To enhance its competitiveness and weather difficulties, Vietnam's shrimp industry is exerting stronger efforts and capitalising on every advantage to develop, according to insiders.
Businesses in the shrimp industry faced numerous difficulties in 2022 such as a lack of information about the global shrimp sector, certificate of origin issues, and high production costs. Currently, they are striving to secure better growth this year.
Having won favour with global consumers, shrimp products in Vietnam now have a new advantage as farming zones have been granted production unit codes and quality certificates, including VietGAP and GlobalGAP.
Phung Duc Tien, Deputy Minister of Agriculture and Rural Development, said the ministry has asked businesses and farmers in the industry to fully comply with legal regulations on aquaculture, food safety, and animal health, including the Law on Fisheries. They were also requested to make production plans in case of drought, saltwater intrusion, environmental changes, diseases, and high input costs.
Aside from certified farming zones and incentives for farmers and enterprises to produce quality products, free trade agreements also give Vietnamese shrimp a competitive edge.
Some fishery experts said that under the EU - Vietnam Free Trade Agreement (EVFTA), which came into force on August 1, 2020, import tariffs on most of Vietnamese goods, including shrimp products, have gradually been removed. The deal has provided a legal basis and also an opportunity for businesses to boost healthy and fair operations in European countries.
In addition, the success in entering demanding markets is also partly attributed to the development of ecological and organic shrimp products.
Ecological shrimp farming has developed mainly in mangrove forest areas where farmers only need to release shrimplets, monitor weather conditions, and ensure suitable salinity.
Thanks to favourable legal procedures and organic certification, shrimp products from eco-farming have been sold well in many markets.
Huynh Quoc Viet, Chairman of the People’s Committee of the southernmost province of Ca Mau, which is home to the largest ecological shrimp farming area in Vietnam, said thanks to their quality, local shrimp products have managed to enter Europe, Australia, the Republic of Korea, and Japan.
Exports to Europe have grown 41%, Australia 85%, Canada 23%, the Republic of Korea 14%, and Japan 13%. These are positive signs for promoting the role of eco-shrimp products, he noted.
Tien said that apart from boosting exports and adherence to quality standards like VietGAP, GlobalGAP, and ASC (Aquaculture Stewardship Council), businesses should also make use of the domestic market to promote the stature of domestically produced shrimp. That will help the industry achieve this year’s export target of 4.3 billion USD.
Work starts on Vietnam’s first green hydrogen plant
TGS Tra Vinh Green Hydrogen Company, a member of The Green Solutions Group, has started construction of Vietnam's first and largest green hydrogen factory in the Mekong Delta province of Tra Vinh’s Duyen Hai district, with total investment of 8 trillion VND (341 million USD).
Covering an area of 21ha, the project is expected to become operational after two years, initially producing 24,000 tonnes of green hydrogen and 195,000 tonnes of oxygen a year. It would provide direct jobs for 300-500 local residents.
Chairman of the Tra Vinh Provincial People’s Committee Le Van Han said the province always accompanies investors during the implementation by creating all favourable conditions for the project to be completed on schedule and put into operation soon.
The investment in a green hydrogen factory project in the area helps the province realise its goal of sustainable economic growth, becoming one of the green energy centres in the Mekong Delta region and the whole country.
Speaking at the groundbreaking ceremony, Nguyen Sinh Nhat Tan, Deputy Minister of Industry and Trade, said Vietnam is promoting the development of the chemical industry, which includes producing green hydrogen and green ammonia.
He added that the chemical industry has been identified by the Party and State as a priority foundation industry for development.
Hydrogen is an important chemical, widely used in the metallurgical industry, oil refining, semiconductor production, cosmetics and is also a basic raw material for the production of other chemicals serving many industries.
The production of green hydrogen from renewable energy has been oriented for development according to the Strategy for Development of Vietnam's chemical industry to 2030, with a vision to 2040.
