Credit institutions forecast the demand for banking services will be buoyant in the remaining months of this year, of which credit growth will reach about 4.4% in the third quarter of 2023 and 12.5% for the whole year, according to a survey of the State Bank of Vietnam (SBV).

SBV’s latest survey on business trends of credit institutions in the third quarter of 2023 released late last week showed the business situation of the banking system in the second quarter of 2023 improved much slower than the previous quarter while pre-tax profits grew slightly but also lower than expected.

According to the assessment of credit institutions, the demand for loans, payment services and cards, and deposits improved in the second quarter of 2023, but the number of credit institutions that saw the improvement was lower than the SBV’s previous survey.

Credit institutions forecast customers' demand for banking services will grow positively in the third quarter of 2023, but the rise will be at a slower rate compared to 2022. The demand for loans is expected to increase more than that of deposits.

Capital mobilisation of the whole credit institution system is expected to increase by an average of 3.2% in the third quarter of 2023 and by 10.6% in 2023.

Outstanding loans of the banking system are expected to increase by 4.4% in the third quarter of 2023 and by 12.5% in 2023, down by 0.6% compared to the 13.7% forecast of the previous survey.

According to credit institutions, the liquidity of the banking system in the second quarter of 2023 remained solid and was more abundant than in the first quarter. Credit institutions forecast the liquidity situation in the third quarter and the whole year will continue to improve compared to 2022.

They also expect the average deposit and lending interest rates of the whole banking system to decrease by 0.31 and 0.42 percentage points in the third quarter, respectively; and decrease by 0.91 and 0.79 percentage points, for the whole year, respectively.

In the survey, they said the overall customer risk in the second quarter increased faster than the first, with 34.2% of credit institutions identifying the overall customer risk currently at a high level. A total of 48.2% forecast the customer risk will increase in 2023 compared to last year.

According to the assessment, the ratio of bad debt to outstanding loans of the banking system showed a slight increase in the second quarter, but the rate is expected to decrease in the third.

Regarding the labour and employment situation of the finance and banking industry in the second quarter, despite improving compared to the previous quarter, it did not reach the expected level. However, credit institutions expect the labour situation will be more positive in the third quarter of 2023 and the whole year.

Vietnamese lychees sold at Thai supermarket

Luc Ngan lychees from the northern province of Bac Giang were officially put up for sale at Central Retail’s Tops Food Hall supermarket at CentralwOrld shopping centre in Bangkok, Thailand, on July 12.

Earlier, a batch of three tonnes of Luc Ngan lychees were exported by Central Retail to Thailand on July 10.

They are now sold at 259 THB per box, or 173,000 VND (7.5 USD) per kg.

On May 16, Central Retail Vietnam and the Bac Giang provincial People’s Committee signed a cooperation agreement on lychee consumption this year, towards consuming about 300 tonnes.

Luc Ngan lychees were exported to Thailand for the first time on June 30, 2017. The fruit has since then become popular in the country.

Lychee is grown in many localities in Vietnam, mostly in the North, with Bac Giang known as the country's lychee growing hub.

The province harvested 199,500 tonnes of lychee in 2022 and earned nearly 6.8 trillion VND from lychee sales and support services, according to the provincial People’s Committee.

Bac Giang lychee has affirmed its brand and value in many countries and territories around the world with 75,900 tonnes shipped abroad, making up 38.1% of the accumulative sales.

Vietnam grabs attention of pharmaceutical companies from RoK

A delegation of pharmaceutical companies from the Republic of Korea (RoK) has visited Vietnam to seek chances for strengthening business partnerships, according to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA).

The fact-finding trip from July 5 to 8, following a State visit to Vietnam by the RoK’s President Yoon Suk Yeol in late June, was considered a demonstration of efforts by both the private and state sectors of the RoK to enter the Vietnamese market in the biopharmaceutical industry.

With a plan approved during President Yoon’s visit to substantively implement the two countries’ comprehensive strategic partnership, bilateral cooperation in the biopharmaceutical industry is expected to expand, KPBMA said.

On July 6, KPBMA, the RoK’s Ministry of Food and Drug Safety, and the Drug Administration of Vietnam held a workshop on cooperation in the pharmaceutical sector, attracting the participation of about 100 experts and officials.

At another meeting the same day, Korean firms operating in Vietnam expressed their hope for more opportunities to discuss with regulatory agencies and businesses in the industry in emerging markets.

Kang Seok-yeon, Director-General for the ministry’s Pharmaceutical Safety Bureau, said they hope the obstacles to businesses’ entry into the Vietnamese market will be resolved through the project currently pursued by the RoK’s Ministry of Health and Welfare, and that via the two Governments’ close cooperation, they will strive to address difficulties facing the industry.

KPBMA Vice Chairman Jang Byung-won said that Vietnam has a highly potential pharmaceutical market that can become a bridge for companies of the RoK to enter the ASEAN market. They welcome efforts by the RoK’s Ministry of Food and Drug Safety to contact with drug regulatory agencies of Vietnam.

