Mong Cai international border gate will suspend border trade during the Lunar New Year holiday from February 10 to February 17, said Tran Bich Ngoc, head of the Mong Cai International Border Gate’s Management Board.

China, on the other hand, plans to resume customs clearance for imported goods starting from March 12 through Dongxing international gate. The focus will primarily be on frozen goods and those temporarily imported for re-export originating from Vietnam.

Both nations will continue to provide immigration services throughout the holiday period.

Trade data for the period from January 1 to February 4 showed a significant 49% increase compared to the same period in 2023, with over 132,900 tons of goods passing through the Mong Cai border gate.

From the beginning of the year until February 4, nearly 682,000 people crossed the Mong Cai border gate, including 337,400 incoming people.

Dragon Capital increases stake in Hoa Sen Group

Dragon Capital has raised its ownership in Hoa Sen Group, which trades its HSG shares on the Hochiminh Stock Exchange, by acquiring an additional 2.8 million shares.

Amersham Industries Limited, a member of Dragon Capital, on January 30 bought 2.5 million HSG shares, while Hanoi Investments Holdings Limited, another member of Dragon Capital, acquired 500,000 HSG shares.

However, two other members of the fund – KB Vietnam Focus Balanced Fund and Samsung Vietnam Securities Master Investment Trust – sold 100,000 HSG shares each.

The transactions increased the group’s ownership from 11.81% to 12.27% of the steelmaker’s charter capital.

Regarding business performance, Hoa Sen Group reported over VND9 trillion in revenue from October to December 2023, up by 14.6% year-on-year. The group’s after-tax profit in the quarter stood at VND103.36 billion compared to a loss of VND680.2 billion in the same period in 2022.

Digital money transfers surge in January

The National Payment Corporation of Vietnam (NAPAS) recorded a surge of over 50% in digital money transfer transactions in January compared to the same period last year, signaling a significant shift in consumer behavior towards non-cash payment methods.

NAPAS reported that the number of money transfer transactions in January increased by 5% from December 2023 and shot up by 58% year-on-year.

Cash withdrawals from ATMs declined by a sharp 28% compared to the previous year, indicating reduced reliance on physical cash, not only seasonally but also during peak periods such as in the lead-up to the Lunar New Year holiday.

The downward trend in cash withdrawals through ATMs has been consistent in recent years. In 2023, ATM cash withdrawal transactions dropped by 16.9% in quantity and 19.5% in transaction value. Currently, ATM transactions account for only 3.6% of the total processed via the NAPAS system.

To meet the increasing demand for cashless transactions, especially during the festive season, NAPAS is enhancing liquidity monitoring within its member organizations. The corporation is ensuring continuous personnel deployment and operating 24/7 to provide unwavering support to banks, payment intermediaries, and businesses during peak holiday periods.

Non-cash payment transactions processed through the NAPAS system exhibited sustained growth throughout 2023. The overall transaction volume increased by more than 52%, with the total transaction value rising by over 12% compared to 2022.

Nam A Bank to move to HOSE next month

Nam A Commercial Joint Stock Bank has announced it would stop trading its NAB shares on the Unlisted Public Company Market, or UPCoM, and then move to the Hochiminh Stock Exchange (HOSE) on March 8.

The last trading date of over one billion NAB shares on the UPCoM market is February 28.

Nam A Bank’s total assets stood at over VND210 trillion as of December 31, 2023, up by 18% over the first month of last year. This made the bank one of the top 20 banks by assets.

Last year, its capital mobilization grew by nearly 20% to VND165 trillion, while outstanding loans expanded by 18% to VND142 trillion.

The bank’s net interest margin (NIM) remained stable at over 3.3%, attributed to its optimized asset and capital structures.

Nam A Bank has been expanding its digital banking ecosystem and witnessing substantial growth in both customer numbers and banking users. The number of active customers increased by 85.3% year-on-year, while online banking users surged by nearly 95%.

This positive growth momentum translated into commendable results for Nam A Bank, with net interest income surpassing VND6.6 trillion, net income from services reaching nearly VND600 billion, and net revenue from other activities surpassing VND330 billion by the end of 2023.

Nam A Bank’s pre-tax profit in 2023 amounted to more than VND3.3 trillion, a 50% rise over 2022.

Bamboo Airways has new chairman

Phan Dinh Tue, former deputy CEO of Sacombank, has been chosen as chairman of Bamboo Airways in the 2023-2028 term.

The privately-held airline issued a resolution on February 5 to pick Tue as the chairman of the Board of Directors (BOD). This leadership change is part of the airline’s strategy to meet new development goals and expedite its restructuring process.

Tue initially joined Bamboo Airways as a BOD member in June 2023 and later served as the BOD vice chairman. He had served as deputy CEO at Sacombank since 2012 but remains a board member at Sacombank.

Bamboo Airways has recently undergone a leadership reshuffle. Its former chairman, Le Thai Sam, now serves as vice chairman of Bamboo Airways, with a 50% stake.

The current BOD of Bamboo Airways has five members: Phan Dinh Tue as chairman, Le Thai Sam and Le Ba Nguyen as vice chairmen, and Nguyen Ngoc Trong and Le Thi Truc Quynh as members.

The airline aims to break even by 2025. In the 2026-2028 period, it plans to expand its domestic and international flight networks by increasing its fleet from 30 to 50 aircraft.

PM calls on SOEs to contribute more to economy

Prime Minister Pham Minh Chinh has urged State-owned enterprises (SOEs) to improve their performance and play a greater role in fueling economic growth.

He was speaking at a meeting held in Hanoi yesterday, February 5, with leaders of the Commission for Management of State Capital at Enterprises (CMSC), and senior executives of 19 SOEs to review their performance in 2023 and discuss action plans for 2024.

In 2023, 15 out of 19 SOEs beat their revenue targets while 16 out of 19 earned more pre-tax profit than estimated.

These SOEs made substantial contributions to the country’s socioeconomic development by initiating key infrastructure projects in energy and transportation sectors. Projects like Ben Luc-Long Thanh expressway, the LNG 1 MMTPA Thi Vai warehouse, and the expansion of the Haiphong International Gateway Port were among their notable achievements.

However, PM Chinh pointed out certain shortcomings at some SOEs, including delays in the implementation of the 500-kV circuit 3 power transmission line project by the Vietnam Electricity Group (EVN).

He stressed the importance of improving SOEs’ efficiency and their contributions to the country’s GDP and State budget.

In 2024, the Government leader outlined several tasks for SOEs, including ensuring an adequate supply of electricity, oil, gas, and coal, completing key infrastructure projects, and enhancing operational efficiency and profitability.

Vietnam enjoys trade surplus of 2.92 billion USD in first month of 2024

Vietnam’s export value has been estimated at 33.57 billion USD in January 2024, a sharp surge of 42% over the same period last year, contributing to generating a trade surplus of 2.92 billion USD in the first month of this year.

According to the General Department of Customs, Vietnam’s export value reached 33.57 billion USD in January 2024, up 6.7% over the previous month, while import value totalled 30.65 billion USD, up 4.2% against the previous month.

The country’s total import and export revenue has been reported at 64.22 billion USD in the first month of 2024, an increase of 5.5% over the previous month and up 37.7% over the same period last year.

The General Department of Customs said that the state budget revenue collected from import and export activities in January 2024 hit 30.65 trillion VND, equivalent to 8.2% of the estimate and up 13.2% over the corresponding period in 2023.

In the first month of this year, the customs sector also detected and handled more than 1,250 cases of legal violations with an estimated total value of goods at about 1.61 trillion VND, collecting nearly 23 billion VND from these cases to contribute to the budget.

Lethargic opening to 2024 bond market poses questions for challenging outlook

Vietnam’s corporate bond market in early 2024 has experienced a subdued start, marked by a notable absence of new issuances and a predominant focus on bond buybacks.

Data from the Hanoi Stock Exchange and the State Securities Commission indicates a conspicuous absence of new bond issuances through January 24, contrasting sharply with the active buyback of bonds by companies, totalling approximately $181.4 million.

Looking ahead, the landscape for bond issuances remains murky. A limited number of companies, primarily banks such as Vietcombank and VietCapital, have disclosed their 2024 bond issuance plans.

Analysts anticipate a market pattern akin to the previous year: a sluggish first half, with expectations of picking up pace later. Contributing to this cautious outlook are persistent business challenges, a lacklustre real estate sector, and a gradual recovery of investor confidence.

A significant regulatory overhaul is set to impact the market, however. The reinstatement of Decree No.65/2022/ND-CP from 2022 on amending private placement and trading of privately placed bonds, following a temporary relaxation under Decree No.08/2023/ND-CP from March 2023, presents a near-term challenge.

Nguyen Ba Khuong, analyst at VNDirect Securities, believed that Decree 65’s stringent conditions, which require investors to hold a minimum portfolio of listed securities valued at around $84,500 for at least 180 days to qualify as professional investors, pose a barrier for individual investors.

“Previously, individual investors were pivotal to the corporate bond market’s growth, accounting for one-third of its purchasing power,” Khuong said. “But following incidents like the Tan Hoang Minh case and introduction of stricter regulations, their participation has markedly decreased. In 2023, they accounted for just 6.8 per cent of the value of corporate bond transactions.”

Khuong also projected a substantial maturity wall in 2024, with private corporate bonds due for redemption valued at approximately $8.73 billion. Notably, real estate enterprises represent 59 per cent of this figure.

“Given the continued slowdown in the real estate market and delays in legal clearances for projects, the sector’s business operations are expected to face ongoing challenges next year,” he added. “This scenario puts a considerable strain on cash flows and heightens the maturation pressure of corporate bonds for real estate firms.”

However, as 2024 unfolds, a potential deceleration in the issuance of private corporate bonds is anticipated, largely due to the activation of Decree 65 from the start of 2024.

“Decree 65’s stringent rules will likely affect private corporate bond issuances in 2024. We predicted a possible upturn towards the end of the year as market players adjust to the new regulations and as business capital needs grow in a reviving economy,” Khuong explained.

Meanwhile, the Vietnamese Bond Market Association expects that in 2024, the total value of maturing bonds nears $11.76 billion, with real estate and banking sectors representing 41 and 20 per cent of these impending maturities, respectively. This looming maturity burden weighs heavily on businesses amidst an already challenging market environment.

Nguyen Quang Thuan, chairman of FiinRatings, noted that Vietnam’s corporate bond market is relatively small scale compared to the ASEAN average.

“A striking 95 per cent of the current issuance and circulation value is attributed to privately issued bonds, which inherently bear the characteristics of project financing,” he said. “Publicly issued bonds, expected to be of higher quality and transparency, represent a mere fraction of the market, less than 5 per cent of the total issuance volume. This concentration, particularly in real estate which accounts for over half of the total issuance value, poses significant concentration risks for the market and investors,” Thuan added.

FiinRatings’ calculations suggest that the total value of maturing private corporate bonds in 2024 could reach approximately $12.15 billion, with 2025 seeing maturities around $8.18 billion.

The Ministry of Finance has yet to announce any extension to Decree 08, which amends and suspends certain provisions regarding the issuance and trading of private corporate bonds, both domestically and internationally.

Meanwhile, many experts support tightening the base of individual investors while opening mechanisms to draw in more institutional investors into the corporate bond market.

Nguyen Ngoc Anh, CEO of SSI Asset Management, said, “Tight control over corporate bond sales to individuals is essential due to their inherent risk. However, in parallel, it’s imperative to establish a dedicated trading channel for institutional investors and investment funds, offering more flexibility to enhance market liquidity. Currently, mechanisms to attract domestic investment funds are limited.”

Diverse FDI augurs well for 2024

Currently, US-backed Nvidia is the most valuable chip manufacturer in the world, with a market value of nearly $1.2 trillion. Established in 1993, it now boasts 27,000 employees and gained revenues of $27 billion in the 2023 fiscal year.

Last September, Vietnamese Prime Minister Pham Minh Chinh visited the corporation’s headquarters in California, and invited president and CEO Jensen Huang to pay a working visit to Vietnam.

Less than three months later, Huang came to Vietnam, where Nvidia has already invested $250 million. He explored more investment potential and then said that Nvidia wishes to establish a base in Vietnam to develop the country’s semiconductor industry as it considers the market an important one.

“The base will be for attracting talent from around the world to contribute to the development of Vietnam’s semiconductor ecosystem and digitalisation,” Huang said.

Nvidia has discussed cooperation deals on semiconductors with Vietnamese tech firms and authorities.

According to the Ministry of Foreign Affairs (MoFA), it is not accidental that giants like Nvidia have come to Vietnam. One of the key reasons is that the country has been making its great efforts to boost business-oriented diplomatic activities to lure in big projects worth multi-billions of US dollars, in the context of increasing competition in luring this kind of funding in the region.

“Such activities are implemented by the leaders of the country and of ministries and agencies,” said Tran Anh Vu, deputy general director of the MoFA’s Department of General Economic Affairs. “Business-oriented diplomacy has been playing a key role in helping the nation to attract foreign direct investment (FDI).”

For instance, when upon hearing Denmark’s toy maker Lego Group was seeking a suitable location to build a large-scale carbon-neutral plant overseas, the Vietnamese prime minister and one deputy prime minister had three talks on the phone with Lego’s leader, persuading him to invest in Vietnam.

“As a result, Lego has come to Vietnam,” Vu said. “In Southeast Asia, a number of nations such as Malaysia and Thailand are strongly deploying business-oriented diplomatic activities to woo such big groups as Lego, and this is creating big pressure for Vietnam.”

In early November 2022, construction of a $1-billion, 44-hectare Lego plant was commenced in the southern province of Binh Duong. The plant is scheduled to generate about 4,000 jobs and market its first products in 2024. This is the sixth plant of the Danish toy company, and its second in Asia.

Lego CEO Niels Christiansen said the group selected Vietnam for its big pool of skilled staff, commitment to carbon-neutrality by 2050, and location as a gateway to the Asia-Pacific region, which has a growing market of young consumers. The government has underlined many a time that Vietnam will attract FDI selectively based on ensuring the environment and sustainability.

“Priorities will be given to projects with high added values and advanced technology in service of infrastructure development, digital economy, digital transformation, and green growth,” said Deputy Prime Minister Tran Luu Quang.

“We will also focus on boosting economic diplomatic activities to woo high-quality FDI from multinational corporations. This will help elevate Vietnam’s status in the global supply chains.”

Cumulatively as of December 20, Vietnam wooed 39,140 projects registered at $468.9 billion, of which $317.2 billion has been disbursed.

The MoFA has been assigned by the government to expand business-oriented and economic diplomatic activities, amid many nations opening their economies to Vietnam’s goods, and many big investors globally seeking safe and attractive investment destinations.

“Vietnam’s leaders have also met with leaders of many groups, including Nike, Adidas, and Adani. Visible outcomes have been seen,” said Nguyen Hoang Phuong, a representative from the MoFA’s Department of Foreign Policy.

In late December, PM Chinh received Gautam Adani, president of Adani, India’s largest business group. Adani is exploring the Vietnamese market, where it wants to invest about $10 billion over the next 10 years in energy and infrastructure.

Currently, Adani has established a representative in Vietnam with a long-term investment plan here.

The MoFA has and will also continue working with many localities nationwide to connect them with foreign investors. For instance, many South Korean investors are seeking locations in Vietnam for their upcoming projects, and we are introducing them with localities so that they can select the suitable places for the projects. Total accumulative registered capital from South Korea as of December 20 reached $85.86 billion, making the Northeast Asian economy the largest foreign investor in Vietnam, followed by Singapore at $74.52 billion and Japan at $73.96 billion.

In 2024, the MoFA will also continue cooperating with localities to organise FDI events. “The diplomatic sector has been making positive contributions to boosting Vietnam’s international integration and connectivity. It has actively mobilised and engaged overseas resources in service of new growth impetuses,” said MoFA Deputy Minister Nguyen Minh Vu.

“Besides successfully attracting green and high-tech investment projects such as Lego and Samsung, the MoFA has also actively been boosting the implementation and support for the establishment of cooperation frameworks in service of Vietnam’s trade expansion and attraction of official development assistance (ODA),” Vu said.

Vietnam has over 50 bilateral and multilateral donors, with a total committed ODA of over $90 billion to the country.

The MoFA also reported that the diplomatic sector had contributed to helping Vietnam attract a large sum of overseas remittance, at $17.2 billion in 2020 and more than 18 billion in 2021, nearly $19 billion in 2022. The figure in 2023 is estimated to climb up to 30 per cent on-year.

Food security tops agenda in new ties with Philippines

Vietnam and the Philippines will increase their bilateral trade and investment ties, with a focus placed on rice exports to help ensure food security.

During the state visit to Vietnam by the Philippines’ President Ferdinand Romualdez Marcos last week, the two Southeast Asian nations agreed that they will devise new mechanisms to enhance regional economic connectivity such as ASEAN’s Free Trade Agreement, Trade in Goods Agreement, and Comprehensive Investment Agreement.

The two countries have also pledged to facilitate investments of each other into respective markets, especially projects involving processing, infrastructure, the vehicle supporting industry, renewable energy, and high-tech agriculture.

According to an investment report released in late December by the ASEAN Secretariat and the UN Conference on Trade and Development, from 2013 to 2022, more than one-third of the favourable foreign direct investment (FDI) measures in ASEAN related to opening new sectors or activities.

For example, in 2021–2022, Vietnam allowed complete FDI in insurance and set implementation guidelines for the 2020 Law on Investment, which includes a restrictive list for market access for foreign investors. Similarly, the Philippines permitted full FDI in renewables and revised its negative list by removing manufacture, repair, storage and distribution of products requiring clearance from its defence department.

Foreign ownership restrictions in small- and medium-sized enterprises and trading enterprises were also relaxed. Besides this, wholly foreign ownership of public services, such as telecommunication, airlines, shipping and railways was allowed.

Figures from the Vietnamese Ministry of Planning and Investment showed that currently the Philippines has 95 valid ventures in Vietnam registered at $608.2 million, ranking 31st out of 144 nations and territories with projects in Vietnam.

Last year, leaders of Philippine group Vista Land visited the Mekong Delta city of Can Tho searching for investment and trade opportunities. Currently, Vista Land is looking for Vietnamese partners to supply assorted products to distribute to its retail chains. The products include enamelled tiles, cement, furniture, rice, agricultural products, snacks, fruit juice, and coffee.

URC Vietnam, part of Universal Robina Corporation and belonging to JG Summit Philippines, also considers Vietnam a lucrative market.

In Vietnam, URC started operations in 2003 as a trading company specialising in imported products until its first factory with snack and candy lines was built at Vietnam-Singapore Industrial Park in the southern province of Binh Duong. URC’s factories have been replicated throughout the country, including three in Binh Duong, one in the south-central province of Quang Ngai, and one in Hanoi.

Meanwhile, Vietnam currently has five projects in the Philippines, registered at nearly $4 million.

In addition to investment, Vietnam and the Philippines have also agreed to promote economic and trade relations, with a major focus laid on the rice trade. They will consider removing unnecessary barriers and support each other to ensure food security, while creating a favourable business and investment climate.

Both nations last week also inked an MoU on rice trading cooperation, aimed to help ensure economic benefit and food security. The Philippines is now the largest rice export market of Vietnam, with a volume of 2.63 million tonnes in the first 11 months of last year, valued at $1.41 billion.

The two countries last week also set a target of reaching a bilateral trade turnover of $10 billion next year, and promoted cooperation in other potential fields such as digital economy, circular economy, green economy, renewable energy, combating climate change, and supporting each other in developing the marine economy, innovation, and startups.

Bilateral trade turnover between the pair increased from $2.9 billion in 2012 to $7.8 billion in 2022. In the first 11 months of 2023, the figure hit $7.1 billion.

The Philippines is the 16th largest trade partner of Vietnam worldwide and the sixth-largest trade partner of Vietnam in Southeast Asia. At present, there are about 30,000 Vietnamese nationals living and working in the Philippines, where there are also 700 Vietnamese students.

Vietnam and the Philippines forged their diplomatic relations in 1976, which were elevated to a strategic partnership in 2015. In 2019, they signed an action programme on implementing the strategic partnership for the following five years.

Sectors of cooperation between Vietnam and the Philippines

Regarding defence and security, the two sides have been actively implementing signed agreements to expand cooperation in defence, logistics, military medicine, search and rescue, humanitarian assistance and natural disaster relief, transnational crime prevention, and anti-terrorism. At the same time, the two countries are also speeding up negotiations and the signing of an MoU on bilateral logistics support, and of agreements on extradition and transfer of sentenced individuals.

When it comes to sea and ocean cooperation, Vietnam and the Philippines established a joint working group on seas and oceans, which met regularly every year and then was upgraded to the Joint Commission on Maritime and Ocean Cooperation in 2012.

As for maritime cooperation, the two sides are promoting negotiations on a commercial transport agreement to replace the Vietnam-Philippines Maritime Transport Agreement signed in 1992, while also actively implementing a bilateral agreement on search and rescue at sea inked in 2010 and taking effect in 2012.

In addition to the MoU on academic cooperation was clinched in 2010, and the two countries are also working on an educational cooperation deal. There are currently nearly 40 Filipino students studying at Vietnam’s Thai Nguyen University.

Regarding culture and tourism cooperation, the two sides are negotiating the Cultural Cooperation Programme for 2024-2028 and discussing the initiative on Implementation of the Cooperation Agreement on Tourism between the Department of Tourism of the Philippines and the Ministry of Culture, Sports, and Tourism of Vietnam for 2024-2028.

In 2022, Vietnam welcomed about 49,300 Filipino visitor arrivals, while the Philippines was visited by more than 25,900 Vietnamese tourists. In the first nine months of 2023, the number of Filipino visitor arrivals to Vietnam reached 130,000, and the Philippines welcomed nearly 52,000 visitors from Vietnam, equivalent to the same period in 2019.

When it comes to labour cooperation, the two countries planned to coordinate to soon sign a labour cooperation agreement. However, the two sides’ labour management agencies have yet to negotiate and ink this agreement.

Regarding cooperation in agriculture, fisheries, and aquaculture, from 1964 to 2009, the International Rice Research Institute in the Philippines trained 254 scientists for Vietnam, including 55 masters and 29 doctors. In 2010, the two sides signed an agreement on fisheries cooperation, laying the groundwork for specific cooperation projects on fisheries and the establishment of a fisheries cooperation committee.

At present, Vietnam and the Philippines are considering the establishment of an intergovernmental agreement on rice cooperation with a term of five years to support each other in ensuring food security. At the recent Joint Committee on Bilateral Cooperation meeting in August 2023, the two sides agreed to deploy a new agreement on setting up a hotline to handle illegal fishing issues and support fishermen. Source: Vietnam’s Ministry of Foreign Affairs

Production woes not yet out of the woods

Though the economy’s industrial production for January appears to be impressive in statistics, it remains in substantial difficulties.

The General Statistics Office (GSO) last week reported that the index for industrial production (IIP) in January was estimated to expand 18.3 per cent on-year, in which the manufacturing and processing industry, which creates more than 80 per cent of industrial growth, increased 19.3 per cent on-year.

The key reason is that many businesses have increased their business and production activities to market more products in service of growing demand in the market to welcome the Lunar New Year taking place in early February.

However, such an increase in January was in fact recorded based on a negative IIP growth of -11.3 per cent on-year in the same period of 2023. Thus, the climb in January this year does not reflect the fact that domestic industrial production has bounced back strongly.

But according to the GSO in January, except for electronics products increasing 5.6 per cent on-year, production of all other key products in the economy recorded double-digit growth, such as leather, paper, garments and textiles, metal, and furniture.

For example, production of garments and textiles increased 20.9 and 46.2 per cent on-year, respectively.

Since Q3 of 2023, Hanoi Textile and Garment Materials JSC has been recovering its performance, with a rise in export orders landed from China, Singapore, Taiwan, and South Korea, which also traditionally welcome the lunar New Year.

“Our revenue in the second half of 2023 increased by 10 per cent on-year versus a 3 per cent on-year rise in the first half,” said Nguyen Viet Thang, a company representative. “Since last October, we have pushing up production at full speed. In January, the revenue is estimated to climb 12 per cent on-year.”

Just one year ago, the company faced with a 30 per cent reduction on-year in output, while operational costs ascended 15 per cent.

“At that time, we were using about 500 workers, instead of 700 before. But now, the situation has remarkably improved. We hope the situation will get better,” Thang said. “Our revenue also reduced by 20 per cent Q4 of 2022 and the rate was down by 10 per cent in the first two months of this year.”

This company has been unable to import materials from China, which is the biggest material provider, while the domestic partners are also shrinking production. In addition, the company is now burdened by paying high lending rates of 15 per cent a year for bank loans.

However, reality shows that not all companies like Thang’s are bouncing back.

In January, 44,000 businesses halted operations – up 25.5 per cent as compared to the previous year; 7,800 enterprises stopped operations and waited for dissolution procedures – up 14 per cent; and nearly 2,200 enterprises completed such procedures.

Last year, 89,100 businesses halted operations – up 20.7 per cent on-year; 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 GSO, although difficulties remain, business confidence has been gradually on the rise, largely thanks to the government efforts to improve the domestic business and investment environment.

A recent survey conducted by the GSO showed that the last quarter of 2023 saw a marked increase in satisfaction among businesses: confidence in the country’s economic situation climbed from 24 per cent in Q3 to 32 per cent in Q4. The outlook for Q1 of 2024 was also positive, with 29 per cent of businesses viewing their prospects as “excellent” or “good” as extreme worries fell from 9 to 5 per cent.

What is more, 31.7 per cent of respondents said their performance got better than Q3. For Q1 of 2024, 31.6 per cent believed they will get better than in Q4 of 2023, while 40 per cent held that their performance would be stable – in which the rate of non-state enterprises is 72.3 per cent, and the rate of foreign-invested enterprises is 71 per cent.

Prime Minister Pham Minh Chinh said that the government in 2024 would continue creating more better conditions for individuals and enterprises.

“We will create an open investment environment and complete the legal system for effective investment, in the spirit of harmonising interests and sharing risks between the state, individuals and businesses,” PM Chinh said.

According to Andrea Coppola, lead economist for the World Bank in Vietnam, it is likely that the demand for Vietnamese exports from the rest of the world to recover in 2024, though it will not be as strong as in the past.

“My message for Vietnam is to leverage its internal strength and boost the productivity growth of its domestic economy to transform the challenges provided by the global economic slowdown into an opportunity to further strengthen its economic growth model,” Coppola said.

EU imposes stricter Oxamyl residue limits on agro-products

The European Union (EU) has introduced stricter regulations concerning the maximum residue levels (MRL) for Oxamyl on various agricultural products, with effect from May 11, 2024, said the Vietnam Trade Section to Belgium, Luxembourg, and the EU.

The EU has reduced the maximum Oxamyl residue levels on animal and plant products to 0.001mg per kilogram from the previous range of 0.01-0.05 mg per kilogram.

The MRL is set at 0.005 mg per kilogram for avocado, 0.002 mg per kilogram for tomato, and 0.005 mg per kilogram for all types of cereals, including rice, as well as animal products.

Under the new regulations, cocoa beans are the only product permitted to have the new MRL for Oxamyl at 0.01 mg per kilogram.

The Vietnam Trade Section to Belgium, Luxembourg, and the EU said that the EU’s updated regulations on MRL will directly impact agricultural products imported from Vietnam. Therefore, Vietnamese exporters are urged to stay informed about these new regulations to make necessary adjustments.

Tet holiday tour bookings shoot up

An increasing number of visitors are opting for domestic tours for the upcoming Tet holiday, which begins on February 10.

Vu Hai Sam, deputy director of the domestic tourism division at Saigontourist Travel, said tours to northern provinces, priced at between VND9 million and VND15 million per guest, have been drawing in travelers.

Tours to central and southern Vietnam destinations, including Bao Loc, Nha Trang, Dalat, Phan Thiet, Phu Quoc, and Danang, are still available for booking until the departure date. These tours typically span 2-5 days and are priced from VND4.3 million per guest.

Saigontourist is currently accepting last-minute registrations for Tet tours. The company is looking to serve over 28,000 domestic and international tourists during the Lunar New Year, a 20% increase compared to the same period last year.

A representative of the leading travel firm in HCMC said there has seen a notable surge in Tet tour bookings from overseas Vietnamese in the lead-up to Tet, accounting for up to 80% of the total.

Funding sought for Long Thanh airport drainage project

Authorities of Dong Nai Province are seeking funding for the initial phase of a water drainage project at Long Thanh International Airport, said local media reports.

The Dong Nai Department of Agriculture and Rural Development has not been able to approve an investment policy for the project due to a shortage of funding. An estimated VND1.2 trillion would be needed for the drainage project.

The project would serve the drainage needs of five reservoirs inside the future airport.

The first phase of the drainage project also involves the construction of five bridges and nearly 17 kilometers of rural roads along streams.

As part of the project, contractors will dredge and reinforce 20 kilometers of Bung Mon and Da Vang streams. A drainage system would be built to drain water from Long Thanh airport into these two streams.

The first phase of the Long Thanh airport water drainage project is a crucial component of the local development plan and has been incorporated into Long Thanh District’s land usage scheme.

As a substantial amount of capital is required, the province has not been able to secure funding from the mid-term public investment budget for the 2021-2025 period, according to provincial authorities.

Danang prioritizes high-tech industries in 2024

The central coast city of Danang has mapped out plans to attract investments in high-tech industries, with a primary focus on semiconductor design, artificial intelligence (AI), big data, and digital technology.

The city wants to leverage the shift in foreign direct investment (FDI) inflows into Vietnam, with the goal of attracting leading companies from the U.S., Europe and Asia, said Nguyen Thi Thanh Huong, deputy director of the provincial Department of Planning and Investment.

In the semiconductor sector, Danang is actively seeking major firms from the U.S., Europe, and Japan to invest in the design phase. Meanwhile, businesses from Asian economies like Taiwan, South Korea, Malaysia and Singapore will be encouraged to invest in the assembly, testing, packaging, and other stages of the semiconductor supply chain.

Danang is committed to providing comprehensive support, including information, handling of requests and issues, and project implementation assistance.

In 2023, Danang approved 104 new foreign-invested projects with total registered capital of US$151.2 million, according to data from the city’s Statistics Office.

Danang’s economic growth target for 2024 is set at 8% to 8.5%.

Turning challenges into opportunities

According to Dr. Nguyen Dinh Cung, former Director of the CIEM, one of the clear indicators that the economy is still struggling is the purchasing power, which remains weak both domestically and internationally, even during the month before Tet.

Recognizing a somewhat more positive trend in the economy in January, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, noted that one of the clear indicators that the economy is still struggling is the market's purchasing power, which remains weak both domestically and internationally, even during the month before the 2024 Lunar New Year, when domestic demand typically experiences a strong increase according to established patterns.

"Consumer Price Index (CPI) in January rose by merely 0.31 percent compared to the previous month, easing inflation concerns. However, looking from another angle, the market's purchasing power remains low," assessed Dr. Nguyen Dinh Cung. This assessment is corroborated by data from the General Statistics Office of Vietnam, which confirms that total retail sales of goods and consumer service revenue in January amounted to an estimated VND524.1 trillion, marking a 1.6 percent increase from the previous month and an 8.1 percent rise from the same period in 2023. This growth, however, is lower than the pre-Tet periods from 2020 to now. Despite the generally optimistic nature of Vietnamese consumers, cautious psychology in spending is noticeably impacting the market.

According to a study released by UOB Vietnam at the end of 2023, eight out of every ten consumers in Vietnam expressed concerns about financial matters. Meanwhile, in January, HSBC predicted that external demand has yet to make a strong recovery. There are several factors supporting this forecast, including weak purchasing power and logistical challenges stemming from conflicts in Russia-Ukraine, Israel-Hamas, and particularly the recent conflict in the Red Sea.

With a shared perspective, both the World Bank (WB) and the Asian Development Bank (ADB) recommend that Vietnam continue implementing policies to stimulate economic recovery, such as boosting consumption and investment. At the final session of the year in 2023, the National Assembly approved the continuation of value-added tax reduction and allowed for the extension of the implementation of the development investment package under the Socio-economic Recovery and Development Program into 2024. These are indeed very appropriate measures.

Moreover, given the ongoing difficulties faced by businesses (with a record-high number of companies exiting the market), there is a pressing need for supplementary measures to assist enterprises in accessing new markets, ramping up exports, and driving domestic consumption.

For businesses, it's essential to proactively monitor economic trends and policy changes in major markets like the US, the EU, China, and Japan to adjust their production and marketing strategies accordingly. They should also capitalize on commitments made in both bilateral and multilateral free trade agreements. In the domestic market, this is a critical time for enterprises to innovate, finding ways to cut production costs and develop more practical products and services. Additionally, they should implement savvy promotional strategies to boost demand. Rather than being discouraged by challenges, businesses should strive to turn them into opportunities.

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