Credit growth expected to approximate 14 percent: Central Bank

According to the State Bank of Vietnam (SBV), credit growth is expected to be about 14 percent this year.

However, the SBV still leaves open the question of whether it would adjust credit growth orientation pursuant to the country’s current situation to support businesses.

Meanwhile, the 2023 strategy report of many securities companies predicted that credit growth in 2023 will only reach about 13 percent. These companies announced that because of high lending interest rates, businesspersons dare not to borrow.

Besides, in the context of high interest rates, the feasibility of investment projects to expand the production of enterprises has also decreased. Banks, as borrowers, are certainly reluctant to provide loans to unfeasible projects.

This was shown in the State Bank of Vietnam’s latest survey that the same credit in the system is only expected to increase by 13.7 percent in 2025 by credit institutions.

In related news, analysts said that although there are still many pressures, the interest rate level, in general, is likely to gradually cool down from the second quarter of 2023; thereby, helping to reduce pressure on lending rates.

Currently, the group of state-owned commercial banks accounts for about 45 percent of the credit market share and capital mobilization market share of the system.

Therefore, the reduction of the deposit interest rate of this group of commercial banks will contribute to the reduction of the deposit interest rate level; thereby, helping banks to lower the cost of capital to reduce lending interest rates.

Over 7,800 autos imported via Haiphong port in January

Port of Haiphong Joint Stock Company has reported some 7,818 autos were imported through the Haiphong port in the first month of this year, increasing by 5,895 units over the same period in 2022.

More than half of the automobiles brought into Vietnam in January came through the port.

The country’s auto imports soared by 218.9% in volume and 148.9% in value year-on-year, with 14,457 vehicles totaling US$314.5 million.

Thailand was the largest auto exporter of the domestic market, with 6,693 units worth US$125.47 billion imported.

Indonesia and the U.S. came in second and third, with their respective volume of 6,176 and 432 units, respectively. China is now Vietnam’s fourth biggest car exporter.

The four nations accounted for 94.3% of Vietnam’s auto imports.

Cash burden alleviation now called for

The domestic real estate market is starting to recover, but it would benefit from more governmental assistance, such as softer bank loans and credit.

At the Real Estate Credit Conference hosted by the State Bank of Vietnam (SBV) last week, Le Trong Khuong, vice chairman of Hung Thinh Group said bonds are an excellent source of cash for companies. “Nonetheless, this mobilisation route is now blocked. Bondholders are concerned about the real estate developer’s viability, growth, and ability to reach customers,” Khuong said.

Thanh Hung, a resort real estate broker, said one project is in Dong Nai province is stuck. “My client is trapped, but I also warn him that the investor has not paid the broker’s fee. The investor proposed paying with real estate, but a simple calculation proved that the broker would lose considerable money, so he took the loss,” Hung said.

Nguyen Tung Anh, head of Credit Risk Research at FiinRatings said, “Bondholders need early buybacks, which strain the liquidity of real estate developers. In addition, legal procedures in the real estate market and issues with planning permission create delays for projects that cannot be made available for sale or generate greater cash flow.”

Pham Thieu Hoa, chairman of Vinhomes’ Board of Directors, commented on the company’s difficulties, “Real estate is exposed to a high risk coefficient of up to 200 per cent compared to conventional economic operations. Investors and consumers would be affected by the higher loan rates than in other sectors,” he said.

International investors who have entered Vietnam are nearly entirely inactive and in a holding pattern. In addition, high interest rates have an impact on the prices of newly introduced items.

Meanwhile, according to general director of Vietcombank Nguyen Thanh Tung, the objective of banks when engaging with companies is to create mutually beneficial relationships. “Commercial banks strive not to increase interest rates and attempt to implement the SBV’s directive to cut deposit rates, consequently decreasing lending interest rates to support the market and bolstering banks.”

However, in order to fund medium- and long-term capital, the capital market must be engaged in addition to the banking system. “Lately, corporate bonds have played a significant role, but owing to several challenges, the whole medium- and long-term capital demand has fallen severely on the banking system, producing difficulties for banks,” he said.

Nguyen Hung, general director of TPBank, said that the financial institution has operational efficiencies and rivalries with other banks but does not wish to anchor excessive interest rates. “However, objective variables such as global interest rates and inflation are quite high. The US dollar interest rate has risen by 3-4 per cent and has not yet hit its peak,” said Hung.

Chairman of the Ho Chi Minh City Real Estate Association, Le Hoang Chau, said, “Real estate enterprises do not fear the lending interest rates of commercial banks. We do not offer to minimise fees, and we do not offer to cut interest rates. Homebuyers are responsible for these costs since real estate companies include them in the asking price. Restructuring debt while preserving the debt group is now the most challenging aspect for real estate enterprises.”

According to Nguyen Hoang Dung, deputy general director of VietinBank, real estate companies must vigorously sell assets in order to self-structure. “Debt restructuring for real estate companies is inappropriate since this is a market issue. If there is a special system for real estate, other industry groups would want a debt structure as well, which would violate the idea of industry equality.”

The government has implemented a number of initiatives to help real estate businesses, such as Decision No.1435/QD-TTg to reduce impediments to the market.

Last December, the SBV also adopted a policy to relax the credit room from 1.5 to 2 per cent. The following month, it established the credit orientation to rise by around 14-15 per cent.

Yeah1 to establish new subsidiary

Yeah1 Group Corporation, whose YEG shares are traded on the Hochiminh Stock Exchange, will establish 1Production Co., Ltd whose VND2-billion charter capital is entirely contributed by Yeah1 Group.

The Yeah1 management board has passed a plan for contributing capital to the new subsidiary, the local media reported.

Earlier, the YEG board approved the transfer of shares of Yeah1 Edigital JSC (Y1D) and Netlink Vietnam Communication Technology JSC.

In specifics, YEG will acquire nearly four million Y1D shares at VND32,700 per share, or a 35% stake.

Besides, 63,000 shares of Netlink Vietnam, equivalent to a 35% stake, will be transferred to YEG. This deal is expected at over VND103 billion.

Y1D was founded in 2012 to connect community, and produce and release digital contents on social media platforms. Meanwhile, Netlink Vietnam was established in May 2020, operating in digital marketing.

On the local stock market, YEG closed unchanged at VND9,650 today, February 16.

Bright prospect for tra fish exports in 2023

Despite experiencing a sharp decline in the last quarter of 2022 and the first month of 2023, tra fish (pangasius) exports still see bright outlook this year, according to insiders.

Le Hang, director for communications at the Vietnam Association of Seafood Exporters and Producers (VASEP), said from October to December last year, tra export value decreased 12% from a year earlier to 457 million USD.  The decline continued to linger until the beginning of this year, with 50% in January.

However, she said tra fish exports are likely to enjoy good growth in the remaining months of the year thanks to increasing demand from Vietnam’s two largest markets, namely China and the US.

China's lifting of the Zero-COVID policy is facilitating the export of Vietnamese agricultural products, including tra fish, to this market, Hang was quoted by Nong Nghiep Viet Nam (Vietnam Agriculture) newspaper as saying.

The fact that Chinese consumers tend to prefer tra fish to tilapia, a key aquatic species raised in their country, is also a good opportunity for Vietnamese businesses to boost exports to the neighbouring country, she noted.

Sam Galletti, president of Southwind Food - a US seafood importer, predicted that consumption of pangasius and tilapia in the US market will rise this year thanks to stable supplies and affordable prices.

The lack of cod supply due to the sanctions against Russia and the reduction in catches will also pave the way for the export of other types of white fish to the US market. In addition, the US tends to import more tra fish fillets than tilapia fillets.

The exports of tra fish to other markets besides China and the US are also expected to rise.

Luu Van Khang, Commercial Counselor of Vietnam’s Trade Office in Mexico, said the shipment of Vietnamese tra and basa fish to the North American country enjoyed zero tariffs under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, describing it an opportunity for Vietnam to continue promoting tra fish exports to this market.

Last year, Mexico is the third largest market of Vietnamese tra fish with an export value of 105.1 million USD.

Strong 2022 export results set to continue on front foot

Vietnam’s goods export landscape for 2023 is expected to continue enjoying a surge as it did last year, on the back of a rebound in global demands and domestic production.

The Central Institute for Economic Management under the Ministry of Planning and Investment has sketched out two scenarios for the Vietnamese economy in 2023, based on the record goods export turnover of $371.5 earned last year – up 10.6 per cent on-year thanks to global demand rising, and also based on domestic production bouncing back.

Under the first scenario, the export turnover will increase 7.21 per cent, meaning $398.66 billion, while under the second scenario, the rate will be 8.43 per cent, or $403.2 billion.

According to a General Statistics Office (GSO) survey on manufacturing and processing businesses in Q4 of last year, 31.4 per cent of respondents said their production volume will increase in Q1 of 2023 against Q4 of last year, and the rate of those forecasting that their production will stabilise in Q1 of 2023 is 38.5 per cent.

When it comes to export orders, 42.7 per cent of surveyed enterprises predict that their export orders will stabilise in Q1 of this year. Only one-quarter of respondents project that these types of orders will increase in Q1.

The government has set a target that in 2023, Vietnam’s total goods export-import value will be about $795 billion, up about 8 per cent against this year. In which the export turnover will be $398 billion – up over 8 per cent on-year. The trade surplus will stay at about $1 billion, far lower than the $11.2 billion recorded last year.

In 2022, according to the Ministry of Industry and Trade (MoIT), Vietnam’s export-import turnover reached $732.5 billion – up 9.5 per cent on-year regardless of difficulties in export markets, especially the US, China, the EU, South Korea, and Japan.

The US, China, and the EU hold the biggest shares of Vietnam’s exports, at $109.1 billion (29.34 per cent), $58.4 billion (15.7 per cent), and $47.1 billion (12.7 per cent), respectively. Vietnam’s exports to these three economies last year also witnessed an on-year rise, standing at 13.3, 4.5, and 17.4 per cent, respectively.

In 2022, Vietnam also saw domestic exporters reap an export turnover of $95.09 billion – up 6.5 per cent on-year and accounting for 25.6 per cent of total export turnover, while foreign exporters harvested an export turnover of $276.76 billion (including crude oil exports) – representing an on-year climb of 12.1 per cent and responsible for 74.4 per cent of total.

According to the GSO, the biggest driver of Vietnam’s export turnover is the shipment of mobile phones and their spare parts, which last year fetched $59.29 billion, up 3.1 per cent on-year. In Vietnam, Samsung holds over 90 per cent of export turnover of these products.

Samsung and many other manufacturers of computers, laptops, and many other electronic products, such as LG, Canon, and Intel have exported these products with total turnover of $55.24 billion in 2022, up from $51 billion in 2021.

Elsewhere, revenues from crude oil exports sat at $3.34 billion, equivalent to 273 per cent of the year’s estimates and up 72.5 per cent on-year.

Nevertheless, many experts said that Vietnam’s new export target for this year may be unreachable due to various risks lingering that could affect the country’s trade.

According to the World Bank, global growth is estimated to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022.

Risks include growth slowdown or stagflation in main export markets, further commodity price shocks, continued disruption of global supply chains, or the emergence of new COVID-19 variants. Domestic challenges include continued labour shortages, the risk of higher inflation, and heightened financial sector risks, the World Bank warned.

The government has required the MoIT to seek solutions to boost exports and closely control imports, and take advantages of commitments in signed free trade agreements in order to expand export markets.

The MoIT is also ordered to direct Vietnam’s trade offices overseas to seek more information and demands from the markets where they are located to timely provide consultancy for the government and the prime minister on how to boost exports to these markets.

Pricing band to influence power tariffs across Vietnam

As Vietnam will shortly unify, regulate, and implement a variety of new systems governing power pricing and electricity transmission, losses at state-run Electricity of Vietnam should be reduced while simultaneously ensuring a dependable energy supply for growth.

The Ministry of Industry and Trade (MoIT) will determine the average retail power price hike for this year based on the implementation of the new average retail electricity pricing bracket beginning on February 3.

Officially implemented by the MoIT, the minimum average retail energy price bracket (excluding VAT) is 7 US cents per kWh and the highest price is 10 US cents per kWh. Hence, compared to the previous frame rate, the lowest price rose by 0.9 US cents per kWh, while the maximum price climbed by 2.3 US cents per kWh.

A week ago, Tran Viet Hoa, director of the MoIT’s Electricity Regulatory Authority of Vietnam, stated that the adaptation of the average retail cost of electricity has not directly altered the retail power prices for daily life and business but is the premise for EVN’s plans to modify the retail electricity price.

“The government has promulgated the average retail price bracket for electricity since the cost range of the average total retail price of electricity is no longer sufficient,” Hoa said. “We have not yet mirrored the volatility of model parameters to the cost of electricity production and business, particularly the fluctuation in fuel price.”

Production costs grow, yet as of 2022, Electricity of Vietnam (EVN) had not increased its power pricing. As of the end of 2021, the price of imported coal for power plants began to rise, and coal-fired power now accounts for around 40 per cent of EVN’s energy output, production, and business expenses.

In addition, the exchange rate disparities recognised in the power purchase agreement for 2019-2024 are expected to be exceeding $889 million, which must be allocated and included in the yearly cost of energy generation.

Two weeks ago, the MoIT delivered a paper demanding EVN promptly come up with a strategy for the average retail price of energy in 2023 and design a roadmap and an acceptable degree of adjustment if it is required to modify the price rise.

Two months ago, EVN had proposed to the MoIT to “raise the average retail price of electricity” in order to alleviate difficulties, balance the financial situation in 2023, and implement the market mechanism for electricity.

Nguyen Tai Anh, deputy general director of EVN, said its record loss of $1.33 billion puts a strain on the electrical industry’s financial status. The cause of the huge loss last year was the steep rise in input parameters (imported coal price, blended coal price, gas price, and global oil price) and the increased cost of purchasing electricity when power plants entered the electricity market.

EVN also forecasts that the financial outlook for 2023 would worsen if power prices remained unchanged. Consequently, power firms and National Power Transmission Corporation anticipate a production and commercial loss of around $2.75 billion.

Numerous analysts opined that the amount and timing of the rise in power rates must be carefully considered so as not to compromise the 2023 socioeconomic development goals established by the National Assembly.

Vice chairman of the Vietnam Electrical Engineering Association, Tran Dinh Long, said changing power tariffs now is fair. He specifically underlined that by evaluating when and how much is acceptable to maintain macro-balance, the power business does not incur losses and assures the endurance of energy users.

Hanoi among the 10 most costly capitals for real estate

Vietnam is among the 10 countries where capital-city real estate values are highest in relation to income, taking almost 45 years to purchase a home.

Early in February, NetCredit, an American technology business, published a report on the worldwide real estate market status in 73 capital cities from October 2021 to October 2022 that was based on more than 800,000 online home sale listings.

According to NetCredit, the average property price over the aforementioned time period ranged from $4,100 to $251,000 per square metre for both houses and flats.

Meanwhile, the General Statistics Office reported on January 10 that the average monthly salary of Vietnamese employees in December 2022 was $321, a rise of $40 on-year.

NetCredit estimates that due to the disparity between average income and housing costs in the capital, it takes residents an average of 45.1 years to purchase a home. Comparatively, in Bangkok, property prices are around $193,000, and it takes 28.5 years to own a property.

Experts explain that the discrepancy by stating that the major cities for real estate development have a wider gap between the high-end and low-income housing sectors.

Specifically, Nguyen Chi Thanh, vice president of the Vietnam Association of Realtors said, "The demand for social housing is quite high, but the market supply is indeed very limited."

He said that for a long time, despite the high demand, there were too few items in this market category, and that Vietnam has not totally resolved this issue.

According to Thanh, it will be difficult to lure investors into the building of social housing if the existing laws are maintained. This is because the investment method for social housing is identical to that for commercial housing, the only difference is that land use fees are not levied. These rules have made investing tough.

More bond issuers face debt repayment woes

Many bond issuing companies are having difficulty settling debt as poor business conditions, tough access to credit and difficulties in raising funds from the stock market have heavily affected their cash flows.

Hung Thinh Incons JSC called for a delay in paying principal and interest for a bond lot worth VND300 billion that fell due on December 31, 2022.

In its debt settlement plan, January 3 was the date for paying the bond principal and interest. However, it managed to pay only VND90 billion last month due to financial hardships plaguing the company.

The firm suggested that it would settle the balance in March.

Earlier, some other firms insisted on late repayments of bonds worth a total of VND471.5 billion. They comprised Hoang Anh Gia Lai JSC, Trung Nam Corporation, Binh Dinh Investment and Development JSC, and Duc Viet Company.

The total outstanding value of corporate bonds by the end of January 2023 amounted to VND1,190 trillion, showed data from the VCBS Securities Company.

The real estate and banking sectors accounted for most of the amount, at 37% and 32%, respectively.

Bonds worth some VND250 trillion would fall due this year, way below the figure in the third quarter last year, due to businesses’ early redemption of bonds, which resulted from the Finance Ministry’s draft decree amending Decree 65/2020, VCBS said.

The draft decree aims to boost transparency in the corporate bond market, in which it orders debt-issuing organizations to refund buyers if they violate their debt sale plan, use proceeds from bond sales for any purposes other than intended, or break laws.

In addition, they must disclose information on solvency, audited financial statements, and audited plans to use proceeds from bond sales for the intended purposes before and after a bond sale.

More Vietnamese farm products exported to Europe

The central province of Quang Tri shipped its first batch of 15 tons of organic rice at a price of US$1,800 per ton to the European Union (EU) on February 13.
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First ‘Dien’ pomelos from the northern province of Hoa Binh are available on the shelves of Longdan supermarkets in the United Kingdom

In the coming time, between 30 and 50 tons of this type of rice will be shipped to the European market every month.

The Ministry of Agriculture and Rural Development announced that the nation exported nearly 7.3 million tons of rice last year, earning US$3.54 billion, up 6.9 percent. 

Viet Nam still has many opportunities to increase the export of agricultural products, including fruits and vegetables, to the EU as it is the only country in the Asia Pacific region that has a free trade agreement with the EU. 

After the European-Viet Nam Free Trade Agreement (EVFTA) came into effect, the tax rate for many kinds of Vietnamese fruit and vegetables was reduced from 10-20 percent to zero.

The country has exported many kinds of fruits to the EU, including dragon fruit, passion fruit, coconut, durian, longan, lychee, mangosteen, and seedless lemon.

Earlier, the first batch of 11 tons of Dien pomelo from the Yen Thuy district was transported to the United Kingdom on February 9 by Longdan, the largest importer of Vietnamese products in this country.

Viet Nam has emerged as a major Southeast Asian supplier of farm produce and aquaculture products to the UK since the UK-Viet Nam Free Trade Agreement (UKVFTA) came into force on May 1, 2021.

As part of the UKVFTA, some 85.6 percent of tariff lines for goods imported by the UK from Viet Nam were eliminated in January 2021, and 99.2 percent will be removed by January 2027, according to the UK Department for International Trade.

The UK imports from Viet Nam amounted to US$6.06 billion last year, rising by 5.2 percent over 2021, reported the General Department of Viet Nam Customs.

Viet Nam urged to ensure exports to Asian, African markets in 2023
     
Vietnamese exporters need to ensure their capacity and maintain existing export markets, typically Asian and African outlets, amid many challenges in 2023, a senior trade official has said.

These challenges included a world economic recession, competition among major big economies, trade protectionism, inflation and rising interest rates, Le Hoang Oanh, Director of the Asia-Africa Market Department under the Ministry of Industry and Trade, said.

To do so, firms must make sure that their products meet the quality requirements of exported goods and shipped goods, which Asiam and African markets need rather than what they have, Oanh told congthuong.vn.

She said open export procedures, convenient logistics services, and updated information about the import policies of the host country would also be necessary to facilitate exports to these markets.

According to the official, ensuring raw materials would play a key role for exporters, especially those exporting textiles and garments to China and South Korea and others shipping seafood products to South Asia and Southeast Asia.

Input materials for production needed to be diversified to avoid dependence on one or several markets, she added.

In 2023, Oanh encouraged exporters to continue promoting their exports to some lucrative markets such as China and India. In China, firms should pay attention to the Yunnan market.

Guangxi and Yunnan have the same population of about 50 million people but the scale of Viet Nam's trade with Yunnan in 2022 reached only US$3.2 billion compared to the country's $30 billion trade with Guangxi, she explained.

Meanwhile, India is also a potential market with considerable purchasing power and market demand thanks to a population of 1.4 billion people. Annually, India imported about $560 billion worth of goods. However, Viet Nam's exports made up only 1.4 per cent of the country's total import value of $8 billion.

Besides the markets mentioned above, Oanh also advised exporters to look to African markets, which have much untapped opportunities for them to accelerate their exports, as Viet Nam only accounted for 0.6 per cent of Africa's import turnover worth $600 billion per year.

Viet Nam’s merchandise trade with Asia reached $475.29 billion in 2022, increasing by 9.6 per cent compared to 2021 and accounting for the highest proportion (65.1 per cent) in the country's total import-export value.

Major trade partners of Viet Nam in Asia include China, South Korea, Japan, and the Association of Southeast Asian Nations (ASEAN).

Last year, the value of imports and exports between Viet Nam and Africa was $8.1 billion, down 3.9 per cent. 

Dragon Capital clarifies information relating to EIB shares
     
Dragon Capital Vietfund Management was recently informed by securities firms that the authorities had requested them to provide transaction information of Eximbank's EIB shares, which were listed on the Hồ Chí Minh Stock Exchange (HoSE), in 2022. 

In the official dispatch that the Investigative Agency of the HCM City Police sent to a number of securities companies, it requested that they provide evidence and documents related to the case being investigated and verified according to the source of the denunciation on "stock market manipulation." The institutional investor referred to is Vietnam Enterprise Investment Limited (VEIL).

VEIL is a closed-end fund managed by Dragon Capital, established in 1995, and is currently the oldest fund operating in the Vietnamese market. VEIL's net asset value (NAV) is now more than US$1.7 billion. The London Stock Exchange presently trades VEIL fund certificates.

ACB Securities Company (ACBS) released a statement on the evening of February 10 in which it claimed to have learned that some forums and groups had posted photos and misrepresented claims that the ACBS had participated in certain EIB share transactions.

ACBS declared it had not participated in any transaction or violated the law related to the trading of EIB. During its operation, ACBS always complied with the regulations of the SSC and the competent state agencies.

"Providing false information about ACBS is regarded as fraud and harms the company's reputation and brand. People and organisations who give false information must be held accountable in court," according to the statement from ACBS.

In the market, EIB shares unexpectedly faced strong selling pressure in the February 10 session, especially in the ATC session. They then ended the session at the floor price of VNĐ22,950 per share, equivalent to a loss of 18 per cent from the beginning of the year. 

Since January, EIB shares have recorded several sessions where put-through volumes were many times higher than the matching transactions.

Hung Thinh rejects rumors of paying salaries by vouchers

Real estate developer Hung Thinh Corporation has denied rumors that the firm is paying salaries by real estate vouchers.

An image of a document that went viral on social media showed that part of the employees’ salaries of Hung Thinh Corporation and its affiliated companies would be paid in the form of real estate vouchers from January.

Hung Thinh told the news site at Congthuong.vn that while a financial crunch is being faced by all real estate firms, the company does not have such a pay policy and still pays its staff in cash.

In its financial statements for the fiscal 2022 fourth quarter, the firm posted over VND1.2 trillion in net revenue for the fourth quarter alone and VND5.4 trillion for the whole year, achieving 73% of its full-year target.

Real estate liquidity problems have forced enterprises in the sector to change business plans, downsize and shelve investment activities, projects and initial public offering plans, said Le Hoang Chau, chairman of the HCMC Real Estate Association.

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