Vietnam’s central bank has announced an extension of its debt restructuring policy, thus allowing commercial banks to maintain current debt classifications for struggling businesses for another six months, until the end of 2024, the local media reported.

The State Bank of Vietnam (SBV) announced the extension at a press conference today, April 19, saying efforts are being made to facilitate credit flow and alleviate financial pressure on businesses and banks.

The extension is provided in Circular 02/2023/TT-NHNN, which permits banks to reschedule debt repayment and keep debt classifications unchanged for debtors in difficulty.

According to Deputy Governor Dao Minh Tu, this move comes due to concerns in the banking sector regarding the expiration on June 30 of the circular. The expiration raised fears of increased repayment pressure on businesses and difficulties in addressing non-performing loans.

“This policy supports both businesses and banks. However, if abused, it may eventually affect the national financial system, as cautioned by the global community. This is because this policy conceals some bad debts and allows them to fester, posing a long-term threat,” said Tu.

He added that the policy will be reviewed by the end of 2024, and if businesses still face difficulties, alternative support mechanisms will be explored.

Under the circular, eligible borrowers can have their loan terms restructured while maintaining debt classifications. Local banks and foreign bank branches can assess customers’ financial situations for debt restructuring purposes.

The latest data from the SBV showed that as of December 31, 2023, nearly 188,000 customers had had their loan repayment terms restructured and debt groups maintained, with total principal and interest amounting to over VND183.5 trillion.

Post-restructuring, banks are required to set aside risk provisions in accordance with specified timelines, ensuring prudential management of loan portfolios.

Despite a sluggish start to the year, credit growth rebounded in March following two consecutive months of decline. As of March 29, credit had increased by 1.34% against the end of 2023.

SBV to sell foreign currency to stabilize exchange rate

The State Bank of Vietnam (SBV) has announced its intention to sell U.S. dollars at VND24,450 in a bid to stabilize the exchange rate, according to SBV Deputy Governor Dao Minh Tu during a press conference today.

Tu said that the central bank stands ready to intervene “as early as today” using the 2023 supplemented foreign exchange reserves if the exchange rate continues to be unfavorable.

He was speaking at a news briefing on the banking sector’s quarterly performance on April 19.

He said the global economic and geopolitical volatility contributed to a 4.9% depreciation of the Vietnamese dong against the U.S. dollar since early this year.

Given Vietnam’s susceptibility to fluctuations in the U.S. dollar due to its import-export dynamics, Tu stressed the importance of implementing flexible yet stable exchange rate management strategies to mitigate market impacts.

The SBV had increased money supply while implementing stronger measures, said Pham Chi Quang, head of the SBV’s Monetary Policy Department.

Quang outlined the SBV’s intervention plan, which involves selling foreign currency to banks with negative foreign currency balances at a rate of VND25,450 per dollar.

“This is a strong measure by the central bank to alleviate market concerns, ensure market liquidity, and meet the legitimate demand for foreign currency in the economy,” Quang added.

VinFast reports Q1 revenue of $302.6 million

VinFast Auto Ltd. (Nasdaq: VFS) announced its unaudited financial results for Q1/2024 on April 17, with total revenues of $302.6 million, representing an on-year increase of just under 270 per cent.

The growth was driven by successful new campaigns like the expansion of VinFast's dealership network and customer interest in new electric vehicle (EV) models.

Meanwhile, deliveries and revenues also soared in Q1 compared to the same period last year, with VinFast delivering around 9,700 vehicles, marking an increase of 444 per cent on-year.

Gross losses in the same period came to a little under $151 million, while the gross margin improved from a negative 173 per cent in 2023 to a negative 50 per cent.

VinFast continues to follow its global growth roadmap by launching its brand in Thailand and Indonesia, establishing a presence in the Middle East, beginning construction of its manufacturing facility in India, and ramping up its sales network globally.

The company launched its brand in Thailand at the 2024 Bangkok International Motor Show and signed letters of intent with 15 dealers, with a target of operating 22 stores in Bangkok.

In Indonesia, VinFast opened its first dealership and began selling the VF e34, a C-segment electric SUV. The company has also implemented a unique battery subscription policy there, specifically designed to incentivise Indonesian consumers to switch to EVs by offering lower initial and operating costs.

While domestic and regional sales still drove most of the company's Q1 revenue, VinFast recorded encouraging growth in the US, with several new dealers reporting encouraging sales figures.

The EV maker has secured partnerships with 10 new dealers, bringing its total US network to 16 dealers across the states of North Carolina, New York, Texas, Florida, Kansas, Connecticut, and Kentucky. These newly signed dealerships will begin operations in the second quarter.

The company also expanded its global footprint with first distribution agreements signed in Oman, Ghana, and Micronesia.

Despite the macroeconomic challenges facing the EV industry, VinFast has established clear plans and remains committed to the target of delivering 100,000 electric cars in 2024, with the majority of deliveries expected in the second half of the year. This effort will be primarily driven by the company's rapidly expanding distribution network, the introduction of new models targeting a broader customer base, and entry into new markets.

Upbeat signs on the horizon right from Q1

Following a challenging 2023, local businesses have returned upbeat results from the first quarter (Q1) of this year, heralding rosier prospects for the rest of 2024.

Thanh Cong Textile Garment Investment Trading JSC (TCM), a large exporter based in Ho Chi Minh City, revealed that the company saw an estimated $39 million in revenue and $2.5 million in profit in Q1, up 6 per cent and 9 per cent respectively, on-year.

According to Tran Nhu Tung, chairman of TCM, "We have already fulfilled 85 per cent of our order target for Q2 and 80 per cent for Q3 and if things continue this way, the company should easily fulfill its targets for the year."

At the company’s 2024 AGM on April 5, shareholders approved targets of a 12 per cent jump in revenue and 21 per cent boost in post-tax profit compared to 2023, to reach around $154 million and $6.7 million, respectively.

Following its Q1 figures, TCM has fulfilled 26 per cent of its full-year revenue and over 38 per cent of its full-year profit targets.

Garment 10 Corporation, a large textile and apparel exporter based in Hanoi, has revealed their Q1 results with a more than 24 per cent jump in total revenue, coming to $47 million, of which exports amounted to $42.5 million, up 29 per cent on-year.

Meanwhile, more favourable situations in the global market will continue to be instrumental for a stronger performance in the petroleum sector.

PetroVietnam Oil Corporation (PVOIL) raked in $1.22 billion in consolidated revenue in Q1 and $12.5 million in consolidated pre-tax profit, up 41 per cent and 5 per cent respectively.

During the same period, the company opened 33 more filling stations, pushing up its total number of filling stations to 789.

PVOIL's targets for the year include $3.45 billion in revenue and just under $31 million in pre-tax profit. The company has now achieved 41 per cent of its profit target following its Q1 performance.

Several businesses in the banking sector have also posted upbeat results for Q1.

SeABank took in a little under $63 million in pre-tax profit, showing a 41 per cent jump on-year, and VIB reported $108 million in profit, equal to last year.

Undergoing a challenging dip in demand, electronics retailer MobileWorld Group is showing positive signs following the first reporting period of the year.

In the first two months alone, the company posted $900 million in total revenue, up 14 per cent on-year.

Nguyen The Minh, head of the Research and Development Division at Yuanta Vietnam Securities, believes that businesses in the garment and textile industry, seafood exports, and transportation will continue to see more robust results this year, along with those in the food, retail and chemicals sectors.

“Furthermore, the industrial real estate sector, availing of steadily surging overseas funding, should also continue to see growth,” said Minh.

Businesses take heed of the dual transition

Combining digital transformation with the green transition has become a more urgent requirement for enterprises to ensure business goals as well as social responsibility.

At last week’s conference on the issue at the Ministry of Planning and Investment (MPI), Nguyen Thi Le Quyen, representative of the MPI’s Agency for Enterprise Development, highlighted that the dual transition trend worldwide involves increasing productivity and economic efficiency, enhancing resilience to climate change, and eliminating greenhouse gas emissions.

“In Vietnam, digital technologies are expected to be the driving force promoting the success of the green transition, realising our goals in the nation’s green growth strategy,” she said.

Specifically, these activities include reducing the intensity of emissions per GDP, transforming the growth model towards greening economic sectors, applying a circular economic model, and promoting sustainable consumption.

Many nations have also been applying this twin transition, which can offer lessons for Vietnam, according to the MPI.

Germany actively contributes worldwide by providing essential knowledge and resources to developing countries. The country has successfully become a carbon-neutral economy through enhancing the efficiency of energy use.

Switzerland offers digital technology initiatives and solutions as key to implementing commitments on sustainable development, such as creating smart agriculture and applying AI and big data. The country limits the waste of resources and renewable energy through a tracking system using blockchain tech.

Singapore applies digital technology and data to promote sustainable development goals, as well as apply sustainable thinking to the management and operation of data and IT infrastructure, for example in using AI or the Internet of Things in environmental management and building construction. Singapore also proactively researches, develops, and tests solutions of greening data centres.

In a specific case, thanks to digital transformation, food producer Eubiz has successfully exported many high-quality Vietnamese agricultural items to the American market and European countries. It has successfully registered its trademark in the US, and is listed among the top 100 best-selling cashew brands in the United States.

“To achieve good outcomes within only a few years, Eubiz has delved into digital transformation activities, promoting sales on major e-commerce platforms,” CEO Nguyen Thi Thanh Hoa told VIR. “The biggest weakness of the agricultural industry is in management and technology. So digital technologies are the best solutions for management.”

To expand suppliers, consumption areas, factories, and then expand the market, if Eubiz only moved in a traditional direction, it would take lots of time to pass through many steps. “But with digital transformation, we can create information coverage of up to thousands or millions of sellers, partners, and customers in only a few months,” Hoa explained.

Besides Eubiz, there are many successful cases on applying digital transformation in businesses. Under the USAID Improving Private Sector Competitiveness (IPSC) project, Thai Xuan Bien in the Central Highlands province of Gia Lai has already developed a traceability tracking system, business management software, and a website for sales. These have helped the company improve performance, productivity, and customer service at a lower cost.

“Thanks to optimising inventory and production management, the company has raised seed output by 15 per cent and revenue has improved significantly,” company director Thai Xuan Bien said.

At Thu Do Multimedia, with the support of the IPSC, the implementation of enterprise resource planning (ERP) is also an important move for the company’s digital transformation.

“Standardising business processes following international practices and ERP solutions in international standards has given positive signals on enhancing performance and speed of coordination among departments, thereby significantly improving labour productivity and customer service quality,” a representative of the company said.

Dai Phuc Hai Packing and Print Service Trading Co., Ltd. has already built a business management system to create quality control and production plans, calculate costs, and monitor manufacturing defect rates.

“We have corrected and cut down 30 per cent of printing errors, standardised production processes, and increased labour productivity. Eliminating waste at every stage of production minimises the environmental impact and significantly saves the production costs,” said company representative Nguyen Thi Duyen.

Carmakers go it alone on e-vehicle charging solutions

Carmakers in Vietnam are looking to develop their own charging infrastructure for electric vehicles through strong partnerships.

Carvivu, a local importer and distributor of electric vehicles (EVs), is planning to cooperate with domestic and foreign companies to develop charging stations, which are in high demand in Vietnam.

Sales director Dinh Quoc Dat told VIR, “When we sell the Haima EV, we provide customers with two AC home chargers and a wall charger with free installation. In addition, we give customers 18 months of free charging at unlimited distances at designated Carvivu stations.”

The company also provides packages for corporate customers and transport companies, and cooperates with them in the installation of charging infrastructure at their premises. “We are aware in advance about the challenges of charging stations in the early stage of EVs, so we decided to build plans for ourselves to serve our current operations as well as future expansion,” Dat added.

Charging infrastructure in Vietnam is still in the early stages of development, and current policies remain unclear. As a result, charging stations in the country are all funded by private companies or suppliers, with the majority owned by VinFast.

Carvivu is working with Chinese car manufacturers, including Haima, and is focused on a number of car models suitable for the Vietnamese market. In 2023, it launched the 7X and 7XE models, and is expected to introduce other lines in the near future.

Ho Hai An, general director of TMT Motors Electric, said that there are still difficulties due to unfavourable infrastructure.

“According to experience learnt from the Chinese market, about 80 per cent of customers mainly charge at home. This will be the main trend of EVs, and charging at home is a useful and convenient feature our offerings,” he explained.

Last year, TMT Motors opened up the small EV segment in Vietnam by launching the Wuling Mini EV, from a three-party joint venture of SAIC, GM, and Wuling.

“This model is equipped with a charger with a capacity of 1.5kW to help the vehicle charge as easily as charging a phone anywhere with a 220V civil power source,” An said. “It is not required to charge at a dedicated charging station like some other EVs. This model is aimed at users who travel daily with a distance of 120-170km. They just need to charge overnight and then are able to use a whole day.”

In the long term, he asked ministries and agencies to soon issue policies to promote EVs. “It is necessary to invest more in the development of EV charging infrastructure to meet more users’ needs. This is part of the government’s orientation to develop vehicles using clean energy in Vietnam,” An said.

The local market has, in recent times, witnessed the landing of EV brands, especially Chinese ones. A series of domestic automobile manufacturers and assemblers, as well as foreign car manufacturers such as Wuling, Haima, Zhidou, and others already moved to launch the first EVs in Vietnam.

In early April, the Vietnamese market welcomed the entrance of Chinese brands Omoda and Jaecoo when owner Chery entered a joint venture with Geleximco to build a factory here.

Complete vehicle imports are expected to be launched in the market at the end of 2024. Vu Van Tien, chairman of Geleximco, said that this joint venture plans to produce hybrid cars initially for the market, instead of focusing entirely on EVs.

“Hybrid cars will be very effective because Vietnam’s infrastructure cannot yet accommodate pure EVs,” Tien said. “In the coming years, when the infrastructure and technology become better with improved charging stations, we will research and produce pure EVs.”

Another Chinese carmaker, Guangzhou Automobile Group, plans to launch the AION Y Plus in June, marking its first EV to be sold in the Vietnamese market.

Like developed countries, Vietnam needs to encourage private organisations to contribute capital to increase charging stations on highways.

Wilmar Matinez, an electric energy research expert from the United Nations Development Programme, said that the number of vehicles in Vietnam using green energy is still quite low compared to those using fossil fuels. This is also the reason why electric charging stations on roads, especially highways, are not as popular as in other countries.

“Countries around the world, such as Germany and Norway, have also implemented financial and tax policies to encourage EV charging infrastructure, while introducing strict regulations in building charging infrastructure, standardising charging points, sources and charging speeds, as well as regulations on charging at public areas and at home,” he said.

Nguyen The Vinh, a specialist at state-run Vietnam Electricity, said that currently, the public charging station system accounts for 10 per cent of the country’s total electricity output.

“The number of charging stations is not the only problem. Increasing EV charging stations on highways also requires consideration of the number of EVs that need to be charged and the charging time at each station to avoid putting great pressure on the power system nationwide,” he cautioned.

Industrial parks within Vietnam keen on Taiwanese investment

At the Vietnam-Taiwan Business Forum in Hanoi last week, Satoshi Kobayashi, deputy general director of the Japanese-invested Thang Long Industrial Park (IP), said he aimed to attract more Taiwanese investors.

“We see a big opportunity for Taiwanese customers with an interest in the Vietnamese market for manufacturing and production, especially in northern Vietnam where there is potential for more funding,” he told VIR. “We have expanded our IP, and we have land on sale already for interested parties from the likes of Japan and Taiwan.”

At present, the IP operates several complexes, where the majority of tenants are Japanese investors. While Vietnam has seen quite aggressive investment coming from Taiwan, there are still only 10 Taiwanese businesses at the IP.

Anticipating the potential, other IPs like Amata, IDICO, Gilimex, Phu My 3, and Fuji Holdings are trying to lure Taiwanese investors.

Nguyen Tang Dat, sales and marketing manager at Gilimex IP, said the company is currently engaged with two parks, including one of 460 hectares in the central province of Thua Thien-Hue and the other of 400ha in the Mekong Delta province of Vinh Long, to target Taiwanese investors and other interested parties.

“In recent years, Taiwan, Hong Kong, and mainland China have been among the biggest foreign investors here. We see more coming to seek new opportunities and we want to pick up the trend,” he said.

At present, Gilimex Thua Thien-Hue is available for investors and businesses, while Gilimex Vinh Long is expected to be put into operation in 2025.

“Vietnam continues to be one of the most attractive investment destinations for Asian, European, and US corporations. Therefore, we are working with authorities of the northern provinces of Bac Giang and Bac Ninh, as well as the south-central province of Quang Ngai on potential IP projects.”

With more IPs to be put into operation, investors will have a varied selection. By the end of 2023, Vietnam aimed for 414 IPs (including four export processing zones) with a total natural land area of ​​nearly 129,000ha. Of them, almost 300 IPs are in operation.

According to the International Investment Research Institute, with the current average investment cost to develop one hectare of IP land being about $600,000, the need for investment capital to develop the infrastructure of IPs towards 2030 is estimated at $72 billion.

According to the Ministry of Planning and Investment, investment from Taiwan in Vietnam surged in 2023, reaching $2.2 billion, a four-fold increase from the previous year. The growth places Taiwan as the fourth-largest foreign investor in Vietnam, while Taiwan has become Vietnam’s fifth-largest trading partner.

Chip industry taking on new players

Domestic and foreign investors alike are supporting Vietnam’s semiconductor strategy by making numerous commitments to invest in chip manufacturing.

Last week, the Ministry of Information and Communications delivered the draft strategy on developing Vietnam’s semiconductor industry to 2030 to all ministries, agencies, and foreign and local associations, to gather opinions for the second time before submitting it for approval.

The strategy sets out several targets for the industry. Firstly, Vietnam has to become a country with a developed semiconductor industry, and one of the important factors in the supply chain of global semiconductors. Secondly, the country will develop and complete infrastructure in the industry, including human resources, technology, research and development, production, and application, contributing to the sustainable development of Vietnam’s digital tech industry.

Last week, during a visit to Viettel Group’s headquarters, Prime Minister Pham Minh Chinh highlighted the role of the semiconductor industry among high technologies at present, and asked Viettel to invest more resources into the industry.

“Viettel has to develop the semiconductor industry more effectively and make it diversified,” the PM said.

Foreign investors are eyeing the Vietnamese semiconductor industry. Most recently, US-headquartered semiconductor manufacturer Analog Devices Inc. revealed its plan for raising investment in the country.

“Vietnam is an important market in our strategy, and we are planning to increase our investments in the near future, especially in the e-vehicle chip segment. Currently, we are finalising our plans in Vietnam, building strong customer relationships, and improving our design and manufacturing capabilities,” said Daryl Wan, the company’s sales director in South Asia-Pacific.

Vietnam is rapidly becoming a key player in the semiconductor industry, driven by growing demand for e-devices and significant development of infrastructure, Wan added.

“Strategic geographical location and competitive human resource costs have attracted foreign semiconductor manufacturers to invest and expand operations here. Moreover, taking advantage of geopolitical independence and foreign investment are the foundation for Vietnam to become a technology hub,” he said.

He emphasised that one of Vietnam’s main opportunities was in chip assembly, a key area to meet industry demand and reduce the over-concentration of production capacity in China and Taiwan, which currently account for 60 per cent of global capacity.

Meanwhile, Chinese investor Victory Giant Technology is planing a large project in Vietnam. In mid-March, when a delegation of the northern province of Bac Ninh visited China to promote investment and visit the headquarters of Victory Giant Technology, a land lease agreement was signed.

This will set up a factory specialising in manufacturing printed circuit boards, with an investment of about $800 million in VSIP2. If everything goes smoothly, the factory be put into operation next year.

American chip-making technology provider Lam Research Corporation is also keen on building factories and developing a supply chain within Vietnam’s semiconductor industry. At a meeting with PM Chinh at the end of March, group vice president Karthik Rammohan said it was looking to expand its operation and diversify its supply chain in Asia.

“In Vietnam, Lam Research plans to tie up with Seojin from South Korea, which has factories in Bac Ninh and Bac Giang provinces, to develop factories and a supply chain with capital of $1-2 billion in the first phase,” Rammohan said.

“Following the first phase, Lam Research will possibly make direct investments or bolster its operations in the country. We would like to research the investment promotion policies and initiatives that Lam Research can join to support suppliers and the supply chain of Vietnam’s semiconductor industry,” he added.

Previously, at the fifth National Forum on Digital Enterprises Development last December, Minister of Information and Communications Nguyen Manh Hung emphasised that the semiconductor industry was fundamental, and a key national industry for the next 30–50 years.

“When developing the semiconductor industry, we should look at the bigger picture. The semiconductor chip design market, the semiconductor industry, or even the electronic industry are valued at only $60 billion, $600 billion, and over $3 trillion, respectively. However, the digital transformation industry is worth $20 trillion.” he said.

Global aid for energy transition ramps up

Vietnam has earned a great deal of financial and technical assistance from the international community in recent months for its energy transition.

Washington State’s Office of the Governor last week led a delegation of about 46 leaders from business, government, industry, and education on a five-day trade mission to Vietnam. The delegation was focused on strengthening trade and collaboration opportunities in advanced technology sectors such as agriculture, clean energy, and AI. The US has pledged to support Vietnam in advancing climate, energy, and the environment, among other areas.

“As the Just Energy Transition Partnership (JETP) turns towards implementation, the US is enhancing technical assistance support for Vietnam’s clean energy transition, including through the Vietnam low-emission energy programme,” the embassy said.

“The US Department of State, Vietnam’s Posts and Telecommunications Institute of Technology, and VMO Holdings have launched the Coalition for Climate Entrepreneurship Hub to promote startup activities in the field of climate change. Meanwhile, the US Department of Agriculture’s Foreign Agricultural Service signed an MoU with Vietnam’s Ministry of Agriculture and Rural Development’s Plant Protection Division to make better use of fertiliser to reduce costs, greenhouse gas emissions, and water pollution,” it added.

The US and nine international partners launched the JETP with Vietnam in 2022 that provides investment and technical expertise to help Vietnam transition its energy sector and reach net-zero greenhouse emissions by 2050.

At a meeting in New York on April 6 between Vietnam’s Deputy Prime Minister Le Minh Khai and Amina J. Mohammed, Deputy Secretary-General of the United Nations, the latter said that UN organisations stand ready to support Vietnam in mobilising sufficient resources to accelerate all development goals.

According to Vietnam’s Power Development Plan VIII (PDP8), in order to achieve energy transition, Vietnam would need about $134.7 billion from domestic and international sources by 2030, of which around $120 billion would be for power generation sources and the rest for the power transmission grid expansion and improvement. This would come from both domestic and international public and private sources.

This excludes costs of just aspects and research with relevance to the power sector, whereas the PDP8 estimate includes investments in new fossil fuel power generation, which is inconsistent with the JETP scope. Nevertheless, a significant part of PDP8 projects will match JETP priorities, including renewable power production, energy storage, and many transmission investments.

Exactly which part of PDP8’s projection matches the JETP scope cannot be as ascertained, but it is likely to be several times the total of €15.5 billion ($16.8 billion) committed by members of the International Partners Group and the Glasgow Financial Alliance for Net Zero, whereas they aim to leverage and raise additional funding, depending on the Vietnamese policy environment.

“The plan will help boost Vietnam’s renewable energy production. From a planned 36 per cent of renewables that Vietnam has in its electricity production, the country now aims for 47 per cent in its energy mix,” said European Commission President Ursula von der Leyen. “The plan is tailored to the needs of the local economy and society. It will help develop wind and solar power, grids, or electric vehicles, for example.”

At a Hanoi meeting two weeks ago between Deputy PM Tran Hong Ha and Tanimoto Masayuki, managing director of the Japan Bank of International Cooperation (JBIC), the latter said the JBIC will support Vietnam in green energy development.

Last December, JBIC signed an MoU with VietinBank to support decarbonisation and the energy transition, as well as to support Japanese mid-tier enterprises and smaller businesses entering its market.

A couple of months previously, JBIC also inked loan agreements with Japan’s Erex Co., Ltd for biomass manufacturing and sales business through its two subsidiaries in Vietnam, Erex Sakura Biomass Tuyen Quang and Erex Sakura Biomass Yen Bai, with each amounting to $6 million. The loans are co-financed with Sumitomo Mitsui Banking Corporation.

Rapid law implementation may propel market fortunes

With quicker implementation of Vietnam’s new land law, the real estate market can resume normal operations and enter a more robust development cycle from the second half of this year.

Last week, Prime Minister Pham Minh Chinh issued urgent instructions on speeding up implementation of the upcoming Land Law.

The prime minister requested relevant authorities to quickly complete documents so that the law could move into effect on July 1 this year instead of the beginning of 2025.

According to Dr. Tran Xuan Luong, deputy director of the Market Data Research Institute, speedier implementation of the law will bring positive effects to the real estate market, especially housing supply.

“When supply increases, it will help reduce house prices, thereby increasing people’s opportunities to access housing,” Luong said.

“Investors and developers are looking forward to the implementation of the new law, which will remove obstacles for a range of projects that are struggling due to stalled procedures and lack of legality. For them, the earlier the better,” he said.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that the new law being applied from July 1 would help to remove bottlenecks for the market. “One of the most important points of the new Land Law is to remove the old land pricing system. Local authorities will now base the pricing on the purpose, land use term, and input information of a property to determine the land price according to the market. Parties have been waiting for that for a long time,” Chau said.

Besides this, the new law also allows for the expansion of limits on transfer of agricultural land use rights by individuals, and regulations on agricultural land concentration and accumulation. “This will promote large-scale agricultural development and draw in more business participation,” Chau added.

In addition, the law also provides a legal framework for tourism real estate, deemed a black spot of the current law, causing commercial housing projects to not be approved for long periods. The new law will help localities have a basis for approving such schemes.

Believing that large cash flows from the stock market or from savings could soon land in the real estate market, many investors have launched products in recent months with a series of incentives.

Last month Gamuda Land announced an attractive sales policy for Eaton Park in Thu Duc of Ho Chi Minh City. Accordingly, customers will only need to spend 5 per cent of the apartment value to sign a contract.

With a favourable payment schedule of up to five years, in the first three years buyers only need to pay 30 per cent, in six instalments, until receiving notice of handover of the apartment.

When receiving a home, the buyers then must pay an additional 35 per cent, and the remaining cost is divided into two instalments of 15 per cent each for the next year. In addition, the developer also offers a preferential discount rate, usually no less than 5 per cent, for early applications.

The Standard villa project in the southern province of Binh Duong, through An Gia Group, applies a payment policy of 10 per cent and buyers can move in immediately, with a sum of 20 per cent paid in the following 12 months. The buyers after that can pause payments for up to two years from the date of signing the sales contract before they have to pay another 65 per cent.

In addition, An Gia also issued a commitment policy to rent town houses and shophouse products with rental incentives of VND25-40 million ($1,000-1,600) per month, lasting up to 18 months.

“Buying a house that has been handed over, but dividing payments into smaller portions, will help customers get a home right away without needing a bank loan, and give people more time to balance and prepare cash flow,” an An Gia representative said.

Other groups such as Nam Long, Hung Thinh, and Vinhomes are all offering attractive discounts and payment policies.

“Observing the stock market recently with liquidity sometimes reaching up to VND35 trillion ($1.4 million) per day or savings interest rates falling sharply to less than 5 per cent per a year, investors believe that there will be cash flow in the near future. This is an opportunity to dominate the market and draw in customers for a new growth cycle,” said investor Nguyen Manh Cuong.

According to Dr. Nguyen Huu Huan from Ho Chi Minh City University of Economics, the market can now thrive thanks to the government’s issuance of policies to remove obstacles for real estate businesses.

“One of the bright signs is that looser monetary policy has encouraged money to flow into investment channels instead of just savings. When the stock market gets better and real estate liquidity increases again, in a short time, cash flow will begin to move from stocks to real estate. Such a movement of cash will bring expectations for the property market to gradually recover by the end of 2024,” Huan said.

Economic expert Dr. Nguyen Tri Hieu said that when savings interest rates decrease, investors are no longer that interested in saving. Instead, they will aim for channels that bring higher profits, including putting money into real estate or in manufacturing and business.

“From Q3/2024, the market will welcome a large amount of cash flow into real estate with the expectation that this will be an investment channel that brings good, stable profits. Investors need to take advantage of this time to put down money with many incentives from developers,” Hieu said.

He added that the high increase demand of end-users, and not speculators, will be one of the decisive factors in forming products for real estate businesses in 2024 and beyond. In provinces and cities with diverse economic development, there is a need for more supply to meet demand.

In its residential industry report published in March, Mirae Asset Securities Company said that the most difficult period of the real estate market had passed and the recovery process was gradually taking place, with the main catalysts being rapid urbanisation, accelerated public investment, increasing demand for accommodation, and government determination.

Mirae Asset cited that the total number of new apartments launched in Ho Chi Minh City and surrounding areas this year are expected to have about 12,000-15,000 units.

“Although new supply is relatively limited in the first months of the year, there will be stronger growth in the second half of the year, thanks to legal policies starting to take effect,” the report said.

According to Savills Vietnam, the number of new apartments opened for sale in Ho Chi Minh City in 2024 will quadruple compared to the previous year. It is expected that by 2026, the market will receive about over 115 new projects, providing an additional 40,000 apartments to the current supply.

SBV outlines restructuring plans for troubled SCB

During a press briefing on April 19, Dao Minh Tu, Geputy Governor of the State Bank of Vietnam (SBV), detailed the government’s strategy for aiding the beleaguered Saigon Commercial Bank (SCB).

Tu said, "The SBV is actively devising mechanisms to gradually stabilise and revive SCB’s operations, which is essential to ensure the bank’s continuity and safeguard our national financial system."

Discussing the wider ramifications of the Van Thinh Phat case and related misconduct at SCB, Tu emphasised the need for accountability.

"The infractions were committed by individuals who intentionally violated regulations. They must be held legally responsible. Our policies and regulatory frameworks are both comprehensive and clear," he said.

Tu highlighted the critical need for stability in the banking sector, especially during crises, saying "Central banks are tasked with implementing timely and targeted solutions to prevent a bank’s collapse from impacting the broader financial system."

Speaking on SCB's specific challenges since October 2022, Tu said, "Given its large asset size, it is imperative that we implement substantial measures. The SBV is obligated to intervene and stabilise the bank to maintain systemic stability and social order."

He reiterated the SBV's commitment to restructuring SCB, saying, "We are methodically developing a restructuring plan for SCB, and actively seeking mechanisms that will enable its stabilisation and return to normal operations."

Speaking on the SBV’s support for SCB, Tu said, "The loans provided, which include tools to manage monetary impact, are part of our broader efforts to stabilise the bank."

Tu also touched on SCB's future, explaining, "We are close to completing the valuations for the mandatory acquisition of GPBank, Ocean Bank, and Construction Bank, as part of SCB’s restructuring strategy. We are vigorously seeking the government's approval to proceed with these plans."

Vietnam’s road to emerging market status

The Ministry of Finance (MoF) started asking for feedback at the end of March on a draft circular aimed at upgrading Vietnam's stock market to 'emerging' status.

At a conference themed "Solutions for upgrading the Vietnam stock market" hosted by the MoF in collaboration with the World Bank Group on April 16, speakers clarified how Vietnam should upgrade from a frontier market to an emerging market, as assessed by international organisations, especially FTSERussell.

The conference focused on discussing four content groups includes analysing the opportunities of upgrading for the development of the Vietnamese stock market in particular, and the economy in general; analysing the conditions and criteria for upgrading to an emerging market that the Vietnamese stock market needs to achieve according to FTSE Russell's evaluation; experiences from some stock markets when upgrading, identifying challenges and risks for Vietnam when upgrading the stock market to an emerging market; proposing solutions to promote the upgrading of the Vietnamese stock market in the near future.

Nguyen Nhu Quynh, director of the MoF's Institute of Financial Strategy, stated at the conference that, "The stock market is becoming an important capital mobilisation channel for Vietnam's economy, especially for medium- and long-term capital. As of March, the VN-Index had reached 1,284 points, up 13.6 per cent compared to the end of 2023, ranking second only to Japan's Nikkei 225 Index, which increased by 20.6 per cent. The market capitalisation of stocks reached $283.33 trillion, up 13.9 per cent, equivalent to 66.2 per cent of Vietnam's estimated GDP in 2023.”

Elevating Vietnam's stock market from frontier to emerging status will be a crucial milestone for the new phase of market development, contributing to increasing scale, enhancing the efficiency of capital mobilisation and utilisation, and fostering the economic growth of the country.

Upgrading the market is a priority for the government, with the prime minister closely overseeing and setting specific goals to strive for by 2025.

"To ensure the sustainable development of a stock market, it must truly be healthy, transparent, and ensure fairness for all investors. As the direct supervisor for the stock market, the State Securities Commission (SSC) has, is, and will continue to make efforts to propose appropriate solutions to meet the criteria of ratings organisations towards the goal of upgrading Vietnam's stock market from frontier to emerging, ensuring continuous, transparent, stable, and fair market operation," said Vu Chi Dung, head of the SSC's International Cooperation Department, at the conference.

However, experts discussed at the conference that when Vietnam's stock market is upgraded, the biggest challenge will be to ensure that the market continues to develop sustainably, maintaining its rating and avoiding a downgrade. This can happen when stock markets no longer meet the requirements to maintain their current status or cannot meet the changing criteria issued by ratings agencies.

Based on the discussion, the conference raised more open issues that need attention from managers, policymakers, and researchers to contribute to improving policies related to upgrading the Vietnamese stock market.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes