VIETNAM BUSINESS NEWS FEBRUARY 9/2023
Economist Nguyen Tri Hieu told a roundtable titled “New Investments amid New Volatility” held in Hanoi on February 7 that looking back at 2022, from the beginning of the year, the economy recovered with growth and strong lending by banks. But, by the end of the year, the economy has shown signs of slowing down due to very strong impacts from both external and internal factors.
He said that this was shown in financial markets such as the stock market losing more than 30% of its value; frozen corporate bond and real estate markets; the gold market fluctuating very strongly and banks raising interest rates to attract capital because deposits were low compared to credit growth.
The State Bank of Vietnam also had to expand the credit room many times for banks. By the end of last year, the credit ceiling was increased to 15.5% and 16%.
Le Trong Minh, Editor-in-chief of Dau Tu (Vietnam Investment) Newspaper, said the investment environment in Vietnam has changed a lot.
Meanwhile, Thai Viet Dung, Director of Exness Vietnam, said 2023 could be a tumultuous year for investors as the conflict between Ukraine and Russia continues to worsen, and the COVID-19 pandemic has not completely disappeared. In addition, inflation is high, countries are tightening monetary policies, and there are mass layoffs at large global technology companies.
Talking about new investments in the difficult context, Hieu said in the five markets of securities, real estate, banks, foreign exchange and gold, the stock market will see little sign of recovery and will not be able to return to the 1,500-point mark as in 2022. However, the situation may improve more positively by the end of 2023.
Meanwhile, the real estate market has not had many positive signals. Investors still choose to wait and observe instead of participating in the market.
The foreign exchange market still has an "unpredictable factor" when the US Federal Reserve (FED) continues to make moves to increase interest rates. The bank deposit market shows signs of increasing when banks were racing to increase deposit interest rates.
As for the gold market, as inflation has not been controlled, it will push the price of gold up. The market therefore will undergo development in 2023. However, currently, the gold price in Vietnam is still higher than the world price. Investors still need to be careful when participating in this market.
From the above analysis, experts believe that investors still have the opportunity to increase profits if they choose the right investment channel. In particular, with the stock market, although it has not been able to return to the 1,500-point mark of 2022, with the 1,000-point mark in 2023, the Vietnamese stock market is receiving great attention from foreign investors.
However, in order to control risks, experts recommended that investors should restructure their portfolio of stocks, and choose good stocks with strong fundementals. In particular, they need to be disciplined and cut losses when necessary.
Many billion-dollar investment funds intend to pour money into the Vietnamese stock market, said Quan Duc Hoang, chairman of A Fund.
Hoang added that although many large investment funds want to pour money into the Vietnamese stock market, they have yet to implement their plans because they do not have big enough partners. Meanwhile, large domestic enterprises run out of room for foreign investors.
A study by BIDV Securities Company analysing over 50 billion USD owned by foreign investors on the Vietnamese stock market showed that more than half of foreign ownership is owned by strategic investors. This group usually holds stocks for the long term.
Foreign investors also expect Vietnam’s market to be upgraded to an emerging market. According to JPMorgan's CEO in the Asia-Pacific region, if it is upgraded to emerging market status, the market will receive approximately 5 billion USD from ETFs. Therefore, the fact that the market is in a period of low valuation is a very good opportunity to invest and hold.
Regarding new investment opportunities in 2023, Nguyen Trung Thanh, Head of Web 3.0 Department, Vietnam Blockchain Association & Founder of Trustkeys Network, said: “2023 also has bright spots such as opportunities to build, complete and open new ideas. In particular, with Blockchain as a new technology, the number of young investors and current market entrants is an endless source. The market is still very small, only reaching 1-2% of the size of the US stock market. The actual amount of cash in the market is about $137 billion at present. So the market's ability to expand in the next 5-10 years is certain."
Vietnam joins India Energy Week
Counsellor and head of the trade office of the Vietnam Embassy in India Bui Trung Thuong participated in the India Energy Week and the 9th Asian Ministerial Energy Roundtable (AMER9) which ran from February 6-8 in India.
The event – the first major one of the country’s presidency of the Group of 20 leading economies - attracted more than 500 energy industry heavyweights and thousands of experts and delegates from over 100 countries across the world.
India’s Prime Minister Narendra Modi said that the energy sector plays a major role in deciding the future of the world in the 21st century and India is one of the strongest voices today in developing new resources and in the energy transition.
AMER9 is jointly organised by the International Energy Forum (IEF) and the Indian Ministry of Petroleum and Natural Gas every two years.
As a member of IEF since 2011, Vietnam is always invited to attend meetings to discuss new pathways for energy security, inclusive growth, and energy transition.
The AMER9 themed “Mapping new pathways for energy security, inclusive growth, and energy transitions” had two discussion sessions, one about solutions to challenges of energy security and social justice in the context of a volatile world, and the other about Asia - the centre of demand, the driving force for inclusive growth and energy transition.
At the meeting, Asian energy ministers discussed ways to address energy security challenges and tools to determine the stability of the global energy market as well as the state of transition. The focus of the global energy market has shifted to Asia which is home to 60% of the world's population before the outbreak of the COVID-19 pandemic.
Setting out to secure a sustainable and safe future for diverse economies has helped make Asia a growth engine for the world economy.
Another Aeon Mall to be built in Hanoi
Another Aeon Mall, covering an area of over 8 hectares, will be built in Dai Kim and Thinh Liet wards of Hanoi's Hoang Mai district.
Under the detailed planning scheme for the project, which has been approved by the municipal People’s Committee, the mall’s parking lot will be able to accommodate 4,000 vehicles.
The Aeon Mall Hoang Mai Giap Bat is Aeon's third shopping centre in Hanoi after Aeon Mall Long Bien and Aeon Mall Ha Dong.
Meanwhile, the People's Committee of central Thua Thien Hue province is scheduled to hold a groundbreaking ceremony for Aeon Mall Hue project with a total investment of 3.9 trillion VND (about 170 million USD) on February 11. It covers more than 8.6 hectares.
The Japanese retail AEON Group currently has about 200 stores in Vietnam, including six shopping centres and supermarkets. Most the supermarkets are concentrated in Ho Chi Minh City and Hanoi. The group plans to pour investment in an additional 16 projects in Vietnam by 2025, including 3-4 more projects in Hanoi
Ho Chi Minh City’s power sector among world’s 50 smart grid index
The Ho Chi Minh City Power Corporation (EVNHCMC) has been ranked in the world’s 2022 smart grid index (SGI) with a score of 71.4 as complied by Singapore’s SP Group.
According to the SGI 2022 Benchmarking Results, the Vietnamese power utility ranked 47th among the 94 power companies from 39 countries worldwide, climbing 6 notches from the 2021 rankings.
In Southeast Asia, EVNHCMC was placed the second, behind SP Group.
SP Group’s smart grid index is measured by seven dimensions, namely monitoring and control, supply reliability, green energy, data analytics, distributed energy resources integration, security, and customer empowerment and satisfaction.
PM Chính arrives in Singapore, meets several officials and CEOs
Prime Minister Phạm Minh Chính and his wife arrived in Singapore on Wednesday, starting an official three-day visit to the country at the invitation of his Singaporean counterpart Lee Hsien Loong with a range of activities.
Welcoming the Vietnamese delegation at the airport included Singaporean Minister for Manpower and Second Minister for Trade and Industry Tan See Leng, Singaporean Ambassador to Việt Nam Jaya Ratnam, Vietnamese Ambassador to Singapore Mai Phước Dũng, officials from the Vietnamese Embassy and a number of overseas Vietnamese in the country.
The visit is taking place at a time when the Việt Nam-Singapore strategic partnership is developing strongly and dynamically across all fields. This year, the two countries are celebrating the 50th founding anniversary of diplomatic relations and 10 years of their strategic partnership.
The PM met President and Chief Executive Officer of The Boston Consulting Group Hans-Paul Bürkner, staff of the Vietnamese Embassy in Singapore, and members of the Vietnamese community on Wednesday.
On Thursday, he will meet Singaporean President Halimah Yacob, hold talks with Singaporean Prime Minister Lee Hsien Loong, and witness the signing of cooperation documents.
He will also meet with Patrick Lee, Cluster CEO Singapore and ASEAN Markets of Standard Chartered, and Teo Chee Hean, Senior Minister and Coordinating Minister for National Security.
On Friday, the PM will have meetings with Deputy Prime Minister and Minister for Finance Lawrence Wong and CEOs of various businesses, as well as participate in the Việt Nam-Singapore Forum.
Cement exports under duress from neighbours
The removal of a levy on imported cement in the Philippines could encourage Vietnamese exporters to engage in new ventures alongside Thailand.
Ronnarong Phoolpipat, Thailand’s Minister of Foreign Trade, has revised the expected rise in cement supplies to the Philippines in 2023. Now that the duty on imported cement has been eliminated, the Philippines will be a promising market for Thai exporters, Ronnarong said.
According to the Philippines’ Ministry of Trade and Industry’s investigative committee, the reduction of taxes on imported cement will reduce the process of price increases for both locally produced and imported cement, benefiting the economy.
Previously, the Philippines side found that cement imported from other nations did not cause or threaten to cause severe harm to the country’s cement sector throughout the review period. Notably, a safeguard tax rate on imported cement entering the Philippines expired in October 2022. Within the next five years, cement exports from Vietnam will no longer be subject to safeguard duties there.
In recent times, the Trade Remedies Authority of Vietnam has advised Vietnamese corporations to consider the competition among Thai cement exporters to draw more importers from the Philippines.
Eliminating the levy has spurred Thai producers to see the Philippines as a possible market. According to an article in The Nation Thailand, Thailand produced around 20.56 million metric tonnes of cement in the first nine months of 2022 and exported 1.67 million MT of cement, mostly to Myanmar, Laos, and Cambodia. Taxes are owed on exports that have not been remitted to the Philippines.
Analysts note that Thai cement has dominated globally, but Vietnam has only exported since 2010. Therefore, Vietnam has limits in export expertise and brand recognition.
Some Vietnamese cement exporters also verified that the quality and speed of Thailand’s shipment are two of its competitive advantages. Conversely, consumer psychology emphasises selecting clients with long-standing traditional ties, such as Thailand, requiring Vietnamese enterprises to put in twice the effort.
Currently, the demand for construction materials, especially cement, is rising in the Philippines since the government is eager to encourage economic development via investment in constructing infrastructure, a sector that contributed 12 per cent to the Philippines’ third-quarter 2022 GDP growth. This presents the potential for Vietnamese companies to enter the Philippine construction materials industry and engage in infrastructure projects.
According to the Vietnamese Ministry of Construction, the Philippines is a major importer of cement and clinker, importing around 15-17 million MT per year, with around seven million MT coming from Vietnam. Two months ago, chairman of Vietnam Cement Industry Corporation (VICEM), Bui Xuan Dung, stated that six million MT of cement would be exported to the Philippines before 2025 as part of an agreement between VICEM and two importers, Fenix International, Inc., and Gold Falcon Trading of the Philippines.
VICEM exports 1.5 million MT per year, or 21.5 per cent of total exports. It has 10 plants with 16 production lines, a capacity of 21 million MT of clinker per year, more than 25 million MT of cement per year, and a consumption of almost 30 million MT of primary products, accounting for about 33 per cent of the domestic market and 23 per cent of exports.
According to Global Cement, Philippines’ producers are concerned about Vietnam’s dominance in cement imports. As the Philippines’ real estate sector and economy continue to thrive, and cement demand will increase. Since the Philippines does not impose safeguard measures on cement from Vietnam, local cement makers will have a greater opportunity to grow exports.
Vietnam’s cement producers strive to deal with excess
Vietnam’s cement industry is anticipating an oversupply issue as a result of China’s reopening and lower coal prices.
By investing in the technological chain of Danish multinational FLSmidth, general director of Xuan Thanh Cement Vu Quang Bac aims to get a licence to enter high-standard markets such as the EU and the United States.
With the completion of the 4.5 million-tonne-per-year production line in October 2022, Xuan Thanh’s total cement capacity will far exceed its previous capacity.
Exports may be a solution for Xuan Thanh and other Vietnamese cement makers with a significant export rate, although it is insufficient to deal the present surplus.
Chairman of the Vietnam National Cement Association (VNCA) Nguyen Quang Cung is worried about the impact of the supply-demand mismatch on producers. The industry’s actual production exceeds its intended capacity of 107 million metric tonnes per year, although cement export output is only approximately 35 million MT.
According to the VNCA, the country’s total cement consumption in 2022 did not exceed 62.68 million MT. Since the second quarter of 2022, weak domestic demand owing to the downward cycle of the real estate market has driven cement and clinker stocks to around six million tonnes, equal to 25-30 days of output. Under typical consumption circumstances, the inventory level is 15 to 20 days.
Meanwhile, the effect of high raw material costs on Vietnamese cement makers is unfavourable. State-run Vietnam National Coal and Mineral Industries Group decided to triple the selling price of coal in 2022. In addition, domestic petrol prices grew by an average of 28.01 per cent between 2012 and 2021.
In 2023, many businesses anticipate that exports encounter challenges. Many nations that import cement and clinker use protectionist measures, while freight prices remain high.
Exports of steel, cement, fertiliser, aluminium, power, and hydrogen to Europe will be subject to a carbon border policy beginning in October.
According to a VNCA study in December 2022, the total amount of cement and clinker exported in 2022 was 30.65 million MT, a 33 per cent decrease from 2021. In 2022, total foreign currency earnings from exports of cement and clinker totalled $1.36 billion, down $398 million.
China’s reopening of its borders might partly reverse the glut, according recent projections. China has been Vietnam’s main export market for cement since 2018, accounting for 54 per cent of Vietnam’s cement exports in 2021.
The Building Materials Department under the Ministry of Construction projects that in 2023, the demand for cement will reach 100-105 million MT, up 7-10 per cent from 2022, with domestic consumption accounting for 60-65 million MT and exports totalling 35-40 million.
As the real estate sector remains weak, SSI Research anticipates flat domestic cement consumption in 2023. On a positive note, it is predicted thatthe value of the public investment plan for 2023 will grow by 25 per cent on year.
In the previous quarter, as cement exports grew 32 per cent compared to the previous quarter, SSI Research saw indications of recovery.
Nonetheless, it noted that when performance is blended with weak use and a decline in export, this results in more competitive pressure in the north and central regions, which are the focus of new cement production initiatives.
Due to potentially less conflict in Ukraine, SSI Research predicts the price of imported coal will likely be low. Oil and liquefied natural gas prices have become steadier, and China intends to boost coal output.
There is a gap, however, between the global and Vietnamese coal price. Consequently, SSI Research anticipates profit recovery of 50-90 per cent for cement businesses in 2023, mostly in the second half.
Vietnam registers $3.6 billion trade surplus in first month of 2023
In January 2023, the merchandise trade balance was projected to have a surplus of $3.6 billion. The domestic economic sector had a trade deficit of $1.04 billion, while the foreign-invested sector (including crude oil) had a trade surplus of $4.64 billion, according to the Ministry of Industry and Trade's (MoIT) January 2023 report on industrial output and trade.
In January, the manufacturing and processing sector was no longer the export growth engine, as the sector's export turnover grew the least compared to agricultural, forestry, fisheries supplies, and mineral fuels groups.
The export volume of the majority of goods produced by the processing industry group fell compared to the same time the previous year. In January 2023, the total export value of industrially processed products had declined by 22.7 per cent compared to the same month last year, falling to an estimated $21.52 billion.
The MoIT anticipates that the export growth for 2023 will rise by about 6 per cent to $394 billion, compared to 2022. The country's exports have increased by 10.5 per cent between 2021 and 2022, reaching $371.33 billion.
Deputy Minister of Industry and Trade Do Thang Hai said at a government news conference last week that the situation for global commerce "could not be improved instantly," as there has been several obstacles since the end of 2022.
According to Hai, one of the most significant issues influencing Vietnam's exports is the fall in global import demand for Vietnam's strong goods. He said there were three main reasons.
Firstly, the global economy continues to face several challenges, particularly in the world's biggest import markets, such as the United States, the EU, and Japan. Despite the recent termination of the strict pandemic strategy in China, there are still several complex circumstances, and the pandemic outlook remains uncertain.
Second, sourcing shocks have increased the price of raw materials, resulting in high manufacturing costs and a decline in the competitiveness of local products.
Thirdly, global inflation is high and inventories are large, which affects consumer demand for imported products, with the greatest impact on non-essential items, which are the primary commodities. Textiles, clothing, and footwear constitute the majority of Vietnam's exports to industrialised nations.
According to Hai, the key factor producing problems and significant hurdles for Vietnam's exports in 2023 is the reduction in global demand.
The expansion of exports in 2023 is contingent on several variables, including the development of the worldwide market, the Russia-Ukraine war, inflation, and economic changes in the world's major import markets.
Economy buckles up for bumpy year
With a slow performance since last October, domestic industrial production for the first quarter of this year is expected to remain low, with the economy set to face more difficulties this year, according to a slew of recent estimates.
The government has released a projection that due to a slowdown in production induced by the traditional Lunar New Year break, the country’s GDP will likely grow 5.6 per cent in Q1 before bouncing back to 6.7 per cent in Q2 (see box) – in which the respective growth rates will be 2.7 and 3 per cent for the agro-forestry-fishery sector, 5.3 and 7.9 for the construction sector, and 5.5 and 8 per cent for the industrial sector.
The government has set a target of 6.5 per cent in economic growth this year.
The General Statistics Office (GSO) last week reported that in January when the Lunar New Year holiday took place with about 10 days off from working, the economy’s index of industrial production went down remarkably, at an estimated rate of 14.6 per cent on-month and 8 per cent on-year.
More specifically, the manufacturing and processing sector, which creates more than 80 per cent of industrial growth, in January declined 9.1 per cent on-year and induced a reduction of 7 percentage points in total industrial production; the mining sector dropped 4.9 per cent; and electricity production and distribution fell by 3.4.
According to the Ministry of Planning and Investment’s Department of Business Registration Management, in January there were 10,800 newly established enterprises registered at about $4.3 billion and employing nearly 68,600 workers – down 16.6 per cent in the number of enterprises, 48.5 per cent in registered capital, and 11 per cent in the number of employees as compared to those in the same period last year.
Global analysts FocusEconomics told VIR that under its own calculations, after expanding sharply in on-year terms in Q3, the Vietnamese economy slowed in Q4 as weaker momentum in services, industrial activity and construction more than offset acceleration in the agriculture, forestry and fisheries sector. Higher interest rates, accelerating inflation and an annual contraction in exports dragged on activity.
GDP growth fell to 5.9 per cent on-year in Q4 of 2022 from 13.7 per cent in Q3. Q4’s reading marked the slowest expansion since Q1, driven by a less favourable base effect. Overall, Q4’s result led to 8.02 per cent annual growth in 2022.
In Q4, significant slowdowns occurred in the services, industry and construction sectors. Services expanded 8.1 per cent, compared to 19.3 per cent in Q3; industry 3.6 per cent, compared to 11.1 per cent in Q3; and construction 6.7 per cent, compared to 17.5 per cent. That said, growth in the agriculture, forestry and fisheries sector accelerated to 3.9 per cent, compared to 3.7 per cent in the previous quarter.
“Looking ahead, quarterly on-year growth is set to remain robust in Q1 of 2023 as increased post-pandemic spending and exports remain resilient, likely boosted by increased tourism amid China’s reopening. That said, higher interest rates will likely add downward pressure to activity,” FocusEconomics said.
In their outlook, analysts at United Overseas Bank said, “The strong growth seen in 2022 showed Vietnam’s resilience and ability to pull off a recovery from the damages caused by the pandemic, due to its diversified economic sectors in manufacturing and services. However, overall growth momentum is likely to moderate further in 2023, as policy tightening from major central banks weighs on external demand.”
While FocusEconomics expects Vietnam’s GDP to expand 6 per cent in 2023 and 6.6 per cent in 2024, HSBC in December revised down the Vietnam forecast for 2023 from 6 to 5.8 per cent due to lingering risks including trade headwinds.
The Asian Development Bank with its own calculations also stated that although domestic trade continues to increase, there are indicators of weakening global demand for the country’s exports. Moving forward, growth for 2023 has therefore been adjusted down to 6.3 per cent as major trade partners weaken.
The World Bank in last October predicted that the Vietnamese economy will increase by about 6.7 per cent in 2023.
Numerous stocks facing exit from exchange
Following a prosperous 2021, about 15 per cent of all businesses on stock exchanges have reported losses after a difficult year in 2022.
Following the third year of losses, the SII share of Saigon Water Infrastructure JSC has just received a notice from the Ho Chi Minh City Stock Exchange (HSX) on the risk of delisting its shares. If the audited financial statements confirm the losses as announced in the company's financial statements, SII will leave HSX.
Despite benefiting from an increase in the price of domestic water in early 2022, SII's full-year net revenue only rose by nearly 11 per cent compared to the previous year, which was not sufficient to offset the growth in business costs.
Nguyen Van Thanh, general director of SII, said that interest expenses and the depreciation of fixed assets were still high, although they have decreased significantly on-year. The plan to divest capital from enterprises has not been carried out yet, so it cannot contribute additional income to the company. The business recorded a consolidated net loss of more than $3.74 million in 2022. By the end of last year, undistributed after-tax profit on the consolidated financial statements decreased to $2.56 million and the parent company reported an accumulated loss of nearly $1.26 million.
Hoi An Tourist Service JSC has also continuously suffered losses over the last three years. Its net loss in 2022 was more than $826,000, following losses of $913,000 in 2021 and $1.08 million in 2020.
By the end of 2022, accumulated losses had risen to $2.8 million, eroding more than 80 per cent of the company's modest charter capital of $3.5 million.
Along with these businesses, the stock of Vietnam Airlines was also removed from the exchange when the airline entered the third year of loss-making business. MCG Energy & Real Estate, Kim Vi Stainless Steel Commercial Producing, Hoang Ha, and Erection Mechanical are all facing the same situation.
In 2022, the proportion of businesses on the stock exchanges reporting losses reached more than 15 per cent, slightly higher than the figure in 2021. If post-audit reports for 2022 confirm the expected losses, numerous stocks will be removed and become ineligible for margin lending.
Real estate firms call for help as market faces low liquidity
The HCM City Real Estate Association (HoREA) has asked the State Bank of Vietnam (SBV) to help local firms get easier access to bank loans to overcome huge difficulties posed by low liquidity in the local market.
Speaking at a meeting held on Wednesday by SBV to seek measures for supporting the local struggling real estate sector, HoREA's chairman Le Hoang Chau said that 2023 would be a decisive year for the sector, as many firms might exit the market if difficult access to credit and negative cash flows persist.
Chau said that local firms had sharply slashed prices of their projects but still had difficulties. They faced serious shortage of cash.
According to HoREA, paperwork is the biggest hindrance to the sector, followed by corporate bonds that are falling due.
It proposed the central bank make it easier for homebuyers to gain credit to facilitate the recovery of the sector as discounts of 45-50 percent offered by real estate firms could not be enough to attract homebuyers back.
Earlier at a meeting late last year with Deputy Prime Minister Le Minh Khai and the Ministry of Construction, HoREA also called on the government and the National Assembly Standing Committee to consider subsidising loans given by the four government-owned banks, BIDV, Vietcombank, Vietinbank, and Agribank, to buy or rent social housing.
It urged the government and the State Bank of Vietnam to increase banks’ credit quota by two percent, thus increasing the amount of credit available by VND 200 trillion (USD 8 billion), to bolster the economy during the end of the year.
Chau also called for amendments to the 2013 Law on Land and related laws to foster the market.
Nearly 33 trillion VND worth of G-bonds raised in January
The State Treasury raised 32.8 trillion VND (1.39 billion USD) worth of Government bonds, or 96.56% of the total G-bonds on offer, via eight auctions on the Hanoi Stock Exchange during January.
The figure was equivalent to 30.4% of the first-quarter issuance plan and 8.21% of the annual target.
Of which, 49.74% were 10-year bonds while the remainder was 15-year bonds, with respective interest rates of 4.36% and 4.56%. The rates are down 29 and 24 basis points from the previous auction.
On the secondary market, the trading value of G-bonds during the month reached over 65.79 trillion VND, down 9.48% month-on-month, with outright transaction value accounting for 53.74%. The remainder were those traded via repurchase agreements.
Vietnamese projects in Lao locality highly valued
The wave of Vietnamese investments in Attapeu has helped to draw more capital to the Lao province, a local official has said.
Attapeu’s Deputy Governor Thanousay Bansalth told the Vietnam News Agency that the province is home to many Vietnamese projects, notably the Xekaman 1 hydropower project, and those by Hoang Anh Gia Lai Group and Truong Hai Auto Corporation, which have contributed to job generation and export in the locality.
Regarding Xekaman 1, Bansalth said it is one of the first energy projects in Attapeu, noting it has played a role in economic development in the province and Laos at large.
The official spoke highly of Vietnamese agriculture projects using cutting-edge, sustainable technologies such as TTC Attapeu Sugar Cane Sole Co,.Ltd, whose high-quality organic products satisfy standards for export to Europe.
Apart from generating high economic values, the project has contributed to environmental protection and offered an effective cooperation model between the business and local farmers, according to Bansalth.
The official expressed his hope that the Vietnamese investments will create an important foundation for Attapeu to spur its economic development and raise living standards of local residents, and contribute to tightening the great friendship, special solidarity and comprehensive cooperation between the two countries.
High rates hurting businesses, hamper economic recovery
High interest rates have been hurting the ability of businesses to recover and invest in ramping up production capacity, said industry insiders and economists.
Economists called for the central government to take measures to bring down the rates, which have been sitting around 10 per cent in recent months.
Tran Viet Anh, director-general of Nam Thai Son Import/Export JSC., said a majority of businesses were not interested in fresh loans but lower rates would be a significant help as they faced lower demand and struggled to keep workers.
Even developers for social housing projects were not immune as they were forced to borrow at regular rates.
Le Huu Nghia, director of Le Thanh Construction JSC., said many social housing projects had to borrow at 14 per cent, roughly the same as other commercial projects. It certainly will not help bring down housing costs in the market.
Despite a directive from the State Bank of Vietnam to give preferential policies to social housing developers, commercial banks have been slow in implementing them, citing a lack of guidance from the central bank.
Nguyen Ngoc Hoa, president of the HCM City Union of Business Associations (HUBA) said as current rates sit above 10 per cent, it's very unlikely for businesses to stay financially viable and stressed the need for measures by the central bank and the government to step in to bring it down in the next six months.
Hoa said a large portion of businesses uses their property assets as collaterals. As the property market has been hit with a cold spell, money have become difficult to come by as banks tightened their purse string.
Professor Tran Dinh Thien, former head of the Vietnam Institute of Economics, said as inflation started to pick up and numerous disruptions experienced by the domestic and the international markets, high rates have been making life difficult for businesses.
He said injecting money through public spending could be useful at a time like this but this channel has been known to be sluggish and inadequate in responding to market changes in a timely manner. Even public fund disbursements aimed at speeding up economic recovery have been slow due to a number of legal and framework barriers.
President of the Vietnam International Arbitration Centre Vu Tien Loc said the country's long-term economic prospect depends a lot on the development of its business community. He stressed the importance of establishing a more streamlined and transparent framework for the financial market.
Loc called for the removal of cumbersome and unnecessary business conditions, stronger administrative reform and shorter import/export processing.