A total of 106 wind power plants nationwide with a combined capacity of more than 5,655 MW have registered to conduct commercial operations and join the national grid, according to Vietnam Electricity (EVN).

Based on the Ministry of Industry and Trade's circular on regulations on the development of wind power projects, If the plants want to recognise their commercial operation date (COD) before October 31, 2021, they must submit documents and files to EVN before August 3.

Investors of the plants were asked to promptly present their agenda which closely reports the projects' situation.

They were also requested to register only when all preparations are completed, in a bid to avoid any schedule changes and prolonged testing as well as ensure safe, stable and constant operations of the power system.

As of early August, 21 wind power plants with a total capacity of 819 MW had begun commercial operations./.

Ministry proposes to PM solutions to ease cargo congestion at Cat Lai Port

Minister of Industry and Trade Nguyen Hong Dien has just sent a document to propose to the Prime Minister some solutions to remove the congestion of goods at Tan Cang Cat Lai Port that has been causing difficulties for import and export activities.

Accordingly, the leader of the Ministry suggested that the Prime Minister should assign the Ministry of Transport to lead and work with Cat Lai Port in particular and other major seaports across the country in general to improve the capacity to release goods from the port; review and work with each cargo owner whose goods are jammed at the port to come up with a plan to resolve problems to receive goods quickly.

At the same time, ports should proactively adjust the arrangement of containers in each area to increase the capacity to receive imported goods and adjust the time to receive export containers suitably.

The Ministry of Industry and Trade proposed to regulate the volume of goods imported to Cat Lai Port, temporarily stop transferring imported goods from Cai Mep and Hiep Phuoc ports to Cat Lai. Instead, cargo owners need to receive their cargoes directly at Cai Mep or Hiep Phuoc port or ports in the Mekong Delta that is near their factories or enterprises.

Vietnam asks China’s Guangxi to facilitate cross-border trade

Vietnam has proposed China’s Guangxi Zhuang Autonomous Region to provide all possible conditions for cross-border trade during a video teleconference between Minister of Industry and Trade Nguyen Hong Dien and Party Secretary of Guangxi Zhuang Autonomous Region Lu Xinshe earlier this week.

Dien asked Lu to facilitate cross-border trade between the two sides by upgrading border gates, restoring customs services at several border gates that have been closed due to COVID-19 in a bid to reduce pressure on those in operation, and extending the operating time of customs clearance services at Vietnam-China border gates, crossings and markets.

He also urged the Chinese side to offer broader access for Vietnamese farm produce and send agricultural experts and business representatives from Guangxi to instruct Vietnamese farmers and producers how to cultivate crops in line with China’s food safety and origin standards.

Exports of Vietnamese agricultural products, dragon fruit for example, via border gates with Guangxi are facing numerous difficulties as a result of restrictions induced by the pandemic, the Vietnamese minister said, expecting that Lu can help solve the problems.

He suggested the two sides establish a hotline to timely exchange and update each other on import management measures and market demand; and sign a Memorandum of Understanding (MoU) between the Ministry of Industry and Trade (MoIT)’s Department of Trade Promotion (Vietrade) and Guangxi International Expo Affairs Bureau and another on supporting rail freight transport services between Vietnam and China.

Lu, for his part, said he stands ready to work with the MoIT in promptly taking comprehensive measures to smooth the way for bilateral trade and economic cooperation, particularly cross-border trade.

He also discussed with Dien on expanding customs clearance capacity and container yards near border gates and organising the 18th China-ASEAN Expo this year.

Both sides reached a consensus on the content of an action plan implementing their MoU for the 2021 – 2023 period which will be inked soon in the future.

According to data from China, last year’s two-way trade between Vietnam and Guangxi reached about 27.08 billion USD, representing 36.4 percent of the latter’s total foreign trade.

Guangxi’s exports to Vietnam accounted for 49.62 percent of its global trade while imports made up 19.43 percent, making Vietnam its major trade partner. Its trade with Vietnam accounted for 74.18 percent of that with ASEAN./.

Indonesia, Vietnam enjoy robust export growth despite COVID-19 threat

Vietnamese export turnover to Indonesia during the first half of the year increased by 47.2% to US$1.92 billion against the same period from last year, according to statistics compiled by the General Department of Vietnam Customs.

These figures were released amid the majority of Vietnamese industrial product groups achieving a high growth rate as a contributory factor to a sharp increase in export turnover throughout the reviewed period.

Furthermore, the strongest growth rates of local items have been recorded in the commodity groups of electronic computers with 167.3%, plastic raw materials at 95.1%, as well as iron and steel with 93.6%.

Most notably, the total export value of these three commodity groups reached US$665.46 million, accounting for 34.6% of the total export value throughout the reviewed period.

In return, the nation mainly imported coal and vegetable oil from the Indonesian market with turnover reaching a figure of US$894.12 million, accounting for 24.7% of the total import value from Indonesia.

Prominent Vietnamese imports from Indonesia during six-month period surged by 47.4% to US$3.61 billion against the same period last year.

