The Vietnam Report JSC has released a white book on the Vietnamese economy in 2023, highlighting the country’s economic achievements last year and giving forecast for 2024 as well as a number of policy recommendations.

According to Vietnam Report General Director Vu Dang Vinh, last year, despite impacts from the world economic crisis and domestic difficulties, Vietnam has still been a bright spot with GDP growth of 5.05% and the recovery of many areas such as export and industrial production.

In its recent report on Vietnam’s top 500 biggest businesses in Vietnam, Vietnam Report underlined that growth was recorded in revenue of all three major areas of industry-construction, service and agro-forestry-fisheries in 2023.

The report also showed a year-on-year rise of 0.2% and 4.1% in the average return on assets (ROA) and return on equity (ROE), respectively. On the contrary, a downturn of 0.4% was seen in the average return on sales (ROS).

Meanwhile, the production and business situation of a number of large enterprises in key economic sectors such as pharmacy, logistics, tourism, hotels - resorts, animal feed were also improved despite many difficulties.

Except for the logistics industry, which is heavily impacted by the global economic downturn, all the remaining sectors enjoyed growth.

Particularly, Vietnam just witnessed a year with boom in the domestic and international tourist market, and the growing demand for meat products, leading to a higher demand for animal feed.

The Vietnam Report held that if they overcome the current difficulties, businesses will reap great opportunities to become the main driving force for the economy, enhancing their position in the domestic and foreign supply chains.

Vinh underlined that flexible adaptation efforts in production and business activities as well as governance strategies of enterprises will be a premise for a more positive year in 2024 when the economic situation gradually improves.

He also underscored the need to build a strong trademark as a way for domestic firms to recover and thrive in the future.

Vietnam wants to cooperate with Samsung in semiconductor development: official

Vietnam hopes Samsung become a strategic investor in the context that the country is building a strategy to develop the semiconductor industry and promote innovation, Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc has told General Director of Samsung Vietnam Choi Joo Ho.

At their recent meeting, Ngoc spoke highly of the Republic of Korean group’s projects in Vietnam as well as its contributions to local socio-economic development.

She proposed the group continue supporting Vietnam in improving the capacity of domestic businesses to be able to participate in its supply chain, and coordinate closely with her ministry to practically and effectively operate training centres located at the National Innovation Centre (NIC).

The Ministry of Planning and Investment will coordinate with relevant agencies to soon build policies in accordance with the international situation and regulations, as well as those of Vietnam to ensure the interests of all parties in the spirit of harmonising benefits and sharing risks, Ngoc said, stressing the Vietnamese Government’s commitment to create a more favourable and attractive business and investment environment for foreign investors.

Choi Joo Ho said that Samsung is continuously expanding its investment in Vietnam, with about 1.2 billion USD added last year. Samsung has focused on developing supporting industries, and will strengthen collaboration with the NIC to operate a lab for innovation and information technology, train technology talent, and support start-up businesses.

As of late 2023, Samsung had invested over 20 billion USD in Vietnam. At present, more than 50% of Samsung products sold around the world are made in Vietnam.

Incentives needed to raise competitiveness of logistics industry: Insiders

The logistics industry has made big strides in recent times, significantly contributing to the country’s economic growth and generating a number of jobs.

In the World Bank rankings, Việt Nam currently ranks 64th out of 160 countries in terms of logistics development and fourth in Southeast Asia after Singapore, Malaysia and Thailand.

It was also among the top 10 in the 2023 Emerging Markets Logistics Index compiled by Agility, one of the world’s top freight forwarding and contract logistics providers.

Among Southeast Asian countries, it was fourth behind Malaysia, Indonesia and Thailand.

But Việt Nam’s logistics costs are equivalent to 16.8-17 per cent of its GDP, much higher than the global average of 10.6 per cent, weakening the competitiveness of its goods globally, chairman of the Việt Nam Logistics Association (VLA) Lê Duy Hiệp, said, pointing to limitations in infrastructure, seaport planning and connectivity between various means of transport.

The World Bank also said Việt Nam's logistics industry still shows many shortcomings in terms of capacity and the pace of digital transformation by businesses.

Although the Government has pushed ahead with a national logistics development strategy for until 2035 that integrates digital transformation, it requires greater efforts to boost the sector’s digitisation.

Besides, the railway network has yet to be fully tapped to serve trade with China and ASEAN member countries despite its great potential.

