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VIETNAM BUSINESS NEWS AUGUST 15

Phu Quoc welcomes increasing investment in urban development
Phu Quoc welcomes increasing investment in urban development hinh anh 1
Attracting large capital for urban development is essential for Phu Quoc city, which houses Phu Quoc island – Vietnam's largest off the southern province of Kien Giang, serving its diverse and sustainable growth after years of investing in the entertainment-resort tourism industry.

A survey by the Vietnam Institute of Real Estate Studies (VIRES) showed that, in the past 3-5 years, over 90% of investors participated in the market’s tourism-resort realty segment. However, at the moment, the focus of investment has shifted to urban projects boasting transparent legality, with over 60% of investors interested in this segment. The vast majority of them chose long-term investment, expecting that the projects’ prices will increase many times in the coming years.

According to the Vietnam Institute for Urban and Rural Planning (VIUP), the city’s overall planning orientation to 2040 covers 12 development zones based on landscape features, natural ecology, topographical features, and other conditions.

Forecasting Phu Quoc’s real estate market for 2022 - 2025, Nguyen Van Dinh, Vice President of the Vietnam National Real Estate Association, said the local urban and residential segment, due to its scarcity and development potential, will still attract the attention of investors across the country, especially regarding mainstream projects with good quality infrastructure, beautiful landscape, and effective business exploitation.

US$5.1 billion Long Son Petrochemical Complex nears completion

Long Son Petrochemical Complex Project, which has received US$5.1 billion in investment, is taking shape in Ba Ria – Vung Tau, with 96.2% of the workload completed.

Workers are now putting the finishing touches to a number of sub-components of the project which is scheduled to be partially put into operation by the end of this year.

The Ministry of Industry and Trade reports that the overall quality of the construction works fully meets the requirements through a number of appraisals and inspections conducted by various relevant agencies since 2019.

Featuring initial investment capital of US$3.7 billion, Long Son Petrochemical Complex was first launched in 2008 with the involvement of numerous local businesses, including the Vietnam Oil and Gas Group (PetroVietnam) and the Vietnam Chemical Group, both of which account for 29% of charter capital.

Notable foreign partners include Siam Cement Group (SCG), Qatar Petroleum Company, Vina SCG Chemicals Company Limited (VSCG), and Thai Plastic and Chemicals Public Company Limited (TPC).

By June 2018, the Southern Petrochemical Complex became an entirely Thai invested project with an investment capital scale of roughly US$5.1 billion. The project has an annual capacity of 1.35 million tonnes of olefins and 1.4 million tonnes of polyolefins.

Vietnam Airlines opens ticket sales for upcoming Tet Holiday

Vietnam Airlines Group, which manages Vietnam Airlines, Pacific Airlines and VASCO, has opened ticket sales for Lunar New Year (Tet) Holiday in the period from January 6 to February 5, 2023.

Tickets have been available on Vietnam Airlines’ website, mobile app and official ticket offices and agents nationwide from August 15.

Along with domestic flights, the carrier will increase flights connecting Vietnam and Asian countries such as Singapore, Thailand, Laos, Cambodia, the Republic of Korea, and those between Vietnam and Australia.

It plans to double its international flight number in the period amid the loosening migration regulations in many countries and territories.

On the occasion, Vietnam Airlines offers special ticket fare from 1.86 million VND (79.48 USD) per leg, including taxes and fees, for business class; and 785,000 VND per leg, including taxes and fees, for economy class.

The promotion is applicable for flights from January 14 to February 5, 2023.

Tech-product distributors, retailers see strong rebound in July

Mobile phone and laptop distributors and retailers reported good revenue and profit in July, showing that business activity of companies operating in this field are on the rebound from the COVID-19 pandemic.

According to surveys by Bao Viet Securities JSC (BVSC) with Digital World JSC (DGW) and PetroVietnam General Services JSC Corporation (PET) - the two big laptop and mobile phone distributors in Vietnam, leaders of these firms said that they all saw signs of recovery in the demand for laptops and mobile phones in July.

The revenue from laptop sales of DGW in the month increased by 5% over the same period last year, and is forecast to continue recovering in August and September. Meanwhile, mobile phone revenue surged 105% year on year as consumption last year was heavily affected by pandemic-induced restrictions. 

PET also confirmed the same trend although it has not yet released its preliminary business data for July.

According to BVSC's estimates, mobile phone revenue in the second quarter of 2022 in Vietnam increased by 15.2% year-on-year, reaching 26.8 trillion VND (1.145 billion USD), but was down 4.2 trillion VND compared to that reported in the first quarter.   

Vietnam’s mobile phone revenue is estimated to grow 13.4% year-on-year in the first half of 2022 to 57.9 trillion VND.

However, according to SSI Securities JSC (SSI), inflation has affected purchasing power, forcing consumers to cut spending on non-essential items from the second quarter of 2022.

SSI forecasts that big companies will gain more market share thanks to their strong bargaining power with suppliers, allowing them to mitigate the impact of higher cost of goods and thereby offer more discounts to customers in the context of inflationary pressure.

Bus fares decline sluggishly

The Saigon Railway Transport Joint Stock Company, on the afternoon of August 11, said that it adjusted rail fares to support passengers after gasoline prices had decreased sharply from the beginning of July.

Meanwhile, bus fares have not changed much. A representative of Grab said the company had been striving to keep the price to continue to monitor the market.

According to a representative of Mien Tay Bus Station, four transport enterprises have applied for a discount of 6-12 percent, including Kumho Samco Buslines Transport Company, Hoa Mai Transport Travel Service Company, Toan Thang Transport Company Limited, which operates on the Ho Chi Minh City - Vung Tau route, and the Rach Gia Branch Cooperative, which operates on the HCMC - Kien Giang route.

Similarly, a representative of Mien Dong Bus Station said he had recently received a proposal to adjust bus fares from Hong Son Transport Enterprise, which transports passengers on the HCMC - Tuy Hoa route, reducing VND10,000 per ticket. However, these passenger transport companies have registered to lower their fares from August 2. So far, no other transport enterprises have submitted to decrease their bus fares.

The leader of the Department of Transport of HCMC said that local taxi companies have been considering adjusting the fare to suit the actual situation. If the transport enterprises increase or decrease their ticket prices by less than 3 percent, they do not have to report to the department. If the adjustment is above 3 percent, they must report to the department and receive approval before changing their fares.

On the same day, representatives of some airlines, namely Vietnam Airlines, Pacific Airlines, and Vietravel Airlines, said that there are many promotions and discounts for customers from then until the end of the year. For example, flights departing from HCMC to Hanoi and Da Nang, and vice versa, will cost from VND109,000 to VND380,000 per way, excluding taxes and fees. Besides, airlines have also launched more promotions on Tuesday, Wednesday, and Thursday every week. 

Vietnam’s exports to EU increase robustly

At the Conference on Market Information and Connection with the European Distribution System (EU) held on August 11, Ms. Nguyen Thao Hien, Deputy Director of the European-American Market Department under the Ministry of Industry and Trade, said that in the first month of 2022, 

Vietnam's export turnover to the EU market increased drastically, estimated at US$27.9 billion, up 22 percent over the same period last year.

Currently, Vietnam's export products are available in most markets in the EU and have recorded good growth, focusing strongly on products such as textiles, footwear, coffee, seafood, vegetables and fruits, black pepper, and rice. Among these, coffee posted the strongest growth, with an increase of 75.2 percent, followed by seafood and black pepper, with 42.1 percent and 43.9 percent, respectively, over the same period last year.

According to experts, the EU-Vietnam Free Trade Agreement (EVFTA), which took effect from August 2020, has created leverage to promote two-way trade between Vietnam and the EU, significantly helping Vietnamese goods improve competitiveness and expand market share in the EU market.

Ample room remains for Vietnam’s exports to EU

There is still a lot of room for Vietnamese goods to expand their presence in the European Union (EU) market, but accessing its retail distribution systems is extremely important, heard a seminar in Ho Chi Minh City on August 11.

Two years since the agreement took effect, the EVFTA does not only promote bilateral trade but also provides an advantage for the business communities of both sides in the context of fluctuating markets and the impact of the pandemic, as well as regional and global geopolitical uncertainties.

According to Hien, the ability of businesses to take advantage of incentives from the agreement is also gradually improving after two years.

Statistics from the MoIT showed that the rate of enterprises using preferential certificates of origin under the EVFTA agreement reached 20.7% in the second year compared with 14.8% in the first year.

Finance Ministry aims for modern, transparent digital financial ecosystem by 2030

The Ministry of Finance sets to develop the foundation for a modern and transparent digital financial ecosystem based on big data and open data by 2025, according to the ministry’s digital transformation plan to 2025 with orientation to 2030 newly-signed by Minister Ho Duc Phoc.

By 2030, the ministry aims to establish a developed digital financial ecosystem with cyber security and efficiency.

The overall objective is to accelerate digital transformation in tandem with building a sustainable, advanced and globally-integrated national financial system in an effort to boost growth, enhance resilience of the economy, and maintain macro-economic stability and financial security.

The ministry plans to apply Fourth Industrial Revolution technologies and inherit what has been done in building an e-Government in a bid to step-by-step digitally transform the finance sector, provide digital financial services and play a part in developing a digital economy and society.

It will cut down the number of public administrative procedures, and reform, simplify and standardise public financial services to reduce costs and improve service quality and productivity by 2025. Accordingly, public administrative services will be done online, providing citizens with paperless and more convenient experience.

The ministry also intends to step up the implementation of the National Single Window and the ASEAN Single Window to facilitate trade.

Vietnam accelerating digital transformation in new-style rural building

The Government has approved a national programme on digital transformation in building new-style rural areas, towards smart rural development, for the 2021 – 2025 period.

The programme will be implemented in all rural areas across Vietnam by the end of 2025, including extremely disadvantaged communes in ethnic minority and mountainous and coastal regions.

It aims to accelerate digital transformation to enhance the effectiveness of the national target programme on new-style rural building, contributing to boosting rural economy, improving rural living standards, and bridging gap in service quality between rural and urban areas.

A goal by 2025 is to have at least 90% of central, 80% of district-level and 60% communal public documents handled online and at least 97% of communes meeting the new-style rural criteria on information and telecommunications.

HCMC to phase out manual toll collection

The number of vehicles using electronic toll collection (ETC) service has surged since early August, so HCMC plans to phase out toll collection by cash.

The HCMC Department of Transport said during the first week of ETC being made mandatory throughout the country, 849,631 vehicles passed through three toll stations in HCMC, namely An Suong-An Lac, the Hanoi Highway and the Phu My Bridge. Over 75% of them used the ETC lanes.

The ETC toll collection rate has grown sharply, reaching 73.6% at the An Suong-An Lac station, 85.7% at the Hanoi Highway station, and 73.6% at the Phu My Bridge station.

According to the Department of Transport, the Hanoi Highway and Phu My Bridge toll stations have been operating smoothly since the first day of ETC toll collection.

White-leg shrimp exports to RoK surge in first half

Vietnamese shrimp exports to the Republic of Korea (RoK) during the first half of the year soared by 38% year on year to reach over US$231 million, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Most notably, white-leg shrimp and tiger prawn accounted for 86.7% and 3.1% of total Vietnamese shrimp exports to the RoK, respectively.

The export value of fresh and frozen white-leg shrimp to the RoK market saw the strongest growth with 51% against the same period from last year.

The average export price of frozen white-leg shrimp ranged between US$8.8 - 9.2 per kilo, while the export price of frozen tiger prawns hovered between US$7.9 - 15 per kilo.

Statistics compiled by the International Trade Centre (ITC) reveal that the RoK imported shrimp products worth over US$384 million in the Jan. – May period, representing a rise of 21% compared to last year’s corresponding period. It moved to increase shrimp imports from Vietnam and Canada, while decreasing imports from Thailand and Ecuador.

Vietnam remained the largest shrimp supplier to the RoK with an overwhelming market share of 45%, while other rivals such as Canada, China, and Ecuador made up a market share of 11%, 8%, and 7%, respectively.

Viet Nam to increase coal imports in 2025-35: Ministry
     
Viet Nam’s coal imports are forecast to rise to meet domestic production demand, according to a draft strategy for developing the coal industry in Viet Nam recently introduced by the Ministry of Industry and Trade (MoIT).

Accordingly, Viet Nam will import about 50-83 million tonnes of coal per year during the period from 2025 to 2035, with the volume gradually falling to about 32-35 million tonnes by 2045.

The data from the MoIT shows domestic coal consumption increased rapidly from 27.8 million tonnes in 2011 to 38.77 million tonnes in 2015, and about 53.52 million tonnes in 2021.

The volume of coal consumed at present has more than doubled compared to 2011, mainly for electricity production.

The demand for primary energy, including coal, will continue to increase, possibly peaking in the 2030-35 period, the ministry said.

Viet Nam's coal demand will be around 94-97 million tonnes in 2025, and peak at 125-127 million tonnes in 2030, mainly due to the increase in demand for power generation, and the cement, metallurgy and chemical industries.

Cashew industry urged to focus on markets with FTAs

The cashew industry should focus on markets in which Viet Nam had signed trade deals to take advantage of preferential tariffs and expand exports as inflation had pushed up the prices of raw materials and forced people to tighten spending, according to the Viet Nam Cashew Association.

Statistics of the Import-Export Department under the Ministry of Industry and Trade showed that cashew exports were estimated at 294,000 tonnes, worth US$1.76 billion in January-July, dropping by 10.5 per cent in volume and 12.1 per cent in value against the same period last year.

While the average export price increased by 1.45 per cent against the same period last year to $5,792 per tonne, the price of raw cashews rose by 15-20 per cent.

The department predicted that cashew exports would continue to struggle in the third quarter due to rising inflation, which was taking place in big economies and forced people to tighten spending.

Sharing the same viewpoint, the Viet Nam Cashew Association also said that cashew exports would continue to drop in the following months, even to the end of this year.

The association said that inflation was badly hitting the import markets of cashews such as the US and the EU.

In this context, the association had to lower its annual export target from $3.8 billion to $3.2 billion, around $400 million lower than the export revenue for 2021.

There was room to promote cashew export in the medium and long term, providing that Viet Nam enhance the product quality and consolidate the brands.

According to the Import-Export Department, global cashew exports are forecast to grow 4.6 per cent per year in the 2022-27 period, along with the worldwide trend of vegan and plant-based diets, favouring alternative protein sources.

Direction for disbursement tightened after mixed results

Despite the challenges surrounding various projects, public investment disbursement has continued to be prioritised as a key task for the country to boost economic growth.

According to the Ministry of Finance, the disbursement of the state budget capital as of the end of July stood at nearly $8.1 billion, accounting for 34.47 per cent of the yearly plan and a slight on-year reduction. Of this, one centrally-run agency and 11 localities reported disbursement at more than 50 per cent, 17 ministries and agencies have reported less than 10 per cent, and the remaining met the national average.

Specifically, in Ho Chi Minh City, the disbursement of public investment in the first seven months accounted for about 15 per cent of the total allocated capital or almost $1.4 billion. This figure includes $108 million from the central budget and $1.28 billion from local funds.

Many important works in the city have yet to expense anything, including one project for green traffic development, a water improvement initiative in the Tau Hu-Ben Nghe-Doi-Te canal basin, compensation and resettlement support for metro line 2 (Ben Thanh-Tham Luong), and an environmental sanitation project.

Room for agro-exports to grow through EVFTA deal

While the export turnover of agro-products has taken off since 2020’s arrival of the EU-Vietnam Free Trade Agreement, ample room still remains neglected due to failure to meet the demand for quality.

Vietnam’s agricultural exports to the European market increased rapidly from over $4.5 billion in 2020 to $5.2 billion in 2021. The figure in the first half of this year, meanwhile, has hit nearly $3 billion. The EU is one of the four major export markets for Vietnam's agricultural, forestry, and fishery products and some of Vietnam’s key agricultural items are exported to the EU, such as coffee, pepper, seafood, cashew nuts, and wood and wooden products.

The market’s room is large, but, in reality, the export turnover of Vietnam’s agro-products makes up a tiny part of all agro-products entering the EU.

Domestic agro-product exporters also admired that instability and failure in products’ quality is also another barrier for agro-products to set a solid position in the market with approximately 800 million people.

In the first five months of this year, the export turnover of rice to the EU has made up just 0.5 per cent of the total export value of the whole country overseas.

Nevertheless, the EVFTA is set to paint a bright future for Vietnamese rice. As part of the agreement, the EU offers Vietnam a quota of 80,000 tonnes of rice a year, subject to zero tariff rates, comprising 30,000 tonnes of husked rice, 20,000 tonnes of unhusked rice, and 30,000 tonnes of the fragrant variety, according to the Ministry of Industry and Trade.

The EU will also fully liberalise the trade of broken rice, helping Vietnam export an estimated 100,000 tonnes there annually.

Constituting a healthy corporate bond market

Greater efforts are being exerted into instituting a transparent corporate bond market and radically tackling violations in corporate bond trading, which are common in the market.

The Ministry of Finance (MoF) is working on perfecting governmental Decree No.153/2020/ND-CP which regulates privately-placed corporate bond issuances.

One of the highlights of the amended decree is gearing individual professional investors’ attention to bond products of better quality, mandating enhanced conditions from service providers, and adding regulations about the rights and responsibilities of market supervisory bodies.

Accordingly, in light of the proposed amended Decree, individual professional investors need to possess a bond value touching VND1 billion ($43,470), stock investment value reaching VND2 billion ($86,950), and an account value (not using margins) maintained at least six months.

In addition, investors must clearly understand the conditions, clauses, and risks associated with the bond investment, and ensure to fully abide by regulations before engaging in privately-placed corporate bond trading.

To ensure the corporate bond market’s sustainable development, industry experts proposed that the MoF should introduce solutions to spur the development of intermediary financial institutions such as insurance firms, investment funds, and pension fund systems in order to fuel market demand as well as create safe investment channels to individual investors.

For its part, the MoF unveiled that it would require the State Securities Commission to review and appraise the operation of stock investment funds and bond investment funds in the direction of stimulating the participation of these funds in the corporate bond market and encouraging individual investors to join the corporate bond market resorting to such investment funds to mitigate risk.

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

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