligence Unit: Vietnam
ranks mid-table for tourism recovery Vietnam along with Thailand, India,
the Philippines, Papua New Guinea, Indonesia, Mongolia, and the Republic of
Korea, ranked mid-table for tourism recovery, according to the travel-ready
index 2022 released by the Economist Intelligence Unit (EIU). This comes after Aljazeera.com
revealed the report by the EIU listed Fiji, Sri Lanka, Malaysia, and the
Maldives among the countries with the strongest position to revive their
pandemic-battered tourism industries among Asia-Pacific destinations. The EIU also ranked Singapore,
Australia, Bangladesh, New Zealand, Nepal, and Cambodia among the top 10
destinations which are best placed for tourism recovery. Elsewhere, the index outlines that
Hong Kong (China) has the worst prospects due to its restrictive border
policies. After Hong Kong (China), other
destinations such as Brunei, Bhutan, Taiwan (China), Samoa, Vanuatu, Japan,
China, and Laos also ranked as the destinations with the least favourable
conditions for tourism moving forward. The EIU said the top performers in the
index have all moved to ease visa and entry restrictions since 2021 or
earlier. The index measures the positive
conditions for tourism based on the importance of the sector to the economy,
local vaccination coverage, ease of travel, and the convenience of returning
home. Laos to develop expressway linking
Houaphanh with Viet Nam The Government of Laos has agreed with
contractors to conduct a feasibility study on the construction of an
expressway from Houaphanh Province to the border with Việt Nam under a recent
agreement, Vientiane Times reported. Under the Memorandum of Understanding
(MOU) inked between the Government, Daochaleun Construction and THB Group,
the 80-km expressway will run from Huanmuang District in Houaphanh to the Nam
Soi - Na Mèo International Checkpoint at the border between Laos and Việt Nam. It will be constructed under a
Build-Operate-Transfer (BOT) model as part of the fourth phase of a larger
expressway construction project linking Vientiane with Houaphanh, for which a
feasibility study is already underway. It is expected that construction of
the section linking Houaphanh to Việt Nam will take up to four years to
complete. Vietnamese firms partner to upgrade
telecoms network in Cambodia Under this contract, MB Cambodia, a
branch of Viet Nam’s Military Commercial Joint Stock Bank, will provide a
credit package with a limit of up to US$100 million for Metfone, an affiliate
of the Viettel Military Industry and Telecoms Group, to upgrade the telecom
services network and expand operations in Cambodia. Govt asked to raise export taxes to
reduce domestic fertiliser prices The move is part of MoF’s ongoing proposal
to amend the export tariffs levied on fertiliser as prices in global and
domestic markets have escalated recently, due to rising input prices. The sharply-increased price of
fertiliser is also attributed to the shortage of empty containers and apatite
supplies, the main resource used in fertilisers production. The proposal was compiled after the
finance ministry received recommendations from agencies. The ministry reports
that it has finished compiling a draft decree on export tariff, preferential
import tariff, list of goods and absolute tax rates. It is said that the total fertiliser
production capacity of Viet Nam’s fertiliser makers reached 29.25 million
tonnes per year, including organic fertiliser. If the production of local
fertiliser producers runs smoothly, they can meet domestic demand for
nitrogenous and phosphate fertilisers, particularly in potash and NPK. Currently, domestic fertiliser
producers still have relied on the import of raw materials due to a lack of
potassium salt mines. The demand for fertiliser for
agricultural production in the country is about 10.5 million tonnes per year.
