As the Republic of Korea (RoK) is forecast to be the largest source of foreign visitors to Vietnam during the coming Lunar New Year (Tet) holidays, many travel companies and tourist attractions have launched new products to meet their demand.

Data from online travel platform Agoda showed that Vietnam is one of the five most favourite destinations of international tourists for Tet. The leading sources of travellers during this occasion will be the RoK, Singapore, China, Hong Kong (China), and Japan.

Major travel companies in the RoK like HantaTour, Very Good Travel, and Kyowon Tour Travel Easy reported that the number of Korean tourists booking Tet tours has increased about 50% year on year, and Phu Quoc island of Vietnam is among the most attractive destinations for them during the approaching holidays.

Grasping the taste of holidaymakers from the RoK, many tourism firms and places have also rolled out the red carpet with various interesting products.

Thai Phuong Hoa, General Director of Sun World – the entertainment brand of Sun Group, told the Lao dong (Labour) daily that the company has introduced a wide range of novel experiences in Phu Quoc such as Cau Hon (Kiss Bridge), a night market, and a multimedia show named “Kiss of the Sea” with fireworks all year round.

Hoa believed that Korean tourists, especially festivalists, will love these activities.

In 2023, nearly 3.6 million visitors from the RoK chose Vietnam as their holiday destination, becoming the biggest source of international tourists in the Southeast Asian nation. Vietnam’s visa exemption policy was considered a plus of its attractiveness to Korean travellers.

Chairwoman of HanaTour Song Mi-sun said her company will strive to help raise the number of Korean visitors to Vietnam this year to 6 million. Apart from popular destinations of Koreans, it will open tours of other places like Sa Pa township in the northern province of Lao Cai.

In addition to coastal cities like Da Nang, Nha Trang, and Phu Quoc, tourists from the Northeast Asian country are now also choosing mountainous areas of Vietnam to explore, particularly Sa Pa.

Yong Sung-ok, head of the Southeast Asian division at HanaTour, noted Vietnam has become a popular destination and the most searched one among Korean travellers in the recent past.

Despite prolonged economic recession impacts, Koreans are currently ready to spend big on luxury seats on flights.

Vietnam was the destination with the biggest volume of business class tickets purchased by Korean passengers in 2023, according to statistics about last year’s flight ticket revenue in the RoK released by the country’s biggest e-marketplace Gmarket.

Commercial banks to mainly focus on credit in 2024

Credit growth will be the main focus for the banking industry in 2024, as it closely relates to economic growth, according to analysts.

In 2023, credit growth was lower than expected but improved significantly in the last months of the year. The low credit growth was primarily due to inflation, high lending interest rates, weak economy, low exports and real estate market freezing.

However, analysts believe credit will increase significantly again in 2024 thanks to a loose monetary policy and a low interest rate environment. In that context, the banking industry, which is sensitive to interest rates, will be the first to benefit.

Under a 2024 strategy report released recently, analysts from VNDirect Securities Company forecast credit growth will reach about 15 per cent in 2024, based on the 6-6.5 per cent GDP growth target. With the global economic recovery, firms’ loan demand for working capital is expected to increase again in the first half of 2024.

"As the real estate and consumer sectors are forecast to recover with strong growth in the second half of 2024, we believe that the credit growth target of 15 per cent this year is completely feasible," VNDirect said in the report.

According to VNDirect, VPBank, HDBank, MB, LPBank, VIB and Techcombank are expected to lead in credit growth this year. At the same time, the banks will also have a net interest margin (NIM) larger than the industry’s average rate. VNDirect forecasts NIM of the entire banking industry at 4.6 per cent in 2024.

However, VNDirect’s analysts assess that the business models of VPBank and Techcombank are inherently sensitive to market fluctuations. Therefore, the two banks will recover quickly following the recovery of the general market, but at the same time will be more vulnerable if the market situation changes negatively.

In contrast, HDBank, MB and VIB have stable business models, demonstrated by sustainable profit growth or low non-performing loan (NPL) ratios.

In fact, the State Bank of Vietnam (SBV) has also targeted commercial banks to focus on lending right at the beginning of this year. Instead of only allocating a part of credit growth quota for banks at the beginning of the year as previously, the SBV this year has assigned the entire credit growth target of 15 per cent for banks from January.

According to SBV’s Deputy Governor Đào Minh Tú, the allocation of all credit growth quota in the first month of this year is expected to boost aggregate demand and create favourable conditions for banks to provide capital to meet the needs of economic growth as difficulties are forecast to continue in 2024. 

Warning issued as trade fraudulent activities on the rise

The Việt Nam Embassy's Commercial Services in the Netherlands has issued a warning regarding a surge in online fraudulent activities against Vietnamese exporters as global demand for petroleum products increases. 

The service said that fraudsters have chosen the northwestern European country as the Netherlands is reputed for its stringent legal system and reputable foreign partnerships, which can then be used to exploit the trust placed in its business environment.

The embassy said fraudsters have set up fake websites and employed impersonation tactics to deceive unsuspecting victims, who place excessive trust in the legal systems of importing countries and may forego thorough verification processes and hastily enter contracts with enticing terms, escalating the risks of disputes and fraud.

According to the Vietnamese trade authorities, fraudulent activities were not confined to the Netherlands alone. Various commercial services have also reported a growing trend in major markets including the United States, Canada, and Europe. As Vietnamese businesses seize opportunities in the expanding global market, the complexities and sophistication of trade disputes and fraud have increased.

As the global economic slowdown has reduced demand for goods and services across the world, some Vietnamese businesses have been prompted to neglect careful examination of contracts and partner verification, according to trade experts. Rushed negotiations could result in unfavourable terms related to payment methods, deposit percentages, and delivery conditions in international trade contracts.

Representatives from various industry associations have expressed concerns about fraud risks in payment and a lack of experience in negotiations among Vietnamese exporters. 

Hoàng Thị Liên, chairwoman of the Vietnam Pepper and Spice Association said the risks in large markets including conflicts, wars, and political instability were significant as foreign partners might struggle with their cash flow and payment method.

This could and had resulted in sizable losses for Vietnamese exporters. 

She advised Vietnamese businesses to invest additional resources in the early detection of fraud and securing information on foreign partners, as well as the value of widely disseminating warning information, advice, and legal consultations through various platforms.

According to the association, businesses in connected countries must coordinate closely with Vietnamese commercial services and embassies to compile a blacklist of potential fraudsters while conducting businesses with increased caution.

Earlier, the association issued several warnings to its business members, which called for stronger support from Vietnamese commercial services and additional information provided to businesses trying to break into new markets. It highlighted the importance of a two-way identification method to help Vietnamese exporters verify and screen their foreign partners, mitigating fraud risks. 

In addition, the association has called for the establishment of reference rules to protect Vietnamese exporters in high-risk markets, which may include a minimum deposit amount and preference of payment method across the entire industry.

According to the association, while some exporters have been sticking to full payment before delivery in high-risk markets a lack of common agreement and uniformity in the industry may expose some of its members to potential frauds.

CPI in January rises by 0.31%

The consumer price index (CPI) in January increased by 0.31% compared to the previous month, marking a rise of 3.37% against the same period from last year, as reported on January 29 by the General Statistics Office.

Vietnam Electricity Group adjusted the average retail electricity price and domestic rice prices to continue rising in line with export rice prices, thereby leading to the rise in CPI in January.

Meanwhile, the core inflation in January also surged by 2.72% compared to the same period from last year. A total of nine groups of goods and services witnessed price hikes with the group of drugs and medical services seeing the highest level of up to 1.02%, making the overall CPI increase by 0.05 percentage points. 

The housing and construction materials group ranked second, up 0.56%; followed by transportation, up 0.41%; other goods and services, up 0.40%; beverage and tobacco, up 0.38%; garments and footwear, up 0.22%; and food and catering services group, up 0.21%. 

Household appliances and equipment group increased by 0.14%, while the culture, entertainment, and tourism group rose by 0.11%.

Two groups of goods and services witnessed a decrease in price index, including the postal and telecommunications, down 0.05%; and education group, down 0.12%. 

Core inflation in January soared by 0.21% over the previous month, up 2.72% over the same period from last year.

According to figures released by the General Statistics Office, core inflation rose by 2.72% over the same period last year, lower than the general average increase of 3.37%, mainly due to health and educational service prices.

Commercial banks to mainly focus on credit in 2024

Credit growth will be the main focus for the banking industry in 2024, as it closely relates to economic growth, according to analysts.

In 2023, credit growth was lower than expected but improved significantly in the last months of the year. The low credit growth was primarily due to inflation, high lending interest rates, weak economy, low exports and real estate market freezing.

However, analysts believed credit will increase significantly again in 2024 thanks to a loose monetary policy and a low interest rate environment. In that context, the banking industry, which is sensitive to interest rates, will be the first to benefit.

Under a 2024 strategy report released recently, analysts from VNDirect Securities Company forecast credit growth will reach about 15% in 2024, based on the 6-6.5% GDP growth target. With the global economic recovery, firms’ loan demand for working capital is expected to increase again in the first half of 2024.

"As the real estate and consumer sectors are forecast to recover with strong growth in the second half of 2024, we believe that the credit growth target of 15% this year is completely feasible," VNDirect said in the report.

According to VNDirect, VPBank, HDBank, MB, LPBank, VIB and Techcombank are expected to lead in credit growth this year. At the same time, the banks will also have a net interest margin (NIM) larger than the industry’s average rate. VNDirect forecast NIM of the entire banking industry at 4.6% in 2024.

However, VNDirect’s analysts assessed that the business models of VPBank and Techcombank are inherently sensitive to market fluctuations. Therefore, the two banks will recover quickly following the recovery of the general market, but at the same time will be more vulnerable if the market situation changes negatively.

In contrast, HDBank, MB and VIB have stable business models, demonstrated by sustainable profit growth or low non-performing loan (NPL) ratios.

In fact, the State Bank of Vietnam (SBV) has also targeted commercial banks to focus on lending right at the beginning of this year. Instead of only allocating a part of credit growth quota for banks at the beginning of the year as previously, the SBV this year has assigned the entire credit growth target of 15% for banks from January.

According to SBV Deputy Governor Dao Minh Tu, the allocation of all credit growth quota in the first month of this year is expected to boost aggregate demand and create favourable conditions for banks to provide capital to meet the needs of economic growth as difficulties are forecast to continue in 2024.

Cần Thơ fruit farmers eke production codes to facilitate exports

Cần Thơ plans to develop more fruit growing areas that are allotted production codes for exports.

The Cửu Long (Mekong) Delta city has 117 areas with a total of nearly 1,300ha that have these codes, or 1 per cent of the total area under fruit.

Longan, milk apple, durian, mango, and some other fruits are grown in these areas.

To get the code, they must conform to Vietnamese good agricultural practices (VietGAP) or other equivalent standards.

The city has 478ha of fruit orchards meeting VietGAP and GlobalGAP standards, according to its Department of Agriculture and Rural Development.

Trần Thái Nghiêm, deputy director of the department, said getting codes was an imperative.

The Sub-department of Plant Cultivation and Protection should ensure this and improve their management to expand exports to South Korea, the US, China, the EU, and other markets, he said.

Phạm Thị Minh Hiếu, its head, said the sub-department together with other departments and agencies and international organisations would organise fruit cultivation in specialised growing areas and develop geographical indication, origin traceability and production codes for them.

That would help control plant diseases, align cultivation with market demand and ensure high quality to meet export requirements, she added.

The city plans to grow other crops this year on 716ha of unproductive rice fields, including mango, durian, lime, longan, and other fruits on 422ha.

The city has increased its area under fruits in recent years and had 25,072ha with an annual output of 223,255 tonnes last year.

It has designated 10,392ha of specialised growing areas for durian, longan, mango, and milk apple.

The initial production costs are higher for fruits than rice, and it takes farmers one to five years to recover them, but subsequently they offer farmers VNĐ100-200 million (US$4,000-8,000) higher profits per hectare per year.

Farmers grow various speciality fruits with great export potential and high value such as durian, longan, mango, and jackfruit.

Phạm Văn Lơ, director of the Nhơn Nghĩa Longan Co-operative in Phong Điền District, said: “The co-operative grows off-season longan and follows instructions given by specialised agencies to meet the requirements of export markets.”

The co-operative has 29 members who grow Ido longan on 22ha and have received production codes for exporting to Japan, South Korea and the US.

Last year they sold their fruit at a high price and earned profits of VNĐ300 million ($12,200) per hectare.

The department regularly provides farmers with market information, teaches them farming techniques and expands effective fruit growing models, according to Lơ.

It has encouraged them to develop linkages with stakeholders for growing and selling their produce and apply quality standards such as VietGAP and GlobalGAP.

Co-operatives, co-operative groups, farmers, and companies in the city have been granted production codes for 970ha of fruits grown for exports. 

Bình Phước Province backs collective economy

The south-eastern province of Bình Phước is encouraging the development of co-operatives of all sizes in various sectors.

According to Trần Văn Mi, deputy chairman of its People’s Committee, efficient co-operatives are provided support so that they become exemplary ones, expand and attract individuals, organisations and companies to participate in them or link up with them.

The province plans to set up 35 new co-operatives this year.

It hopes to have 60 agricultural co-operatives that use technology for production and sales of products and ensure origin traceability for them.

It also plans to have 55 agricultural co-operatives linked with companies to develop value chains.

To achieve the targets, it will improve oversight of the collective economy to mobilise resources for its development and implement support policies.

Relevant agencies will monitor co-operatives and take measures to mitigate any difficulties they might face.

The province will instruct its Co-operative Development Support Fund to provide soft loans for expanding co-operatives.

It will encourage co-operative groups and co-operatives to participate in the fourth industrial revolution and help them make the digital transformation.

It is drafting plans for trade promotions and investing in infrastructure for the collective economy.

There were 334 co-operatives and 1,390 co-operative groups as of the end of last year.

Nguyễn Thanh Phương, chairman of the province Co-operative Alliance, said co-operatives were encouraged to apply standard processes for production and quality management and offered assistance.

It helped co-operatives strengthen linkages with other stakeholders, especially companies, to develop sustainable value chains for their products, he said.

The province’s collective economy had developed various models and co-operatives had developed linkages for producing and selling their products, he added.

Key products such as pigs, chicken, cashew, pepper, and fruits are farmed on a large scale by co-operatives and meet high quality requirements, according to the chairman.

They have high economic efficiency and are exported, thus increasing the incomes and stabilising the lives of co-operatives’ members.

For instance, the province has 24 co-operatives, co-operative groups and farms growing cashew, and they are linked with 10 processing companies to grow 3,500ha of the nuts to US and EU organic standards.

Bình Phước is the country’s largest cashew producing province with more than 150,000ha of the crop, or nearly 50 per cent of the country’s total.

Điểu Tân of Bù Đăng District’s Đắk Nhau Commune joined a local co-operative to grow cashew under organic standards and is taught tending techniques.

He feels secure about adopting organic standards because the co-operative always pays higher than market prices for his cashew.

“I was provided with [free] fertilisers and plant protection chemicals [by the co-operative].”

Many co-operatives have developed linkages with other stakeholders and this has helped their members improve incomes and ensure sustainability in production.

Phạm Thị Hậu, deputy director of the Đồng Xanh organic agriculture co-operative in Bù Đăng District, said the co-operative, 80 per cent of whose members are ethnic people, had developed linkages with various stakeholders.

The province’s financial subsidies and training for farmers in new growing techniques had helped its members increase yields and incomes, she said.

It chose four cashew co-operatives and one fruit co-operative to subsidise, providing VNĐ1.9 billion (US$77,000) since 2019.

The co-operatives used the money to provide their members with free inputs for cultivation, help them package and label their products and build facilities for semi-processing of their produce.

Vietnamese export staples enjoy growing demand

Vietnamese exporters are recording rising orders for rice, fruit and vegetables, and coffee at the beginning of 2024, signalling a vibrant year for Vietnam’s agricultural exports.
 
According to the Ministry of Agriculture and Rural Development, rice, coffee, and fruit and vegetables brought in over $14 billion in export revenues last year, the highest level ever. It is forecast that exports in these three categories will reach as much as $17.5 billion in 2024.

Already this year, Trung An High-Tech Agriculture JSC has signed six orders with a volume of 1,500 tonnes of rice for the EU, the United Kingdom, Malaysia, Dubai, and Australia, with the highest price of almost $1,400 per tonne.

General director Pham Thai Binh said, “There are many opportunities for rice exports in light of the growing demand in major markets such as Indonesia, the Philippines, and China. Vietnam’s rice export may be similar to the volume last year, but the value is greater thanks to higher prices.”

Meanwhile, Nguyen Dinh Tung, chairman of Vina T&T Group, said, “The company has just exported the first shipment of durian to China and An Giang mango to the United States and Australia in 2024. The export market is sending positive signals as we achieve full orders from our traditional buyers.”

Last year, Vina T&T Group generated $73 million in export revenue, up 40 per cent on-year. The company mainly exports durian, dragon fruit, mango, longan, grapefruit, and coconut to demanding markets such as the US, Australia, Europe, and China. The company expects its exports to achieve double-digit growth this year in light of the positive signals in the market.

Vietnam’s fruit and vegetable sector has become a bright spot in agricultural exports, as its export turnover hit a record high of nearly $5.6 billion last year. Among them, durian accounted for $2.4 billion, while processed fruits and vegetables made up $1 billion.

In addition, Vietnam also exported 1.61 million tonnes of coffee in 2023, earning $4.2 billion, down 9.6 per cent in volume but up 3.1 per cent in value on-year. The average coffee export price climbed 14.1 per cent on-year to $2.834 per tonne.

According to the Ministry of Industry and Trade’s Agency of Foreign Trade, Vietnam’s coffee exports continue to benefit from the rise in robusta coffee prices, which is likely to reach a peak amidst the potential supply shortage.

Meanwhile, Vietnam’s rice exports also jumped to a record high of eight million tonnes last year, generating over $4.8 billion in revenue. The nation maintains an average rice export of 7-8 million tonnes per year, indicating stability in stock and supply chain. As a result, many foreign buyers are increasingly importing Vietnamese rice.

The Vietnam Food Association said that rice exports will continue benefiting from a favourable context in 2024 as the world is facing a shortage of five million metric tonnes, with importers such as Indonesia and the Philippines still having demand for imported rice, and India likely to maintain export restrictions.

Agricultural exports are expected to grow this year as Vietnam’s production, processing, and supply capacity are increasingly improved. The country’s agricultural products have been present in over 190 countries and territories.

However, Vietnam only holds a modest market share in major markets. Specifically, Vietnamese agricultural products account for less than 5 per cent of China’s total import value within this product category. There is also ample room for growth in the US, EU, and Japan.

After successful exports of fresh durian, Vietnam has set its sights on frozen durian this year. The country has completed procedures and documents and is waiting for a licence for the official export of durian to China. Thus, durian exports could climb 30 per cent to reach $3.5 billion this year. In addition, Vietnamese authorities are also promoting the official export of other produce to China, such as fresh coconut.

Japanese retail businesses want to expand in Vietnam

100 per cent of Japanese retail businesses in Vietnam have expansion plans, according to a Survey on the Status of Japanese Enterprises Investing Abroad in the fiscal year 2023.

Announced by the Japan Trade Promotion Organization (JETRO) in Vietnam on January 26, the survey was conducted from August 21 - September 20, 2023.

Nobuyuki Matsumoto, chief representative of JETRO in Ho Chi Minh City said that by industry group, the proportion of manufacturing enterprises wanting to expand operations was 47.1 per cent, and non-manufacturing enterprises 65.5 per cent.

Japanese businesses evaluate the attractiveness of Vietnam as a growing and potential market. The main strength is the stable socio-political situation and cheap labour. Vietnam will continue to receive a lot of attention in the China + 1 trend.

Further results from the survey pointed out that 56.7 per cent of Japanese businesses said they planned to expand business in Vietnam in the next 1-2 years, the second most in Southeast Asia, after Laos.

“This rate decreased by 3.3 percentage points compared to the 2022 survey. Although expansion ambitions remain high, Vietnam is the only country among the six key Southeast Asian countries with a reduced expected expansion rate,” said Matsumoto.

Across all Asia-Pacific markets that JETRO surveyed, the rate of Japanese businesses planning to expand business in Vietnam is behind India, Bangladesh and Laos. Thus, after two consecutive years of Vietnam leading Southeast Asia, Laos has surpassed the ranking, with 63.3 per cent of Japanese businesses wanting to expand their business inside the country.

However, the main risks that make them hesitant are complicated administrative procedures, increased labour costs and an incomplete legal system that lacks transparency in operations.

A trend to note is that Vietnam has the advantage of cheap labour but at the same time the risk is that costs are increasing. In addition, Vietnam is behind other countries in Southeast Asia in terms of infrastructure, he added.

The rate of Japanese businesses expected to be profitable when doing business in Vietnam in 2023 is 54.3 per cent, 6.6 per cent points lower than the Southeast Asia average. The cause is a decline in domestic and foreign demand, increased labour and input costs, and fierce competition with other competitors.

By 2024, half of businesses surveyed said profits would improve. "Although exports have had a difficult year, it is expected to recover," Matsumoto said.

Last year, the localisation rate of Japanese companies in Vietnam increased to 41.9 per cent. JETRO said that Japanese businesses still had high motivation to promote on-site purchasing activities, and at the same time expected the further development of the supporting industry.

"Going forward, high-quality personnel such as specialised engineers is an issue that needs attention," Matsumoto recommended.

According to the General Statistics Office, Japanese investors registered nearly $6.57 billion into Vietnam, accounting for nearly 18 per cent of the country's total foreign investment capital in 2023, an increase of 37.3 per cent compared to 2022, ranking second among countries and territories investing in Vietnam.

Romania playing active role in Vietnam

In addition to attracting more Romanian investments, Vietnam is seeking to increase cooperation with this European nation in research and development, and oil and gas projects, with a focus laid on AI.

During last week’s official visit to Romania where he used to study and work as a diplomat, Prime Minister Pham Minh Chinh told leaders and companies that Vietnam is willing to boost its cooperation with Romania, particularly in the digital, green, circular, and sharing economies.

“Vietnam welcomes all foreign investors including those from Romania, and will create the best conditions for them, so that they can make long-term, effective and sustainable investment in Vietnam in the spirit of ‘harmonising benefits and sharing risks’. We have been making great efforts to improve the investment and business climate in favour of businesses and investors,” PM Chinh stated while attending the Vietnam – Romania Business Forum.

Vietnam is keen to advance collaboration in sectors where Romania possesses expertise and Vietnam has burgeoning potential, PM Chinh said, including education, culture, labour, and the burgeoning spheres of digital economics, green and circular economies, science and technology, AI, and emerging industries.

The Vietnamese leader said that Vietnam has focused on three breakthrough strategies on institutions, human resources and infrastructure which will create favourable conditions for enterprises and investors to reduce input costs and improve competitive capacity, thus having effective, sustainable and long-term development in the country.

While paying a visit to Prahova province, which is Romania’s industrial, oil, and gas hub, PM Chinh said that Vietnam is expanding some oil refineries, constructing gas power plants, and investing in the sector. This is an opportunity for Prahova companies to cooperate with Vietnam.

“We stand ready to cooperate. Romanian enterprises can come to invest and support the transfer of technology, human resources and equipment in the oil and gas industries,” the PM said.

Romanian Minister of Economy, Entrepreneurship and Tourism Stefan-Radu Oprea called on Romanian businesses and Prahova province to increase investment in Vietnam.

Minister Oprea underlined that Vietnam has achieved rapid economic growth in many years, with a population nearing 100 million. The nation has also inked a large network of free trade agreements.

He also said that Romania can function as a gateway for Vietnamese products to penetrate the European market and its population of 500 million.

During his visit to the National Institute for Research and Development in Informatics (ICI) in Romania last week, the Vietnamese leader urged collaboration between Vietnamese and Romanian experts in research and development projects, focusing on AI, cybersecurity, and the application of IT in various social domains.

The ICI is responsible for establishing the internet infrastructure and data centres in Romania, developing cloud computing projects for state institutions, building supercomputers, establishing a cyber diplomacy centre, pioneering blockchain technology development, setting up a mobile data recovery centre, and creating virtual trading platforms.

“The ICI stands ready to collaborate with Vietnam in advancing these fields,” said ICI general director Adrian Victor Vevera.

Vietnam has mobilised all resources to serve the rapid and sustainable development of the country, relying on sci-tech and fostering innovation. PM Chinh proposed the ICI prioritise Vietnam as a key partner in expanding international cooperation.

In the near future, both sides will send working delegations to jointly formulate plans and cooperation programmes, he said, also suggesting that the ICI assist Vietnam in training high-quality human resources in this sector.

According to Vietnam’s Ministry of Industry and Trade, two-way trade between Vietnam and Romania reached nearly $431 million last year, marking a 1.4 per cent increase from 2022. Vietnam’s exports to Romania decreased by 12.5 per cent to $282.3 million, but imports from Romania surged by 44.8 per cent to nearly $148.7 million.

Key exports from Vietnam to the European market consist of machinery, equipment, textiles, aquatic products, computers, electronic products, steel, and coffee. Meanwhile, Vietnam imports wheat and maize, animal feed, pharmaceuticals, wool fabrics and wood.

Trade with Romania accounts for just 0.06 per cent of Vietnam’s total foreign trade, while trade with Vietnam makes up only 0.2 per cent of Romania’s foreign trade.

As of December 20, 2023, Romania had six valid projects in Vietnam with a total registered capital of $1.68 million, ranking 92th out of 144 countries and territories investing in Vietnam. Meanwhile, Vietnam recorded one project worth $600,000 in Romania, ranking 65th out of 80 destinations of Vietnamese outbound investment, according to Vietnam’s Ministry of Planning and Investment.

Romania has played an active role in assisting Vietnam with the EU-Vietnam Free Trade Agreement negotiations, leading to its ratification and implementation. Moreover, Romania was among the pioneering EU members to endorse the EU-Vietnam Investment Protection Agreement, showcasing its support for enhanced economic integration.

During the height of the COVID-19 pandemic, Romania distinguished itself as the first EU country to provide vaccine aid to Vietnam, an act which was pivotal in enabling Vietnam to manage the crisis and pave the way towards economic resurgence.

Additionally, both nations have inked an education cooperation programme to last until 2026, deepening their collaborative efforts in education. There is a concerted push to fortify local-level cooperation, which promises to yield mutually beneficial outcomes and further the partnership between Vietnam and Romania.

Investment intensified through German activities

Vietnam and Germany have intensified their investment cooperation on the back of the Vietnam-EU free trade deal, with the industrial sector of particular interest.
 
During German President Frank-Walter Steinmeier’s state visit to Vietnam last week, both nations agreed that the EU-Vietnam Free Trade Agreement (EVFTA) has and will continue to be a crucial driver of the two countries’ economic, trade, and investment ties.

Vietnam and Germany also pledged to facilitate investment flows thanks to the EVFTA’s reduced tariffs. Thanks to the EVFTA, bilateral trade last year hit approximately $12 billion, tripling over the past 10 years.

Vietnam also asked Germany to soon ratify the EU-Vietnam Investment Protection Agreement in service of investors from both sides.

“The Vietnamese government pledges to always accompany and create all the best conditions for German enterprises to fruitfully do business and investment in Vietnam based on harmonised benefits, and sharing of risks,” stressed Prime Minister Pham Minh Chinh.

According to statistics from Vietnam’s Ministry of Planning and Investment, currently, about 500 German companies are effectively operating in Vietnam, of which around 80 per cent have manufacturing plants in the country, creating as many as 47,000 jobs. Cumulatively as of December 20, German firms had 463 valid projects in Vietnam, registered at $2.68 billion.

The first German investments flowed into Vietnam shortly after the country opened its doors to foreigners. In 1992, Bültel, producing fashion for brands such as Camel Active, settled down in the southern province of Binh Duong. In the same year Tatonka, an outdoor brand, opened a backpack production line in Ho Chi Minh City. German investments began really gaining steam when Vietnam ascended to the World Trade Organization in 2007 and received another impetus with the 2015 amendments to the laws on enterprises and investment.

Currently, more than half of the German companies are concentrated in the south of Vietnam, with Ho Chi Minh City being the commercial centre. Some of the oldest and biggest German investments lie in the cities of Hanoi and Haiphong in the north, while central Vietnam is attractive because of its lower land and labour costs as well as good living conditions.

Recently, the main driver for German investments in Vietnam is the emerging diversification strategy followed by many companies in order to broaden their representation in different parts of the world and to reduce individual country risks.

The largest German investments have been implemented by Bosch (automotives), Stada – Pymepharco (medical equipment) and Messer Gases (chemicals). Bosch is employing a major manufacturing complex for push belts in the southern province Dong Nai while also operating a research and development centre in Ho Chi Minh City, while Stada – Pymepharco manufactures pharmaceuticals in its factory in the south-central Phu Yen province. And Messer is supplying gases to local customers such as Hoa Phat from its main production hubs in the northern province of Hai Duong and the south-central province of Quang Ngai.

German project developer PNE AG plans offshore wind farms off the coast of the south-central province of Binh Dinh with a capacity of up to 2GW and an investment volume of several billions of US dollars.

Most of the energy generated by offshore wind farms planned by PNE AG will be consumed in the region and thus does not burden the national power grid, which would enable the ideal symbiosis between economic growth and sustainable development.

Last September, German Leonhard Kurz Group also inaugurated a 12-hectare factory producing high-tech thin films with an investment of $40 million for the first phase in Binh Dinh. The factory has a total capacity of 15 million square metres of products a year, with environmental friendly materials used.

In 2022, the Binh Dinh government and Leonhard Kurz Group signed an MoU on implementing this project, with total capital for the two phases amounting to $100 million.

Several German companies have also successfully utilised merger and acquisition strategies to establish themselves in Vietnam.

For example, Ottobock, a German manufacturer of orthopaedic and prosthetic devices, has expanded its presence in Vietnam by acquiring a local competitor. The acquisition allowed Ottobock to establish branches in Ho Chi Minh City and Hanoi, reaching a larger customer base, according to the Delegation of German Industry and Commerce (AHK Vietnam).

In another case, in the food industry, Gourmet Dairy Zott acquired Delys, a long-standing Vietnamese importer and distributor. As part of their commitment to consistently implement their planned development strategies, Zott Vietnam Co., Ltd. was founded, with its headquarters situated in Hanoi and a branch in Ho Chi Minh City.

“This strategic step effectively solidified Zott’s leadership position within the local dessert sector,” said Marko Walde, chief representative of AHK in Vietnam, Myanmar, Cambodia and Laos.

What is more, FUCHS, one of the world’s largest lubricant manufacturers, has acquired 70 per cent of the lubricants business of STD & S Co., Ltd., a distributor of speciality lubricants based in Vietnam.

“This expansion included the opening of a new high-tech plant in the southern province of Ba Ria-Vung Tau, responding to the growing demand for lubricants in the region,” Walde said.

Meanwhile, HDI Global SE, a subsidiary of Germany’s Talanx Group, invested in PVI JSC, a prominent Vietnamese insurance company. The investment aimed to access the rapidly growing Vietnamese insurance market and enhance PVI’s growth. In October 2023, HDI submitted an application to acquire an additional one million shares of PVI with the intention of bolstering their investment and increasing their ownership stake. Before this transaction, HDI already held more than 90 million PVI shares, granting them a substantial 38.47 per cent ownership in the company.

Can Tho posts strong economic indicators in January

The Mekong Delta city of Can Tho has gained positive economic indicators this month, according to Tran Viet Truong, chairman of the city.

Can Tho held a conference on January 24 to review the socio-economic performance in January this year and its development plan for the entire year.

This month industrial production has expanded by 0.17% month-on-month and 21.21% over the same month last year. Retail sales of goods and services have grown by 4.57% against December last year and 10.26% against January this year to VND10.9 trillion.

However, newly registered businesses and capital have decreased. The city’s budget revenue for January has declined over the same month of the previous year.

Can Tho City will accelerate work on key projects in line with the resolutions from the National Assembly, the Government, the Can Tho Party Committee, and People’s Council.

Trade ministry proposes electricity tariff hike in 2024

The Ministry of Industry and Trade has proposed revising up electricity tariffs this year, citing mounting input costs and Vietnam Electricity Group’s (EVN) losses of over VND37 trillion in 2022-2023.

Last year, retail electricity tariffs were adjusted up twice, leading the average tariff to rise by 7.5% to VND2,092.78 per kWh. Currently, the power tariff adjustment mechanism is governed by the Prime Minister’s Decision 24/2017, with a six-month interval between reviews.

If the ministry’s proposal is approved, the next tariff revision may occur in May this year.

The proposal to raise electricity tariffs comes against the backdrop of EVN’s ongoing financial woes, with losses amouting to VND17 trillion in 2023. In the 2022-2023 period, the State utility reported losses of a staggering VND37 trillion.

Domestic rice prices decline

Rice prices in the Mekong Delta, Vietnam’s key rice growing region, have inched down over the past week following the strong rally since the middle of last year.

The staple food has dropped by VND1,200-1,400 per kilogram in just over a week, the most significant price fall since India suspended rice exports in July 2023.

The Indian rice export ban last year led to the global undersupply, which sent Vietnamese rice for export soaring to an all-time high in early December 2023.

At the close of the rice trading session on December 4 last year, 5% broken rice shot up from US$650 to US$663 per ton, the world’s highest so far, except 2008 when rice leapt to US$1,000 per ton but then Vietnam imposed a rice export ban.

However, since the beginning of this year, Vietnam rice prices have edged down. On January 22, 2024, paddy (unhusked rice) varieties like IR 50404 in the Mekong Delta slipped by VND500-700 compared to just a week earlier to VND8,600-8,700 per kilogram, and OM 5451 and Dai Thom 8/OM 18 to VND9,200-9,400 per kilogram.

Speaking to The Saigon Times, rice traders just confirmed another drop of VND600-700 per kilogram at VND8,800 for Dai Thom 8 and OM 18, and VND8,200-8,300 for IR 50404.

A rice exporter in the Mekong Delta province of Dong Thap said the facilities that handle rice exports in the Mekong Delta are purchasing less, with some even pausing purchasing.

Meanwhile, major rice importing countries like the Philippines, Vietnam’s top rice market, are pushing for lower prices. They have proposed US$690 per ton for fragrant rice, and US$670 and US$630 per ton for soft rice varieties like OM 5451 and IR 50404.

These levels are below the ask prices of Vietnamese rice exporters.

In the first half of January 2024, Vietnam exported over 194,000 tons of rice valued at over US$134.5 million despite a volume fall of 32,000 tons. Rice export revenue increased by US$20 million compared to the same period last year. The average rice export price in the first half of January reached around US$693 per ton, a substantial increase from the 2023 average of US$578 per ton.

HCMC well-prepared for Tet shopping needs

As the Tet holiday is approaching, the shopping needs of HCMC dwellers are significantly increasing. The abundant commodities amount in markets and stores is ready to serve these demands.

In the afternoon of January 28, stores on Hai Thuong Lan Ong street (District 5) and Thap Muoi Street (District 6) were bustling with work. As the prices here have been more reasonable, customers after customers were joyfully choosing decoration items for their houses at the upcoming Tet.

A similar busy atmosphere can be found in wholesale markets around the city like An Dong Market (District 5) and Binh Tay Market (District 6). Popular Tet food such as dried shredded squid at VND280,000 (US$11.4) per kilo, pumpkin seeds at VND140,000 ($5.7 a kilo), sunflower seeds at VND90,000 ($3.7 a kilo), cashew at VND260,000 ($10.6 per kilo) are hot-sellers.

A seller of sugar-coated fruits and confectionery items in Binh Chanh District shared that the purchasing power in her store for the last two days has risen by 2-3 times and she has to take 100kg more of merchandise from Binh Tay Market, which is quite unexpected. She reasoned that this increase might be because more people have decided to stay in HCMC this Tet instead of coming back to their hometown.

The HCMC Department of Industry and Trade reports that an abundant volume of produce at stable prices in wholesale markets is ready to serve the needs of the city dwellers and neighboring areas. About 40 percent of fresh flowers, vegetables, and fruits entering Thu Duc wholesale market are from Lam Dong Province, some even enjoying a price drop compared to this time last year.

The above department estimates that the total amount of goods available in the three major wholesale produce markets of Binh Dien, Hoc Mon, and Thu Duc comprises 70 percent of the city’s demand (at 800 tonnes of livestock and poultry, 1,200 tonnes of seafood, and 5,600 tonnes of vegetables per day). At present, 45 suppliers are in charge of distributing essential food at Tet.

Around supermarkets and department stores in HCMC, the purchasing power has also witnessed remarkable growth. MM Mega Market has increased its stock by 20-30 percent to ensure a stable supply and price range during the Tet holiday, along with attractive promotional campaigns. It operates from 6:00 a.m. to 10:00 p.m. each day. Saigon Co.op is running the scheme ‘Coming to Co.op – Bringing Tet home’ in 800 of its branches nationwide. It is enjoying an order rise of 50 percent compared to normal days.

Deputy Director Nguyen Nguyen Phuong of the HCMC Department of Industry and Trade informed that the businesses taking part in the market stabilization program have guaranteed not to increase the prices of their merchandise during Tet. The amount of stabilized goods accounts for 25-43 percent of the goods supplied to the market.

He added that his department is closely cooperating with relevant interdisciplinary functional agencies and the local authorities to monitor the market to eliminate unreasonable price increases of essential commodities. Any detected cases will be severely punished.

HCMC gains most new foreign investment projects in Vietnam in January

In the first month of 2024, Ho Chi Minh City leads the country in both the number of new projects accounting for 42.1 percent and capital contribution and share purchases accounting for 78.2 percent meanwhile the Northern Province of Bac Ninh leads in the number of capital adjustment projects accounting for 16 percent.

The Foreign Investment Agency under the Ministry of Planning and Investment said that in the first month of 2024, registered foreign investment capital including new grants, adjustment and capital contribution, share purchase, and capital contribution purchase reached more than US$2.36 billion, an increase of more than 40.2 percent over the same period last year.

In January 2023, total registered investment capital decreased by 19.8 percent compared to the same period in 2022.

Regarding the structure of investment capital, the total newly registered capital reached more than $2 billion, an increase of 66.9 percent over the same period last year. The number of new projects increased rapidly with 190 projects, an increase of 24.2 percent and there were also large-scale investment projects including an investment project in a large urban area in Hanoi, with a total registered capital of more than $662 million.

In addition, there were 75 projects registered to adjust investment capital, down 15.7 percent over the same period, with a total additional registered capital of more than $235.4 million down 23.1 percent over the same period.

Moreover, there were 174 capital contributions and share purchases by foreign investors, a year-on-year decrease of 14.7 percent with the total value of contributed capital reaching more than $116.5 million down 33.1 percent over the same period.

Last but not least, $1.48 billion was disbursed in January 2024, an increase of 9.6 percent over the same period in 2023.

In terms of partners, according to the Foreign Investment Department, investors from 39 countries and territories poured their money into Vietnam in January. Amongst them, Singapore leads with a total investment capital of more than $1.4 billion, accounting for 59.5 percent of total investment capital, an increase of 72.8 percent over the same period in 2023. Japan ranked second with nearly $297 million, accounting for 12.6 percent of total investment capital, more than 7 times higher than the same period. Next are Samoa, China, and Hong Kong (China ).

Surge in cashew export orders

On January 26, the Vietnam Cashew Association reported an increasing demand for cashews in the markets of India, Europe, the United States, China, and Japan.

Mr. Vu Thai Son, Chairman of the Binh Phuoc Cashew Association, said that numerous cashew processing plants are running at full capacity to meet delivery deadlines. In 2023, the cashew industry achieved outstanding growth, with total export turnover reaching US$3.63 billion, marking a 17 percent increase in value and a 23 percent rise in volume compared to 2022. Vietnam's cashew exports continue to dominate the global market, maintaining the top position for the 16th consecutive year and accounting for 80 percent of the total global cashew export volume.

The export turnover of the cashew industry in 2024 is expected to witness substantial growth as numerous enterprises effectively explore the Chinese and US markets. Presently, the US stands as the largest consumer market for Vietnamese cashews, constituting 25 percent of the total export turnover, followed by China at 19 percent. Furthermore, there is a growing interest in emerging markets like Europe and India.

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