Given that, Hiệp suggested offering more incentives to help logistics firms bolster their competitiveness.

Deputy Minister of Planning and Investment Trần Duy Đông said the number of logistics businesses has increased rapidly to over 3,000.

The Government is trying to improve the investment environment, increase public spending, stimulate demand, and remove difficulties faced by manufacturers and exporters, he said.

Infrastructure is a key factor in the development of the logistics industry.

In the past two years many important highways and regional roads have been built.

Việt Nam's goal is to have 3,000km of highways by 2025 and 5,000km by 2030 besides coastal roads, ports and airports.

Đông said "These are necessary conditions for Việt Nam to develop the logistics industry. However, to achieve the goal of cutting logistics costs, improving the business environment and enhancing the competitiveness of the logistics industry amid the international economic integration and fourth industrial revolution, we still have much work to do."

With respect to the legal framework for the industry, specific policies expanding on guidelines have not been announced or there are overlaps, he said.

Transport and logistics infrastructure are not synchronised to create multimodal transport corridors though the need for high-quality transshipment of goods is growing, he said. 

Việt Nam also lacks centralised logistics areas in strategic locations connected with ports, airports, national highways, or production facilities, a significant hurdle to the development of the logistics industry, he said.

"The current question is how to take advantage of the opportunity to turn logistics into an important economic sector, both meeting domestic needs and being internationally competitive, while keeping up with development trends. The global trend is green logistics to achieve sustainable development goals."

Minister of Industry and Trade Nguyễn Hồng Diên said to develop the logistics industry quickly the ministry would co-ordinate with other agencies, local authorities and businesses and industry associations to draft a development strategy for until 2035.

It would also co-ordinate with the Ministry of Transport and various localities to ensure co-ordination between traffic and logistics centre plans across the country, he said.

It would help provinces and cities, industry associations and businesses proactively plan to reduce congestion at ports and border gates, he said.

It will also promote links between logistics and production businesses and the role of the Việt Nam Logistics Forum.

Đông said the Government would improve the logistics infrastructure, review plans and ensure the synchronisation of infrastructure with transport services.

To develop human resources for logistics, authorities plan to accurately determine labour needs and develop occupational standards, he added.

Counter-cyclical fiscal policy recommended to continue in 2024

As the room for the fiscal policy remains quite large, Việt Nam in 2024 should continue to pursue the counter-cyclical fiscal policy, with a focus on increasing spending and maximising tax and fee exemption and reduction, to support economic growth, experts believe.

According to experts, in 2023, although there were still many difficulties in promoting economic growth, the positive effects of fiscal and monetary policies were shown. Specifically, the proactive and flexible monetary policy managed by the State Bank of Vietnam (SBV) contributed to controlling inflation, stabilising the macroeconomy and supporting the economy to grow by 5.05 per cent, among the highest in the region and the world. Meanwhile, the fiscal policy, including supporting packages for reducing and exempting taxes and fees of several goods and services, were quite effective, contributing to supporting the business community to overcome difficulties, recover and develop production and business.

Tô Hoài Nam, Vice Chairman of the Vietnam Association of Small- and Medium-sized Enterprises, said supporting packages to reduce value added tax (VAT), special consumption tax, and environmental protection tax on gasoline had a direct effect in helping recover production and business activities of many enterprises last year.

The total value of fiscal support packages last year was nearly VNĐ200 trillion. The policies, which were issued and implemented promptly, were highly appreciated by the business community as they created great support resources for them, Nam said.

Sharing the same opinion, expert Võ Trí Thành said the tax and fee reduction policies last year had an immediate effectiveness as it was quickly applied into practice and brought direct benefits to enterprises.

According to Thành, although the disbursement of some supporting packages, such as the 2 per cent interest rate preferential package worth VNĐ40 trillion from the State budget, was not high, they basically had a positive effect in some industries.

In particular, according to many experts, the good coordination between the fiscal and monetary policies in Việt Nam last year helped improve financial market liquidity, reduce pressure on interest rates and foreign exchange rates, and recover the bond and real estate markets, which importantly contributed to controlling inflation and stabilising the macroeconomy.

Frederic Neunamni, Chief Asia Economist and Co-head of Global Research Asia at HSBC, said the SBV's four-time reduction in policy interest rates last year, which was opposite from the tightening currency policy of many countries around the world, had a major contribution to controlling inflation in Việt Nam. At the same time, policies on reducing and exempting several taxes and fees, and restructuring due loans helped enterprises reduce input costs, which contributed to cutting product prices and stimulating consumption.

As the domestic economy in 2024 will still face many difficulties due to the impact of global headwinds while room for the domestic monetary policy remains quite limited, experts suggest that it is necessary to rely more on fiscal policy to help the country achieve the growth target of 6-6.5 per cent.

According to the macroeconomic research group of the HCM City Banking University, although the real estate and corporate bond markets still face prolonged difficulties, the fiscal policy, which still has an ample room, will become a key driver to boost domestic demand. Specifically, the wage rising policy will significantly increase the country’s GDP.

The researcher also forecast the country’s public investment in 2024 will accelerate.

Temporary tax postponement, and reduction of environmental and value added taxes will bring positive impacts to households and enterprises, Dr. Nguyễn Đức Trung, Principal of the HCM City Banking University commented.

Dr. Nguyễn Khắc Quốc Bảo, Deputy Director of HCM City Economics University, also believes the extension of the VAT reduction policy this year will have a positive impact on many enterprises. An increasing consumer spending will stimulate domestic aggregate demand, which will contribute to reducing inflationary pressure and continuing the recovery of economic growth in the first months of 2024.

According to the International Monetary Fund (IMF), in the 2022-23 period, in the context of declining business confidence and weakening loan demand, Việt Nam effectively applied a counter-fiscal policy. In 2024, the fiscal supporting policy should continue to be implemented in the direction of increasing public investment spending; maximising tax and fee reduction and exemption; and strengthening administrative and investment procedure reforms to stimulate aggregate demand.

In the long term, the IMF suggests Việt Nam should focus on streamlining the legal framework for digital economic development, green economy, circular economy, energy conversion and carbon credit market application.

Besides proactively restructuring operation, controlling cash flow risks, and diversifying capital and goods supply sources, enterprises need to devise roadmaps to apply green production, green consumption and investment in technology and human resources to increase competitiveness, the IMF said.

SCIC proposes solutions to promote State investment capital

The State Capital Investment Corporation (SCIC) has set an average annual revenue target of 9.4 trillion VND (391.67 million USD) per year according to its five-year production and business plan.

The corporation announced the implementation of the development strategy, business plan, and investment plan in accordance with Decision No 1336/QD-TTg of the Government on approval of the Development Strategy to 2030 with a vision to 2035, and its business plan and development investment plan to 2025.

The average profit after tax reaches 6.7 trillion VND, while the average annual State budget contribution reaches 5.4 trillion VND and the total investment disbursement is 36.3 trillion VND for the whole period by 2025.

During the 2026-2030 period, SCIC will focus resources to promote capital investment and business activities, prioritising investment in effective industries, key and important industries and fields in which the State needs to hold and SCIC has advantages.

It will gradually research and transform its operating model to that of a professional investment organisation to well perform its duties as an investor of the Government after 2025.

In the 2031-2035 period, SCIC will operate under the model of a professional financial investment organisation, serving as an investment tool and channel for the Government in the economy.

To achieve these goals, SCIC offers a group of solutions, according to which, for the period of 2025, it will accelerate the reception of the right to represent the owner of State capital; improve corporate governance efficiency; continue to implement restructuring and equitisation, selling state capital in enterprises; promote and expand business investment activities.

Along with that, SCIC will research, perfect and propose operating models to well perform capital investment and business tasks; continue to build the institutional system, innovate corporate governance, restructure and improve financial capacity and transform SCIC's operating model.

It is the first time its Development Strategy has been approved by the Prime Minister after 17 years of operation, said SCIC Chairman Nguyen Chi Thanh.

The development strategy and five-year plan are important legal bases and clearly define goals, directions and solutions for SCIC to promote the implementation of capital investment and business activities, and perform the role of the Government as an investor, according to Thanh.

SCIC has received 1,080 businesses with a total State capital of more than 32.34 trillion VND, successfully sold at 1,054 businesses, with a total value of 51.67 trillion VND, arrange and equitise 31 enterprises.

The enterprise achieved total revenue of 110.43 trillion VND, total profit of 85.86 trillion VND, average ROE for the whole period of 13% per year, total payment to the state budget of 92.25 trillion VND, and total investment disbursement value of 37.6 trillion VND.

Flight tickets for Tet remain scarce ahead of festive season

Although domestic airlines have continuously moved to increase the number of flights on offer during the 2024 Lunar New Year, known locally as Tet, with numerous flight routes still experiencing high booking rates and ticket shortages during the peak period.

The Civil Aviation Authority of Vietnam (CAAV) said that there has been a significant rise in seat reservations for flights departing from Ho Chi Minh City to northern and central provinces before the festive period.
 
Furthermore, during the post-Tet period, flights from Hanoi to different localities and from central provinces to Ho Chi Minh City are also nearly fully booked.

In particular, flights departing from Ho Chi Minh City to Buon Ma Thuot, Hue, Tuy Hoa Thanh Hoa, Da Nang, Quang Binh, and Hai Phong Vinh have all seen high reservation rates and face ticket shortages, with some routes hitting full capacity at 100% during peak days. 

As part of efforts to meet the growing demand, the CAAV continued to add 48 slots for Vietnamese airlines, equivalent to 48 flights and 10,000 seats per day.

It also advised passengers to arrive at airports three hours before the departure time in order to avoid congestion, and use online and digital check-in methods to save time.

HCM City banking sector to prioritise support for businesses

Support for the business sector, improving credit quality and tight control of credit to high-risk sectors are among its priorities for HCM City this year, the State Bank of Vietnam has said.

Võ Minh Tuấn, director of the central bank’s city branch, said credit growth in the city last year was lower than in 2022 at 9.77 per cent.

Under the Government’s 2 per cent interest subsidy programme, banks offered customers subsidies of VNĐ 390.06 billion (US$15.9 million) on loans of VNĐ 24 trillion, he said.

They restructured and rolled over loans worth VNĐ40 trillion ($978.3 million) for over 37,000 customers, he said.

Though the economic outlook for the country and city is improving, headwinds persist, according to the bank official.

Banks will continue to help industries meet their funding needs with a focus on those driving economic growth, as directed by the Government and the city.

While loan interest rates have dropped sharply, businesses want further cuts to help them to overcome their difficulties.

Phan Đình Tuệ, vice chairman of the HCM City Union of Business Associations, said enterprises, especially small and medium-sized ones, had faced difficulties due to the decline in global consumption.

That combined with high interest rates had exhausted businesses.  

"Businesses do not dare to borrow from banks though access has been improved. Banks are also looking for borrowers. So banks need to continue to share difficulties with businesses by sacrificing part of their profits to further cut lending interest rates. Loan interest rates have decreased compared to the beginning of 2023, but to revive the market, businesses need more support from banks."

Speaking at a conference held to discuss implementation of tasks in 2024 held by the SBV’s HCM City branch last week, Nguyễn Văn Dũng, vice chairman of the city People's Committee, said though the credit growth rate last year was lower than in 2022, disbursement was redirected into the city’s key production, trading and services sectors.

The city was determined to implement digital transformation plan and the National Assembly’s Resolution 98/2023  this year, he said.

The banking sector needed to join hands with the city for digital transformation activities and accelerate its digital transformation, he said.

The city was also focusing on becoming a regional service hub and international financial centre, and the sector needed to also support this, he said.

He urged the central bank to maintain a flexible exchange rate and management policy for the city’s businesses to increase exports. 

Cu Kieu-growing farmers in Quang Ngai worry about sharp drop in price

Cu Kieu (Allium chinese or Chinese onion) of Quang Ngai Province is sold for VND8,000 (US$0.32) per kilogram at the current time lower than the same period of last year making farmers worry about their income as Tet holiday is approaching.

At the largest Allium Chinese onion growing area of Long Yen Village in Binh Long Commune, Binh Son District, the farmers are busy at the fields for harvesting.

However, the price of Allium Chinese Onion is only traded at VND8,000 (US$0.32) per kilogram after harvesting.

A portion is sold in Quang Ngai while the rest output is collected by traders and sold in various places outside the province.
 
Vice Chairman of Binh Long Commune People's Committee Pham Dinh Duong said that Long Yen Village has spent more than 20 hectares of land for growing the plants with an estimated output of 16 tons per hectare.

At the current time, traders are purchasing with minor amount over previous years as Allium Chinese Onion from other places are entering in harvest season and distribute to the Quang Ngai market.

Over US$25.6 bln disbursed through Banking-Business Connection Program

The State Bank of Vietnam- Ho Chi Minh City Branch said that although the city's credit growth in 2023 has been slower compared with the previous year, the growth rate of 9.77 percent was adequate with the current economic situation in the city.

In 2023, the banking sector of Ho Chi Minh City has dramatically implemented solutions to support the economic recovery and development processes in the locality.

Of which, the Banking-Business Connection Program 2023 has become a bright spot with a strong spillover effect and brought effective practical support to the business community.

In 2023, the credit institutions in Ho Chi Minh City collaborated with the People’s Committee of Ho Chi Minh City and districts to successfully host 34 connection conferences to perform the disbursement of more than VND633,000 billion (US$25.6 billion) for nearly 177,000 passengers, an increase of 11 percent over 2022.

Durian prices high, farmers switch to grow durian despite warnings

In the Mekong Delta, when prices of durian increased, farmers massively cut down many other crops to grow durian trees in their orchards despite agricultural experts’ warnings.

Even, farmers in some places grow durian on alum-saline soil, in areas outside the planting area planning. However, experts warned farmers not to grow durian based on their emotions but not according to the recommendations of the Ministry of Agriculture and Rural Development, or else they would suffer losses.

In recent years, durian growers in Cai Lay District in Tien Giang Province have made great profits. Some households earned billions of Vietnamese dong after each harvest. Therefore, farmers in many other localities in the province rushed to cut down star apple, mango, dragon fruit, and green-skinned grapefruit to grow durian.

In the past 2 years, nearly 1,000 hectares of green grapefruit and mangoes in Cai Be District have been cut down and 1-2-year-old durian trees were planted, bringing the total durian area in this locality to more than 7,000 hectares.

Meanwhile, in Tan Phuoc District in Tien Giang Province, local authorities and functional agencies have recently advised farmers not to grow durian, because this land is rich in alum which is unsuitable for growing durian trees.

However, despite agricultural experts’ warnings, many farming households in Tien Giang and neighboring provinces such as Dong Thap are still massively cutting down their fruits and then improving the land to grow durian. Farmers in other localities such as Phung Hiep District in Hau Giang Province, Phong Dien and Thoi Lai districts in Can Tho, Giong Rieng District in Kien Giang Province have all grown durian trees in their orchards making the areas increase rapidly.

However, not all farmers achieved fruitful results. For example, many durian orchards in Giong Rieng District died due to lack of water and alum and salinity contamination.

According to Director of the Department of Agriculture and Rural Development of Tien Giang Province Nguyen Van Man, the department didn’t encourage farmers to grow fruit trees in alum-contaminated lands, saline soils or outside planned areas. The department advised farmers to pay attention to improving the quality of commercial durian fruit to meet the standards set by China so that China will grant an official growing area code for exports.

Every year, responsible agencies develop detailed plans for each crop group and conversion area of each locality based on the orientation of the province's crop conversion project.

However, farmers planted fruit trees or destroyed other fruit trees to plant durian trees by themselves without following the agricultural sector’s plan.

Currently, Tien Giang Province is one of the localities with the largest durian growing area in the Mekong Delta with more than 22,000 hectares while more than 500 hectares of durian are grown mainly in Tan Thanh, Thanh Hoa, Moc Hoa districts of Long An Province.

The Department of Agriculture and Rural Development of Long An Province required local authorities to strictly manage areas planned for durian growing with a determination to maintain the planting areas which are granted codes for durian trees. At the same time, growers are recommended not to cut down other crops to switch to growing durian for immediate profits.

According to Director of the Southern Fruit Institute Vo Huu Thoai, although durian trees generate high economic efficiency, farmers pour more money into growing durian. For instance, a durian tree costs about VND4 million-VND7 million from planting to harvesting and 200 trees are grown in one hectare.

Thus, he proposed farmers carefully think before growing durian, because farmers will suffer great losses. Director Vo Huu Thoai said that the Ministry of Agriculture and Rural Development has sent a document to durian-growing provinces requesting not to expand the durian-growing areas, especially in areas with heavy alum contamination, without embankments, and areas lacking water. He disclosed that durian is mainly exported to China whose agricultural authority only granted planting area code for about 12,000 hectares, but the durian growing area was about 110,000 hectares.

He suggested farmers who grow low-priced agricultural products should not rush to destroy them but need to learn about the market or seek advice from agricultural agencies, and at the same time reduce investment to lower production costs. After prices of their agricultural products increase again, farmers will take care of their fruits, thus reducing losses for farmers compared to hastily cutting and investing in new planting.

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