Of this, domestic factories can provide about 7.5 million tonnes per year. Fertiliser producers have now produced
most of the major fertilisers such as phosphates, urea and NPK fertilisers,
while still importing SA and Potassium fertilisers. Viet Nam has so far
exported fertilisers to more than 20 countries around the world. To lower the domestic fertiliser price
and stabilise the supply, the Finance Ministry has submitted to the
Government to lower export taxes on fertilisers by 5 per cent, without
classifying the ratio of natural resources, or minerals. Accordingly,
fertiliser with a value less than 51 per cent will be subject to 5 per cent
instead of zero per cent currently. Export tax for other kinds of fertilisers
remain unchanged. Opportunities growing to export farm
produce to US The US needs to import vegetables,
fruit, coffee, tea, pepper, rubber, cashew nuts and seafood. Viet Nam has
gained significant revenues from exports of furniture and seafood to the US,
but export values of rice, coffee and vegetables have been modest. With a total export turnover of US$3.5
billion, the US became the largest export market of Viet Nam's agricultural,
forestry and fishery products in the first three months of 2022. Of which,
the export value of timber and wood products accounted for 68.2 per cent. According to local businesses,
agricultural products exported to the US still face many difficulties,
especially fresh products. The US has licensed the import of six kinds of
fresh fruit from Viet Nam, including mango, longan, lychees, dragon fruit,
and rambutan. Other fruits such as coconut and durian are still exported to
the US but as frozen products. According to MARD, in the first
quarter of 2022, the total trade value of agricultural, forestry and fishery
products is estimated at $22.6 billion, up 6.3 per cent on the year,
including an export value of $12.8 billion and import value of $9.8 billion.
Agriculture gained a trade surplus of $3 billion, up 3.1 times over the same
period last year. Vietravel loses $4.7 ml in Q1 But its revenue structure saw a
significant change as revenues from selling airline tickets fell sharply from
VND70.6 billion in the same period of last year to VND2.6 billion, while
revenues from tourism services increased strongly to VND196 billion from
VND72 billion. During the period, the company's
financial income also declined by more than 98.6 per cent on-year to VND225
million from VND16.6 billion. Meanwhile, other expenses all dropped
dramatically, with financial expenses down 27 per cent, and selling and
general administration expenses fell by 81.5 per cent and 51.6 per cent,
respectively. The loss of VND60 billion in
affiliated activities was the main cause of the loss of VND108 billion in the
first quarter of 2022. After losing for four consecutive quarters, the
company posted a profit of VND228 billion in the last quarter of 2021. This year, Vietravel set a revenue
target of more than VND3.5 trillion and a profit before tax of VND5.8
billion. As of March 31, Vietravel's
undistributed profit after tax was negative VND293 billion. Its equity was
negative VND100 billion, while at the beginning of the period it was still
positive VND8 billion. The loss in affiliated activities
during the period came from Vietravel Airlines. Before December 15, 2021,
Vietravel sold 55.58 per cent of Vietravel Airlines' charter capital for
VND867 billion. However, by the time of issuing financial statements,
Vietravel had not yet collected the fee from this transfer. New draft on bond issuances to suffocate
market: experts Notably, Article 5 of the amended
draft stipulates that firms are not allowed to issue bonds to raise capital
which will be used to purchase shares, bonds and contributed capital of other
firms, to make capital contributions to those firms, or to lend them money. Experts said the article would work
against big corporations as it prevents them from issuing bonds to finance
their projects and subsidiaries. Some financial authorities, including
the National Financial Supervisory Commission, propose that Article 5 be
inapplicable to parent companies issuing bonds to finance their subsidiaries,
thereby maintaining a common practice in corporate finance. Experts also mention Article 8 as a
legal setback for the market. Article 8 stipulates that professional
securities investors are allowed to purchase privately-placed bonds issued by
only public companies with collateral or payment guarantee. Experts say the article sets the bar
too high for bond issuers as only public companies with collateral or payment
guarantee are eligible to offer privately-placed bonds. According to the State Securities
Commission of Vietnam, Viet Nam had around 2,809 public companies by late
March 2022. Meanwhile, the number of firms in the country is about 683,590.
That means less than 0.5 per cent of firms are eligible for public placement
of bonds under Article 8. The economic expert attributes the
chaos in the bond market to inexperienced F0 investors who have little
understanding of financial systems. He said the investors have insufficient
information about bond issuers and do not know how to evaluate issuer-related
risks. As a result, those investors normally come up with bad investment
decisions. He suggests the establishment of
credit-rating agencies that would help reduce the risk of asymmetric
information, thereby better safeguarding investors. The Asian Development Bank (ADB)
shares the view, saying that credit-rating has become the norm in other Asian
markets, notably Thailand, India and China. Viet Nam should follow their
model to incorporate credit-rating into the draft. Thinh proposes that the agencies are
in charge of supervising bond issuers and publishing the credit-ratings
assigned to them with or without their consent. Some experts, however, disagree with
Thinh's proposal as they are concerned about the quality of the
ratings. Vietnamese gold demand increases in Q1 The World Gold Council’s report on
demand trends showed that consumer demand for gold in Viet Nam was estimated
to total 19.6 tonnes from January to March, representing a year-on-year rise
of about 6 per cent. Demand for gold bars and coins
totalled 14 tonnes, a year-on-year increase of 4 per cent, while demand for
jewellery was 5.6 tonnes, up by 10 per cent. According to Andrew Naylor, head of
ASEAN and Public Policy of the World Gold Council, Viet Nam’s gold demand
increased on rising inflation and the weakening Vietnamese dong, making gold
more attractive. The gold demand was also supported by
several festivals in the first quarter, including the Lunar New Year
holidays, Valentine's Day and God of Wealth Day, coupled with the recovery of
business activities to pre-pandemic levels. The global gold market saw a solid start
to 2022, with first-quarter demand up 34 per cent year-on-year, thanks to
strong ETF flows, reflecting gold’s status as a safe haven during
geopolitical and economic uncertainty. According to the World Gold Council,
geopolitical crises weighed heavily on the global economy and reinvigorated
investor interest, pushing the gold price briefly to US$2,070 per ounce in
March, just shy of its all-time high. The report revealed that gold ETFs had
their strongest quarterly inflows of 269 tonnes since the third quarter of
2020, more than reversing the 173 tonnes annual net outflow from 2021 and
driven in part by the rising gold price. Vietnam’s easing monetary policy
unlikely to reverse amid Fed’s rate hike The Federal Reserve (Fed)’s biggest
rate hike in 22 years by a half-percentage point and the current high
inflationary pressure may not be enough to reverse Vietnam’s current easing
monetary policy, at least in the upcoming three to six months, according to
the VnDirect. For the past two years, the State Bank
of Vietnam (SBV), has cut the policy rates three times and kept a
low-interest-rate environment to support the economy against pandemic
impacts. Skyrocketing strategic commodities in
the global market as a result of the Ukraine-Russia conflict, however, have
raised concerns that the inflation in Vietnam may exceed the 4% target in
2022. In the first quarter of 2022, the
average price of Brent crude oil stood at US$100 per barrel, an increase of
59.7% year-on-year, while experts suggested prices of gas and crude oil may
not return to the pre-crisis level any time soon. The high crude oil prices would no
doubt pile pressure on Vietnam’s efforts to control inflation, especially
with rising high transportation costs. The consumer price index (CPI), a
gauge of inflation, expanded by 1.47% in April, taking the four-month rate to
0.97%. Commercial banks have also raised
interest rates for 3-month deposits and capital mobilization rates of 12
months by seven and eight percentage points, respectively, in the first
quarter against late 2021. VnDirect’s report, however,
anticipated the SBV to maintain its easing monetary policy by at least the
end of the second quarter, as the CPI in the first half of 2022 is estimated
to expand by 2.5% year-on-year, significantly lower than the 4%-threshold. Another factor pointed out by the
report is the demand that has not fully recovered after the pandemic. While the SBV may not further cut its
policy rates, VnDirect expects support could come in the form of injecting
more liquidity into the market, purchasing foreign currency, or raising
credit quota for commercial banks. Source:
VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes |
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