Vietnam remains attractive investment destination: Report
Vietnam is still seen as an attractive destination and the problems of 2021 do not mean that foreign investors will turn away, according to a recent report by Singapore Institute of International Affairs (SIIA).
Entitled “From Crisis to Endemic: Stumbling or Pressing Ahead?” the report examined the economies of Indonesia, Vietnam, Malaysia, and Thailand, which together account for over 70 percent of overall ASEAN gross domestic product (GDP).
In 2020, Vietnam was held up as a model for its ability to curb the initial COVID-19 outbreak, with discipline and social support for strong measures, resulting in low, near-zero numbers, it said. However, this has changed in 2021, when the country has experienced a surge of cases since 27 April, driven by the Delta variant, and the situation could not return to the previous low levels of infection.
The extensive lockdowns to prevent the spread of the coronavirus have disrupted not only local consumption but also impacting the manufacturing and supply chain activities to export markets. The pandemic impacts were especially felt by manufacturers of garments and electronics, noted the report.
At the macro-level, however, the Vietnamese economy showed considerable resilience. Even amidst the 2021 pandemic situation, trade numbers have remained strong with Vietnam’s total trade value of goods up 33.5 percent year-on-year in the first five months of 2021. This is supported by strong economic recoveries in major markets, especially the US and China, according to the report.
The report said challenges and impacts experienced by businesses operations and supply chains in 2021 could impact the future. Nevertheless, economists forecast Vietnam should still attract some 30 billion USD in foreign direct investment (FDI) this year, or a 2 percent rise, year on year.
At a conference to announce the reports, experts held that the investment environment of Vietnam in the long term is prominent compared to other ASEAN major economies thanks to the political stability. Vietnamese attraction also comes from the country’s special policies to facilitate production and technology development, they said./.
$281.3 million expressway between Cao Lanh and An Huu waits for pre-feasibility approval
The management board of My Thuan project asked the Ministry of Transport to appraise the pre-feasibility report of the first phase of the Cao Lanh-An Huu expressway, with total investment capital of $281.3 million.
The management board asked the Ministry of Transport to implement the project under the public-private partnership model with a build-operate-transfer contract, with 50 per cent of capital coming from the state budget and a payback period of 27 years.
In the first phase, the expressway will be designed with four limited lanes and a maximum speed of 80 kilometres per hour.
The expressway will begin from Trung Luong-My Thuan Expressway, a major project under construction in Tien Giang, and run northwest to Cao Lanh, the city of Dong Thap.
According to the plan, it takes three years from 2021 to complete the procedures. The land clearance will be implemented in 2022-2023. The construction is scheduled to be completed in 2025.
The expressway will reduce traffic on the existing National Route 30 which runs through the two Mekong Delta provinces.
The project is part of 25 projects prioritised for investment in 2021-2025, with a vision to 2050, which are waiting for approval from the prime minister.
According to the draft road system plan that the Ministry of Transport submitted to the prime minister, the MoT targets that by 2030, Vietnam would successfully complete a system of highways connecting economic and political centres, key economic regions, seaports, and international airports. In addition, around 5,000 kilometres of highways would be constructed.
EVFTA serves as a leverage for Vietnamese, EU firms: Forum
Vietnam has become the largest commodity trade partner of the European Union (EU) in ASEAN just one year after the EU-Vietnam Free Trade Agreement (EVFTA) took effect, Deputy Minister of Industry and Trade Dang Hoang An said on October 27.
He made the remark during the Vietnam-EU Trade Forum titled "EVFTA – Leverage for Trade and Investment Cooperation in the New Normal’ jointly held by the Ministry of Industry and Trade (MoIT) and the European Chamber of Commerce (EuroCham) in Hanoi.
The two sides can be optimistic about a strong surge in the Vietnam-EU trade and investment cooperation development in the new normal, An affirmed.
He said that the MoIT and trade offices of Vietnam in the EU will stand side by side with businesses of the two sides to maximise opportunities offered by the EVFTA, thereby creating favourable conditions to foster trade and investment and address difficulties.
Businesses are urged to take the initiative in innovating themselves, raising capacity and adjusting business strategies to quickly adapt to the new situation.
With a strong commitment to ensuring transparency, openness and favourable conditions in the trade and investment environment, Vietnam has gained access to high-quality investment sources from the EU with projects using advanced technologies.
In particular, as traditional trade methods are hindered by the COVID-19 pandemic, e-commerce has become a bright spot, becoming one of the prioritised fields in the post-pandemic economic recovery strategy.
Many domestic and foreign experts voiced their optimism about prospects for economic recovery and growth of EU-Vietnam trade and investment relations in the new normal. They also pointed out challenges in the coming time.
Vietnam was advised to build scenarios suitable for adapting to the new situation in a flexible and effective manner and seize all possible resources for economic recovery and growth, as well as address bottlenecks for businesses.
Ambassador Giorgio Aliberti, Head of the EU Delegation to Vietnam, said the EVFTA is projected to bolster the export of Vietnamese fruits and farm produce to the EU. However, firms have been facing obstacles in entering the EU market due to complicated procedures.
EuroCham Chairman Alain Cany stressed that the two sides need to closely cooperate with each other in resolving current issues, saying that with various advantages, Vietnam has chances in attracting new foreign investment inflows from European investors who are seeking a stable, safe, prosperous and competitive destination./.
IPs with seaports will have the advantage in attracting new-generation FDI flows
The COVID-19 pandemic affected global supply chains and the transport industry, especially aviation, was disrupted, thus shipping took the throne. Meanwhile, new developments from free trade agreements are creating new opportunities for Vietnam's industrial real estate market.
Recently, China officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). If China joins, the CPTPP will surpass the Regional Comprehensive Economic Partnership (RCEP) as the trade agreement possessing the world's largest value with the combined GDP of economies accounting for 30 per cent of global GDP compared to the current figure of about 13 per cent.
Previously, in November 2020, China also joined the RCEP including 10 ASEAN member countries and four countries with which ASEAN signed a free trade agreement (FTA), namely Australia, Japan, South Korea, and New Zealand.
The CPTPP currently includes 11 members, ranking third in size among FTAs in the world, after RCEP, which is worth $26 trillion and the US-Mexico-Canada FTA (USMCA) which is worth $21 trillion.
The admission of new members will become a controversial topic among member countries as it will shift the balance of trade, economy, and politics in the region.
Putting aside political and economic goals, these moves are increasingly reinforcing the trend of capital flows in the direction of "China + 1".
Before that, since the US-China trade war broke out in 2018, the US and some developed western countries have moved part of their supply chains out of China. This is to avoid putting all of their eggs in the same basket, minimising political and commercial risks.
Accordingly, companies maintain production activities in China while expanding to another country. At this time, ASEAN is particularly appealing because it is close to the Chinese market.
With the above developments, it is understandable why the ASEAN region has received large foreign direct investment (FDI) inflows in recent years, including Vietnam. Vietnam shares a land and sea border with China, with an international seaport system, developed industrial park (IP) infrastructure, and stable policies. It is also a member of the CPTPP and RCEP. Therefore, Vietnam is rated as one of the most attractive destinations in ASEAN.
Whether China is agreed to join the CPTPP or the US returns to the CPTPP, ASEAN will continue to be the focus of FDI flows. Vietnam is making good use of this opportunity to welcome new, high-quality, and environmentally friendly FDI flows.
Especially in the context of the pandemic, aviation and road transport face many difficulties, and sea transport is emerging as the optimal transportation channel. Countries in ASEAN that have seaports will have more advantages in attracting investment, and one of two seaports of class 1A (international gateway port) is located in Haiphong city.
This partly explains the growth of FDI inflows to Vietnam, particularly to Haiphong, in the first nine months of 2021, despite the impact of the fourth outbreak.
Nam Dinh Vu IP of Sao Do Group owns this great advantage. Nguyen Thanh Phuong, general director of the group said: "Since the beginning of 2021, the IP has been continuously attracting new projects, and the group must also accelerate the leveling of our vacant land fund to meet the demand of investors."
With the advantage of having a seaport located in the area, the Seaport and Logistics subzone with a scale of nearly 200 hectares is one of the most potential convergence areas of the IP, with a scale of seven container terminals and a total investment of VND6 trillion ($260.87 million). Currently, the entire technical infrastructure of the first phase of Nam Dinh Vu port has been completed, with two berths already in operation with a capacity of about 800,000 to 1 million TEUs per year. The next two berths of the second phase are already underway and are expected to be launched in mid-2022.
In addition, the group has also invested in a bonded warehouse with a scale of 13ha and is currently putting it into operation quite effectively, gradually contributing to the improvement of facilities and services for this area. In the coming time, Sao Do Group will invest in building a liquid cargo wharf, providing petroleum, gas and natural gas services to industrial customers.
Besides developing the advantage of a seaport in the IP, the group also uses VR technology to assist foreign investors in visiting Nam Dinh Vu IP from afar, and promote investment in infrastructure to create sufficient land bank for large corporations and expand ready-built factories.
All these factors will help Nam Dinh Vu IP increase services and business efficiency for investors.
Reference exchange rate up 7 VND
The State Bank of Vietnam set the daily reference exchange rate at 23,131 VND/USD on October 27, up 2 VND from the previous day.
With the current trading band of +/-3 percent, the ceiling rate applicable to commercial banks during the day is 23,824 VND/USD and the floor rate 22,438 VND/USD.
The opening-hour rates at commercial banks stayed stable.
At 8:30 am, Vietcombank listed the buying rate at 22,625 VND/USD and the selling rate at 22,855 VND/USD, unchanged from October 26.
Similarly, BIDV also kept both rates unchanged at 22,655 VND/USD (buying) and 22,855 VND/USD (selling)./.
10-month FDI disbursement slightly down due to pandemic
While both newly- and additionally-registered capital soared by double-digits in the first 10 months, foreign direct investment disbursement decreased slightly during the period.
In the first 10 months, foreign direct investment (FDI) disbursement reached $15.15 billion, a decrease of 4.1 per cent on-year, and only 0.6 percentage points more than in the first nine months, reported the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.
The pandemic and social distancing have almost completely halted production and business activities across the country. However, the health crisis is being contained and enterprises are receiving ample support to adapt to the new normal, it added.
"Businesses are resuming their activities, and FDI disbursement in the last months of the year is expected to rise," said a representative of the FIA.
In general, total FDI inflows into Vietnam during the first 10 months of the year rose by 1.1 per cent on-year to $23.74 billion.
As of October 20, $13 billion was poured into 1,375 newly-licensed projects, down 34.5 per cent in the number of projects and up 11.6 per cent in value over the same period last year. Besides this, $7.09 billion was added into 776 projects currently underway, a decrease of 14.4 per cent in the number of projects and a rise of 24.2 per cent in value against the year prior. Foreign investors also poured $3.63 billion into share purchase deals, down 40.6 per cent on-year.
The FIA reported that newly- and additionally-registered FDI remained on an uptrend, however, the on-year increase for the first 10 months was lower than for the first nine months.
The decrease in the number of new and expanded projects were attributed to travel restrictions and long quarantine policy, which made it hard for foreign investors to survey projects.
Among the 18 sectors receiving investment from foreign investors in the first 10 months of this year, processing and manufacturing took the lead with $12.74 billion, accounting for 53.7 per cent of the total FDI. It was followed by power production and distribution with over $5.54 billion, making for 23.3 per cent, followed by real estate, and wholesale, retail.
Singapore led the 97 countries and territories investing in Vietnam in the period, with a total investment capital of nearly $6.77 billion, followed by the Republic of Korea ($4.15 billion), and Japan ($3.4 billion).
The Mekong Delta province of Long An attracted the highest amount of FDI during the period with over $3.68 billion, including $3.1 billion in a big energy project. Ho Chi Minh City was second with $2.73 billion, followed by the northern port city of Haiphong with $2.72 billion.
The export turnover of foreign-invested enterprises (FIEs) continued to increase in the first 10 months, however, on-year growth for the period was lower than for the first nine months with $198 billion (including crude oil), up 20.1 per cent on-year, or $196.7 billion (excluding crude oil), up 20.3 per cent.
FIEs' import turnover was estimated at $176.9 billion, an increase of 31.3 per cent on-year. Generally, in the first 10 months, the trade surplus of the FDI sector was about $21.2 billion (including crude oil), or $19.8 billion (excluding crude oil), while the trade deficit of local enterprises was $23.2 billion.
Electronic invoice deployment centres put into operation
The General Department of Taxation has opened a series of electronic invoice deployment centres, located at its headquarters and the taxation departments in six localities.
They include the taxation departments of Hanoi, Ho Chi Minh City, Hai Phong, Quang Ninh, Binh Dinh and Phu Tho.
According to the General Department of Taxation, in the first phase, the deployment of electronic invoices in those six cities and provinces will play a decisive role in providing e-invoices nationwide. Enterprises in those localities account for 60% of the total number of operating enterprises, and 70% of invoices nationwide.
This is an important milestone in implementing the General Department of Taxation's electronic invoice system from mid-November 2021.
General Director of the General Department of Taxation Cao Anh Tuan said this system would solve questions and problems from individuals and enterprises regarding e-invoices.
This system would help the General Department of Taxation organise and direct the application of e-invoices for those six taxation departments, before expanding to the taxation departments of 57 other provinces and cities next.
The system of seven centres will ensure smooth operation and timely sharing of information and experiences via an online platform, Tuan said.
At the same time, the General Department of Taxation and local taxation departments will provide a 24-hour hotline to solve questions and problems from taxpayers.
The centres will also be responsible for reporting on the progress of implementation of electronic invoices, as well as any problems that occur.
At the moment, 99.72% of businesses nationwide have made electronic tax declarations and 98.71% of them have implemented electronic tax payments. About 98.64% of them have carried out electronic tax refunds, according to the general department.
This is especially important in the context of the COVID-19 pandemic, which has limited direct physical contact.
To promote further modernisation of the tax sector, the General Department of Taxation has also proposed the issuing of circulars and decrees on the management of invoices for the sale of goods and services.
