The Spring Fair 2023 kicked off on Thursday in Ha Noi.

The fair is being held at the Trade Promotion Centre for Agriculture (Agritrade), 489 Hoang Quoc Viet Street, featuring more than 100 stalls displaying agricultural specialities of enterprises, production facilities and craft villages from 20 provinces and cities.

The products introduced at the fair all meet quality standards, ensuring food safety and hygiene in all stages from production, processing, preservation to consumption.

The fair will last until next January 19. 

Vietnam, Laos seal 10 cooperation deals

Vietnam and Laos signed 10 deals this morning, January 11, to boost economic cooperation, with Vietnamese Prime Minister Pham Minh Chinh and his Lao counterpart Sonexay Siphandone witnessing.

The signing ceremony occurred after talks between the two prime ministers during PM Pham Minh Chinh’s official visit to Laos.

The 10 deals will help strengthen bilateral ties in digital technology, mutual legal assistance, training and education, water transportation, innovation in financial and payment systems, health and diplomatic consultation.

At the talks, the two sides agreed to maintain annual trade growth of 10-15% or above and promote cooperation in information and communications.

Bilateral trade between the two countries in 2022 reached nearly US$1.7 billion, up 21% compared to 2021.

Vietnamese businesses pledged investments of over US$180 million in Laos in 2022, up 52.5% over 2021.

VND5 trillion to be spent on railway upgrade

The Ministry of Transport will start work on five North-South express railway upgrade projects in the first quarter of this year, at a total cost of over VND5 trillion.

The Vietnam Railway Authority under the ministry is in charge of deploying the five projects using the mid-term public investment sourced from the State budget in the 2021-2025 period, the local media reported.

The 319-kilometer-long Hanoi-Vinh rail line will be upgraded at a cost of over VND810 billion, while the Vinh-Nha Trang railway upgrade project will require some VND1.2 trillion in investment.

The authority will spend over VND1 trillion upgrading the Nha Trang-Saigon railway section.

Besides, the rest will be used to upgrade several stations in the northern region and build railway bridges.

Gov works on securities, housing market overhaul

The Government is working toward stabilizing macroeconomic conditions, curbing inflation and spurring growth this year, with a focus on restructuring the securities and real estate markets.

The prime minister issued Decree 01 on economic development plans, budget revenue estimates and improvement of business conditions in 2023.

Accordingly, Vietnam will continue to follow tight monetary and expansionary fiscal policies, stabilizing the financial and forex markets by helping the money, bond, stock and real estate markets grow in a sustainable way.

The new decree also urged handling six poor-performing banks and eight projects with tardy progress to prevent cross-ownership in the banking system.

It requires the authorities to closely monitor the prices of necessities such as electricity and petroleum products, develop electronic and digital government and enhance labor quality.

Besides, ministries are tasked with devising quarterly industry-related growth scenarios and tracking domestic and global developments to impose timely measures against adverse economic and business conditions.

Prices of petrol hold, oil down 520-960 VND per litre from January 11

In the latest petrol price adjustment on January 11 by the Ministry of Industry and Trade and the Ministry of Finance, the price of petrol remained unchanged compared with those of the last adjustment.

Accordingly, the retail price of petrol remained at 21.350 VND (0.91 USD) for E5 RON 92 and 22,150 VND for RON95.

Meanwhile, the price of diesel oil decreased by 520 VND to 21,620 VND per litre, kerosene went down by 960 VND to 21,800 VND per litre.

The price of mazut oil also went down 380 VND per litre to 13,740 VND per litre.

At this price adjustment, the two ministries decided to not extract petrol oil prices for the price stablisation fund.

However, from January 11, they started to extract 605 VND per litre from diesel oil, 650 VND per liter from kerosene, and 300 VND per kg from mazut for the petrol price stabilisation fund./.

CAAV approves more flights for Tet

The Civil Aviation Authority of Vietnam (CAAV) has approved an additional 28 flights each day, equivalent to 5,600 seats per day, to meet the huge air travel demand in the run up to the Lunar New Year (Tet) holiday which starts on January 22.

There will be two flights per hour from 7 a.m. to 8:55 a.m. and four flights per hour from 0 a.m. to 5:55 a.m. from January 17 to 21 (or from the 26th to the 28th of the final lunar month) and from January 25 to 29 (or from the 4th to the 8th of the first lunar month).

The total number of additional flights is 280, with 56,000 seats during that period.

Passengers should come to the airport two hours before departure for domestic flights and three hours prior to departure for international flights. They should also use online check-in service to save time and avoid long queues and mass gatherings at airport check-in counters.

Previously, CAAV increased the number of flights at the Tan Son Nhat International Airport from 42 flights per hour to 44 flights per hour from 9 a.m. to 4:55 p.m. and 6 p.m. to 9 p.m. in the January 6-December 5 period (or from the 15th of the final lunar month to the 15th of the first lunar month).

Hanoi sees strong recovery in serviced apartment market in Q4/2022

Hanoi’s real estate market in the fourth quarter of 2022 saw a better performance in the serviced apartment segment than in apartments sales, according to the Savills’ report on the Hanoi property market released on January 10.

On the serviced apartment market, occupancy of 81% rose by four percentage points quarter on quarter and 12 percentage points year on year. That has nearly reached the pre-COVID (or the quarter of 2019) figure at 82%.

Rent of 575,000 VND per sq.m per month increased by 1% quarter on quarter and 6% year on year. Grade A charged the most at 735,000 VND per sq.m per month.

According to the report, Hanoi had no new supply of serviced apartments in the fourth quarter of 2022, while the stock of 5,935 units from 63 projects was stable quarter on quarter but increased by 4% year on year.

In 2022, Hanoi was sixth nationally in registered foreign direct investment (FDI), reaching 1.7 billion USD, a year-on-year increase of 12%. Newly registered FDI mostly came from Singapore, Japan, and the Republic of Korea.

The Hanoi Department of Labour, War Invalids and Social Affairs granted over 10,000 new work permits to foreign workers and reissued 868.

China reopened its borders on January 8, 2023. This will likely correlate to manufacturing and industrial growth in Vietnam, which will support FDI inflows and the serviced apartment sector. These properties largely cater to expats working in FDI projects and related enterprises, embassies, industrial parks, international banks, and other foreign businesses.

Meanwhile, Hanoi also changed the infrastructure with the development of Samsung's R&D project in Starlake Tay Ho Tay, which is its largest R&D facility in Southeast Asia.

Ring Road 2 is expected to be completed at the beginning of 2023. Once completed, it will improve traffic in Hanoi and between other provinces. These projects will drive demand for well-located serviced apartments.

Tan Cang Long Binh Inland Container Depot put into service

The Ministry of Transport has announced to launch the first phase of the Tan Cang Long Binh Inland Container Depot covering 25 hectares in Bien Hoa City, Dong Nai Province.

The Tan Cang Long Binh Inland Container Depot, developed by Tan Cang Long Binh ICD JSC, is located at 10 Phan Dang Luu Street, Quarter 7, Long Binh Ward, Bien Hoa.

The services offered by the depot include loading and unloading, warehousing, customs clearance and cargo tally, among others.

ICD Tan Cang-Long Binh now has 105 hectares for exploitation, including 30 qualified and multi-functional warehouses, such as a bonded warehouse, a domestic warehouse, a container freight station, a distribution warehouse, a cold storage warehouse, a toxic chemical warehouse and a customized warehouse.

The depot’s three-hectare goods inspection station, consisting of a goods inspection and parking space, can accommodate 100 vehicles of all types and make the loading and unloading of goods between trucks and container vehicles easier.

Vietnam’s growth likely to reach 6.47 percent

The Central Institute for Economic Management (CIEM) forecast Vietnam’s growth at 6.47 percent in 2023.

The CIEM under the Ministry of Planning and Investment announced two scenarios to forecast Vietnam's economic prospects in 2023 at a seminar this morning. The first scenario is considered a more feasible scenario with economic growth in 2023 possibly reaching 6.47 percent.

This level is approximately equivalent to the economic growth target of 2023 that the Government has determined, which is 6.5 percent. In the second scenario, according to the CIEM, the country’s growth can reach 6.83 percent. Vietnam is showing the image of a country that is trying to materialize strong commitments and clear orientations from COP26 on attracting high-quality investment toward a carbon-neutral economy and green growth, said Mr. Nguyen Anh Duong, Head of the CIEM’s General Research Department.

Regarding Vietnam's economic prospects in 2023, CIEM said that Vietnam may be influenced by more factors such as its ability to control the spread of SARS-CoV-2 virus variants and new diseases, increased geopolitical competition, the possibly prolonged Russia-Ukraine conflict, the tightening monetary policies of in key economies to handle inflationary pressures. The country’s economic growth will depend significantly on the ability to diversify export markets in connection with opportunities from free trade agreements. Moreover, its growth relies on handling risks associated with trade confrontations - technology among the superpowers, and the downtrend of regional currencies against the US dollar.

Industry minister checks troubleshooting at Nghi Son oil refinery

Minister of Industry and Trade Nguyen Hong Dien visited the Nghi Son oil refinery in Thanh Hoa Province this morning, January 12, to get updates on the troubleshooting progress over technical issues affecting fuel supply before the Lunar New Year (Tet) holiday.

Accompanying Dien were representatives of the Domestic Markets Department; the Oil, Gas and Coal Department; the Commission for Management of State Capital at Enterprises; the Thanh Hoa People’s Committee; and PetroVietnam.

A representative of the Nghi Son Refinery and Petrochemical LLC reported that it had mobilized enough human resources and equipment to fix the leakage in the residual fluid catalytic cracking (RFCC) unit since January 4.

The unit is expected to resume its operation on January 14 and ramp up its production to 105-107% capacity to make up for the shortfall during the suspension.

Currently, Nghi Son oil refinery produces an average of 17,000 cubic meters of fuel per day.

Minister Dien requested the refinery to fix the technical issues fast and put the RFCC unit back to normal operation before January 15.

The Domestic Markets Department and Oil, Gas and Coal Department have been assigned to follow the troubleshooting progress closely and draw up appropriate plans to ensure adequate fuel supply.

The Nghi Son oil refinery reported its technical issues to the ministry on December 31, 2022, and shut down its RFCC unit to fix the leakage.

The refinery was also forced to reduce its production during the repair of the RFCC unit. Consequently, the fuel output is estimated to fall by 20-25%, equivalent to around 125,000 cubic meters in the first 10 days of 2023.

Over 1,600 vehicles of goods cleared via Lang Son border gate

As many as 1,611 vehicles carrying goods have been cleared to pass through Lang Son border gates since China moved to reopen its border on January 8.

Hoang Khanh Duy, deputy head of the Management Board of Dong Dang - Lang Son border gate economic zone, said customs clearance activities have improved two days on since the northern neighbour’s reopening.

Tthe number of trucks for exports, mainly fruit trucks reached 593 whilst the number of vehicles imported into Vietnam stands at 1,018.

Duy emphasised that with customs clearance activities being eased, the transportation costs of enterprises will be further reduced while the demand for goods exchange among firms of the two countries will also increase.

He predicts that with the Lunar New Year drawing near, the volume of goods passing through border gates will not suddenly increase but will instead remain stable.

Moving forward over the coming days, between 400 and 500 vehicles of goods are expected to be cleared each day via the border gates.

Diversification still on radar of major foreign investors

Despite headwinds caused by geopolitical tensions, Vietnam has seen solid overseas investment, laying the ground for the country to boost inflows and realise its socioeconomic goals.

Last week, Edmund Malesky, director at Duke University’s Center for International Development in the United States, said he appreciated the role of foreign direct investment (FDI) in Vietnam’s stellar economic performance in 2022.

A few days ago, laptop manufacturer Quanta Computer revealed its intention to set up a factory in the north of Vietnam to fulfil orders for Apple MacBooks, according to DigiTimes.

Based in Taiwan, Quanta is a component manufacturer for many major computer brands worldwide, such as Dell, Toshiba, Amazon, HP, Cisco, Lenovo, and Fujitsu. It is also the largest Apple Watch manufacturing partner.

Previously, Apple said it planned to move some MacBook production lines to Vietnam for the first time to diversify production outside China. Apple has asked Foxconn to start manufacturing MacBooks in Vietnam as soon as possible, believed to be in Q2 of this year.

Apple has been preparing for two years to move dozens of its facilities or Taiwanese suppliers to Vietnam and set up a trial production line here.

Also last year, Danish toymaker Lego Group started constructing a $1 billion plant in the southern province of Binh Duong that will include cutting-edge environmental standards to achieve carbon-neutral emissions.

However, due to the drop in the number of billion-dollar projects, registered inflows in 2022 were down 11 per cent on-year. The total newly registered capital, adjusted capital, capital contributions, and share purchases stood at $27.7 billion for the year, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA). FIA director general Do Nhat Hoang underlined some factors behind the falling registered capital.

Over the year, over 2,000 projects were granted investment registration certificates, with the total registered capital of almost $12.5 billion, down 18.4 per cent from last year. There were around 3,560 capital contributions and share purchases as of December 20, equivalent to $5.2 billion and a dip of 25.2 per cent over 2021.

On the bright side, many large-scale projects had their capital adjusted up significantly in 2022. For instance, Samsung Electro-Mechanics Vietnam was given two capital boosts, of $920 million and $267 million. Samsung HCMC CE followed suit with $841 million. Programmes to manufacture electronics and multimedia devices in Bac Ninh and Nghe An provinces, and Haiphong city were financed with additional capital of $306 million, $260 million, and $127 million, respectively. The adjusted capital reached over $10.1 billion, up 12.2 per cent on-year.

Explaining the increase in additional capital, Malesky said that investor interest in Vietnam had grown steadily over time and further accelerated in 2018 when US tariffs raised the costs of doing business in China.

More recently, foundations have been laid for Vietnam to speed up and reach the goals outlined in 2023 that call for $36-38 billion of FDI into the country. Numerous large corporations and well-known names have pledged to invest and expand their facilities in Vietnam.

Energy security deemed more likely with appropriate offshore wind strategy

Offshore wind power is not only expected to contribute to Vietnam’s net-zero goal by 2050 but also help with the country’s ever-increasing hunger for energy.

Imai Masanori, president of Toda Corporation, held a meeting with the Ministry of Industry and Trade (MoIT) at the end of last December, proposing the construction of a wind measuring station in the south-central province of Binh Thuan’s waters to gain specific data on the province’s offshore wind potential. “The Japanese government has provided funds for Toda to conduct studies on the potential of offshore floating wind power in Vietnam,” he said.

Vietnam and Japan have pledged to be carbon-neutral by 2050. Vietnam, which has no experience in offshore wind power development, plans to develop 7,000MW of offshore wind power by 2030, according to the draft Power Development Plan VIII by the MoIT.

In October, Electricity of Vietnam (EVN) also proposed to the government to create a mechanism to develop about 4,000MW of offshore wind power in the north of the country to ensure electricity. The north currently accounts for nearly half of Vietnam’s electricity demand.

EVN’s updated calculations on electricity supply and demand in 2022 showed that new power sources in the north are expected to operate very little, and additional power sources are in Vietnam’s central and southern parts (mainly renewable energy) can only partially support the north as the transmission capacity through the 500kV lines is technically limited to a level that ensures safety and stability of the system.

In addition to EVN, some localities such as Quang Ninh, Ho Chi Minh City, Haiphong, Thai Binh, and Nam Dinh have asked the government to develop offshore wind power sources as more and more domestic research also leads to the possibility of wind power development.

According to a survey by the Energy Assessment Programme for Asia of the World Bank, Vietnam has the largest wind potential in Southeast Asia with an estimated capacity of over 513,000MW – 200 times the capacity of Son La Hydropower Plant and more than 10 times the total forecasted capacity of Vietnam’s electricity industry by 2020.

According to the General Department of Meteorology and Hydrology under the Ministry of Natural Resources and Environment, sea areas have the best potential for exploiting wind energy in Vietnam. In particular, the wind potential is at a “good to excellent” level in the coastal areas from Ninh Thuan to Ba Ria-Vung Tau provinces with an annual average wind speed of 8-10m/s, and an average annual energy density of 600-700W per square metre.

Coal groups contend with new era

Vietnam is being urged to demonstrate that economic development will not depend on the use of fossil fuels like coal.

As mining outputs decline, reserves plummet, and imports face difficulties which could impact coal supply for power generation in Vietnam in 2023, the country’s energy transition remains a huge challenge, particularly since coal-fired power is still one of the main sources of electricity.

Coc Sau Coal JSC is approaching the mining depth of 300m, the deepest level in open pit mines in Cam Pha area of the northeastern province of Quang Ninh.

Tran Son Ha, deputy director of Coc Sau, said, “Coal output and quality were affected by the increasing depth of exploitation and limited field size. Coal production and processing output of Coc Sau in the first nine months of 2022 only reached about half of the planned three million tonnes.”

In Cam Pha, besides Coc Sau, other open-pit coal mines such as Cao Son Coal, Deo Nai, and Southwest Da Mai, are also speeding up lowering pits for coal. Coal output of these four companies accounts for nearly a quarter of the total raw coal output of Vietnam National Coal and Mineral Industries Group (Vinacomin).

Currently, the open-pit coal mines of Vinacomin are continuing to exploit deeply, at an average depth of 10-15m per year.

Open-pit mining continues to play an important role in the total coal output of Vinacomin in 2023, as the output of each mine is expected to reach 1.5-4 million tonnes of coal per year.

However in December, Vinacomin only supplied about 1.27 million tonnes of coal, too low for the targeted 10 million tonnes of coal in the fourth quarter.

At the beginning of 2023, Vinacomin estimated its coal inventory to be around 1.5 million tonnes, much lower than the same period last year.

According to the company’s calculations of the coal supply capacity for electricity in 2023, the total volume would amount to 45.89 million tonnes of coal. Particularly for the thermal power plants of EVN, the volume of coal expected to supply in 2023 is 17.98 million tonnes, about 1.5 million tonnes lower than long-term coal contracts.

EVN proposed Vinacomin to prioritise coal supply for power generation and have solutions to “increase domestic coal mining capacity” in both the immediate and long-term.

According to EVN’s Technical Production Department, there are many challenges in supplying coal for electricity in 2023 due to reduced domestic exploitation and expensive imported coal prices. In 2022, electricity produced and imported for the whole system was 268.4 billion kWh, an increase of 5.26 per cent compared to 2021.

According to Trading Economics’ data, the world coal price has increased sharply since the beginning of 2021 with a chain of increases extending over 237 per cent as of May 2021, reaching a record threshold of over $400 per tonne and showing no sign of trend change.

According to many analysts, coal demand for power generation will continue to increase sharply in the world in 2023 as the Russia-Ukrainian conflict also shows no sign of ending.

The electricity system’s operation plan for 2023 has been developed by the National Load Dispatch Centre. It is expected that in the first six months of 2023, the mobilisation demand for coal-fired power plants will be much higher than in 2022.

Last year, Vinacomin is estimated to have supplied 16.9 million tonnes of coal to consumers, with the largest users being electricity, fertiliser, cement, and steel producers.

In 2023, Vinacomin is expected to supply blended coal for EVN’s thermal power plants, but it is still concerned that this coal source will greatly affect the stable and economic operation of thermal power plants.

According to Truong Duy Nghia, chairman of the Vietnam Association of Thermal Science and Technology, Vietnam’s coal is mainly anthracite with a calorific value equivalent to that of bituminous and sub-bituminous coal of other countries but with a higher calorific value. He cited the Ninh Binh Thermal Power Plant using mixed coal as fuel for power plants, which leads to a large coal consumption and high carbon content in ash, causing combustion chamber slag.

To ensure coal supply for economic development, Vinacomin’s leaders said that there was a plan to report to the government for consideration to adjust the domestic coal selling price, especially the selling price of coal to power households as coal sold to electricity households accounts for over 80 per cent of coal consumption of Vinacomin.

Tenants to benefit from Ho Chi Minh City rental market

2023 is anticipated to be a tumultuous year for the office-leasing market, as many commercial buildings in Ho Chi Minh City, particularly those in much-desired locations with top-tier tenants, expect to see pricing and operational changes.

The average monthly rent for Grade A office buildings in the centre of Ho Chi Minh City, such as the Saigon Center, Diamond Plaza, and Bitexco Financial Tower, has seen a climb of 15-20 per cent since the beginning of last year, to $57.73 per square metre. Despite the rise in rents, the capacity of these buildings is consistently 80-85 per cent.

Meanwhile, Grade B office rents remain unchanged at $33.78 per sq.m/month, with capacity over 90 per cent, while Grade C has consistently had the highest rates of occupancy at 96 per cent.

According to analysts, the rental market has been controlled by lessors for a particularly long time owing to the lack of available space. Beginning this year, however, as supply grows, the market should see a change as renters begin to gain power over landlords.

Knight Frank Vietnam Property Services noted in recent research that office tenants could dominate contract discussions in 2023 as Ho Chi Minh City builds over 300,000sq.m of extra Grade A and B office space over the next two years. The first projects are anticipated to become functional in the second quarter of 2023, with particular focus on the market entry of two projects in Thu Thiem and one in District 1.

According to Leo Nguyen of Knight Frank, the two sites in Thu Thiem, together with a number of other high-end buildings in the city centre, will contribute to a change in the market that should favour tenants.

Nguyen expects that Grade A office rent in the city has fallen by around $2 per sq.m/month. Prices should fall to $55.5 per sq m/month by the end of 2024, while vacancy rates may skyrocket to 20 per cent. Guests are now paying $33.68 per sq.m/month for Grade B office space, but by this time next year, rents may have fallen to around $27 per sq.m/month.

The shifting sands of the market have compelled commercial landlords, particularly in Grades A and B, to engage in vigorous competition. Le Viet Hoa, the owner of a network of three office buildings for lease in Districts 1 and 3, said that regardless of how advantageous office leasing activities had been in 2022, the pressure to win clients will rise dramatically this year.

According to Hoa, landlords used to have the power to choose their tenants based on who could meet stringent conditions, such as the requirement of tenants to pay several months' rent in advance. However, the market now demands workplaces offering attractive amenities, contract flexibility, and comprehensive services, and it is leaving many lessors feeling disconcerted.

A number of office buildings that are due to open this year have included a variety of competitive features, providing tenants with greater flexibility.

The Nexus, The Hallmark, and The Crest Tower B are all planned for this year, while The Sun Tower, The Pearl, and IFC One Saigon are set to launch in 2024, according to Cushman & Wakefield (C&W).

So far, the southern part of the city has led the way in terms of renewed supply, but 2023 will be the year that the east emerges with a plentiful amount of Grade A office space. Together with excellent transportation links to the city centre, this will provide ideal circumstances for the east of the city to become a magnet for high-end firms and investment, added C&W.

Nevertheless, in the near future, there will be a number of changing trends in the commercial property market, such as remodelling older buildings to meet environmental requirements, with many historic buildings in desirable locations having already begun the process of refurbishment.

Inspiring inward remittances despite challenging 2022

Vietnam saw stable inward remittanceflow until the end of last year despite the global economic recession and spiking inflation around the world.

A report compiled by the World Bank in tandem with the Global Knowledge Partnership on Migration and Development has highlighted that despite the detrimental impacts on the development landscape globally over the past two years and spiking inflation in many parts of the world, the flow of overseas remittances into Vietnam has proven stable.

In 2021, Vietnam ranked eighth worldwide and third in the Asia-Pacific region setting an $18.1 billion record for inward remittances, higher than the $12.5 billion level announced by the State Bank of Vietnam (SBV).

The funds sent back to Vietnamese families from abroad have surpassed the $10 billion mark in the past decade and nearly doubled compared to the previous decade.

According to the report, after surging by 5 per cent in 2021, the inward remittance volume is expected to inch up by 4.4 per cent in 2022 and 3.6-4.5 per cent in 2023.

According to Nguyen Duc Lenh, deputy director of SBV’s Ho Chi Minh City Branch, as many world economies have faced high inflation, depreciating currencies, and decreasing incomes, stable inward capital flow into Vietnam has been significant to the country’s socioeconomic development generally and that of Ho Chi Minh City in particular.

After surging by 5 per cent in 2021, the inward remittance volume is expected to inch up by 3.6-4.5 per cent in 2023.
The southern growth engine received an estimated $6.8 billion in inward remittance last year.

DongA Money Transfer Co., Ltd. reported that the flow into Vietnam was affected by the gloomy economic picture in the first half of last year, yet the situation became better in the second half, contributing to a positive overseas remittance picture for the whole year.

Sacombank Remittance Express Co., Ltd. (SBR) reported that more than $2 billion of inward remittance was transferred through Sacombank and SBR last year.

Many bank executives shared that the amount of money sent back to families in Vietnam during the traditional Lunar New Year often surges by 10-15 per cent compared to normal months.

Economist Nguyen Tri Hieu believes that the state needs to craft policy breakthroughs aimed at overseas Vietnamese and inward remittances.

Accordingly, Hieu suggested that the Law on Housing be more relaxed allowing more overseas Vietnamese to buy property in Vietnam, thus enhancing their attachment to their homeland.

Besides simplifying investment registration procedures, in the coming time, he feels that state management agencies should engage in studying foreign experience to more effectively avail of inward remittance sources, including forming specialised inward remittance funds earmarked to support small- and medium-sized enterprises and aid startups.

To prepare for the peak period for inward remittance before the Tet holiday, banks and money transfer companies are scaling up their technology investments and opening thousands of service points to assist the beneficiaries.

Lenders search for further credit room

As the gap widens among banks in terms of profit growth, on-year credit growth remains an important driver for banks, as it makes the largest contribution to pre-tax profit growth. Thus, banks are looking for an allocation of credit room this year.

Tran Thi Khanh Hien, director of analysis at VNDirect Securities, said that credit growth would slow down and reach about 12 per cent in 2023. The system’s credit increased by 14.5 per cent in 2022, a percentage point higher than the same period the previous year. However, credit only climbed by about 5 per cent from the end of June to the end of December. This is a marked slowdown when the government is prioritising economic stability.

In addition, global inflation has shown signs of peaking. Inflation in Vietnam is likely to remain high due to a 20.8 per cent increase in wages effective July 2023 and rising expenses for healthcare and public transport. Meanwhile, liquidity pressure also leads to the slowdown of credit growth. At the end of the third quarter of 2022, all banks recorded a strong increase in loan-deposit ratio. Some banks have nearly reached the regulatory threshold (85 per cent).

In this context, the State Bank of Vietnam (SBV) prioritises commercial banks with a healthy credit structure (low proportion of loans to risky segments such as real estate and corporate bonds and/or high proportion of retail loans). Banks will not only participate in restructuring weak financial institutions, but also boast healthy asset quality, a high capital adequacy ratio, and sound risk management.

Following the social distancing period in the third quarter of 2021, credit growth had already boosted the profit growth of the banking industry. It posted profit growth of 53 per cent in the third quarter of 2022, higher than 31 per cent in the first quarter and 36 per cent in Q2. The industry registered a growth rate of nearly 40 per cent for the first nine months of the year.

However, there were signs of a slowing in quarterly growth since the second quarter of 2022. Rong Viet Securities (VDSC) estimates that the credit growth of the banking industry will be around 11-12 per cent for the whole year of 2023, lower than the target of 15.5-16 per cent in 2022. This is due to the reduced credit demand soon amid rising interest rates and declining economic growth.

Tran Minh Binh, chairman of VietinBank’s Board of Directors said, “We urge the management agency to announce growth documents in 2023, especially a key document for Circular No.22/2019/TT-NHNN on limits and prudential ratios of banks and foreign bank branches. This will be for banks to balance capital and take a proactive approach to capital sources and credit growth from the beginning of the year.”

In the face of global and local macro shocks, the SBV had made flexible adjustments to achieve its operating goals last year. The SBV has started to tighten monetary policy since June to stabilise the exchange rate and control inflation.

Hoang Nu Ngoc Thuy, head of Research and Analysis at BIDV, said that the SBV increased operating interest rates in the third quarter. The open-market-operation rate has risen to 6 per cent per year from 2.5 per cent per year. Meanwhile, other operating interest rates have increased twice, with a total increase of 2 per cent per year. The SBV also adjusted the money supply more carefully, with an estimated net withdrawal of more than $8.52 billion.

Notably, during this period, the SBV increased the credit growth target of the whole system by 1.5-2 per cent, to 15.5-16 per cent. Thus, commercial banks could expand their lending activities to support businesses and contribute to Vietnam’s economic growth.

BIDV’s Thuy predicts that SBV will adjust credit growth at a reasonable level. With the government’s targets for GDP growth of 6-6.5 per cent and inflation at 4.5 per cent, the credit growth limit could continue to hover around 13-14 per cent next year.

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