Vietnam’s 2021 economic outlook depends on the domestic and global COVID-19 situation, but growth of 6 percent is an achievable target for next year, a lawmaker has said.

Talking to the press on November 3 on the sidelines of the 14th-tenure National Assembly’s 10th session, deputy Duong Minh Tuan of southern Ba Ria-Vung Tau province said amid the complex COVID-19 outbreak and a global economic recession, although Vietnam has also suffered from the pandemic’s socio-economic impacts like other countries, this year’s GDP growth of about 2-3 percent is encouraging.

Showing his support for the Government’s reports on socio-economic development and the State budget, he highly valued the Cabinet’s efforts, attributing the stable economic development and GDP growth in 2020 despite COVID-19 to the whole political system’s engagement and the Government’s drastic directions.

Vietnam has been striving to minimise the pandemic’s consequences and done a good job in COVID-19 prevention and control, he said.

Though export and import activities have been affected as they are related to other countries, the realisation of targets set by the NA hasn’t been influenced much, Tuan said.

The legislator noted that the expected growth of 2.5-3 percent this year is relatively low.

However, he held that the target of about 6 percent for 2021 is feasible if the country can maintain anti-COVID-19 efforts like at present and successfully stimulate domestic demand.

The NA’s 10th session is scheduled to last for 19 days with online meetings held from October 20 to 27 and face-to-face discussions in Hanoi from November 2 to 17./.

Dong Nai province boosts agriculture restructuring

Dong Nai province has been tasked in recent years with building new-style rural areas associated with the restructuring and linking of agricultural production. This has helped the southern province post a breakthrough in agriculture, with incomes improving as a result.

Under its agricultural restructuring plan, the southern province of Dong Nai has developed a biosafety production model associated with product consumption and building a concentrated agricultural production area.

In previous years, cocoa growers in Dong Nai province had faced a situation whereby they may have a good harvest but their crops are still devalued. Farmers then began to link with businesses to sell their crops.

In 2019, Dong Nai was one of the first two provinces to be recognised as reaching new-style rural area standards, under a decision from the Prime Minister.

To do so, Dong Nai had introduced many policies to develop production and increase incomes, and created production chains to ensured stable consumption. Annual per capita income in the province’s rural areas now stands at nearly 62 million VND, nearly three times higher than in 2011.

Dong Nai is set to have all communes and five districts to be recognised as reaching new-style rural area standards by 2025./.

Vinamilk plans to import 1,200 milch cows from US in 2021

Vinamilk, the largest dairy producer in Vietnam, recently imported 500 dairy cows from the US, and plans to buy additional 1,100-1,200 cows in 2021 for its dairy cow farm in the central province of Quang Ngai to boost the domestic supply of raw milk.

Vinamilk splashed out some 700 billion VND (30.1 million USD) on the high-tech farm, which spans 100 hectares in Quang Ngai province and raises 4,000 milch cows.

The farm, the second largest farm of Vinamilk, will be inaugurated in Duc Hoa commune, Mo Duc district in March 2021.

Last year, Vinamilk inaugurated Vietnam’s largest dairy cow farm in Tay Ninh province. Invested at total cost of more than 1.2 trillion VND, the farm covers 685 hectares in Long Khanh commune, Ben Cau district. With a herd of 8,000 cows, the farm provides 100,000 litres of fresh milk per day, equivalent to 40 million litres of milk annually.

Vinamilk recorded over 45.27 trillion VND in revenue during January-September, up 7.4 percent year on year. Its post-tax profit surged 7 percent from the same time last year to 8.96 trillion VND.

In 2020, the firm targets to gain 59.6 trillion VND in revenue and 10.69 trillion VND in post-tax profit, up 6 percent and 1 percent as compared to the figures in 2019./.

EU ready to resume FTA talks with Thailand

The European Union (EU) is ready to resume negotiations on its free trade agreement (FTA) with Thailand as soon as possible, senior officials have affirmed.

Director-General of the Department of European Affairs under the Thai Foreign Ministry Sasiwat Wongsinsawat and the EU's Deputy Managing Director for Asia and Pacific Department at the European External Action Service (EEAS) Paola Pampaloni recently co-chaired the 15th Thailand-EU Senior Officials' Meeting via video conference.

This year's annual meeting discussed COVID-19 and its impact on the economy, as well as the political developments in Thailand, according to a statement released by the Department of European Affairs, with both parties also agreeing to strengthen ties by signing the Partnership and Cooperation Agreement by the end of next year.

