Export-import activities at Kim Thanh II International Border Gate

Businesses have expressed their hope that customs agencies and relevant ministries and sectors will further simplify administrative procedures, which, they suggested, should be completely handled online, according to a survey.

The survey was conducted in 2020 among 3,657 firms operating in import-export, production, outsourcing, processing and logistics, among others, to find out their satisfaction with import-export administrative procedures.

Its results were announced at an online workshop held by the Vietnam Chamber of Commerce and Industry (VCCI) and the General Department of Vietnam Customs, with the support of the US Agency for International Development (USAID), in Hanoi on July 15.

VCCI Chairman Vu Tien Loc said Vietnam’s export and import have still made noted achievements despite the impact of COVID-19 and the disrupted global trade as from 2020.

The country’s total export-import value last year reached 545.3 billion USD, up 5.3 percent year-on-year, he cited figures from the General Statistics Office (GSO). In the first half of this year, the number stood at 316.73 billion USD, a rise of 32.2 percent from the same period last year.

The figures reflect great efforts of domestic firms amidst a range of challenges caused by the pandemic, Loc stressed.

The interviewed businesses suggested increasing publicity and transparency in the implementation of administrative procedures, upgrading the infrastructure system, and raising the capacity of officials.

Customs agencies and relevant ministries and sectors should better coordinate in this regard to create optimal conditions for enterprises to complete export-import procedures, they said.

According to Hoang Viet Cuong, deputy head of the General Department of Vietnam Customs, the businesses better evaluated the information provided by customs agencies, and were more satisfied with agencies’ response to their concern.

Dau Anh Tuan, head of the VCCI’s Legal Department, said the businesses lauded reforms in the customs sector and its improved service quality, notably positive changes in the inspection and management work.

They also suggested better coordination between customs agencies and concerned ministries and sectors, and stressed the need to ensure consistency and stability in building and realising policies and laws.

USAID/Vietnam Mission Director Ann Marie Yastishock applauded coordination between the Ministry of Finance and the VCCI and the General Department of Vietnam Customs in conducting the survey and releasing its outcomes.

The USAID wishes to continue its cooperation with the Vietnamese agencies to tighten the links between the Government and the private sector to consolidate the policy making and law enforcement in the time ahead, she said./.

HSBC points out three challenges for Vietnam’s economy in H2

Ngo Dang Khoa, country director of foreign exchange and capital markets at HSBC Vietnam, has suggested three challenges that the Vietnamese economy would face in the second half of this year.

HBSC has recently lowered its economic growth forecast for Vietnam this year from 6.6% to 6.1% following the fourth wave of COVID-19, which is the worst outbreak since the start of the pandemic.

Regarding the macro economy, the latest outbreak has caused disruptions in supply chains and would affect the sustainable recovery of the Vietnamese economy in the long term.

“With the closure of industrial parks and a long period of social distancing, Vietnam’s economic growth will definitely face many challenges in the third quarter and the second half of 2021 as a whole,” he said.

Social distancing measures to curb the spread of the coronavirus have also affected the consumption outlook and the recovery of the services and tourism industries.

Besides, the new variants of COVID-19 and the slow vaccination progress would delay the reopening of borders to foreign investors and tourists.

“Timely fiscal and monetary policies are needed to help businesses and citizens overcome difficulties,” he suggested.

In terms of the exchange rate, it would be hard to maintain a stable VND-US$ exchange rate in the second half given Vietnam’s trade deficit, inflation worries and the possible rise in US interest rates. Khoa predicted the exchange rate to be VND23,100 per dollar by the end of this year.

According to Khoa, unlike Western countries, Vietnam and other Asian countries have yet to see inflationary pressure. However, if prices continue to increase, the State Bank of Vietnam might have to raise interest rates.

He suggested that Vietnam should not increase interest rates too early or too quickly as the economy is severely affected by the pandemic.

Despite many challenges, HSBC still forecast a positive outlook for the Vietnamese economy in 2022 thanks to its strong motivation for economic growth.

The bank has revised upward its forecast for Vietnam’s economic growth next year to 6.8% from the previous 6.5%.

“Once the pandemic is brought under control, Vietnam will benefit from strong recovery driven by technology development and foreign direct investment, becoming one of the most potential countries in the region,” Khoa concluded.

More long-term support for COVID-hit business needed: VCCI

The Government should have more long-term policies and packages supporting and aiding businesses to recover from the impacts of COVID-19 Viet Nam Chamber of Commerce and Industry (VCCI) has said.

The statement was submitted as part of the two proposals submitted by the VCCI to the Ministry of Planning and Investment (MPI)’s to promote the Vietnamese economy post-pandemic.

The second proposal was for policies and recommendations that could be enacted immediately.

Due to the extent of the spread of COVID-19 in the most recent outbreak, Vietnam needs to move quickly to a new stage of effective pandemic prevention that includes mechanisms for safe, continuous production.

The VCCI has proposed legal regulations for businesses, related to pandemic prevention measures, be made available as soon as possible. This will ensure businesses have ample time to prepare.

Detailed regulations will also help firms be proactive in enacting continuity plans, thereby minimising the risk of supply and manufacturing chain disruption.

Businesses are currently facing many difficulties due to the additional costs of COVID-19 prevention as well as a decrease in cash flow due to a smaller market. At the same time, they have been under pressure to increase production.

Ministries should do a better job of disseminating support policies available to businesses. In particular, there should be specific, detailed and complete instructions on the procedures and processes necessary to access support presented in a simple and easy way.

VCCI said, over the long term, prioritising the implementation of macroeconomic stability and getting control over the pandemic are two key goals in 2021 that will create a solid growth foundation for the economy and businesses.

