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The garment and textile industry is seeing positive signals in orders after a difficult year. Export is expected to improve and drive economic growth this year. — VNA/VNS Photo Trần Việt |
Factories are hastening production from the first months of this year with improvements in orders coupled with tailwinds from improved consumption which are creating optimism for economic recovery after a long difficult period.
Unlike what happened in 2023, the garment and textile industry is seeing positive signals.
Vinatex Đà Nẵng returned to work right after the Tết Lunar New Year Holiday. The company’s director Nguyễn Tiếp Hiệp said they now had enough orders to ensure jobs for workers to the end of July, adding that the company would increase searches for orders, recruit more workers and increase incomes by VNĐ1-2 million per employee per month this year.
Simexco Đắk Lắk is hastening production and striving to complete 500 containers for export, mainly coffee, in two weeks after the traditional holiday. Lê Thanh Sơn, the company’s director said that the company targeted to export 125,000 tonnes of coffee this year.
Lộc Trời Group has also won a bid to export 60,000 tonnes of rice to Indonesia. The group has received export orders for the first half of this year.
Industrial production increased by 18.3 per cent in January. Export jumped by 42 per cent. These are positive early signals, Minister of Industry and Trade Phạm Hồng Diên said. Still, he added that the improvement is largely dependent on global political and economic developments.
According to VinaCapital chief economist Michael Kokalari, production accounted for nearly 25 per cent of Việt Nam’s gross domestic product (GDP), meaning that improved production will accelerate GDP growth.
Vietnamese economy will be boosted by increased production and higher consumption this year, thanks to improvements in employment in the manufacturing sector. Consumer confidence and domestic demand, which were weak in 2023 due to layoffs and real estate industry problems, will recover significantly.
Although consumer spending is not expected to grow strongly in the first quarter, it will be stronger in the latter half of this year.
Gabor Fluit, Chairman of the European Chamber of Commerce in Việt Nam (EuroCham), said that Việt Nam had emerged as a leading destination for investments, signalling the economic recovery on a wide scale. The prospect was promising but it would still require cautious observation, he said.
The business confidence index is still below average and more than one third of enterprises expected inefficient operation.
Minister of Planning and Investment Nguyễn Chí Dũng said risks were forecast to remain in 2024 from the world political and economic environment which would cloud Việt Nam’s economic recovery prospect.
The situation required prompt response and adaptation to take advantage of opportunities for breakthrough development and fuel growth momentum such as green economy, green growth, digital economy and circular economy in order to enhance internal capacity and economic resilience, he said.
He emphasised that the priorities should be on accelerating economic recovery, stabilising macroeconomic situation, controlling inflation and ensuring major balances. The focus would be placed on three drivers, including investment, export and consumption.
He said that it was necessary to keep a close watch on global and domestic developments to have timely response measures, besides continuing the implementation of support policies such as tax reductions and exemptions.
In addition, appropriate credit policies were needed to provide capital for the economy, direct capital flow into production and business, prioritised sectors and those which create growth momentum.
Credit institutions would be encouraged to cut costs and simplify lending procedures to further reduce rates and improve access to credit.
Tô Hoài Nam, Deputy President of Việt Nam Association of Small and Medium Sized Enterprises, said enterprises were optimistic about the economic recovery this year on the solutions of improving the business environment, enhancing national competitiveness and eliminating business barriers.
According to Jonathan Pincus, chief economist of the United Nations Development Programme (UNDP) in Việt Nam, the GDP growth target of over 6 per cent is achievable. Exports will remain the main driving force this year.
He added that many foreign investors were showing interest in investing in Việt Nam, especially in high-tech industries such as semiconductors and computer equipment which were positive signs. These investments would create significant momentum for growth when realised, he said.
Demand slumps for meat, eggs in HCM City
After the long Tết holiday, sales of meat and eggs in HCM City are falling due to limited demand and changes in consumer diets for the vegetarian month.
Many carts on the streets in HCM City are currently selling poultry eggs at very low prices, only VNĐ15,000-20,000/10 eggs. Markets and supermarkets are also selling eggs at much lower prices compared to before Tết.
Vương Quang Dũng, director of Vương Huỳnh Produce Commerce and Services Company Limited, which farms egg-laying chickens in Đồng Nai Province, said that about a month before Tết, chicken eggs were priced at VNĐ1,900 per egg, but then have gradually decreased to VNĐ1,300-1,500.
The decrease in poultry egg prices is due to bakeries switching from using fresh eggs to egg powder. Additionally, early Tết holidays for factory workers and extended school closures have led to a significant decline in demand, as cafeterias for workers and students are big buyers of eggs and meat.
The remaining egg stock from before Tết has not been fully consumed, so it will take another one to two weeks for egg prices to recover.
According to egg-laying chicken farms in the Southern region, at the current price level, farmers are facing losses of about VNĐ200 per egg.
Phạm Thị Huân, Chairwoman of the Board of Directors of Ba Huân Joint Stock Company, said that poultry egg supply after Tết was very abundant.
Trương Chí Thiện, CEO of Vĩnh Thành Đạt Food Joint Stock Company (V.Food), said that egg consumption was normally low in the first month of the lunar year, so V.Food was focusing more on processing egg products.
Not only poultry eggs, but demand for pork is also declining. Nguyễn Trí Công, Chairman of the Đồng Nai Livestock Association, noted a slight increase in pork prices, but demand had decreased by about 30 per cent year-on-year.
According to the Sales Department of the Hóc Môn Wholesale Market, the amount of pork entering the market on February 20 reached 337 tonnes (approximately 4,500 pigs), which was less than the average daily amount in 2023, which was 5,700 pigs.
However, compared to the first working day after Tết (February 15), with 2,180 pigs, the amount of pigs entering the market was recovering.
Regarding chicken, Nguyễn Văn Ngọc, vice chairman of the Southeast Poultry Association, said that demand was low because this was the vegetarian month (lunar January) and also many workers had not returned to work.
This had kept industrial chicken prices at low levels, ranging from VNĐ26,000-27,000/kg, causing farmers to lose from VNĐ4,000-5,000/kg.
Farmers had reduced their flocks by about 50 per cent due to prolonged losses, but they still could not push prices up.
Ngọc said the main reason was the competition from cheap imported chicken and organs.
On the other hand, the vegetarian food market was bustling because lunar January is the time when people's demand for vegetarian food is highest in the year. After a Tết holiday full of meat and fat, people seek more balanced and light meals.
Trần Công Phương Linh, Director of Saigon Vegetarian Food Company Limited, said that the company's production had increased two to three times compared to normal due to many supermarkets and stores placing large orders.
The Co.opmart supermarket chain has also launched promotional programs with a variety of vegetarian products, including spices and processed foods.
Vietjet opens new route connecting Ho Chi Minh City with Vientiane
Vietjet inaugurated a new route connecting Ho Chi Minh City with Vientiane (Laos) on February 25, expanding opportunities for economic development, tourism, and cultural exchange between the two neighbouring countries, Vietnam and Laos.
Souvannaseng Amphay, Deputy Consul General of Laos in Ho Chi Minh City, along with leaders from the Department of Civil Aviation of Laos, airports, Lao Airlines, locals and tourists participated in the opening ceremony and congratulated Vietjet on the launch of new route.
International financial institutions learn about Vietnamese market
A delegation of representatives from 14 international financial institutions led by Maybank Investment Banking Group (MIBG) recently visited Vietnam to learn about the local market, according to the Vietnam Chamber of Commerce and Industry (VCCI).
The two sides discussed investment potential of the Vietnamese market, especially the financial and business environment of small- and medium-sized enterprises (SMEs) or startups, where Maybank and other investment funds have strengths.
The MIBG is the largest financial and banking group in Malaysia and the fourth largest in ASEAN, with total assets of more than 200 billion USD.
Nguyen Manh Dung, head of institutional equities sales at Maybank, said that in Vietnam, the lender has been providing banking and securities services since 1996, and has also invested in and become a strategic shareholder of An Binh Commercial Joint Stock Bank since 2008. In addition, the group has been a credit partner of numerous domestic companies and corporations, typically Vingroup, Hoa Phat or Thaco.
The delegation also included representatives from other investment funds of Malaysia like LTH and KWAP, Thailand’s SCBAM and Asset Plus, Japan’s Nomura Asset Management, and Haitong International of China’s Hong Kong.
VCCI Vice President Nguyen Quang Vinh said that many corporations have been interested in and committed to investing in Vietnam which boasts a population of 100 million, an abundant young workforce, a stable socio-political environment, and important investment attraction policies of the State, in such fields as semiconductor, high-tech manufacturing, and clean energy.
In addition, Vietnam also has fundamental strengths in infrastructure and human resources, and its Government has issued strategies to pursue new fields such as technology, semiconductor, green economy, clean energy and startup investment, he added.
Agencies advised to foresee problems to boost public investment disbursement
To boost public investment disbursement in 2024, ministries, sectors, and localities need to foresee problems that may occur during the implementation of projects to take timely solutions, said an official of the Ministry of Finance (MoF).
Duong Ba Duc, Director of the MoF’s Investment Department, said to ensure the disbursement progress, the department has proposed the MoF instruct ministries, sectors, and localities to accelerate capital allocation and seriously carry out measures.
It has recommended ministries, sectors, and localities to allocate capital for projects in the order of priority, revoke capital in line with regulations, and provide enough funding for projects facing capital shortages.
The department has also asked for scientific and reality-matching allocation and registration of capital. Meanwhile, an appropriate level of funding should be given to newly-launched projects since they still need time for site clearance and invitation for bids, he noted.
In January, more than 16.93 trillion VND (687 million USD) in public investment capital sourced from the state budget was disbursed, equivalent to 2.46% of this year’s plan and 2.58% of the target set by the Prime Minister, higher than the respective rates of 1.72% and 1.81% recorded in the same period last year, according to the MoF.
Meanwhile, over 127.59 trillion VND from the state budget is set to be allocated to nationally important projects in 2024, including nearly 96.4 trillion VND from the central budget and 31.2 trillion VND from local budgets.
About 1 trillion VND was supplied to those projects as of January 31, statistics showed. The PM targets a public investment disbursement rate at 95% for 2024.
Duc considered this target as feasible as the sum of public investment this year is over 600 trillion VND, lower than last year’s figure. Besides, nationally important projects that connect regions and have ripple effect have had their procedures basically completed, providing grounds for better disbursement.
How to fully tap potential for durian exports to Chinese market
With existing advantages, greater attention is being given to improving Vietnamese durian quality so as to continue affirming its export position ,while engaging in the billion-dollar export industry in 2024, according to the Ministry of Agriculture and Rural Development (MoIT).
The whole country currently has more than 110,000 hectares of durian cultivation, yielding nearly 850,000 tons/year, most concentrated in the Central Highlands, Mekong Delta, Southeast and South Central coast.
The price advantage and popularity of import markets have put Vietnamese durian fruit in a higher position than many other crops such as pepper, dragon fruit, and rubber.
This has been seen from the results of durian exports in recent times as there is no agricultural product that has just reached the world market and has quickly brought in billions of dollars in turnover like durian.
Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetables Association (Vinafruit) said that among the markets consuming the most durian, China remains a potential market for Vietnamese durian fruit. In particular, while durian growing countries only harvest it seasonally, Vietnam can harvest it all year round, he emphasized.
However, the Chinese market currently has set out requirements for the quality of durian exports, therefore, if durian growers do not focus on product design and quality, it will be difficult to capitalize on highly lucrative export markets.
“Vietnamese relevant agencies need to conduct negotiations on the singing and market expansion for potential, high-value agricultural products. In the future, durian will have a large market share in nearby markets, because we have the advantage of geographical distance, lower costs as well as short transportation time," Nguyen said.
Exports show positive signs of recovery in early 2024
Export turnover in January 2024 is estimated to reach US$33.57 billion, up 6.7% from a month earlier and compared to the same period last year, January export turnover soared by 42%, according to the Ministry of Industry and Trade (MoIT).
Vietnamese exports to major export markets all recovered well during the first month of 2024. Notably, export turnover grew strongly and evenly in the agro- forestry- fishery sector, up to 98. 6% and the processing industry up 38.4%.
Many key export items in the processing industry achieved high growth rates, even posting a 2-3 digit increase, such as textiles and garments, which surged by 28.6%; wood and wood products by 74.6%; shoes of all kinds by 35%, and computers, electronic products and components by 57.4%.
Nguyen Dinh Dat, Director of the Department of Industry and Trade of Lang Son province, said that export activities in the province were vibrant over the initial month of this year, primarily focusing on agricultural products and fruits. Thanks to good regulation, there is no congestion in the import-export situation at border gates, with customs clearance being made for about nearly 400 vehicles/day on average, especially during the days leading up to the Lunar New Year.
Also in January, Vietnamese businesses won 10 bidding packages to supply over 300,000 tons of rice to Indonesia and the rice volume is set to be delivered to Indonesia right after the Lunar New Year.
In addition to Indonesia, the Republic of Korea (RoK) is also planning to allocate quotas to import rice from Vietnam in 2024. These contracts are creating great motivation for rice growers in the Mekong Delta provinces.
Ha Vu Son, director of the Department of Industry and Trade in the Mekong Delta city of Can Tho said that from February 15, Trung An Enterprise in the city exported the first batch of rice to Malaysia, while many others have also received orders from the RoK until the end of 2024.
Updated information from the Department of Agriculture and Rural Development in the Mekong Delta province of An Giang, GAP Cu Lao Gieang Cooperative in Cho Moi district has just completed exporting 13 tons of flat-seeded mangoes to the Korean market.
Not only mangoes, during the first days of the year, many durian shipments from An Giang were exported to international markets, raking in nearly US$2.2 billion in export turnover, representing a 4.8 fold increase over the same period from last year.
Increasing official exports associated with brand building
According to the MoIT, the world situation is forecast to continue to see major and unpredictable changes in 2024 with many intertwined opportunities and challenges.
The global economy is facing challenges from weak growth and high inflation, with growth expected to slow down mainly due to the tightened monetary policy over the past 2 years.
The instability and uncertainty of the global economy are at the highest level in many years, affecting macroeconomic stability and growth prospects of Vietnam - a highly open economy in the near future.
Therefore, functional units of the MoIT need to synchronously carry out trade promotion solutions, and make good use of market opening opportunities to boost exports to traditional and neighboring markets and partner markets that have signed Free Trade Agreements (FTAs), especially new generation FTAs.
This should be done with monitoring, updating, and ensuring the progress of customs clearance of agricultural goods at northern border gates after the Lunar New Year, while coordinating with ministries and local branches to intensify official export activities along with brand building.
Regarding import-export forecasts in 2024, Tran Thanh Hai, deputy head of the Import-Export Department under the MoIT said that the world context is anticipated to continue to encounter major and unforeseeable difficulties.
However, Tran Thanh Hai said that Vietnamese exports have plenty of opportunities to enjoy growth in 2024 as high inventories in many countries is gradually being resolved, while domestic enterprises continue to take advantage of the benefits from FTAs for imports and exports.
The Import-Export Department expects that the total export turnover in 2024 will increase by over 6% compared to 2023 and the trade balance will continue to record a trade surplus, Hai added.
VND6 trillion allocated for key projects in Dong Nai
The total investment capital for key projects in the southeastern province of Dong Nai is estimated at nearly VND6 trillion, up by 25% against the previous year.
The province has recently announced additional funding of VND4.9 trillion for key projects. Prior to this allocation, major projects had received over VND1 trillion in funds.
Currently, Dong Nai has 29 important projects underway, especially infrastructure. Among them are the Bien Hoa-Vung Tau Expressway, a riverside road along Dong Nai River and an axis road in Bien Hoa City.
Last year, around VND4.5 trillion was allocated for vital projects in the province. However, only VND3.3 trillion was disbursed, or 74% of the plan. The implementation of many key projects faced difficulties, primarily attributed to slow land clearance and a shortage of land for resettlement areas.
Mekong Delta property prices seen rising this year
Property prices in Vietnam’s Mekong Delta are projected to rise 5-10% this year, driven by a shortage of supply, according to industry experts.
Speaking at a conference on February 22, Pham Van Luan, vice chairman of the Can Tho Real Estate Association, said the prices of residences on the primary market would edge up while those in the secondary market are expected to remain stable.
High-end condominiums are anticipated to become a new trend for both residence and investment, garnering a positive response from the market.
Regarding land plots, Luan emphasized a significant price surge, particularly due to regulations prohibiting land from being divided into small lots in special designated urban areas, effective next year.
A ban on land subdivisions in special Class I, II, and III urban areas could give existing land development projects a boost in 2024 as land becomes scarcer, paving the way for more ready-built houses and condominiums.
In Can Tho City, the focus of supply will be on apartment segments, including social housing and high-end units, while suburban districts will dominate in land plots.
The positive market outlook is attributed to robust government policies, substantial public investment, and completion of vital infrastructure projects, attracting customers and investors from other regions. The real estate market in the Mekong Delta region of Vietnam is expected to attract remittances and additional funds from maturing bank deposits amid declining interest rates.
Duong Quoc Thuy, chairman of the Can Tho Real Estate Association, noted signs of improvement in Vietnam’s real estate market since late 2023, indicating a revitalized sector in the upcoming years. Thuy highlighted the revitalization of capital flow into the real estate sector following a period of tightening measures, with significant impacts from four interest rate cuts by the State Bank of Vietnam fostering conditions for growth and stability.
Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, emphasized the need for enhanced dissemination of information and guidance to facilitate proper implementation and mitigate violations.
Binh Dinh to invest VND7.3 trillion in Phu Cat airport expansion
The south-central province of Binh Dinh is making preparations for the Phu Cat airport expansion project.
The province will carry out three key construction components at a total cost of VND7.3 trillion.
In the first component, a second runway and other necessary infrastructure will be developed from 2024 to 2027, with around VND3,013 billion required, inclusive of spending on site clearance.
The second component involves the removal of military facilities to clear land for civil airport expansion from 2027 to 2032. It will require VND1,207 billion.
Funding for the first two components will be sourced from the State budget.
The third one focuses on the construction of the civil aviation area, encompassing the expansion of aircraft landing facilities, the construction of passenger terminal 3, airport operation buildings, parking lots, and jet fuel supply areas.
This component will be executed through a public-private partnership (PPP), with work slated to be executed from 2027 to 2032. The estimated cost of this phase is VND3,132 billion, sourced from both the state budget and the private sector.
Phu Cat airport is planned to serve as a domestic airport for both military and civilian purposes.
Latest drive to phase out red tape begins
The Government Office last week released a conclusion from the seventh meeting of the government’s Steering Committee on Administrative Reform. The conclusion underlined that the government, ministries, and localities must “remove all unnecessary business conditions” as soon as possible.
“Ministries and sectors are required to take the initiative in researching and reviewing all business conditions, and proposing the removal of conditional business conditions in the sectors that can apply other more effective management solutions. This task has to be completed before June because it is very urgent,” the conclusion stated.
“They are also ordered to promptly review and propose the eradication of business conditions that are unnecessary, infeasible, unclear, difficult to determine, and unsuitable to the reality. Also, they have to annul all unnecessary certificates, and reduce certificates overlapped in content, and this task has to be completed in Q2 of 2024,” the conclusion continued.
The government in 2024 has set out a mission in boosting administrative reform to “create new values, new impetuses, and new success”, with the public and enterprises being the biggest beneficiaries. Efforts are to be made to remove and decrease at least 10 per cent of compliance costs for administrative procedures and business regulations.
In 2024, the government will complete all decentralising administrative procedures that are subject to the power of the government and prime minister, ensuring that at least 70 per cent of public services will be provided online and the rate of people performs such services will be at least 40 per cent. Last year, the government cut, reduced, and simplified 340 business regulations; simplified 390 administrative procedures; and decentralised 156 procedures.
With such efforts, the government has achieved some achievements in public financial reforms. Specifically, state budget revenue exceeded about 8.12 per cent of the estimate, while exempting, reducing, extending taxes, fees, charges, and land rental of nearly $8.2 billion. At the same time, the government increased revenues and saved expenses, and set aside about $23.63 billion to contribute to resources that will be used for salary reform in the 2024-2026 period.
Disbursement of public investment capital hit $27.96 billion, the highest ever, reaching about 93 per cent of the initial plan. This is nearly $5.2 billion higher in absolute terms compared to 2022.
However, according to the General Statistics Office, in 2023, just over 89,000 businesses halted operations – up 20.7 per cent as compared to the previous year. Some 65,500 enterprises stopped operations and waited for dissolution procedures – up 28.9 per cent; and 14,400 enterprises completed such procedures.
According to the the American Chamber of Commerce (AmCham) in Hanoi, some regulations continue to introduce new administrative procedures such as licensing, approvals, and heavy reporting requirements. For example, there is still uncertainty and a lack of clarity regarding the requirements to obtain work permits for foreigners. AmCham encourages the government to clarify those elements of Vietnamese law that hinder the efficient deployment of foreign investment, and that any additional administrative burdens in draft laws and regulations be carefully considered and avoided whenever possible.
Meanwhile, Marko Walde, chief representative of AHK in Vietnam, Myanmar, Cambodia, and Laos, said that German businesses are boosting their presence in Vietnam both in direct investment and indirect investment. However, challenges remain.
“While mergers and acquisitions are an effective strategy for German companies aiming to enter or expand in the Vietnamese market, they may encounter certain challenges from a German perspective,” Walde said. “These challenges include cultural differences, legal and regulatory hurdles, due diligence complexities, and issues related to intellectual property and post-acquisition integration.”
Green transition creating challenges for garments and textiles SMEs
Vietnam has signed 16 free trade agreements (FTAs) with the international community, creating the conditions for firms to expand into new markets and boost profitability, while also posing numerous challenges with their increasingly stringent 'green growth' requirements.
The resulting push for a 'green transition' is creating mounting challenges to small- and medium-sized enterprises (SMEs) in the garments and textiles industry as export partners tighten their environmental protection requirements.
Pham Quang Anh, director of Dony Garment Co., Ltd. based in Ho Chi Minh City’s Tan Binh district, said, "The greatest difficulty lies in the supply chain as it goes beyond the influence of Vietnamese firms."
Of the many factors affecting green production, recycled materials play a crucial role, but they can be over 20 per cent more expensive than traditional resources.
The increasing cost of other factors such as machinery and accessories means the final production expense could be double that of similarly designed products using non-recycled materials.
According to Pham Van Viet, deputy chairman of Ho Chi Minh City Association of Garments, Textiles, Embroidery and Knitting, just 15 per cent of textile apparel firms have reportedlybeen or are embracing the green transition journey.
“These issues represent challenges, yet also opportunities, to the sector. Those who perform well can win the trust of their customers and secure long-term business deals,” said Viet.
Nguyen Thi Tuyet Mai, deputy general secretary of the Vietnam Textile Apparel Association, said, "Over 80 per cent of SMEs in the sector face a lack of finances to fully embrace the green transition, and complex regulations make businesses more hesitant to do so."
"Most businesses in the sector feel pressure to adhere to the new green requirements from their partners, particularly regarding rooftop energy requirements," said Hoang Thanh Nga, sustainable textile programme manager at WWF Vietnam.
Between 2019-2020, Vietnam witnessed a boom in the solar power development, followed by a halt in development, creating an impasse for investors, particularly regarding power-grid connections.
Currently, the green transition relies on several factors, such as technology concerns and economic efficiency, as businesses are unsure whether the required investment is just too big a risk at this time.
“It is a matter of access to capital. We have supported many businesses in this regard, but it is important to state clearly the potential role of banks in helping firms unlock more financing,” said Nga.
Many in the industry concede that the transition to more eco-friendly practices will be a lengthy exercise, spanning the breadth of the production process from design and fibre manufacturing, to dyeing and tailoring.
US considers upgrading Vietnam’s economy status
The US is considering the recognition of Vietnam as a market economy, which means that Vietnamese goods entering the US would avoid many risks caused by trade barriers.
US Ambassador to Vietnam Marc E. Knapper stated two weeks ago that the US government is currently reviewing Vietnam’s non-market economy status and its desire to receive market economy status.
“This is something our Department of Commerce (DoC) is working on. There is a 270-day deadline to do this, which began in October 2023. The US government is committed to an impartial and transparent process that is consistent with international rules,” Knapper said.
“We look forward to the continued effort by our DoC to do this. And we look forward to continuing to work with Vietnam as we deepen and strengthen even further our country’s trade and investment relationship.”
The review also includes a public comment period before a determination is made. Thus the US will conclude the review in around mid-July this year.
On September 8, the Vietnamese government filed an official request that the DoC consider it a market economy citing the country’s economic reforms made in recent years.
Since the first anti-dumping investigation involving Vietnam in 2002, the US has considered Vietnam a non-market economy. According to US regulations, the determination of a market economy status is based on six criteria set by the DoC.
These criteria include the currency conversion rate, wage and labour negotiation issues, foreign investment levels, state and private ownership, government control over resources and prices, and other relevant factors.
Currently, the US categorises 12 countries as non-market economies in trade defence cases, which has a significant impact on Vietnamese businesses, especially in anti-dumping investigations.
The US assesses a Vietnamese product’s value based on what it is worth in a third country (a market economy) and then assumes this is the likely production cost to a Vietnamese company, rather than using data provided by the company itself.
This calculation causes the dumping margin to be pushed up very high and does not actually reflect the situation of Vietnamese companies, according to the Centre for WTO and International Trade managed by the Vietnam Chamber of Commerce and Industry.
If recognised, the market economy status will help Vietnam shun anti-dumping duties by the US, and Vietnam would be able to make their products more competitive in the US market, also meaning that Vietnam’s export-oriented manufacturing sector will develop further.
At present, the US is among the key export markets of Vietnam. Two-way trade between Vietnam and the US increased from $450 million in 1995 when the two countries established their diplomatic relations, to $110.6 billion last year. Vietnam is the US’ eighth-largest trading partner and its largest trading partner in ASEAN, while the US is Vietnam’s second-largest trading partner and its top export market.
“Vietnam is the US’ eighth largest trading partner and our largest trading partner in ASEAN, we are Vietnam’s second largest trading partner. And we are also Vietnam’s number one export market. You know, we firmly believe in the importance of Vietnam in terms of global supply chains,” Ambassador Knapper said.
During a state visit to Vietnam last September by US President Joe Biden, the two countries elevated ties to a comprehensive strategic partnership. President Biden and Vietnam Party General Secretary Nguyen Phu Trong reaffirmed the importance of economic, trade, and investment cooperation and innovation-driven inclusive economic growth as the core foundations and sources of momentum in the bilateral relationship.
Both sides pledged to create stronger conditions and facilitate the further opening of markets for each other’s goods and services, support trade and economic policy, and regulatory measures to achieve this aim; and to address issues such as market access barriers via the Trade and Investment Framework Agreement, said a joint leaders’ statement released during the visit.
“The US applauds Vietnam’s progress in significant market-based economic reforms, and affirms its enthusiasm and commitment for a broad, strengthened, supportive, and constructive engagement with Vietnam in its transition to a market economy, and subsequently to market economy country status, under US law,” the statement added.
Under the joint statement, the US noted Vietnam requested the review of its market economy status last September. The US will review Vietnam’s request as expeditiously as possible, in accordance with US law.
The US appreciates Vietnam’s ongoing efforts to further modernise and enhance the transparency of its monetary policy and exchange rate management framework, to promote macroeconomic stability, and to ensure the safety and soundness of the banking system, the joint address noted.
At the same time, the US also committed to work with Vietnam to help it to develop the semiconductor industry and other high-tech industries, as well as to build a workforce for the 21st century in terms of computer scientists, engineers, and IT workers who can help to work in the high-tech economy that Vietnam and the US aspire to.
It is expected that in late March, Vietnam and the US will jointly organise a dialouge at the foreign ministerial level in order to continue materialise the shared strong commitments made in the comprehensive strategic partnership. According to the Vietnamese Ministry of Foreign Affairs, the Vietnamese side will continue working with the US about the recognition of Vietnam as a market economy.
To date, 72 countries including major economies such as Canada, Australia, Japan, and South Korea have recognised Vietnam as a market economy. Most recently, the UK recognised Vietnam’s market economy status in a formal letter when it joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This recognition ensures that the UK will not apply unfavourable rules to Vietnamese imports in cases of trade defence investigations.
Bamboo Airways to halt services to Con Dao Island in April
Bamboo Airways has announced that it will discontinue its services from Hanoi and HCMC to Con Dao Island, starting from April this year, according to the local media.
The decision follows the airline’s decision to terminate the lease of three Embraer E190 aircraft by the end of March. The move is in line with the restructuring plan presented to the Government by the privately-held carrier at the end of last year.
Starting in April, Bamboo Airways’ passenger aircraft fleet will consist of eight Airbus A320/321 aircraft, which might expand to 12-15 by the end of the year.
Upon returning the Embraer E190 aircraft, the airline will suspend all or part of its flight services on routes from Hanoi and HCMC to Con Dao, Hue, and from Hanoi to Dong Hoi.
The carrier will center on services between Hanoi and HCMC, and those connecting Hanoi and HCMC with Danang and other domestic destinations.
This is not the first time Bamboo Airways has suspended domestic services. Since the end of last year, the airline has reduced frequencies or ceased services on some poor-performing routes, such as those from Hanoi and HCMC to Phu Quoc, or from Hanoi to Ca Mau.
Vietjet signs deal for 20 A330neo aircraft at Singapore Airshow
Vietnamese carrier Vietjet Aviation JSC has inked a deal to purchase 20 A330neo aircraft from Airbus at the Singapore Airshow, the local media reported. This is Vietjet’s largest order for wide-body aircraft to date.
The new A330neo planes will replace Vietjet’s currently leased A330-300 fleet and support the privately-held airline’s expansion plan.
Christian Scherer, CEO of the Commercial Aircraft business of Airbus, said the A330neo would enable Vietjet to achieve the lowest possible operating costs. He emphasized the A330neo’s synergy with Vietjet’s existing A321XLR fleet, which will enhance the airline’s capacity for long-haul flights and providing passengers with extended travel options.
Dinh Viet Phuong, CEO of Vietjet, said the A330neo’s fuel efficiency and advanced features would support Vietjet’s sustainable development goals and help improve the flying experience of Vietjet passengers.
Strict management proposed over shipping cost increases
Three key associations in the logistics sector have asked the Government to tighten control over the fee adjustments imposed by foreign shipping lines, as these lines have consistently hiked container service fees by 10 to 20% since the beginning of this year.
The Vietnam Shippers’ Council (VNSC) has formally communicated with the Government and relevant industries, stressing the urgency of taking measures to regulate the adjustment of terminal handling charges (THC) by foreign shipping lines.
The Vietnam Logistics Business Association (VLA) has expressed concern over the current regulations, which only require foreign shipping lines to provide a notice 15 days before increasing surcharges, without any obligation to provide justification or undergo inspections by competent authorities. This regulatory gap poses a considerable challenge for businesses, according to the association.
To address this issue, VLA has proposed adopting regulations and international business practices to enhance the effectiveness of managing fee collections by foreign shipping lines.
Similarly, the Vietnam Ship Agents, Brokers, and Maritime Services Providers Association (Visaba) have voiced their apprehensions regarding the continuous hikes in surcharges by foreign shipping lines and have called for stricter control in this regard.
Visaba said that foreign shipping lines levy about 10 types of charges, the rates of which are determined at their own discretion.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes