Shrimp exports from January to March fell 37% over the same period in 2022 to US$600 million, showed data from the Vietnam Association of Seafood Exporters and Producers (VASEP).

Shrimp exports in March contributed US$265 million to the first-quarter value, 33% lower than the year-ago figure, due to falling consumer demand in major markets. Shrimp shipped to Japan and Korea dropped by 20% in the month, while shipments to the U.S., the European Union and China plummeted by 40%.

Japan was the biggest buyer of Vietnamese shrimp in the first quarter, with US$105 million, decreasing 29% compared to the year-ago period.

Meanwhile, shrimp exports to the U.S. dipped nearly by half versus the first quarter of 2022, at US$104 million, given weak demand and high inventory.

The Russia-Ukraine military conflict hindered shrimp sales to the EU market, leading to revenue falling 44% year-on-year to US$89 million.

Shrimps sales to Korea slid by 25% year-on-year to US$78 million.

Whiteleg shrimp remained the chief export item, with revenue of US$451 million, plunging 38% against the same period last year. Black tiger shrimp sold to foreign markets amounted to US$83 million and other varieties brought in US$65 million, dropping 34% year-on-year.

According to VASEP, shrimp export prospects would remain bleak this year due to inflation  and poor global demand, in addition to price competition with Ecuador and India.

This year, Vietnam’s shrimp industry looks to obtain around US$4.3 billion from exports.

Vietnam joins Seafood Expo Global in Spain

Vietnamese seafood are being introduced at the Seafood Expo Global that is underway in Barcelona, Spain from April 25-27.

The exhibition, one of the largest of its kind in Europe and the world, draws over 1,550 exhibitors from 76 countries.

According to the Vietnam Association of Seafood Producers and Exporters (VASEP), Vietnam has joined 20 editions of the exhibition. This year, Vietnam sends 38 fisheries firms to the event, doubling last years’ number.

Along with major products such as tra fish and shrimps, Vietnamese businesses also brought intensively processed products, including ready-to-eat and ready-to-cook products to the exhibition to catch up with consumers’ trend.

The association also organises performances of cooking dishes from tra fish, shrimps, tuna and other seafood with the theme of “heathy convenience” by Vietnamese chefs.

The association held that this is a good chance for Vietnam to promote high added value products and seek partners.

VASEP data showed that in the first quarter of this year, aquatic exports dropped 27% year on year to only 1.8 billion USD, with downturn recorded in the majority of products. The association expects the sector to recover from the third quarter of this year.

Along with producing more products with higher added values to export to the EU, the Republic of Korea, Japan, Australia and the US, Vietnam is targeting small and potential markets such as those in the Middle East and ASEAN.

The VASEP asserted that joining international trade fairs will help Vietnamese firms evaluate the market to shape their production and export strategy for the 2023-2024 period.

HCMC lacks industrial land for FDI projects

The city is running short of industrial land for big foreign direct investment (FDI) projects, said HCMC Chairman Phan Van Mai.

Speaking during a hybrid meeting with foreign investors chaired by Prime Minister Pham Minh Chinh late last week, Mai said the city now lacks large locations of industrial land for strategic investors.

With the global minimum corporate tax of 15% coming into force next year, tax incentives cannot apply. Therefore, HCMC is now expediting infrastructure projects, making more industrial land available by forming new industrial parks and adjusting the leasing prices of the existing ones.

He proposed the prime minister include two industrial parks, Pham Van Hai 1 and Pham Van Hai 2 in Binh Chanh District, in the city’s industrial park development plan.

HCMC requested the prime minister direct ministries and agencies to update national policy on FDI attraction given the global minimum tax.

In 2022, HCMC attracted US$4.33 billion in new FDI capital, of which US$2.8 billion, 65.7% of the total, came from hi-tech projects.

Ample room ahead for Vietnamese tea exports to Indonesia

Vietnamese firms are required to develop the nation’s tea brand and promote the high-quality tea segment and organic products in a bid to increase tea exports to the Indonesian market, according to Vietnamese Ambassador to Indonesia Ta Van Thong.