Japanese consumers remain keen on Vietnamese agro-fisheries products

High-quality Vietnamese agro-aquatic products continue to have a strong presence in several major supermarket chains in Japan, according to Vietnam’s Trade Office in Japan.

As a means of assisting domestic enterprises to export their goods to foreign countries, the trade office has moved to enhance connectivity with Japanese importers by sending out their product catalogs and showcasing their goods at the 2021 International Food and Beverage Exhibition (FOODEX 2021).

Local goods, especially agro-fisheries products, have recently become popular in Japan as they meet the needs of the Vietnamese community living and working in the Far East nation, as well the habits of Japanese consumers.

Most notably, high-quality Vietnamese goods have enjoyed a greater presence on the shelves of several supermarket chains in Japan in recent times, including at major retailers such as AEON and Donkihote.

Despite these positives, local businesses have been advised to pay close attention to the tastes of Japanese consumers by ensuring selling prices remain stable, along with maintaining sustainable supply sources to the demanding market.

Furthermore, Vietnamese enterprises have been recommended to invest in improving product quality, along with diversifying product categories in order to satisfy the various tastes of different customers in the Japanese market.

In addition, Vietnamese exporters should actively participate in trade exchange programmes organised by state agencies as they seek to step up co-operation with foreign partners, especially Japanese firms.

Agro-forestry-aquatic product exports up nearly 27 percent in seven months

Total export-import value of agro-forestry-aquatic products in the January-July period was over 53.2 billion USD, of which some 28.6 billion USD came from exports, up 26.7 percent year-on-year.

In July alone, these products earned 4.2 billion USD from exports, up 26.7 percent against the corresponding time last year, but down 9.5 percent from the previous month, according to the Ministry of Agriculture and Rural Development.

Rubber, fruits and vegetables, pepper, cashew nuts, cassava and cassava products, husbandry products, tra fish, shrimp and timber products were among the items with high export values in July.

However, coffee, rice and tea saw their export volumes and values dropping in the month.

For export markets, Asia made up 42 percent of the market share, followed by America (31 percent), Europe (11 percent) and Africa (nearly 2 percent).

The US was the biggest importer of Vietnamese agro-forestry-aquatic products with turnover amounting to 8.2 billion USD, accounting for nearly 29 percent of the market share. It was followed by China with revenue of some 5.5 billion USD, and Japan with over 1.9 billion USD.

To boost exports in the remaining months of this year, the ministry will continue opening the market and providing updates on trade agreements, policies and regulations of foreign markets for exporters, said Deputy Minister Phung Duc Tien.

The ministry has also closely coordinated with Vietnamese commercial counsellors abroad, and supported localities and businesses in shipping qualified products to the EU, the UK, China and Japan, while working to remove trade and technical barriers for Vietnamese agricultural exports.

Given the complex developments of COVID-19, it will instruct and assist localities and enterprises to maintain production and business in line with pandemic prevention and control regulations, he said.

The ministry said in the seven months, Vietnam imported some 24.7 billion USD worth of agro-forestry-aquatic products, a year-on-year increase of 42.8 percent, resulting in a trade surplus of around 3.9 billion USD, a drop of 25.8 percent from the same period last year./.

$620 million super seaport project may be empty promise

Despite holding a ground-breaking ceremony for My Thuy International Seaport in the central province of Quang Tri 17 months ago, the investor is proving unable to start construction.

Super seaport project worth $600 million may be empty promise (the image on the groundbreaking ceremony)
Quang Tri People’s Committee has assigned Quang Tri Economic Zones Management Authority and relevant authorities to build and propose solutions to deal with the investor My Thuy International Port JSC due to the delay in the construction of the My Thuy seaport project.

The project has a total capital value of VND14.2 trillion ($617.4 million), including VND2.14 trillion ($93 million) from the company’s equity and VND12.09 trillion ($569.13 million) loaned by strategic partners.

The investor was planning to develop the first phase in 2018-2025, however, the construction was only kicked off in February 2020 – followed by no real progress.

In late December 2020, Quang Tri People’s Committee sent an ultimatum to the company to either accelerate the construction or be replaced. Besides, at the time, the investor had yet to complete several important some procedures, including construction license and it had no plans to improve the construction schedule.

The province had plans to replace the investor in case it could not prove that it has the requisite experience and financial capacity. However, no change was made.

It was not until three months ago that at a working session with provincial leaders the investor committed to start the construction in either June or July 2021. The provincial leaders asked the company to complete procedures, including the feasibility report as well as the compensation and resettlement plans. Besides, the investor will also have to compile an environmental assessment impact report.

The harbour where My Thuy seaport would be located covers 685 hectares and can receive 100,000-tonne ships. It has 10 ports that will be built in three stages, including four ports in 2018-2025; three ports in 2026-2031; and three ports in 2032-2036.

The seaport complex aims to provide transport services for industrial zones (IZs) in the Southeast Economic Zone and other IZs in the province, as well as goods in transit from Laos and Northeastern Thailand in the East-West Economic Corridor. 

Viet Nam’s manufacturing sees decline in output amid COVID-19 outbreak

The Vietnam Manufacturing Purchasing Managers' Index (PMI) ticked up to 45.1 in July from 44.1 in June, signalling a marked deterioration in business conditions across the sector for the second month in a row.

The latest survey from Nikkei and IHS Markit revealed on Monday that the current wave of the COVID-19 pandemic in Viet Nam has led to disruptions across the manufacturing sector during July. Rates of decline in output and new orders increased from the previous month and employment was down sharply amid reports of temporary company closures and social distancing restrictions.

Meanwhile, disruption was also felt in supply chains, with delivery times lengthening to the greatest extent in more than ten years of data collection. The rate of input cost inflation accelerated sharply, but efforts to secure orders meant that firms raised their selling prices at a relatively modest pace.

“Anecdotal evidence from manufacturers highlighted the impact that the latest COVID-19 outbreak has had on operations. Some firms have been forced to close temporarily, while others are having to operate with reduced capacity due to social distancing measures,” the survey stated.

These effects, alongside a marked drop in new orders, resulted in a further sharp reduction in manufacturing production at the start of the third quarter. The decline in output was softer only than those seen following the initial outbreak of the COVID-19 pandemic in March and April last year.

According to the survey, alongside lower total new orders, new business from abroad was also down. That said, the reduction in exports was softer than that seen for total new business amid some reports of improving demand in international markets.

Reduced workloads, temporary closures and limits on staff numbers due to social distancing requirements meant that employment decreased markedly for the second month running. While disruption to operations led to backlogs of work to build up at some firms, this was outweighed by a sharp drop in new orders. Overall, outstanding business decreased moderately.

Severe disruption to supply chains was noted in July, with the extent of delivery delays the most marked since the survey began more than a decade ago. Panellists linked longer lead times to difficulties with transportation both domestically and internationally due to the pandemic, as well as raw material shortages.

Manufacturers were also faced with surging input costs. The rate of input price inflation accelerated the fastest since April 2011. Higher costs for raw materials such as iron and steel, products imported from China and freight charges were all reported by respondents.

While some firms passed on these higher cost burdens to clients, others were reluctant to do so given a weak demand environment. As a result, the rate of output price inflation was much softer than that seen for input costs, suggesting pressure on profit margins.

Concerns around the ongoing impact of the pandemic meant that business confidence remained below the series average in July, although firms remained optimistic overall of output growth over the coming year.

Commenting on the latest survey results, Andrew Harker, Economics Director at IHS Markit, said: “The current wave of the COVID-19 pandemic is having a severe impact on Vietnamese manufacturers, according to the latest PMI data, with company closures and social distancing contributing to a steep drop in production. Rules are also limiting how many staff members can be on site at any time, further disrupting production lines.

"Added to issues with new orders and production, firms are also facing severe supply-chain disruption. Supplier lead times lengthened to an even greater extent than after the initial outbreak of the pandemic last year when price pressures surged.”

"The sector is likely to remain under pressure and struggle to generate growth until the outbreak can be brought under control, so it will be important to keep watching the COVID-19 case numbers for signs of improvement," Andrew said.

IIP up nearly 8%

The General Statistics Office (GSO) reported Viet Nam’s index of industrial production (IIP) rose by 7.9 per cent year-on-year in July.

The rise was much higher than the 2.6 per cent growth rate of the same period in 2020, but lower than the 9.4 per cent rate of the same period in 2019.

Manufacturing recorded the largest gain in the first seven months of this year at 9.9 per cent, against the 4.2 per cent increase of the same period in 2020. The rise contributed 8.1 percentage points to the whole industry’s growth.

It was followed by an increase of 8.2 per cent in power generation and distribution.

Water supply and waste treatment climbed 5.6 per cent while mining and quarrying declined by 6.3 per cent. 

High cost, lack of infrastructure barriers to electric car market

The Ministry of Industry and Trade has just released a list of factors that are undermining the development of the electric car industry in Vietnam.

Citing data from the Vietnam Register, the Ministry of Industry and Trade (MoIT) said that the number of electric cars in Vietnam is currently quite small with only 140 cars in 2019, 900 last year and 600 by the end of the first quarter of this year.

Currently in Vietnam, there is no enterprise other than Vinfast Trading and Production Limited Liability Company engaged in the production and assembly of electric cars.

First is the low average income. GDP per capita in Vietnam in 2020 is estimated at 2,750 USD, still too low for consumers to own a regular four-wheeled personal car, without considering the higher cost of electric cars over their fossil-fuel burning rivals.

There is also a lack of charging station infrastructure. Currently almost no charging stations are available for electric cars in the country. There is also a lack of road traffic infrastructure, stationary parking spots, and land set aside to build charging stations for electric cars.

At the same time, the range of electric cars is still limited. Although recent electric car models have significantly improved their range they still cannot meet the travel needs of customers compared to fuel cars.

Moreover, a policy to encourage the development of electric cars in Vietnam is almost nonexistent. Electric cars have so far only received special consumption tax incentives, which are lower than petrol cars.

Power production is also an issue. For developing countries, hydroelectricity and thermal power account for a large proportion of the power generation infrastructure. However, thermal power is one of the least clean types of power generation.

In this context, experts suggest that the first step to take is to deploy clean energy production and prepare the necessary infrastructure when considering the large-scale deployment of electric cars.

At the same time, electric cars also have an environmental impact at the point of production. Because the battery pack is heavy, manufacturers have to lighten the rest of the cars, resulting in electric cars components often using a lot of lightweight materials that require a lot of energy to manufacture and handle.

The materials used in the battery can also be harmful to the environment and recycling of lithium-ion batteries is rarely done even in developed countries.

The MoIT said that the strategy for the development of Vietnam’s automobile industry by 2025, with a vision to 2035, is determined to encourage the production of environmentally friendly cars, meeting the requirements of emission standards according to a roadmap approved by the Prime Minister.

To develop effective mechanisms and policies to encourage the production and use of electric cars in Vietnam, the Ministry of Industry and Trade stated that the electric cars industry needed to integrate and take advantage of the existing capacity of traditional automobile manufacturers.

At the same time, the development of the electric car industry must be consistent with the development of transport infrastructure and electric charging station systems.

The MoIT has proposed developing electric car technology in Vietnam through the application of special consumption tax rates for electric cars on the basis of their carbon dioxide (CO2) emissions into the environment.

In addition, the MoIT is also coordinating with the Ministry of Finance to study and propose amendments to the Law on the Special Consumption Tax in the direction of preferential excise tax rates applied within a certain period of time (five years) to encourage the development of electric cars in Vietnam./.

Hung Yen longans sold on e-commerce platform

Longans originating from the northern province of Hung Yen are now sold on Sendo, following a co-operation agreement between the e-commerce platform and the Viet Nam e-Commerce and Digital Economy Agency (iDEA) under the Ministry and Industry and Trade.

Hung Yen longans – one of the famous specialties of Viet Nam – are being sold on a trial basis between Tuesday and Sunday this week with discounts of up to 50 per cent.

Sendo has become the first e-commerce platform to sell Hung Yen longans, enabling the fruit to reach Vietnamese consumers through a "virtual market" in order to facilitate consumption of local agricultural products amid the ongoing complicated developments of the COVID-19 pandemic locally.

Other domestic major e-commerce platforms are co-ordinating with iDEA to accelerate the consumption of Hung Yen longans throughout August.

Hung Yen is home to about 4,800ha of longan, of which more than 1,300ha have met VietGAP standards. The province expects to harvest about 50,000-55,000 tonnes of the fruit this year, 15-20 per cent higher than last year’s output. 

Hai Duong begins harvesting longan for export

A conference to seek buyers of agricultural products and launch the harvest of longan for export in 2021 was jointly held on August 5 by the Departments of Agricultural and Rural Development and Industry and Trade, and the authority of Chi Linh city of the northern province of Hai Duong.

Chi Linh city has 740 ha under longan with an estimated output of 4,000 tonnes, of which 52 ha have been granted cultivation area codes for export to the European Union (EU), Singapore, the US, Australia, and New Zealand.

A representative of FUSA Organic Agriculture Joint Stock Company said that the firm will start to purchase and process longan for exporting to Europe in the next few days.

The company has shipped a number of batches of longan to the UK, France, and the Netherlands. It expects to export between 20-30 tonnes of Chi Linh longan to 300 supermarkets in the UK and EU member countries in 2021.

Amid the ongoing COVID-19 outbreak, the Chi Linh city authority has worked to connect with export businesses, food stores, supermarkets, and e-commerce platforms to sell longan. Thanks to the efforts, local longan has become available on the e-commerce platform voso.vn of Viettel Post at a price of 93,000 VND per 3kg.

Planting fruit trees is one of the advantages of Chi Linh district, with some typical fruits such as longan, litchi, custard apple, red flesh dragon fruit, and orange. Chi Linh longan has been granted a collective trademark.

The locality plans to develop 10 products meeting at least the three-star standards of the “One Commune, One Product” (OCOP) programme in 2021./

Businesses dig deep to make sure they come out on other side of pandemic intact

Businesses in Viet Nam are making all efforts to survive the fourth wave of COVID-19 which is battering the country.

Giant food producer KIDO Group said in a recent press release it has adopted a number of solutions to adapt to the new situation and keep production going while also ensuring safety.

A spokesperson told Viet Nam News that to ensure uninterrupted production, the company has adopted the “3 on-site” model, which involves on-site production, dining and rest, for over a month.

It unfailingly complies with the provisions of the Government’s circular No 16 and 5K message, he said.

It is also preparing for life after the pandemic, he said.

“We are ready to bring new products and segments into the market immediately after COVID-19 is controlled.”

It plans to introduce the Vibev brand of products made in collaboration with Vinamilk.

Another plan is to introduce Chuk Chuk, a new food and beverage brand, opening 1,000 stores by 2025.

The company’s general director, Tran Le Nguyen, said the first market for Chuk Chuk would be HCM City, and stores would open in Ha Noi and some northern provinces by September if the pandemic is controlled by then, adding it would be present across the country by 2025.