The EU also confirmed its readiness to resume EU-Thailand FTA talks as soon as possible. Relevant agencies will discuss the details at a meeting of a committee on trade and investment in December.

At the same time, Thailand and the EU voiced a desire for close and tangible cooperation including in the fight against Illegal Unreported and Unregulated (IUU) fishing via the ASEAN Network on Combating IUU Fishing, and by setting up a Thailand-EU Security Dialogue and promoting the protection of labourers via the Thai-EU Labour dialogue.

Moreover, the EU will discuss a voluntary agreement on combating illegal wood trading with the Forest Law Enforcement, Governance and Trade.

The EU is Thailand’s fifth largest trade partner, after ASEAN, China, Japan and the US. Two-way trade hit 44.5 billion USD in 2019, of which 23.58 billion USD came from Thailand’s exports. The deal, once taking into effect, is expected to help raise annual exports and imports by 3.4 percent each, and investment by 2.7 percent./.

Smart energy to grow with smart urban development

As smart energy plays an important role in smart urban areas, Vietnam plans to develop smarter, cleaner, greener and more sustainable energy resources for its cities.

Per Resolution 55-NQ/TW on the national energy development up to 2045, economical and efficient use of energy and environmental protection must be considered an important national policy and the responsibility of all of society.

According to the Ministry of Construction, there are 833 urban centres including two special cities, 20 grade 1 cities and the rest grade 3 or grade 4 centres.

According to the World Energy Organisation, ASEAN exports some primary energies, but it will become an importer of energy in a very short time due to its rising population.

As a production country with more and more industrial zones and a possible importing country, experts noted that Vietnam had to use energy efficiently.

As cleaner smart energy is a demand now by major foreign firms to meet their own corporate carbon reduction policies, greener industrial zones will attract more quality investors to Vietnam./.

Trade defence – a relief buoy for firms during integration

Trade defence measures acted as an effective “relief buoy” that helped protect businesses in the context of international integration, said Le Trieu Dung, director of the Ministry of Industry and Trade’s Trade Defence Department.

Dung said these legal measures were designed to protect domestically produced goods from the sudden increase in imported products that had stemmed from the 13 free trade agreements (FTAs) Viet Nam had signed.

“This is why the most integrated and free economies are also the ones with the most trade defence measures,” he added.

For example, such measures were introduced in the US 100 years ago and had become a mandatory element in the international commercial business environment to protect legal interests in the domestic market from unfair competition of imported goods.

“Viet Nam’s consistent policy during integration and the implementation of FTAs, including new generation FTAs such as the EVFTA and CPTPP, is basically to reduce tariffs on imported goods. This has created competition pressure. Enterprises and associations need to study and use trade defence to protect their interests in the domestic market against unfair competition from imported goods,” he said.

The ministry has been investigating 20 cases, mainly anti-dumping, anti-subsidy and safeguard investigations, typically with fertiliser, wood, steel, aluminum, cane sugar and syrup.

The number of cases remains modest compared to the 200 cases of Vietnamese exports being sued by foreign markets. However, they have contributed to protecting the manufacturing industry, which accounted for about 6 per cent of the country’s GDP in 2019 and nearly 150,000 jobs. Some industries such as steel, aluminum and fertiliser would be at risk without protective tools.

Due to the increase in trade remedies imposed by foreign markets, the MoIT has co-ordinated with relevant ministries and agencies to support businesses by providing up-to-date information, advice on legal issues and details of investigations being carried out by other countries, as well as solutions for businesses.

Viet Nam has seen some positive results. The country has successfully appealed about 43 per cent of cases to ensure products, especially commodities such as basa fish and shrimp, continue to be exported to major markets such as the US and EU with tax rates of zero per cent or very low. It has petitioned five cases to the WTO’s Dispute Settlement Agency, of which it has won three.

However, experts said only a small number of enterprises and business associations understood the laws and policies regarding trade remedies so only a few had been able to effectively employ them.

Nguyen Thi Thu Trang, director of the WTO and Integration Centre under the Viet Nam Chamber of Commerce and Industry (VCCI), said Viet Nam had opened up its domestic market to goods from 51 partner countries, helping to make the Vietnamese market more vibrant and competitive.

However, mass imports that caused unhealthy competition has also been seen, capable of causing significant damage and threatening the long-term interests of some manufacturing industries.

