The State Bank of Vietnam (SBV) will improve credit quality and prioritise capital for spearhead sectors that drive the economic growth in 2024.

It will continue operating an open market in a flexible and proactive fashion, and stand ready to support liquidity for the credit institution system.

KB Security Vietnam Company (KBSV) expected Vietnam’s credit growth at 13-14% in 2024 on the back of a better economic situation as well as the removal of bottlenecks in the realty market and enterprises bonds.

In 2023, unprecedented developments of the global economy posed formidable challenges to the country’s monetary policy. In the meantime, credit growth was well below expectations as enterprises were in a difficult situation though the SBV rolled out an array of support measures.

Earlier, the central bank said the credit growth target in 2023 will be about 14-15%, with flexible adjustments in accordance with actual development so as to stabilise the macro-economy and support economic growth in a rational fashion.

To realise the set goal, the SBV carried out an array of measures to back credit growth, including the issuance and amendment of related mechanisms and policies, while rolling out large-scale credit programmes for affordable housing projects, renovation of old apartment buildings, and seafood and forestry processing.

It adjusted the refinancing interest rate and overnight rate of the interbank e-payment, and ordered credit institutions to reduce deposit interest rates by 1.5-2% a year.

According to SBV Governor Nguyen Thi Hong, the bank has strictly followed the Government and the Prime Minister’s directions, and kept a close watch on the economic situation. The idea is to have a flexible response and roll out uniform measures and monetary policy tools, making contributions to the nation’s economic development.

Despite drastic measures put in place, the bank found it hard to withstand the challenges in credit growth. As of November 30, the total credit of the entire economy had risen 9.15% year-on-year to reach some 13 million of billion VND (532.75 billion USD), which is far from the year-end target. 

SBV Deputy Governor Dao Minh Tu blamed the fall to the fact that mobilisation channels of the capital market did not show efficiency.

They did not develop on par with their roles of supplying mid- and long-term capital for the economy. Therefore, there is a need to incrementally increase the economy’s reliance on capital from commercial banks, he explained.

The ratio of credit to GDP was on the rise, posing great risks to the credit insitutions, he said, adding as they have a lot of liquidity while lending rates would be lower, there is ample room for credit growth.

According to Dr. Nguyen Xuan Thanh, lecturer from the Fulbright School of Public Policy and Management, Vietnam’s credit would expand 11% for the whole 2023, while the figure could rise to 14-15% next year to support the GDP growth from 6.5%.

A loose monetary policy should be maintained; however, the central bank could adjust it if the economy faces pressure from exchange rate and inflation, Thanh said.

Import and export recovery in 2023 to create momentum for breakthrough in 2024

Although Vietnamese import and export activities in 2023 have yet to record a strong recovery, the decline has narrowed significantly, a factor which will serve as a premise for prosperity in the year ahead.

Import and export activities last year saw great support from international economic integration, thereby helping the country to become an important link in terms of the global value chain, with many strong industries continuing to continuously hold the top position in world export turnover.

Amid difficulties occurring in the world economy coupled with a general decline in the global aggregate demand, although Vietnamese import and export activities did not increase compared to the previous year, the decline significantly narrowed.

Total export-import turnover in 2023 was estimated to have reached US$683 billion, of which exports hit roughly US$354.5 billion and imports stood at around US$328.5 billion.

The trade balance continued to enjoy a trade surplus for the eighth consecutive year with an estimated surplus of nearly US$30 billion, a three-fold increase over 2022.

Assessing import and export activities in 2023, a representative of the Import-Export Department under Ministry of Industry and Trade said that the country has actively taken advantage of opportunities from the recovery of large, traditional markets in a bid to boost exports.

The trade surplus can primarily be put down to imports falling more sharply than exports, thereby showing difficulties in producing goods for exports.

The import of of raw materials, machinery, and equipment for production has not increased significantly, thereby indicating that although export orders have recovered, there remains numerous difficulties ahead.

The highlight of exports last year came thanks to the effective management and expansion of export activities to China, thereby contributing to increasing export turnover as the neighbouring country became the only market among major Vietnamese export markets to record positive growth.

Most notably, Vietnamese exports to China soared by about 8.1% for the whole of 2023, while other major markets witnessed a fall.

Le Hoang Tai, deputy head of the Trade Promotion Agency under the Ministry of Industry and Trade, commented that economic and trade co-operation activities between the country and China over recent years have continued to develop. According to statistics compiled by Vietnam Customs, during the past 11 months of 2023, total Vietnamese import-export turnover with China reached a figure of US$155.8 billion, with two-way trade in 2023 estimated to have hit the same turnover level as the two sides achieved in 2022.

