Jan industrial production picks up 6%

Vietnam’s industrial growth is put at 5.9% in January against the same period last year, data of the Ministry of Industry and Trade showed.

Some industries with significant growth last month were processing-manufacturing with 8.2%, electricity generation with 13.2%, mining with 4.2%, water supply with nearly 10%, motor vehicles with 16%, metal production with 14%, beverages with 15% and apparel with 12%.

According to the ministry, the industries that faced a production slowdown in January were oil and gas, electrical devices and electronic device-computer-optical product with respective declines of 6.2%, 2% and 1.2%.

By January 1, the inventory index of the processing-manufacturing sector had risen by 9.2% against a year ago. The sectors of beverage, leather and electronics recorded high inventory increases of nearly 96%, 27% and 90% respectively.

The hefty slump in oil prices has hit Vietnam’s oil and gas industry. Around 1.5 million tons of crude oil was pumped in January, down 7.2% year-on-year.

Regarding the steel industry, according to the ministry, January production of crude steel fell 7% to nearly 365,000 tons. Prices of steel products are forecast to remain unchanged as consumption in some regional markets like China tends to tumble and domestic demand is unlikely to rise.

As supply of construction steel has outpaced demand and China is boosting exports, the price of the product is unlikely to go up this year. This will force domestic steel makers to enhance cooperation to improve competitiveness and product quality.

Venous catheter production project licensed at SHTP

The Saigon Hi-Tech Park (SHTP) authority has awarded an investment certificate to Wembley Medical Factory Joint Stock Company to produce medical devices including venous catheters at the park in HCMC’s District 9.

Tran Thi Ngoc Thuy, chairwoman of the company, said the factory worth VND230 billion (US$10.35 million) will go up on 7,000 square meters at the park. The project is scheduled to get off the ground in the middle of this year and begin operation in 2018.

The facility will produce medical devices including venous catheters and dental, orthopedic and rehabilitation equipment. At hospitals, venous catheters are placed into large veins of patients to deliver medication.

Thuy said every year hundreds of billions of Vietnam dong is spent to import about 50 million venous catheters with prices ranging from VND13,000 to VND15,000 per item. When in place, the plant will be able to turn out five million venous catheters per year with prices around 20-30% lower than imported products and meet about 10% of local demand.

According to Thuy, the domestic-invested project will use production lines imported from countries with advanced technology.

Le Hoai Quoc, head of the SHTP authority, encouraged the company to implement the project as scheduled to help Vietnam gradually replace imported products. He noted that Vietnam imports not only venous catheters but also many other medical devices at a huge cost.

Central Coast Vietnam runs new website to promote tourism

Central Coast Vietnam Destination Marketing Organization (CCVDMO) has built a new website (www.centralcoastvietnam.com) in an effort to increase awareness about Vietnam’s stunning tourist destinations in Danang, Quang Nam and Thua Thien-Hue.

While the area is known for its pristine beaches, natural attractions and national relics, the new CCVDMO website also draws attention to central Vietnam’s lesser known charms and activities, from visits to local ethnic communities to ecotourism projects and gastronomic delights.

The website features individual sections of highlight activities, UNESCO World Heritage sites, arts, culture, dining, accommodation, golf, spa, and shopping to help guests have comprehensive access to the many itinerary options available along the country’s central coast, whether they plan to stay for a few days, a few months, or want to plan future return visits.

Vietnam recently relaxed visa requirements allowing citizens of European countries including Belarus, Denmark, Finland, France, Germany, Italy, Russia, Spain, Sweden and the United Kingdom, as well as of Japan and South Korea in Asia to visit the country for 15 days without visa. Furthermore, ASEAN citizens can visit Vietnam visa-free for up to 30 days.

There are more direct international and charter flights scheduled to fly into Danang International Airport with an average of 130 flights per week. At present, tourists from Cambodia, China, Japan, Macau, Malaysia, Singapore and South Korea can come there with ease.

