Thanks to the campaign to encourage Vietnamese people to prioritise Vietnamese products, which has been carried out for years, and the stable quality of the products, made-in-Vietnam commodities have drawn increasing attention of consumers.

With the Lunar New Year (Tet) is just around the corner, domestic supermarkets such as Mega Market, Big C, Hapro Mart, Saigon Co.op and Winmart have been filled with products for Tet, most of which are domestic.

According to Le Manh Phong, Managing Director of Big C & Go! in Hanoi and northern region under the Central Retail Vietnam, Vietnamese products are making up over 90% of the total products available in the supermarkets chain.

Bui Trung Chinh, Food Purchasing Manager for the southern region at AEON Vietnam, said that the majority of products sold in the supermarket are supplied by Vietnamese partners, with over 80% being domestic products.

Data from the Ministry of Industry and Trade (MoIT) showed that currently, Vietnamese products are occupying more than 90% of space at domestic distribution facilities, and 60-96% of foreign supermarkets in Vietnam. At traditional markets, the rate is at least 60%.

Particularly, since the COVID-19 pandemic broke out, 76% of Vietnamese consumers have said that they choose domestic products, especially those with trademark and high quality, it said.

Le Viet Nga, Vice Director of the Domestic Market under the MoIT, said that the ministry and domestic firms have paid special attention to material zone to ensure the quality of products, while improving the design and packaging to meet the demands of consumers. At the same time, suppliers have focused on environmental issues and communications to draw more consumers, she said.

However, experts held that with the engagement in many free trade agreements, the nearly 100-million-strong Vietnamese market is becoming an increasingly attractive destination for foreign commodities, which means fiercer competitions facing Vietnamese goods.

They advised domestic firms to raise their production capacity through the strengthening of science-technologies.

Vietnam’s stock market still attractive to investors: report

The relatively low devaluation of the VND against the USD in comparison with that of other currencies in the region shows that the Vietnamese stock market remains an attractive destination for investment flows, as uncertainties persist in most of the global financial market, according to a weekly investment strategy report of the Vietcombank Securities Co., Ltd (VCBS).

That the US Dollar Index continues to decrease slightly and the State Bank of Vietnam’s successful increase of foreign exchange reserves in the past week is considered a positive signal for the domestic market, it said.

In the short term, the liquidity of the VND will continue to improve significantly, resulting in the possibility of interest rate reduction in the interbank market.

At least 12 commercial banks, notably Vietcombank and Agribank, have announced to reduce lending interest rates to support businesses following a directive from the central bank.

Following a slight increase in the benchmark index and continued low liquidity levels in recent weeks, the VCBS believes that the market will continue to struggle and fluctuate in a narrow range before the holidays.

Experts from the company recommend short-term investors take advantage of the uptrend to take profits on short-term speculative stocks while limiting the opening of new transactions until the Lunar New Year holiday.

MB Securities (MBS) said that as the VN-Index gained for two consecutive weeks, the upper limit of 1,064 points is still a strong resistance when there is no support from liquidity.

The market is expected to break out of the accumulation zone after the Lunar New Year or remain sideways, but investors will have opportunities with individual stocks.

Bank stocks to flourish in 2023     

Bank profits are forecast to be the bright spot in the fourth quarter 2022 financial report season, which takes place after the Lunar New Year. This will help bank stocks flourish.

Although the financial statements for the fourth quarter of 2022 have not been announced, according to analysts' forecasts, in 2022, the picture of bank profits will have a strong divergence, along with the return of the commercial banking group with State capital. After two years of "holding" growth to support customers affected by the COVID-19 pandemic, the profit of this banking sector has increased sharply again.

By the end of 2022, Vietcombank's pre-tax profit reached nearly VNĐ36.8 trillion (US$1.6 billion), an increase of 39 per cent compared to 2021. This figure at BIDV was VNĐ22.56 trillion, an increase of nearly 80 per cent and at VietinBank was VNĐ20.5 trillion, an increase of 21.5 per cent compared to 2021.

Credit poured into priority areas, interest rates controlled at a reasonable level, and good asset quality are the reasons why State-owned commercial banks are granted more credit room by the State bank, thereby improving business results. In 2022, the credit of these banks all increased sharply, while bad debts were strictly controlled.

By the end of 2022, BIDV's bad debt ratio was only 0.9 per cent, bad debt coverage ratio reached 245 per cent, the highest level in recent years, and the balance of the risk reserve fund was up to VNĐ40 trillion. At Vietcombank, the bad debt ratio was only 0.67 per cent and the bad debt coverage was also above 465 per cent. At VietinBank, bad debt was also only 1.2 per cent, bad debt coverage ratio reached approximately 190 per cent, up 10 per cent compared to 2021.

The private joint stock commercial banks have not yet announced their profits, but it is forecast that the top banks will still maintain a positive growth rate, especially those with not too large corporate bond outstanding loans. Meanwhile, small joint stock commercial banks and banks with large bond outstanding loans are likely to see lower profits in the fourth quarter of 2022.

A recent survey by the State Bank of Việt Nam showed that business results of many credit institutions in the fourth quarter of 2022 did not meet expectations. However, 80 per cent of credit institutions predict that the overall business situation in 2022 will improve compared to 2021.

According to VNDirect analysts, in 2022, the banking industry's profit increased by about 32 per cent. In 2023, the banking sector's profit growth will decelerate, growing at only about 10 per cent due to slowing credit growth, narrowing net profit margin (NIM) and rising credit costs. Even so, opportunities are still open for banks with cheap valuations, healthy asset quality, high capital adequacy ratio, healthy credit structure, and restructuring. These will be the banks prioritised by the State Bank in the credit room grant in 2023.

Nguyễn Hoài Phương, Investment Director, who runs the Việt Nam Market Access Equity Fund (VESAF) under VinaCapital, said that in 2023, the VESAF Fund will consider increasing the proportion of bank stocks, especially banks with competitive advantages in terms of liquidity ratios, diversified loan portfolios and good risk management.

In the first week of 2023, bank stocks traded actively. Lê Đức Khanh, analyst at VPS Securities Company, said that it is still too early to judge the growth trend of bank stocks, but most likely, the banking group is leading the market to 1,060 - 1,080 - 1,100 points.

Programme seeks to enhance production, business capacity for Vietnames SMEs

Small and medium-sized (SME) enterprises will be assisted in terms of production and business management capacity under the second phase of a programme launched by the Agency for Enterprise Development (AED) under the Ministry of Planning and Investment (MPI).

It is part of a project for SME Promotion and Industrial Development, which is sponsored by the Japan International Cooperation Agency (JICA), designed to boost production capacity for Vietnamese enterprises.

The programme will also facilitate the connection between local SMS and Japanese enterprises.

According to Bui Thu Thuy, deputy director of the AED, improving production and business capacity for small and medium-sized enterprises has been defined as one of the important solutions for Vietnam to improve the quality of the economy, develop sustainably and move towards a modern industrialised economy by 2030.

The project consists of three components, of which, the second focuses on improving the production and business capacity of Vietnamese SME and connecting with leading Japanese enterprises.

Despite being affected by the COVID-19 pandemic, the project has developed a set of criteria to evaluate enterprises and 15 SMEs have been selected to receive support to improve production capacity for almost a year. Specifically, some enterprises had signed supply contracts with Japanese enterprises.

Thuy said these are very commendable results and suggested that the project continue to extend further support to a large number of businesses. She also expressed her belief that SMEs will gradually improve their production and business capacity and be able to participate in global supply chains.

Yashiro Hiroaki, Chief Advisor of the project, said that through the project, businesses are expected to learn and apply the methods, especially the Japanese-style business model, to further develop and contribute more to the socio-economic development of the country.

Vietnam strives to keep inflation in check from start of 2023

Global basic commodity prices in 2023 are expected to remain high and unpredictable. However, the success in keeping inflation in check over the past difficult year is the foundation to believe that Vietnam will be able to continue maintaining low inflation.

After many years of setting, and successfully realising, the inflation control target at 4%, the National Assembly decided to increase the inflation target for 2023 to 4.5%, demonstrating that the economy is facing great inflationary pressure.

In addition to the request to enhance price management and regulation during the Lunar New Year (Tet), the National Steering Committee on Price Regulation has asked ministries, local authorities and relevant agencies to cautiously manage the prices of goods regulated by the government in the first months of the year to provide safe room for controlling inflation in all of 2023.

In fact, adjusting the prices of goods regulated by the government, especially electricity, healthcare services, and education, will have a strong effect on the consumer price index (CPI). According to the General Statistics Office (GSO), education and healthcare account for nearly 12% of the basket of goods and services used to calculate inflation. Therefore, adjusting tuition fees and healthcare costs as planned this year will affect Vietnam’s overall CPI.

In November 2022, the CPI rose by 4.37% over the same period in 2021, which was the highest increase since 2014 (except for 2016, when the rise was 4.52%), mainly due to several localities hiking tuition fees, causing the education index to go up by nearly 11%. For electricity, a 10% rise in prices will result in a 0.33% increase in CPI.

According to Nguyen Thu Oanh, Head of the GSO’s price statistics department, since production and business activities have returned to normal, the operation will have to follow market rules and the period of price restraint on government-regulated goods is coming to an end. Therefore, tuition fees, medical costs and electricity prices will increase, causing great pressure on inflation. In the face of present inflation risks, it is necessary to take bold actions from the first months of the year in order to keep inflation at about 4.5%.

Economic experts have identified several factors weighing on prices in 2023. Externally, global inflation is expected to decline after peaking in 2022 but will remain high, continuing to be the greatest risk for many economies, including in Vietnam. China’s lifting of zero-Covid policies will increase the demand for production materials, consumer goods and services, pushing prices higher in the world and causing pressure on global inflation. In addition, as Vietnam is a big importer of many inputs for manufacturing, higher prices of raw materials will result in higher costs and prices of final goods, causing inflation pressure on the economy.

Domestically, a number of tax support policies, such as VAT reduction, expired at the start of 2023, causing the prices of goods to rise again. Price rises are also expected with the increase in salary from July 2023. Furthermore, the demand-pull pressure from growth stimulus packages will push up prices and build up pressure on inflation.

However, there are also a number of factors that can help restrain price rises. The biggest factor is Vietnam’s abundant supply of foods to meet domestic demand and for export. The 50% cut in the environmental protection tax on fuels will help curtail the rise in the retail prices of this important goods.

Based on the actual developments, the Ministry of Finance has constructed three scenarios for inflation in 2023, with respective CPI rises of 4.2%, 4.55% and 4.98%. These scenarios are based on the projected increases of government-regulated goods in the third and fourth quarters, with respective electricity price rises of 5%, 7% and 8%.

Forecasts by some domestic organisations that have included more positive data on global inflation show that Vietnam’s inflation pressure in 2023 may cool down, with the CPI averaging at 3.2-3.5%.

According to Associate Professor Ngo Tri Long, the advantages from effectively curbing inflation in 2022 provide the opportunity for Vietnam to continue maintaining relatively low inflation compared to other economies. However, in face of the potential risks, we must not be complacent in the task of price management and regulation.

Vietnamese organic products introduced to Dutch consumers

Miss Linh, an e-commerce platform of Viet Nam Food Europe BV operating in the Dutch market, has presented Vietnamese eco-friendly products at Horecava 2023 in Amsterdam, the Netherlands.

At the event, which was held from January 9 to 12, Miss Linh signed a contract with VI2CI company, one of the e-commerce platforms for agricultural products, electronic devices and fashion in Vietnam. This is seen as an opportunity for Vietnamese agricultural products to penetrate the Dutch market.

According to Vietnamese Ambassador to the Netherlands Pham Viet Anh, as the Nethelands is a gateway to Europe so it is easy for a product to enter other European countries once it is imported into the Netherlands.

More recently, Vietnamese litchi and longan were shipped to France and Belgium from the Netherlands and later transported to other countries, including those in Eastern Europe.

Since its establishment in August 2022, Miss Linh has helped four small and medium-sized businesses owned by women sell their products on "webshop" platform.

Miss Linh is expected to develop quickly in the Dutch market, especially in the context that e-commerce has became popular and bilateral trade turnover between the two countries has increased in recent years, reaching about 11 billion euros  (11.9 billion USD) in 2022.

Japanese group starts work on 1.8 million USD overpass in Da Nang

Mikazuki Hotel Group of Japan held a groundbreaking ceremony on January 15 for an overpass connecting the Da Nang Mikazuki entertainment complex and the beach across Nguyen Tat Thanh street in the central city of Da Nang.

With a total investment of 42 billion VND (nearly 1.8 million USD), the bridge measures more than 140 metres in length and stands 11 metres high, and is designed in the modern Japanese architectural style.

Speaking at the ceremony, Chairman of Hotel Mikazuki Group Odaka Yoshimune said the pedestrian bridge will allow locals to safely reach beach and enjoy the beautiful landscape of the locality.

Vice Chairman of the city’s People’s Committee Le Quang Nam said 2023 marks the 50th anniversary of Vietnam-Japan diplomatic ties, and the work will be a great testament to the friendly diplomatic ties between the two nations.

The construction of the bridge is expected to be completed on May 30, 2023.

Currently, Japan is the leading foreign investor in the number of FDI projects in Da Nang with 222 projects and total investment capital of more than 1 billion USD.

PV Drilling supplies jack-up rig for Korean firm

The Petrovietnam Drilling and Well Service Corporation (PV Drilling) will supply a jack-up rig for drilling operations by the Republic of Korea’s SK Innovation Co. Ltd (SKI) at Lot 16-2 in Vietnam’s offshore area.

PV DRILLING VI, the most cutting-edge self-elevating rig of PV Drilling, was produced by Keppel FELS of Singapore and meets the KFELS MOD V Enhanced Class B standards.

It is capable of drilling wells in a maximum water depth of 121m and to a total depth of 9,000m.

Earlier, this rig served a drilling campaign of the Petrovietnam Exploration Production Operating Co. Ltd (PVEP POC). As soon as finishing its task at PVEP POC, it will work for SKI in 2023.

In 2022, PV DRILLING VI performed drilling operations for ENI, Vietsovpetro, and Habour Energy in the domestic market.

VNG invests in CloudVerse - the Global Multicloud Management Platform     

VNG-backed CloudVerse introduces an intelligent SaaS platform for businesses using cloud services, with the aim of simplifying, securing and optimising the multicloud services and helping save significant costs.

CloudVerse, the Multicloud Management Platform, will provide a centralised view of multicloud resources, while making cost optimisation and security compliance recommendations. Being the first multicloud management platform developed in Viet Nam, CloudVerse’s machine learning algorithms confidently meet these urgent needs.

The platform has integrated with seven public cloud service providers: Amazon Web Services (AWS), Google Cloud Platform (GCP), Microsoft Azure, Alibaba Cloud, Tencent Cloud, Huawei Cloud and Digital Ocean. In 2023, CloudVerse expects to integrate with many more cloud service providers including VNG Cloud.

CloudVerse currently supports IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) services across the above-mentioned seven clouds. The platform plans to integrate SaaS (Software as a Service) services soon.

Insurance companies benefit from interest rate hike in 2023

Insurance companies will have the chance to earn higher profits in 2023 thanks to a continual interest rate hike trend.

It is feasible for insurers to continually increase profits this year as the majority of their investment portfolios are bank savings and government bonds, whose interest rates are forecast to remain at high levels in the year.

According to the current legal regulations, insurers have to use at least 70% of their capital to deposit at banks or buy government bonds to ensure the insurers’ capital safety. Therefore, the current high interest rates of the two channels are an advantage for insurers to increase their profits.

As the interest rate hike trend is forecast to remain in 2023, financial activities of insurance companies are expected to continually record positive results this year.

The US Federal Reserve (Fed) last year raised interest rates by a total of 4.25-4.5% per year to curb inflation, the highest rate since January 2008. Fed is expected to continue increasing interest rates in the first quarter of 2023.

The Fed’s interest rate hike caused the money flows to change. Investors have gradually withdrawn in most of the emerging and frontier countries and returned to the US. This pushed the US dollar Index to 104.2 points on December 27 last year, up by 8.6% compared to the beginning of 2022.

Facing the pressure of local currency devaluation, as well as the withdrawal of investment flows, most countries have had to raise interest rates. Vietnam is no exception, especially when the market is thirsty for capital with the credit growth increasing faster than the capital mobilisation growth. To cope with the difficulties, the State Bank of Vietnam (SBV) increased policy interest rates twice in September and October 2022, by 1% per year each time.

Under the SBV’s move, the interest rates for 12-month term deposits at banks in 2022 increased by 2-4% per year on average. For example, the 12-month interest rate at BIDV is currently 7.4% per year from 5.5% at the beginning of 2022. Similarly, the rate rose from 5% to 9.1% per year at VPBank, from 5.8% to 8.9% per year at Sacombank, from 5.5% to 7.4% per year at Vietcombank.

The savings interest rates are forecast to remain high or even increase higher in the next six months to 12 months.

As interest rates are high, borrowing costs are expensive, and economic growth is slowing. It is currently a tough time for most businesses. However, this is an opportunity for businesses, including insurance companies, which own a large amount of cash.

Statistics of seven listed insurance companies, including Bao Viet Holdings (BVH), Bao Minh Insurance Corporation (BMI), Petrovietnam Insurance Corporation (PVI), Vietnam Reinsurance Corporation (VNR), Post and Telecommunications Insurance Corporation (PTI), Petrolimex Insurance Company (PGI) and Military Insurance Corporation (MIG), showed by the end of the third quarter of 2022, the companies had more than 127.5 trillion VND in cash. The cash was short-term financial investments with mainly short-term bank savings, which accounted for some 42% of the companies’ total assets.

As the short-term savings interest rates of banks have been consecutively adjusted up, especially at the end of September and October last year, the 127.5 trillion VND short-term financial investments of the insurers have earned significant profits.

According to experts, the financial revenue of insurers often depends on the interest rates of the market. When interest rates increased, the financial revenue of the insurers increases and vice versa.

Data from Viet Dragon Securities Company (VDSC) also showed interest rates tended to go up in the 2009-11 period. They then slowed in the 2011-15 period, and increased again since 2016.

The financial revenue of insurers was also under the same move in the periods. The financial revenue of three typical insurance companies, including BVH, BMI and PVI, also increased from 2009 to 2011, when the interest rates rose in the domestic market. In the period of interest rate decline in 2012-2015, the financial revenue of the insurers slowed before increasing again in the 2017-2019 period.

In fact, besides the insurance business segment, the financial revenue of insurance companies is often high compared to their total pre-tax profit. Specifically, at BVH, in the 2008-2021 period, the insurer’s ratio of financial revenue to pre-tax profit averaged 339.7%. The ratio at BMI and PVI was 102.5% and 150.7%, respectively.

According to Ngo Viet Trung, Director of the Ministry of Finance’s Insurance Supervision Administration, despite difficulties and challenges of the economy after the COVID-19 pandemic, insurance companies adapted proactively and flexibly, helping the country’s insurance market maintain a good growth rate in 2022.

As of December 12, 2022, insurance premiums in Vietnam increased 15.1% year-on-year to more than 251.3 trillion VND, of which 68.2 trillion VND was from non-life insurers and 183.10 trillion VND from life insurers.

By December 12, the total assets of insurance companies grew by 14.51% against the beginning of the year to 811.31 trillion VND, while equity reached 162.81 trillion VND, up 3.83%.

The numbers are positive in the current context, Trung noted, adding insurance companies have actively improved their competitiveness and expanded their operation area.

Vietnamese pickled radishes make debut in Japanese market

As many as 18 tonnes of pickled radishes from the northern province of Ha Giang have been exported to the Japanese market for the first time and are expected to arrive in Japan within the next few days.

The shipment was a result of fruitful cooperation in the value chain linkage between Ha Giang and Vietnam Misaki Co., Ltd of Japan.

In order to ship pickled radishes to Japan, Vietnam Misaki Co., Ltd has worked closely alongside farmers in the growing areas and packaging facilities, all of which have undergone various stages of inspection in a bid to meet stringent requirements relating to food safety and hygiene set by the Japanese side.

The company has provided farmers with high-quality seeds and fertiliser, with the final products being resold to the company in accordance with its commitments.

Under the cooperative programme, export products include pickled onion and radish, ginger, and bamboo. The Japanese business side has also completed the preliminary processing facilities for radish with a production scale of 1,000 tonnes per year.

The export shipment of picked radishes has paved the way for the development of agricultural products in Ha Giang province in a safe and sustainable manner, as well as establishing close linkages from production to consumption markets.

Gov’t asks for focus on digital finance, digital economy this year
     
The Vietnamese Government has asked ministries and localities to focus on promoting the development of digital finance and digital economy in 2023.

Accordingly, the institutions, mechanisms, policies and legal framework would be improved to accelerate the national digital transformation with a focus on developing human resources and ensuring information security.

The digital platforms and national databases would be integrated to improve the efficiency in management and handling of administrative procedures.

Non-cash payments for social allowance, pension and social insurance allowance would be promoted while the national population database would be improved and used to identify customers and authenticate bank accounts.

Digital transformation must also be strengthened at corporations and small and medium-sized enterprises.

In the context that global growth momentum losing steam, the Government is looking for new growth drivers, one of which is developing the digital economy.

Recently, the Government has raised drastic measures to promote the development of the digital economy.

The Government issued a strategy for developing e-Government toward digital Government, the national strategy about developing digital economy and society, and the programme about national digital transformation to 2025 with a vision to 2030.

The latest edition of the e-Conomy SEA report by Google, Temasek Holdings Pte and Bain & Co published in late December highlighted that Viet Nam had the fastest growing digital economy in Southeast Asia with a year-on-year increase of 28 per cent in gross merchandise value (GMV).

The report pointed out that the driving force for Viet Nam’s digital growth was the growing penetration of new forms of commerce across urban and rural regions for businesses. Logistical infrastructure also improved to facilitate nationwide e-commerce transactions and there was a noticeable high-quality homegrown tech workforce that had been driving innovation in Viet Nam.

Tran Minh Tuan, director of the Department of Digital Economy and Society under the Ministry of Information and Communications, said that based on the survey of Financial Times and Omdia, Viet Nam was the second fastest growing digital economy in the world, expanding at the rate of 12.3 per cent in 2022, after India. In 2023, Viet Nam might fall behind Mexico and India but could take the lead in the world in digital economy growth in the 2022-26 period.

Tuan pointed out that the scale of Viet Nam’s digital economy remained modest, leaving significant room for future development, especially in connectivity, digital payment and digital entertainment.

Digital finance was expected to see breakthrough development with a compound annual growth rate of 114 per cent in 2021-22 and at 56 per cent in 2022-25.

The department said that the digital economy contributed 14.26 per cent of GDP in the third quarter of 2022. Viet Nam targets to increase the contribution of the digital economy to GDP to 20 per cent by 2025. 

Labour market marks quick recovery

According to the Ministry of Labour, Invalids and Social Affairs (MoLISA), supportive solutions and policies have helped the domestic labour market recover quickly, thus, helping industrial parks, export processing zones and key economic regions to maintain a stable labour force.

At the national virtual conference held on January 14, to deploy the tasks of labour, people with meritorious services and society in 2023, Minister of Labour, Invalids and Social Affairs Dao Ngoc Dung said, that in the past year, the sector has actively researched and proposed to the Party Central Committee, the National Assembly and the Government measures to restore production and short-term and long-term social security policies.

According to the MoLISA, the labour market in 2022 witnessed a fast and strong recovery. The average income of employees continuously increased and improved from the first quarter to the third quarter of 2022.

The labour force, the number of people working, and average monthly income increased compared to the previous year. The work of creating jobs associated with raising incomes for workers has always been a concern for local authorities.

However, from the beginning of the fourth quarter of 2022 until now, several industries and fields have encountered difficulties in production, business, and job maintenance for employees, especially enterprises in the fields of textiles, garments and leather shoes, wood processing, etc.

To promptly stabilise the situation, the MoLISA submitted to the Prime Minister to issue Official Dispatch No.1170/CD-TTg dated December 16, 2022, on measures to stabilise and develop flexible, effective, sustainable labour and take care of employees' lives.

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