“Although China has an important position and role and is viewed as a potential market, Vietnam's economic and trade cooperation with China is still below both nations' full potential when imports and exports still account for a very modest proportion in their total trade turnover," Tai continued.

Entering 2024, many experts believe that import and export activities will continue to face many unforeseeable risks.

The trend of trade protection appears more with many countries taking measures aimed at bringing investment back home, while also erecting trade barriers to protect and boost domestic production.

Looking at changes occurring in different markets, many businesses affirm that converting to green production is no longer an option but a mandatory requirement and an imperative of markets.

Vu Duc Giang, chairman of Vietnam Textile and Apparel Association (Vitas), affirmed that in addition to price factors, product quality and delivery time, greening and sustainable development are competitive criteria which major markets such as the United States, the EU, and Japan require from suppliers.

“If Vietnamese export enterprises want to survive, they must overcome the ‘green’ problem in production activities, with many criteria such as meeting waste treatment standards, energy-saving production, and waste recycling solutions. In the textile industry, just by using ‘green’ materials, input prices are 300% higher than traditional products. This is also a significant obstacle for textile and garment enterprises to continue on the path of “greening," Giang pointed out.

With the world forecast to continue to face major and unpredictable changes with many interwoven opportunities and challenges, Nguyen Cam Trang, deputy head of the Import-Export Department under the Ministry of Industry and Trade, noted that many markets pay greater attention to product standards related to consumer safety, sustainable development, and climate change response.

“However, exports in 2024 have a wealth of opportunities to recover and grow when inventory problems in many countries are gradually being overcome. Efforts to accelerate negotiations and diversify Vietnam's export markets will bring more competitive advantages to exports in the coming time," Trang optimistically shared.

In order to increase import-export turnover over the coming year, Deputy Minister of Industry and Trade Phan Thi Thang affirmed that the Ministry of Industry and Trade will speed up negotiations towards signing agreements, as well as pledging new trade links with potential partners in a bid to diversify products, markets, and supply chains. All of this will be done while supporting businesses in taking advantage of commitments in free trade agreements (FTAs) to bolter exports.

“In addition to key markets, the Ministry of Industry and Trade will coordinate with the Ministry of Agriculture and Rural Development to negotiate with China to open more export markets for Vietnamese fruit and vegetable products. The focus will be on well regulating the speed of customs clearance of import and export goods in Vietnam -China border gate area, especially seasonal agricultural and aquatic products in order to shift swiftly to official exports,” Deputy Minister Thang added.

Da Nang Port receives first cargo in New Year 2024

Da Nang Port Joint Stock Company welcomed the first tonne of cargo at Tien Sa Port on January 1, the first day of New Year 2024.  

The cargo was loaded and then unloaded from the ship SITC HAINAN with a total tonnage of 21,355 DWT.

After completing all import procedures for the shipment, the ship is set to transport a total of 231 containers of cargo for exports.

Last year saw Da Nang Port invest in purchasing modern equipment in order to optimise its exploitation capacity. Furthermore, the port has also implemented the Hoa Vang Logistics Center, building project covering an area of 20 hectares as well as a large warehouse system which is capable of serving the entire central region.

Moreover, it has focused on upgrading infrastructure and logistics systems with the aim of implementing a Door to Door service for customers in 2024.

Tran Le Tuan, general director of Da Nang Port, said that despite numerous difficulties faced by the Vietnamese economy, there remains huge potential for greater development in both Da Nang and the nation’s central region.

This year, Da Nang Port is determined that all production and business targets will increase by 7% compared to 2023, with worker average income soaring by 3% compared to the previous year.

Garment and textile sector seeks to remove hurdles for opportunities ahead

Although the Vietnamese textile and garment sector faced numerous challenges last year, it grossed more than US$40 billion in turnover thanks to a number of stable markets, according to industry insiders.     

In fact, the slowdown occurring in the global economy coupled with escalating geopolitical conflicts in several countries around the world also impacted Vietnam's textile and garment exports, which saw a decline of 9% compared to 2022.

According to a report compiled by the Vietnam Textile and Apparel Association, the industry has  encountered difficulties due to high inflation in key markets such as the United States and Europe, a fall in export orders, high interest rates, and exchange rate differences.

Despite a gloomy picture, there remain bright spots for textile and garment exports to several markets, with Japan, Australia, and India all witnessing an upward trend.

Furthermore, local enterprises have also moved to expand to a number of new markets in Africa and the Middle East.