SBV asks to issue revised decree on foreign ownership cap at Vietnamese banks
The State Bank of Vietnam (SBV) has suggested the Government to issue a revised decree on foreign investors buying shares from Vietnamese credit institutions.
Under a report recently submitted to the Government, the SBV said the revised decree will amend and supplement a number of articles of the Government's Decree No. 01/2014/ND-CP dated January 3, 2014.
Notably, the revised decree drafts to increase the foreign ownership limit for credit institutions that receive the compulsory transfer of weak credit institutions to 49%.
Decree No. 01 stipulates that the total share ownership rate of foreign investors must not exceed 30% of the charter capital of a Vietnamese credit institution.
According to the SBV, four banks will receive compulsory transfer of four weak banks and two of them will be allowed to increase the foreign ownership limit to 49%, but detailed plans haven’t released yet.
Vietcombank, Military Bank, HDBank and VPBank are the four financial institutions that are reportedly known to either have already stated intentions to receive compulsory transfer or aim to do so in the near future.
Military Bank and Vietcombank had intended to take over two weak credit institutions, and the plans were given the green light in their shareholders’ meetings this year.
At the shareholders’ meeting last year, Luu Trung Thai, CEO of Military Bank, said the admission of a bank under the compulsory transfer programme is in line with the Government and the State’s policy on restructuring weak banks, and making the banking operation healthier and more sustainable. This is a great opportunity to obtain an operational growth rate higher than the average growth rate by 1.5-2 times in the long term, and to improve competitiveness.
Meanwhile, with experience in the successful restructuring of credit institutions and its pioneering spirit, HDBank is getting involved in the compulsory transfer of another weak credit institution after its shareholders voted in large numbers in favour of the plan in a meeting last year.
According to SSI Securities Corporation, the mandatory transfer plan has positive long-term implications for HDBank, even for international investors increasing investment to accompany the bank.
Meanwhile, VPBank Chairman Ngo Chi Dung said the bank is considering the acquisition of a poor credit institution.
According to the current regulations, State-owned Vietcombank is not qualified to raise the foreign ownership cap as the State must hold more than 50% of the bank’s capital. Therefore, two of the remaining three banks MB, HDBank and VPBank will have opportunity to increase the cap.
Lao Airlines resumes direct flights to Da Nang city
The central city of Da Nang on March 30 welcomed 150 tourists from Vientiane, Laos, on the first direct flight of Lao Airlines after a two-year hiatus caused by the COVID-19 pandemic.
The move signifies a promising growth in tourism, investment and trade between Laos, northeast of Thailand and central Vietnam.
The airline began its schedule with two flights per week on Thursday and Sunday before increasing to daily flights in the future.
The group of Lao tourists will visit destinations in Da Nang and the UNESCO-recognised world heritage sites in Hoi An, My Son Sanctuary and Thua Thien-Hue province.
It’s the third city that Lao Airlines has resumed its post-pandemic flights to after Ho Chi Minh City and Hanoi.
Lao Airlines said it would help connect and attract more visitors from the Republic of Korea and China to Vietnam through the Vientiane-Da Nang air route.
Da Nang city's Department of Tourism said the reopening of the flights would help boost tourism among world heritage sites in central Vietnam and destinations in Vientiane, Luang Prabang, northeast of Thailand in tourism links built between Laos and Vietnam.
The department said Laos was an important destination in the top-ten tourism market in 2022 with 10,000 tourists visiting, making up 2.1% of all international visitors to Da Nang.
Da Nang was a key hub in central Vietnam that help connect Laos, Thailand, Myanmar and Vietnam through the East-West Economic Corridor in promoting tourism, trade, international logistics in the region.
Joint statement on conclusion of negotiations on UK’s CPTPP accession issued
Representatives from member nations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the UK approved a joint statement at the ministerial level on the substantial conclusion of negotiations on the UK's accession to the CPTPP at their virtual meeting on March 31 (Vietnam time).
The meeting was chaired by Japanese Minister of Economy, Trade and Industry (METI) Shigeyuki Goto, who is also chairman of the UK’s Accession Working Group (AWG), and drew the attendance of ministers and representatives of the CPTPP members - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam - and the UK.
The participants confirmed that the UK has provided commercially meaningful market access offers of the highest standard on goods, services, investment, financial services, government procurement, state-owned enterprises and temporary entry for business persons.
The CPTPP is one of the most comprehensive and ambitious trade deals ever concluded. It is also one of the largest trade pacts in the world, covering 13.5% of global GDP and a market of about 500 million people.
Bank lowers Vietnam’s GDP growth forecast
The United Overseas Bank (UOB) has lowered its 2023 economic growth forecast for Vietnam from 6.6% to 6% due to a low base in the first quarter (Q1) of this year.
In the latest economic growth in Q1/2023 report of Vietnam, the bank said that the country's GDP growth in the period only increased 3.32% year on year, a sharp fall from 5.92% in Q4/2022.
Based on statistics from the General Statistics Office (GSO), it attributed the fall to negative factors in production and export.
The bank’s experts said inflation in Vietnam has shown positive signs as consumer price index (CPI) in Q1/2023 rose 4.18% compared to the same period last year and lower than the 4.5% target set by the government.
Vietnam's March CPI rose 3.35% year-on-year but declined 0.23% compared to February, indicating a slower pace in inflation.
The UOB also predicted that further loosened polices will be introduced by the State Bank of Vietnam (SBV) in the coming time.
As the US Fed is expected to end its rate hike cycle as soon as May this year and domestic inflation rates are showing some signs of reversing, the bank anticipated that the SBV will cut its refinance rate sometime in the second quarter by 100bps to 5%.
Vietravel Airlines to increase flight frequency for summer travel rush
Vietravel Airlines plans to increase the number of its domestic and international flights, and launch air ticket promotion programmes in the coming summer to meet the increasing travel demand in the peak period.
According to the firm, it started preparing its summer flight schedule and resources as of late March, towards serving a larger volume of domestic and foreign passengers.
It will also offer many flexible and convenient options to passengers with more reasonable prices during the peak season on the National Reunification Day (April 30) and May Day (May 1).
The firm will continue to maintain the frequency of operating routes, and add more flights to key routes that are attractive to tourists in summer such as Hanoi - Da Nang; and those connecting HCM City to Da Nang, Quy Nhon, and Phu Quoc.
Vietravel Airlines has successfully opened two international routes connecting Hanoi and HCM City to Bangkok with a frequency of 14 flights per week.
The carrier has also coordinated with its partners to operate charter flights connecting Daegu city of the Republic of Korea, and Hangzhou, Changzhou and Kunming cities of China to Cam Ranh (Khanh Hoa).
For Vietravel Airlines’ promotion programmes, passengers will have a chance to hunt discounted tickets priced from 8,000 – 9,900 VND (0.34 - 0.42 USD), with tax and fees not included.
Vietnam's economy to grow by 6.6% this year: OECD
Vietnam's economy will grow by 6.6% this year and at a similar rate in 2024, according to a report released on March 31 by the Organisation for Economic Co-operation and Development (OECD).
The report “The Economic Outlook for Southeast Asia, China and India 2023: Reviving tourism post-pandemic” states that Vietnam’s economic growth is driven by foreign investment in the manufacturing sector, especially electronics, machine manufacturing, textiles and footwear, and benefits from China's loosening of COVID-19 prevention and control measures.
At this rate, the OECD believes that Vietnam continues to lead the top five largest economies in Southeast Asia. The Philippines is forecast to reach growth of 5.7% in 2023 and 6.1% in 2024, Indonesia at 4.7% and 5.1%, Malaysia at 4.0% and 4.2%, and Thailand at 3.8% and 3.9% in the same period.
The report says that the end of support programmes after the COVID-19 pandemic will create favourable conditions for Vietnam to improve its public financial situation. However, weaker demand is likely to reduce investment in the Vietnamese economy. The report also recommends the country continue to closely monitor inflation trends.
As tourism was among the sectors most affected by both the COVID-19 pandemic and responses to it, the report highlights the economic impact of tourism in the region and explores how the sector can be reshaped to regain its significant role in Emerging Asia.
The interruption of tourism allowed countries in the region to consider reforms in the sector, including diversifying tourism markets and addressing labour market challenges, while catering to the new needs and preferences of the post-pandemic world, prioritising sustainable and environmentally responsible activities, and accelerating digitalisation.
Investment plan for Ho Chi Minh Highway’s two sections get green light
Deputy Prime Minister Tran Hong Ha has recently signed a decision giving the green light to the investment plan of a project on construction of two road sections passing through the Mekong Delta provinces of Kien Giang and Bac Lieu, as parts of the 2,744-km-long trans-Vietnam Ho Chi Minh Highway.
The two sections will have a total length of 51.82km, with 45.22 km in Kien Giang province and the rest of 6.6km in Bac Lieu province.
The Rach Soi-Ben Nhat section linking Kien Giang’s Chau Thanh and Giong Rieng districts will be 11.2km long, while the 40.6km Go Quao-Vinh Thuan section, will connect Go Quao and Vinh Thuan districts of Kien Giang. Twenty-six bridges, including three crossing large rivers, are will be built.
The total investment of the project is estimated at over 3.9 trillion VND (166 million USD). Construction is expected to be completed in 2025.
The Ho Chi Minh Highway is an important work, having great significance on the economy, national defence and security, and poverty reduction.
Passing through 28 provinces and cities from Pac Bo in the northern mountainous province of Cao Bang to Dat Mui in the southernmost province of Ca Mau, the highway project is estimated to receive a total investment of 99.2 trillion VND (around 4.23 billion USD).
Regional connectivity critical for development of southeastern region
Socio-economic cooperation between Ho Chi Minh City and other southeastern localities has produced significant outcomes, giving a boost to many sectors like industry, real estate, investment-trade, health care and education, an official has said.
According to Deputy Minister of Planning and Investment Tran Duy Dong, the collaboration has helped to attract resources from different economic sectors in southern metropolis to other southeastern localities.
HCM City is aware that its development should be inseparable from the southeastern region, said Chairman of the municipal People’s Committee Phan Van Mai at a recent conference in Binh Phuoc province, noting that the city has benefited most from regional connectivity.
It is necessary to strengthen collaboration with each of the localities in the region, he emphasised.
Chairman of the People’s Committee of Binh Duong province Vo Van Minh said HCM City has driven the development of its adjacent cities and provinces, and the country as well.
However, he said, bottlenecks remain in regional connectivity, which has hindered the development of both HCM City and the southeastern region.
The southeastern region encompasses HCM City and the five provinces of Binh Duong, Dong Nai, Ba Ria-Vung Tau, Tay Ninh and Binh Phuoc.
Their People’s Committees shared the view that the regional connectivity is intended to create common economic space and optimise advantages of each locality.
The connectivity should cover transport infrastructure, information-communications infrastructure, electricity and water supply, tourism products and infrastructure, green economy, and high-quality personnel, they said.
Secretary of the HCM City Party Committee Nguyen Van Nen pointed to roadblocks to regional transport links and the need to remove them in order to create an impulse for regional growth.
Local authorities, therefore, have agreed to cooperate in road, railway and waterway construction and development, and work together in the planning work, making it match regional and national planning schemes.
Tourism linkage expected to raise visitor numbers
Many southern localities have formed and optimised trans-regional tourism products to promote the attractiveness of both local and regional tourism.
Director of the HCM City Department of Tourism Nguyen Thi Anh Hoa said the southern metropolis has partnered with six regions across the country in tourism development.
They have worked together in tourism promotion, investment attraction and personnel training, contributing to post-COVID-19 tourism recovery, the official said.
A wide range of tours have been launched, linking HCM City with other localities like Tay Ninh, Binh Duong, Binh Phuoc, Dong Nai, Ba Ria-Vung Tau, Vinh Long, Tien Giang, Can Tho, Hau Giang, Soc Trang, Bac Lieu, Ben Tre, Tra Vinh, Long An, Dong Thap, An Giang and Kien Giang.
HCM City welcomed over 34 million visitors last year. The figure stood at more than 5.3 million in the first two months of this year, up nearly 67% year-on-year with revenue of 21.23 trillion VND (903.21 million USD), a rise of about 62% from the same period last year.
Duong Hoang Sum, Director of the Department of Culture, Sports and Tourism of Tra Vinh province, said the locality and neighbouring Ben Tre province have joined hands to bring into full play their tourism strengths, offering new experiences to holidaymakers.
Soc Trang province has also coordinated with Ba Ria-Vung Tau, Can Tho, Tien Giang, Bac Lieu and Ca Mau in the connection programmes, aiming to become a festival tourism centre in the Mekong Delta.
Given the fact that the number of international tourists to Vietnam has yet to meet the expectation, localities and businesses have stepped up connectivity, expanded the market and reformed the communications work.
HCM City, for example, has combined tourism with culture, agriculture, trade and services, while coordinating with other cities and provinces to carry out tourism promotion activities abroad.
Master Tran Thanh Thao Uyen from the Dong Thap University pointed to similarities in tourism products and development orientations of Mekong Delta localities as a major obstacle, and suggested them identify focuses in their connectivity.
Vietnam joins ASEAN central bank officials at meetings in Indonesia
A delegation of the State Bank of Vietnam (SBV), led by its Deputy Governor Pham Tien Dung, attended the ASEAN Central Bank Governors’ Meeting, the ASEAN Finance Ministers’ and Central Bank Governors’ Meeting, and related events in Bali, Indonesia, from March 28 - 31.
These were the most important events chaired by Bank Indonesia (BI) and the Indonesian Ministry of Finance within the framework of the ASEAN financial and monetary cooperation in 2023, when the nation holds the ASEAN Chairmanship.
With the theme “ASEAN Matters: Epicentrum of Growth” for the ASEAN Year 2023, the BI and Finance Ministry of Indonesia informed some focuses of regional financial and banking cooperation, namely reconstruction, digital economy, and sustainable development.
On behalf of the SBV, Dung highly valued the proposals by the BI and Finance Ministry of Indonesia to deal with urgent issues facing countries and devise long-term orientations towards sustainable growth in the region.
Assessing the ASEAN banking integration outcomes, central bank and financial officials recognised efforts by the ASEAN Senior-Level Committee (SLC) on banking integration and the working committees in actively coordinating and effectively implementing cooperation initiatives. They also gave directions to accelerate moves to achieve targets of the ASEAN Economic Community Blueprint 2025.
The Vietnamese official applauded the working committees’ outcomes, asking them to consider the review plans for the set targets for 2025 and prepare for making plans for the 2025 - 2035 period.
He called on the Working Committee on Capital Account Liberalisation (WC-CAL) to increase discussions and further share information about the situation of capital flows and the application of macro-prudential policies in member countries, which is a highly important issue amid many risks and uncertainties facing global financial conditions. Meanwhile, the Working Committee on ASEAN Banking Integration Framework (WC-ABIF) should look into lessons for risk inspection, supervision, and governance in the regional banking system following some recent bank failures in the US and Switzerland.
The Deputy Governor welcomed the activities and initiatives carried out by the Working Committee on Payment and Settlement Systems (WC-PSS) to build a cross-border payment network and consider the establishment of a multilateral payment mechanism in ASEAN.
As part of the meetings, the central bank governors and finance ministers of ASEAN, representatives of the ASEAN Business Advisory Council (ASEAN ABAC), the US - ASEAN Business Advisory Council (US - ASEAN BAC) and the EU - ASEAN Business Advisory Council (EU - ASEAN BAC), along with managing directors of big financial institutions in the region discussed challenges related to digital economy, supply chains, climate change, inflation, and geopolitical tensions.
Viet Nam to enhance competitiveness of logistics sector
Việt Nam will focus on enhancing the competitiveness of the logistics sector and removing bottlenecks in the sector in order to promote trade and investment with India, an official has said.
Speaking at a meeting on Thursday in HCM City, Phạm Thị Ngọc Thủy, director of the Office of the Private Economic Development Research Committee, said there was immense potential for improvement in bilateral trade between Việt Nam and India, especially in the logistics sector.
Việt Nam’s heavy investment in infrastructure development has created significant opportunities for logistics enterprises, she said.
In addition to logistics, other key investment sectors include hi-tech agriculture, food processing, renewable energy, the supporting industry, healthcare, education, infrastructure, and tourism, among others.
Bilateral trade between the two countries has grown steadily from US$200 million in 2000 to $15.05 billion in 2022, up 13.6 per cent year-on-year, she said.
India is the eighth largest trading partner of Việt Nam, while Việt Nam is India’s fourth largest trading partner in ASEAN, she added.
Việt Nam has become an attractive destination for Indian investors thanks to its stable political environment, appealing policies, affordable labour costs, and potential market access due to free trade agreements that the country has concluded, she said.
Đặng Hồng Nhung, director of the Import-Export Department under the Ministry of Industry and Trade, said the logistics sector in Việt Nam had great potential for growth, given the heavy investments in infrastructure systems, including building and expanding expressways, airports, seaports, and logistics centres.
The Government last year issued a resolution to enhance the competitiveness of the logistics sector, making it a high-added value services sector.
Under the resolution, Việt Nam aims to promote the logistics industry development with production, import and export activities.
It’s necessary to establish sustainable supply chains, improve the quality of human resources and promote digital transformation and technology application in the logistics industry.
The resolution also aimed to promote the development of green logistics, which has become a trend and an important indicator for the sustainable development of the logistics industry.
The Government has instructed the Ministry of Finance to continue reviewing the policies of taxes and fees while customs procedures would be further simplified to create favourable conditions for logistics services providers.
She also noted that 2023 would be a challenging year as the global economy is in a recession coupled with high inflationary risk, leading to a decrease in trade activities as well as logistics activities.
She recommended companies prepare for uncertainties in the context of the ongoing Russia – Ukraine conflict, natural disasters, diseases, or unexpected incidents.
Bùi Trung Thướng, Vietnamese trade counsellor in India, said India has a long coastline that is very convenient for shipping while Việt Nam has a direct shipping route to India.
Việt Nam and India should cooperate in building and expanding expressways, airports, seaports, and logistics centres, he added.
Experts also recommended Việt Nam develop a strategy for green logistics to 2030, in which, the digital transformation should be sped up, infrastructure quality increased and conditions for multimodal transport improved.
Policies should also be raised to encourage small- and medium-sized enterprises to switch to green logistics and use renewable energy, they said.
Việt Nam and India established diplomatic relations in 1972, which was lifted to a comprehensive strategic partnership in 2016.
Vietnam aspires to learn about smart city growth from US
Vietnam has suggested fostering a US-Vietnam collaboration for the development of smart cities, aiding its future urban planning milestones.
On March 28, Minister of Construction Nguyen Thanh Nghi highlighted this matter during a meeting with US ambassador to Vietnam Marc E. Knapper.
Nghi asserted that Vietnam is an active member of the ASEAN Smart Cities Network. He indicated a willingness to enhance collaboration between the Ministry of Construction and US agencies and partners in the sector, particularly those with expertise in smart city development.
According to YCP Solidiance case studies, following the conclusion of the Smart City Asia Summit 2022, all eyes are on the expansion of Vietnam's smart cities, particularly as more consumers and investors become aware of the value of sustainable and smart urban environments.
Some regions in the country are in the process of building their own smart city blueprints, taking into consideration the infrastructure and quality of life requirements of their residents.
Vietnam has shown its interest in smart cities and has acted. In 2020, the government approved the Programme for National Digital Transformation for the 2025–2030 period as a roadmap for each city and province to develop their own smart cities.
"Yet, obstacles continue for well-established urban centres like Ho Chi Minh City and Hanoi, complicating and delaying overall infrastructure development," stated the report.
Smaller cities, like Danang, have easier routes to becoming smarter since the adjustments are made to brand-new projects as opposed to existing ones.
Before October 2022, Danang Department of Information and Communications' Department of International Cooperation and the American Chamber of Commerce in Vietnam organised a smart city and digitalisation cooperation programme. The event drew 28 ICT companies from the United States to learn about the investment and partnership potential in Danang, including for smart city development.
Irregularities detected in bancassurance activities
The Ministry of Finance has uncovered certain irregularities during an inspection of the sale of insurance products through banks, heard a press conference yesterday, March 30.
As the inspection of bancassurance has been completed, the violations and coping measures will be announced soon.
The Ministry of Finance previously formed a team to inspect four insurance companies with their distribution of insurance products through banks and uncovered some alleged violations, said Nguyen Duc Chi, Deputy Minister of Finance.
A hotline has been set up for everyone to report cases of bank employees forcing customers to purchase insurance when making deposits or loan applications.
After one month, 178 phone calls and 218 emails reporting such cases were received. The department classified and verified the reports before forwarding them to the relevant authorities for further investigation.
Doan Thanh Tuan, deputy director of the Insurance Supervisory and Management Department, urged individuals victimized by banks or insurance salespeople who violated regulations in bancassurance activities to file reports to the police.
Bancassurance has rapidly developed and made a certain contribution to the total revenue of the Vietnamese insurance market in recent years. For example, it accounted for about 20% of the life insurance market’s total premium revenue and 14% of the non-life insurance market’s.
However, the rapid development has led to some drawbacks in managing the quality of insurance services through banks.
Loan rescheduling proposed for construction companies
The Saigon Association of Construction and Building Materials (SACA) has proposed the prime minister allow banks to reschedule loans owed by construction and construction material companies.
The the Ministry of Construction said on its portal that SACA and the Vietnam Society of Construction Engineers (VSCE) representing 21 construction and construction materials firms have asked the prime minister, the State Bank of Vietnam governor and the minister of construction for permission to defer loan payments by their members.
The post-pandemic sluggish business operations of many realty and tourism businesses have directly affected these companies, exacerbated by high lending rates.
SACA proposed three urgent measures to help out the construction and realty sectors.
Banks should reschedule loan payments for affected firms and maintain their debt categorization, said SACA. In addition, a grace period of 24 months should be applied to businesses in construction, construction materials manufacturing and trading as well as realty projects’ investors.
The proposal aims to give businesses time to collect debts from their clients, maintain business operations to have the financial capacity to service bank loans, and at the same time, reduce bad debts in the banking system.
They proposed the Government direct the Ministry of Construction to find ways to eliminate regulatory bottlenecks for property projects. This will enable businesses to complete legal procedures in investment, building and sales, satisfy conditions on loan access and put their projects into service soon.
Simultaneously, SACA suggested setting up a portal to update information on planning, legal issues, projects’ schedules and trading activities to keep investors and residents updated so that they can make informed decisions.
In this way, the imbalance in the supply and demand of the real estate sector can be avoided.
Currently, 40% of construction material businesses are in limbo, with many of them likely go bankrupt at the end of this year if there is no rescue policy for them, said the HCMC Union of Business Associations.
Banks to lower interest rates further: SBV Deputy Governor
During a seminar on "Opening Capital Flow into Production and Business" hosted by Tuoi Tre Newspaper on March 30, the Standing Deputy Governor of the State Bank of Vietnam (SBV), Dao Minh Tu, emphasized SBV's message to lower interest rates.
Although many countries around the world are raising interest rates, the State Bank of Vietnam is lowering interest rates to support people and businesses. There is currently an excess of capital in the economy, so banks are encouraging lending. In the near future, the State Bank will once again reduce interest rates.
At the seminar, many businesses said interest rates remained too high, although many commercial banks had several programs and policies to reduce interest rates for businesses in priority areas.
According to Mr. Nguyen Ngoc Hoa, Chairman of the Ho Chi Minh City Union of Business Association (HUBA), based on a survey by HUBA, key manufacturing industries have all experienced a decline in exports, leading to record low growth in HCMC. The textile and garment industry has seen a decrease in growth while the export of seafood has dropped by 30 percent. The wood industry has fallen by 40 percent, and the real estate sector has frozen, leading to repercussions for the steel and cement industries with a 90 percent freeze. Business activities seem to have stalled.
Mr. Hoa believes that businesses have tried to maintain operations in difficult circumstances. Currently, demand is decreasing, affecting business operations, so businesses do not need to borrow for production and business activities but for survival. Therefore, banks need to have debt rescheduling policies for businesses.
"Businesses need long-term investment capital, but with interest rates above 10 percent, no business dares to borrow, not that banks do not lend," Mr. Hoa stated. Therefore, he recommends that there should be a more comprehensive policy for long-term capital, and interest rates should be reduced to below 10 percent to encourage businesses to borrow.
Additionally, property collateral and valuations should be recalculated. Interest rates need to be lowered and collateral requirements should be made more flexible. Currently, businesses may have land, but the lengthy legal procedures make it difficult to use the land as collateral.
Mr. Dao Minh Tu, the Deputy Governor of the SBV, stated that the goal for 2023 is to maintain currency stability, control inflation, and stabilize the exchange rate. Interest rate policy is a challenging aspect of macroeconomic management, requiring a developed economy and balance between investors and businesses across multiple sectors.
Despite other countries raising interest rates, the SBV has lowered interest rates to support people and businesses. With capital currently in surplus, banks are encouraging lending.
"The State Bank plans to further reduce interest rates soon, which will allow commercial banks to lower their interest rates depending on their financial capacity," stated the Deputy Governor.
Mr. Dao Minh Tu also stressed the importance of extending and postponing debts for businesses, which will be implemented soon. However, the extension and postponement of debts must take into account each specific industry to avoid creating bad debts and destabilizing credit.
State budget revenue up 1.3% in Q1
State budget revenue reached an estimated 491.5 trillion VND (over 20.9 billion USD) in the first quarter of 2023, equivalent to 30.3% of the estimate, and up 1.3% from the same period last year, the Ministry of Finance reported on March 30.
Twenty-eight of the 63 provinces and centrally-run cities nationwide recorded state budget revenue hitting 28% of their yearly estimates.
Twenty-three provinces and centrally-run cities saw the higher revenues than in the same period of 2022, while 40 others reported lower revenues.
Meanwhile, the accumulated expenditure in the first quarter was equivalent to 17.5% of the yearly estimate.
The Ministry of Finance said expenditures in the last three months were carried out as planned, meeting requirements for socio-economic development, defence, security safeguarding, state management, debt repayment, and implementation of social security tasks.
The ministry said it has directed tax and customs offices to implement tax laws and state budget collection tasks in 2023; fully perform solutions and policies on state budget collection to support businesses and people.
Apart from accelerating administrative reform and digitalisation, and taking drastic measures to help businesses promote production and business activities, tax and customs offices have actively performed inspections to prevent revenue losses.
They have also focused on collecting tax from e-commerce services, and from overseas suppliers without permanent establishments in Vietnam.