Vietnam’s pharmaceutical market was estimated at about 8.2 billion USD as of 2022. It is forecast to grow 11% annually due to people’s increasing attention to health and multinationals’ strong investment, data of the Vietnam Industry Research and Consultancy (VIRAC) show.

Together with the growth potential, Vietnam is also considered a gateway to ASEAN, so it has attracted attention from many Korean businesses.

Vietravel Airlines to receive fifth aircraft

Vietravel Airlines, a member of Vietravel Corporation, will receive and put into use its fifth aircraft in mid-August, and further expand its fleet to six within this year, according to the airline’s representative.

With more aircraft, the airline plans to expand its domestic and international networks, targeting destinations in China, the Republic of Korea (RoK), Japan and Taiwan (China).

In the first half of this year, Vietravel Airlines increased the number of flights by 48%, seats by 55.1% and transported passengers by 42.7% from the same period last year.

The airline has operated flights connecting Ho Chi Minh City/Hanoi and major tourism destinations in the country, including Nha Trang, Da Lat, Phu Quoc, Da Nang and Quy Nhon.  

It also conducted charter flights to Daegu (the RoK) and Macau (China).

Binh Duong province, US state to cooperate in different fields

Binh Duong province and Nebraska state of the US signed a memorandum of understanding (MoU) on cooperation at a ceremony in the Vietnamese southern locality on July 12.
 
Under the document, the People’s Committee of Binh Duong and Nebraska’s authorities will work together for a strong relationship, contributing to socio-economic development of each side.
 
The two sides will enhance their friendship and expand collaboration in such areas as planning, infrastructure development, urban construction, economy, science-technology, health care and education.
 
Priorities will be given to cooperation in science-technology, trade promotion and investment in the fields of high-tech industry and services, education-training, and supply chain development.
 
The two sides pledged to create optimal conditions for their businesses to explore investment opportunities in the respective markets.

On this occasion, the Eastern International University in Binh Duong and the University of Nebraska-Omaha also inked an MoU on cooperation in personnel training in the spheres of science-technology, health care, technology and economy, among others.
 
In his remarks, Nebraska’s Governor Jim Pillen said his visit to Vietnam aims to tighten the relations between the state and Binh Duong province, and open up new cooperation opportunities.
 
Chairman of the provincial People’s Committee Vo Van Minh noted that the signing of the MoU between Binh Duong and Nebraska has elevated their cooperative ties to a new height, contributing to promoting the Vietnam-US relations.
 
Binh Duong hopes for more intensive and extensive cooperation with Nebraska in planning, infrastructure development, urban construction, economy, science-technology, health care and education, he stressed.

Google programme for Vietnamese startups launched

The programme “Google for Startups Accelerator Southeast Asia: Vietnam's Breakthrough in Innovation" was launched in Hanoi on July 11.

The event was held by Google in collaboration with the National Innovation Centre (NIC) under the Vietnamese Ministry of Planning and Investment, and the US mission in Vietnam in order to promote the growth of Vietnamese tech startups.

The programme aims to enhance support for the national digital transformation efforts by providing training courses and a network of advisors for Vietnamese startups, with the goal of accelerating their business growth.

Speaking at the event, Deputy Minister of Planning and Investment Tran Duy Dong said the programme demonstrates the Vietnamese Government’s commitment to supporting the development of the innovation and startup ecosystem, as well as Google's commitment to backing innovation and entrepreneurship in emerging markets.

It is built upon the success of the 'Google for Startups: Startup Academy Vietnam' programme which was launched for the first time in Vietnam last year, benefiting 50 startups from 16 different key sectors nationwide. This year, it will focus on training six core industries instead of 16, ensuring a more specialised approach and aligning with the country's core development sectors of education, health care, agriculture, retail, fintech, and smart city development.

"Google for Startups Accelerator, Southeast Asia" is a three-month programme that begins with a five-day in-person bootcamp, followed by five online workshops leading up to Graduation Day and Demo Day for investment. Participating startups will have mentoring sessions with experts from Google and industry specialists throughout the period.

Twenty startups will be selected to join in one-on-one training sessions, direct and group mentoring, and workshops. The selected startups will join the global Google for Startups network, which comprises over 1,000 companies from various regions.

Google and NIC will also co-design online training workshops for 200 startups across the country.

Last year, the programme featured 15 workshops and 283 hours of mentoring with experts and industry insiders.

According to the e-Conomy SEA 2022 report, Vietnam is emerging as a startup hub in Southeast Asia, with the national Internet economy projected to reach 50 billion USD by 2025, the fastest growth in the region. Additionally, Vietnam now has four unicorn companies, including a private startup valued at over 1 billion USD as of 2023 and over 3,400 startups with a skilled workforce capable of developing advanced technological solutions and products.