According to the Vietnam Textile and Apparel Association, last year saw the sector export to more than 100 markets and territories, with the major markets being the US, Japan, the Republic of Korea, and the EU.

Vuong Duc Anh, Chief of Office of the Board of Directors of Vietnam Textile and Garment Group (Vinatex), said local firms are required to closely follow market requirements, seize upon any opportunities from the market, seek new clients, and move to diversify products to boost exports.

Moreover, as part of efforts to stabilise production during this period, businesses must reduce unnecessary costs, focus on seeking new outlets, and move to improve product quality.

Sharing this perspective, Le Tien Truong, chairman of the Board of Directors of Vietnam Textile and Garment Group, said that businesses are required to exert every effort in a bid to reduce costs, increase productivity, and seek the most reasonable production method to reach new markets and customers.

Amid fierce competition, local businesses are encouraged to become innovative and create new values to maintain market and customers, he added.

Multidisciplinary linkages bring high value to businesses

The trend of multidisciplinary linkages is taking place strongly in the Vietnamese business community; especially in the area of medium, small and micro enterprises.

Many multidisciplinary business communities have been built and developed, establishing connection networks between manufacturing enterprises, service providers and consumer partners, thereby, promoting the trade situation and growth rate of member businesses.

From a research perspective, Dr. Cao Đình Kiên, the Faculty of Business Administration, Foreign Trade University, said that the trend of business partnerships was becoming more and more popular in the modern economy because of the benefits it brought to the participating parties.

With the development of technology and globalisation trends, business co-operation activities are also indispensable to help businesses expand their scope and scale of operations as well as reduce costs or increase competitiveness.

In Việt Nam, the State has also introduced many policies to encourage multi-sector economic development; as well as promoting the process of international economic integration by opening the economy and actively participating in world economic organisations.

This not only creates potential and opportunities for development but is also a big challenge, requiring domestic businesses to know how to take advantage of business association activities as well as its advantages to enhance competitiveness.

Although many business links had been formed, there was still no initiative from participating entities, especially small and medium-sized enterprises - those who benefit from this activity, said Kiên.

Forms of business association in Việt Nam had also stopped at a simple level, implementing horizontal and cluster linkages to form craft villages or business associations of a certain industry, he said.

Some large enterprises associate with small enterprises and business households in the form of leasing or contracting, mostly for non-core business activities of the enterprise.

The rate of conducting business linkages for core business activities or further participation in the global value chain is not much.

This was partly due to the fact that Vietnamese economy is mostly run by households and individuals, with a high degree of spontaneity; production processes and quality were not standardised, so it was difficult for large enterprises or foreign enterprises to trust and co-operate in long-term, he added.

Therefore, in order to encourage business linkage activities, there needed co-ordination from the State, industry organisations and economic entities, said Kiên.

Accordingly, functional branches create a favourable legal framework, appropriate institutions and legal policies for different types of businesses to develop.

Professional organisations in all economic fields must play a role in communication through seminars with content related to business association activities, and at the same time, consulting and connecting to businesses find opportunities to link together and develop the industry's value chain, at home and abroad.

To do so, organisations needed financial resources and human resources with expertise to carry out the advisory role, said Kiên.

Finally, economic entities or businesses and business households are conscious of change, self-improvement and proactively seek to participate in the process of business linkages and formation of value chains.

The initiative of economic actors played a key role in the formation and operation of economic links, he noted.

To promote socio-economic benefits from business links, economic entities must proactively seek opportunities to co-operate and solve difficulties in the value chain in which their businesses operated, he added, only then could new business links operated most effectively in the market. 

Vietnamese economy 2024: Challenges intertwined with growth opportunities

The Vietnamese Government's determination to overcome difficulties and devise strong support solutions will be factors that have a positive impact on economic growth in 2024, while creating momentum for progress in the medium term, according to international organizations and economic experts.

In a difficult international economic context, the Vietnamese economy in 2023 still showed clear signs of recovery.

The nation's GDP in 2023 secured an estimated growth rate of 5.05%, although it failed to meet the set target, but is still considered a positive number amid global economic difficulties.

Nguyen Thi Huong, General Director of the General Statistics Office (GSO) stated that agro-forestry- fishery production continued to be a solid pillar of the national economy, with the export turnover of some agricultural products having increased coupled with stably developed and aquaculture thanks to the application of high-tech models that have brought economic efficiency.

Notably, industrial production in 2023 followed a positive trend, especially in the last months of the year, with vibrant trade and service activities maintaining a high increase compared to the previous year.

Despite the national economy in 2023 growing modestly and at a low level compared to the 2022 level of 8.02% ,this is still a higher growth rate than many countries in the region and the world.

Credit rating agency Fitch Ratings recently issued an optimistic forecast for Vietnam's economic growth in 2024 and 2025.

Specifically, Fitch Ratings reports that Vietnam's domestic financial and monetary policies have greatly supported the economy, accordingly, Fitch forecasts that the nation’s economic growth is likely to reach 6.3% in 2024, and 7.0% by 2025.

According to the latest Asian Development Outlook (ADO) Report published by the Asian Development Bank (ADB), Vietnam's economic growth in 2024 will be maintained at 6%. The International Monetary Fund (IMF) also predicted that the country will rank 20th in the world with a growth rate of 5.8% in 2024.

Regarding the Socio-Economic Development Plan for 2024, the 15th National Assembly has set a GDP growth target of 6 - 6.5%, and an average CPI growth rate of 4 - 4.5%.

​Talking to VOV, Tran Van Lam, member of the National Assembly's Finance and Budget Committee, said that in the current context, setting a growth target of 6% - 6.5% is feasible as the three growth pillars: exports, investment and consumption are all showing positive signs.

In line with this, the domestic market's demand is also indicating signs of recovery, with a large amount of money from the stimulus support package being injected into the national economy to stimulate production and consumption. Public investment will still be disbursed, albeit slowly, but private investment will recover, he continued.

Regarding consumption, in 2024, Vietnam will carry out wage reform, which will also create great demand, providing a platform for the economy to grow stronger than in 2023.

"If there are no adverse or sudden factors, the growth target set for 2024 are completely achievable," Tran Van Lam emphasized.

Besides expectations, economic challenges in 2024 are currently very obvious as fierce conflicts are taking place in many areas; the global supply chain for spare parts and exports is still broken; major countries are intensifying protectionist measures more and more clearly. This is already having a clear impact on Vietnam in 2023 and shows no signs of ending in 2024.

According to many experts, more than 30 years after the 1986 reform, this is the most difficult time for the Vietnamese economy.

Associate Professor. Dr. Tran Dinh Thien, former Director of the Vietnam Institute of Economics, said that the Vietnamese economy is living irrationally. The country is a large open market with more than 200% of GDP, but exports mostly come from the FDI sector. The rate of businesses withdrawing from the market is several dozen percent, while newly established businesses are increasing but the speed is falling, he pointed out.

The newly established and registered businesses have not created value or contributed to GDP growth, not even mentioning that newly registered businesses can be "virtual" because the current business registration policy is open, with many forms of setting up businesses for auction, invoice revolving, fraud, tax evasion, which are harmful to the real economy, Thien added.

According to GS. Dr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee, the factors affecting the economy in 2022 - 2023 have been clearly recognized and in 2024, if GDP is to grow, these weaknesses must be resolved. As a result, growth will likely to be even higher the set target of 6-65%.

Professor. Dr. Hoang Van Cuong emphasized that now is the time to find solutions to overcome negatives factors and limitations. Hopefully in 2024, the Government, ministries, sectors and localities will "look straight at the problem" and adopt reasonable policies aimed at giving ample room for higher and better growth in order to realize the goals of the socio-economic development plan for the 2021-2025 period.

Vietnamese businesses in Berlin get together on New Year day

A get-together was recently held for Vietnamese enterprises in Berlin on the occasion of the New Year 2024.

Speaking at the ceremony, Minister-Counsellor at the Vietnamese Embassy Chu Tuan Duc expressed his delight at the strong development and success of enterprises there.

Duc said he believes that the Vietnamese people in Germany will continue to reap further achievements and serve as a bridge for the Vietnam – Germany relations, elaborating the strategic partnership between the two countries is not only consolidated by the two governments but also nurtured by the peoples, businesses, and localities of the two countries.

Meanwhile, Mayor of Licktenberge Martin Schaefer committed to supporting the Vietnamese businesses for sustainable development and better integration.

Vietnam targets 2 billion USD in tra fish exports in 2024

Vietnam aims to produce 1.7 million tonnes of commercial tra fish and earn 2 billion USD from exporting the products in 2024, according to Deputy Minister of Agriculture and Rural Development Phung Duc Tien.

To that end, the fishery sector needs to be ready with plans to better respond to the increasingly competitive market, and stricter regulations and technical barriers of importing countries, Tien said.

Although Vietnam's tra fish exports in 2023 faced difficulties and consumption demand from markets decreased, especially the European and Chinese markets, there will be many positive signs for the tra fish industry in 2024.

Le Hang, Communications Director of the Vietnam Association of Seafood Exporters and Producers (VASEP), said despite a decrease in market share in certain markets, the export of tra fish is showing more positive signs in some markets such as China, Mexico, Canada, Brazil, and the UK.

The tra fish export value reached an estimated 1.8 billion USD last year, down 27% compared to the figure of 2022, according to the General Department of Customs.

However, there remains a great demand for Vietnamese tra fish in many markets in the coming time, especially for deeply-processed products, Hang said.

The US has been among the top markets consuming the most Vietnamese tra fish products.

The demand for tra fish products has also recorded a resurgence in the European Union (EU) market which is hoped to be a bright spot for Vietnam’s exports next year when it has a more stable economy than other key ones.

As one of the traditional import markets for Vietnamese tra fish, China is expected to witness a high growth in tra fish imports in 2024. In recent years, this market has consistently ranked among the top three largest importers of tra fish products, following the US and Japan.

VASEP said that the import demand for Vietnamese tra fish from China and Hong Kong (China) remained stable from June to November last year. China is showing its willingness to expand the import of aquatic products from Vietnam, including tra fish.

The product also has an advantage in other markets such as Europe and Algeria. Recently, the Vietnam Trade Office in Algeria coordinated with the Carrefour supermarket system in the country to organise an activity to introduce and promote Vietnamese products, including coffee and tra fish fillets.

Improving State management and law enforcement capacity on digital transformation

Deputy Prime Minister Trần Lưu Quang on behalf of the Prime Minister has just signed a decision approving the project of consolidating the organisational structure, improving state management capacity and enforcing laws on digital transformation from the central to local governments by 2025, with a vision to 2030.

Accordingly, by 2030, the digital transformation network will be formed and operate effectively, closely linked and co-ordinated synchronously in implementing national digital transformation tasks and solutions.

The project aims to strengthen the organisational structure, improve State management capacity and enforce laws on digital transformation on the principle of not increasing the staff of officials and civil servants, and expanding organisations and apparatus of State agencies as per the Politburo’s requirement of streamlining staff and restructuring the team of officials and civil servants.

Under the project, a digital transformation network from the central to the grassroots levels will be formed with the participation of State agencies at all levels, organisations, businesses and people with an aim to mobilise the maximum resources of society.

By 2025, all ministries, ministerial-level agencies, Government agencies and People's Committees of provinces and centrally-run cities will complete the organisational apparatus of specialised information technology units to accelerate tasks and solutions on digital transformation.

All organisations and individuals in the Digital Transformation Network will have access to and use digital platforms and unified toolkits nation-wide to serve State management and law enforcement on digital transformation.

By 2030, the Digital Transformation Network will be completed, operate effectively, be closely linked and coordinate synchronously in implementing tasks and solutions of the national digital transformation.

All staff performing digital transformation tasks from central to local levels will be trained annually to improve their capacity to meet State management and law enforcement requirements in accordance with their job title and position standards.

The project proposes reviewing and supplementing of the functions, tasks, powers and organisational structures of State management and law enforcement agencies on digital transformation in central and local levels according to the provisions of the Law on Information Technology, the Law on Cyber ​​Information Safety, the Law on Cyber​​Security, the Law on Electronic Transactions and other relevant legal documents in a centralised and unified manner.

The tasks include strengthening the organisation of the State management and law enforcement apparatus; developing and disseminating nationally-unified digital platforms and toolkits, including trainings, project management, survey conduction, online measurement and monitoring, data connection and sharing, knowledge management, virtual assistant, network information security, advisory and consulting for digital transformation management boards from central to local-level governments. 

Industry sees 3.2% growth in added value

Last year saw industry recording 3.2% growth in added value against the previous year, General Statistics Office data showed.

Processing and manufacturing posted a 3.62% rise in added value and contributed 93 basis points to the country’s economic growth. Electricity generation and distribution grew 3.79%, contributing 14 basis points.

Water supply and sewerage and waste management went up 5.18%. In contrast, the mining sector’s value was down 3.17%

The 2023 index of industrial production (IIP) inched up 1.5% year-on-year. Sectors posting strong IIP growth were plastics and plastic products (13.2%), chemicals and chemical products (9.5%), metals mining (8.3%), textiles (7%), and food production and processing (6.1%).

There were 50 centrally-governed provinces and cities reporting an increase in the IIP, while 13 others declined. These disparities were attributed to the performance of processing and manufacturing, mining, and electricity-related activities.

The National Assembly has set a target for the industrial sector to contribute around 24.1% to the nation’s gross domestic product in 2024.

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