Law needed to ensure banks can repossess collateral on bad debts

It is necessary to create a synchronous and breakthrough legal framework to deal with bad debts in order to achieve more positive results as the work is facing many challenges, according to experts.

According to General Secretary of the Vietnam Bankers Association Nguyen Quoc Hung, Resolution No 42 on piloting bad debt settlement will be extended only until the end of 2023. Therefore, the legalisation of the resolution provisions is absolutely necessary.

Data from the State Bank of Vietnam (SBV) showed the bad debt ratio of the whole banking system by the end of February 2023 reached 2.91%, a sharp increase compared to 2% at the end of 2022 and nearly doubling compared to the end of 2021.

Total bad debts of the banking system by the end of February 2023 were estimated to account for 5% of total outstanding loans, which was nearly equal to when Resolution 42 came into effect.

In the process of bad debt settlement, a very important issue is seizing collateral, which will become illegal when Resolution 42 expires as at that time it must comply with the provisions of other laws.

Without regulations allowing them to seize collateral under Resolution 42, banks may be afraid to grant credit, affecting the ability to access loans of firms and individuals.

Techcombank’s senior director of public relations Nguyen Thi Van Hoai said the application of measures for collateral plays an important role in banks’ credit activities, ensuring they can recover capital in the event of defaults. It is necessary to have a clear and transparent legal framework to protect the lender and the secured party in cases the borrower is unable to repay or deliberately delays fulfilling the debt repayment obligation.

Dr. Phan Duc Hieu, member of the National Assembly’s Economic Committee, said there should be special regulations on dealing with bad debts and a mechanism to increase the efficiency of handling the problem.

The law needed to take into account the interests of creditors and borrowers to ensure fairness, Hieu said.

In order to streamline regulations, especially after Resolution 42 expires on December 31, 2023, the SBV has drafted the Law on Credit Institutions (amended) to submit to the National Assembly for comments. The draft Law adds a chapter on handling bad debts and collateral, in order to legislate Resolution 42.

The draft law also legislates a number of provisions in Resolution 42 on piloting bad debt settlement of credit institutions related to the sale of bad debt and collateral; as well as the purchase and sale of bad debts with collateral being land use rights, land-attached assets, and land-attached assets formed in the future.

The addition of these regulations has so far received the support of domestic and foreign banks and business communities.

According to Dr. Chau Dinh Linh from Ho Chi Minh City Banking University, the legalisation of Resolution 42 will create a legal corridor to improve the effectiveness of bad debt settlement.

When Resolution 42 is legalised, it will create a unified and synchronous legal mechanism to help banks handle bad debts faster and more effectively as the current difficulties closely relate to many other laws, such as the Law on Land (amended), the Law on Housing (amended), the Law on Real Estate Business (amended) and the Law on Electronic Transactions.

Nghe An lures 725.4 million USD worth of foreign investment in H1

The central province of Nghe An attracted 725.4 million USD worth of foreign investment in the first half of this year, ranking 8th among the country’s 63 provinces and centrally-run cities, the provincial People's Committee has said. 

During the period, the province licensed eight new foreign-invested projects with a total registered value of 613.8 million USD. 

Among new foreign-invested projects was the first phase of Tho Loc Industrial Zone (IZ), valued at 164.6 million USD and a 100 million USD hi-tech project being financed by Foxconn Interconnect Technology Singapore PTE.LTD in WHA IZ. 

Despite this encouraging performance, the province has yet to attract large-scale projects. Investments in its prioritised sectors such as thermal, agriculture and tourism remained modest, the committee said. 

The province is implementing solutions to attract more investment with a focus on hastening the development of projects in the Southeast Economic Zone and other IZs and improving its ranking of indicators such as the provincial competitiveness index (PCI), the provincial public administration index (PAPI), and the administrative reform index (PAR INDEX).

By the end of 2023, Nghe An will coordinate with developers of Vietnam-Singapore Industrial Park (VSIP) and WHA IZ to call for investment into these zones. It also strives to attract from 100 to 120 projects with a total combined investment capital of about 32 - 35 trillion VND in 2023, of which 500-600 million USD will come from foreign investors.

Vietnam Airlines to host World Safety and Operations Conference

The International Air Transport Association (IATA) announced that the World Safety and Operations Conference (WSOC) will take place in Hanoi from September 19-21, with Vietnam Airlines as the host airline.

Under the theme “Leadership in Action: Driving Safer and More Efficient Operations,” the conference will bring together more than 800 delegates who are representatives from airlines and international organisations worldwide.

“Borders are open, airports are busy, and flights are full. As we rebuild airline networks and balance sheets, it is vital that all aviation stakeholders maintain the same strong commitment to safe operations that we exercised during the pandemic years. The WSOC is the forum to discuss and debate today’s challenges and opportunities to keep the industry on a trajectory of improving safety and more efficient operations,” said IATA’s Director General Willie Walsh.

“Safety is aviation’s highest priority and is the cornerstone of all Vietnam Airlines’ operations and practices. We are excited to be the host airline for this important inaugural conference, bringing together cutting-edge leaders, regulators and a larger global community to address key topics relating to safety and infrastructure to ensure stronger safety operations in the wider industry,” said Le Hong Ha, President and CEO of Vietnam Airlines.

Session tracks will address safety, cabin operations, flight operations and emergency response planning and aircraft recovery, according to IATA.

Vinfast to hold EV factory groundbreaking ceremony in US

VinFast, the subsidiary automaker of Vietnamese conglomerate Vingroup, has announced it will hold a groundbreaking ceremony of its electric vehicle (EV) factory in North Carolina, the US, on July 28.

This will be the first EV manufacturing facility in the state and help contribute to the supply of this kind of vehicles in North America, accelerating the global green mobility revolution.

The facility will be built at the Triangle Innovation Point in Chatham County. Covering an area of approximately 1,800 acres, VinFast's factory is designed to reach a capacity of 150,000 vehicles per year in Phase 1. The factory will consist of two main areas: production and assembly. The complex will also house supplementary supplier businesses.

The project has received basic permits to begin Phase 1 construction. When the manufacturing complex commences operations, VinFast's factory will create an ecosystem of suppliers and help generate thousands of new jobs.

Le Thi Thu Thuy, CEO of VinFast Auto, said that the manufacturing facility in North Carolina is one of VinFast's key projects. When it begins operations, the factory will be VinFast's primary supplier of EVs to the North American market. The company also hopes the construction of the factory in Chatham County will contribute to advancing the clean energy economy in the US and help to support North Carolina's green mobility strategy.

The factory is expected to start production in 2025. Last year, VinFast was awarded a 1.2 billion USD incentive package from the State of North Carolina for this project, along with critical financial support from the City of Sanford, Chatham County, and the Golden Leaf Foundation.

In addition to the factory, VinFast is accelerating its business and brand recognition in the US by expanding its retail store and service centre system, organising local test drives and displaying products events throughout California. These efforts will aid in bringing opportunities for customers to directly experience VinFast's EVs.

Domestic retailers see gradual recovery

Profits of domestic retailers hit their lowest point in the first half of this year, whilst businesses are on the right track to recovery, according to analysts.      

SSI Securities Joint Stock Company forecasts that the companies will see a return to profit growth ahead in the fourth quarter and in 2024 thanks to the acceleration of disbursement of consumer loans and improvements in macro-economic conditions.

The long-term prospects of Vietnamese retailers will depend on their transition from traditional to modern commerce, as well as their capital mobilisation plans, the firm said.

During the first six months, retailers encountered various difficulties, yet experts believed that they have already gone through the hardest period.

Total revenue from retail sales of consumer goods and services increased by 10.9% on-year in the first six month of this year to reach more than VND3.01 quadrillion, equal to US$127 billion, according to the General Statistics Office (GSO).

According to a survey conducted by Infocus, consumer confidence in the nation dropped to 54 points in June from 63 points in July, 2022. The 2023 PwC Consumer Insights Survey in Vietnam also revealed that Vietnamese consumers have drastically adjusted their spending habits, with 62% “holding back” on non-essential spending amid the globally rising cost of living.

However, VNDIRECT Securities Corporation outlined that the market is in the process of recovering with rosy signs ahead for the second half of the year, noting its hope that new orders from major markets will rise over the remaining months of the tear, and that the trend of declining lending rates will continue to boost consumption.

VNDIRECT also believes that the consumption of electronics, particularly home appliances, will experience the strongest growth in the time ahead.

Furthermore, the value-added tax (VAT) has been reduced from 10% to 8% for various essential items such as dry food, beverages, confectionery, and household utensils, a move which is expected to bring about dual benefits as consumers can access items with lower prices, and businesses enjoy additional revenue.

Vietnam and Jordan seek to step up economic - trade cooperation

The Vietnam Trade Office in Saudi Arabia and the Jordan Chamber of Commerce co-hosted a business forum in the Jordanian capital of Amman on July 18 to ramp up economic and trade links and accelerate the export of Vietnamese goods to Jordan.

Addressing the event, Jamal Al - Refaei, first vice president of the Jordan Chamber of Commerce, welcomed the initiative to organize the business forum for the first time, offering a platform to display export products by more than 150 Vietnamese firms.

The Jordan Chamber of Commerce is ready to strengthen connectivity between the two business communities, he affirmed.

In response, Vietnamese Ambassador to Jordan Dang Xuan Dung committed to providing updated information and policies regarding Vietnamese trade and tourism activities to Jordanian businesses. He also suggested some potential areas of joint cooperation between the two business communities.

At the event, representatives from Jordanian enterprises highlighted Vietnamese goods’ design and quality, and said the forum created a wealth of opportunities for them to gain greater insights into the Vietnamese market.

At present, Jordan has high demand for importing agricultural and aquatic products, food, environmentally friendly products, charcoal, agarwood, construction materials, furniture, tiles, and tourism services.

Simultaneously, Jordanian businesses are also keen to promote the export of their advantageous products, such as chemicals, copper, and raw materials for the textile and footwear industry to the Vietnamese market in the coming time.

Commodity exports likely to gather full steam in second half

Vietnam’s commodity exports are expected to show a full recovery moving into the second half of the year thanks to the warming up of the national economy coupled with support measures for manufacturing industries.

According to the Ministry of Industry and Trade, Vietnam raked in more than US$164 billion from exports in the first half of this year, a drop of 12.1% over the same period from 2022. The export turnover of the domestic economic sector decreased by 11.9%, or 0.3% less than the foreign direct investment (FDI) sector’s.

Seven localities that earned more than US$10 billion from exports included Ho Chi Minh City, Bac Ninh, Binh Duong, Thai Nguyen, Hai Phong, Dong Nai, and Bac Giang. With the exception of Bac Giang, the six remaining localities endured a contraction in export growth.

Statistics highlight that Ho Chi Minh City experienced a decrease of more than US$5 billion in export earnings, followed by Bac Ninh with nearly US$4.3 billion, Thai Nguyen with US$4.31 billion, Binh Duong with US$3.35 billion, and Dong Nai with US$2.53 billion.

The first half of the year also saw the national economy only expand by 3.72%, the lowest figure throughout the 2011 to 2022 period except for 2020. Despite efforts, industrial production has yet to fully recover, with the index of industrial production (IIP) of the whole industry decreasing by 1.2%. Indeed, this decline can be seen in the economy’s major hard currency earners such as electronics, garments and textiles, and wood processing.

Experts pointed out that localities had opportunities to reboot their production and exports, although the demand for goods in the main import markets remains low.

Paulo Medas, head of the International Monetary Fund (IMF) 2023 Article IV Mission to Vietnam, said the global economy is decelerating which has duly impacted Asian exporters, with demand from some of Vietnam’s main export markets, including the United States and the EU, falling sharply.

Exports fell by up to 12% in the first half of this year, which took a heavy toll on Vietnamese export businesses, with industrial production being the hardest hit, he said.

Vietnam is an open economy, therefore growth heavily relies on export recovery, along with the two main pillars: investment and the domestic market.

According to information given by international financial institutions, the Vietnamese economy is likely to recover ahead in the second half of this year thanks to export recovery, as well as support measures adopted by the Government, especially the fiscal policy, that will stimulate the economy.

In an attempt to further promote exports, the Ministry of Industry and Trade will host Vietnam International Sourcing 2023 expo, an event to connect international supply chains, in Ho Chi Minh City this September. The function is expected to attract 150 international delegations from 30 countries and territories globally. 

The event will effectively support businesses in their efforts to get more deeply involved in the global production and supply chains, directly export goods into foreign distribution networks, and intensively invest in technology innovation as a means of producing quality and high-value added products, said Vu Ba Phu, director of the Trade Promotion Department under the Ministry of Industry and Trade.

The Ministry of Industry and Trade reported that a series of hypermarkets and foreign retail distributors have made lists to buy food, textiles, shoes, backpacks, sports and outdoor goods, household appliances, and furniture from Vietnamese suppliers.

Large retail firms such as Aeon and Uniqlo of Japan; Walmart, Amazon, Boeing, and AES of the US; Carrefour and Decathlon of France; Central Group of Thailand; and Coppel of Mexico have all confirmed to participate in the expo.

Public space will be lost without green living space: experts

Businesses that recognise their part in mitigating climate change can better recruit and retain employees, and better serve customers and shareholders, experts said.

In a new report about office stock across Asia Pacific, Trang Bùi, country head of Cushman & Wakefield Vietnam, confirmed that public space would be severely lacking or completely lost if developers are only interested in making buildings, without paying attention to creating green living space between buildings and other facilities.

“In recent years, Việt Nam's major cities have made significant progress in urbanisation, but the tight construction density of high-rise office, retail and apartment building projects are crammed on an increasingly narrow land area.

This phenomenon also increases the density of the population concentrated in one area, leading to an overload on infrastructure and a very low ratio of green areas per capita,” she said.

According to the Department of Technical Infrastructure under the Ministry of Construction, the ratio of green trees per person in urban areas of Việt Nam is low, only 2-3 sq.m per person, while the minimum green target of the United Nations is 10 sqm and the norm of modern cities in the world is between 20-25 sqm per person.

The Cushman & Wakefield report has a wider view about office stock in Asia Pacific.

The report said that office stock in Asia Pacific faces a lower risk of obsolescence than that in Europe or North America, but the ongoing flight to quality and growing focus on sustainable buildings could shorten the timeline available for investors and landlords to optimise their assets.

Approximately half of the region’s existing office stock is secondary grade while only 43 per cent of the prime-grade stock has any form of sustainability accreditation. This means that approximately 28 per cent of existing stock meets specifications for top corporate tenants; the remaining 72 per cent will require some form of optimisation to remain relevant.

The Asia Pacific report called “Rethinking the office sector: Optimising your asset for a new era” considers factors including the average age of prime office assets, the percentage of prime stock to total stock within a market, return-to-office rates, sustainability accreditation and employee density benchmarks when weighing up the risk of obsolescence for 10 key markets across Asia Pacific.

It also shows tailwinds for the Asia Pacific market are likely to lessen the risk of obsolescence seen in other regions.

“Asia Pacific’s growth drivers include the creation of almost 15 million new office jobs by 2030, a higher return-to-office rate than other parts of the world, potential de-densification of workspaces and younger office business districts. These factors will provide a buffer against some of the more severe headwinds felt in other regions,” said Dr. Dominic Brown, head of International Research Asia Pacific and the report's author.

“The risk of office obsolescence, or at least the need to reposition assets, is rising across the world. Asia Pacific is currently benefiting from stronger office job creation and GDP forecasts than other regions, but all indicators show a clear and growing occupier preference for higher quality, better amenity stock,” said James Young, head of Investor Services for Asia Pacific and Europe James Young.

“This occupier flight-to-quality has resulted in the top grade of office stock accounting for more than half of the total office demand in Europe every year since 2019; a similar trend is expected to continue driving competition among occupiers for the approximately 30 per cent of sustainability certified, premium office space in Asia Pacific.

Investors who reposition their assets stand to benefit from this growing demand for sustainable, prime-grade stock; those who do not will face diminishing returns.” 

Law needed to ensure banks can repossess collateral on bad debts

It is necessary to create a synchronous and breakthrough legal framework to deal with bad debts in order to achieve more positive results as the work is facing many challenges, according to experts.

According to General Secretary of the Việt Nam Bankers Association Nguyễn Quốc Hùng, Resolution No 42 on piloting bad debt settlement will be extended only until the end of 2023. Therefore, the legalisation of the resolution provisions is absolutely necessary.

Data from the State Bank of Việt Nam (SBV) shows the bad debt ratio of the whole banking system by the end of February 2023 reached 2.91 per cent, a sharp increase compared to 2 per cent at the end of 2022 and nearly doubling compared to the end of 2021.

Total bad debts of the banking system by the end of February 2023 were estimated to account for 5 per cent of total outstanding loans, which was nearly equal to when Resolution 42 came into effect.

In the process of bad debt settlement, a very important issue is seizing collateral, which will become illegal when Resolution 42 expires as at that time it must comply with the provisions of other laws.

Without regulations allowing them to seize collateral under Resolution 42, banks may be afraid to grant credit, affecting the ability to access loans of firms and individuals.

Techcombank senior director of public relations Nguyễn Thị Vân Hoài said the application of measures for collateral plays an important role in banks’ credit activities, ensuring they can recover capital in the event of defaults. It is necessary to have a clear and transparent legal framework to protect the lender and the secured party in cases the borrower is unable to repay or deliberately delays fulfilling the debt repayment obligation.

Dr. Phan Đức Hiếu, member of the National Assembly’s Economic Committee, said there should be special regulations on dealing with bad debts and a mechanism to increase the efficiency of handling the problem.

The law needed to take into account the interests of creditors and borrowers to ensure fairness, Hiếu said.

In order to streamline regulations, especially after Resolution 42 expires on December 31, 2023, the SBV has drafted the Law on Credit Institutions (amended) to submit to the National Assembly for comments. The draft Law adds a chapter on handling bad debts and collateral, in order to legislate Resolution 42.

The draft law also legislates a number of provisions in Resolution 42 on piloting bad debt settlement of credit institutions related to the sale of bad debt and collateral; as well as the purchase and sale of bad debts with collateral being land use rights, land-attached assets, and land-attached assets formed in the future.

The addition of these regulations has so far received the support of domestic and foreign banks and business communities.

According to Dr. Châu Đình Linh from HCM City Banking University, the legalisation of Resolution 42 will create a legal corridor to improve the effectiveness of bad debt settlement.

When Resolution 42 is legalised, it will create a unified and synchronous legal mechanism to help banks handle bad debts faster and more effectively as the current difficulties closely relate to many other laws, such as the Law on Land (amended), the Law on Housing (amended), the Law on Real Estate Business (amended) and the Law on Electronic Transactions. 

Market-based pricing essential to a healthy power market

A conference on the electricity market, organised by the Standing Committee of the National Assembly on Tuesday, emphasised the need for a market-based mechanism for electricity pricing. This move is crucial to restructuring the power market and ensuring energy security.

Deputy Chairman of the National Assembly, Nguyễn Đức Hải, acknowledged issues with electricity pricing policies and the slow progress in developing a competitive energy market. Lê Quang Huy, Chairman of the Committee of Science, Technology and Environment, emphasised the importance of developing the power sector to support socio-economic growth and national energy security.

The pricing policy for electricity plays a central role in attracting investment and achieving sustainable goals, including climate change adaptation.

Nguyễn Đình Phước, head of finance and accounting department of Vietnam Electricity (EVN), said that although average electricity retail prices increased by 3 per cent from April 29, the increase, estimated at VNĐ8 trillion in total, was not enough for EVN to deal with financial difficulties, which would affect the operation of power plants and electricity supply.

Bùi Xuân Hồi, Rector of the North Electricity College, said that unreasonable electricity prices would undermine EVN’s ability to reinvest in expanding the power system and put pressure on the economy.

According to Trần Tuệ Quang, Deputy Director of the Electricity Regulatory Authority of Việt Nam under the Ministry of Industry and Trade, electricity pricing must be market-based to ensure the development of the power market.

Hà Đăng Sơn, Director of the Energy and Green Growth Research Centre, highlighted the need for bold actions in restructuring Việt Nam's power sector to align with the ambitious National Power Development Plan for 2021-2030.

He said that the development of a competitive power market must be accelerated.

The National Load Dispatch Centre would be developed into an independent unit to ensure the operation of the power market with transparency and fairness among parties, he added.

In the short term, the focus should be placed on completing the legal framework for the operation of a competitive retail electricity market.

The mechanism of direct power purchase should be issued to encourage renewable power plants to participate in the power market, he said, adding that this would also create impetus for investment in and use of renewable energies to realise sustainable development goals.

The competitive electricity generation market was piloted in Việt Nam from July 1, 2012 to December 21, 2018 and officially operated from the beginning of 2019.

To implement the competitive electricity retail market following the Prime Minister's Decision No 63/2013/QĐ-TTg dated November 8, 2013, the Ministry of Industry and Trade issued Decision No 2093/QĐ-BCT dated August 7 to approve the design of the competitive electricity retail market model.

Several points of the Law on Electricity were amended and took effect from March 1, 2022, to pave the way for the construction of a competitive electricity retail market. 

Domestic automobile market grows 15 per cent in Q1

Members of the Vietnam Automobile Manufacturers Association (VAMA) sold 23,800 vehicles in June, up 15 per cent from the previous month, VAMA announced on July 12.

Of the sold vehicles, there were 17,334 passenger cars, up 20 per cent; 6,344 commercial vehicles, up 4 per cent; and 122 special-use vehicles, a drop of 17 per cent compared to the previous month.

In terms of vehicle origins, the sales of domestically-assembled automobiles reached 15,488 units, up 28 per cent, while the number of imported completely built-up (CBU) ones was 8,312, down 4 per cent from the previous month.

In the first six months of 2023, VAMA members sold a total of 137,327 units, down 32 per cent compared to the same period last year with the sales of passenger cars, commercial vehicles, and special-use vehicles dropping by 37 per cent, 11 per cent, and 65 per cent, respectively.

According to experts, besides sales by VAMA member units, the Vietnamese auto market also includes other brands such as Audi, Jaguar Land Rover, Mercedes-Benz, Nissan, Subaru, Volkswagen, and Volvo, but they do not disclose business results.

Honda Vietnam also announced that its retail sales of motorcycles and automobiles in June decreased by 6.2 per cent and 19.2 per cent respectively compared to the previous month due to market difficulties.

In June, Honda Vietnam sold 133,777 motorbikes, with 17,475 exported, and 1,419 cars of all kinds, amounting to a decrease of 19.2 per cent against the previous month.

Meanwhile, Thành Công Group (TC Group) on July 12 announced its sales of 5,108 Hyundai automobiles in June, which brought its six-month figures to 28,011 units sold.

In addition, VinFast reported that it handed 2,660 electric cars over to customers in June. So, in the first half of this year, VinFast delivered 11,143 units.

According to experts, since the Government approved the reduction of 50 per cent of the registration fee for new cars manufactured and assembled in Việt Nam from July 1 (corresponding to a reduction of 5-6 per cent of the price with fees/taxes being included), it is forecast that the Vietnamese auto market will prosper in the coming months.

HCM City banks sign up to lend $33.3 million to businesses

Many banks in HCM City have committed to providing loans worth nearly VNĐ793 billion(US$33.3 million) at preferential interest rates to 34 enterprises and business households in the city’s Tân Bình and Tân Phú districts.

The contracts were signed at a conference to link up banks and businesses organised by the State Bank of Vietnam’s city branch and the people’s committees of the two districts in HCM City on July 11.

The conference aimed to provide information about banking policies related to enterprises, co-operatives and business households in the two districts, and help them borrow for their business activities.

Nguyễn Đức Lệnh, deputy director of the SBV’s city branch, said that earlier this year 20 banks registered preferential credit packages worth more than VNĐ453 trillion ($19 billion) for businesses.

As of the end of June they had disbursed more than VNĐ375 trillion ($15.7 billion) to 86,351 customers.

The loans were provided to businesses mainly in exports, agriculture and rural development, supporting industries, high-tech, and small and medium-sized enterprises.

Most of the borrowers use the loans for the designated purpose, ensuring they can repay in time, the SBV said.

Nguyễn Đăng Khoa, deputy general director of Vietbank, one of the banks to sign up at the conference to provide loans, said: “Vietbank always understands the difficulties faced by enterprises in accessing capital.”

From now through August 30, his bank would lend VNĐ1 trillion ($42 million) on preferential terms at interest rates starting at 8.9 per cent, he added. 

Vietnamese goods to better penetrate UK market

When the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has the UK as a new member, more cooperation opportunities will open up for Vietnam and the European country, according to insiders.

With the signing of the protocol on the UK’s accession to the CPTPP last weekend, the number of CPTPP member states has amounted to 12.

The UK's entry is expected to raise the bloc’s gross domestic product (GDP) to nearly 16% of the world’s total from 12%. The CPTPP will be an additional agreement alongside the Free Trade Agreement (FTAs) that the UK is having with most member countries.

According to experts, investment between the UK and CPTPP member states is expected to hike thanks to terms that limit barriers and encourage more internal investment.

As of June, the UK recorded 530 foreign-invested projects worth over 4.26 billion USD in Vietnam, ranking 15th among the 141 countries and territories investing in the country. Last year, the European nation invested in 53 new projects valued at 64.3 million USD in Vietnam.

After the UK-Vietnam FTA officially took effect on May 1, 2021, two-way trade rose to 6.84 billion USD last year, up 3.4% annually.  Of the figure, 6.07 billion USD was Vietnam’s exports to the UK, up 5.2%, resulting in a trade surplus of around 5.3 billion USD, higher than 4.8 billion USD recorded in the previous year.

On the back of the CPTPP, the two countries are seeing ample opportunities to soon achieve the target of 10 billion USD in bilateral trade. The Vietnamese agro-aquatic products, including fruits and vegetables, coffee, cashew nut, are to benefit the most. Several export items to the UK, which have not been granted tax exemptions based on bilateral agreements, will enjoy more favourable taxes under the CPTPP.

Meanwhile, products such as whisky and automobiles, which are among the 99% of the UK’s current exports to CPTPP countries, will qualify for tax exemptions. At the same time, the UK is likely to export more agricultural products, pharmaceutical materials, advanced equipment and technology to Vietnam.

CEO of the UK-based TT Meridian Ltd Thai Tran said Vietnamese farm produce such as durian, pomelo and Cao Phong orange have gradually conquered the UK market.

According to him, the UK has high requirements as it not only pays attention to prices but also environmental, social and governance standards.

Policy breakthrough needed to better attract investment to pharma sector: expert

The lack of a breakthrough in vision and infeasible legal policies, worsened by complicated administrative procedures in pharmacy sector, are among limitations that make Vietnam less attractive to foreign investors, said Duong Thi Mai Hoa, managing partner at Hanoi-based Indusviet Legal LLC.

In her writing publicised on Dau tu ( Investment) newspaper on July 19, she said that since 2015, Vietnam’s pharmaceutical sector has recorded several significant achievements, thus taking its first step in attracting the attention of both prospective domestic and foreign investors as well as major pharma corporations to invest and collaborate with Vietnam.

The domestic pharmaceutical industry is prioritised for development, especially in areas of clinical pharmacy, manufacturing facilities, and related personnel via the promulgation of various policies.

For manufacturing facilities in particular, Vietnam’s pharmaceutical ecosystem is becoming more developed and very strongly linked with the increasing number of manufacturing factories, reaching the number of 250 factories and 200 exporting and/or importing facilities.

Nevertheless, there exist challenges for Vietnam to face, she said.

Over the past few years, especially during the COVID-19 pandemic, countries have paid more attention to health, medicine, and pharmacy with new approaches. As a result, the investment trend into pharmaceuticals in association with technology transfer is taking a clearer shape.

She said that Vietnam has made major strides in establishing policies and amending legislation in an attempt to provide guidance and reinforcement to the development of Vietnam’s pharmaceutical industry.

One of the prominent points is that the global trend of developing technology transfer in the industry is reflected in its contents. Subsequently, it sets out a specific target for technology transfer by 2030 to transfer production technology of at least 100 innovator drugs with valid trademarks, vaccines, medical biologicals, and medicine which Vietnam has not been able to produce.

In practice, investment in pharmaceuticals is also starting to see a transition. At the beginning of 2022, Indian enterprises entered into an MoU on funding Vietnam-India Pharmaceutical Park with Dai An Urban-Industrial Zone Development Corporation in the northern province of Hai Duong.

With a total capital reaching 10-12 billion USD, this project is expected to be a strategic lever to propel Vietnam to become a leading pharmaceutical research, development, and manufacturing institute in Southeast Asia.

Apart from Indian enterprises, a plethora of multinational corporations such as Sanofi and Nipro Pharma are expected to continue pouring money and increasing their presence in Vietnam.

Despite a transition in the legal policies of Vietnam in providing more incentives for better attraction of foreign capital, such policies, nonetheless, prove insufficient in the long run for investors to cope with the complicated or unspecified legal procedures in Vietnam as well as the humbleness of objective aspects on manufacturing facilities, materials, personnel, and policies on domestic drug prices.

Desite the Law on Technology Transfer started taking effects in July 2018, there is yet to exist any provision expressively stipulating the procedures and process of pharma tech transfer in Vietnam.

The Ministry of Health has drafted a circular guiding the activity of drug processing and technology transfer in drug manufacturing as a replacement to a 2013 circular guiding the activity of drug processing. But currently, this circular is yet to be approved, thus effectively leaving a gap in the legal framework.

Hanoi starts work on road connecting Phap Van-Cau Gie expressway with Ring Road 3

Construction started on a road connecting Phap Van–Cau Gie Expressway with Ring Road 3 in Hanoi on July 19.

The route is expected to reduce frequent and serious traffic jams at the southern gateway of the capital city.

Approved by the Prime Minister on January 21, 2020, the project covers a length of 3.4 km and has an investment of over 3.2 trillion VND (135.3 million USD) sourced from the city budget. The project will be implemented in 2025.

Addressing the groundbreaking ceremony, Vice Chairman of the municipal People's Committee Duong Duc Tuan emphasised the necessity and urgent need of the project construction, urging the Hanoi Management Board for Traffic Infrastructure Investment and Construction Projects to closely coordinate with other departments, agencies, and construction contractors to implement the project in accordance with regulations, and strictly comply with standards, processes, and technical regulations.

Vietnamese enterprises make positive contributions to Laos' socio-economic development

Projects with investment from Vietnamese enterprises in Laos are currently operating effectively, thereby creating jobs, increasing incomes for thousands of local workers, and supplementing revenue for the Laos state budget.

In the spirit of great friendship, special solidarity, and comprehensive ties, the Governments of Vietnam and Laos have created the most favourable conditions possile for both nations to enhance economic ties in a more methodical direction.

Many effective investment projects run by Vietnamese enterprises have remarkably contributed to the host nation’s socio-economic development, which has been acknowledged and highly appreciated by the Laotian government.

Star Telecom Company with the Unitel brand name is one of the nation’s main investment projects in Laos, in the form of the most successful joint venture of the Military Industry and Telecoms Group (Viettel).

From the smallest mobile service provider, Unitel has become the leading telecommunications company in Laos with 3.3 million subscribers, duly accounting for up to 57% of market share, thus making Laos one of the countries with the best 4G coverage and speed throughout Southeast Asia, with high-speed Internet accessible to all Laotians.

In addition, Unitel has continuously made positive contributions to the overall socio-economic development of Laos by creating jobs for 27,000 employees, ranking second in the neighbouring country in terms of tax and budget contributions.

Like Star Telecom Company, Lanexang Public Assurance Company was established on the basis of collaboration and capital contribution between Lao Development Bank and Vietnam Post Insurance Corporation.

Over the past 13 years, the company has seen constant development and created a certain position through a network of more than 200 agents spreading across Laos.

Along with business and social activities, the company has also made practical contributions aimed at community development programmes in Laos as a way of preserving the image of the joint ties.

Duong Dinh Bang, chairman of the Vietnam Business Association in Laos, said that co-operation in investment, business, trade, and services of Vietnamese enterprises in Laos over recent years has achieved remarkable results.

Of these, the social security work carried out by Vietnamese enterprises in Laos reached nearly US$73 million, with a particular focus on health care, education, and building houses for the poor in remote areas.

According to Bang, the Laos Government is actively amending the current legal system as a means of improving the local business investment environment.

Numerous agreements between the two countries have been signed, thereby creating a favourable legal corridor for further investment activities of Vietnamese enterprises in Laos.

The ministries and sectors of the two countries, especially the Ministry of Planning and Investment and both nations’ co-operation committees, have supported investment production and business projects by Vietnamese enterprises in Laos, which are gradually stabilizing.

Vietnamese enterprises operate in Laos primarily in the fields of investment, trade, finance - currency - banking, hydropower - mining, petroleum trading, and transportation.

Evaluating the activities of these firms in the Laotian market, Viengsavanh Vilayphone, vice chairman of the Lao-Vietnam Cooperation Committee, said that most of the investment projects in Laos carried out by these companies are effective, creating steady for local workers as a mean of gradually improving the quality of life for local, as well as contributing to the host nation’s socio-economic development.

Over recent times, the Commission has co-operated with the country to solve problems and difficulties of many Vietnamese enterprises investing in Laos.

In 2022, the total trade turnover between both sides reached US$1.703 billion, up 24.1% compared to the previous year.

In particular, the first five months of the year saw bilateral turnover hit US$701.42 million, up 1.57% on-year.

Notably, Vietnamese investment in Laos has made remarkable changes, with the total registered investment capital in 2022 reaching over US$180 million, marking an annual rise of 52.5%.

During the first half of this year alone, with four new projects and two increased capital projects worth US$26.3 million, Vietnam continues to be the third largest investor in the neighbouring country.

Seminar seeks ways to support trademark, GI registration in China

A seminar was held in Hanoi on July 20, aiming to facilitate the registration and management of Vietnamese trademarks and geographical indications (GI) in China.

The event was jointly organised by the Intellectual Property Office of Vietnam (IP Vietnam) under the Ministry of Science and Technology, the Hanoi Department of Science and Technology and the China National Intellectual Property Administration (CNIPA).

Addressing the seminar, IP Vietnam's Deputy General Director Tran Le Hong said great potential of import and export activities between Vietnam and China has resulted in rising demand for enterprises to establish and enforce intellectual property rights in business and commercial activities in China.

However, the number of industrial property registration applications in general and trademark registration in particular by Vietnamese people in China remains modest, he said, adding that the percentage of certificates granted is not high.

He attributed the problem to Vietnamese enterprises' poor awareness of trademark and GI protection in China and their lack of experience in setting up rights in the neighbouring country.

To assist Vietnamese businesses to successfully register trademarks and GIs in export markets, including China, Vietnam is striving to implement many support activities such as negotiating and joining free trade agreements to create a favourable legal corridor for the registration of industrial property rights abroad, devising policies and programmes to facilitate enterprises in developing intellectual property and establish domestic consulting channels.

Nguyen Hong Son, Director of the Hanoi Department of Science and Technology, said that activities to support the building of trademarks for local agricultural products and traditional craft villages are being promoted throughout the city.

Up to now, Hanoi has nearly 100 agricultural products and craft villages that have been protected by collective trademarks and certification. Two products are being appraised for GI protection namely Son Tay chicken and La Tinh pomelo, he noted.

After being protected, many products have received attention of foreign partners thanks to their clear origins, Son said, adding that the seminar offered an opportunity for Hanoi to learn more about intellectual property activities and China's experience with the validation symbols.

At the event, participants discussed issues including experience in effective management and exploitation models of China's trademarks and GIs as well as difficulties enterprises face when registering for trademark protection in the neighbouring country.

Seminar details financial solutions for Vietnamese exporters

The Vietnam Chamber of Commerce and Industry (VCCI) and OLEA Global - a digitised supply chain platform that empowers sustainable trade held a seminar on fintech financing for Vietnam’s exporters on July 20. 

Participants in the seminar focused on exchanging and discussing policies on financial access for businesses, and ways to take advantage of free trade agreements to promote the development of export markets for Vietnamese enterprises.

OLEA also introduced receivables for export businesses on OLEA's technology platform, and insurance in trade finance.

Speaking at the event, VCCI Vice President Bui Trung Nghia said that in Vietnam, banks and financial institutions have had many preferential programmes and credit programmes for exporters. They also provide effective financial solutions in international payments with diversified financial services and support services to help businesses avoid exchange rate risks and gradually improve import and export payment transactions, customers, and market development under fierce competition.

“VCCI is implementing activities to assist businesses in accessing and strengthening financial resources and solutions to meet their needs,” he said.

In the past time, VCCI cooperated with banks, the Small and Medium Enterprise Development Fund, and business-supporting organisations to carry out activities to connect financial institutions with businesses, Nghia said.

Letitia Chau, a representative from OLEA said OLEA is committed to creating the most favourable conditions to help businesses shorten the process of accessing and deploying solutions, quickly have financial resources to supplement their operations, and soon achieve the growth target of this year and following years.

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