Hanoi transport department to enhance CCTV surveillance

Hanoi Transport Department is considering adding more CCTV cameras to reduce traffic congestion.

According to the department, the CCTV cameras installed on Ring Road No. 2 and the Chua Boc-Thai Ha flyover have improved traffic flow.

The CCTV surveillance warns drivers of possible traffic jams at the Nga Tu So intersection, which is often congested. Based on the information, drivers can choose alternative routes.

The information about the intersection, consisting of visuals and letters, is displayed every six seconds, depending on the status of the intersection during the day.

From January 13 to June 1, 2023, the CCTV cameras timely updated the traffic situation at the Nga Tu So intersection, allowing drivers to detour when the area is congested.

A survey of 105 drivers conducted by the department shows that 38.1% are willing to change their route when warned of potential traffic jams.

The cameras detect and warn vehicles that exceed the clearance height of the overpass. 

Prior to the installation of CCTV cameras, trucks and buses that exceeded the height limit often took the overpass and got trapped in the clearance bars.

The smart CCTV captures the vehicle's license plate number and measures its height. If the height exceeds the height allowance, the plate number is displayed on the screen to warn the vehicle not to enter the overpass.

Between December 1, 2022, and June 1, 2023, when the cameras were fully operational, fewer overheight vehicles were caught in the overpass's clearance bar. During that time, more than 13.4 million vehicles passed through the overpass, and more than 125,000 vehicles detoured when they received a congestion warning.

However, experts said the surveillance range should be increased because the current range of 15 meters between the overpass and the vehicle makes it difficult for drivers to change lanes.

Experts give recommendations to boost economic growth in new context

Experts gave recommendations to restore aggregate demand and promote growth in the new context at the mid-year macro-economic roundtable in Hanoi on July 11.

Speaking at the event, Assoc. Prof., Dr. Nguyen Thanh Hieu, Vice President of the National Economics University (NEU), said that Vietnam reported a GDP growth rate of 3.72% in the first half of 2023 – a relatively low rate compared to the same period of the last 10 years (only higher than the 1.74% in the same period of 2020 - due to serious impact of the COVID-19 pandemic). Disbursement from the State budget was estimated at 232.2 trillion VND (9.8 billion USD), equivalent to 33% of the yearly plan, while the capital disbursed from the non-state sector increased by 2% year-on-year, lower than the 9.5% rise in the same period of 2022. Registered FDI in Vietnam reached 13.43 billion USD, down 4.3% year-on-year.

Hieu said that these figures demonstrate a sharp decline from the aggregate demand of the Vietnamese economy. The 6.5% growth target in 2023 may be hard to be reached in the context of unpredictable impacts from the world, and the domestic manufacturing sector yet to fully recover from the pandemic.

This requires the Government, ministries, sectors and agencies to take prompt and appropriate measures to restore the aggregate demand and develop the economy in the next context, he stressed.

UNDP Senior Economist Jonathan Pincus suggested building a counter-cyclical fiscal policy to stimulate demand amidst slowing global growth.

Specifically, it is necessary to reverse the decline in public investment, increase its efficiency, modernise the social welfare system suitable for a middle-income country, and make the country’s fiscal policy transparent, he added.

Assoc. Prof., Dr. Pham The Anh from the NEU stressed the necessity to encourage private investment through continuously cutting down lending interest rates and using short-term investment tax credit.

It is essential to control money supply growth around 10%, Anh said, stressing the importance of accelerating public investment, with focus on infrastructure projects, developing social housing, and building new public schools to meet social needs.

The State should have policies to stimulate consumption through social welfare subsidies for poor households and people who have lost their jobs; and increase taxable income and reduce value-added tax (VAT) for essential items, the expert said.

Vietnamese lychee promoted in Japan

A cultural exchange promotion event and introducing Vietnamese lychee was organised at Kitahanada AEON Mall in Osaka, Japan, as part of a series of activities to mark the 50th anniversary of Vietnam-Japan diplomatic relations.

The event, which was organised by Japan-Vietnam Economic Development Association (JVEDA), attracted thousands of visitors and customers buying lychee from the northern province of Bac Giang.

Speaking at the event, Yamamoto Hironobu, JVEDA’s vice chairman, sent his thanks to two Japanese firms: Big Global HR Inc and Monomaru with Mono Food brand for distributing lychee under Global GAP to Japanese consumers.

Consulate General of Vietnam in Osaka, Ngo Trinh Ha said, “Vietnamese agricultural products are increasingly making great strides and positions in the international market, especially Japan. As a strict market in terms of quality standards, products such as Global GAP lychee from Bắc Giang Province, Vietnam are highly appreciated and have a lot of potential to expand in Japan. I hope that there will be many Vietnamese enterprises with innovative ideas to bring clean agricultural products to the world in the near future.”