Ride-hailing and delivery company Grab has rolled out a number of programmes to help customers buy foodstuffs.

To ensure the safety of its drivers and customers, it has tied up with the General Department of Vocational Education and Training to fully equip its drivers with the necessary skills and competencies.

They have also jointly built and standardised the training materials, and drawn up communication plans for raising awareness about vocational skills development for drivers.

Truong Anh Dung, director general of the department, said: "The COVID-19 pandemic has had a great impact on the Vietnamese economy, and drivers cannot be immune to it. This partnership helps resolve long-term problems for technological drivers, equipping them with the necessary skills to sustain and improve not only their livelihoods but also the quality of life of themselves and their families."

Grab also has a programme to support disadvantaged people in HCM City in co-operation with Golden Lotus Foundation. It provides free meals to people economically affected by the pandemic or living in locked-down areas.

To start with, around 11,500 meals would be provided, it said.

Tourism is one of the many sectors badly hit by the pandemic, and many businesses in it have been striving to overcome the challenges they face.

For instance, before the semi-lockdown began weeks ago some hotels had begun to offer co-working space to provide customers with a safe working environment.

Now, with stricter social distancing regulations, they have changed their strategy and offer quarantine facilities, and this has received strong support from customers.

Recently a Southeast Asian travel and lifestyle superapp, Traveloka, announced that it is working with the HCM City Department of Tourism to help the city’s residents find and book hotels and transportation to enable quarantine.

Demand for quarantine facilities has increased along with the developments of COVID-19 in HCM City, and its quarantine hotel and transportation online booking and payment solutions are expected to help curb the spread of the pandemic by limiting direct contact between people, Traveloka said.

They have been available since the start of August.

Le Truong Hien Hoa, director of the HCM City Tourism Promotion Centre, hailed the partnership, saying: “With support from Traveloka, HCM City is the first city in Viet Nam to digitise the quarantine hotel booking process … and will extend it to international arrivals in the near future.

“It also helps hoteliers switch their business model to survive amidst the COVID-19 pandemic.”

With the aid of the app’s advanced technologies, customers can easily access complete information about room types, prices and transportation options in real-time, and pay for it via Traveloka.

Traveloka said it is partnering with more than 80 hotels and selected transportation partners across HCM City, including private cars and shuttle buses.

MVV Academy, a pioneer organisation for comprehensive, on-site and advanced resource development solutions in Viet Nam, decided to organise training programmes to make its staff sales consultants and brand ambassadors to introduce its products to the public.

It also recently launched MVV Uni, an advanced training platform that offers working professionals an interactive and flexible experience to support their various learning needs, and acts as a one-stop-shop with courses in all essential business skill sets such as leadership, sales, marketing, management, soft skills, and digital transformation.

“The COVID epidemic has disrupted many human resource training activities at Vietnamese enterprises,” Bui Duc Quan, CEO of MVV Academy told Viet Nam News.

“Taking advantage of the strength of technology, combined with experience in content building and understanding of learner experience through operating platforms such as TopClass and Everlearn, we quickly built a solution, MVV Uni, to offer enterprises training programmes for their employees during Covid.

“Our ambition is to build a university community on the cloud.” 

Tra Vinh okays $13m industrial cluster

The southern province of Tra Vinh has approved the establishment of the Hiep My Tay Industrial Cluster with total investment capital of VND300 billion (US$13 million), the vice-chairman of the provincial People's Committee Nguyen Quynh Thien has said.

The cluster is being developed by Thuan Phat Trading and Construction Co in Cau Ngang District and is slated for completion in the third quarter of 2023.

Once completed, it will serve a wide range of industries such as handicrafts, wooden furniture, building materials, packaging, leather shoes and textiles, food and food processing, fertiliser production, electrical and electronics, and technology for manufacturing motorcycles.

In order to meet the requirements of socio-economic development in the period of 2020-25, Tra Vinh has decided to establish three other industrial cluster (IC), including the 21ha Tan Ngai IC in Chau Thanh District; the 33ha Sa Binh IC in Long Duc Commune of Tra Vinh City and the 10.5ha Phu Can IC in Tieu Can District.

The province currently has three industrial parks, including Long Duc, Cau Quan and Co Chien IPs which cover a total area of 420ha. 

Phan Thiet to become national hub of tourism, marine sports

Located in the south-central province of Binh Thuan, Phan Thiet city has devised a plan which aims to turn the locality into a national tourism and marine sport centre by 2025.

The city plans to develop its tourism industry in association with marine sports to cater to the taste of both domestic and foreign tourists.

Most notably, Hon Rom - Mui Ne and Ham Tien tourist sites will develop various activities for guests to enjoy, including paragliding, kiteboarding, kitesurfing, windsurfing, sailing, sand-skiing, cycling, and cross-country running.

Furthermore, the Doi Duong - Thuong Chanh beach resort will be the location in which to organise games such as beach volleyball, beach soccer, beach handball, cross-country running, and marathon

Phan Thiet city will be regularly organising international sports tournaments involving kitesurfing, windsurfing, yachting, and golfing, as well as a hot air balloon festival.

The municipal administration will co-ordinate efforts with the provincial Department of Culture, Sports and Tourism in order to design unique marine sports products that can meet the various interests of tourists. This in turn will boost the image of Phan Thiet tourism to international friends and potential guests.

Vietnam records trade deficit of US$2.5 billion over seven months

Vietnam racked up a trade deficit of US$2.5 billion during the first seven months of the year, according to the General Department of Vietnam Customs.

July alone saw the country’s total import and export value decrease by 2.5% to US$53.5 billion compared to the previous month.

July’s exports stood at an estimated US$26 billion, representing a drop of 4.4%, while total import value fell by 0.6% to US$27.5 billion.

However, the seven-month import-export value surged by 29.5% to US$371.16 billion, of which exports hit US$184.33 billion, up 24.8%, and imports stood at US$186.83 billion, up 34.4%.

These figures indicate that Vietnam recorded a seven-month trade deficit of US$2.5 billion, contrary to the trade surplus of US$8.7 billion obtained during the same period from last year.

This trade deficit can largely be attributed to the sharp increase in imports of key commodity groups for business production in the country.

Most notably, the import turnover of computers, electronic products and components surged by 19.4% to US$39.06 billion, while imports of machinery, equipment, tools and spare parts soared by 35.3% to US$26.81 billion

Vietnam also spent US$10.41 billion on importing telephones and components, up 45.7%, and US$8.68 billion on fabrics, up 32.9%.

Action programme of Vietnam, Netherlands Business Platform for Mekong Delta signed

Director of the Vietnam Chamber of Commerce and Industry in the Mekong Delta city of Can Tho Nguyen Phuong Lam and Netherlands Ambassador Elsbeth Akkerman have signed an Action Programme of the Vietnam-Netherlands Business Platform for the Mekong River Delta.

This Action Programme is established under the framework of the Letter of Intent to establish the Netherlands – Vietnam Business Platform for the Mekong River Delta, which was signed at the Sustainable Business Event in January 2021.

The platform will serve as an important foundation for the effective transformation of agriculture in the Mekong Delta of Vietnam, especially in water resource management and agricultural technologies, with the private sector given a bigger role in the process.

Ambassador Akkerman said the Netherlands Government will support Vietnam in agricultural transformation, and cooperate with universities and institutes in the region to conduct research, while the Netherlands private sector is ready to work together on sustainable agricultural value changes, agro logistics, inland waterways and agro-water technical solutions.

VCCI Can Tho Director Nguyen Phuong Lam affirmed that the establishment of the Netherlands-Vietnam Business Platform in the Mekong Delta is an important milestone for the development of agriculture and business in the region.

Activities under the action programme include exchanging and disseminating market and business information between Mekong Delta businesses and Netherlands counterparts, and conducting a study comprising of market assessment and business development in the Mekong Delta to facilitate Dutch companies and/or relevant potential projects.

The two sides will work together to hold a Dutch Business Forum as a side event of VCCI Can Tho’s Economic Forum in December 2021 to promote the Dutch business development in the Mekong Delta.

The Netherlands side will support VCCI in the process of preparing the annual Mekong Delta Economic Report 2021 by nominating experts to join the evaluation committee and co-organizing thematic workshops./.

Debt improvements illustrate efficiency

Despite huge spending from state coffers on supporting both individuals and enterprises, Vietnam has nevertheless controlled public debt over the past five years, with the country’s financial security and also debt quality ensured.

The government last week reported to the National Assembly (NA) that since 2016, the economy’s “debt safety norms have been closely controlled and stayed within the permissible limits approved by the NA. The public debt has reduced gradually on an annual basis, contributing to increasing the room for applying the fiscal policy.”

Specifically, the debt-to-GDP ratio decreased from 63.7 per cent in late 2016 to 55.2 per cent at the end of last year, while the government debt in GDP went down from 52.7 per cent in 2016 to 49.1 per cent by late 2020, and the foreign debt in GDP shrank from 49 per cent in 2017 to 47.2 per cent by late last year.

By 2025, the public debt is forecast to not exceed 60 per cent of GDP, while the government debt will not surpass 50 per cent of GDP. The safety limit will be 55 per cent of GDP for public debt, and 45 per cent of GDP for government debt.

Along with these reductions, the government also reported that the quality of public debt has also improved remarkably.

“Initiative has been taken in implementing solutions about restructuring public debt portfolios in a manner that domestic loans have been increased and foreign debts have been trimmed in order to reduce risks in exchange rates,” said the government report. “The term for the government bond issuance has been prolonged, with a remarkable reduction in interest rates. This has contributed to decreasing the costs of capital mobilisation for the state budget. Besides this, the structure of investors has continued being diversified.”

For example, last year, more than 270,000 government bonds were issued with an average term of 13 years, with a lending rate of only 2.95 per cent, which is very low, according to the Ministry of Finance (MoF).

Over the past few years, questions have been raised over how the government has worked on ensuring national public debt, amid rising worries about state budget overspending and shrunk revenues for the state coffers caused by numerous difficulties when a new government tenure has been taking place.

The MoF reported that the public debt expanded by 18.1 per cent in the 2011-2015 period, tripling the economic growth rate. However, such expansion dropped to 6.8 per cent in the 2016-2019 period, equivalent to the economic growth rate.

By late 2020 alone, the public debt accounted for 55.2 per cent of GDP. This rate, however, should have been reduced if there had been no big rise in state budget spending for supporting enterprises and fighting against the ongoing pandemic.

Last year, the Vietnamese economy suffered from a total state budget deficit of $11.87 billion, with the total budget expenditure was more than $77.39 billion, including the recurrent spending of $42 billion or 54.2 per cent. Policies on deferred tax payments and directly supporting businesses and the public have also amounted to tens of billions of US dollars.

For 2021, the government is set to borrow over $27.14 billion, which is made up of $22.93 billion from domestic sources and $4.21 billion from foreign lenders. Of this, about $25.2 billion will be used to balance the central budget while the remainder will be spent on lending. The government is expected to repay debts of around $17.15 billion in 2021.

Under Vietnam’s recently-approved public debt management programme for the 2021-2023 period, the total borrowing until 2023 will be $75.65 billion, of which $69.56 billion will go to the central budget. The local budget spending deficit is limited at 0.2 per cent of GDP, as stipulated in the 2015 Law on State Budget, and the debt repayment obligation of local governments is approximately $800 million.

With regards to foreign commercial loans by businesses and credit institutions, the growth rate for short-term credit is capped at 18-20 per cent, per year and the net maximum medium-term and long-term loans are around $6.35-7 billion per year.

According to The Economist’s Global Debt Clock, by late last week, Vietnam’s public debt in GDP stood at 45.6 per cent, and per capita public debt was $1,450, while total public debt was almost $94.85 billion.

The MoF reported that in the first half of this year, the state budget expenditure reached $30.2 billion, of which 72.14 per cent or $21.78 billion was recurrent spending. Other types of spending embraced development investment capital of $5.82 billion and interest payment of $2.47 billion.

Meanwhile, the total state budget revenue hit $33.69 billion. In which domestic revenue totalled $27.52 billion, revenue from crude oil exports stood at $804.34 million, and revenue export-import activities sat at $5.34 billion. Thus, there was a surplus in the state budget of $3.5 billion in the first half of this year. 

Vietnam reaps bigger fruits from regional integration

Since its official establishment in the ASEAN Economic Community, Vietnam has been boosting its exports to the region thanks to the bloc’s trade facilitation, with the country making efforts to lure regional funding, optimising investment in its conditional sectors.

The Ministry of Industry and Trade (MoIT) has reported that Vietnam’s trade with other Southeast Asian markets has kept rising year-on-year.

Specifically, Southeast Asia is now Vietnam’s fourth-largest export market, after the US, China, and the EU. Vietnam’s export value to the region soared to US$24.7 billion in 2018 and US$25.3 billion in 2019, and stood at US$23.1 billion last year. The figure in the first seven months of this year was US$16.2 billion, up 25.8% year-on-year.

This latest figure means ASEAN stands just behind the US (US$53.7 billion, up 37.7% year-on-year), China (US$28.8 billion, up 24.6%), the EU (US$22.6 billion, up 15.6%).

Meanwhile, Southeast Asia is also Vietnam’s third-largest import market. The country’s import turnover from other regional member markets totalled US$32 billion in 2018, US$32.1 billion in 2019, and US$30 billion in 2020. The figure reached US$24.9 billion in the first seven months of this year, a 49.6% rise as compared to the same period last year.

In the first seven months of the year, China was the largest import market of Vietnam, with a total value of US$62.4 billion – up 48.8% year-on-year, followed by the Republic of Korea (US$29.8 billion, up 20.6% as compared to the same period last year).

Also in the first seven months, Vietnam witnessed a trade deficit of US$8.6 billion, up 123% year-on-year, while also enjoying a trade surplus of US$12.8 billion from the EU market, up 12.6% year-on-year. The country also suffered a trade deficit of US$33.6 billion from China and US$17.7 billion from the Republic of Korea, up 78.3 and 27.4% year-on-year, respectively.

However, according to the MoIT, Vietnam’s big trade deficits with these markets is not worrying as about 95% of imports are used for production within the country, with products locally consumed and exported.

Cementing trade and investment ties

According to Vietnam’s General Statistics Office, many drivers embracing tax cuts under the region’s commitments have enabled the country to swell its investment and trade ties with other regional economies. In late 2015, the ASEAN Economic Community was officially established as part of the ASEAN Community.

Statistics from the Ministry of Planning and Investment (MPI) showed that as of late July 2021, Vietnam’s investment to some regional markets remain positive, including Laos (almost US$5 billion), Singapore (over US$300 million), and Cambodia (US$2.7 billion).

Notably, in the first seven months of this year, Vietnamese investment projects in these countries were privately funded. For example, the Truong Thanh Corp., JSC has announced a scheme to contribute capital to Natuzzi Singapore Pte Ltd. The capital is tantamount to 20% of the Singaporean company’s charter capital.