Ambassador Thong made the statement during a trade exchange conference held on April 24 in the northern province of Phu Tho.

At present, Indonesia is purchasing tea from Vietnam mainly in the form of raw tea, including green and black tea, the diplomat said, adding that there is a lack of Vietnamese instant tea products in the Indonesian market.

Furthermore, the presence of tea brands of Vietnamese enterprises in the market remain limited, due to a general lack of market information, as well as Indonesia's low import demand.

The Vietnamese diplomat underlined the need to diversify tea products with a focus on instant tea products, ensure the delivery time and limit the use of pesticides to maintain the reputation of the Vietnamese tea industry.

At present, Indonesia is the eighth largest tea producer in the world, although its tea production area is decreasing. The Indonesian Government estimates that domestic demand for tea increases by roughly 1.4% per year.

Ambassador Thong emphasised that Vietnamese tea has gained a certain foothold in the Indonesian market, and the challenges faced by the Indonesian tea industry are expected to create fresh opportunities for Vietnamese tea enterprises to boost exports to the market.

HCM City needs 320,000 additional workers in 2023

Recruitment demand in Ho Chi Minh City is forecast to continue to increase in the coming months with roughly 320,000 additional workers needed, according to Dr. Do Thanh Van, deputy director of the city’s Resources Forecast and Labour Market Information (Falmi) Centre.

The city, the largest economic and financial hub in Vietnam, is home to over 4.6 million people of working age. Depending on both global and domestic economic growth, its demand for trained labourers stands at 86.45%, including 23.54% of university graduates.

Businesses are mostly in need of labourers in trade and services at 70.61%, industry and construction at 28.06%, and agriculture, forestry and fishery at 1.3%. Private enterprises account for 88% of the total market demand for human resources.

Dr. Van said that firms have great needs of recruiting workers, especially experienced labourers, high-quality human resources, and skilled workers.

Those in the job market are required to equip themselves with appropriate knowledge and skills to meet employer requirements, he stressed.

Potentials of tourism associated with OCOP products needs to be fully tapped

Industry experts have said there is still much-untapped potential for developing One Commune-One Product (OCOP) items associated with tourism activities in the Mekong Delta region.

They said the primary concern is to establish synchronised and coherent cooperation and solutions to simultaneously create sustainable livelihoods for local communities while enhancing product value and promoting tourism development.

Developing tourism associated with local specialities and OCOP products is an important solution to effectively develop tourism in the Mekong Delta region after the Prime Minister approved the OCOP programme for the 2021-25 period and the rural tourism development programme for the 2021-25 period.

With the certificated OCOP products, localities have initially implemented the effective development of tourism associated with OCOP products, combining the development of many types of tourism, such as cultural tourism, agricultural and rural tourism, ecotourism, and shopping tourism.

Currently, the country has over 8,800 OCOP products, focusing on six main product groups, including food and beverages, textiles and garments, souvenirs, decorations and interior furniture, herbs, and community tourism services and attractions.

In the Mekong Delta, which produces fruits, rice, and aquatic products with many traditional craft villages, many OCOP products have been recognised and supplied to the domestic and export markets.

The region has taken advantage of its natural conditions, agricultural production, culture, and craft villages to create unique tourist destinations.

Experts said that each OCOP product represents the culture of a specific locality and brings special features from its raw materials and production process, and embraces value in cultural and spiritual aspects.

They said many OCOP products have not become popular despite their high quality. Therefore, it is essential to fully exploit the values in OCOP products and introduce them to tourists, they said.

To link tourism with OCOP products, it is necessary to have cooperation among all authorities and sectors to preserve and convey the cultural values of OCOP products.

Nguyễn Trùng Khánh, head of the Vietnam National Administration of Tourism, said the administration would continue coordinating with the Ministry of Agriculture and Rural Development and localities to focus on upgrading and investing in developing rural tourism sites associated with OCOP products.

Trần Anh Thư, deputy chairman of An Giang Province’s People’s Committee, said the province would focus on policies to promote the development of OCOPs as well as planning and developing raw material areas in a bid to build distinctive and sustainable OCOP products.

An Giang is focusing on developing its strengths in local handicraft products, such as the Khmer traditional silk weaving village in Văn Giáo Commune, the Chăm traditional silk weaving village in Châu Phong Commune, and the Mỹ A silk weaving village in Tân Châu Town as well as ironwork products in Phú Tân District.

To create added value for OCOP products and tourism activities in Đồng Tháp Province, Deputy Chairman of the provincial People's Committee Đoàn Tấn Bửu said the province values the development of ecotourism and agricultural tourism associated with OCOP products, such as village craft tours and cultural tours.

The province is trying to attract investment to develop eco-tourism associated with the value chain of typical products such as lotus, mango, Lai Vung mandarin, and tra fish, he added. 

Vietjet launches new promotion to celebrate new route to South Korea

Vietjet offers passengers three golden days with attractive promotions applicable to all routes between Việt Nam and South Korea between now and Thursday. 

Tens of thousands of promotional tickets with prices from only zero đồng (excluding taxes and fees) are available at www.vietjetair.com and Vietjet Air mobile app, with a flight time from May 10 to December 15, 2023. 

The promotion was launched to celebrate the opening of the direct route between Đà Lạt and Busan, connecting the romantic city of thousands of flowers with Busan, Korea's largest coastal city.

The new route will operate everyday from July 13 with seven flights per week. The flights from Liên Khương Airport  in Đà Lạt to Gimhae airport in Busan take off at 1.25am (local time) and land at 8am (local time). Meanwhile, the flights from Gimhae airport to Liên Khương airport depart at 9.30am (local time) and arrive at 12.15am (local time).

Petrol retailers to buy from multiple sources

The Ministry of Industry and Trade (MoIT) informed the National Assembly's Economic Committee on April 21 that petrol retailers will be able to obtain products from multiple suppliers, including distributors and wholesalers, as opposed to the current sole source.

According to MoIT, the decision was made after noting the opinions of ministries, sectors, and businesses regarding the amendment of Decree No.95/2021/NQ-CP and Decree No.83/2014/ND-CP on petroleum trading.

The MoIT stated in a report that the revision of petroleum trading regulations will focus on adjusting the price formula, operating method, operating time, and price announcement. There are numerous suppliers on the market; therefore, permitting agents to choose and switch suppliers will increase source flexibility, particularly during market fluctuations.

According to petrol and oil retailers, the reality that agents can only be obtained from a current source is one of the reasons why businesses incurred losses when the market fluctuated over the past year.

In accordance with the regulations governing the revocation of certificates of eligibility for key enterprises, the distribution of diesel and oil will be revised to be more appropriate. The intermediaries in the petroleum distribution system will reduce their presence (eliminate the function of general agents) and be more specific regarding the mandatory circulation reserve.

The proposed amendments to decrees 95 and 83 regarding the sale of diesel and oil are drafted in accordance with the streamlined order and procedures. To achieve the objective of ensuring supply and national energy security, the modification of regulations is intended to address the recent market instability.

Previously, in mid-April, Deputy Prime Minister Le Minh Khai tasked the drafting agency with examining regulations on business expenses and the return of profits to retail as part of the process of correcting petrol trading regulations.

Sweet time for sugar firms

The stable upward trend of sugar prices on the world market is making for a sweet time for sugar firms, despite the persistent pressure from imported products.

On April 13, the sugar price of US sugar futures contracts surpassed 24 US cents per pound, up nearly 20 per cent compared to mid-March, and over 30 per cent compared to early 2023.

In the UK, the price of refined sugar for May fetched $694 per tonne, setting an 11-year record.

In the domestic market, sugar prices rose slightly, hovering around 78 US cents per kilogram, owing to incurring pressure from imported sugar and amid a peak time for sugarcane pressing.

Several securities firms have forecast sugar prices in the domestic market to exceed 80 US cents per kilogram in the third quarter (Q3) this year.