Nishikawa Kaori, chairwoman of Big Global HR Inc in Japan, said, “We hope to be able to put lychee into most of the supermarket systems across the country, so that Japanese people can enjoy Vietnam’s fresh fruits. In addition to fresh lychees, frozen lychees also have many advantages when applying the most advanced Japanese freezing preservation technologies such as Denba Technology and CAS to help preserve the full flavour of fruits, then transport lychees around the world.”

JVEDA is a pioneer in trade and investment promotion activities between Vietnam and Japan. The event has not only promoted cultural exchange and introducing Vietnamese lychee fruit but also opening up many trade opportunities for Vietnamese and Japanese businesses in the field of agricultural products.

Vietnam emerges as a rising star in startups and innovation

Vietnam is viewed as a "rising star" in the region in terms of startup and innovation as the country’s startup ecosystem is on track to record strong development, according to insiders.

Deputy Minister of Planning and Investment Tran Duy Dong made the statement at a ceremony to kick-start the programme "Google for Startups Accelerator, Southeast Asia: Vietnam" in Hanoi on July 11.

Addressing the event, Dong emphasised that the Vietnamese innovation ecosystem boasts great potential for further development, mainly due to the openness of the economy.

With proper initiatives and solutions falling in line with the global trends, the country can benefit from these trends in order to become a regional and global hub for innovation and entrepreneurship moving forward, he added.

Thye Yeow Bok, head of Startup Ecosystem Southeast Asia at Google, said the launch of the startup scheme has demonstrated Google’s long-term commitment to supporting Vietnamese economic development.

The objective of the programme is to provide support for the country's digital transformation by delivering training schemes and an in-depth mentoring network specifically for Vietnamese startups.

Google's project will last for three months, with a specific focus on six main fields, namely education, health, agriculture, retail, financial technology, and smart cities.

Some 20 startups will be selected to participate in training sessions, mentoring consultations, and seminars. Selected startups will also be able to join the global Google for startups network made up of more than 1,000 businesses from many regions.

According to annual reports on innovation and entrepreneurship conducted by Do Ventures and StartupBlink, the Vietnamese startup ecosystem has risen from fifth to third place among the top six Southeast Asian economies, just behind Indonesia and Singapore.

Overseas remittances to Ho Chi Minh City hit US$4.4 billion in first half

Overseas remittances to Ho Chi Minh City during the first half of the year stood at an estimated US$4.4 billion, equivalent to 66% compared to 2022’s figure, according to the latest report released by the Ho Chi Minh City People's Committee.      

The report assessed the positive growth of remittances and its contribution to stabilising the foreign exchange market whilst accelerating economic growth in the southern metropolis.

From the beginning of 2021 to June 2023, the amount of money remitted to the city by Vietnamese expatriates reached US$18.07 billion, representing an increase of 68.42% compared to the first half of the previous term.

Throughout the reviewed period, the total foreign direct investment (FDI) into the city hovered at an estimated US$12.65 billion. The city is striving to attract US$4.4 billion in FDI this year, about US$5 billion next year, and some US$6.2 billion ahead in 2025.

According to the Ho Chi Minh City People's Committee, despite the global economic downturn, foreign investors still view Vietnam as a potential investment market in both the immediate and long term.

Several FDI enterprises in the HCM City High-Tech Park have decided to expand their investment in recent times, with popular names including Intel, Samsung, and Nipro.

The expansion of production by FDI enterprises has therefore contributed to enhancing the Vietnamese role as part of the global supply chain, generating many high-quality jobs in the process.

Amid fierce competition among developing countries in terms of FDI attraction, FDI inflows are forecast to decrease this year.

Viet Nam contributes to global food security: MARD Deputy Minister

Viet Nam is contributing to ensuring food security not only for its own people but also for the wider region and the world, according to Deputy Minister of Agriculture and Rural Development Phung Duc Tien.

The agriculture deputy minister made this statement at a press conference this week in Ha Noi, acknowledging the agricultural sector as the "firm foundation" of the national economy.

The Ministry of Agriculture and Rural Development (MARD) held the press conference to release official information about the country's agricultural production and exports in the first six months of the year.

Tien said the agricultural sector implemented a plan for the first six months of 2023 to address challenges, of which, the export market for agro-forestry-fishery products, mainly for wood and aquatic products, was a particular difficulty.

He said the country still has much potential in agricultural exports and MARD will undertake flexible solutions to boost management, adapting to the new context and meeting the demands of the world market.

While ASEAN countries and the agriculture industry around the world is currently concerned about food security, Viet Nam has achieved impressive results in ensuring food security for its 100 million population while maintaining its standing in the global rice export market.

"People often believe that over time, rice yield will decrease, but this year the situation did not happen because the MARD has learned from previous experience and promptly provided technical support for farmers," said the agriculture deputy minister.

Nguyen Nhu Cuong, Director of the MARD's Department of Crop Production identified current development trends, especially the migration of the workforce to urban environments, industrialisation and exploration in different crops, as causing negative impacts on rice production.

However, with the application of scientific and technological advances in seed and seedling cultivation, along with a timely respond to climate change, the country's agricultural sector is fully operational over the next six months of the year and in the next two years, ensuring both exports and domestic consumption.

 Viet Nam is also focusing on exporting high-quality, good-priced rice. — Illustration photo nongnghiep.vn
A report from MARD shows rice and other crop production in the first six months of the year achieved good results.

The whole country planted about 4.98 million ha of rice with an average yield of 67 quintals/ha, an increase of 1.8 quintals/ha, with output reaching 22.8 million tonnes.

Rice exports in the first six months reached 4.2 million tonnes, earning $2.32 billion, including $300 million in June. The average export price of rice in the first five months of 2023 was estimated at $517 per tonne, up 5.8 per cent over the same period in 2022.

Meanwhile, VNDirect expects the export price of rice to continue to increase in 2023 thanks to the increased demand for food reserves in many countries, and Viet Nam is also focusing on exporting high-quality, good-priced rice.

According to data from the General Department of Customs, in 2022, Viet Nam's rice exports were recovering from the impact of the COVID-19 pandemic, totalling 7.1 million tonnes, equivalent to $3.5 billion.

In the agricultural sector report, VNDirect said that rice demand will remain high in 2023 as political and economic uncertainties push up the demand for rice reserves. Besides this, climate change is still affecting rice supply in many countries, especially the Philippines, due to floods, and China, due to drought.

Analysts also expect rice export prices to continue to increase in 2023 thanks to increased demand for food reserves in many countries.

Viet Nam is focusing on producing high-quality rice to match global consumption trends since many rice-growing areas have switched to other more profitable crops.

MARD reported the area of agricultural land used for the 2022-2023 crop year in the country has decreased by 3 per cent compared to the previous crop.

Cuong said although Viet Nam's cultivation area is not large but agricultural export value is not inferior to that of many other countries, with its agricultural products present in all countries and territories in the world.

In the first half of 2023, fruit and vegetable export turnover was estimated at $2.8 billion, including $950 million in June, up 2.6 times compared to June 2022.

The fruit growing area was about 1.22 million ha, up 2.7 per cent with an increase in output of many items such as mango, oranges, rambutan and lychee while the area used for industrial crops expanded to 2.2 million ha, up 0.3 per cent with output raising in pepper, rubber, cashew, and tea cultivation.

"The target to reach US$10 billion from exports of vegetables and fruits can be fulfilled in the future despite a downtrend in the area due to industrialisation, urbanisation and other factors," he said.

Tien emphasised that fruit and vegetable exports have never been as high as they are now. "According to this growth momentum, it is certain that in 2023, the country's fruit and vegetable exports will reach over US$5 billion and if investment is more focussed on deep processing and market expansion, the figure of US$10 billion from will likely be achieved," he said.

Railway sector’s revenue up 17% in H1

The Viet Nam Railways Corporation (VNR) has revealed that its total revenue topped VND3.7 trillion (US$156.4 million) in the first six months of this year, up 17 per cent year-on-year.

Of the total, the combined revenue of the VNR’s two affiliates - the Ha Noi Railway Transport Joint Stock Company (Haraco) and the Sai Gon Railway Transport Joint Stock Company (Saratrans) - is estimated at VND2.5 trillion, up 18 per cent year-on-year, with direct takings from transportation activities reaching more than VND1.9 trillion, up 25 per cent.

While passenger transport grew strongly with a turnover of more than VND1.2 trillion, a year-on-year increase of 83 per cent, freight transportation dropped sharply, to just VND824 billion, equal to about 80 per cent of that in the same period last year.

According to the VNR, the railway sector has implemented many solutions to promote transport.

Regarding passenger transport, the number of trains and train schedules have been adjusted to suit passengers’ needs, with a focus on short-distance sections of high travel demand such as Ha Noi to Thanh Hoa, Vinh, Dong Hoi, Hue and Da Nang and vice versa, and HCM City to Nha Trang, Phan Thiet and Da Nang and vice versa.

The task of completing the plan in the last six months of the year has seen many difficulties and challenges, said Dang Sy Manh, chairman of the Members' Council of VNR.

The construction of projects to renovate and upgrade the North-South railway had affected the rate of trains leaving and arriving on time, while the rainy season in the last six months of the year will greatly affect operations and transportation.

The Commission for Management of State Capital at Enterprises has set business targets for Vietnam Railways Corporation (VRN) in 2023 with a total revenue of VND6.5 trillion ($275 million) and an after-tax profit of VND3 billion. This is an ambitious goal after a loss of VND130 billion in 2022.

However, the representative from the State-owned corporation said the assigned tasks are within its reach. 

Passenger, goods transport volume sees strong surge in H1

The transport sector carried over 2.17 billion passengers in the first half of 2023, up 15.9% year-on-year, heard a conference hosted by the Ministry of Transport in Hanoi on July 10.

In the review period, about 1.10 billion tonnes of goods were transported, up 15.9% compared to the same period last year.

In the Jan – June period, the Ministry of Transport continued to adjust and supplement the detailed list of fixed interprovincial passenger transport routes nationwide, with a focus on the direction towards 2030. Efforts were made to actively promote bilateral and multilateral negotiations on annual international road transport activities between Vietnam and other countries, as well as international organisations.

The ministry directed relevant agencies to focus on developing a project to apply digital transformation to the organisation and operation of road transport activities using automobiles.

The sector has also concentrated on completing a project to improve container transportation capacity on the Bac Ninh - Hai Phong inland waterway route with a target of developing this form of transport toward increasing the market share.

Meanwhile, the volume of railway passengers has experienced a strong increase in the period, recording a revenue growth of 138.92% compared to the same period last year.

The aviation sector has basically met the demand. Some international routes have gradually recovered to the pre-pandemic level. The Ministry of Transport has also implemented various solutions to reduce flight delays and cancellations, and better the quality of air transportation services.

The maritime sector has paid attention to implementing a project to develop Vietnam's shipping fleet; simplifying administrative procedures, strongly applying information technology and the national one-stop-shop mechanism for 11 administrative procedures at 22 maritime port authorities nationwide.

Crunch time for Vietnamese economy over 30 years

Vietnam is relying too much on monetary policies in order to stimulate demand. However, loosening lending standards and lowering interest rates serve to reduce asset quality, thereby creating asset bubbles, according to economic experts.

As part of his address at a recent seminar held on recovery of aggregate demand aimed at promoting economic growth in the new context, organized by the National Economics University, Ass. Professor Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, stated that despite the Vietnamese economy being open, it remains weak due to suffering from issues in the international economy and external impacts.

In addition, the internal economy has also revealed many weaknesses, both in terms of management and administration, as well as the capacity to cope with and overcome difficulties of the business community, especially small and medium enterprises.

According to Dr. Thien, the Vietnamese economy is in the midst of a particularly difficult period when facing a structural crisis and a crisis of economic mechanism, meaning it is necessary to properly identify it. Especially, after two to three years of COVID-19, Vietnamese businesses have been exhausted, while no proper policies have been adopted.

Statistics indicate that in the first half of the year, there were 75,900 newly-registered enterprises, down 0.5% over the same period from last year. Nearly 37,700 enterprises resumed operations, down 7.4%; 60,200 enterprises suspended business activities for a definite time; 31,000 enterprises stopped operating and waited for dissolution procedures, up 28.9%; and 8,800 enterprises completed dissolution procedures, up 2.8% on-year.

Dr. Thien said that enterprises withdrawing from the market is a real issue, while the rate of enterprises participating in the market is not necessarily "real", meaning that they have not yet contributed to GDP growth.

Amid the current challenges facing the Vietnamese economy, the former director of the Vietnam Institute of Economics underlined the necessary of re-identifying all structures of the national economy that are facing serious difficulties in improving its real capacity, combining domestic enterprises with weak foreign enterprises, and adjusting policy institutions.

Sharing this view, Dr. Nguyen Dinh Cung, former head of the Central Institute for Economic Management (CIEM), said that over 30 years, this is the most difficult period for the local economy.

According to Dr. Johnathan Picus, chief economist of the UN Development Program (UNDP) in Vietnam, the nation requires more fiscal policy tools. First of all, it is necessary to overcome the situation of fragmented and inefficient public investment, which is not tied to industrial and trade policies. Along with that, the social security and welfare system must be expanded and become more modern.

The country’s fiscal deficit stands larger than official figures; the ratio of public investment to GDP decreases, becoming more and more localised; and public investment decentralisation in the country is among the highest in the world, he went on to say.

The nation therefore needs to develop a countercyclical fiscal policy which can stimulate demand during a period of declining global growth, modernise its social security system to suit middle-income countries, boost industrialisation, and ensure transparency of the fiscal policy, the UNDP expert recommended.

Assessing Vietnamese fiscal policies over recent years, Dorsati Madani, senior economist of the World Bank (WB), stated that there remains plenty of room for Vietnamese fiscal policy. Despite this, the implementation process still faces numerous challenges and requires immediate action, such as accelerating disbursement of public investment capital, improving investment procedures, and defining objectives and quality of the implementation process.

Solutions for public investment are not enough, according to the WB, the Government therefore must support workers and households affected by the shock related to the global economic slowdown, noted Madani.

Besides, Madani said that the effectiveness of the monetary policy remains limited.

The WB expert suggested that the country should quickly reform to support economic growth over the medium term, such as strengthening the capital adequacy of banks, as well as improving institutional frameworks for careful supervision and early intervention, banking and crisis management, and the regulatory framework for dealing with weak banks.

In particular, the nation needs to  consolidate confidence through structural reforms as it seeks to enhance competitiveness, improve the business environment, restart the SOE reform programme, promote financial inclusion, facilitate the acquisition of skills according to market needs, and improve the medium-term adaptability of exports, she stressed.

It is therefore predicted that Vietnamese GDP will grow below 5% this year, with the recover to stand at roughly 5.5% to 6% next year, Madani added.

Vietnam sets out stall on GMT impacts

Concerns among multinational corporations about new global tax impacts are expected to be eased by Vietnam’s efforts to facilitate the foreign business community.

Director general of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency, Do Nhat Hoang, at the Vietnam-South Korea Business Forum held in late June announced that Vietnam is currently working on new mechanisms and policies to attract giant foreign-invested enterprises (FIEs) in the context that global minimum tax (GMT) will be applied from early 2024.

As many as 100 major FIEs will be subject to it.

“It is expected to submit to the National Assembly (NA) in October the measures to harmonise the interests of businesses and the state, and align them with international commitments,” Hoang said.

“Along with that, we still enforce special investment incentive mechanisms for projects in innovation, research and development (R&D), semiconductors, clean energy, and high-tech agriculture,” he added.

Hoang Viet Tien, deputy secretary general of Vietnam Digital Communication Association, added, “This announcement is necessary and important, showing the strong determination of Vietnam to facilitate investors and to keep its attraction amid announcements about GMT actions from regional markets.”

Singapore, Malaysia, Thailand, and Hong Kong all have their own declarations on the application of GMT, namely the qualified domestic minimum top-up tax (QDMTT), through budget plans or statements of government agencies.

They also announced that there will be new preferential and supportive policies to continue to maintain and increase foreign investment attraction. For instance, Thailand announced that it will regulate 50-70 per cent of the additional tax revenue from the QDMTT to transfer it to a fund to support businesses that the country encourages investment from.

At a meeting with South Korean President Yoon Suk-yeol, who paid an official visit to Hanoi in late June, NA Chairman Vuong Dinh Hue said it has asked the government to review and check issues related to GMT. As planned, the NA will consider the issue at its session at the end of the year.

At present, the Ministry of Finance is working with the MPI and other ministries on building supporting policies. They are expected to include increasing investment in infrastructure directly in industrial zones where these businesses are located; supporting human resource training; and supporting them in R&D, as well as having other policies in line with Vietnam’s commitments.

While waiting for details of solutions and measures, investors and businesses from many nations are looking forward to better understanding the orientation of GMT in Vietnam, in order to assess possible impacts as well as devise appropriate plans.

Many South Korean giants are making expansion plans in Vietnam. At the business forum, Samsung Vietnam announced that it is planning to expand the supply source from Vietnamese enterprises to ensure a stable supply chain for its manufacturing complexes.

Meanwhile, Doosan Group is interested in large-scale gas and wind power development projects, a company representative said at the forum.

Record input costs thwart cement groups

Demand and oversupply issues continue to thwart the cement industry, as inputs for production are failing to see a drop in costs.

Two weeks ago, the People’s Committee of Hoa Binh province authorised investors to implement the Xuan Son Cement Plant project. The facility is anticipated to begin operations in the fourth quarter of 2024 with an annual capacity of 2.3 million tonnes.

In addition to Xuan Son, a number of new cement facilities went into operation in 2023, such as Line 3-Xuan Thanh Cement (4.5 million tonnes), Dai Duong Cement (2.5 million tonnes), and Long Thanh Cement (2.5 million tonnes). If the Xuan Son project is included, the current cement supply exceeds 120 million tonnes.

In contrast to the exhilaration of supply, demand is a troublesome issue. Vietnam’s cement industry faces oversupply as its greatest challenge. The director of Tan Quang Cement JSC in the province of Tuyen Quang, Le Danh Thang, stated that the unit’s production in the first half of the year “did not meet the plan, and it is projected to drop about 80,000 metric tonnes due to no output.” The firm is presently pausing production to perform machine maintenance.

According to the Ministry of Construction, cement production in the first six months of 2023 is estimated to be 39 million tonnes, a 7 per cent decrease. Domestic consumption totalled 29 million MT, a decline of 8 per cent compared to the same period in 2022.

Currently, cement factories in Vietnam have a design capacity of up to 120 million tonnes per year, but cement demand is only about 65 million tonnes.

According to Sam, the cement industry’s retail price has dropped, but the cost of electricity, coal, and other inputs for cement production have risen or reached a high level.

The real estate industry deteriorated, resulting in the downturn of the whole construction sector. However, SSI Research’s Hoang Anh Tuan, stated that the profit of cement companies is likely to recover by the end of the year.

Sharing the same viewpoint, Thang from Tan Quang Cement stated, “Production won’t stabilise again until the construction market warms up and public investment is increased further.”

The company expressed its optimism that a new resolution will shortly be implemented, enabling businesses to adapt and develop sustainably over the next few years.

However, according to Sam from the VABM, the aforementioned solutions are only transient and the oversupply situation will not improve if the reality of banks lending to invest in cement ventures remains rampant.

Economic growth seen below target – report

Economists at the Central Institute for Economic Management (CIEM) have predicted that Vietnam’s gross domestic product (GDP) growth for 2023 may fall short of the target of 6.5% set by the National Assembly.

During a seminar, titled “Vietnam’s economic performance in the first half and prospects for the second half of 2023,” held yesterday, CIEM and the German Agency for International Cooperation presented three economic growth scenarios.

In the first scenario, assuming that global economic conditions develop as projected by international institutions and that Vietnam keeps the same policies as those in 2021 and 2022, GDP growth for 2023 would reach 5.34%. This projection includes a 5.64% decrease in exports, a 3.43% increase in the consumer price index (CPI), and a trade surplus of US$9.1 billion.

The second scenario considers the same global economic factors as the first scenario, but with Vietnam further easing monetary and fiscal policies. Under this scenario, the projected GDP growth for 2023 is 5.72%, with a 3.66% decline in exports, a 3.87% increase in the CPI, and a trade surplus of US$10.3 billion.

The third scenario envisions a more favorable global economic context, characterized by improved growth recovery, reduced supply chain disruptions, lower inflation in the U.S., and effective reforms and management in Vietnam. In this scenario, the projected GDP growth for 2023 is 6.46%. Exports are expected to decline by 2.17%, the CPI is projected to expand by 4.39%, and the trade surplus is estimated at US$6.8 billion.

The report also analyzes factors that may influence Vietnam’s economic prospects in late 2023, including monetary tightening in major economies, intense strategic competition, shifting capital inflows due to the global corporate tax, progress in the Economic-Social Recovery and Development Program, and Vietnam’s digital and green transformations.

During the seminar, Tran Thi Hong Minh, director of CIEM, highlighted various global economic developments in the first half of 2023. Vietnam will have to pursue economic growth while maintaining macroeconomic stability and social welfare, with a focus on promoting sustainable economic development, she noted.

Bui Quang Tuan, director of the Vietnam Institute of Economics at the Vietnam Academy of Social Sciences, cautioned about the rapidly changing conditions and the importance of considering factors such as retail potential, domestic consumption, digital economy, and requests for special mechanisms from different regions in the country.

New mobile network launched in Vietnam

VNSKY, a mobile virtual network operator owned by the local payment solutions company VNPAY, has launched its service across the country with the numeral prefix 0777.

VNSKY provides seamless mobile data connectivity at affordable prices, responding to the increasing internet usage among local customers, particularly those already using a SIM card for basic daily needs, according to Nguyen Van Dung, director of VNSKY.

Firstly launched in the north-central province of Nghe An in May, VNSKY highlights VNPAY’s commitment to building a comprehensive digital service ecosystem, as stated in their official announcement. The mobile network service will be integrated with a diverse range of VNPAY offerings, such as VNPAY-QR, VnShop, and VNTAXI.

As a mobile virtual network operator, VNSKY has established partnerships with telecom operators nationwide to access the existing infrastructure system. This ensures widespread coverage and reliable service for VNSKY users.

VNSKY has introduced a promotional program offering special benefits to customers with service activated by the end of August. Users can enjoy unlimited internet data and free same-network calls for 60 days with some specific conditions.

VNSKY SIM cards are now available at local grocery stores and e-commerce platforms such as Shopee, Lazada, and TikTok Shop.

Nearly US$33 mln of credit support dedicated to HCMC enterprises

The People’s Committees of Tan Binh District and Tan Phu District have just organized a conference to connect banks and enterprises in the two localities.

The conference focused on exchanging and providing information related to State policy in the banking sector for enterprises, collectives and household businesses.

Besides, the conference aimed at grasping concerns, sharing and proposing prompt solutions to overcome the difficulties at the current time for businesses, collectives and household businesses in the two districts which would contribute to overcoming the difficulties and boosting the business development in manufacturing together with social welfare issues.

A signing ceremony on credit contract among seven banks and 34 enterprises in districts of Tan Binh and Tan Phu also took place with a total supported amount of VND792.7 billion (US$33 million).

International Shoes & Leather Exhibition kicks off in HCM City

The 23rd International Shoe & Leather Exhibition – Vietnam opened on July 12 in Ho Chi Minh City, with the event attracting the participation of hundreds of businesses from various countries around the globe.

Upon addressing the three-day event, Nguyen Duc Thuan, chairman of the Vietnam Leather, Footwear and Handbag Association (Lefaso), emphasized that the annual function has created plenty of opportunities for local businesses to stay update don the latest information and trends of the shoe and leather industry, while simultaneously contributing to export promotion and market expansion.

On display at the occasion were cutting-edge shoemaking machinery, leather goods production and knitting machines, automated production lines, shoe materials, chemicals, and accessories from global companies from Italy, Germany, Argentina, the Republic of Korea, Taiwan (China), and China.

The event also provides an ideal venue for the business community, investors, and buyers to strengthen connectivity, seek potential customers, and explore further investment opportunities.

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