From July 1, 2022, all enterprises, economic organisations, business households and individuals shall make electronic invoices, excluding small and medium enterprises, cooperatives, and business households and individuals who do not have online transactions with tax authorities.
This is an important legal basis for transforming the method of managing and using electronic invoices, saving costs for businesses and society, and improving efficiency in the administration and management of both businesses and tax offices.
Ninh Thuan to organise international bidding for $2.28 billion LNG Ca Na Power Centre
Ninh Thuan People’s Committee will organise international bidding to select investors for the LNG Ca Na Power Centre Project – phase 1.
According to the plan, investor selection will start in this fourth quarter and will finish within 262 days. Ninh Thuan Department of Industry and Trade will be in charge of organising the bidding.
To date, five potential investors have met the requirements regarding financial capacity and experience and expressed ambitions to develop the project. These investors include two joint ventures, namely Korea Consortium and the joint venture of Total Gaz Electricite Holding France SAS, Novatek Gas & Power Asia Pte, PV Power, Siemens Energy AG, and Zarubezhneft JSC. The remaining investors are Gulf MP Co., Ltd., Jera Company Inc., and Trungnam Group.
According to the initial plan, construction was expected to kick off in the third quarter, however, so far, the province had only completed the bidding procedures to look for investors.
It was added to the Power Development Plan VII this April. The project includes a 1,500MW combined cycle gas turbine (CCGT) liquefied natural gas (LNG) power plant, a port to receive LNG with an annual capacity of 4.8 million tonnes, as well as an LNG warehouse with a capacity of 4.8 million tonnes a year.
Once completed, the power centre will supply electricity to southern cities and provinces.
Greater efforts aim to remove Vietnam from IUU fishing warning
The country has been strongly advised to redouble efforts to put an end to illegal, unreported, and unregulated (IUU) fishing in a bid to have the European Commission (EC)’s ‘yellow card’ removed, thereby boosting aquatic exports to the EU market, according to industry insiders.
Phan Thi Hue, head of the Legal Inspection Department under the Vietnam Directorate of Fisheries, noted that the EC will not try to remove the ‘yellow card’ regarding the detection of fishing vessels encroaching in foreign waters.
An EC report in May warned that it is likely to impose ‘a red card’ on Vietnamese seafood in the event that violations on fishing regulations are not handled in a quick manner.
The EC has therefore highlighted Vietnamese determination and efforts to gradually reduce the number of fishing vessels violating regulations regarding IUU fishing in foreign waters located in the Pacific region.
It also spoke highly of the country’s goodwill, co-operation, transparency, and honesty in providing information about the fishing vessel database, as well as issuing a legal framework in line with international standards towards sustainable and responsible fishery management and international integration.
Despite this, IUU inspection missions to several localities throughout the country have revealed that there remain inadequacies in terms of the implementation of the legal framework on fisheries as there was a high number of fishing vessels of up to 260 encroaching foreign seas from January 1, 2020, to October 15, 2020.
Nguyen Thi Thu Sac, vice president of the Association of Seafood Exporters and Producers (VASEP), said once the EC moves to impose a ‘red card’, then Vietnamese seafood will not be allowed to enter the EU market, causing the sector to lose roughly US$380 million each year.
Furthermore, local firms will also fail to maximise the benefits from the EU-Vietnam Free Trade Agreement (EVFTA), and lose the European market worth US$480 million.
Moving forward, in the event that the ban lasts for between two and three years, it will cause severe disruptions to the local fisheries sector, particularly with the exploitation of aquatic products shrinking by roughly 30% in terms of output.
Tran Dinh Luan, director general of the Directorate of Fisheries, underlined the importance of enhancing management over fishing vessels due to the country having up to 90,000 fishing vessels operating at sea.
He emphasized the necessity of imposing stricter penalties against IUU fishing, while simultaneously urging seafood processing and export enterprises to refuse to illegally exploit seafood.
Sac stressed the necessity of organising an auction market in the near future as part of efforts to remove the bottlenecks for the seafood industry.
Singapore Institute highlights Vietnam as attractive investment destination
Vietnam is still being viewed as an attractive destination, with the problems which have arose during the course of the past year not putting off foreign investors, according to a recent report by Singapore Institute of International Affairs (SIIA).
Entitled “From Crisis to Endemic: Stumbling or Pressing Ahead?”, the report examines the economies of Indonesia, Vietnam, Malaysia, and Thailand, which combine to account for over 70% of overall ASEAN gross domestic product (GDP).
Last year saw the country hailed as a model for its ability to curb the initial COVID-19 outbreak, with discipline and social support among local people for strong measures, thereby resulting in very low, near-zero, numbers. However, this changed when the country experienced a surge of cases starting from 27 April, largely driven by the Delta variant, with the situation being unable to return to the previous low levels of infections.
The extensive lockdowns put in place to prevent the spread of COVID-19 have therefore disrupted not only local consumption, but also impacted on the manufacturing and supply chain activities to numerous export markets. The impact of the pandemic has especially been felt by manufacturers of garments and electronics, noted the report.
Despite these challenges, at a macro-level the Vietnamese economy has shown considerable resilience. Even amidst the pandemic situation this year, trade numbers have remained strong, with total Vietnamese trade value of goods up 33.5% annually in the first five months of the year. This is widely supported by strong economic recoveries seen in major markets, especially the United States and China, according to the report.
The report outlines that challenges and the impact experienced by business operations and supply chains this year could still impact the future. Nevertheless, economists forecast that the nation should still attract approximately US$30 billion in foreign direct investment (FDI) this year, a 2% rise on-year.
During a conference held to announce the report, experts stated that the Vietnamese investment environment over the long term is prominent compared to other ASEAN major economies thanks to consistent political stability. Vietnamese attraction also comes from the country’s special policies to facilitate production and technology development, they said.
Vietnamese cashew makes up overwhelming market share in Netherlands
The market share of Vietnamese cashew nuts as part of total Dutch imports accounted for 82.29% during the opening seven months of the year during the seven months of last year, according to Eurostat, the statistical office of the EU.
They Netherlands imported 35,400 tonnes of cashew nuts worth US$238.52 million during the seven-month period, representing a rise of 2.1% in volume, despite being a drop of 9.4% in value over the same period from last year.
The EU nation also moved to increase its cashew nut imports from both Vietnam and the Ivory Coast, although it reduced imports from India and Brazil in the reviewed period.
Of the figure, the Netherlands imported 29,130 tonnes of cashew nuts worth US$193.83 million from Vietnam, marking an increase of 8.0% in volume, but down 3.1% in value against the same period from last year.
Statistics compiled by the General Department of Vietnam Customs revealed that the Netherlands marks the third largest consumer of Vietnamese cashew nuts with 53,072 tonnes worth US$291 million throughout the reviewed period, marking a rise of 15.2% in volume but a decline of 2.9% in value compared to last year's corresponding period.
Vietnam among top 10 largest suppliers of goods to EU market
Vietnam is among the top 10 largest suppliers of goods to the EU market, with last year's two-way trade reaching EUR43.2 billion.
This information was unveiled during the Vietnam - EU Trade Forum 2021, an event which was co-hosted by the Ministry of Industry and Trade and the European Chamber of Commerce in Vietnam (EuroCham) on October 27 in Hanoi.
One year since the implementation of the EU-Vietnam Free Trade Agreement (EVFTA), two-way trade turnover between the country and the EU reached US$54.87 billion, an increase of 12.1% compared to the same period last year, of which exports and imports surged by 11.3% and 14.04%, respectively.
Despite the adverse impacts of the COVID-19 pandemic in several southern provinces, two-way trade turnover between the nation and the bloc in September recorded positive growth, with turnover standing at US$ 41.3 billion, up 13.4% against the same period last year.
Upon addressing the forum, Deputy Minister of Industry and Trade Dang Hoang An affirmed that several local businesses are taken full advantage of incentives from the EVFTA through the use of certificates of origin (C/O), noting that the competitiveness and market share of Vietnamese goods has also improved markedly within the EU market.
With a strong commitment to ensuring transparency, openness, and convenience in the current business climate, the country has received high-quality investment from the EU with a number of projects involving in the hi-tech field, a move which has created common values and benefits for the both sides' business communities.
Deputy Minister An therefore emphasised that the pandemic has also caused changes in consumption trends, leading to the development of digital transformation and e-commerce. In line with this, the Governments of several countries globally have devised solutions to promote the digital economy, especially e-commerce.
These moves have served to open up bright prospect for cross-border trade channel in the near future, An noted.
Deputy Prime Minister Le Minh Khai has asked ministries, agencies and localities to closely monitor market developments and to be cautious, flexible and active in price management in order to stabilise price levels and promote economic growth.
Deputy PM Khai made his comments at a meeting to review and evaluate price management in the third quarter of 2021 held in Ha Noi on Tuesday.
Khai, who is also head of the Price Management Steering Committee, suggested that ministries, agencies and localities focus on managing prices of electricity, food, fertiliser, animal feed, medicines, biological products, medical supplies and especially gasoline.
The Deputy PM said that from now until the end of the year, the average CPI is expected to increase by around 2 per cent. Therefore, the inflation control target assigned by the National Assembly and the Government in 2021 was not under severe pressure, while the possibility of achieving the target was high.
Khai told participants that price management and administration have made a positive contribution to maintaining macroeconomic stability, removing difficulties and obstacles for businesses and individuals in the country’s economic recovery and development. He noted that price stabilisation also helped stabilising people’s lives in difficult times.
Khai said that early next year, many countries will start to open and restore production, so the demand for materials and energy will increase, noting that although Viet Nam had controlled the pandemic well, the developments of COVID-19 posed potential risks, causing difficulties in the production, supply and circulation of goods.
From now until the end of this year, Khai required ministries and sectors to closely monitor market developments, and operate in compliance with legal provisions, while proactively adopting adequate, effective and timely solutions.
Providing price management solutions for the remaining months and indications for 2022, the Government’s representative asked the Ministry of Finance to collect opinions of ministries and agencies in order to closely follow the situation and practical conditions of Viet Nam.
In addition, the Ministry of Foreign Affairs must coordinate with the Ministries of Finance, Planning and Investment and the State Bank of Vietnam to closely monitor developments in the world situation, general inflation in countries and market trends.
Regarding important and essential commodities, the Deputy Prime Minister suggested that ministries, agencies and localities closely monitor market supply and demand to prepare reserves and stabilise prices, especially in the remaining months, the Lunar New Year and the beginning of 2022.
Khai also has paid particular attention to this group of goods, because this year the economy has been heavily affected by the COVID-19 pandemic. Therefore, ministries and sectors must pay close attention to organising the reserve and maintaining work appropriately.
Delivering a speech at the meeting, Deputy Finance Minister Ta Anh Tuan said price levels in the economy in the first 10 months of this year were basically predicted in the price management scenario since the beginning of 2021.
Tuan said the consumer price index (CPI) in the first nine months 2021 rose by 1.82 per cent compared with the same period last year and it was the lowest increase since 2016. The country’s inflation in nine months increased by 0.88 per cent. The CPI in October, 2021 is expected to decline by 0.1-0.15 per cent with the average increase in 10 months estimated at between 1.81-1.83 per cent compared to the same period last year.
Prices of essential products such as animal feed, fertiliser, construction materials, gasoline and liquefied petroleum have increased due to a shortage of raw materials and high transportation costs.
The Ministry of Finance reports that inflation is under the Government’s control. Inflation has also remained low this year. However, next year’s inflationary pressure will be higher, especially when the energy crisis could worsen all over the world.
Tuan noted that price management should continue to be conducted with caution, flexibility and proactivity, focusing on target-based inflation control and supporting dual goals of the Government. Management must keep the price level stable in order to remove difficulties for production and business and ensure the lives of people in the context of disease prevention and control.
Businesses must adapt to 'new normal' and take advantage where they can
The fourth wave of COVID-19 has affected all aspects of socio-economic life, including production and business. In response to the relaxing of pandemic restrictions, enterprises are being encouraged to take advantage of the unique opportunities that are now on offer.
The pandemic situation in HCM City and the surrounding areas has improved, presenting businesses with a window to restart operations. Support packages are being made available to help businesses kickstart operations, Vu Tien Loc, Chairman of the Vietnam International Arbitration Centre (VIAC), told Viet Nam News.
Loc predicted that orders would increase in the run-up to the spring and summer of next year, offsetting contracts from international brands that had been lost during the most recent wave of COVID-19.
Demand in the domestic market would grow steadily as consumption rises with the relaxing of restrictions, he said. Loc forecast that Viet Nam's economy would grow again in the first quarter of 2022, thanks to the combined efforts of the Government and business community.
Loc is petitioning the Government to accelerate support for businesses, as this is the fastest way to ensure economic recovery.
"Top priority should be given to simplifying administrative procedures to create the most favourable conditions for businesses in the next two years, facilitating their access to current monetary support packages and developing new incentive policies to support firms," Loc said, adding that tax reduction should be also included.
The State should help enterprises improve their competitiveness via training courses. Virtual trade promotion programmes would help firms reconnect to their export markets, he said.
Local businesses must adapt to the operational reality of the new normal, Loc said. Although the COVID-19 threat would soon end, other challenges, such as climate change and trade wars, would come over the horizon. Businesses must be ready to meet these challenges.
"The firms should take the initiative in sharpening their competitiveness with a focus on digitalisation, enhancing their corporations and risk governance capacities to survive all storms," Loc told Viet Nam News.
Sharing Loc's opinion, Le Xuan Nghia, Director of the Business Development Research Institute under the Ha Noi Association of Industry and Trade, said that as Viet Nam starts to reopen the economy, businesses should plan to recover quickly, seeking new markets and recruiting more labourers.
During an online conference held in Ha Noi, Pham Dinh Doan, Chairman of Phu Thai Group, who specialise in trade and consumer product distribution, suggested local businesses implement restructure and review initiatives, to ensure their effectiveness and open new avenues of revenue.
They should also improve their knowledge of mergers and acquisitions.
While waiting for State bailouts, businesses needed to actively negotiate with banks, financial institutions, customers and employees, to temporarily maintain cash flow, he added.
Sao Ta Foods Joint Stock Company, which operates in frozen shrimp manufacturing and exporting in the southern province of Soc Trang, said key markets for Vietnamese shrimp products were on a route to recovery thanks to widespread vaccinations and the implementation of post-COVID-19 support packages.
These countries had also gradually reopened their catering and tourism sectors while other large shrimp suppliers, such as India and Indonesia, had been severely affected by COVID-19, leaving a gap in the market that Viet Nam can fill.
"Vietnamese exporters have a lot of room to expand shrimp exports if they know how to take advantage of opportunities," the company said in an article published on its website.
According to Sao Ta, COVID-19 has changed consumption habits, making convenient foods and small packaged products more popular. As countries gradually emerge at different rates from the pandemic, Sao Ta plans to develop the two areas further.
The company will continue to expand its standard farming areas according to regulations, to offer more products that meet the traceability requirements of export markets, especially those in the EU.
It also plans to improve processing capacity and foster the appliance of 4.0 technology, to combat the labour shortages caused by migrant workers returning to their hometowns.
"Taking advantage of business opportunities is always a long-term solution of Sao Ta. To do so, Sao Ta is working hard to explore these opportunities while ensuring constant self-improvement," the company said.
In order to better facilitate the business community, the National Assembly (NA) has decided to waive many of the fees and taxes for businesses and people affected by the pandemic for the remainder of the year.
Under the latest resolution signed off by the NA Chairman Vuong Dinh Hue, taxpayers with revenue of less than VND200 billion (US$8.8 million) in 2021, and lower than their figure recorded in 2019, will be subject to a 30 per cent cut in corporate income tax.
The NA also agreed to exempt personal income tax, value-added tax, and other expenses payable by business households and individuals in districts affected by the pandemic during the third and fourth quarters of 2021.
The Government's Resolution No 128 provides temporary guidance on the "Safe adaptation, flexibility and effective control of the COVID-19 pandemic". The Resolution is considered an important step towards Viet Nam adapting to the so-called new-normal situation. The resolution has been welcomed by the business community.
The guidelines set out three criteria to assess the level of pandemic risk, including the number of new infections in the community, the coverage of vaccinations and the ability to receive and treat patients, so that pandemic control and other socio-economic actitivies can be conducted from a uniform approach.
The guidelines stipulate four levels of pandemic risk, which are as follows: Level 1: low-risk (new normal) – labelled green; Level 2: medium-risk – labelled yellow; Level 3: high-risk – labelled orange; and Level 4: very high-risk – labelled red.
Production and business establishments, enterprises, cooperatives, households businesses, traffic works, construction, business and service establishments are all allowed to operate at all four levels, but owners must have plans and take responsibility for pandemic prevention and control.
Finance Ministry asked to reconsider proposed gold export tax
A proposal by the Ministry of Finance to impose a 2 per cent tax on the export of gold products, with a gold content of under 95 per cent, has come under fire as traders claim the tax will cripple their ability to compete. They fear the move will only encourage gold smuggling out of the country.
The Vietnam Gold Trader Association said the proposed tax should be scrapped. The association claimed a zero per cent tax, which is applicable to most exported gold pieces of jewellery and decoratives, was important in the country's ability to generate foreign currencies.
Furthermore, a tax on gold exports would likely encourage gold smuggling across the borders, which ultimately hurts the State's budget.
Any tax on gold exports must hit a delicate balance, said the State Bank of Vietnam, to both help facilitate manufacturing and trade while not hindering the industry. The central bank said further studies on how the tax would affect all stakeholders in the industry must take place.
Vietnam Chamber of Commerce and Industry (VCCI) said the tax would hurt the ability of Vietnamese gold to compete internationally. They had asked the ministry to reconsider.
The Ministry of Public Security said that it supported the tax as gold held a high price domestically at the moment, which would translate into a low amount of gold being exported anyway. They have suggested the Ministry of Finance take time to conduct further studies.
A spokesperson from the Ministry of Finance said one of the major shortcomings in current regulations was the difficulty to categorise gold products with different gold content, which would often require a series of tests to determine. The ministry said it's high time that gold products be categorised based on gold content, or purpose of use, to cut expenses on export procedures and testings.
The association said Vietnamese gold traders already faced higher prices for input materials as they were not allowed to import gold to produce jewellery. They have to instead source gold domestically, which costs around VND6-8 million (US$264-352) per kilogram more than foreign-sourced gold.
The tax would put Vietnamese gold traders in a disadvantageous position against other countries in the region, including Thailand, Indonesia, Malaysia, and Singapore, who currently impose no import or export tax.
Last year, gold exports accounted for $10 billion for Thailand, $8 billion for Singapore and $6 billion for Indonesia. Viet Nam's exports were $2.6 billion in the same period.
HCM City restaurants busy preparing to reopen
No air-conditioners and no alcoholic drinks are among the COVID-19 prevention regulations that eateries in HCM City need to meet to be able to receive dine-in customers.
Pham Khanh Phong Lan, head of the HCM City Food Safety Management Board, explained that alcohol would not be allowed because it would cause customers to stay back longer, increasing the risk of infection.
But notably, there will be no stipulation on the maximum number of customers at a same venue.
With the city announcing the conditions, many restaurants are scrambling to get ready for the reopening after a long period of closure.
Tran Quoc Thinh, a restaurant owner in Phu Nhuan District, said in the past few days he has got his staff back to work, and they are busy cleaning, rearranging tables and chairs and preparing raw materials.
But many others are not prepared to reopen because the two-metre social distancing requirement would not be practicable.
Tran Minh Vy, the owner of an eatery in Tan Phu District, has no plans of reopening yet and wants to wait for more details from authorities before making a decision. Since the city authorities have said customers must comply with the 5k message of the Ministry of Health, including social distance, he has interpreted it to mean customers must sit at least two metres apart.
Shortage of workers is also a reason why many restaurants are unable to reopen.
The department said the closure of businesses for nearly four months had caused food and beverage sales to fall by 620 per cent in the first eight months of the year to VND32 trillion.
Many had to close for good, which also affected the real estate rental market, it added.
SSI launches Vietnam Long-term Growth Fund
SSI Asset Management Co., Ltd has received approval for the initial public offering of its Vietnam Long-term Growth Fund.
The objective of the new open-ended fund is to generate steady returns in the long term for investors by investing in high-quality stocks in industry groups that make an important contribution to the growth of the economy such as consumer goods, retail, banking, real estate, and logistics.
So VLGF will invest mostly in stocks of leading companies and those with a strong business model, good corporate governance, a competent and transparent management, a healthy financial position, and long-term growth prospects.
It will also invest in companies with lower market caps and liquidity if they meet sustainable development criteria and have good potential for growth and fixed income assets.
Application and payment should be done between October 27 and November 16.
The offer price is VND10,000, and there is no issuance fee.
The minimum investment is VND500,000.
The fund is expected to list at the end of this year.
Le Thi Le Hang, CEO of SSIAM, said, “We see an increasing trend of investing in open-ended funds since last year, especially by those who don't have a lot of money to invest.”
Vietcombank’s charter capital raise plan approved
Vietcombank will issue millions of shares to pay for last year’s dividends and raise its charter capital to over VND50.4 trillion (US$2.22 billion) under a plan recently approved by its board of directors.
The plan was adopted at Vietcombank's annual general shareholders’ meeting in April.
Accordingly, Vietcombank will issue more than one million shares to pay for last year’s dividends at a rate of 27.6 per cent of 2019’s retained earnings. The State-owned bank will also issue additional individual shares, worth 6.5 per cent of its total charter capital at maximum at the time of offering, to investors and existing shareholders.
The issuance of shares for dividend payouts will add over VND10.23 trillion to the bank’s charter capital while more than VND3 trillion is expected to be raised from issuing individual shares.
Previously, the government approved the State Bank of Viet Nam’s proposal to provide an additional VND7.65 trillion to maintain the State’s ownership ratio at Vietcombank, which now stands at 74.8 per cent.
Vietcombank is to increase total assets by 5 per cent, total outstanding loans by 10.5 per cent, and consolidated pre-tax profit by 11 per cent this year. The non-performing loan (NPL) ratio will be kept at under 1 per cent and dividends will be paid at 8 per cent.
Construction of $2.2 billion Vung Ang II thermal power to start in December
Vung Ang II Thermal Power LLC (VAPCO) will organise the groundbreaking ceremony for the Vung Ang II Thermal Power Plant project in December.
To date, the investor completed the procedures for the preparation process, including signing a build-operate-transfer contract, the power purchase agreement, and government guarantees and undertakings for the project.
The project combines two turbines with a total capacity of 1,300MW, and is expected to start commercial operation in the third quarter of 2025.
In August 2021, Ha Tinh People’s Committee approved using 24.42 hectares of forest area to serve for the plant’s construction.
In December, the Japan Bank for International Cooperation signed a loan agreement with VAPCO to finance a loan worth $636 million for the project, under the bank's Growth Investment Facility.
The loan is co-financed with private financial institutions as well as the Export-Import Bank of Korea. The total co-financing amount is approximately $1.77 billion.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan
HCM City remittances up 22% to $5.1b