In another case, conglomerate Vingroup was already granted a licence in Singapore to implement a US$20.5 million project to trade in electronic products, telecom equipment, automobiles, and home appliances.

Meanwhile, according to the MPI, as of July 20, the total investment from ASEAN member economies in Vietnam stood at over US$88.78 billion, with Singapore’s investment valued at US$62.34 billion, followed by Thailand (US$12.9 billion), Malaysia (more than US$13 billion), Indonesia (US$611.6 million), and the Philippines (US$615.25 million).

For instance, between January and July 20, 2021, Singapore became the largest investor in Vietnam with total new investment of US$5.91 billion, Thailand (US$3237.62 million, and Indonesia (US$4.73 million).

After implementing projects in Vietnam, many of these ASEAN investors have also expanded the import of goods from their home markets into Vietnam, after which they have also exported goods back to their countries.

In fact, in addition to tariff cuts and total removal under regional commitments, the Regional Comprehensive Economic Partnership (RCEP) was inked last November between the 10 ASEAN state members and partners including China, Japan, the Republic of Korea, Australia and New Zealand. China, Japan, Thailand and Singapore have approved the deal. Vietnam is expected to followed suit in 2021.

The RCEP is aimed at phasing out 90% of import tariffs among member states within 20 years, while also promoting flows of services and investment.

Besides this, another driver for Vietnam to further increase its investment and trade cooperation with ASEAN is the ASEAN Comprehensive Investment Agreement (ACIA). In February 2021, Vietnam adopted the fourth protocol revising this deal.

The ACIA hopes to promote trade and investment in the ASEAN region by developing a free, open, and transparent investment regime. Without restrictions or discrimination, other member states will be more willing to participate in trade in Vietnam, and vice versa. What is more, ACIA centres on five major sectors namely manufacturing, agriculture, fishery, forestry, mining, and quarrying, all of which are developing sectors in Vietnam.

At a recent meeting between Prime Minister Pham Minh Chinh and Singaporean Minister for Foreign Affairs Vivian Balakrishnan, the former suggested Singapore facilitate Vietnam to export and distribute some of Vietnam’s goods in Singapore, such as furniture, footwear, agro-forestry-fishery, e-car, electrical cables, garments and textiles, and processed foodstuffs.

Vietnam also recommended that both countries should accelerate negotiations and the inking of deals on the mutual recognition of quarantine standards in the agro-forestry-fishery and processed foodstuff sectors, while further capitalising on benefits from the RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Optimising investment in conditional sectors

As part of its strategy on attracting foreign direct investment (FDI), Vietnam has been making great efforts to woo FDI with emphasis placed on projects with high levels of technology and the creation of high value which can help raise Vietnam in the regional and global value chains.

Within this strategy, Vietnam also wants to attract FDI into some sectors, which represent opportunities for investors looking to tap into this market segment.

Specifically, the amended Law on Investment (LOI) introduces a new ‘negative list’ which covers business lines that are completely off-limits and others that come with certain conditions.

According to pan-Asia consultancy firm Dezan Shira & Associates, while conditional sectors offer potential opportunities, investors should study the law carefully due to the number of restrictions on control, activities, and capital contributions.

For many foreign investors, Vietnam’s greatest potential lies in its conditional investment sectors. These areas of the Vietnamese economy are still largely untapped by foreign capital and present prime opportunities for investors to enter a new market with little or no competition.

Opportunities within conditional sectors are, however, tempered by a number of restrictions on control, activities, and capital contributions. Each conditional industry is subject to a specific set of restrictions and all investors should be sure to evaluate their exposure.

The MPI maintains a full list of conditional sectors and industry-specific requirements on the National Business Registration Portal. The requirements include foreign ownership caps or/and minimum capital requirements.

in many conditional sectors, the government may impose additional limitations on business activities, which companies with foreign ownership may be required to adhere to. These are similar to the licensing, approvals, and other requirements that are applied to all enterprises, however, these restrictions are specifically laid out for entities involving foreign enterprises.

Under the amended LOI, business lines that are banned from foreign investment activities include:

· Debt collection services (new);

· Trading in narcotics as per Appendix I of the LOI;

· Trading in chemicals and minerals as per Appendix II of the LOI;

· Trading in wild flora and fauna as specified in Appendix I of the LOI;

· Dealing in prostitution;

· Buying and selling human tissue, bodies, organs;

· Business-related to human cloning; and

· Trading in firecrackers (new).

The amended LOI has reduced the number of conditional business lines to about 227 from around 240. These business lines and industries are subject to certain conditions and approvals as per Appendix IV of the law. These include:

· Aviation transport business;

· Manufacture of seals

· Tobacco detoxification provision services;

· HIV/AIDS treatment;

· Elderly care;

· Employment service business;

· E-commerce;

· Multi-level marketing;

· Water sanitisation;

· Architectural services;

· Import press distribution services;

· Electronic identification and authentication services;

· Real estate;

· Social networking businesses;

· Data centres;

· Fishing vessel registration; and

· Fishing vessel crew training, among others.

Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes 

VIETNAM BUSINESS NEWS AUGUST 5

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