Several large oil and gas companies have accumulated large amounts of debt in environmental protection tax, said the Ministry of Finance. VNA/VNS Photo

Eight out of ten insurance companies in Việt Nam were investigated by the Ministry of Finance (MoF) in 2023, including AIA, Dai-ichi, Manulife, Prudential, MB Ageas, Sun Life and BIDV Metlife, said Doãn Thanh Tuấn, deputy head of the Department of Insurance Supervisory Authority under the MoF, with investigations into the remaining two to produce result before the end of the Lunar New Year. 

According to the ministry, the results of the inspections on four insurance companies: Prudential, MB Ageas, Sun Life and BIDV Metlife, have shown various irregularities in insurance sales through bank channels, especially in the consultation process by bank employees and brokers.

Typical violations were not providing sufficient consultation to customers, not following through until procedures were completed, failing to provide customers with a full understanding of the insurance products, allowing free agents and bank employees to use agent codes, and not following the insurance premiums approved by the Ministry of Finance.

In addition, MoF announced a plan to investigate another six insurance companies this year, during a quarterly conference yesterday in Hà Nội. 

Regarding a large amount of tax debt owed by large oil and gas companies, deputy director-general of the General Department of Taxation Mai Sơn said nearly ten major oil and gas companies in Việt Nam had tax debts, mostly related to environmental protection taxes.

"Companies are allowed to calculate and pay taxes on their own according to regulations. The tax authorities inspect, supervise and urge declaration and payment. Our general department has urged the recovery of tax debts from companies in general, including oil and gas companies," Sơn said.

Responding to questions on how to collect the tax debts, the general department said measures, ranging from taking over companies' accounts and invoices, to banning companies' executives from leaving the country, had been taken to prevent losses to the state budget.

According to the general department, a top priority for the country's tax authority in 2024 is to establish a database of financial reports to help enforce the country's tax laws.

Deputy Minister of Finance Nguyễn Đức Chi said, for the most part, tax authority allowed companies to self-declare and pay taxes by themselves with the authority overseeing the process. Managing cash flow was the responsibility of the companies, and violations would be handled according to current laws and regulations. 

Several large oil and gas companies have been named for tax arrears in 2023, such as Xuyên Việt Oil Company with nearly VNĐ1.53 trillion, accounting for nearly 20 per cent of the taxes owed to HCM City Tax Department. In particular, the environmental protection tax alone amounted to nearly VNĐ1.25 trillion.

Thái Bình Province's tax department also named Hải Hà Inland Waterway Transport Company Limited with the largest tax debt, up to VNĐ1.78 trillion, also mainly consisting of environmental protection tax. After the company failed to meet their tax obligations, the department proposed a ban on the company's executives from leaving the country.

Nam Sông Hậu Petroleum Trading and Investment Joint Stock Company had a tax debt of over VNĐ1 trillion. Explaining the reason for the tax debt, the company stated that the fluctuation in the oil and gas business in 2022 resulted in heavy losses for the company. After several unanswered payment requests, the Hậu Giang Province's tax department deducted money from the company's account and froze all accounts belonging to companies with tax debts in the area. 

Korean, Singaporean businesses seek investment opportunities in Cần Thơ

Secretary of the Cần Thơ municipal Party Committee Nguyễn Văn Hiếu on January 18 met with representatives from the Republic of Korea’s SK Energy Co., Ltd. and Singapore’s Vietnam Draco Environment Co., Ltd. who are seeking investment opportunities in the Mekong Delta city.

At the meeting with the SK Group delegation, Hieu emphasised that the formation and development of a green hydrogen ecosystem by SK Group in the city is suitable because Can Tho is located in the heart of the Mekong Delta region, adding that its infrastructure for green hydrogen production in Cần Thơ will create a premise to attract investment to the city and the entire region.

The city strongly supports SK Group's investment ideas and will create favourable conditions for the group to implement its projects in the city, he affirmed.

Lee Dong-uk, the group’s senior advisor, briefed the host on the role of green hydrogen, the global green hydrogen market outlook, and the use of hydrogen in building a clean energy economy in the future.

He said as SK Group plans to gradually expand to agricultural products, it wants to invest in a wholesale agricultural product centre in Can Tho city, affirming this will be the first model that combines wholesale agricultural products and the use of clean, environmentally-friendly energy.

Meanwhile, at a meeting with representatives from the Singaporean company, Hiếu said that the city is calling for investments in areas like water treatment and supply for daily activities and wastewater treatment plants in new industrial zones and clusters, especially in the Vietnam - Singapore Industrial Park in Cần Thơ (VSIP Can Tho). He called on the company to study and invest in water treatment and supply – one of its strengths.

For his part, Director of Vietnam Draco Environment Co., Ltd Lim Chuan Hui that the company is seeking investment opportunities in wastewater treatment and clean water supply projects.

Besides, the company has coordinated with other enterprises to invest in other areas, he said.

Viettel leads in MNP race

After more than five years of implementing mobile number portability (MNP), Viettel is the leading network operator in this race as of January 4, with more than 1.8 million additional subscribers, reported the Việt Nam Telecommunications Authority (VNTA).

Network operators are allowed to carry out MNP services from November 16, 2018.

Accordingly, out of more than 2.3 million registered subscribers transferring to Viettel from other networks, 1,857,505 subscribers were successfully transferred.

Meanwhile, the number of subscribers transferring out of this network is also relatively low, only 623,405 subscribers.

Viettel has advantages in infrastructure, wide coverage in many remote areas, and reasonably designed packages, which makes many users prefer it.

Quite a distance from Viettel, VinaPhone also has 992,218 new subscribers, and MobiFone's figure is 374,105 subscribers.

In the opposite direction, these two networks respectively have 636,908 subscribers and 382,147 subscribers successfully moving away.

Viettel also leads the rate of successfully moving subscribers among these three major carriers, reaching 99.3 per cent, about 6 per cent higher than the other two businesses.

Despite large and continuous promotions, with thin infrastructure, Vietnamobile is still the network operator with the highest number of subscribers leaving, more than 1.7 million.

Although only nearly 86 per cent of registered subscribers successfully moved, this network still had 1,582,887 subscribers leaving the network.

EU increases official controls on durian from Việt Nam

The European Union has announced the temporary increase of official controls and emergency measures governing the entry into the block of certain goods, including durian from Việt Nam.

Accordingly, durian from Việt Nam, both chilled and fresh, for the first time will be subject to identity and physical checks on 10 per cent of consignments.

In the announcement, the EU said that data from the Rapid Alert System for Food and Feed (RASFF) notifications and information regarding official control performed by the member states indicate the emergency of new risks to human health, due to a possible contamination by pesticide residues.

Therefore, it is necessary to require an increased level of official controls on durian from Việt Nam.

Besides durian, peppers of genus capsicum (fresh, chilled or frozen) and instant noodles containing spices, seasonings or sauces from Việt Nam are also included in the list for increased levels of official controls, with the frequency of identity and physical checks at 50 per cent and 20 per cent, respectively.

Okra (fresh, chilled or frozen) and dragon fruit (fresh or chilled) from Việt Nam are subject to special conditions for entry into the union due to contamination risk by mycotoxins, with the frequency of 50 per cent and 20 per cent, respectively, meaning that quality certificates are required for entry.

This EU update adds more than 100 goods from 27 countries and will take effect 20 days from the announcement date, meaning the new regulations will be applied from early February.

EU imports around US$160 billion worth of agricultural products every year, of which, Việt Nam accounted for a modest 4-5 per cent.

Việt Nam’s export revenue of agricultural products to the EU was $5.34 billion in 2023, a drop of 12.2 per cent on falling consumption demand.

The durian export of Việt Nam reached nearly $2.2 billion in the first 11 months of 2023, 4.8 times higher than the same period last year. China was the largest market for Việt Nam’s durian with a share of more than 91 per cent. Exports of durian to some EU member countries increased strongly, such as Czech by 28,000 per cent and France by 32 per cent.

The EU sets high technical standards for imported agricultural products.

Although the EU – Việt Nam Free Trade Agreement has been implemented for 2 years, Việt Nam’s ability to take advantage of the trade deal was estimated at only 12.1 per cent.

Nguyễn Thuỳ Linh from the Department of International Cooperation under the Ministry of Agriculture and Rural Development said that Việt Nam must hasten efforts to take advantage of the trade deal as the EU is going to complete negotiations on an FTA with Thailand, a competitor to many Vietnamese products.

To expand in the EU, it was critical to reorganise agricultural production towards improved product quality, meeting sanitary and phytosanitary standards, together with promoting green and circular production, she said.

Private hospitals look to capture growing healthcare market, profitability varies

Private hospitals are seeking to expand quickly to tap into the growing healthcare market though not all are profitable.

According to the Việt Nam Private Hospital Association, by the end of 2022 the country will have nearly 320 private hospitals with 22,000 beds or a fifth of all hospitals and 8 per cent of beds. There are also 38,000 private clinics.

The non-public medical market is considered to be lucrative for investors due to the rapid growth of the middle class in Southeast Asia and increasing spending on healthcare.

Nevertheless, not all participants are finding it uniformly profitable.

Only two private hospitals, Tâm Đức Heart Hospital and Thái Nguyên International Hospital Joint Stock Company, publicly disclose their financial performance since they are listed on the stock market.

Thái Nguyên, established in 2013, has since increased its charter capital from VNĐ27.7 billion (US$1.1 million) to VNĐ518 billion.

It operates the Thái Nguyên International Hospital and Yên Bình Thái Nguyên General Hospital with a total of 550 beds, and is the largest private healthcare provider in the mountainous provinces of the north-east.

Its average annual revenues were around VNĐ270 billion from 2015 to 2019. But they rose significantly after it expanded in 2020, and are on course to reach a record VNĐ415 billion in 2023.

It next plans to build a hospital in Bắc Giang with 300 beds and another in Hà Nội with 500.

Tâm Đức Heart Hospital Joint Stock Company, which opened in 2006 with 250 beds, achieved revenues of over VNĐ723 billion and pre-tax profits of nearly VNĐ104 billion in 2022.

In the first nine months of 2023, for which results are available, it had net revenues of VNĐ553 billion, a 4 per cent increase year-on-year, and pre-tax profits of VNĐ73 billion.

However, many other private hospitals are struggling to generate significant profits or are even losing money.

Vinmec International General Hospital, part of conglomerate Vingroup, is one of the leading private hospital networks in terms of revenues. It has 10 hospitals and clinics with 1,650 beds.

It saw a 50 per cent increase in the number of patient visits in 2022, but remained mired in losses despite a 53 per cent revenue growth to VNĐ4.48 trillion.

Its pre-tax loss in 2022 topped VNĐ700 billion.

Hoàn Mỹ Medical Group, Việt Nam’s largest private healthcare network with 14 hospitals and six clinics, is providing comprehensive services across its Hạnh Phúc and Hoàn Mỹ brands.

The Tâm Anh General Hospital chain belonging to medical and pharmaceutical entrepreneur Ngô Chí Dũng (the person behind the VNVC and Eco Pharma brands) makes negligible profits despite earning revenues of hundreds of billions of đồng.

In 2019 and 2020 the private hospital chain reported after-tax profits of VNĐ1.14 billion and VNĐ380 million on revenues of VNĐ660 billion and VNĐ745 billion.

Tâm Anh was established in 2007 but only began operations in 2016. It has one hospital each in Long Biên District in Hà Nội and District 2 in HCM City.

In July 2023 Thomson Medical Group paid US$381.4 million to acquire Far East Vietnam Medical Company Limited, owner of FV Hospital, making it the largest M&A deal in Southeast Asia in the healthcare sector since 2020.

FV was founded by Dr. Jean-Marcel Guillon in 2003 with a group of French doctors and registered capital of $44 million.

By last year it had nearly 200 beds and more than 30 specialities, and was capable of treating 1,500 patients per day.

According to Thomson Medical Group, FV made a profit of $19.5 million in 2022.

In 2019-22 it achieved annual revenue growth of 8.2 per cent and profit growth of 14.8 per cent. 

Numerous water companies surpass earning targets

Numerous companies in the water industry have reported surpassing their predetermined revenue and profit targets by the conclusion of 2023.

Two prominent players in the water industry, Thủ Dầu Một Water Joint Stock Company (TDM Water or TDM) and Bình Dương Water - Environment Corporation Joint Stock Company (Biwase or BWE), experienced varied growth in their profits by the end of 2023.

Biwase estimates that its total revenue for 2023 will reach nearly VNĐ4 trillion, a 2 per cent increase compared to 2022, successfully meeting 100 per cent of the annual plan. However, the company has not recorded VNĐ46.8 billion in revenue from the wastewater treatment sector by the end of December 2023 due to ongoing administrative procedures. Once the waste treatment revenue is accounted for, the parent company's revenue is projected to be around VNĐ4.02 trillion, surpassing the revenue target by VNĐ23.8 billion.

Biwase foresees a post-tax profit of VNĐ601 billion for 2023, a 12 per cent decline compared to 2022, but still exceeding 83 per cent of the annual profit target of VNĐ720 billion. This decrease is attributed to increased financial costs. Biwase stated that despite challenges posed by interest rate and price fluctuations, the achieved profits align with expectations and ensure business stability and dividends.

Conversely, Thủ Dầu Một Water reported a net revenue of VNĐ532.6 billion for 2023, an 11.2-per cent increase compared to the previous year. The majority of this revenue, VNĐ466 billion, comes from clean water supply, accounting for 87.5 per cent of the total, while VNĐ6.8 billion is from raw water supply. Additional material supply revenue of VNĐ59.4 billion was recorded in 2023.

A noteworthy aspect is that despite a decrease in financial revenue during the fourth quarter, TDM Water's financial revenue for 2023 still rose fivefold to nearly VNĐ124 billion compared to 2022. Dividends contributed significantly to this revenue, with distributed profits amounting to VNĐ118.9 billion.

Consequently, TDM Water received two significant amounts in 2023: VNĐ93.8 billion in dividends and profits distributed from the Bình Dương Water - Environment Corporation Joint Stock Company (Biwase); and VNĐ400 million from the Consulting Joint Stock Company for Water Supply and Environment. TDM Water reported a post-tax profit of VNĐ283 billion for 2023, a 28.6-per cent increase compared to 2022.

Thừa Thiên Huế Water Supply Joint Stock Company (HueWACO or HWS) concluded the fourth quarter of 2023 with a net revenue of over VNĐ150 billion, a 2 per cent decrease compared to the same period the previous year. However, cost of sales increased by 8 per cent to VNĐ107 billion, resulting in a 20 per cent decline in the company's gross profit compared to the same period last year, amounting to VNĐ43 billion.

The company's revenue from financial activities also experienced a decline, reaching slightly over VNĐ4 billion, more than halving compared to the same period in 2022. Huewaco faced increased costs, particularly a 65 per cent rise in business management expenses to over VNĐ16 billion.

Consequently, Huewaco reported an after-tax profit of nearly VNĐ16 billion for the fourth quarter, a 45 per cent decrease compared to the corresponding period. However, due to profitable performances in the previous three quarters, Huewwaco reported a post-tax profit of nearly VNĐ127 billion for 2023, a 7 per cent increase compared to the previous year, exceeding the annual plan by 2 per cent (VNĐ124 billion).

Lâm Đồng Water Supply and Sewerage Joint Stock Company (Lawaco or LDW) recorded a net revenue of nearly VNĐ71 billion in the fourth quarter of 2023, a 4 per cent increase compared to the same period in the preceding year. The company reported a quarterly post-tax profit of over VNĐ17 billion, a 44 per cent increase compared to the fourth quarter of 2023.

Throughout 2023, Lawaco achieved a 7 per cent increase in net revenue, surpassing VNĐ297 billion. The company's gross profit rose from VNĐ64.8 billion in 2022 to nearly VNĐ79 billion. Lawaco successfully reduced costs during the year, with financial costs decreasing by 13 per cent to nearly VNĐ14 billion and sales costs dropping by 16.7 per cent to VNĐ4 billion. Only business management costs saw a slight increase of approximately VNĐ1 billion to VNĐ16.2 billion.

Consequently, Lawaco reported pre-tax and post-tax profits of over VNĐ100 billion and VNĐ80 billion, respectively, a 40-per cent increase compared to 2022, surpassing the annual plan of VNĐ74 billion by 35 per cent.

Nhà Bè Water Supply Joint Stock Company (NBW) recorded net revenue of VNĐ223 billion in the fourth quarter of 2023, a 1.5-per cent increase compared to the revenue of VNĐ219.7 billion in the same period of 2022. The company reported a post-tax profit of VNĐ5.5 billion in the fourth quarter of 2023, a slight 0.5 per cent increase compared to the same period last year.

Overall, in the entirety of 2023, Nhà Bè Water Supply witnessed a 22 per cent increase in post-tax profit compared to the previous year, reaching over VNĐ25 billion. The company experienced improved performance in its core business, with net revenue for the entire year of 2023 amounting to VNĐ889 billion, a 4 per cent increase compared to the previous year. Notably, the company's financial revenue experienced growth, reaching VNĐ5 billion, nearly three times higher than the previous year.

In 2023, Nhà Bè Water Supply aimed for a total revenue of VNĐ873 billion and a pre-tax profit of VNĐ27.9 billion. Consequently, the company achieved 101 per cent of the revenue plan and 117 per cent of the profit target by the end of the year.

Việt Nam trade office in Netherlands warns of online trading fraud

The Vietnam Trade Office in the Netherlands has warned of online fraud cases, particularly related to petroleum products, amidst the high demand for this category of goods.

Fraudsters often create fake websites with fabricated information or counterfeit websites impersonating legitimate import-export companies or companies providing petroleum storage tank services whose contact information being usually a mobile phone number or an internet phone number.

According to the trade office, many companies are easy to become victims of the scams because of their fear of missing out on business opportunities and without information verification about partners due to they believe that the Netherlands is a developed country with a strict legal system and reputable companies.

The agency advised Vietnamese businesses to be cautious and engage in transactions with reputable partners whose contact information provided on their websites includes a landline phone number and an email in the format of info@.

The payment method commonly used in petroleum trading transactions is through a letter of credit (L/C), it noted.

The trade office has provided information related to online fraud and a list of counterfeit websites compiled by the port authority of Rotterdam (continuously updated), which can be accessed at https://ferm-rotterdam.nl/en/blacklist.

Bình Dương promotes industrial manufacturing decarbonisation towards net-zero

Bình Dương Province pledges to accelerate the effort for decarbonisation towards a net-zero future and contribute to promoting sustainable development, Mai Hùng Dũng, Deputy Chairman of the southern province’s People’s Committee, said.

He was speaking at the “US – Việt Nam Getting to Net Zero Workshop: Industrial Manufacturing Decarbonisation” held on Thursday in Bình Dương, discussing potential US clean energy technologies to support Việt Nam’s clean energy transition.

Stressing that climate change is a global issue, Susan Burns, Consul General at the US Consulate in HCM City, said that Việt Nam needs energy efficiency technologies and decarbonisation solutions to promote greener production and reduce costs, especially in the context that the country is emerging as an industrial manufacturing hub of the region, posing a number of challenges to the environment.

Dũng said that the southern province is developing a new ecosystem to supplement the industrial – urban services complex.

It is an ecosystem for innovation, science and technology, a smart eco-industrial model to promote sustainable development and leverage the province’s industry to a new height and gradually develop new growth momentum which will replace advantages from labour-intensive and land resources.

The new ecosystem will help Bình Dương actively participate in the emission reduction to journey towards net zero by 2050 as the Government committed.

Net-zero is not only solving environmental issues or sustainable development, but is also a test of local governance capacity, Dũng said, adding that as a major manufacturing centre of Việt Nam, Bình Dương will participate in the process of bringing net emissions to zero with the desire to contributing to building a sustainable future for Việt Nam and the world.

At the workshop, participants also discuss energy efficiency solutions for industrial parks, eco industrial park models in Việt Nam, industrial decarbonization and potential US clean technologies for industrial manufacturing decarbonisation as well as opportunities to leverage international assistance and opportunities in renewable energy and carbon certifications to drive sustainability in manufacturing. 

Investors eye old Hanoi apartment renovation projects

As many as 100 investors have expressed their interest in projects to restore degraded apartment buildings, said Deputy Director of the Hanoi Department of Construction Mac Dinh Minh.

According to Minh, Hanoi has issued a plan on old apartment renovation which has attracted the attention of around 100 investors.The renovation plan will cover apartment buildings in Giang Vo, Thanh Cong, Ngoc Khanh, Kim Lien, Trung Tu, Khuong Thuong, Thanh Xuan Bac, Thanh Xuan, Nghia Tan areas and the Ministry of Justice’s residential area by 2025. Among those, Giang Vo, Thanh Cong, Ngoc Khanh and the Ministry of Justice’s residential area are listed as severely deteriorated.

The Department of Construction has approved the inspection task for 1,022 old buildings in Hanoi, including 126 buildings to be directly inspected by the department. Meanwhile, the remainder will be carried out in districts and towns.

Districts will be allowed to selectl investors for local apartment building restoration, according to the Department of Construction.

By September 2021, Hanoi had nearly 1,600 old apartment buildings built between 1960 and 1994, some of which were built before 1954, the Vietnam News Agency said.

Apartment prices in Hanoi forecasted to rise
 
Apartment prices in Hanoi have been forecasted to continue increasing amid limited supply.

According to a report by Savills Vietnam, the number of apartments in Hanoi’s primary market in the fourth quarter of 2023 reached 11,911, down 41 percent on-year. The average apartment price in Hanoi in the quarter was around VND58 million per square metre, up 7 percent against the third quarter and 12 percent on-year. This has recorded a rise in the city’s primary apartment prices for 19 consecutive quarters.Do Thu Hang, Senior Director of Consulting and Research Department at Savills Hanoi, said that the housing market in Hanoi has witnessed a shortage in the affordable apartment segment. The completion of metro lines and ring roads is expected to drive a trend of gradual relocation away from the city centre.

Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, beside the low supply, the prolonged implementation of apartment projects has further added to the shortage in Hanoi. Meanwhile, many projects are also stalled due to legal complications, affecting supply.

According to a recent report conducted by the Ministry of Construction, most of the apartments in Hanoi and HCM City are from VND25 million (USD1,000) per square metre, while the high-end segment is priced at VND35-70 million per square metre.

Pig farmers call for government help to curb illegal imports

The Dong Nai Animal Husbandry Association is seeking help from the government to curb rising illegal pig imports from Cambodia which are causing losses to local farmers.

In an urgent document sent to the PM, Dong Nai Animal Husbandry Association said that illegally imported pigs are accounting for 30 percent of the total sold everyday in the country.

Although PM Pham Minh Chinh issued a dispatch which requires strict punishment on illegal trading and transporting of pigs through Vietnam’s borders, these activities have continued, affecting sales and posing the threat of disease transmission into the country, the association said in their document.

According to the association, the illegal activities have sharply increased amid rising demand for the coming Tet Lunar New Year.

"Between 6,000 and 7,000 pigs had been illegally brought into Vietnam every day from Cambodia through border gates in the southern region between January 1-15," the association said. "These illegally-imported pigs are being sold at cheap prices of around VND50,000 per kilo, making it difficult for local pig farmers to sell their products at profitable prices."

The association also mentioned great losses facing local farmers due to some diseases affecting their pigs, which they claim might have been spread from the foreign pigs.

"We very much hope that the PM and the Minister of Agriculture and Rural Development to direct concerned agencies to prevent the situation," the association said.

Vietnam’s pig farmers are struggling as the price of live pigs has recently fallen to a two-year low of VND46,000 per kilo. Meanwhile, lower consumption and oversupply both from local production and imports are still driving down prices.

Pork imported from China, Thailand and Brazil, is currently sold at 30 percent cheaper than local pork.

Vietnam's steel sector revitalised in 2024

In the early days of January, the domestic construction steel market underwent its first price adjustment as manufacturers collectively raised prices for rolled steel and various reinforced steel types by a common margin of $8.33 per tonne.
 
Le Hai Thanh, an analyst at MBS, said, “Steel is a sector with existing recovery prospects, thanks to the global steel price increase, warming demand in the domestic market, and the potential for heightened profit margins as input factors such as coal and ore are predicted to decrease slightly.”

FPT Securities also suggests that 2024 is poised to be a prosperous one for the Vietnamese steel industry, with domestic market consumption expected to reach 18.6 million tonnes, marking an 8.7 per cent increase compared to 2023. This would signify the first positive growth in steel consumption within the domestic market after two consecutive years of decline.

The growth is attributed to a robust push in public investment, exemplified by the initiation of 12 public projects by the Ministry of Transport at the end of 2023.

Furthermore, the MoT is gearing up to launch at least 19 transport projects in 2024, continuing its efforts to bolster transportation infrastructure. These initiatives include upgrading the Khe Net pass railway route on the Hanoi-Ho Chi Minh City railway line, enhancing the Quy Nhon channel for 50,000DWT ships, and implementing an aviation scheme to construct an information system for managing vehicles and air traffic infrastructure.

Deputy general director of Nhan Luat Investment and Steel Trading Holding Corporation Phan Ho Chau Nam said, "There are still some hurdles ahead for the industry due to the current domestic growth momentum, primarily concentrated in the government's public investment sector, while the real estate market still grapples with persistent challenges that cannot be immediately overcome, especially the issue of trust."

However, the driving force behind domestic steel consumption in 2024 primarily stems from the expectation of a robust recovery in the civil construction sector, while industrial construction and infrastructure are expected to maintain the growth momentum from the previous year.

This expectation is explained by the National Assembly passing amendments to the Land Law on January 18, with changes that are considered appropriate and positive, contributing to the resurgence of the real estate and civil construction markets this year.

On the export front, World Steel identifies that the growth in infrastructure construction activities in ASEAN, the United States, and the European market will stimulate Vietnam's steel exports in the current year. Particularly in Europe, major import partners of Vietnam have displayed significant growth rates compared to the same period in 2022.

Notably, Italy, Vietnam's largest steel importer, has seen a 128 per cent growth with over 1.35 million tonnes, while Belgium imported around 500,000 tonnes with a growth rate of 30 per cent, and Spain imported 350,000 tonnes with a growth rate of 70 per cent.

It is expected that export volume will improve in the first quarter of 2024 due to the increasing price difference between steel in North America and Europe compared to steel in Vietnam. Additionally, Europe's tighter control over the import of finished steel products produced by Russia in 2024 will further support Vietnam's steel exports to Europe.

The anticipated demand from ASEAN countries is expected to increase by 5.2 per cent in 2024, surpassing the 3.8 per cent growth recorded in 2023. Meanwhile, the US construction sector is also experiencing a strong resurgence. Companies are actively bringing back a portion of their production activities to the homeland, with an "American-made" wave gaining momentum.

The return of major nations to the construction race has continuously brought positive news for the domestic steel price in Vietnam in the last few months.

"The impressive 64 per cent growth in export figures, particularly in hot-rolled and cold-rolled steel, signals a positive trend in the steel industry during the latter months of 2023. Nonetheless, it is crucial to emphasise that this recovery is predominantly export-driven, while domestic demand continues to show relative weakness," said Nam of Nhan Luat Investment and Steel.

A crucial factor helping the Vietnamese steel industry usher in a bright dawn after two years of decline is the prospect of enhanced profit margins resulting from anticipated reductions in input costs such as coal and ore.

The World Bank forecasts that iron ore prices in 2024 will be around $108 per ton, a 2.8 per cent decrease compared to 2023. The three factors identified as contributing to the continued decrease in iron ore prices are sluggish construction activities and production reduction trends in China; slow steel demand recovery in other countries; and a global increase in iron ore supply.

The World Bank and Fitch Ratings also agree that the prices of various types of coal will decrease this year. For Australian coking coal, the average free on board export price for the entire year of 2024 is forecasted to be around $190 per tonne, a 24 per cent decrease compared to 2023, marking the second consecutive year of sharp decline.

Calls for review of IUU certificate provision to boost fish firms

The Vietnam Association of Seafood Exporters and Producers (VASEP) has turned to the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development (MARD) over concerns that despite inflation being contained in the world’s major economies and the global recession bottoming out, the ensuing recovery has proceeded at a snail’s pace, with global seafood consumption particularly affected.

Aside from concerns at the macro level, businesses in the sector, particularly shrimp and basafish farmers, face the daily challenges associated with rising feed costs, with feed for basa fish increasing by more than 30 per cent on-year.

VASEP also reported that Vietnamese shrimp is facing stiff competition from similar products from Ecuador and India, with the situation not expected to improve until at least well into the first half of this year.

Additionally, sea transportation costs saw a sharp jump from early January, particularly for ships heading to the EU, US, and Canada amid the heightening Russia-Ukraine conflict and Middle East tension.

For instance, the transportation cost to Hamburg in Germany jumped from $1,200-1,300 last December to as high as $4,350-4,450 in January; and to New York, costs escalated from $2,600 to $4,100-4,500 for the same period.

“Current food safety measures are too stringent and time-consuming, and pose a risk to firms as they might lose out on orders and potential customers.” - Nguyen Hoai Nam, VASEP deputy general secretary.
Nguyen Hoai Nam, VASEP deputy general secretary, added that the 'illegal, unreported, and unregulated' (IUU) yellow card related to product origin tracing could pose more challenges ahead.

“Current food safety measures are too stringent and time-consuming, and pose a risk to firms as they might lose out on orders and potential customers. The tuna, cuttlefish, and octopus segments are suffering the most,” said Nam.

In a report to the government, VASEP mentioned the bottlenecks in the product origin tracing process, suggesting that this could be solved if the MARD changed the way it granted IUU certificates at fishing ports.

“We propose that the certificates be granted to cargo owners when they finalise unloading raw materials from ships under the supervision of port staff. Currently, certificate provision takes place after firms transport materials to factories in several different locations. Sometimes this process takes many months,” said Nam.

Businesses in the billion-dollar tuna export sector voiced their concerns about meeting requirements for food health certificates. Under the current regulations, these certificates are provided by a relevant state management agency. It is currently very difficult for tuna fishermen to acquire such certificates, as the catches are being kept aboard freezer vessels out at sea before being transported onshore to businesses.

Meanwhile, under current EU regulations, such certificates can be provided for catches kept aboard freezer vessels by the ship captains.

“Our association has proposed the PM and the MARD to review current food safety standard regulations in Vietnam and the EU to make suitable revisions,” said Nam.

Manufacturing ready for external pressures

Manufacturers in key industries are grappling with rising costs and plummeting demand that is weakening manufacturing and export activities.

According to the Ministry of Industry and Trade (MoIT), the sector failed to achieve a slew of targets in 2023. Vietnamese export earnings dropped by 4.4 per cent compared to the plan to grow by 6 per cent. The proportion of manufacturing and processing in GDP reached 23.84 per cent, compared with the target of 25.4–25.8 per cent.

Meanwhile, Vietnam’s index of industrial production rose 1.5 per cent on-year in 2023, against the target of 8–9 per cent. The added value of the industrial sector and the manufacturing and processing industry posted the lowest increase in the past 12 years, making an insignificant contribution to economic growth compared to previous years.

The consumption index of the whole processing and manufacturing industry climbed 1.8 per cent in 2023, compared to an increase of 7.1 per cent in 2022. Meanwhile, the average inventory rate of the whole manufacturing industry was 87.5 per cent in 2023 against 78.1 per cent in 2022, indicating challenges in the manufacturing and consumption of industrial products.

The added value of the whole industry in 2023 rose by 3.02 per cent on-year, also the lowest increase in the 2011, and contributed 1 percentage point to the overall growth of the economy. Of which, the manufacturing and processing industry increased by 3.62 per cent, the lowest growth in the last dozen years.

Low demand is the main reason behind the poor business performance of Vietnam National Textile and Garment Group (Vinatex). At an annual review meeting on January 8, Vinatex CEO Cao Huu Tien acknowledged that 2023 was its most difficult period in over 30 years of operation.

Vinatex recorded consolidated revenue of $705.6 million and pre-tax profit of $15.4 million, reaching 104.4 and 101.9 per cent of the yearly targets, respectively. However, the 2023 pre-tax profit dropped 60 per cent on-year.

“Vinatex set out many scenarios for 2023, but the worst scenario took place due to market developments, negatively affecting our business and production activities,” Tien added.

Vietnam’s garments and textiles sector reached an export revenue of $40 billion, down 11 per cent on-year.

Deputy Prime Minister Tran Hong Ha said, “The manufacturing and processing industry is the foundation for other industries. However, some sectors recorded a sharp decline, such as a 43 per cent decrease for the electronics sector. There are both objective and subjective reasons. However, the economy reveals issues amid the headwinds in 2023. We need to review the strategy to promote industrial production and the market.”

The MoIT forecasts that there will be huge external pressure on industrial production and export activities in 2024. The main pressure comes from international trade, with many major economies slowing down, which dampens overall demand recovery and affects export results.

“Fluctuations will continue into 2024. Many garments and textiles companies are coming up with measures to make timely adjustments, thereby lowering the impact when the market becomes worse,” said Hoang Thuy Oanh, deputy general director of Hoa Tho Textile and Garment JSC. “This trend will directly impact the orders of businesses. Amid this challenge, we need to take advantage of every single opportunity in the market by expanding the customer base, diversifying products, and receiving small orders.”

Research group Wood Mackenzie forecasts that global GDP growth will slow in 2024 compared to the last two years as geopolitical conflicts continue to linger. Due to the pressure, global consumers will slash purchases of non-essential goods, including textiles and garments.

Le Thi Quy Huong, deputy general director of Phu Bai Spinning JSC, said, “The yarn industry is predicted to contract until the next quarter. Thus, we formulate production plans every month rather than every quarter. The company has changed products to meet market trends and customer demand. We are striving to secure enough orders for the first quarter of 2024 to ensure capacity for three spinning factories.”

Andrew Harker, economics director at S&P Global Market Intelligence, added, “The final month of the year was indicative of the picture for much of 2023 in the Vietnamese manufacturing sector, with subdued demand limiting production volumes. Firms are still optimistic that output will expand. This has led to broad stability of employment and purchasing activity despite the reductions in new orders, as manufacturers attempt to maintain capacity in the hope of better days to come.”

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