It proposed the MPI to develop policies to create more favourable conditions for Vietnamese private enterprises to survive and get ahead after the COVID-19, especially in innovation, training of high-quality human resources.

The fourth wave of the COVID-19 from April has quickly spread to provinces and cities, including the largest economic centres in the country such as HCM City and Hanoi, causing many economic activities to come to a standstill.

Quick calculations from industry associations show that the goods output of key industrial areas in the north, specifically in Bac Ninh, Bac Giang and Vinh Phuc, may decrease by 50 per cent due to the influence of the pandemic, leading to a serious decrease in the value of transport, logistics and export chains.

VCCI proposed that the Government should issue policy packages to support businesses to recover and expand business investment for the new period 2021-25. The small and medium enterprise (SMEs) development fund and the credit guarantee fund for SMEs need to have more flexible policies in the upcoming time.

VinaCapital funds report high growth

Several of VinaCapital’s funds achieved remarkable results in the first half of the year.

VinaCapital VN100 ETF reported a return of 38.5 per cent and VEOF and VIBF ranked among the top three performers in their respective categories with returns of 39.1 per cent and 26.6 per cent.

As of June 30 the three funds had assets under management of over VND855 billion (US$37.2 million) and nearly 6,000 subscribers.

VinaCapital VN100 ETF was established a year ago and replicates the VN100 Index, which is comprised of the 100 leading stocks listed on the Ho Chi Minh Stock Exchange (HOSE).

It is traded on HOSE under the ticker FUEVN100.

Over 80 per cent of the fund’s assets are invested in the financial, real estate, consumer staples, and materials sectors.

The top holdings are Hoa Phat (HPG), Vingroup (VIC), Techcombank (TCB), VP Bank (VPB), and Vinhomes (VHM).

Launched in July 2014, VEOF is one of VinaCapital’s longest established open-ended funds. It invests in large and mid-cap companies with the growth potential to earn higher profits than the VN-Index.

VIBF is a two-year-old open–ended balanced fund that combines bonds and listed stocks.

Brook Taylor, CEO of VinaCapital Fund Management Joint Stock Company, said, “After just one year, the VinaCapital VN100 ETF has delivered on our expectations that the fund would mirror the performance of the VN-Index better than any other ETF currently on offer in Viet Nam.

“The ETF, as well as VEOF and VIBF offer local and foreign investors exposure to a range of growth stocks that are positioned to benefit from Viet Nam’s continued macroeconomic stability, rising corporate profits, and positive growth of the stock market, which could see a number of new listings in the year ahead as the equitisation process of State-owned enterprises accelerates as planned.

“Viet Nam [was] one of the rarest countries in the world with positive GDP growth in 2020 (+2.9 per cent) which continued into the first half of 2021 (+5.6 per cent), boosting the confidence of domestic and foreign investors. As a result, Viet Nam’s stock market has become one of the best growth markets in Asia, increasing by 15 per cent in 2020 and 27.6 per cent in the first six months of 2021.”

Export of agricultural, forestry and fishery products brightening in the first half

Despite the pandemic, the export value of agricultural, forestry, and fishery products in the first half of the year reached $24 billion, a rise of 28.2 per cent on-year.

According to the Ministry of Agricultural and Rural Development (MARD), despite being hit by the COVID-19 pandemic, the total export turnover of agri-forestry-fishery products in the first half of the year soared and surpassed the target. Of this, the export value of agricultural products (rubber, tea, pepper, fruit, wood products) was $10.4 billion, up 13.3 per cent.

Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetables Association, confirmed that the export value of fruits in the first half increased by 17.4 per cent on-year to $2.36 billion with numerous fruits having cracked open "difficult" markets in addition to China.

"The export turnover of fruit in the first half has surpassed 2020. Despite the pandemic, lychee still entered Singapore, the EU, Malaysia, Germany, Thailand, Cambodia, France, and the Czech Republic, in addition to China," Nguyen said, adding that the domestic consumption of fruit also rose significantly, thanks to the cooperation of a variety of businesses in the supply chain.

Bac Giang Department of Industry and Trade reported that the consumption of lychee reached impressive levels this year. Year-to-date by July 1, 213,765 tonnes of lychee were sold in the province, a rise of 130 per cent on-year.

Besides lychee, the consumption of plum, longan, and dragon fruit reported good results both in quantity and price in the first half.

Additionally, seafood exports recovered well, especially shrimp and catfish, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). The MARD reported that seafood exports reached $4.05 billion in the first half, an increase of 12.5 per cent on-year.

While the export volume of rice did not increase by much, prices were getting higher. This has been beneficial for Vietnamese producers as the demand for rice and foodstuff has been increasing, especially in China and South Korea. Some businesses have been receiving export contracts even for the next quarters.

There are four major markets – China, the United States, Japan, and South Korea – importing agricultural, forestry, and fishery products of Vietnam, and most of them have maintained positive growth.

Specifically, the export turnover to the US, the largest market in the first half, was $6.7 billion, a rise of 59.8 per cent on-year, and making up 27.9 per cent of the total export turnover. The export value to China, the second-largest export market, was $4.75 billion, a rise of 32.1 per cent on-year and 19.6 per cent of the total.

Industrial production shores up post-pandemic prospects

Despite enormous difficulties remaining due to the COVID-19 crisis causing disruptions in supply chains, domestic industrial production has continued bouncing back, promising a brighter picture for economic growth.

Having been operating in Hanoi for 13 years, Japanese-backed Walcom Industry in Hanoi last December had to halt imports of components and materials from Japan and a number of other overseas markets where production and supply chains were disrupted by COVID-19.

However, since this March, imports have been resumed as the foreign partners recovered and boosted exports. Walcom Industry, manufacturing vehicle components, is also increasing exports to Japan, China, and elsewhere in Southeast Asia.

“The company’s import volume has risen 10 per cent since March, and we are planning to open a new workshop to expand production,” said a Walcom Industry Vietnam representative. “The company’s six-month revenue is estimated to increase by 5 per cent on-year, and the rate may be the same for the whole year.”

Also based in Hanoi, Japanese-invested FCC Vietnam Co., Ltd. is expected to import six new lathes valued at over $1 million for one of its workshops by late September this year, meaning another about 25 new workers will be needed.

“The company has recently imported two lathes as it is expanding production. Over recent months, workers like me have become much busier as FCC Vietnam has landed many new orders from American partners who want to buy new products from the company,” worker Do Hong Minh told VIR. “More work means more money and I’m able to save for my upcoming wedding. My average monthly income has climbed by another VND1 million ($44), in comparison to that made in December.”

FCC Vietnam boasts 1,200 workers for three big workshops manufacturing vehicle clutches, and other spare parts of the automotive sector to supply for Yamaha, Suzuki, and Honda. The products are also exported to the US.

Previously, the health crisis forced FCC Vietnam to shrink production costs, with over 200 workers facing a layoff with 70 per cent of monthly salary. At present, all workers are working at full speed, with an increase in income.

These two firms are among many increasing imports for their manufacturing production in Vietnam over the past months. Under a recent survey by Japan’s Pasona Group Inc, about 57 per cent of Japanese businesses in Vietnam are planning to increase performance in the nation, with 43 per cent saying they had or will have a plan to expand their offices in the country.

According to the General Statistics Office (GSO), Japanese firms have greatly contributed to domestic industrial production, which is gradually improving because more and more materials and components are imported into Vietnam for production, and not for direct consumption.

The GSO reported that Vietnam’s import turnover, mostly for domestic production, hit $159.1 billion in the first half of this year, up 36.1 per cent on-year. In which, the figure was $75.31 billion in the first quarter, up 26.3 per cent, and $83.5 billion in the second quarter, up 45.7 per cent.

Meanwhile, the country’s six-month export turnover reached $157.63 billion, up 28.4 per cent on-year. In which, the figure was $77.34 billion in the first three months, up 22 per cent, and $79.23 billion in the second quarter, up 33.5 per cent.

“Amid the ongoing pandemic, business and production activities of enterprises in general and of manufacturing and processing firms in particular in the second quarter have shown positive signals,” said GSO general director Nguyen Thi Huong.

The GSO reported that after growing 6.29 per cent on-year in the first quarter, industrial production in the second quarter of 2021 saw positive growth of 11.45 per cent as compared to that of only 1.1 per cent in the same period last year.

In the first half of this year, the rate was 8.91 per cent on-year, in which the growth rate of the manufacturing and processing sector – which creates 80 per cent of industrial growth – climbed 11.42 per cent as compared to that of 5.06 per cent in the corresponding period of 2020.

Under a recent GSO survey of nearly 5,700 manufacturing and processing enterprises nationwide, 68 per cent of respondents said their second-quarter performance has been better than that in the first quarter. The businesses’ confidence in the government’s direction of the economy has risen significantly, with 78 per cent of respondents forecasting that their performance will be better in the third quarter than in the second quarter. Only 22 per cent predicting that they will be more difficult in the third quarter.

Moreover, up to 70 per cent of enterprises said their orders increased in the second quarter as compared to those in the first quarter. Some 79 per cent of surveyed firms expected that their orders will be increased and maintained in the third quarter. About 83 per cent predicted their new orders in the second half of 2021 will be increased and maintained.

Meanwhile, Minh from FCC Vietnam also told VIR that he felt optimistic over his work, and believed in the economy’s prospects.

“Our company is expanding its workshops, meaning we will have more work to do,” Minh said. “My sister is also working for a foreign company in Hanoi producing garments. She is working at full speed, with an income in the first half of 2021 at VND1.5 million ($65) higher than that in the same period last year.”

According to the GSO’s survey, the respondents in the garment sector said their company’s orders increased 36.1 per cent in the second quarter of 2021 as compared to the first three months.

In a specific case, Nguyen Viet Thang, director of No.26 JSC, said that the company is expanding operations, and in need of new workers. “We currently have over 1,000 workers and is recruiting more,” Thang explained. “All products are locally consumed and exported.”

The GSO reported that in the first half of 2021, Vietnam’s total garment and textile export turnover hit $15.2 billion, up 14.9 per cent on-year.

Figures from the GSO also showed that in the first half of 2021, the economy witnessed 67,100 businesses newly established, registered at VND942.6 trillion ($41 billion) and employing 484.3 new labourers, up 8.1 per cent in the number of businesses, and 34.3 per cent in registered capital.

However, also in this period, 60,300 businesses halted operations and awaited disbandment, up 24.9 per cent on-year.

The government has enacted Resolution No.63/NQ-CP on boosting economic growth, disbursement of public investment, and sustainable exports in the remaining months of 2021 and into 2022.

The resolution focused on many varying solutions such as combating the pandemic and facilitating socioeconomic development; maintaining macroeconomic stability and ensuring major balances of the economy; fostering administrative reform and digital transformation; removing institutional barriers; speeding up public investment disbursement; boosting import and export towards a harmonious and sustainable trade balance; and also supporting both individuals and businesses, among many others.

Policy recommendations from the International Monetary Fund

Given Vietnam’s overall successful containment of COVID-19, the near-term policy imperative is to limit permanent scarring and support a robust recovery. Over time, policies should centre on achieving sustained, inclusive, and greener growth.

Provide fiscal support and improve execution: Available fiscal space should be flexibly deployed to support vulnerable households and distressed, but viable firms, with improvement of execution as a priority. Fiscal support should remain in place until the recovery is cemented, with the emphasis thereafter pivoting to revenue mobilisation for financing productive and green infrastructure investment and strengthening social protection systems.

Maintain monetary support and modernise the policy framework: Monetary policy should remain supportive while allowing for greater two-way exchange rate flexibility. Reforms to modernise the monetary policy framework and improve policy transmission should continue.

Safeguard financial stability: Corporate sector support should be targeted and timebound, and debt restructuring mechanisms strengthened. Exceptional policy support should be gradually phased out and financial stability risks closely monitored. Fragilities in the banking system should be addressed, including rebuilding capital buffers and facilitating Basel II adoption once the crisis abates.

Boost productivity and lift growth potential: Decisive structural reforms are needed to make the most of Vietnam’s considerable potential, with priority given to ensuring a level playing field for small- and medium-sized enterprises, lowering the regulatory burden and reducing corruption, alleviating labour skill mismatches, and tackling informality.

Businesses hopes for fully online administrative procedures

Businesses have expressed their hope that customs agencies and relevant ministries and sectors will further simplify administrative procedures, which, they suggested, should be completely handled online, according to a survey.

The survey was conducted in 2020 among 3,657 firms operating in import-export, production, outsourcing, processing and logistics, among others, to find out their satisfaction with import-export administrative procedures.

Its results were announced at an online workshop held by the Vietnam Chamber of Commerce and Industry (VCCI) and the General Department of Vietnam Customs, with the support of the US Agency for International Development (USAID), in Hanoi on July 15.

VCCI Chairman Vu Tien Loc said Vietnam's export and import have still made noted achievements despite the impact of COVID-19 and the disrupted global trade as from 2020.

The country's total export-import value last year reached US$545.3 billion, up 5.3 percent year-on-year, he cited figures from the General Statistics Office (GSO). In the first half of this year, the number stood at US$316.73 billion, a rise of 32.2 percent from the same period last year.

The figures reflect great efforts of domestic firms amidst a range of challenges caused by the pandemic, Loc stressed.

The interviewed businesses suggested increasing publicity and transparency in the implementation of administrative procedures, upgrading the infrastructure system, and raising the capacity of officials.

Customs agencies and relevant ministries and sectors should better coordinate in this regard to create optimal conditions for enterprises to complete export-import procedures, they said.

According to Hoang Viet Cuong, deputy head of the General Department of Vietnam Customs, the businesses better evaluated the information provided by customs agencies, and were more satisfied with agencies' response to their concern.

Dau Anh Tuan, head of the VCCI's Legal Department, said the businesses lauded reforms in the customs sector and its improved service quality, notably positive changes in the inspection and management work.

They also suggested better coordination between customs agencies and concerned ministries and sectors, and stressed the need to ensure consistency and stability in building and realising policies and laws.

USAID/Vietnam Mission Director Ann Marie Yastishock applauded coordination between the Ministry of Finance and the VCCI and the General Department of Vietnam Customs in conducting the survey and releasing its outcomes.

The USAID wishes to continue its cooperation with the Vietnamese agencies to tighten the links between the Government and the private sector to consolidate the policy making and law enforcement in the time ahead, she said.

Economic growth continues to backed by FDI, but risks remain

The Vietnamese economy saw a relatively positive growth rate in the first six months of this year, with a rise in foreign investment as one of the key pillars in defiance of concerns over the fourth wave of COVID-19.

According to the General Statistics Office (GSO), despite COVID-19, the Vietnamese economy in general has been bouncing back, with a year-year growth rate of 3.68, 0.39, 2.69, and 4.48% in the first quarter, second, third, and fourth quarter of 2020, respectively. In the first and second quarter of 2021, the rate hit 4.48 and 6.61% year-on-year.

Last November, the National Assembly set an economic growth target of 6% for 2021. In January, the government set a target of about 6.5% for the entire year.

The Ministry of Planning and Investment (MPI) has reported its two economic growth scenarios for the second half of this year to the government. In the first scenario, so as to hit the growth target of 6% for 2021, the economy must grow by 6.2% in the third quarter, and 6.5% in the fourth quarter.

In the second scenario, for the economy to climb 6.5% for 2021, the economy must increase 7% in the third quarter, and 7.5% in the fourth quarter.

“Based on these two scenarios, localities must also devise their own growth scenarios for deployment. We must be patient in implementing our dual targets of economic development and COVID-19 containment at the same time, though it is a very difficult choice,” said Prime Minister Pham Minh Chinh at the government’s recent meeting with localities nationwide on six-month economic development.

One of the key drivers of Vietnam’s economic growth over recent years has been the development of the manufacturing and processing industries which create 80% of industrial growth.

The GSO report that after growing 6.29% on-year in the first quarter, industrial production in the second quarter of 2021 saw positive growth of 11.45% as compared to only 1.1% in the same period last year.

In the first half of this year, the rate was 8.91% on-year, of which the growth rate of the manufacturing and processing sector – which creates 80% of industrial growth – climbed 11.42% as compared to 5.06% in the corresponding period of 2020.

Also in the first two quarters, agro-forestry-fishery made up 12.15%, industry and construction 37.61%, and services 41.13%.

The government has just ordered ministries, agencies, and localities to review and remove all obstructions for businesses and investors to perform their business and investment activities, with specific tasks needed to be implemented immediately. All results must be reported to the government.

According to the MPI, one of the key contributors to Vietnam’s industrial production in particular and the country’s economic growth in general is foreign investment, with foreign-invested enterprises (FIEs) continuing to consider the nation a good investment location in a region where many nations are being ravaged by the health crisis.

In January-June 20, 2021, foreign investors registered US$15.27 billion in Vietnam, 97.4% of that of the corresponding period last year, according to the MPI.

Of which, US$9.55 billion was in 804 newly-licensed projects, a year-on-year rise of 13.2%. Meanwhile, US$4.12 billion was added into 460 operational projects, up 10.6% year-on-year. Foreign investors also used US$1.61 billion for capital contribution and share acquisition in Vietnam.

Also during January-June 20, 2021, FDI disbursement hit US$9.24 billion, up 6.8% year-on-year.

Among the 18 sectors with FDI, manufacturing-processing wooed the highest registered FDI volume at US$6.98 billion or 45.7% of the total registered investment, followed by electricity production and distribution with US$5.34 billion or almost 35% of the total.

As of June 20, 2021, Vietnam was home to 33,787 foreign-invested projects registered at US$397.89 billion, of which US$241.1 billion, or 60%, had already been disbursed.

Similar to last year, Asian nations represented the lion’s share of FDI into Vietnam. Singapore led the list, accounting for almost 36.9% of total investment capital, a year-on-year increase of 3.6%, followed by Japan with 16% and the Republic of Korea, responsible for nearly 13.4%, a year-on-year climb of 43.6%.

In terms of foreign-invested projects, the Republic of Korea topped the list, followed by Japan, Singapore, Taiwan, and Hong Kong.

FIEs have also made great contributions to Vietnam’s trade picture. In the first six months of this year, despite the pandemic and factory shutdowns, FIEs’ export revenue climbed 32.2% year-on-year to US$116 billion including crude oil exports being responsible for 74.1% of the nation’s total export turnover. Without crude oil exports, FIEs’ export turnover hit US$115.3 billion, a year-on-year rise of 32.6%.

Exports to the US in the first half of 2021 increased 42.6% to US$44.9 billion, contributing to GDP gains. Vietnam’s overall exports swelled 28.4% to US$157.63 billion. While smartphones exports were strong, exports of garments, shoes, and other goods to the EU also grew thanks to Vietnam’s free trade agreements including the recently implemented EU-Vietnam Free Trade Agreement.

Meanwhile, FIEs’ total import turnover in the first half of this year reached US$102.6 billion, up 38.7% year-on-year. As a result, FIEs created a trade surplus of US$13.4 billion including revenue from crude oil exports.

In fact, GDP and FDI figures have been well maintained, but challenges remain as the fourth wave of the epidemic has been disrupting economic activities.

Despite these figures, investors are facing challenges due to the COVID-19 pandemic, border closures, strict work permit requirements, and quarantine measures as well as factory shutdowns that have been hurting both business and production.

According to the MPI, mergers and acquisitions (M&As) continue to be affected due to travel limitations as investors are unable to travel, hold meetings physically and inspect sites and businesses.

In the first half of this year, Vietnam saw a total of 1,855 contribution capital and stake purchase deals valued at US$1.61 billion, down 55% in quantity and 54.3% in quality year-on-year.

The Vietnamese government has constantly promoted the dual task of COVID-19 containment and socioeconomic development by maintaining production where possible.

However, this will be a challenge. While cases in the northern provinces of Bac Giang and Bac Ninh are falling, Ho Chi Minh City and many provinces in the Mekong Delta are still reporting a high number of cases every day while implementing one of the strictest lockdowns since last year.

While the government has now prioritised Ho Chi Minh City residents for vaccines, just over 3% of the country’s population is vaccinated. If vaccine procurement lags, this could dent economic growth and prevent the country from a full-scale reopening of the economy.

Trade, transport, and tourism activities continue to be significantly affected by the pandemic. IHS Markit notes that while Vietnam was able to control the pandemic last year, the latest flare-up makes the country vulnerable to a protracted wave. While GDP grew and exports improved, the fourth wave led to a decline in manufacturing activity in June. The Purchasing Manufacturers Index (PMI) shows a decline to 44.1 in June from 53.1 in May (a score of 50 or more indicates expansion).

VND11.5 trillion needed to widen southern expressway section

Some VND11.5 trillion is needed to widen a 24-kilometer section of the HCMC-Long Thanh-Dau Giay Expressway connecting HCMC and Long Thanh District in Dong Nai Province to eight lanes from the current four lanes, according to a preliminary report for the project.

In a report submitted to the Ministry of Transport, the project consultant Transport Engineering and Design Inc. South (Tedi South) proposed expanding the An Phu-Long Thanh section running from Ba Dat Bridge in An Phu Ward of HCMC’s Thu Duc City to an intersection with the Bien Hoa-Vung Tau Expressway in Long Thanh District, Dong Nai Province.

Of this, a 4.5-kilometer section from An Phu to Ring Road No. 2 will be widened by 4.75 meters each side so that the section’s width will reach 36 meters. The section will have a design speed of 100 kilometers per hour, Tuoi Tre Online newspaper reported.

Meanwhile, a 20-kilometer section from Ring Road No. 2 to the intersection with the Bien Hoa-Vung Tau Expressway will be expanded by 7.5 meters each side to increase the section’s width to 42.5 meters and will have a design speed of 120 kilometers per hour.

Tedi South also suggested building the Long Thanh 2 bridge on the same scale as the existing Long Thanh Bridge.

Of the total estimated capital, VND8.3 trillion will be used for construction, VND405 billion for site clearance and the remaining for backup and consulting and project management services.

The expressway expansion project will be executed from 2021 to 2025.

The first phase of the HCMC-Long Thanh-Dau Giay Expressway with four lanes was put into operation in 2015. It has been overloaded, especially on holidays.

The 2019 statistics indicated that the number of vehicles on a section of the expressway from Long Phuoc Ward of HCMC to the National Highway 51 reached 52,410 passenger car units (PCU) daily, while the number rose to some 57,000 PCU on holidays and weekends. Meanwhile, it was designed to serve 44,000 units per day.

Therefore, the Ministry of Transport in late 2019 directed the expansion of the expressway to meet the travel demand, especially once the Long Thanh International Airport is in place, serving the socioeconomic development and ensuring national defense and security in the southern key economic zone.

Ministry proposes raising duties on steel exports, reducing tariffs on imports

As the steel price surge has affected many public investment projects, the Ministry of Finance has suggested raising duties on steel exports and reducing taxes on steel imports.

In a draft decree amending Decree 57 on preferential import-export tariffs, the ministry stated that the sharp increase in the local steel prices was mainly due to the high prices of materials for steel production, while these materials have been mainly imported, the local media reported.

To reduce the steel prices, the Ministry of Finance has proposed the Government increase the duties on steel billet exports from 0% to 5% to help stabilize the supply of steel billets for the domestic market and the steel prices, limit steel exports and ensure the sustainable development of the steel sector.

Meanwhile, some steel products have been subject to high import taxes, at 15%-25%, for a long time. Therefore, the duties on steel imports which are now subject to a 15% tax rate should be cut to 10% and those subject to 20% or 25% tax rates to 15% to reduce the prices of materials for steel production.

The reduction of these import tariffs will see the State budget revenue drop, but it is necessary. The reduced figure will not be too high due to the low demand for steel imports.

The tariff reduction will encourage domestic enterprises to invest in technologies to reduce the prices of their products and improve their competitiveness with imported steel.

Live pig prices lowest in two years

Due to transport disruptions caused by the Covid-19 pandemic and the closure of a number of traditional markets, live pig prices across the country have dropped to VND52,000-57,000 per kilogram, the lowest since mid-2019.

Live pig prices in the northern cities and provinces currently range from VND56,000 per kilogram in Hanoi and Tuyen Quang to VND59,000 per kilogram in Thai Nguyen, Yen Bai, Lao Cai, Nam Dinh, Thai Binh, Vinh Phuc and Ninh Binh.

In the Central Highlands and central region, live pig prices are VND55,000-56,000 per kilogram.

Live pig prices are the lowest in the southern cities and provinces, ranging from VND52,000 to VND57,000 per kilogram. In Dong Nai Province, the prices are the lowest in the country, at VND52,000.

Ha, a live pig trader in Dong Nai, said traders are facing many difficulties to transport live pigs to other provinces as the drivers have to present a negative test certificate for Covid-19.

“If transport disruptions continue, live pig prices would fall to VND52,000 per kilogram in the coming time,” he said.

According to Nguyen Tri Cong, chairman of the Dong Nai Livestock Association, wholesale markets and major distribution centers in HCMC have been suspended, affecting the consumption of pigs.

“While live pig prices have dropped sharply, the production cost has increased significantly. The cost to raise pigs is estimated at VND60,000 per kilogram. With the current live pig prices, the farmers are suffering heavy losses,” he said.

The Dong Nai Livestock Association has written to the provincial government and related departments proposing opening meat stores in Bien Hoa City to increase the consumption of live pigs and offer pork at reasonable prices for the locals.

The Agro Processing and Market Development Authority (Agrotrade) said live pig prices in the southern cities and provinces, which are currently hit the hardest by the fourth Covid-19 wave, have seen the steepest drop. Agrotrade forecast live pig prices would rebound slightly once transportation issues are resolved.

Although live pig prices have fallen sharply, pork prices at meat stores, minimarts, wet markets and supermarkets remain high due to an increase in related costs, especially the cost of transport.

Vietnam may consider licensing new airlines after 2022

The Vietnamese Government should not consider licensing new airlines at the moment, (including air freight carriers) to avoid supply-demand imbalance and undermining the sustainable development of the aviation industry in the context of the Covid-19 pandemic, according to the Vietnamese Ministry of Transport’s latest proposal to the Prime Minister.

The proposal came from the request of the Government for more concrete guidance on building and appraising the application for setting up IPP Air Cargo JSC, an air transport business, last month.

The Ministry of Transport (MoT) will continue monitoring the market situation and the impact of the pandemic and report to the Prime Minister for consideration and decision on the possibility of establishing a new airline when the aviation market may recover by 2022, according to the latest official letter signed by Le Anh Tuan, Deputy Minister of Transport.

The ministry emphasized, since the Covid-19 pandemic broke out, local airlines have suffered serious damage.

Currently, Vietnamese airlines including Vietnam Airlines, Vietjet Air, Bamboo Airways, Pacific Airlines, and Vietravel Airlines are conducting freight service, including carriage of goods in the passenger cabin, in order to generate additional revenue to compensate for damage caused by the Covid-19 pandemic.

As of June 28, these airlines have repurposed nine-passenger aircraft for cargo flights by removing passenger seats. In addition, some other aircraft are allowed to carry goods in the cabin without having to remove seats provided that they do not carry passengers on the same flight.

In a last May’s document sent to the Prime Minister, the MoT said the establishment of a new airline should only be considered after the aviation market recovers (expected 2022) and received the acceptance of Deputy Prime Minister Trinh Dinh Dung.

According to the ministry, in the short term, the aviation industry needs to prioritize recovering the domestic and international air transport market and removing difficulties for businesses in the sector.

Vietnam seeks Finland’s ratification of EVIPA

Vietnam expected Finland to soon ratify the EU-Vietnam Investment Protection Agreement (EVIPA) and encourage Finnish firms to expand investment activities in the country in priority fields, including hi-tech, telecommunications, renewables, and environment.

Deputy Prime Minister Pham Minh Binh made the view in a meeting today [July 15] with the outgoing Finnish Ambassador to Vietnam Kari Kahiluoto.

Given the strong progress of bilateral relations, Minh called for greater cooperation between the two countries to tap into the potential of the EU-Vietnam Free Trade Agreement (EVFTA), which took effect on August 1, 2020, as well as ratifying the EVIPA.

Minh requested Finland to continue supporting the Vietnam-EU comprehensive partnership.

“For its part, Vietnam is willing to serve as a bridge to promote relations between Finland and ASEAN,” he continued.

According to Minh, both Vietnam and Finland have signed a framework agreement for public projects in Vietnam to access concessional loans from the Nordic country’s Public Sector Investment Facility (PIF) scheme, saying this would contribute to Vietnam’s socio-economic development.

Meanwhile, educational cooperation between the two countries has seen strong progress, creating favorable conditions for Vietnamese students studying in Finland.

“Finnish educational model is being adopted at the Vietnam-Finland International School under Ton Duc Thang University,” he informed.

At the meeting, Kahiluoto informed the Finnish government has approved a report evaluating Vietnam’s transitional process in June 2021, which marks the shift in cooperation mechanism between the two countries from aid support to fair cooperation with mutual benefits.

Vietnam eyes formation of large scale corporations in retail sector by 2030

The Vietnamese government continues to encourage the formation of large-scale corporations in retail, aiming to strengthen the linkage between production zones and consumer markets.

This move was revealed in the government’s decision No.1163/QD-TTg on Vietnam’s strategy to boost domestic trade until 2030, with a vision to 2045.

Under this strategy, Vietnam expects to set up sustainable supply chains in the country that could ensure effective implementation of regulations on food safety and quality, origin tracing, and environmentally friendly.

“Major corporations that serve as market-leading players would create positive spillover effects to those of smaller scale and reduce the market dependence on foreign firms or multinationals,” stated the decision.

To realize this goal, the government identifies the necessity to train the high-quality workforce in trade to meet the growing demand of the global trade integration process, while transforming domestic trade promotion activities and pushing for investments in the trade infrastructure systems.

“State governance in domestic trade would focus on the aspect of ensuring market stabilization, combating trade frauds and violation of consumer rights while respecting market principles,” it added.

Meanwhile, the government aims to protect the domestic market via instruments and intervention measures that are in line with international commitments.

“The ultimate objective would be to promote modern, rapid, and sustainable development of domestic trade, which could serve as the foundation for domestic production and global economic integration,” stated the decision.

In the 2021-2030 period, the added value from domestic trade is expected to grow by an average rate of 9-9.5% per annum, resulting in a contribution of 15-15.5% of the GDP by 2030.

Total revenue from retail sales and services would average 13-13.5%.

By 2030, revenue from e-commerce is set to make up 10.5-11% of total retail sales and services of the economy, or an expansion of 20-21%; 40-45% of small and medium enterprises operating in trade would take part in major domestic and foreign e-commerce platforms.

Social distancing vital for containing pandemic

Ho Chi Minh City has now issued Directive 16 to implement strict social distancing in public places. This is a necessary decision taken by City authorities to ensure that the pandemic remains contained.

However, future measures to help people and businesses are unclear. When India implemented social distancing, the international media reported that people were adversely affected. The question now is on how Vietnam plans to live with the Covid-19 pandemic situation for a long period of time.

Many scientists and experts in the medical field have strongly recommended adapting to living with the Covid-19 pandemic situation. However, this can only be possible when a majority of the population has been vaccinated and a threshold of community immunity has been reached. In recent months, developed countries have stepped up on vaccination drives. Singapore and Australia now already have a clearer roadmap to survive and live with the Covid-19 situation.

The difficulty for Vietnam today is lack of better access to the vaccine. In the early stages of the pandemic in the beginning of 2020, effective preventive anti-pandemic measures made us complacent towards prioritizing the importance of the vaccine. The Ministry of Health was slow in reaching out to vaccine producers, far slower than many other countries.

The current amount of vaccines that Vietnam receives are mainly from the COVAX program and the relatively large amount of aid from some countries such as Japan and the United States. Over the last few months, Vietnam has tried diplomacy to improve its vaccine strategy, by reaching out to suppliers and governments of developed countries that have excess vaccine supply, and who could possibly help Vietnam. There has also been a strong move by Vietnam to involve in vaccine production technology to ensure a long-term source of vaccine in the country.

The latest data shows that only 4% of the population, or about 3.9 million people in Vietnam, have completed their first dose of the vaccine, while the number of people who have completed their second dose is only 0.2%. Vietnam's goal is to get 150 million doses of the vaccine, enough for 70% of the population, but current agreements are set at only 105 million doses. However, more important is the time to receive this vaccine and deploy it on a larger scale for all the people.
Social distancing vital

When the rate and number of new infections are predicted to increase beyond the capacity of the health system, there is no other way but to strictly follow social distancing rules. The health system, even in rich and developed countries, does not have enough Intensive Care Unit (ICU) beds to accommodate a sudden increase in the number of patients. Maybe many people don't realize it, but an ICU in France comes with a private room and at least five medical staff. The equipment within an ICU is complicated and not everyone knows how to use all these complicated devices. Therefore, there is no other way than to adopt to maximum social distancing measures. At the same time, with the implementation of social distancing, it is necessary to take into account its consequences and look for more functional solutions.

Currently, it cannot be estimated how much economic damage will occur as a result of implementation of social distancing every single day that passes in Ho Chi Minh City. This loss will affect the lives of many persons, families, and businesses. When France implemented social distancing for two months, it was estimated that the damage during that time was EUR 120 bn, about EUR 2 bn per day. Britain's social distancing in 2020 also averaged about EUR 800 mn per day. In Australia it was about EUR 63 mn per day, in New South Wales about EUR 90 mn per day, and in Malaysia about EUR 150 mn per day.

Perhaps the Ho Chi Minh City government also has a plan to provide support in dire situations on an urgent priority basis. On social network sites we have seen volunteer groups helping in many difficult situations. The spirit of love and compassion in these difficult times has also reawakened in the Vietnamese people.

Even as social distancing is implemented, the reorganization of daily life and essential business and production activities also need to be maintained. The first is to ensure that the circulation and distribution of food is kept to a minimum by ensuring supply, prioritizing home delivery, or ordering in advance to be delivered later. Agencies or businesses also need to maintain a minimum number of employees for important work to be done. Take a simple example such as those who work with paperwork, who can't work online, and have to go to the office to complete their shift, and have to also ensure social distancing among a number of people present at the office. Manufacturing plants can still be maintained if the pandemic prevention measures are strictly followed.

Another important issue that has received little attention in Vietnam is that of mental health. Social distancing on a weekly basis will negatively affect the psychology of people living in big cities because of narrow spaces and lack of greenery. In developed countries, after a period of separation, people have seen an increase in domestic violence, and the psychology of both adults and children is negatively affected. Some countries have education and propaganda programs specifically for children to help them better understand Covid-19, without causing fear or negative emotions.

The implementing of Directive 16 by Ho Chi Minh City authorities at this time is absolutely necessary. It is hoped that the City will quickly recover back to normal and soon stabilize the reorganization of essential services and goods. The relaxation of social distancing can only be done on the strength of the health system, while waiting for the vaccine supply. The budget needs to adjust to overspending in times like this, and if it has to be advanced for the future, this is also perfectly acceptable.

Companies set up temporary accommodations for workers to maintain production

After Ho Chi Minh City went into social distancing under the Prime Minister's Directive 16 on July 9 and Chairman of the city People’s Committee Nguyen Thanh Phong directed workers to stay on-site for both working and quarantine purposes, many businesses and manufacturers have prepared plans to set up temporary accommodations for their workers to avoid the spread of coronavirus and maintain production.

The Ministry of Labor, Invalids and Social Affairs, the Vietnam General Confederation of Labor and the Vietnam Chamber of Commerce and Industry jointly signed a document for both isolation and production in enterprises and business establishments nationwide, said the office of the Ministry of Labor, Invalids and Social Affairs this morning.

According to the information provided by the office, Minister of Labor, Invalids and Social Affairs Dao Ngoc Dung, Chairman of the Vietnam General Confederation of Labor Nguyen Dinh Khang and Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) ) Vu Tien Loc have just signed an agreement No. 2242 for both isolation and production in enterprises and business establishments to achieve the Prime Minister’s direction of dual goal preventing the Covid-19 pandemic and promoting socio-economic development.

Accordingly, the joint dispatch gave guidance and recommendations for business establishments to achieve the goals of both epidemic prevention and business activities, making sure that workers can work in a safe environment.

The Ministry of Labor, Invalids and Social Affairs, the Vietnam General Confederation of Labor and the Vietnam Chamber of Commerce and Industry required business establishments to have isolation camps and continue production while applying preventative measures against the spread of Covid-19.

Under the guidance, enterprises eligible for continued production are those who committed to implementing preventative measures against the coronavirus epidemic as well as having a plan to prevent and handle cases of Covid-19. These businesses do not employ workers who are under medical quarantine.

moreover, enterprises must have vehicles taking employees from their accommodation to workplace meeting requirements according to decision 2787 issued on June 5, 2021, by the Ministry of Health.

Laborers’ test results must be negative for SARS-CoV-2 before they come to the workplace and dormitories during business operation.

Additionally, enterprises are asked to implement policies of supporting laborers who stopped working without allowance and other policies as per the government’s Resolution 68 taking effect on July 1, 2021 and the Prime Minister’s decision 23/2021.

Along with that, enterprises must update employees’ information including their test results every three days to the competent agencies according to the law.

Domestic trade expected to make up over 15% GDP by 2030

The Government sets goal to raise the GDP share of domestic trade to at least 15 percent over the next decade.

This is part of the Government’s strategy for domestic trade development through 2030, vision to 2045.

The total retail sales of consumer goods and services is expected to increase by 13-13.5 percent annually while e-commerce revenue would account for around 10.5-11 percent of the total retail sales of consumer goods and services.

The number of small- and medium-sized enterprises (SMEs) operating in trade is projected to account for 40-45 percent of the total SMEs.

Viet Nam’s e-commerce revenue reached US$11.8 billion in 2020, up 18 per cent against last year and accounting for 5.5 per cent of total retail sales, making Viet Nam the only country in Southeast Asia to achieve double-digit growth rate in e-commerce.

COVID-19 pandemic is a major boost to e-commerce, prompting many companies to do businesses online, as well as attracting first-time online shoppers./.

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

VIETNAM BUSINESS NEWS JULY 16

Exporters, hit by pandemic, turn to domestic market