Vietnam warned of troublemaking transshipment from China, S.Korea to US

Vietnam should take stronger measures related to origin of goods and products to avoid risks of lawsuits or being taken advantage of by other countries to evade US import tariffs.

Vietnam should be careful not to become a transshipment point for China and South Korea in re-routing their exports to the US and circumvent levies, economists of the Vietnam Institute for Economic and Policy Research (VEPR) have warned.

 Overview of the VEPR's launching conference of its annual economic report. Photo: Ngoc Thuy. 

“Being a deeply integrated economy with growth driving forces relying heavily on international trade, Vietnam is highly susceptible to external shocks, including policies changes from major economies or regional and global tensions,” said Nguyen Duc Thanh, former director of VEPR, at the launch of the think tank's annual economic report on June 17.

The US – China trade war, and to a lesser extent, the tension between South Korea and Japan, caused investors to shift investment to countries less affected by friction.

As a result, more and more multinationals are looking for an alternative for China and South Korea, Thanh stated.

In this circumstance, Vietnam, with a dynamic economy and member of major free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU – Vietnam Free Trade Agreement (EVFTA) and the upcoming Regional Comprehensive Economic Partnership (RCEP), among others, is emerging as an attractive alternative to China.

 Source: GSO. 

In 2019, the US was Vietnam’s largest export market with a turnover of US$60.7 billion, up 27.8% year-on-year. Capital goods for manufacturing and processing industries reached US$144.12 billion, or 90.6% of total import turnover. China was the largest import market of Vietnam, with a turnover of US$75.3 billion, up 14.9% year-on-year.

For this year, although the Covid-19 pandemic has caused a major disruption to global value chain, the US remained Vietnam’s largest buyer spending US$25.11 billion on Vietnamese goods in the first five months, up 10.6% year-on-year and accounting for 25.1% of Vietnam’s total exports.

VEPR’s report suggested Vietnam to review the tax or land preferential policies for foreign-invested companies, in order to create a more equal environment for domestic firms.

Moreover, the country should put in places tighter measures related to origin of goods and products to avoid risks of lawsuits or being taken advantage of by other countries to evade US import tariffs.

Vietnam's GDP growth forecast revised up

With the removal of the social distancing earlier than expected (from the end of April compared to the expected end of May before), VEPR has revised up Vietnam's economic growth to be higher than the previous forecast of 4.2% for optimistic scenario.

 
 VEPR revised up Vietnam's GDP growth forecast from the previous 4.2% for optimistic scenario. 

The most optimistic scenario is based on the assumption that the disease is completely controlled domestically by the end of April and the economic activity gradually returned to normal. Meanwhile, the world has begun to relax lockdown measures since the beginning of June, helping Vietnam's goods export industry grow well in the second half of the year.

However, economic activities in the field of tourism, accommodation and passenger transport are still reserved and only gradually recover.

With this optimistic scenario, Vietnam's economic growth is forecast to reach up to 5.5% in 2020.

Under the neutral and pessimistic scenarios, the pandemic is presumed to recur and countries must extend the lockdown period to the second half of the third quarter, even the fourth quarter of 2020. The impact of Covid – 19 on the agriculture, forestry & fishery, manufacturing sector and service sector will be more serious. Economic growth in 2020 might be only 3.9% in the neutral scenario, or just 1.7% in the pessimistic scenario.

In line with the current short-term policies to mitigate the negative impacts of Covid-19, Vietnam should continue working on longer-term policies to improve macroeconomic foundation and reduce future risks, stated VEPR.

In all situations, inflation, interest rates, and exchange rates need to be kept stable. Diversification of export/import markets needs to be paid more attention to to avoid heavy dependence on some major economic partners.

In this time of difficulties, many inadequacies in managing economic policies have been revealed, so efforts to improve the institutional environment need to be sustained. Especially, Vietnam should gradually build a fiscal buffer to prevent external shocks, the report suggested.

VEPR’s GDP growth forecast is in line with Prime Minister Nguyen Xuan Phuc’s estimation of  an economic expansion of over 5% for this year, significantly higher than the International Monetary Fund (IMF)’s estimate of 2.7%.

The World Bank predicted the country’s economic growth at a slightly lower rate of 4.8%. ADB's growth prediction is similar to the World Bank's of 4.9%, while Fitch Ratings anticipated the country's growth at 3.3%. Hanoitimes

Ngoc Thuy

Prospects for those with good grip on rule of origin

Prospects for those with good grip on rule of origin

The enforcement of the landmark EU-Vietnam Free Trade Agreement can become reality within the next few months, ushering in multiple benefits for both sides.

Chinese found counterfeiting Vietnamese origin for woodwork exports

Chinese found counterfeiting Vietnamese origin for woodwork exports

Many Chinese wooden furniture manufacturers have been found setting up foreign invested enterprises (FIEs) in Vietnam to ‘fabricate’ Vietnamese origin for their exports to the US.

 
 

Other News

.
LG pulls out of smartphone production in Vietnam from today
LG pulls out of smartphone production in Vietnam from today
BUSINESSicon  02/06/2021 

Today, June 1, is the last day that South Korean conglomerate LG produces smartphones in Vietnam before it focuses on making home appliances only.

Investment into local start-ups expected to rise this year
Investment into local start-ups expected to rise this year
BUSINESSicon  01/06/2021 

The investment capital into Vietnamese start-ups this year would see a breakthrough despite a year-on-year decrease of 48 per cent in 2020 to reach US$451 million.

Businesses seek sources to buy vaccines for their workers
Businesses seek sources to buy vaccines for their workers
FEATUREicon  02/06/2021 

The electronics, textile and garment, footwear, wooden furniture and dairy sectors have proposed that the Government allow them to seek vaccine sources and pay for vaccinations at their enterprises so they can maintain production.

Vaccines yet to come, but biotech share prices escalate
Vaccines yet to come, but biotech share prices escalate
BUSINESSicon  02/06/2021 

Biotech shares, especially the shares of vaccine producers, are being sought by investors.

New master plan for seaports needed to further boost economic development
New master plan for seaports needed to further boost economic development
BUSINESSicon  01/06/2021 

A new master plan for seaports is needed to further boost the country’s socio-economic development in the rapid international integration process, experts have said.

Realty tax needs revamp to ensure fairness
Realty tax needs revamp to ensure fairness
BUSINESSicon  31/05/2021 

Realty tax not only creates sources of collection for the State budget but also is a policy able to spur growth and reduce bribery related to land. Vietnam does have realty tax.

Many companies manufacture components for Samsung, Foxconn resume operations
Many companies manufacture components for Samsung, Foxconn resume operations
BUSINESSicon  01/06/2021 

The Management Board of Industrial Parks of Bac Giang Province has allowed nine enterprises in Van Trung, Dinh Tram and Quang Chau industrial parks in Viet Yen district, Vietnam’s largest epidemic hotspot, to resume operations.

VIETNAM BUSINESS NEWS JUNE 1
VIETNAM BUSINESS NEWS JUNE 1
BUSINESSicon  01/06/2021 

Shares gain on buoyant banking stocks

Market will continue to breach new highs, but investors should be more cautious: experts
Market will continue to breach new highs, but investors should be more cautious: experts
BUSINESSicon  31/05/2021 

The market witnessed strong buying interest last week and analysts from many securities firms expect indices to continue to hit new highs, but have warned investors to be cautious.

E-commerce changing domestic retail property market
E-commerce changing domestic retail property market
BUSINESSicon  31/05/2021 

The shift toward e-commerce due to the COVID-19 pandemic has brought challenges to Vietnam’s retail property market, according to Savills Vietnam.

Customs sector helps exporters utilise benefits of FTAs
Customs sector helps exporters utilise benefits of FTAs
BUSINESSicon  30/05/2021 

The customs sector will continue to introduce measures to help Vietnamese enterprises fully tap the benefits brought about by FTAs Vietnam has signed with foreign partners, an official from the General Department of Vietnam Customs has said.

CPI inches up 0.16 percent in May
CPI inches up 0.16 percent in May
BUSINESSicon  30/05/2021 

Vietnam’s consumer price index (CPI) in May was up 0.16 percent agaisnt April and 2.9 percent from last year, reported the General Statistics Office (GSO) on May 29.

Major transport infrastructure works to be started in June
Major transport infrastructure works to be started in June
BUSINESSicon  30/05/2021 

Four major transport projects will be kicked off in June, announced the Ministry of Transport at a conference on May 28.

Lending interest rates about to increase
Lending interest rates about to increase
BUSINESSicon  30/05/2021 

Recently, the interbank interest rates suddenly jumped, causing many people to worry whether bank lending rates will increase in the coming time while the business and production activities have been facing many difficulties due to Covid-19.

HCMC to try reigniting delayed BT projects
HCMC to try reigniting delayed BT projects
BUSINESSicon  30/05/2021 

Financial shortcomings of investors combined with the government’s failure to offer support are some of the reasons multiple BT infrastructure projects in HCMC are being delayed indefinitely, experts said. 

Firms should facilitate Gen Z to develop
Firms should facilitate Gen Z to develop
BUSINESSicon  30/05/2021 

Enterprises should consider applying new thoughts or amend regulations to meet the demand of Gen Z, including those born in 1996-2010, and create favorable conditions for them to develop as they will be an important part of the country’s workforce.

Vietnam credit growth forecast to hit 14% in 2021: Fitch Solutions
Vietnam credit growth forecast to hit 14% in 2021: Fitch Solutions
BUSINESSicon  30/05/2021 

A GDP growth of 5.8% in 2021, nearly double the 2.9% growth last year, would boost credit demand.

VIETNAM BUSINESS NEWS MAY 31
VIETNAM BUSINESS NEWS MAY 31
BUSINESSicon  31/05/2021 

New COVID-19 outbreak puts brakes on trade, transport

More Vietnamese agro products to be available on e-commerce platforms
More Vietnamese agro products to be available on e-commerce platforms
BUSINESSicon  29/05/2021 

Following successful sales of lychees, efforts have been made to sell other Vietnamese farm produce on e-commerce platforms, the Nong nghiep Viet Nam (Vietnam Agriculture) newspaper has reported.

Debt burden risks budget stability
Debt burden risks budget stability
BUSINESSicon  29/05/2021 

Vietnam has had outstanding economic development in recent decades, even through the pandemic so far. 

 
 
 
Leave your comment on an article

OR QUICK LOGIN