The favourable market conditions have underpinned sugar firms’ performance in the year to date.

Quang Ngai Sugar JSC (QNS) unveiled that in Q1 this year, the company saw $96 million in total revenue, showing an over 18 per cent increase on-year, and equal to 26 per cent of the full-year plan.

Its pre-tax profit came to $15.6 million, soaring over 72 per cent on-year, and equal to just under 30 per cent of the full-year plan.

Mirae Asset Vietnam Securities have raised expectations for QNS this year, with a prediction of almost $40.2 million in total revenue and $58.4 million in post-tax profit, up 11.9 per cent and 4.6 per cent on-year respectively.

The upbeat prospects have given a boost to sugar companies on the stock market.
At Lam Son Sugar JSC (LSS) the company aims to earn over $94 million in revenue and $2.6 million in pre-tax profit this fiscal year, up 6 per cent and 20 per cent on-year respectively.

The company’s management unveiled plans for LSS to produce at least 450,000 tonnes of sugarcane this season through its further cooperation with large plantations and crafting strategy on sugarcane variety selection.

Meanwhile, LSS will keep a close eye on state policies on sugar production and the market situation at home and abroad. The company is also considering the possibility of opening a subsidiary in Laos or Cambodia.

The upbeat prospects have given a boost to sugar companies on the stock market.

QNS closed at $1.80 a share on April 21, up 17.5 per cent compared to early 2023. During the same period, LSS reached 43 US cents a share, surging over 40 per cent, Son La Sugar, with the ticker SLS, hit $7.40 a share, up 32.7 per cent.

According to the Vietnam Sugarcane and Sugar Association, the country is currently home to around 151,300 hectares of sugarcane production, a 3 per cent increase compared to the previous season.

Office developers inclined to incorporate ESG standards

Integrating environmental, social, and governance elements is the latest survival strategy for operators of leased office buildings, with experts noting that issues remain with post-pandemic workspace changes.

According to Bui Trang, country head of Cushman & Wakefield Vietnam, to be able to survive in the market, office building investors need to reposition, improve facilities, build sustainable services, and improve the community by creating services and events geared towards residents living and working around the property.

In addition, reuse strategies must also be considered, such as converting a building’s function into an industrial, life sciences, or healthcare property.

Cushman & Wakefield’s report suggests that the link between companies’ hiring demand and job growth has not really resumed in the past year. Tenants tend to seek a smaller office space compared to the number of employees because not all will work in the office on a regular basis.

Nicholas Michaux, the founder of financial consultants Alpha Prime, told VIR that offices for lease and commercial buildings in Vietnam are sought after by foreign investors, as returns could be higher. And in Vietnam’s big cities, houses and apartments tend to be smaller, with many generations living under one roof. This, along with the lagging technology and internet in the workplace, makes it difficult for the Vietnamese labour market to accept hybrid work.

A Knight Frank Vietnam report on Q1 indicated that Grade A office space for lease in Ho Chi Minh City had a stable vacancy rate of 4.9 per cent, the same as it was last year. However, the market will have great fluctuations thanks to the addition of supply from more than 131,000 square metres of office space that are about to come into operation within the next 12 months. Therefore, the vacancy rate might be increased up to 25 per cent.

Leo Nguyen, director of Strategy and Tenant Solutions at Knight Frank Vietnam, commented that this oversupply situation has not happened for over 10 years, and advises building owners to be prepared to face challenges when the office market shifts in favour of tenants.

Knight Frank also predicts Grade A office rents will fall by over 17 per cent over the next three years.

The business result of the Grade B office segment has also tilted more towards tenants faster than analysts had anticipated, and can be taken as an indicator of what is to come on a larger scale. This segment will receive an addition of under 300,000sq.m of floor space by 2025, thereby nearly doubling the vacancy rate to 23 per cent. This is the largest Grade B vacancy rate in the market for over a decade now, and Knight Frank experts forecast it to remain above 10 per cent over the next year or two.

Time is now to clear up property ownership overlap

The Ministry of Construction wants gaps between the housing and land laws closed in order to boost the chances of foreigners purchasing private homes in Vietnam.

Minister of Construction Nguyen Thanh Nghi earlier in April reported to the prime minister on receiving and explaining the conclusions of the National Assembly Standing Committee and the preliminary inspection report from its Law Committee on the revised Law on Housing.

The ministry (MoC) cited that the 2014 law allows foreign individuals entering Vietnam to buy and own houses in Vietnam (including individual houses and apartments) in certain areas. Foreign buyers are granted certificates of land use rights, and ownership of homes and other land-attached assets in accordance with the regulations on land.

However, according to Article 5 of the Law on Land 2013 and the draft revised version, foreign individuals are not eligible to use land in Vietnam. In addition, Resolution No.18-NQ/TW issued in June 2022 on perfecting the effectiveness and efficiency of land management and use does not mention the use of land by foreign individuals in Vietnam.

The issue continues to be brought up at regular Vietnam Business Forum (VBF) meetings. Speaking at VBF 2023 in the presence of Prime Minister Pham Minh Chinh in March, European Chamber of Commerce in Vietnam chairman Gabor Fluit emphasised that the delay in granting land use right certificates to foreigners has significantly affected various stakeholders.

According to current regulations, local authorities must issue their own lists of areas that are prohibited for foreigners to buy property. But this procedure is very rarely carried out.

The MoC stated that a clear recognition of foreigners’ rights in the land law would help solve the current problems. In addition, a consistent legal framework will also help attract foreign individuals to own various types of real estate such as condotels, tourist villas, resort villas, bungalows, officetels, and shophouses.

It is expected that the draft amended Law on Housing will be submitted in May and could be considered and approved at the sixth session of the XV National Assembly.

According to preliminary statistics from localities, the number of foreigners who have been granted certificates stands at a modest 3,000 individuals and organisations, mainly for apartments. The country is currently home to more than 80,000 non-nationals.

The MoC said that it has not received reports on foreign organisations and individuals buying individual houses such as villas or townhouses.

Lenders manifest steady trajectory with profit figures

Although first quarter business results of banks show deceleration compared to the final quarter of 2022, in the current macro context, this still is an encouraging growth.

The first bank to publish its financial statements in Vietnam was PGBank, which recorded a Q1 pre-tax profit at VND153 billion ($6.5 million), up 21 per cent over the same period. As of March 31, 2023, PGBank’s total assets were down 5 per cent compared to the beginning of the year, mainly due to the bank’s reduction in lending to other credit institutions and a decrease in its investment securities portfolio.

Outstanding loans to customers increased by 0.3 per cent, while customer deposits expanded by 4.8 per cent.

According to PGBank’s financial report, its net interest income increased by 44.5 per cent compared to the first quarter of 2022, mainly thanks to the growth of interest income from customer loans. Moreover, profit from services increased by 32 per cent, and profit from foreign exchange rose by 32.4 per cent.

Meanwhile, investment in securities trading did not record any profit/loss in the first quarter.

According to Nguyen Duc Vinh, general director of VPBank, by the end of March, the bank achieved more than VND4 trillion ($170.16 million) in profit, with credit growth of 7 per cent and deposit growth of 11.5 per cent.

While profit figures are still near the top, VPBank has only reached about 20 per cent of the plan for the first quarter of 2023. Meanwhile, subsidiary FE Credit continues to suffer losses.

Elsewhere, Eximbank’s general director Tran Tan Loc informed that the bank’s pre-tax profit was estimated at over VND900 billion ($38.3 million), up 16 per cent over the same period last year.

Tu Tien Phat, general director of ACB, said the consolidated Q1 profit reached VND5.1 trillion ($217 million), up 24 per cent over the same period and reaching 26 per cent of the full-year plan.

Phat said that despite being affected by the economic slowdown, the bank’s management is confident of completing the annual plan, along with appropriate credit and deposit growth.

In the same vein, SHB’s general director informed that the bank’s pre-tax profit in Q1 reached more than VND3.5 trillion ($149 million), up about 10.3 per cent over the same period in 2022. With this result, SHB completed about 35 per cent of its profit target for the year.

It was reported that groups involved in almost one-quarter of the total capitalisation value of Vietnam’s stock exchanges have estimated or officially announced their profits for Q1.

According to FiinTrade, profit after tax Q of 10 banks representing 70 per cent of banking industry capitalisation was estimated to have increased by 14 per cent over the same period the previous year. Notably, the profit after tax of 10 banks increased by 17.8 per cent compared to the previous quarter.

FiinTrade added that profit growth from the group of state-owned banks was supported by increased credit and sustained net interest margins. As for BIDV, the reduced provisioning pressure also helped the bank improve its profit in the first quarter.

For joint-stock banks, with the exception of those with a high proportion of loans to the real estate sector (including TCB) whose profits decreased due to the increase in provision for credit risks, most of them made profits. Q1’s profit after tax is estimated to grow over the same period, led by STB (+57 per cent) and ACB (+24.6 per cent). However, credit growth has been very low or even decreased in some retail banks (including ACB and VIB).

On the stock market, the prices of banks with high profits in the first quarter, including BID, ACB, and STB, are now at a peak after one year – a strong recovery by 40-60 per cent compared to the middle of November last year.

According to survey results from the Department of Forecasting and Statistics at the State Bank of Vietnam, there was an improvement in the business situation of the banking system in Q1, but the improvement rate has slowed compared to the previous quarter. Credit institutions assessed that the pre-tax profit of the banking system has grown in Q1 but not as much as expected.

However, 67-80 per cent of credit institutions expect their business to improve in the second quarter and the whole of 2023. Nearly 90 per cent of them expect profits in 2023 to grow positively compared to 2022. Furthermore, 5.7 per cent are still worried about negative profit growth in 2023 and 5.7 per cent of credit institutions estimated unchanged profit.

The survey report added that demand in the economy for banking products and services, together with customer’s business and financial conditions, are expected to be the most important objective factors to help improve the banking sector situation for the remainder of the year.

Companies hold back from listing in exchange shake-up

A number of companies have postponed or entirely cancelled plans to list in Vietnam due to current market volatility and economic uncertainties, while some banks signal their intention to tap into broader funds by switching to the Ho Chi Minh City bourse.

Earlier this month, Phu Hung Securities Company withdrew its application for an initial public offering (IPO) on the Ho Chi Minh City Stock Exchange (HSX). Its application for the listing of 150 million shares was submitted in November, but it cited unfavourable stock market conditions and the interests of shareholders for the about-turn.

In January, KienlongBank passed a resolution to withdraw its application to list on HSX due to the market’s poor developments. It had submitted an application to list five months prior.

KienlongBank initially made it known it wanted to go public at the end of 2021 and had even proposed a name change to KSBank, but it was not approved by the State Bank of Vietnam. The bank then initiated a brand repositioning plan after personnel from the Sunshine Group joined the bank’s senior management.

Sacom Real Estate JSC also cancelled its plan to list on HSX earlier this year, citing a mismatch with the company’s direction.

In December, Vietnam First Securities Company announced a resolution to withdraw its application to list shares on HSX. The reason cited was also unfavourable financial and securities market developments in Vietnam.

Numerous Vietnamese businesses have signalled their ambition to be listed on the HSX, but many have yet to complete the requirements for approval, such as Thanh Cong Securities, Vietnam Construction Securities, and Quy Nhon Port JSC.

Data by Deloitte showed that companies in Southeast Asia raised $7.6 billion from 163 IPOs last year, down 43 per cent from a record $13.3 billion from 152 in 2021. While the number of IPOs had increased, there was a decrease in total funds raised in 2022, which is indicative of a high number of small-sized offerings that year.

This is due to smaller companies proceeding with their IPOs despite the existing economic uncertainties, while bigger players with better leverage are postponing their offerings ahead of better market conditions.

Bui Van Trinh, deputy leader of Disruptive Events Advisory at Deloitte Vietnam, said, “The focus on IPOs has shifted from real estate to industrial products and consumer businesses. Consumer businesses should continue to play a key role, with some highly anticipated upcoming listings from this sector.”

Despite the withdrawals, HSX could be poised to regain its former vibrancy as several companies announce plans to migrate their listings from other exchanges.

Notable among these companies are Binh Son Refining and Petrochemical, Bao Chau Pharmaceutical Corporation, and Nam A Commercial Bank.

Nam A Bank recently has meanwhile decided to transfer all its currently traded shares on the Unlisted Public Company Market (UPCoM) to either HSX or the Hanoi Stock Exchange (HNX).

In a similar move, Viet Capital Joint-Stock Commercial Bank announced its intention to transfer the trading of its shares from UPCoM to HSX. The bank has been trading on UPCoM for over two years.

Currently, there are 17 banks listed on the HSX, two listed on the HNX, and eight banks trading on the UpCOM, while three other banks are trading over-the-counter.

However, the goal of the overarching the Vietnam Stock Exchange (VNX) from the outset was that by the end of 2023, all listed stocks on the Hanoi bourse would be transferred to the HSX.

VNX chairman Nguyen Thanh Long previously stated that since its inception, the Ho Chi Minh bourse has consistently maintained its goal of creating a trading market for high-level listed businesses, while the HNX, in addition to providing a trading market for small businesses, continued to develop and expand its objectives of developing bond market.

Meanwhile, Trinh of Deloitte believed that with the current uncertainties, investors as well as companies are proceeding cautiously.

Favourable balance declared in foreign currency

The interbank USD/VND exchange rate is expected to stabilise in the current quarter, according to forecasts.
The rate in the first quarter was volatile, recording a strong increase of about 1.8 per cent in the period after the Lunar New Year before falling back to 23,450 VND/USD at seen at the beginning of the year.

In the international market, the USD has become less attractive. Although good economic data in the first two months of the year brought the US Dollar Index up nearly 2 per cent to 105-106, the turning point came with uncertainties in the banking sector, causing the index to drop to around 101-102.

According to Bui Hai Duong, sales director at HSBC Vietnam, the trend of the Dollar Index is the main factor affecting the foreign exchange market in Vietnam. The index, after peaking in early March, has returned to a bearish trend as the world market expects the Fed to soon end the hike cycle.

According to a leader at BIDV, the balance of supply and demand of foreign currency has become favourable, with an estimated surplus of about $4-5 billion. This is remarkable in the context of the overall balance of payments having a huge deficit in 2022, at approximately $23 billion.

Some components have significantly improved compared to the previous year, such as a trade balance of goods with a surplus of about $4 billion, and import and export of services with a small deficit of $210 million compared to $4 billion last year.

Duong of HSBC forecast that the Dollar Index will continue its downward trend in the global market, with the main driving factor being the expectation that the USD interest rate will soon peak. Meanwhile, a factor that could increase the value of the USD comes from the need to hold it as a safe asset amid fear of a crisis in the US banking system.

According to Duong, Vietnam’s balance of payments is improving. Data for the first quarter of 2023 shows that the supply of foreign currency is stable from the trade surplus at $4 billion, foreign investment disbursement reached $4.3 billion, and there has been a strong return of foreign capital into the capital market.

Meanwhile, the service balance deficit narrowed to only $216 million in the first quarter of 2023, which was a great improvement as compared to the first quarter of 2022 and the fourth quarter of 2022, respectively $1 billion and $3.9 billion. The improvement of the service balance was largely due to a strong recovery in foreign tourists.

In the international market, the strength of the USD is likely to continue to be limited, as the Fed gradually reaches the end of the monetary tightening process.

From the domestic perspective, he suggested the balance of supply and demand of foreign currency was not expected to be abundant in the second quarter, and estimated to be balanced. Some basic capital flows such as the balance of trade in goods and disbursement of foreign direct investment are expected to be negative, due to a difficult global economy.

However, the arising foreign currency demand is not expected to be large due to favourable trends in the international environment. If some large-scale potential capital sales are made, the supply and demand for foreign currency may shift back to surplus.

Duong of HSBC added that the decline in global trade affected both sides of Vietnam’s trade.Foreign funding disbursement showed a slight decrease of 2.2 per cent on last year. Meanwhile, the foreign currency supply is supplemented by the return of foreign tourists and indirect investment inflows.

The SBV’s move to lower interest rates is aimed at supporting the struggling economy. In particular, the decision to lower interest rates will help businesses operating in the commercial production sector to reduce financial costs and stabilise business in the context of a weakening global economy, Duong concluded.

Petrol retailers to buy from multiple sources

The Ministry of Industry and Trade (MoIT) informed the National Assembly's Economic Committee on April 21 that petrol retailers will be able to obtain products from multiple suppliers, including distributors and wholesalers, as opposed to the current sole source.
 
According to MoIT, the decision was made after noting the opinions of ministries, sectors, and businesses regarding the amendment of Decree No.95/2021/NQ-CP and Decree No.83/2014/ND-CP on petroleum trading.

The MoIT stated in a report that the revision of petroleum trading regulations will focus on adjusting the price formula, operating method, operating time, and price announcement. There are numerous suppliers on the market; therefore, permitting agents to choose and switch suppliers will increase source flexibility, particularly during market fluctuations.

According to petrol and oil retailers, the reality that agents can only be obtained from a current source is one of the reasons why businesses incurred losses when the market fluctuated over the past year.

In accordance with the regulations governing the revocation of certificates of eligibility for key enterprises, the distribution of diesel and oil will be revised to be more appropriate. The intermediaries in the petroleum distribution system will reduce their presence (eliminate the function of general agents) and be more specific regarding the mandatory circulation reserve.

The proposed amendments to decrees 95 and 83 regarding the sale of diesel and oil are drafted in accordance with the streamlined order and procedures. To achieve the objective of ensuring supply and national energy security, the modification of regulations is intended to address the recent market instability.

Previously, in mid-April, Deputy Prime Minister Le Minh Khai tasked the drafting agency with examining regulations on business expenses and the return of profits to retail as part of the process of correcting petrol trading regulations.

Market management agency, Germany group cooperate in dealing with counterfeit goods

The Vietnam Directorate of Market Surveillance (DMS) on April 25 signed a Memorandum of Understanding (MoU) with Schott AG, a leading group in the areas of specialty glass, glass-ceramics and glass innovations from Germany, aiming to promote cooperation in combating counterfeit products and enforcing intellectual property (IP) rights of Schott AG brands in Vietnam.

This is part of DMS’s activities to improve the effectiveness of the fight against counterfeiting, IP infringement and protecting consumers’ rights as well as raise public awareness about genuine and counterfeit goods, especially products of foreign enterprises that are doing business in Vietnam.

At the signing ceremony, Tran Huu Linh, DMS’s director general, said combating and preventing counterfeit goods and IP infringement is one of the key tasks of the market surveillance force.

The production and trading of counterfeit goods continue to be a pressing issue in the domestic market, he said, noting that DMS has coordinated with relevant agencies such as border guards and public security to handle violations in this regard.

Last year, the market surveillance force handled 3,069 cases and imposed administrative fines totalling over 38 billion VND (1.6 million USD).

In the first quarter of this year, 1,764 violations were dealt with total fines of more than 15.7 billion VND.  

According to Simon Kreye, Deputy Head of the German Embassy in Hanoi, the signing of the above-mentioned MoU is a significant step in strengthening the cooperation between Vietnam and Germany in the field of IP protection and consumer safety.

Fake products not only harm the reputation and innovation of businesses but also pose serious risks to the health and life of consumers, he said.

Under the MoU, the market management force will share information on policies, regulations and legal procedures on handling violations. The business partner will be facilitated to participate in the process of investigation and handling of violations when necessary to shorten the time and enhance efficiency of investigations.

The market surveillance force is also willing to listen to businesses' opinions to improve the collaboration between the law enforcement force and the business community.

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