New flights introduced in 2015 include HK Express via Hong Kong, Jetstar via Singapore, and Jin Air and Jeju Air via Seoul and Busan. Future direct flights from Thailand are in the pipeline.

According to Central Coast Vietnam, international tourist arrivals in the region have steadily grown, with Danang being named TripAdvisor’s Top Destination on the Rise in 2014, followed by Hue in 2015. Danang International Airport handled over 434,000 international visitors in 2011 and more than 4.6 million visitors in 2015, 1.2 million of them from abroad. This significant increase has paved the way for a number of new resorts and a helicopter service, while drawing further attention to the area’s existing award-winning hotels and even attracting the attention of the Clipper Round the World Race.

The CCVDMO website is currently available in English, but its Chinese, Japanese, Korean and Vietnamese versions will be available soon. The future of the website also holds a ‘plan your trip’ option, so users will be able to use it as a one-stop-shop to customize their trips to the country’s Central Coast.

CCVDMO, a non-profit organization, was set up in 2012 to promote the beautiful and culturally diverse central coast areas of Vietnam. With 20 current members across the hospitality industry on board, the non-profit entity reinvests collected membership fees to strengthen the destination’s profile while increasing international leisure travel to the central coast, including Danang, Quang Nam and Thua Thien-Hue.

HCM City’s budget collections off to good start

Budget collections in HCMC were estimated at VND31.13 trillion in the first month of this year, a year-on-year increase of 15.5%, according to a report on January socioeconomic performance the city released on February 1.

At a meeting in mid-January, the HCMC Department of Finance was told to mull measures to boost tax and fee collections to meet this year’s budget revenue target of VND298.3 trillion (around US$13.3 billion). The tough target assigned by the Government is 9.53% higher than in 2015.

The city should boost transfers of housing and land under the city’s management and create favorable conditions for local enterprises to do business.

According to the report, the city’s budget spending in January rose by 8.3% against the same month a year ago to VND2.4 trillion.

Total retail sales of goods and services neared VND64.7 trillion in the month, up 4.1% over December and 13% against January last year.

The report said goods prices were stable in the city in the first month of 2016.

HCMC’s consumer price index slid by 0.03% last month against the previous month, with three groups of commodities (pharmaceutical-healthcare services, transport and post-telecom) falling in price and five groups (beverage-tobacco, garment-footwear, housing-electricity-water-gas, home appliances and other goods and services) inching up slightly.

The city posted export turnover of around US$2.4 billion in January, down 0.5% mainly due to a year-on-year decline of 50.3% in crude oil prices. Meanwhile, January imports picked up 9% to US$2.86 billion, resulting in a trade deficit of over US$400 million.

HCMC attracted 445,560 international visitors and registered tourism revenue of nearly VND8.34 trillion last month, up 8% and 7% respectively.

New enterprises went up by nearly 30% in number and 90% in registered capital.

The city government has set a dozen socio-economic targets for this year. They include gross regional domestic product (GRDP) growth of 8%, contribution of total factor productivity to GRDP reaching 35% or above, proportion of trained laborers rising to 75%, new jobs for 125,000 people and unemployment of less than 4.5%.

Fewer pig farms found to use banned substances

The number of pig farms detected to use banned substances has edged down sharply as the Ministry of Agriculture and Rural Development has intensified controls on pig farming.

A report of the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) under the ministry showed that the number of samples testing positive for banned substances including Salbutamol and Auramine is less than in December last year.

Last month, the ministry set up two inspection teams to carry out snap checks of 20 animal feed firms in the northern region and 11 firms in the south. Inspectors took some 207 samples of animal feed for testing but none of these samples contained Salbutamol and Auramine.

Explaining why animal feed producers have stopped using banned substances, leaders of the inspection teams said the ministry and police of the Ministry of Public Security have worked harder to prevent the use of banned substances and have taken heavy sanctions against violators. Firms found to use banned substances in animal feed production will face criminal charges under articles 190 and 317 of the 2015 Penal Code.

Besides, relevant agencies have succeeded in preventing pharmaceutical companies from supplying banned substances on the market.

However, urine samples taken at some pig farms still tested positive for prohibited substances though the number of such samples has plummeted to 4-9% from 15-26%.

According to the ministry’s inspectors, a number of farm owners still used growth stimulants to force their pigs to grow fast due to rising demand for meat during the Lunar New Year holiday (Tet).

The livestock and animal health departments have provided 8,000-9,000 rapid test kits for related agencies to detect banned substances. This equipment can produce a result that is 98% similar to that of common testing methods.

Enterprises put up higher walls against corporate financial crime

Local organisations are advised to adopt measures to combat financial crime, which tends to climb in Vietnam.

According to Terri Clementson from Deloitte’s SE Asia Financial Crime Strategy & Response, the financial crime landscape in many emerging markets like Vietnam is particularly attractive right now to those scheming to commit offenses. “Criminals look for gaps in controls they can exploit,” she said.

“Customer and investment scams run in waves across different markets, targeting customers or investors directly rather than corporations,” explained Clementson in an interview following a presentation to EuroCham company leaders in Hanoi in mid January.

“In terms of corporate financial crime in Vietnam, crime risk spikes where business processes depend on manual controls - meaning where people drive risk checks, authorise payments or receive and direct funds – because people can be vulnerable to intimidation, corruption, and temptation,” she noted.

Vietnam’s economy in particular can expose businesses to new relationships and new sources of funds, and also unknown entrepreneurs that may be connected to crime.

It is because the economy’s large capital flows, significant remittance traffic and increasing foreign investment and trade relationships all multiply and magnify transaction volumes.  

“High transaction volumes where transactions or capital are managed by large numbers of staff reliant on manual processes, or where risk management routines and incident response is weak, make companies ‘ripe’ for exploitation,” Clementson affirmed. “And risk compliance gaps in buoyant and busy markets will always attract more criminal activity.”

Processes being exploited for criminal purposes in Vietnam currently include procurement and contract tampering, identity fraud (to gain a benefit or conceal information), and account manipulation, such as skimming small amounts from accounts to evade detection, according to Clementson.

Additionally, creating fictitious accounts to satisfy sales targets or key performance indicators or divert payroll payments are among other potential crimes.

The potential crimes also include online account intrusion/hacking (cybercrime), and adding phantom services to invoices (services never delivered) that are actually bribes or facilitation payments to subvert risk controls.

“Leading local firms are in fact working hard on new fraud control frameworks, including fraud policies, procedures, and establishing fraud task forces or dedicated misconduct teams to lift fraud vigilance, monitoring, sampling and fraud detection,” said Clementson, adding that some companies were also investing in electronic early fraud detection capabilities using smart data analytics to target their risks proactively. But beyond detection, investment in ‘fraud response’ was also important.

This means hiring or training experts in-house to gather incident evidence carefully to support prosecutions and bring perpetrators to justice. Stepping up fraud response can also act as a powerful deterrent.

“Also, more staff training is key. Young or inexperienced staff often don’t understand that small compliance breaches by them can magnify companies’ risk exposure,” Clementson noted. “Learning to recognise and report fraud confidentially and safely will help insulate them from being manipulated to enable fraud.”

Vietnamese companies stepping-up risk defence will need to be careful to not just add more controls, more checks, and more points of authorisation in response to incidents.

Every control adds red tape and operations complexity. And where there is complexity, companies increase the likelihood that staff will breach controls to maintain productivity, customer service, or meet their targets.

According to Clementson, this is why “reassessing the effectiveness of controls can be critical”.

Singaporeans investors show strong interest in vacation homes in Vietnam

Singaporeans real estate companies and investors have increasingly been showing interest in investing in vacation real estate projects in Vietnam.

On January 30 and 31, representatives of more than 200 real estate companies from Singapore as well as many investors joined the conference at InterContinental Singapore where Sun Group  showcased its projects in Danang and Phu Quoc.

Leong Boon Hoe, managing director of CBRE Singapore, explained that as of now the price of Vietnamese real estate in the mid- and high-end segments were lower than that in Singapore.

Specifically, a 300 square-metre villa in Sentosa Singapore is about $12.6-$14 million, and a three-bedroom apartment is about $500,000-$840,000. Meanwhile a similar villa at Premier Village Phu Quoc Resort, Premier Village Danang Resort, Premier Residences Phu Quoc Emeral Bay is about $1-2 million, one at InterContinental Danang Sun Peninsula Resort is about $3.8-$6.5 million while an apartment in Sun Group’s projects is about $150,000-$1 million.

“Singaporeans travel frequently to destinations in the Southeast Asia. They rent apartments at $20,000 per month to live in. so they are ready to pay $15 million town a vacation villa,” said Felicia Ang, executive director of Savills Singapore.

With vacation villas in Vietnam being cheaper compared to those anywhere else, and the potential rise in the price, the number of Singaporean investors being interested in vacation real estate in Vietnam has been on an increase recently. However, according to Ang, only projects with prestigious developers that have been recognised worldwide can attract Singaporean investors.

That’s why Sun Group’s projects have been receiving attention from Singaporean investors, as Sun Group’s InterContinental Danang Sun Peninsula Resort has recently, for the second consecutive year, been crowned World’s Leading Luxury Resort in the World’s Travel Awards.

Other projects of Sun Group in Danang and Phu Quoc were also highly regarded by Singaporean real estate companies due to their competitiveness, besides their relatively lower prices, and the 9 per cent profit rate commitment in the first nine or ten years of the renting programme.

VND30 trillion property support programme still underway: Official

The government's VND30 trillion (US$1.33 billion) property support package will continue to be implemented until June 1, an official from the central bank said.

State Bank of Viet Nam (SBV) Deputy Governor Nguyen Thi Hong affirmed the continuation at the government's meeting last Friday, after some media reports said several credit institutions had stopped financing within the programme.

SBV Circular 11/2013/TT-NHNN, which took effect on June 1, 2013, stated that the programme would be carried out within 36 months from the effective date.

The package has been disbursed to assist low-income homebuyers and prop up an ailing realty market that faced too high inventories.

The annual interest rate for loans in this programme was lowered to 5 per cent during the last two years, after it was initially set at 6 per cent. The 5 per cent rate will be maintained this year, according to the central bank.

Banks with State capital, including Agribank, BIDV, Vietcombank, and Vietinbank, along with MHB, have mainly been responsible for the disbursement.

Several joint stock commercial banks, such as VPBank, TPBank, PVcombank, and Eximbank, in addition to SHB and OCB, have also been designated to take part in the programme.

Hong said the SBV would direct relevant agencies to check the disbursement issue. It was possible that some banks ceased lending to meet their credit quotas at the end of last year, and would resume the financing this year.

She told the press that the authorities would also verify information and treat any bank which might complicate procedures in carrying out the property support lending.

Meanwhile, the central bank said the committed loans within the programme were still growing strongly, reaching some VND1.88 trillion ($83.56 million) last December alone. December's disbursed amount was also significant at VND2.45 trillion ($108.89 million).

The Ministry of Construction has also reported progress of the programme.

VnEconomy online reported, citing the ministry's data, that the total loans committed within the programme reached nearly VND27 trillion ($1.2 billion), or 90 per cent of the VND30 trillion package, as of December 31, 2015.

About VND17.71 trillion ($787.11 million), or some 60 per cent of the package, was disbursed as of the end of last year.

SBV Deputy Governor Nguyen Phuoc Thanh told a meeting in HCM City last month that the central bank would, however, control property loans this year.

This was in line with a resolution on socio-economic development in 2016, in which the government asked the central bank to strictly regulate loans allocated in high-risk areas.

This would be part of the central bank's policies to help the country control inflation, maintain macro-economic stability and accelerate economic growth.

PMI to 51.5 in January

The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, ticked up to 51.5 in January from 51.3 in December.

The reading signaled a second consecutive monthly strengthening of business conditions, with the health of the sector improving at a slightly greater pace than seen at the end of 2015.

“The most pleasing aspect of the latest set of manufacturing PMI figures for Vietnam was a quickening in the rate of growth of new orders at the start of 2016, showing that local firms are still able to generate new business despite a challenging global environment,” said Mr. Andrew Harker from Markit, which compiles the survey.

While job creation remained weak, a build-up of outstanding business suggests that manufacturers might need to up their rate of hiring in coming months to keep on top of workloads.

“With the TPP set to be signed later this week, thereby kicking off the ratification stage, 2016 could lead to further positive developments in the Vietnamese economy following a solid start to the year,” Mr. Harker added.

New orders increased for the second successive month in January, and at a solid rate that was faster than recorded in December. Firms reported that rising client demand had been the main factor leading to new order growth. New export business also increased during the month, albeit at a weaker pace.

The rise in total new business contributed to a second increase in output in as many months, with the rate of expansion broadly in line with that seen in the previous month.

The acceleration in the pace of new order growth reportedly led to a build-up of backlogs of work in the sector - the first in eight months. “Although modest, the rate of accumulation was the sharpest since November 2014,” according to the report.

Input costs continued to fall in January, extending the current sequence of decline to seven months.

Moreover, the pace of reduction quickened from that seen in December, with panelists linking lower input prices to falling costs for commodities, including oil. In a number of cases declining input prices were passed on to clients, leading to a further decrease in output charges.

Rises in both employment and purchasing activity were linked to increased production requirements, according to the report. Job creation was recorded for the ninth time in the past ten months, although the rate of growth was only marginal. Meanwhile, input buying rose at a faster pace than in the previous month.

Higher purchasing activity led some firms to see a rise in stocks of inputs. However, this was cancelled out by the use of inputs in the production process, leaving pre-production inventories largely unchanged overall.

Difficulties for suppliers in securing goods and an increase in the number of deliveries contributed to longer lead times in the sector, with vendor performance deteriorating at a stronger rate.

“Finally, stocks of finished goods decreased for the first time since August 2015 amid higher sales and the delivery of products to clients,” the report added.

HCMC budget revenue increases early 2016

Ho Chi Minh City’s budget revenue reached VND31,130 billion (US$ billion) in January, an increase of 15.5 percent over the same period last year, said director of the Department of Planning and Investment Su Ngoc Anh at a meeting yesterday.

Budget spending also went up 8.3 percent to hit VND2.4 trillion (US$108 million). Total retailed revenue of goods and services in the month--peak shopping time for the Tet holidays neared VND64.7 trillion (US$2.91 billion), up 4.1 percent over the previous month and 13 percent against the same period last year.

Consumer price index reduced 0.03 percent against December with three down groups namely services, health, traffic and telecommunication and five slightly up groups including beverage and cigarettes, garment-textile-footwear, housing-water-electricity-gas, household appliances and other goods and services.

According to report by the city’s People’s Committee, HCMC export turnover approximated US$2.4 billion, sliding 0.5 percent from a year ago because the export value of crude oil reduced up to 50.3 percent.

Import turnover reached US$2.86 billion, a year on year increase of 9 percent, creating a trade deficit of over US$400 million.

The number of international visitors to the city saw a year on year hike of 8 percent totaling 445,600 bringing VND8,340 billion (US$375.3 million) in revenue, up 7 percent.

So far the program connecting banks and enterprises has loaned VND173,200 billion (US$7.79 billion) to 4,732 customers. The demand stimulation program has approved 132 projects with a total capital of VND13 trillion (US$585 million).

At the meeting, deputy chairman of the People’s Committee Le Van Khoa asked the banking industry to ensure sufficient credit supply for production and trading before, during and after the Tet, examine ATM post system to prevent any cash withdrawal congestion. Relevant agencies should keep an eye on Tet goods conditions in both quantity and quality at wholesale markets and trade centers.

Chairman of the People’s Committee Nguyen Thanh Phong instructed districts and relevant departments to concentrate on solving difficulties especially in administrative procedures for businesses to develop production and trading.

The city’s economic growth rate was rather good in January with most norms posting a year on year increase, which is a positive sign for the city to strive for socioeconomic targets this year, said Mr. Phong.

In January the number of newly established businesses raised nearly 30 percent in number and 90 percent in capital and foreign direct investment remained unchanged, he added.

Banks prepare for surging cash withdrawal at ATM locations

Banks in Ho Chi Minh City have prepared many measures for sufficient cash supply at ATM locations, especially in industrial parks and export processing zones, to meet surging cash withdrawal demand on days near Tet when many people return  home for Tet celebration.

Because Vietnamese are still in cash use habit, the number of customers at ATM posts has been high especially at yearend when many withdraw wages and bonus for Tet travel and spending.

Mr. Le Huynh Ha, head of Vietcombank’s ATM Service Management Department in HCMC reported sudden withdrawal increase at ATM posts last weekend. So they have doubled or tripled staff on duty, cash transport cars and volume at ATM locations to meet workers’ demand.

However they are just able to ensure enough cash and timely handle machine breakdowns not do anything to solve the condition in which workers wait in long queues in front of ATM posts, he said.

So it has worked with the Management Board of HCMC Export Processing Zones and Industrial Parks (EPZs and IPs) to propose workers not to withdraw cash at the same time to prevent overloading.

Mr. Duong Ngoc Minh, deputy director of ATM and POS Center of Dong A Bank said they would supplement two mobile ATM trucks comprising four machines each at EPZs and IPs, and work with trade unions of enterprises with a lot of workers to pay wage and bonus in cash to reduce pressure on ATM service.

Mr. Nguyen Hoang, director of OCB Bank’s Credit Card Center, suggested banks to provide ATM machines with large value cash to prevent workers from doing transactions many times.

According to banks, February 2-5 will be peak withdrawal time when the number of customers at ATM locations will rocket up causing overloading. So they advised customers withdraw money before and after this period and avoid doing that from 5-8 p.m. everyday. Shoppers should option POS payment at supermarkets and trade centers.

Statistics from the State Bank of Vietnam show that HCMC has 9.9 million bank cards domestically and internationally now, up 9.3 percent over 2014. Of these, ATM cards reach 7.7 million accounting for 77 percent of the total and up 3.5 percent over 2014. There are 4,180 ATM machines in HCMC now, up 147 ones over 2014.

Ha Tinh revokes seven FDI projects' licenses

Ha Tinh province reportedly revoked licenses of seven Foreign Direct Investment (FDI) projects in 2015.

The projects were cancelled because foreign investors did not carry out projects on schedule or investors suggested ending the contracts.

In 2015, FDI capital reached US$ 3, 24 billion, accounting for 81 percent compared to the plan and a decrease of 13, 09 percent compared to 2014.

Last year, additional ten foreign direct investment projects were licensed in the province, increasing three projects compared to 2014.

Total investment capital increased US$ 121 million, 21 percent compared to the plan of 2015.

Up to now, 10 countries and territories worldwide have planned to invest into Ha Tinh province including Taiwan (China), Japan, South of Korea, Brunei, Australia, the United States, Thailand, the Philippines, Laos and China.

Vietnam a potential market for EU exports: EU trade commissioner

As a fast growing economy of more than 90 million consumers with a growing middle class and young labour force, Vietnam is considered a market offering a range of opportunities for exports of agriculture, industry and services from the European Union (EU).

The statement was made by European Commissioner for Trade Cecilia Malmstrom on February 1, on the occasion of the EU launching the text of the Free Trade Agreement between the EU and Vietnam (EVFTA).

According to a statement by the European Commission (EC), according to the usual procedure, the text will now be subject to a legal review to verify its consistency and ensure that all the provisions are formulated in a legally-sound way. It will then be translated into all EU languages as well as into Vietnamese before being signed and ratified by both parties.

Earlier, in December last year, in the presence of Vietnam Prime Minister Nguyen Tan Dung and EC President Jean-Claude Juncker, Vietnamese Minister of Industry and Trade Vu Huy Hoang and European Commissioner for Trade Cecilia Malmstrom signed the Declaration on the formal conclusion of the EVFTA negotiations. The two sides affirmed the signing was a great historical moment and a special mark to celebrate the 25th anniversary of the EU-Vietnam diplomatic relations.

The agreement is formed in the context of increasingly developed Vietnam-EU bilateral relations, especially in economic and trade ties. It is expected to continue to motivate trade, investment, and economic growth, as well as helping create more jobs in Vietnam and the EU.

The EU is Vietnam's largest export market (together with the US) and its' second trade partner. Two-way trade turnover has increased from US$17.75 billion in 2010 to US$36.8 billion in 2014. In the first six months of 2015, total bilateral trade reached US$19.4 billion, up more than 11% compared to the same period in 2014. The significant feature in the trade structure between Vietnam and the EU is that it is largely complementarity with less direct competitive confrontation.

Vietnam mainly exports to the EU footwear, garments, coffee, furniture, and seafood.

The EU is also the largest investor in Vietnam. By the end of the first six months of 2015, 23 of the 28 EU member countries had invested in Vietnam with more than 2,100 valid projects totaling US$38.4 billion.

EU investors have been present in most important economic sectors of Vietnam, most concentrated in the industrial, construction and service sectors.

Paying due attention to inflation control

The country’s consumer price index (CPI) remained unchanged in January compared to the previous month and inched up just 0.8% from a year earlier. The figure broke the market rule several years ago when the CPI generally surged in the month before the Lunar New Year (Tet) festival.

The January CPI growth was very slow, just below 1%, despite increases in prices of nine of the 11 categories of goods and services calculating the CPI. On the contrary, a 6.44% drop in fuel prices including those of fuel gas, petrol and diesel oil from last December dragged the overall CPI down 0.27%.

Prices of goods and services in the market generally remained stable, posing a positive signal to consumers and state management agencies. However, due attention still needs to be paid to the task of controlling the CPI because the calculation cycle for February CPI falls on the occasion of the Tet festival (CPI is regularly calculated from the 15th day of the current month to the 15th of the next month). This occasion usually sees a soaring demand for purchasing commodities, so opportunistic price rises will be inevitable unless effective measures are taken to enhance market management and stabilisation and ensure sufficient supply of goods and services. Notably, the recent severe cold spell could influence the provision of several goods items, especially food and foodstuff, driving prices on the verge of increasing.

As predicted by economists, the CPI will continue to rise but still at a moderate level in February before being possibly affected in March due to surges in prices of several health services since the first day of the month. Price increases of these medical services are part of a roadmap to adjust the prices of medical services in line with the market prices in order to gradually move towards the true value of these kinds of services. It is possible to take advantage of the current low level of CPI to work out a roadmap to adjust prices of several types of goods and services, including educational and health services and electricity, in line with the market prices. However, many experts also raise an alert that upward price adjustments must be considered under thorough research of impacts, avoiding high and sudden increases which will negatively affect inflation and people’s lives.

According to the General Statistics Office of Vietnam, a 10% increase in prices of medical services will result in a 0.34% hike in the CPI, while a 10% surge in prices of educational services can make the CPI up 0.58%. If prices of both these types of services rise 10%, the CPI will see a jump of 0.92%. The CPI will even leap 1.31% if prices of educational and medical services and electricity increase 10%.

Thus, the CPI will be under pressure to rise in the coming months due to upward adjustments in prices of several services according to the market price roadmap. However, this is a subjective factor and necessary interventions can definitely be made, regarding considering the time and level for price increases, in order to minimise the entailed impacts.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR