China represents the largest importer of Vietnamese pepper in the first half of the year, duly accounting for 32.9% of the overall market share, according to figures released by the Vietnam Pepper Association (VPA).

During the six-month period, the northern neighbour purchased 50,369 tonnes of pepper, representing a rise of 798%, or eight-fold increase against the same period from last year.

The sudden rise in Chinese import volume can be attributed to the fact that they moved to reduce pepper purchases during the 2021 to 2022 period and increased imports after reopening.

The latest statistics released by the VPA indicate that the country exported 152,986 tonnes of pepper of all types worth US$485.9 million, of which black and white peppers reached US$417.9 million and US$68.0 million respectively.

The country’s export volume increased by 21.8%, but dropped by 14.6% in export value compared to the same period from last year.

The United States became the second largest consumer of Vietnamese pepper with the import volume reaching 25,894 tonnes, marking a drop of 14% on-year, followed by the United Arab Emirates (UAE), India, and Germany, with import volume falling between 30% and 40% annually.

Experts pointed out that the rising consumption demand during the year-end period is expected to become a positive factor for the local pepper industry in the remaining months of the year.

FBC ASEAN 2023 - Manufacturing Business Matching to get underway in Hanoi

As many as 200 manufacturing enterprises, including nearly 100 foreign buyers, are set to gather at the FBC ASEAN 2023 – a Manufacturing Business Matching event which is scheduled to take place in Hanoi from August 23 to 28.      

The business-to-business (B2B) trade event, to be organised both virtually and physically, aims to help firms seek suppliers in the Vietnamese market, sign additional contracts, and bring in multi-million dollars to participating businesses and visitors.

Foreign companies that are in high demand for seeking suppliers include those operating in fields such as mechanical processing, molds, stamping components, casting, heat treatment, electronic components, and raw materials.

There will be a total of 10 trading sessions per business held each day during the three-day event, which will continue to be held online via Zoom Meeting in September. Those who may concern can register to meet buyers online from Japan and Thailand.

The programme is technically supported by NC Network Vietnam Joint Stock Company, a subsidiary of Japan's NC Network Corporation, which has a database comprising more than 22,000 manufacturing enterprises in Japan, Thailand, and Vietnam.

Vietnamese tuna exports to Italy skyrocket due to tax incentives

Vietnam’s tuna exports to Italy in June witnessed a 12-fold rise thanks to preferential tariffs implemented under the EU-Vietnam Free Trade Agreement (EVFTA), according to details given by the General Department of Vietnam Customs.      

Statistics indicate that despite experiencing a downward trajectory in January, the country’s tuna exports to the Italian market witnessed continuous three-digit growth rate in the following months.

In line with this, six-month tuna exports to this market surged by 37% to reach US$5.8 million against the same period from last year.

The Vietnam Association of Seafood Exporters and Producers (VASEP) assesses that Italy imported the most canned tuna from the nation, duly accounting for more than 50% of tuna export value to this market.

Along with canned tuna, the country’s frozen tuna meat/loin exports coded HS0304 to this market also surged by 71% against the same period from last year.

Local businesses revealed that the tariff preferences set out under the terms of the EVFTA is one of the main reasons that has made Vietnamese tuna products become attractive to Italian importers, especially amid the current high price of raw tuna.

Experts point out that being the preferential tariff quotas being used up in the second half of the year, it is likely that exports to Italy will start to slow.

Furthermore, if the European Commission’s inspection outcomes of the anti-illegal, undeclared, and unregulated (IUU) fishing next October fail to meet the requirements of removing the yellow card, Vietnamese tuna exports to EU member countries will be negatively affected.

Miss Universe Vietnam 2023 announces prizes for winners

The organising board of Miss Universe Vietnam 2023 announced prizes on August 8 for the top 5 winners of the competition.

According to the information, the Miss Universe Vietnam 2023 winner will represent the country to compete at Miss Universe 2023, with the event scheduled to take place in El Salvador from November 3 to November 11, following which she will have one month to prepare for the beauty pageant.

Meanwhile, the four other contestants to feature among the Top 5 will have the chance to take part in three other international beauty contests in 2024.

The organising board said that the prizes aim to encourage and motivate the top 5 contestants to have more activities which will ultimately contribute to the benefit of the community and society as a whole.

In addition, it also represents a golden opportunity to introduce Vietnamese tourism and culture to an array of international friends.

The final round of the competition is set to be held in mid-September.

Int’l wood material, woodworking machinery fair opens in Binh Duong

The international wood material, woodworking machinery fair –BIFA WOOD Vietnam 2023 opened in the southern province of Binh Duong on August 9 with nearly 800 booths from 100 leading enterprises in the industry both at home and abroad.

The fair creates an opportunity for businesses in the field of wood processing at home and abroad to seek cooperation deals, forming a supply chain of raw materials and accessories, machinery, technology to manufacturers, enterprises from reputable manufacturers from the US, Europe, Japan, China, Taiwan (China), among others.

Speaking at the opening ceremony, Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri said that in 2022, with countless efforts of the sector, the association achieved the set target with export value reaching over 17 billion USD, an increase of 7.1%. Vietnam is one of the important destinations of international timber product partners as the second country in Asia and fifth in the world in exporting wood and timber products.

In the first seven months of 2023, due to the gloomy economic situation of the world’s economy, consumers in the main export markets of Vietnam's forest products continued to tighten spending for non-essential products including timber and wood products. As a result, the export value of the sector only reached 7.8 billion USD, down 25.5% from the same period last year.

Tri stressed that the exhibition is an opportunity for businesses to restructure, upgrade production capacity, change models, expand markets, and innovate technology in an attempt to turn disadvantages into opportunities to overcome hurdles and grow.

Several activities will take place during the four-day event, including a fact-finding trips, seminars, workshops on markets, and trade promotion.

Vietnam Airlines, Expedia Group to expand cooperation

National flag carrier Vietnam Airlines and Expedia Group, one of the world’s biggest travel groups based in the US, have announced that they will expand their cooperation to a global scale.  

This agreement will create favourable conditions for international travelers to visit the Southeast Asian nation on Vietnam Airlines flights, through Expedia's global online platform. The two sides will collaborate across various fields to improve passengers’ experiences, expand market access, and increase their revenue.

Vietnam Airlines will also cooperate with Expedia Group Media Solutions to enhance its brand recognition while promoting its flights to Expedia's customers globally.

Vietnam Airlines Deputy General Director Dang Anh Tuan said the agreement is expected to attract more international visitors to Vietnam, offering them more diverse experiences.

Greg Schulze, Senior Vice President for Expedia Group, highlighted good cooperation with the carrier in some markets over the past years, saying both sides want to raise their growth and promote brand recognition globally.

Vietnam Airlines and Expedia Group have maintained their fruitful cooperation in Europe and key markets such as Australia, the US and Japan over the past more than 10 years.

Sóc Trăng calls for planning of deep-water seaport

The Mekong Delta province of Sóc Trăng is stepping up procedures to complete a pre-feasibility study report on the Trần Đề deep-water seaport project to call for investment.

The plan was made in a workshop co-organised by the provincial authority and the Ministry of Transport early this week.

The workshop aims to exchange information relating to the planning and development of the deep-water seaport in the Mekong Delta. Under the plan, the existing Trần Đề Port will be developed into an international deep-water seaport on a large scale.

Trần Văn Lâu, chairman of the provincial People's Committee, said more than 70 per cent of the import and export goods of the Mekong Delta are currently transported by road to ports in HCM City. This will prolong the time and increase transportation costs, affecting quality as well as putting great pressure on the transport system.

Lâu added the Government issued Resolution No 78 in 2022 on an action plan for the implementation of Politburo and Resolution No13 on socio-economic development orientation and ensuring national security and defence for the Mekong Delta region by 2030, which set out an orientation to develop Trần Đề into a special seaport and a gateway of this region.

Under Sóc Trăng’s plan, the total construction will cover about 5,750ha of land and water. The deep-water seaport alone will cover 1,400ha and be able to berth vessels of up to 160,000 DWT and handle 30-35 million tonnes of cargo a year by 2030.

In addition, the Prime Minister also issued Decision No 886/QĐ-TTg dated July 24, 2023, approving plans, policies, solutions and resources to implement the national seaport system development master plan from 2021-2030 with a vision to 2050. Under the approved national seaport development scheme, seaports are divided into different groups depending on the scale and function. The seaport system is connected with railway and water routes as well as the national highway and local road system.

The total investment needed for the plan until 2030 is about VNĐ313 trillion ($13.7 billion).

Accordingly, the Trần Đề port has been added by the Prime Minister to the master plan. It has identified the importance of the development of this deep-water seaport project with an expected investment capital of VNĐ50 trillion ($2.1 billion).

To carry out policies on the planning of the Trần Đề seaport, Sóc Trăng authorities worked with the Transport Ministry to urgently complete and submit a pre-feasibility for approval to call for investment. Once completed, the port will help connect with key traffic projects, including Châu Đốc-Cần Thơ-Sóc Trăng expressway projects.

Deputy Minister of Transport Nguyễn Xuân Sang said the ministry will complete the planning of Trần De deep-water seaport by the end of 2023. The construction of this deep-water seaport is necessary to help the Mekong Delta region have a large seaport to meet the import-export demand of million tonnes of goods annually.

According to Secretary of the Sóc Trăng Provincial Party Committee Lâm Văn Mẫn, the province will soon instruct relevant agencies to conduct a pre-feasibility study report on the construction of Trần Đề deep-water seaport. 

Việt Nam has chance to promote rice exports to UK

Việt Nam now has a great opportunity to expand its rice market share in the UK after India, the biggest supplier of the grain to this market, banned exports, said Trade Counsellor Nguyễn Cảnh Cường at the Việt Nam Trade Office in the UK.

The UK, home to a community of over 5.5 million Asian-origin people, has high rice demand while it doesn’t produce rice. In 2022, its rice import volume increased 4.1 per cent year on year to over 678,000 tonnes while the value rose 7 per cent to more than US$603 million.

Last year, Việt Nam’s rice export to this market grew strongly to approximately 3,400 tonnes worth over $3.7 million, up 24.5 per cent in volume and 34 per cent in value from 2021. However, the country accounts for just 0.6 per cent of the UK’s rice import at present, ranking 14th among exporters there, according to statistics cited by Cường.

He said the export ban by India, which makes up nearly 27 per cent of the UK’s rice import volume, will trigger a shortage of about 75,000 tonnes of rice in this market in the second half of 2023.

The sudden decline in rice supply from India will create advantages for other exporters, including Việt Nam, the Trade Counsellor noted, perceiving that it’s now a good chance for Vietnamese rice to increase its market share in the UK, especially with favourable tariffs generated by the UK - Việt Nam Free Trade Agreement (UKVFTA).

Nguyễn Hải Nam, chairman of EUTEK Group, which exclusively distributes the rice brand of ST25 Ông Cua in the UK, said that the UK is a great potential market for Vietnamese rice, one of the items exempted from tax under UKVFTA, especially Việt Nam's long-grain rice.

Nguyễn Thị Minh Phương, product development manager, Longdan Group - one of the largest importers of Vietnamese goods in the UK, said that the demand for importing and consuming rice in the UK has increased sharply since the beginning of the year. 

She cited that Longdan's imports of Vietnamese rice have so far this year increased by 40 per cent over the same period last year.

Though immediate impacts haven’t been recorded, India’s rice export ban is likely to affect supply sources in the UK in the future and subsequently boost imports from other countries like Việt Nam and Thailand. Meanwhile, consumers now prefer Vietnamese rice to that from Thailand thanks to more competitive prices and quality, she added.

Cường said dealing with no rice supply from India, British importers will switch to buying Vietnamese and Thai rice, indicating that it is an opportunity for Việt Nam to have a higher position in British rice importers' customer lists, mainly including Indian and Thai suppliers who have longstanding partnerships with them.

If Vietnamese exporters conduct professional marketing in the British market, such as advertising in English on local media, they can gain a bigger market share, including at the restaurants serving Asian tourists, who make up a large number among the tens of millions of visitors to the UK each year, according to the official.

Cường said Việt Nam is a major rice exporter, but Việt Nam's rice products exported to the UK as well as many other countries have often been sold on the domestic market under the brand name of distributors. 

Therefore, branding is a long-term solution for Vietnamese rice to maintain market share in the UK once the quality of Vietnamese rice has conquered consumers, Cường said.

Nam said that it also needs the State's management to ensure the product quality of the brands. For example, ST25 fragrant rice was invented by engineer Hồ Quang Cua and is recognised as the world’s best. ST25 rice is exported to many European countries, but it has uneven quality because Việt Nam’s businesses have bought the seed of ST25 rice but produced under different processes. 

Therefore, according to Nam, it needs to have a unified production process for this kind of rice labelled national brand to retain its rice brand integrity. 

Cường has highlighted that to meet the requirements on product quality and agricultural production of the UK as well as Europe, Việt Nam’s producers need to apply Global GAP standards. 

The State, the Ministry of Agriculture and Rural Development and rice-growing localities need to support farmers in technology and funds to expand the application of Global GAP. That makes importers and distributors in the UK and Europe interested in increasing rice imports from Việt Nam, according to Cường.

He has also recommended that to take advantage of this new export opportunity, the State should provide credit to the businesses to purchase rice exports. 

Meanwhile, Nam said that Việt Nam’s rice exporters need to participate in fairs in the UK because the events will bring a great opportunity to find customers. 

Việt Nam’s rice exports in the first seven months were estimated to reach about 4.83-4.84 million tonnes. It is expected to export about 7.5 million tonnes of rice in 2023.

Following India's imposition of a rice export ban, the export cost of Việt Nam's 5 per cent broken rice rose from $535 to $602 per tonne; and the price of its Jasmine rice jumped from $625 to $690 per tonne early this month.

PM calls on Abbott to expand investment in Vietnam

Prime Minister Pham Minh Chinh on August 9 suggested US healthcare giant Abbott expand its investment and upgrade the quality of its pharmaceutical manufacturing plants in Vietnam, thus helping promote the domestic pharmaceutical industry.

At a reception in Hanoi for Robert Ford, Abbott's Chairman of the Board and Chief Executive Officer, the PM told his guest that Vietnam considers the US a leading partner in its foreign policy, and wishes to enhance the bilateral comprehensive partnership in a more practical and effective manner and on the basis of mutual respect for independence, sovereignty and territorial integrity, and political institutions of each other.

The leader used the occasion to thank the US government and businesses, particularly Abbott, for their support to Vietnam in the COVID-19 fight, and appreciated the group’s practical and effective contributions to national economic development as well as the Vietnam-US relations.

Both sides noted with pleasure the outstanding development of the Vietnam-US ties over the past time, saying the US has become Vietnam’s biggest importer, while Vietnam has been the US’ seventh largest trade partner globally and its biggest in the Association of Southeast Asian Nations (ASEAN).

Chinh affirmed that the Vietnamese government always listens to opinions raised by enterprises, including those from the US, and creates optimal conditions for them to expand operations, especially in digital transformation, digital economy, manufacturing and processing, health care, high-tech, and high-quality personnel training.

He spoke highly of Abbott’s introduction of cutting-edge medical technologies to the Vietnamese market, and asked firms from the US and other countries to further invest in Vietnam, helping the country in the field of nutrition.  

For his part, Ford lauded Vietnam’s development achievements, especially in socio-economic recovery post pandemic, as well as the country’s open policies towards enterprises.

Vietnam holds potential for the development of clinical research and large-scale pharmaceutical production, he said, stressing that Abbott will continue its long-term investment in the country.

Abbott has been operating in Vietnam since 1995, with two pharmaceutical manufacturing plants at present.

Cutting rates too quickly could lead to credit risk

The Government has introduced measures to stimulate credit growth to spur the economy, but experts are concerned loans could flow into risky industries that are the most capital thirsty with high absorption capacity.

As firms are facing many difficulties and the capital absorption of the economy in the first half of 2023 hit the lowest level in the past 13 years, the Government has urgently required the banking industry to further reduce interest rates and pump capital into the economy.

After four rate cuts this year, Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú said if conditions are favourable, the central bank will make further cuts before the end of the year.

However, even if the SBV’s policy rate does not decrease, the Government has asked commercial banks to try and cut rates based on cost reductions.

Many large firms have been offered loans by banks with interest rates of 7 to 9 per cent. However, not all firms can have access to this lower rate. Vũ Công Huân, director of HDC Group Joint Stock Company, said his company is having to borrow unsecured loans with an interest rate of 14 per cent, which is still lower than last year, but obviously unsustainable nonetheless. 

Dr Nguyễn Thị Mùi, a member of the National Monetary and Financial Policy Advisory Council, said expanding credit in the current context is difficult, banks cannot lend when firms cannot prove their ability to repay loans and are unable to manage cash flows.

Many firms asked banks for unsecured loans, but promoting unsecured lending is not possible when the two sides have not built trust, Mùi said, explaining that cheap or subprime credit is very risky and if banks are not careful, it could spillover and affect other areas of the economy, much like in the US in 2008.

Nguyễn Quốc Hùng, General Secretary of the Vietnam Banks Association, also noted the responsibility of the lender is greater than that of the borrower, which feeds into a bad debt cycle. Banks can't lend at all costs: they must first ensure safety.

Data from FiinGroup showed in the second quarter of 2023, the total profit of non-bank firms decreased by nearly 42 per cent. According to FiinGroup, firms no longer have high financial leverage, but are eating through capital nonetheless.

Instead of pushing new credit into the economy, the Government’s policies should focus on lowering rates and rescheduling existing rates and loan payment times.

Monetary policy is shifting to a more flexible and loose direction, but according to Phạm Chí Quang, Director of the SBV’s Monetary Policy Department, relying on credit to boost the economy is not the safest measure.

An economy based on high lending poses systemic risks as bank capital is short-term while the demand for medium and long-term loans is huge. Besides bank credit, it is necessary to focus on developing other safe capital channels such as the stock and corporate bond markets, Quang suggested.

Dr. Lê Duy Bình, Managing Director of Economica Vietnam, said lowering interest rates and recklessly injecting credit into the economy could cause a boost in speculative fields, leading to market bubbles. Therefore, credit growth should only be at a reasonable dose to stimulate economic growth.

Real estate is the most capital-thirsty industry, with high capital absorption capacity. This is also a highly pervasive field if capital flows into segments serving real needs such as residential and industrial park projects. Funding for real estate recovery is one of the necessary solutions to warm up the current economy.

However, real estate is a high-risk sector and relying on cheap credit will have dangerous consequences. Besides interest rate cuts to stimulate production, there must be solutions to warm up the stock and bond markets to reduce the dependence on bank credit.

Fortunately, the stock market has recovered since the beginning of this year while the bond market seems to have passed its most difficult period.

Lower interest rates are supporting the two markets. The missing piece of the puzzle is investor confidence. 

Loan interest expenses incease, causing hardship for firms

Interest expenses in the first six months of this year increased by 47 per cent year on year, despite efforts from regulators to lower interest rates.

This is information based on the financial statements of the second quarter of 2023 of 1,026 public companies provided by FiinPro.

Specifically, businesses had to spend more than VNĐ53.77 trillion on interest expenses in the first two quarters of this year.

The total of the 10 enterprises with the highest interest expense in the first half of 2023 reached nearly VNĐ19 trillion, an increase of more than 47 per cent over the same period last year, equivalent to the general increase of all enterprises.

In which, the top five enterprises with the highest interest expenses all saw them surpassing VNĐ1 trillion in the first half of this year.

Among the 10 enterprises mentioned above, the interest expense of Electricity Corporation 3 (EVNGENCO 3) saw the strongest increase - nearly doubling compared to the same period last year, reaching VNĐ1.2 trillion.

Three out of 10 businesses with the highest interest expense in the first half of this year have cut debt. Specifically, the total loans and finance lease liabilities of EVNGENCO 3, Masan and Vietnam Airlines at the end of the second quarter of 2023 decreased by 7 per cent, 4 per cent and 1 per cent, respectively, compared to the end of 2022.

At the conference to review the first six months of 2023 and implement the tasks for the last six months, Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú said that the State Bank had reduced operating interest rates four times in a row. By the end of June, the average deposit interest rates of new deposits in Vietnamese đồng of commercial banks decreased by about 1 per cent per year compared to the end of 2022.

Some commercial banks have implemented incentive programmes to reduce lending interest rates for new loans, with a reduction of about 0.5-3 per cent per year, depending on the type of customer.

However, businesses are still burdened with interest costs of up to trillions of đồng on old loans.

According to data from FiinPro, the total short-term and long-term loans of 1026 businesses at the end of June 2023 only increased slightly by 4 per cent compared to the beginning of the year, reaching more than VNĐ1.55 quadrillion. In which, short-term loans increased by 11 per cent but long-term loans decreased by 5 per cent.

This shift shows that businesses have begun to avoid long-term loans.

In 2023, the SBV has set a credit growth target of 14 - 15 per cent. But by the end of June, credit only increased by 4.03 per cent - much lower than the growth of 9.4 per cent in the same period last year. This was the lowest credit growth in 10 years.

The main reason for slow credit growth was weak economic demand, in both production and consumption.

Commercial transactions between businesses are also showing signs of weakening as the balance of payables decreases, the SBV said.

As of June 30, 2023, the total balance payables to sellers of 1,026 enterprises decreased by 5.5 per cent compared to the beginning of this year, reaching nearly VNĐ433 trillion. In which, VinGroup, Vietnam Airlines and Petrolimex were the three enterprises with the highest payables, all over VNĐ20 trillion each.

Many businesses have chosen to offset debt with assets, shares, or even products to pay sellers, especially construction and real estate businesses.

Typically, Hoà Bình Construction approved the transfer of 88 real estate products from 2 investors, Novaland and Sungroup, in the first half of this year, to offset debts.

As of the end of July, the Purchasing Managers' Index (PMI) of Việt Nam's manufacturing industry has seen 5 consecutive months below the threshold of 50 points. Although there was a recovery in July, the overall production activity of the country was still weakening. 

Key issues in land valuation process must be addressed

Land valuation has been said to be a major bottleneck in Việt Nam's socio-economic development, said Deputy Prime Minister Trần Hồng Hà during a government meeting on Monday.

The deputy PM said improper application of methods or the use of subjective, non-transparent, and inaccurate data inputs employed during the valuation process has often resulted in inaccurate pricing and caused revenue losses to the State budget. Additionally, the complexity of valuation methods and the lack of comprehensive and reliable land price databases in the market also contribute to inconsistent results.

He said the forthcoming amended Land Law will provide a legal framework to establish a land prices database and land value map for the country.

In a report by the Ministry of Natural Resources and Environment (MoNRE), there are currently five different methods to evaluate land prices used by Government agencies: direct comparison, deduction, income, surplus, and land price adjustment coefficient methods. The aim of said methods has been to bring prices closer to market level, minimising losses to the State budget, and ensuring the rights of landowners whose land is being acquired.

However, in the last decade, there have been concerns voiced over their shortcomings and limitations. Certain localities are still uncertain in their application, affecting the progress of determining land prices. Some land valuation methods are not suitable for real market information conditions, and the transparency of land use rights is lacking, making them inconsistent with state management on land prices, especially in the absence of a complete land price database.

The ministry said it's high time the country reviewed and revised its land valuation methods, as well as created new procedures. In addition, detailed guidance should be given to local authorities to help them with the implementation of such methods. This is especially important as the new approach to land valuation places local governments at the centre with additional autonomy and delegation of power.

The new approach should aim to minimise assumptions and subjective preferences, ensure uniformity in selecting and applying these methods, specify the information sources required for applying each method and expand the cases in which the land price adjustment coefficient method can be used.

Economist Cấn Văn Lực urged the Government to quickly establish a set of criteria for cases where additional valuation methods are required, with consideration given to data collection capabilities and the conditions of the land being valued.

Regarding the surplus method, he said that the law should provide detailed and specific guidelines for determining initial assumptions, such as expected future profits and forecasted incurred costs when implementing projects.

Nguyễn Tiến Thỏa, chairman of the Vietnam Valuation Association, said as each method has different application conditions, there must be very detailed and specific criteria and guidelines for each.

Deputy Minister of Finance Nguyễn Văn Chi stressed on the importance of a strict and scientific method in collecting land information.

"Collecting information is the first, and the most crucial step in the valuation process. Without a proper database of information, it doesn't matter what methods are being employed," said Deputy Minister of Public Security Lê Văn Tuyến.

He said a large number of violations during the process have been committed by Government officials and businesses, often to put lands' value significantly lower than their market level.

Representatives from Hà Nội and HCM City, two of the country's largest cities, and the Vietnam Real Estate Association voiced their concerns over a number of issues regarding current legal frameworks, procedures and valuators' responsibility and accountability.

The Deputy PM instructed MoNRE, the Ministry of Finance and the Ministry of Construction to closely collaborate with other ministries to clarify the criteria and conditions for collecting information and input data for each specific land plot or project.

"The criteria for input information must be standardised, transparent, publicly available, simple, and feasible to serve as the basis for applying the appropriate valuation method," he said. 

Vietnam prepared for production pressures

Vietnam’s industrial performance, which is the key economic growth pillar, is facing major challenges coupled with a reduction in business confidence, depressing the country’s economic prospects.

Since March, Nguyen Van Duc, a worker from a Japanese company manufacturing industrial spare parts at Hanoi’s Thang Long Industrial Park, has been working a reduced schedule.

“Over the past four months, with nearly another 500 workers, I have been working six hours a day instead of eight hours as normal,” Duc said, adding that his income had reduced from VND300,000 ($12.50) a day to about VND250,000 ($10.50).

“Life has become all the more difficult as our two children are about to enter the new school year, which will cost more money,” said Duc.

His wife, Do Thi Man, is an employee at Hanoi-based furniture manufacturer Narori Co., Ltd. Man is also working with a 20 per cent reduction in income since early this year due to the company’s difficulties.

Narori employs about 1,000 workers, about half of whom have had to work reduced hours, waiting patiently for a brighter outlook without daring to look for other employment from other companies.

“I once tried to look for another job, but failed as many other companies were also bogged down in difficulties, with thousands of workers like me are living in increased worries,” Man said.

According to the General Statistics Office (GSO), Vietnam’s index for industrial production (IIP) in July increased 3.9 per cent on-month and 3.7 per cent on-year. However, poor performance of many companies has caused an on-year 0.7 per cent fall in the first seven months of this year.

In the corresponding periods from 2019 and 2022, the on-year rate expanded 9.4, 2.6, 7.6, and 8.6 per cent, respectively.

“Such a grey situation has been attributed to the world economy facing massive difficulties in the first months of this year which have had negative impacts on the domestic production activities,” the GSO stated.

The IIP for processing and manufacturing, which creates more than 80 per cent of industrial growth, reduced 1 per cent compared to the same period last year when such IIP increased 9.5 per cent on-year.

The IIP of the electricity production and distribution climbed only 1.4 per cent on-year, while the IIP of the industry of water supply and waste management and treatment climbed 6.3 per cent, and the mining industry declined 1.2 per cent on-year.

In a specific case, difficulties have hit state-owned PetroVietnam hard. This group reported that its total six-month revenue is estimated to be $14.52 billion, down 8 per cent on-year.

PetroVietnam’s total export turnover in the first half of this year reached $1.17 billion, down 26 per cent on-year - including a reduction of 8 per cent in the first two months, 17 per cent in the first quarter, 21 per cent in the first four months, and 16 per cent in the first five months.

PetroVietnam’s production of some key products decreased on-year, such as crude oil (5.31 million tonnes – down 2 per cent); and production of nitrate (874,700 tonnes – down 6 per cent. Moreover, PetroVietnam’s consumption of some products also went down, such as liquefied petroleum gas (3 per cent), crude oil (3 per cent), and condensate (25 per cent).

Meanwhile, Electricity of Vietnam (EVN) has also reported a limited performance in the first six months of this year, when its gross industrial output is estimated to hit $8.08 billion, up only 1.77 per cent on-year. In which, electricity produced and purchased is estimated to be over 131 billion kWh, up merely 1.63 per cent, and commercialised electricity is estimated to total 118.92 billion kWh, up only 1.77 per cent.

EVN also reported that it is expected to continue facing increased difficulties in production and business activities due to a very high climb in assorted input materials. For example, the price of imported coal is set to increase by 2.32 times as compared to 2021, and 5.3 times over 2020; while the oil price is expected to increase by 1.22 times against 2021 and 2.06 times as compared to 2020. What is more, the exchange rate in 2023 is also forecast to stay higher than the average level of 2022 – affecting the group’s performance.

In July about 13,700 businesses were newly established, and registered at $5.28 billion, with total registered employees of nearly 79,000 – down by 1.2 per cent in the number of enterprises, 8.6 per cent in registered capital, and 24 per cent in the number of registered employee, respectively, compared to June.

In the first seven months of 2023, Vietnam saw 89,600 newly established businesses registered at $34.76 billion, using 589,000 workers. This was up by 0.2 per cent in the number of enterprises, but down 17.1 per cent in registered capital and 5.2 per cent in the number of employees compared to the same period last year.

Positive offsets found amid downbeat sentiment

Vietnam’s export landscape continues to regain momentum on account of gradually recovering demands, but risks are still looming.

The Ministry of Industry and Trade (MoIT) last week reported to the government that in July, total export turnover was estimated to sit at $29.68 billion, up 0.8 per cent on-month. Domestically invested exporters earned $7.76 billion, down 1.8 per cent; and foreign-invested exporters came at $21.92 billion, including crude oil exports up 1.7 per cent. Also in July, the total import and export turnover of goods was estimated at $57.21 billion, up 2.5 per cent over the previous month and down 6.7 per cent over the corresponding period last year.

Cumulatively, in the first seven months of this year, the country’s total export value hit $194.73 billion, down 10.6 per cent as compared to that in the same period last year. However, the MoIT said that this reduction is being narrowed down as it remains lower than the on-year reduction of 12.1 per cent in the first half of this year.

Under the General Statistics Office’s Q2 survey on enterprise performance, when it comes to orders, almost three-quarters said they expect a rise and stability in orders in Q3 as compared to Q2. Only just over one-quarter of respondents predicted a reduction in orders.

As for export orders, 73 per cent of enterprises said they expect a rise and stability in orders in Q3 as compared to Q2. Only 27 per cent projected a decrease in export orders.

One of the strong foundations for the respondents to believe in a brighter export outlook is that good signals from the major export markets, said the MoIT.

American multinational financial services firm J.P. Morgan also stated, “The US has avoided recession so far in 2023. The US economy, as measured by real GDP, has expanded at an estimated 1.5 to 2 per cent annualised pace through the first half of the year. While business sentiment has been downbeat and business investment has slowed, the upside to consumer spending has provided a positive offset.”

Meanwhile, the EU has also been boosting implementation of its NextGenerationEU, an €806 billion ($886.5 billion) temporary recovery instrument to help repair the immediate economic and social damage brought about by the pandemic.

However, according to the MoIT, though Vietnam’s export situation is regaining momentum, it is expected to face massive difficulties in the months to come due to the world economy forecasted to see slower-than-expected growth, leading to a slow-paced recovery in consumption demands.

More than a week ago, the International Monetary Fund issued its fresh forecast on the global economy outlook. “Global growth is projected to fall from an estimated 3.5 per cent in 2022 to 3 per cent in both 2023 and 2024. The rise in central bank policy rates to fight inflation continues to weigh on economic activity,” it said.

All regions worldwide are also predicted to see lower-than-2022 economic growth in 2023, such as the US (1.8 per cent for 2023 versus 2.1 per cent last year), the euro area (0.9 per cent versus 3.5 per cent), Japan (1.4 per cent versus 1 per cent), and other advanced economies (2 per cent versus 2.7 per cent).

This grey forecast would also mean demands for goods will not be able to bounce back remarkably from now until the year’s end, affecting Vietnam’s efforts to boost exports, according to the MoIT.

In the first seven months of this year, Vietnamese enterprises’ export turnover hit nearly $51.5 billion or an on-year reduction of 10.2 per cent – accounting for 26.4 per cent of the economy’s total export value. Foreign exporters’ export turnover including crude oil stood at nearly 143.23 billion, down 10.8 per cent on-year and creating 73.6 per cent of Vietnam’s export turnover.

The economy witnessed a seven-month trade surplus of $15.23 billion, not deemed a good signal as both exports and imports suffered from on-year value reduction at 10.6 and 17.1 per cent, respectively, especially in the current context that Vietnam is a trade-reliant economy.

Apparel, footwear on display at Magic Show in Las Vegas

A delegation from the Vietnam Textile and Apparel Association (VITAS) and the Vietnam Leather, Footwear and Handbag Association (LEFASO) joined the 16th edition of the Sourcing at Magic (Magic Show) in the US city of Las Vegas from August 7-9, with 20 stalls. 

As part of the 2023 National Trade Promotion Programme approved by the Vietnamese Minister of Industry and Trade, it was also one of the annual series of market research and survey activities conducted in the US. 

The Magic Show gathered textile, apparel, leather and footwear products, with thousands of exporters, importers, wholesalers, and retailers from the US and various other countries around the world taking part. Its aim is to establish stable and sustainable trading relationships and cooperation, recover and maintain the global supply chain, especially during the post-COVID-19 period.

Led by VITAS Vice President Truong Van Cam and LEFASO Vice President and Secretary General Phan Thi Thanh Xuan, the Vietnamese delegation consisted of 28 member enterprises.

 Trade Counsellor and head of the Vietnam Trade Office in the US Do Ngoc Hung said in the first five months of this year, Vietnam remained the US’s eighth largest trade partner while the US continued to be the biggest importer of Vietnam. Trade surplus between two countries neared 40 billion USD, only behind China and Mexico. 

At present, Vietnam ranks second in the list of the biggest exporters of apparel, leather and footwear to the US, just behind China. New orders in the last two quarters of this year indicate that 'Made in Vietnam' products are increasingly popular in the US.

Flaws in infrastructure hinder plans for LNG

The possibility that electricity generated from liquefied natural gas will replace coal-fired power is some way off, with infrastructure concerns regarding import operations coming to the fore.

Le Xuan Huyen, deputy general director of state-run oil and gas group PetroVietnam, last week authorised the publication of a 16-page report on sustainable energy development with a vision to 2050. The report highlighted the difficulty of establishing Vietnam’s liquefied natural gas (LNG) import infrastructure.

According to Ta Vu Duy Hoa, deputy director of PetroVietnam’s Economic and Investment Department, importing LNG is necessary to counteract the annual decline in domestic gas production.

His remark recalls a prediction made by the Ministry of Industry and Trade in 2019 regarding the possibility of Vietnam importing natural gas beginning in 2020. The ability to supply gas through the PM3-Ca Mau pipeline was expected to diminish in 2023 and cease supplying gas by 2028, at which point gas production onshore will drop.

As per Hoa, PetroVietnam is “maximising resources” in an effort to increase supply from two massive gas projects, Blue Whale and Block B, but the majority will not arrive before 2026. Vietnam’s domestic gas supply is dwindling, which is the primary cause of a decrease in the quantity of gas used by households to generate electricity.

In 2023, PetroVietnam will provide approximately 4.3 billion cubic metres of gas for power generation in the southeast region. In 2024, this will be reduced to 3.1 billion cu.m, and by 2030, it will fall to approximately one billion cu.m per year.

According to PetroVietnam’s data, recent initiatives that have run into difficulties have not significantly changed domestic gas production for many years. The operation plan for 2021 of the Block B gas project, the largest gas-to-power project chain in Vietnam, with an estimated annual production of 5.06 billion cu.m, is not as anticipated. Difficulties in the investment preparation of subsequent projects have caused inconsistency in this project chain.

In addition, the objective of obtaining the first gas supply from the Blue Whale gas-to-power project chain is unlikely to be met in 2023. The project operator, ExxonMobil, is waiting for a decision from the parent company after obtaining an official document sent to the government at the end of 2020 regarding not submitting development plans for engineering, procurement, and construction.

Vietnam requires modern infrastructure to import and store a sufficient quantity of LNG, guaranteeing the stable operation of 13 LNG power projects on the list of essential and prioritised projects in the power sector. According to the gas industry development plan towards 2035, Vietnam will import 1-4 billion cu.m of LNG per year between 2021 and 2025, and 6-10 billion cu.m annually from 2026.

Tran Anh Khoa, head of the source and market development at PetroVietnam Gas (PVGAS), stated that the import of LNG must progress in tandem with port infrastructure development in the country.

“The plan is to bring into operation a series of terminals by 2026, including My Son LNG Terminal, Northern LNG Terminal, and Thi Vai Terminal Phase 2; and increasing capacity to 3-5 million tonnes per year at the same time,” Khoa said.

Importing significant quantities of LNG in the immediate future is unlikely. Dr. Nguyen Quoc Thap, president of the Vietnam Petroleum Association, told VIR that Vietnam lacks experience in constructing and operating LNG terminals.

“Vietnam lacks a large-capacity LNG receiving port, a prerequisite for optimising the cost of constructing gas pipeline infrastructure between the port and power facilities,” Thap explained.

Vietnam is in the process of creating a model for a gas power centre as well as a terminal for LNG import and regasification.

“Importing LNG is an intricate issue, especially under the current conditions, where the exporter expects a long-term commitment and binding on output,” added Thap. “Vietnamese importers have not been able to make long-term commitments because, on the one hand, the government does not provide a guarantee and, on the other hand, they fear the risk of mortgaging the project’s cash flow.”

According to Thap, Vietnam imports LNG in a similar manner as other countries in the region and can learn from the likes of Thailand and South Korea. To reduce expenses in gas pipeline infrastructure between ports and power plants, lower electricity production costs, and optimise the system, these nations construct concentrations of LNG power plants with large receiving ports of at least six million tonnes of LNG per year.

In accordance with environmental criteria, they also select locations that are advantageous for the construction of an LNG terminal, Thap added.

Exhibitions help connect Vietnamese, Japanese enterprises

The 10th Vietnam-Japan Supporting Industries Exhibition (SIE) and the 14th Vietnam Manufacturing Expo (VME 2023) kicked off on August 9 in Hanoi, aiming to tighten the trade relationship of the two countries' enterprises in the supporting industry as well as promote the development of the industrial manufacturing sector in Vietnam.

The three-day events, which are jointly held by RX Tradex Vietnam, the Japan External Trade Organisation (JETRO) and the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, are expected to see the participation of over 200 manufacturers and distributors from 20 countries and territories.

Many activities will be arranged to support businesses and visitors in connecting with agents, distributors, and business partners within the framework of the events.

Chief representative of JETRO Office in Hanoi Takeo Nakajima said that 22 Japanese firms have expressed their desire to buy goods from local manufacturers while 28 Vietnamese manufacturers have displayed their products and introduced their supply capabilities to Japanese businesses.

Through these exhibitions, JETRO wishes to contribute to the development of the supporting industry in Vietnam, and assist Japanese businesses in seeking suitable suppliers, he said.

According to Watanabe Shige, Japanese Deputy Ambassador to Vietnam, if the supply of raw materials and accessories is stable, it will increase flexibility in supply, reduce costs, and improve capacity for supporting industry in Vietnam, thus, contributing to the development of the domestic manufacturing industry.

According to him, the Japanese government and businesses have been giving the best support to Vietnam's supporting industry, adding that Japanese enterprises who are investing in the Southeast Asian nation expect to improve technology and enhance quality management for Vietnamese counterparts.

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