This was why businesses needed to put forward their ideas for the latest draft project to improve their trade defence capabilities. 

Vietnam imports 1.4 mln tonnes of Cambodian rice paddy

Cambodia has exported more than 1.4 tonnes of rice paddy to Vietnam over the past 10 months, according to the Cambodian Ministry of Agriculture. 

The ministry said most of the exports came from the provinces of Kandal, Prey Veng, Svay Rieng, Takeo, Battambang and Kampot.

Minister of Agriculture Veng Sakhon told Khmer Times for the 2019-2020 harvest Cambodia produced 10.88 million tonnes of rice paddy with a surplus of 5.76 million tonnes.

“These figures show that we don’t want to stop exports to Vietnam, because our farmers will lack a market. Last season Cambodia was estimated to export more than 2 million tonnes of rice paddy to Vietnam,” he said.

Secretary-General of Cambodia Rice Federation (CRF) Lun Yeng said most of the rice paddy exported to Vietnam is short-time-growth rice that can take just three months to mature.

“Short-time-growing-rice is not our target for processing for export but we encourage farmers to export it because it helps farmers to generate more income and working capital,” he said.

Cambodia has more than 2.7 million hectares under rice cultivation. Floods in recent times have affected more than 213,000 hectares, with 32,000 hectares severely damaged. The natural disaster could reduce the amount of paddy exported to Vietnam, which often reaches more than 2 million tonnes a year.

Minh Phu Seafood to pay 15 per cent cash dividend

Shrimp processor and exporter Minh Phu Seafood JSC (MPC), Viet Nam's biggest shrimp company, plans to pay 2019's dividend in cash at a rate of 15 per cent, the company announced Friday.

A shareholder will receive VND1,500 for each share he or she owns. With nearly 199 million shares currently in circulation, Minh Phu Seafood will have to spend about VND298.5 billion (US$12.9 million) for this dividend payout.

The expected dividend payment time is from November 26, 2020.

In the third quarter of 2020, Minh Phu recorded revenue of nearly VND2.79 trillion, a decrease of 14.27 per cent compared to the third quarter of 2019. Post-tax profit increased by 61.17 per cent to VND166.42 billion.

In the first nine months, the company earned revenue of nearly VND6.65 trillion and after-tax profit of VND408.9 billion, down by 21 per cent and 15.59 per cent over the same period last year.

By the end of September, Minh Phu's total assets reached more than VND8.3 trillion, up 21.1 per cent compared to the beginning of this year. Cash and cash equivalents decreased by nearly 52 per cent, touching VND220.5 billion. Short-term financial investments gained by 21.5 per cent to over VND1.39 trillion. Short-term receivables increased by 62.86 per cent to VND1.48 trillion. Inventories rose 41.13 per cent to VND1.58 trillion.

Liabilities totaled VND2.9 trillion, up strongly by 90.6 per cent compared to the beginning of the year and accounting for 35.22 per cent of total capital. 

Vietnamese exports to US market enjoy robust growth

Vietnam's import-export value during the course of the opening ten months of the year witnessed a slight increase of 2.6% to US$439.82 billion, with exports to the United States reaching up to US$62.34 billion, according to the latest figures released by the General Department of Vietnam Customs. 

Fruit exports to the United States see positive signs despite adverse impacts of COVID-19 epidemic
Of the figure, the total export value is anticipated to record an increase of 4.7% to US$229.27 billion, while imports rose by 0.4% to US$210.55 billion during the reviewed period. Indeed, the trade surplus is expected to be US$18.72 billion, far higher than last year’s level of US$9.3 billion

The General Department of Vietnam Customs points out that exports to major markets have experienced vigorous growth, with exports to the US during the course of the ten-month period soaring by 24% to US$62.34 billion, equivalent to an annual increase of US$12 billion.

Furthermore, Vietnamese exports to China also saw a rise of 14% to US$37.6 billion, equal to an increase of US$4.6 billion on-year, while imports from the northern neighbour picked up by 6.2% to US$65.78 billion in comparison with last year’s corresponding period.

Seafood firms urged to capitalise on CPTPP to boost exports to Canada

Vietnamese seafood exports to Canada have witnessed robust growth in recent times following the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with shrimp, tuna, and basa fish making up a high market share in the Canadian market, according to industry insiders.

To Thi Tuong Lan, deputy secretary general of the Vietnam Association of Seafood Exporters and Producers (VASEP), said seafood exports to Canada enjoyed an increase from US$196 million in 2015 to US$229 million in 2019.

Most notably, despite suffering from the adverse impacts caused by the novel coronavirus (COVID-19) epidemic, seafood exports to Canada during the opening eight months of the year saw a rise of 11.6% on-year to over US$156 million, of which shrimp exports surged 27% to over US$110 million, with tuna also rising by 3.1% to approximately US$16 million.  

Seafood exports to this market for the entire year are projected to record an increase of roughly 20% compared to last year’s figures.

Despite these positives, several local businesses have stated that they face numerous obstacles when trying to enter the Canadian market due to their high requirements on quality, food safety, and hygiene standards.

Furthermore, some Canadian businesses require that Vietnamese firms deliver goods before payments are made, which therefore poses a high risk for Vietnamese enterprises.

As a means of dealing with this situation, Dao Phuong Thuy, president of the Vietnam Club - Canada Hub Solutions, has advised domestic firms to gain knowledge about their partners and establish a long-term partnership with importers as a means of gaining greater insights into the Canadian market.

Canada is regarded as a gateway to the global market thanks to its access to priority markets through the signing of 14 free trade agreements with 51 countries, representing nearly 1.5 billion consumers with a total GDP reaching US$49.3 trillion, according to Nguyen Tuan, deputy director of the Investment and Trade Promotion Center of Ho Chi Minh City.

Vietnam represents appealing market for EU investors beyond EVFTA

With the EU-Vietnam Free Trade Agreement (EVFTA) an important factor in attracting EU investors, it is not the only reason why financiers are interested in the nation, according to Nicolas Audier, chairman of the European Chamber of Commerce in Vietnam (EuroCham), speaking during a recent media interview.

Discussing the impact of the EVFTA on investors, Audier mentioned some of the factors that affect the decision making process of EU financiers in the country.

Since its implementation, the EVFTA affects all aspects of the economy as a whole, with the EU itself representing a large economy, comprising of 27 member states after Brexit. Indeed, many countries are lining up to sign a trade agreement with the European bloc.

In ASEAN, only Singapore and Vietnam have managed to signed a free trade agreement (FTA) with the EU. Whilst Singapore plays an important role as the financial hub of the region and does not have many production activities, this represents an opportunity for the nation, which has plenty of advantages to boost its production, therefore making it easier to attract a large flow of capital.

Through the EVFTA, there will be increased high-tech investment that will be brought into the country in the near future, he added.

In terms of which investment fields domestically that businesses from the bloc are most interested in, many EU firms are investing in the nation in the form of mergers and acquisitions (M&A) and joint ventures. In particular, approximately EUR6 billion from the EU is poised to be invested in the new Vietnamese energy sector, with European businesses being interested in energy and green fuel production.

This represents a major infrastructure construction project that is about to take shape locally, with plenty of major European companies investing in the country’s new technology, infrastructure, and environmentally friendly industries, the EuroCham chairman said.

Some of the issues that most concern EU businesses are not costs and taxes, but also labour laws, technologies used locally being environmentally friendly, and ensuring  sustainable development.

Vietnamese businesses that strive to export to the EU must meet these requirements, along with other standards such as quota requirements and product quality, especially gender equality, he noted.

At present, the Vietnamese Government is making great efforts to improve the legal system and becoming more open to foreign investors. Currently, foreign financiers are able to propose and work directly alongside the Government, with EuroCham being appreciative, noting that few countries are open in the same manner as the country.

Upon being asked what attracts EU businesses to invest in the nation, the EuroCham official said EU investors are attracted not just because of the EVFTA, although it is an important factor. Whilst the trade deal has made the EU more understanding and pay greater attention to the Vietnamese market, many choose to invest simply because of the attractiveness of the nation. Following the implementation of the renewal (Doi Moi) process, the country is fast emerging as an attractive investment destination. In addition, with the country’s strategic geopolitical position, it will be a springboard for multinational companies to penetrate the ASEAN Economic Community as a means of achieving greater penetration in the Asian market.

As a means of helping Vietnamese businesses join the supply chain of EU businesses, Audier stated that the country has been participating in the global supply chain. The Vietnamese Government has been focusing on supporting the development of small and medium private enterprises (SMEs), with private enterprises increasingly having a voice and a more solid foothold in the current economy.

One key issue remaining is to further improve local infrastructure systems, such as roads, bridges, airports, and ports. These represent important factors in developing the global supply chain, therefore helping the nation draw major foreign enterprises.

The country must also improve the quality of human resources with more and more methodical investment in terms of the vocational school system which will allow human resources to meet the requirements of foreign investors moving forward, he said. 

Agriculture sector targets USD40bn export revenues

The agriculture sector has aimed for USD40bn in export revenue for 2020 despite various difficulties because of Covid-19 and natural disasters.

Head of the Department of Agro-Processing and Market Development Nguyen Quoc Toan said that the sector had been badly affected by Covid-19 so maintaining an export growth would already be considered a success.

Agriculture export revenue reached USD30.05bn in the first nine months, an increase of 1.6% compared to the same period last year. As of now, eight agriculture products have recorded over USD1bn in export value and six products have USD2bn export value. Do Hao Nam, vice head of Vietnam Food Association, said that Vietnam had exported 4.8 million tonnes of rice worth over USD2.4bn, a decrease of 0.8% in volume but an 11.8% increase in value. The EVFTA is also bringing many opportunities.

Vietnam's export of wood and wood products brought back USD8.48bn in the first nine months, an increase of 12.4% compared to the last period last year. According to the chairman of Timber and Forest Products Association Do Xuan Loc, the sector will have more achievement with the EVFTA since timber and wood products are one of the key export products to the EU with annual export revenue of USD500m.

Deputy Minister Phung Duc Tien said, "The agriculture sector growth rate was still positive because demand actually increased amid the pandemic. More importantly, our product quality has improved greatly. The EU is a huge market but has strict requirements. If we can export to the EU, we will have the chance in other markets too."

The pandemic and natural disaster development will continue until the end of 2020. However, the agriculture sector set a target to reach USD10bn in export revenue in the final quarter and USD40bn for 2020. Many measures and plans have been implemented to realise the targets.

Thai Huong, chairwoman of TH Group said they had put into operation Van Ho Herbal and Fresh Fruit Processing Factory with capacity to deal with 300 tonnes of fruit a day. The factory will maximise hi-technology and the fruit gardens of Son La Province.

The sector would also focus on dealing with the aftermath of recent flooding. The Department of Crop Production will work with the authorities in the central region to provide seeds and livestock to the farmers so they can settle down as soon as possible. They will work with the northern region provinces to boost fruit production for export.

The Ministry of Agriculture and Rural Development forecast that fishery exports to the US would continue to rise in late 2020. Saudi Arabia had also allowed 12 Vietnamese seafood companies to resume the export of seafood products to Saudi Arabia following suspension since early 2018.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien said that they would collaborate with the Ministry of Industry and Trade to update farmers and traders the situation in key markets like the US, the EU, Japan and China and the contents of free trade agreements to ensure food hygiene and quality requirements.

FPT Retail reports yet another quarter of losses

FPT Retail has reported another quarter of losses due to weak mobile sales and the mounting costs of expanding its Long Chau pharmacy chain, according to VN Investment Review. 

FPT Retail, the retail arm of technology giant FPT Group, has just released its third-quarter results.

Accordingly, its pre-tax losses dropped to VND8 billion ($347,830). In comparison to the same period of last year, its revenue fell by 22 per cent to VND3.422 trillion ($148.8 million).

Although posting better performance than in the second quarter, when it had pre-tax losses of VND21 billion ($913,050), earnings continue to suffer with another round of store closures that have hurt mobile phone sales amid weaker disposable incomes and consumption demand.

According to KB Securities, the aggressive expansion of Long Chau drug stores was another factor in its earnings fallout. The firm has upped the ante to bring better customer experience by rolling out its online channel as a solution during the pandemic. Its online sales have reached VND1.614 trillion ($70.17 million), up 22 per cent on-year, and increasing total quarterly revenue by 47 per cent.

Year-to-date pretax earnings plunged 94 per cent to a mere VND18 billion ($782,610). This represents 8 per cent of the management’s full-year earnings target and 9 per cent of this year’s consensus.

Revenue for the first nine months is also down 14 per cent on-year to VND10.729 trillion ($466.5 million), equaling 70 per cent of the management’s annual goal.

On the other hand, FPT Retail has ventured beyond their traditional businesses and into pharmacy retail in recent years, with the Long Chau pharmacy chain. Long Chau pharmacy chain recently reported its third quarter’s revenue reaching VND351 billion ($15.26 million), up 131 per cent on-year.

Strong topline growth was likely from the pickup in demand for health products and flu medications due to the pandemic but these items usually carry thinner margins.

The total number of stores reached 593 FPT shops and 176 Long Chau stores, following the opening of 41 new Long Chau locations and closing of three FPT shops in this quarter.

The company’s board, however, remains committed to expanding the Long Chau franchise and is planning to open more than 200 stores nationwide by the end of 2020.

The company’s initial plan was to open 150 new Long Chau stores this year.

Credit growth boosts economic recovery

Credit in the last months of 2020 is expected to witness good growth, thus contributing to pouring more capital into the economy and helping to resume production and business activities post-COVID-19.
Vietnam’s GDP growth in the first nine months this year reached 2.12%, thanks to the active support from credit growth. With the current good control of COVID-19, the State Bank of Vietnam (SBV) has predicted that credit growth in the last months of the year would likely to increase significantly, resulting in an increase of from 8-10% for the whole year.

According to an updated report from the SBV’s Department of Credit for Economic Sectors, regarding credit growth to the whole economy, after the first quarter increased slowly (at 0.01% in January, 0.2% in February, and 1.3% in March), the credit showed signs of fast increasing in the second quarter (April: 1.42%; May: 1.96%; June: 3.63%). By the third quarter, credit flourished with an increase of 4.03% in July, 4.75% in August, and 6.09% in September compared to the end of 2019 (the same period in 2019 saw an increase of 9.4%).

Regarding credit growth to economic sectors, outstanding loans of trade and services account for a large proportion at 63%, with the highest growth of about 6.32%; while outstanding loans of construction industry are estimated to have increased by 5.89%, accounting for 28.75%; while credit for the agro-forestry and fishery sector accounts for 8.66%, an estimated increase of 5.09%.

In particular, credit has supported a number of industries that are the driving force for economic growth, with credit for electricity production and distribution, gas, hot water, steam and air conditioning increasing by 13.31%; water supply, waste and wastewater management and treatment up by 8.36%; construction up 9.01%; and wholesale and retail and repair of automobiles, motorbikes, motorbikes and other motor vehicles up 8.08%.

Regarding credit for priority sectors, capital continues to pour on priority areas under the direction of the Government. Notably, some sectors are now taking advantage of the new context such as credit for exports, up about 7%; credit for agriculture - rural area development, up 5%; and credit for small- and medium-sized enterprises, up 5.5%.

In the context of economic difficulties, credit growth in the first nine months of 2020 has positively contributed to support the country's nine-month GDP growth of 2.12%, as well as sectors that are the driving force for economic growth, including electricity production and distribution, gas, hot water, steam and air conditioning supply, up 3.7%; processing and manufacturing, up 4.6%; construction, up 5.02 %; and wholesale and retail, up 4.98%. This result shows that the credit management of the central bank is on the right track, with proposed solutions have been issued timely and are suitable with reality, while gradually promoting their efficiency.

With the current well control of COVID-19, the implementation of the Government’s solutions to remove difficulties to promote economic recovery, along with monetary and credit solutions from the banking sector, credit at the end of the year is expected to continue to enjoy good growth, contributing to boosting capital supply for the economy and production and business operations.

The SBV has committed to implement synchronously such solutions as creating the most favourable liquidity for commercial banks to reduce lending interest rates to support their customers, continuing to adjust the credit growth limit to facilitate credit institutions to extend credit supply to people and businesses, while still ensuring the sector’s safety and efficiency, especially in ensuring effective investment in projects, thus contributing to economic growth.

At a recent Government press conference in September, SBV Deputy Governor Dao Minh Tu said that credit growth for the whole year may reach 8-10%, in which over 9% is feasible. Credit movements in September showed a positive sign in the issue of enterprises' access to capital, thereby showing a positive development of the economy.

Specifically, by the end of August, credit growth only reached about 4.2-4.3%, but by the end of September, it reached about 6.1%. In the context of the economy heavily affected by the COVID-19 epidemic, credit growth in the first quarter was very slow and grew slightly faster in the second quarter, but still in a very difficult situation due to the negative impact of the epidemic on various sectors and fields. For that reason, the results achieved in the last quarter are encouraging.

In particular, some sectors, such as agriculture - rural area development and manufacturing, even areas that are still in difficulty such as services, telecommunications and transportation have all recorded positive increase in credit growth at a higher level than the general growth rate at about 7%. This shows that, in the context of the economy facing many difficulties due to the impact of the pandemic, businesses are changing positively and flexibly. Therefore, in the event of difficult conditions due to old debts, enterprises are still ready to access new loans on the basis of delaying and restructuring old debts.

In the remaining months of 2020, Deputy Governor Dao Minh Tu affirmed that the SBV would continue to closely follow the plan to boost the credit growth to positively support economic growth. To achieve that goal, the central bank has proposed a range of solutions, in which it has been actively handling difficulties for businesses through restructuring debts and interest due, but the most important solution is to reduce interest rates.

Specifically, the SBV has reduced the operating rate three times since the beginning of the year, with the 3rd adjustment in particular (applied from October 1) having had an immediate effect. The resonance reduction rate after three times of changing is about 1.5-2%, which would create a source of cheap capital for commercial banks to facilitate businesses and people wishing to borrow capital with lower interest rates.

Besides, commercial banks themselves have also reduced costs and lowered conditions to support businesses in borrowing loans at lower interest rates. In fact, the support through the lowering of interest rates, applied on both new and old loans, has created favourable conditions for businesses to access capital more easily.

Radical measures are needed for private sector to become Vietnam’s important growth driver

The domestic private sector is flourishing with a significant role in the Vietnamese economy. As of 2019, the sector contributed 42% of GDP and 30% of government revenue while employing 85% of the workforce and accounting for over 43% of total social investment.

Private firms have made successful investments in important infrastructure projects and areas of business which were previously dominated by state-owned enterprises, such as airports, sea ports, tunnels, expressways and air transport.

But it is a paradox that few can build up to become truly large enterprises and the majority remain as small and ultra-small enterprises.

Some even took years to become medium-sized enterprises only to decide to sell themselves or merge with others once they began to establish a reputation.

In the meantime, household businesses, which are much larger than the formal sector, are reluctant to convert themselves into formal enterprises.

Recent years have seen more than 100,000 enterprises established each year, injecting a significant amount of capital into the economy, but at the same time many have also pulled out from the market.

It is estimated that for every ten new enterprises, there are six to eight being forced to close temporarily, awaiting completion of bankruptcy procedures or formally closing down.

The question is whether the business environment in Vietnam is attractive and safe enough to motivate the people’s legitimate aspirations of becoming rich and contributing to national development instead of just earning a livelihood. And what needs to be done to tap into the huge pool of resources possessed by the people, which is estimated at billions of US dollars kept in banks for safety rather than flowing into investment and production channels.

With such a reality, the Party and Government have identified private sector development as an important driver of the socialist-oriented market economy and new driver for economic growth. It is a significant change of mindset and needs to be manifested in socio-economic development strategies.

Accordingly, it is necessary to form an equal and healthy competitive environment for the private sector to grow by fine-tuning and improving the quality of institutions and laws so that they are stable, specific and transparent, while also meeting international standards.

For their part, private enterprises need to enhance their labour productivity, product quality and competitiveness as their top priorities by applying new technologies and administration methods as well as promoting linkage and integration.

Only when such measures are taken can the private sector grow in proportion to their potential and become an important driver of national development.

HCMC leads in new foreign-invested projects in Jan-Oct

HCMC took the lead in the number of new foreign-invested projects in the January-October period of this year with 776 projects worth US$3.4 billion.

However, the registered investment of the city ranked second, after the Mekong Delta province of Bac Lieu, with US$4 billion, reported Nguoi Lao Dong newspaper, citing a report by the Ministry of Planning and Investment.

According to the HCMC Statistics Office, the city attracted the largest foreign capital in trade and industry with a total investment of US$838 million. The property sector came second with US$772 million.

The capital of Hanoi ranked second in the number of new foreign-invested project approvals with 438 projects, followed by Bac Ninh with 125 projects.

In the 10-month period, the pledged foreign investment in Vietnam reached nearly US$23.5 billion, equal to 80.6% of the figure seen during the same period last year.

Of the total, 2,100 new projects obtained investment certificates, with total registered capital of US$11.66 billion.

Foreign investment was committed to 18 sectors, of which the manufacturing and processing sector attracted the most capital at US$10.7 billion, accounting for 45.7%. The electricity production and distribution sector came in second, with over US$4.8 billion, followed by the real estate and wholesale-retail sectors.

Singapore was Vietnam’s largest investor during the period, with US$7.51 billion, or 31.9% of the total, followed by South Korea, China and Japan.

At a seminar held in HCMC on October 30 to support enterprises to access capital resources and step up their production and business after the Covid-19 pandemic, representatives of many domestic and foreign investment funds said they have yet to come to Vietnam to learn about projects and make investment decisions.

However, they have assessed the country as a potential and attractive market, especially during a shift of investment from China to other countries, including Vietnam.

Pandemic-triggered wave of tourism unemployment yet to end

A lack of business brought on by the Covid-19 pandemic has forced scores of enterprises in the tourism industry in Vietnam to remain shut as of this month, leaving millions of employees furloughed or laid off and having no clue about when they can resume work.

Data from the General Statistics Office revealed that the number of international visitors to Vietnam in October rose by 7.6% month-on-month but reached 14,800 only. During the January-October period this year, the country welcomed over 3.8 million international tourists, plunging a massive 73.8% over the same period in 2019.

The domestic segment also saw a sharp decline in arrivals.

According to Nguyen Trung Khanh, head of the Vietnam National Administration of Tourism, the local tourism industry served 43.5 million domestic tourists in the 10-month period, falling as much as 41% against the same period last year. The sharp decline in international and domestic tourist arrivals has forced a large number of firms in the field to suspend their businesses and put millions of employees out of work.

Many tourism operators told the Saigon Times that the pressure on the unemployment rate has yet to be eased although the domestic tourism segment has resumed. Such pressure could linger for the next few years, they said.

“We started receiving tour bookings from this September but the number of bookings remains modest. Therefore, most of our employees go to work for just five days a month,” head of a travel firm, which is among Vietnam’s top 10 tour operators, told the paper.

This hard time may last for the next few years, especially at companies offering international tour services that furloughed most of the staff since the end of March, after the Government ordered a temporary suspension on international air routes to contain the spread of Covid-19.

UNWTO: International travel demand to recover in Q3-2021

Travel restrictions meant to prevent Covid-19 led to the number of international arrivals around the globe slumping 70% in the January-August period, but tourism is forecast to recover from the third quarter of 2021, said the World Tourism Organization (UNWTO).

Asia Pacific suffered the most impact with a 79% decline, followed by Africa and the Middle East with 69%, Europe with 68% and America at 65%.

In the Asia Pacific, July and August reported the steepest fall at up to 96%. In Vietnam, data from the General Statistics Office showed that the number of international arrivals nosedived by 98.9% year-on-year.

In the coming months, the situation may not improve as the Government has yet to welcome international vacationers.

Meanwhile, Europe saw a milder decline in July and August as nations gradually opened their borders. However, the recovery was short-lived as travel restriction measures and recommendations have been put in place again due to the rising number of cases of infection.

By the end of August, the number of international travelers dropped by over 700 million compared with the same period last year. Export revenue from international tourism dipped by US$730 billion, eight times higher than that triggered by the global financial crisis in 2009.

Vietnam has yet to calculate the total damages caused by the decline. However, as of the end of October, the nation saw the number of foreign vacationers down by nearly 10.7 million. Foreigners recorded an average spending of US$1,074 each in 2019.

The unprecedented decrease is leading to serious socioeconomic consequences, posing risks to millions of jobs and businesses, Zurab Pololikashvili, Secretary-General of the UNWTO, stated in a recent press release.

Pololikashvili stressed the need to restart the tourism sector in a safe, timely and coordinative manner. However, the industry still faces a gloomy outlook in the near future.

According to UNWTO, the demand for traveling will keep plunging, with the number of international arrivals expected to sink by nearly 70% this year. They key reasons remain travel restrictions, the slow coronavirus control process, low consumer confidence and the economic recession.

Most UNWTO experts expected the demand for international travel to recover next year, mainly from the third quarter. However, 20% of them believed it would happen only in 2022.

Many tourism experts and businesses in Vietnam have expressed concern over a possible slow recovery in the inbound segment that has developed poorly due to the pandemic. Some partners have canceled tours to Vietnam until the first quarter of 2021 and even until next October.

Some partners in Europe have heard that international flights to Vietnam will not resume until next April. The nation is still in hibernation, said Bui Viet Thuy Tien, managing director of Asian Trails.

Commenting on the recovery rate of the segment, Grant Thornton Vietnam said the number of international arrivals may go from 10 to 12 million in 2021 in the most optimistic scenario, from eight to 10 million in the average and from six to eight million in the worst scenario.

Source: VNA/VNN/VNS/SGGP/VOV/NDO/Dtinews/SGT/VIR