Ho Chi Minh City expects strong tourism growth in 2024 following its encouraging outcomes in 2023, said Director of the municipal Tourism Department Nguyen Thi Anh Hoa.

Last year, the city attracted nearly 5 million foreign visitors and over 35 million domestic tourists. Its tourism reached nearly 160 trillion VND (7.8 billion USD).

In 2023, it was honoured as “Asia’s Leading Business Travel Destination” the “Asia’s Leading Festival and Event Destination” and was on the list of the world’s Top 100 City Destinations Index 2023.

Hoa said that the city set a target to attract about 6 million foreign visitors and 38 million domestic tourists this year, with 190 trillion VND in revenue.

According to the department, the city continues improving the quality of tourism products as well as diversifying local products. In addition to communication and promotion campaigns, it will pay more attention to making use of digital applications in the tourism sector.

It also continues to focus on existing tourism products associated with cultural and historical values, inner-city waterways and programmes that promote tourism linkage between the city and six regions and 46 localities across the country.

In 2024, the city will focus on implementing its tourism development strategy to 2030, toward the local tourism sector's comprehensive and sustainable development.

Gold rebounds to VND76 million per tael

Despite the decline in global gold prices, the domestic SJC gold price recovered to reach VND76 million per tael on January 3.
 
Around 4:30 p.m. on the same day, in Ho Chi Minh City, Mi Hong Gold Shop in Binh Thanh District posted buying and selling prices at VND73 million per tael and VND76 million per tael, respectively, showing an increase of VND1 million in both buying and selling compared to the previous day.

Simultaneously, in Hanoi, PNJ Company bought SJC gold at VND73 million per tael and sold gold at VND76 million per tael, up VND500,000 in both buying and selling rates.

Businesses still maintained a gap of VND3 million between the buying and selling prices of SJC gold.

Meanwhile, the price of 9999 gold rings was kept unchanged by some gold trading businesses compared to the previous day, and in some cases, there were even reductions. Specifically, PNJ Company and SJC maintained the price of 9999 gold rings at VND62.1–62.15 million per tael for buying and VND63.15–63.25 million per tael for selling.

On the other hand, Bao Tin Minh Chau Company reduced both buying and selling prices by VND180,000 to VND62.58 million per tael for purchasing and VND63.78 million per tael for selling.

On the global gold market, the spot gold price on the Kitco exchange on the evening of January 3 (Vietnam time) hovered around US$2,058.25 an ounce, a decrease of $17 an ounce compared to the previous trading session. After converted, this price is equivalent to VND60.7 million per tael, lower than SJC gold by VND15.3 million per tael and lower than 9999 gold by VND2.6-3 million per tael.

Central bank sets credit growth target of 15% in 2024

The State Bank of Vietnam (SBV) has set a credit growth target of 15% for the domestic banking system in 2024.

The target can be adjusted depending on developments of the real situation, the central bank said in a document sent to credit institutions.

The SBV requested credit institutions to provide loans in a safe manner and in line with their risk management capacity, liquidity and ability to mobilise capital, while preventing bad debts from rising.

They are also banned from providing preferential interest rate loans for executives and their relatives, businesses within their ecosystems and “backyard” companies.

The central bank said that it will closely monitor actual developments to manage credit growth in a proactive, flexible, prompt and effective manner. It will also adjust the credit growth target and proactively revise credit growth quotas given to each credit institution.

Hai Duong continues to create breakthroughs in attracting investment

The northern province of Hai Duong this year will continue to attract large domestic and foreign investors who have sufficient financial and technological capacities and strong management skills, according to local authorities.

The province would also complete the list of projects calling for investment between now and 2030, Chairman of the provincial People's Committee Trieu The Hung said, adding that projects that might have risks of causing environmental pollution would not be prioritised.

Secretary of the provincial Party Committee Tran Duc Thang said the province focused on luring foreign investment in the fields of high technology, smart technology, biological industry, new materials, processing industry, manufacturing and supporting industries.

In 2024, the locality would continue to improve the quality and efficiency of business support services, deploy solutions to restructure the labour market, associated with bettering the quality of labour training and facilitate the cooperation between businesses and training institutions, authorities said.

They added that accelerating investment promotion activities and perfecting the investment and business environment would also be included.

By the end of November 2023, Hai Duong had attracted more than 1.13 billion USD worth of foreign investment, over three times higher than the same period last year, statistics from the provincial Department of Planning and Investment revealed.

The province is now home to 540 foreign-invested projects with a total registered capital of over 10.16 billion USD. Of the sum, 289 projects, worth above 5.98 billion USD, have been invested in industrial parks.

Electricity prices highly unlikely to decrease

It is highly unlikely that electricity prices will go down given the current demand, Nguyen Anh Tuan, General Director of Vietnam Electricity (EVN), said at a conference organised by EVN in Hanoi on January 2.

Tuan said electricity production requires natural resources, which are finite and being depleted, including hydropower. Coupled with the financial challenges faced by EVN, minor decreases in fuel prices do not have an effect significant enough to bring electricity prices down.

According to Tuan typically Vietnam's hydropower output accounted for 35% of total output. However, due to droughts in 2023, many hydropower reservoirs were at dead water levels, resulting in hydropower accounting for just 28.4% of total output.

Meanwhile, coal-fired thermal power, which typically accounts for 33.2%, managed to account for 46.2% of total output in 2023. Gas turbine and oil-fired thermal power, normally making up 10.3%, accounted for 9.8%. Imported electricity had a very low share of 1.46%, and renewable energy with an installed capacity of 26.9% only achieved 13% in production.

For now, hydropower remains the most stable output but it can only meet less than a third of the nation's demand for electricity. Renewable energy remains expensive due to earlier incentive policies, which have driven its prices as high as 9.35 US cents per FiT1, higher than EVN's electricity retail prices. 

"With our output structure, the cost to produce electricity mainly relies on natural resources. As resources are depleting, the cost will increase. This must be communicated clearly to our customers," Tuan said.

According to EVN, the average total cost of electricity generation, transmission and distribution is 2,092.78 VND/kWh, while the selling price is 1,950 VND/kWh.

"Of the 2,092.78 VND/kWh, the production cost of buying electricity from EVN units and non-EVN enterprises is approximately 1,620 VND/kWh, equivalent to 80% of our total operating costs. In other countries, the cost of buying electricity is typically about 50% compared to the selling price, with the remaining 50% allocated to transmission, distribution and operational management. Meanwhile, we only have 20% for these processes, making it very difficult for EVN and its units to balance our books," said Tuan.

EVN's efforts to optimise costs and improve savings in recent years have not produced significant results, at least not enough to address its financial challenges. Therefore, adjustments to retail electricity pricing policies in 2024 are necessary to address EVN's financial difficulties.

Total revenue from electricity sales for the entire group in 2023 is estimated to reach 497 trillion VND, a 5.4% increase year-on-year. The total consolidated asset value of EVN as of the end of 2023 is estimated at 630.53 trillion VND, 94.7% compared to 2022, with equity capital of 201.53 trillion VND, 89.4% compared to 2022.

According to the director-general, Vietnam's total power capacity has reached over 80,000 MW, an increase of nearly 3,000 MW compared to 2022, with renewable energy exceeding 21,000 MW, making the country the top ASEAN renewable producer.

However, due to management issues, there were shortages in the country's northern regions in June last year. 

He said the shortages occurred due to various unfavourable factors, including both objective and subjective reasons. These included a low power reserve in the northern region, and the impact of El Nino leading to prolonged drought and reduced water flow to hydropower reservoirs, especially in the northern region. Other causes included high demand for supplementary load, as well as malfunctions in many coal-fired thermal power plants across the system due to the increased water temperature for cooling, extended repair work, and troubleshooting at some non-EVN coal-fired thermal power plants.

FTAs give fresh impetus to economic growth, market diversification

The benefits of free trade agreements (FTAs) have exerted a positive impact on the socio-economic development of localities across the country, especially in terms of accelerating trade growth and market expansion, according to insiders.

In fact, new-generation FTAs such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the EU – Vietnam FTA (EVFTA), and the UK – Vietnam FTA (UKVFTA) have opened up a wealth of opportunities for Vietnam to diversify its export and import markets and at the same time attract greater foreign investment.

To Thi Huong Lan, deputy director of the Thai Binh provincial Department of Industry and Trade, emphasised that the province’s export turnover has increased to 40% thanks to advantages brought about by these FTAs, adding that local firms have utilised tariff incentives from FTAs in an effective manner.

Lan revealed that the majority of the locality’s export products have met the origin criteria set forth by the new-generation FTAs, while businesses have moved to take advantage of tax incentives in a bid to boost exports to several demanding markets, including Japan.

Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said that while most major markets have shrunk due to decreasing demand, exports to the UK even witnessed impressive growth of up to 11% last year.

The positive export growth recorded in the UK market helped the Vietnamese leather and footwear industry not suffer any steep declines last year.

Xuan analysed that the UK is also a major importer of Vietnamese footwear, particularly as these products are almost no longer produced in the UK, a factor that will open up bright export prospects for Vietnamese businesses moving forward.

At present, local firms are focused on applying British standards and regulations, as well as testing equipment in order to evaluate product quality to further accelerate exports to the demanding market.

Thanks to effective cooperation among relevant Vietnamese agencies and the German Organization for International Cooperation, Xuan said Lefaso has supported small and medium-sized enterprises (SMEs) to improve product quality, especially when exporting quality shoe products to the European market.

Further penetration into the UK market will also help to create opportunities for Vietnamese products to make greater inroads into other demanding markets around the world, she noted.

According to experts, although FTAs have brought about plenty of positive effects, Vietnamese enterprises have yet to fully tap into the FTA incentives.

In fact, the proportion of export turnover to FTA markets has so far failed to meet expectations, while the rate of taking advantage of preferential certificate of origin (C/O) is not high.

This will therefore require greater efforts and stricter coordination from relevant agencies and craft associations in supporting businesses in gaining greater insights into the advantages of each FTA to bring about the highest possible level efficiency, industry insiders stressed.

With regard to the regulations of new-generation FTAs, Do Thi Thuy Huong, member of the Executive Committee of the Vietnam Electronic Industries Association, underlined the need to grasp the latest rules set forth by foreign importers.

Huong revealed that local businesses have received effective support from the German Corporation for International Cooperation (GIZ), which has provided them with the latest standards set by the German Supply Chain Due Diligence Act (LkSG).

The programme, which took effect since January 1, 2023, imposes certain obligations on organisations with respect to the conduct of due diligence implicating adverse environmental and human rights impacts in supply chains. 

This is one of the regulations which local exporters in the supply chain are required to abide by in order to boost exports to the EU in a sustainable manner, concluded Huong.

Additional VND1 trillion proposed for My Thuan - Can Tho Expressway

The Ministry of Transport has proposed to the government to add nearly VND1 trillion (USD 41 million) to complete works on the My Thuan-Can Tho Expressway.

The opening of this expressway together with the My Thuan 2 Bridge has helped reduce travel times from HCM City to the Mekong Delta region to two hours down from the previous three and half hours.

Despite being opened to traffic since last December, there are some connection roads and an intersection with the Vo Van Kiet Street in Vinh Long Province that need to be completed with a total length of about 7.30 kilometres," the ministry said in its proposal to PM Pham Minh Chinh.

The ministry proposed to add VND998.91 billion to carry out these remaining works, raising the total cost of the expressway to over VND5.82 trillion.

The added construction works will be carried out this year to be completed in 2025.

The My Thuan-Can Tho Expressway runs 22.97 kilometres, including 12.52 kilometres in Vinh Long Province and 10.45 kilometres in Dong Thap Province.

The opening of this expressway together with the My Thuan 2 Bridge has helped reduce travel times from HCM City to the Mekong Delta region to two hours down from the previous three and half hours.

Banks get one-off credit growth quota allocations for 2024

The State Bank of Vietnam (SBV), the country’s central bank, has made one-off credit growth quota allocations for commercial banks right at the start of 2024, instead of using the recurring allocation system as seen in previous years.

The central bank has set the credit growth target at 15% for the banking system.

These credit growth quotas may be adjusted based on the actual market situation.

Last year, the SBV aimed for a credit growth rate of 14% to 15%. However, as of December 29, credit growth in the banking system was a mere 11%.

To make things more predictable, the SBV allocated credit growth quotas for banks in the beginning of the year, thus eliminating the need for banks to request a credit growth quota expansion as in previous years.

The SBV determines a credit growth quota for a bank based on factors such as outstanding loans for 2023, 2022 bank rankings, outstanding debts to be sold in 2024, and unrecovered loans.

For 100% foreign-owned banks and joint venture banks, outstanding loans at the end of 2024 must not exceed the approved quotas.

These changes in credit management by the State Bank of Vietnam follow repeated requests by the prime minister to inject capital into the economy.

HCMC issues over 22,000 home ownership certificates in 2023

More than 22,140 home ownership certificates were issued to residents in HCMC last year, according to the HCMC Department of Natural Resources and Environment.

These certificates account for 25% of the total number of units without ownership certificates, with over 32% of them being the newly-issued certificates.

VND7,781 billion in personal income tax and registration fee was collected last year when these home ownership certificates were issued, said the department.

The department earlier said that 81,085 apartment units of housing development projects in HCMC had not had ownership certificates due to hindrances such as administrative procedure delays, financial obligations and inspections.

To expedite the ownership certificate issuance process, the department has categorized the obstacles into major groups, including legal issues, pending certifications for financial obligations, new property types, additional financial obligations, and delayed submission of requests for home ownership certificates.

OCOPs displaying promising future

The program ‘One Commune One Product’ (OCOP) has run for 5 years, becoming a potential startup model of several organizations and cooperatives with the ability to thrive nationally and internationally.

According to the Ministry of Agriculture and Rural Development, until December 2023, there were over 11,000 OCOPs from 5,600 entities obtaining three-star rating, which excellently fulfills the target of the 2021-2025 period to have 10,000 such.

Director Nguyen Minh Tien of the Center for Agricultural Trade Promotion (under the Agriculture and Rural Development Ministry) commented that the quality of OCOPs has greatly increased compared to the beginning time of the program. Many new products do not merely rely on the uniqueness of the locality but can also satisfy the demands of modern consumers. These merchandise items have attractive packaging and approach potential customers via different channels like supermarkets or malls.

However, economic experts are concerned that there is monotony and overlapping among these OCOPs. In certain localities, the OCOP model is only a kind of short-term movement. The local authorities merely encourage commercial entities to startup through this model, but do not provide further support related to market expansion or customer connection. Therefore, followers of the model have to slowly seek their target clients, while the manufacturing scale is rather small.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien shared that true to the name, an OCOP must be a unique product of one area or commune. It must play the role of an ambassador conveying personal stories of humanity and history of that area.

Minister Le Minh Hoan of Agriculture and Rural Development stated that there is still great potential for the growth of OCOPs in Vietnam. What is urgently needed right now is the implementation of science-technology and innovative ideas to introduce more novel products.

Economists said that besides the help of the State in releasing suitable policies and mechanisms, OCOP commercial entities themselves have to promote their own trades, seek possible customers, improve the appearance of their products, and more importantly, increase the quality of these merchandise items.

For a more stable output, in addition to participating in trade fairs and exhibitions or marketing goods on social network sites, trading floors, it is essential to boost product quality so that these items can be accepted in modern distribution channels like convenience stores, supermarkets. The good news is that until now, all provinces in Vietnam have distribution points for OCOPs.

Vice President Paul Le of Central Retail Vietnam stressed that supermarkets wholeheartedly welcome OCOPs as long as their designs are compatible with the shelf space here and can ensure food safety.

Finally, the Ministry of Agriculture and Rural Development proposed that for OCOPs to sell more in the country and expand their market globally, there are three key goals to fulfill. The product quality must be enhanced via the use of science-technology, the packaging must be attractive, and brand building associated with traceability must receive more attention so that the product can satisfy criteria of renowned certificates in the field.

Sustainable banks the way ahead for success

Vietnam’s financial sector is increasingly embracing sustainability practices, although challenges like the need for a comprehensive legal framework, skilled personnel, and enhanced data management remain areas for improvement.

Environmental, social, and governance (ESG) principles are increasingly becoming the bedrock of business practices, particularly in the banking and financial sectors, said PwC chairwoman Dinh Thi Quynh Van at a seminar last week.

Several Vietnamese banks are not only adopting ESG standards themselves, but are also actively assisting their clients in embracing these principles.

Tran Phuong, deputy CEO of BIDV, said, “By November 30, we had extended green credit to over 1,500 clients across 1,900 projects, with a total outstanding loan amounting to over $3 billion, which is nearly 5 per cent of the bank’s total loan portfolio.”

Particularly, BIDV has distinguished itself as the first domestic bank to develop a sustainable loan framework. These investments predominantly target clean and renewable energy, accounting for over 80 per cent of the funding, followed by environmental protection and disaster mitigation initiatives.

In the agricultural sector, critical to Vietnam’s economy, Agribank has been proactive in implementing ESG practices.

Nguyen Thi Thu Ha, head of the Financial Institutions Department and deputy head of the ESG Steering Committee at Agribank said, “With a significant portion of our lending in agricultural and rural sectors, we have integrated ESG considerations into our risk management and business strategies, and are actively engaging in community development.”

Within the private banking sector, institutions including MB, SHB, and ACB are allocating considerable resources towards sustainable lending initiatives.

Pham Nhu Anh, CEO of MB Bank, also shared the bank’s comprehensive risk management framework and criteria for green credit across various sectors, including green energy, sustainable agriculture and forestry, and green industry.

For ACB, the bank’s initiatives extend beyond financing. It is driving digital transformation, reducing paper usage, and enhancing environmental awareness among our staff, explained chairman Tran Hung Huy.

However, Phuong of BIDV believes that the absence of a comprehensive legal framework for green classification and green bond issuance is a significant barrier.

Phuong also pointed out the global challenge of emissions data collection, crucial for environmental impact assessment in banking.

Addressing the state of Vietnamese enterprises, Phuong also observed that most are only beginning to align with sustainable development and ESG practices.

Pham Do Nhat Vinh, head of Financial Services at KPMG Vietnam, stressed the necessity of adapting to carbon accounting to future-proof banking operations, and underscored the importance of assessing environmental risks, particularly in nature and biodiversity.

Regarding to roadmap for banks to incorporate ESG practices, he believed that risk management frameworks play a key role.

Vietnam's manufacturing expected to grow in 2024

Thanks to hopes for a recovery in demand both domestically and in export markets, plus business expansion plans, manufacturing is forecast to increase this year, according to S&P Global.
 
The S&P Global Vietnam Manufacturing Purchasing Managers' Inde (PMI) posted 48.9 points in December, remaining below the 50 and signalling a fourth consecutive monthly decline in business conditions in the sector. That said, the index rose from 47.3 points in November to point to a softer rate of deterioration.

The health of the sector worsened through much of 2023, improving only in February and August. The average PMI reading across the year was the lowest since the COVID-19 pandemic outbreak in 2020.

The latest decline in operating conditions again reflected a subdued demand environment, with total new orders down for the second month running in December. The pace of reduction eased from that seen in November, however, as new export orders neared stabilisation.

Anecdotal evidence suggested that recent price rises had deterred customers and contributed to the latest reduction in new orders. Responding to these signs, manufacturers limited the extent to which they raised their selling prices at the end of the year, hiking charges only fractionally and to the least extent in the current five-month sequence of inflation.

The marginal nature of the rise in selling prices contrasted with that seen for input costs, which continued to increase markedly and at a pace that was little-changed from the nine-month high seen in November.

According to respondents, higher input costs often reflected increases in prices for electricity and oil, plus exchange rate weakness. With new orders decreasing in a challenging demand environment, manufacturers cut their production volumes again in December, extending the current sequence of decline to four months

However, hopes for growth of manufacturing output in 2024 meant that firms kept their employment and purchasing activity broadly stable in December despite falls in new orders. In both cases, the broad stability at the end of the year represented an improvement from modest reductions in November.

Andrew Harker, economics director at S&P Global Market Intelligence said, “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 responded to demand weakness by restricting price rises in December to try and help stimulate new business. This was despite a further marked increase in their own input costs."

Attention now turns to the prospects for 2024, with firms still optimistic on balance that output will expand. This 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, he said.

Banking system posts credit growth of 13.5% in 2023

Vietnam’s credit growth reached around 13.5% in 2023 although unprecedented developments of the global economy posed formidable challenges to the country’s monetary policy, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said on January 3.

According to Tu, the result was spurred by the drastic direction of the Prime Minister and resolve of the banking sector in the past year.

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

The SBV rolled out an array of measures, policies and programmes to ensure sufficient capital for the economy, helping the country achieve the GDP growth rate of around 5%, the official stressed.

Focus was sharpened on the completion of legal framework on lending as well as the simplification of lending procedures, the strengthening of the connectivity between commercial banks and enterprises across the nation, and the development of special credit programmes.

Tu said the central bank has set a credit growth target of 15% for the domestic banking system in 2024, with possible adjustments in line with the development of the macro-economy and inflation rates.

The bank will continue directing credit institutions to prioritise capital for critical spearheads - investment, consumption and export that drive the economic growth, the official said, adding it will strictly control the credit in potentially risky areas.

Additionally, the central bank will accelerate the implementation of the national target programmes, create favourable conditions for businesses and local people to get access to capital, and remove bottlenecks in the expansion of consumer credit so as to combat loan sharks.

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