The nation's economic growth in the first half of the year was at a rate lower than that targeted in the wake of the COVID-19 pandemic hurting production and business activities. The government is mulling over new solutions to drive the economy forwards, with some international forecasts still proving upbeat.

Based on economic performance in the first five months of this year, the government has just reported to the National Assembly Standing Committee its fresh forecast that the economy’s total GDP in the first six months of this year will be nearly VND4 quadrillion (US$174.4 billion), up about 5.8% year-on-year, or 0.42 percentage points lower than the target of 6.22% as set out in the Resolution No.01/NQ-CP released on January 1 on the key tasks for the implementation of the socioeconomic development plan and state budget estimates for 2021.

The 5.8% rise will also be 0.12 percentage points lower than the government’s updated scenario of 5.92% set out in the first quarter of this year.

However, the 5.8% rate, if accurate, will also be far higher than in the same period last year, when GDP rose merely 1.81% year-on-year, also the lowest six-month rise in the 2011-2020 period.

The government predicted that in the first six months, the agro-forestry-fishery sector will rise 3% year-on-year, which is 0.34 percentage points lower than the target of 3.34% set in Resolution 01 and 0.46 percentage points lower than the updated scenario of 3.46%.

Meanwhile, industrial production will grow 7.85% year-on-year, which is 0.71 percentage points lower than the goal of 8.56% prescribed in Resolution 01 and 0.06 percentage point lower than the updated scenario of 7.91%.

The service sector is projected to increase by about 5% this year, which is 0.33 percentage points lower than the goal of 5.33% in Resolution 01, and also 0.2 percentage points lower than the updated scenario of 5.2%.

Total retail and consumption service revenue is forecast to climb 7.1% year-on-year, but activities related to travel and transportation will continue facing great difficulties caused by COVID-19.

“In addition, businesses’ activities are expected to continue facing difficulties, with the number of newly-established enterprises predicted to rise at a low level, at only 1.6% year-on-year, however the volume of newly-registered capital will soar by 34.8% as compared to the corresponding period of last year,” according to Minister of Planning and Investment Nguyen Chi Dung at a National Assembly Standing Committee meeting organised early this week in Hanoi. “The trend of enterprises withdrawing from the market will likely stay at a relatively high level.”

“The momentum for economic growth in 2021 will come from the industrial-construction sector and the service sector, especially the processing and manufacturing industry, a rise in investment and expansion of trade activities via effectively taking advantage of free trade agreements that have been signed,” Minister Dung said.

According to the General Statistics Office (GSO), in the first five months of this year, more than 59,800 enterprises withdrew from the market, up 23% year-on-year. Most of them operate in the commercial sector.

It is expected that at the first session of the 15th National Assembly in July and August 2021, the legislative body will use the four days to discuss important issues such as reports on socioeconomic development and the state budget in the first half of 2021 and solutions for the same issue for the second half of the year.

In particular, measures to support enterprises will also be debated.

The government proposed strong measures to frequently review all policies aimed to assist the public and enterprises vulnerable to the pandemic as well as those those impeded by cumbersome administrative procedures.

“We must further boost administrative reforms and create the best environment for production and business activities,” stated Prime Minister Pham Minh Chinh.

According to the Ministry of Planning and Investment, the government needs to take the initiative in effectively deploying solutions to support the public and businesses, especially those who lost their jobs and those who work at industrial parks, as well as employers so that they can resume operation immediately after the pandemic is brought under control.

An Asian Development Bank (ADB) study suggests that there has been a huge impact from COVID-19 on the income and poverty levels of Vietnamese households. For example, the impact of the pandemic will reduce household per-capita income on average by 9.8%, and the poorest income group will suffer a 10.2% income drop, while the poverty rate of households in the poorest income quintile will rise by 40%. There will be additional 1.7 million poor people due to the pandemic, and those living in rural, remote and ethnic minority areas will be most severely affected.

The World Bank Group has just released its Global Economic Prospects report for June 2021, forecasting that Vietnam’s economy will grow at a relatively high rate of 6.6% in 2021 and 6.5% next year.

“Vietnam has been successful in containing COVID-19 and has benefitted from fiscal measures supporting public investment and robust foreign direct investment (FDI) inflows,” the report said. “Among the smaller ASEAN countries, only Vietnam has seen output surpassing its pre-pandemic levels. Mobility around retail areas remains subdued, reflecting the continued spread of the virus amid slow progress in vaccination. Consumer spending has therefore been lagging, but industrial output has mostly recovered, helped by a quick rebound of regional goods exports.”

The World Bank Group expects that output in Vietnam will expand by 6.6% on average in 2021 and 2022, resulting in only a small gap between the current forecast of GDP and pre-pandemic projections.

The ADB recently projected that Vietnam’s economic growth will rebound to 6.7% in 2021 and 7% in 2022. The country’s industrial production will rise 9.5% this year, contributing 3.5 percentage points to GDP growth, while the service sector will also increase 6% in 2021, creating 2.3 extra percentage points for economic growth.

The ADB said that Vietnam’s agro-forestry-fishery products will increase strongly in 2021, after reaping US$28.5 billion from exports in the first five months, thanks to growing demand for food and foodstuffs in many nations caused by the negative consequences of the COVID-19 pandemic and a shift in export markets. In addition, there will be a recovery trend in terms of FDI in the global market, and this will have a positive impact on Vietnam’s FDI outlook.

According to the latest Economic Outlook report from Oxford Economics, commissioned by chartered accountancy body Institute of Chartered Accountants in England and Wales and released last week, despite the recent resurgence of COVID-19 cases, Vietnam’s growth outlook remains optimistic and the economy is expected to return to pre-COVID-19 levels by the second quarter of 2021, with GDP forecast to grow at 7.6% in 2021, one of the highest in the region, rebounding strongly by 4.8% in 2021, after contracting by 4.1% in 2020.

“Singapore and Vietnam are expected to continue leading the region in recovery. Despite a resurgence of COVID-19 cases in Vietnam, which has affected its manufacturing sector and export industries, its economy is predicted to rebound swiftly once restrictions are lifted,” the report said.

UK-based Standard Chartered Bank has also freshly projected that Vietnam’s GDP will grow 6.7 and 7.3% in 2021 and 2022, respectively.

“Vietnam’s economic fundamentals remain robust. The country has been one of the world’s best-performing economies during the pandemic. That said, we are closely watching the domestic COVID-19 situation,” said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered, in the bank’s recent Global Research report entitled “Vietnam – Strong performance continues this year”.

Vietnam began vaccinations on March 8, with about one million of the population of 96 million having been inoculated. Wider vaccination rollout is a precondition for a tourism rebound and a sustainable economic recovery, according to Standard Chartered.

The bank’s economists pointed out that trade data has maintained positive momentum.

In the first five months of 2021, Vietnam’s total export-import turnover is estimated to have reached US$262.21 billion, including US$130.94 billion from exports – up 30.7% year-on-year, and US$131.31 billion from imports - up 36.4% year-on-year.

Also, according to the GSO, in the first five months of 2021, about 55,800 enterprises were established, with total registered capital of VND778.3 trillion (US$33.84 billion), employing 412,400 new labourers, up 15.4% in terms of the number of enterprises and a 39.5% rise in registered capital.

If another VND975.1 trillion (US$42.4 billion) registered by 19,100 operational enterprises was included, total capital supplemented into the economy in the period was VND1.753 quadrillion (US$76.2 billion), up 27.5% year-on-year. Furthermore, 22,600 businesses also resumed operations, up 3.9% year-on-year.

Shopee, Tiki, and Lazada to pay tax for their online sellers

E-commerce operators like Shopee, Tiki, and Lazada will need to fulfill tax obligation for their online sellers according to Circular No.40/2021/TT-BTC guiding VAT, PIT ,and tax management for business households and individuals.

E-commerce operators will have to deduct payable tax before transferring sales back to households and individuals selling on e-commerce platforms. The new regulation aims to fight tax loss and evasion for e-commerce activities. Circular 40 will officially take effect on August 1, 2021.

During the transition stage, e-commerce platforms need to supply information of online sellers to tax bodies such as address, email, phone number, goods and services, business revenue, and bank accounts.

E-commerce platforms record around an average of 35 million transactions per day. Despite the booming activities, the legal framework for e-commerce remains incomplete. Over the past few years, tax authorities have made efforts to build mechanisms to identify individuals and organisations that are intentionally dodging their tax obligations, tracing their operations and collecting the arrears.

The new regulation is result of the efforts to tighten tax management of business households and individuals who earn large revenues on e-commerce platforms but are dodging their tax obligation.

The General Department of Taxation will coordinate with e-commerce state management agencies under the Ministry of Industry and Trade and the Ministry of Information and Communications to support e-commerce platforms in declaring and paying taxes for their online sellers.

Risky losses in aviation industry

Amid the pandemic, aviation remains on of the most affected industries with losses and debts continuing throughout the year.

If the pandemic is controlled, it will not be before 2024 that the aviation industry can recover
According to the Ministry of Planning and Investment, the demand for air transport in 2020 decreased by up to 65.9 per cent, with revenues of aviation enterprises decreasing by 61 per cent compared to the previous year.

Around this year's Lunar New Year, the pandemic caused the aviation industry's revenue to decrease by 80 per cent compared to the same period in 2020.

Air transport is forecast to continue to face difficulties in 2021. If the pandemic is controlled, it will not be before 2024 that the aviation industry can recover.

Vietnam Airlines expected a loss of about VND4.8 trillion ($209.3 million) in the first quarter of 2021, and VND10 trillion ($436 million) in the first six months of the year. Currently, Vietnam Airlines' overdue debt amounts to up to VND6.24 trillion ($272 million).

The ministry supposed that this corporation is likely to be on the verge of bankruptcy. Commercial banks have not seen the government's support package of VND12 trillion ($523.24 million), so they do not allow Vietnam Airlines to further disburse funds or grant further credit limits.

Together with Vietnam Airlines, private airlines such as Vietjet and Bamboo Airways have tried to optimise their operations and maintain production and business through the transfer of assets in 2020. However, it is forecasted that they are still facing difficulties in 2021 and are gradually running out of financial resources to support air transport services.

It is estimated that Vietjet has a shortage of about VND10 trillion ($436 million) meant to maintain production and business activities.

The Vietnam Aviation Business Association said that Vietnamese airlines could lose up to VND15 trillion ($654 million) in 2021. Businesses proposed to the government to establish a credit support programme to remedy related issues.

Vietjet proposed to a credit loan of up to VND5 trillion ($218 million) in the 2021-2023 period as well as an interest rate subsidy of about 4 per cent.

Meanwhile, Bamboo Airways proposed a long-term loan of VND5 trillion with a preferential interest rate of 0 per cent and another VND5 trillion for long-term loans from commercial banks with a supportive interest rate.

Ho Chi Minh City proposes 0 per cent unsecured loans for 5,000 tourism businesses

Ho Chi Minh City Department of Tourism proposes to lend more than 5,000 tourism businesses unsecured loans with 0 per cent interest.

Accordingly, the proposal aims to support tourism businesses that are facing difficulties due to the impact of the COVID-19 pandemic, to pay wages to employees. The expected amount is more than VND208.8 trillion ($9.1 billion) to pay salaries for employees for three months.

Ho Chi Minh City has 5,002 tourism businesses in operation, with about 31,500 employees including 552 travel businesses with 12,000 employees and 4,450 tourist accommodation establishments with 19,500 employees.

Furthermore, Ho Chi Minh City Department of Tourism also proposed the city to spend more than VND21.7 billion ($943,480) supporting tourist attractions and museums of relics as public non-business units for five months.

Specifically, there would be free entry to five attractions, including the War Remnants Museum, the City History Museum, the City Museum, the city’s Fine Arts Museum and Historic Relics and the Cu Chi Tunnel complex in the year-end tourist season from August to the end of 2021. Plus, the salaries of employees would be also supported.

Ho Chi Minh City Department of Tourism also proposed considering training human resources for tourism this year, with 20 classes expected with a total amount of about VND1.2 billion ($52,170). 80 per cent of this expenditure comes from the city budget. The participants are managers, tour guides, and workers who directly work at tourist resorts, restaurants, and accommodation.

In addition, the department also proposed extending the period of suspension of payment of retirement and survivorship life insurance, delaying the time of payment of the union’s fund for business and those affected by the pandemic without interest and penalties for late payment.

At the same time, the regulations on unemployment benefits in 2021 are proposed to adjust in the direction of reducing the minimum working time from 12 to three months, increasing the unemployment benefit from 60 to 80 per cent of the average monthly salary paid for voluntary insurance.

Along with that is the proposal to the Ministry of Finance (MoF) to consider reducing the value-added tax from 10 to 5 per cent, prolonging the policy of 15 per cent land rent reduction, extending the reduction of fees for appraisal of travel business licenses and tourist guide cards until the end of this year.

Furthermore, the MoF is proposed to coordinate with the State Bank to study and propose the government to allow travel businesses to reduce their deposit by 80 per cent within two years.

SK Investment Vina raises ownership to 29.2 per cent in Imexpharm

SK Investment Vina III Pte., Ltd. has spent over VND34.5 billion ($1.5 million) to acquire 3.4 million shares of Imexpharm Pharmaceutical JSC to raise its ownership at the firm to 29.22 per cent.

Accordingly, two Vinacapital funds namely VOF Investment Ltd. and Vietnam Ventures Ltd. will transfer 5.18 per cent of its shares to SK Vina III, raising the latter's ownership at IMP from 24.02 to 29.2 per cent.

Following the transfer, the foreign ownership limit at Imexpharm remains unchanged at 49 per cent.

SK Investment Vina III is a member fund of SK Group, which has investments in Masan and Vingroup.

Total net revenue and income in the first five months of 2021 of Imexpharm were VND508.2 billion($22.1 million), which made up 33.2 per cent of the annual plan and was up 11.6 per cent on-year. Net revenue in the first five months reached VND502.2 billion ($21.83 million) and increased by 11.2 per cent compared to the corresponding period of the previous year. Imexpharm products accounted for 97 per cent of its revenue structure. Besides this, revenue from franchising and sales from other products decreased rapidly compared to last year.

Pre-tax profit accumulated until the end of May was VND97.6 billion ($4.24 million) and met 33.7 per cent of the annual target. However, it was up an impressive 26.1 per cent on-year.

The company predicted that in the coming months, sales expenses would slowly increase due to the fourth wave of the pandemic in the northern provinces and Ho Chi Minh City. Therefore, Imexpharm has reviewed sales support and marketing activities to ensure that the company fully obeys the pandemic prevention measures issued by the Ministry of Health and provincial governments.

90% of tourism firms in HCMC suspend operations

Due to the Covid-19 pandemic, 90% of tourism companies in HCMC, including small and medium ones and those specializing in inbound tours, have suspended their operations, according to the HCMC Department of Tourism.

From January 1 last year to March 3 this year, 152 tourism companies had their travel business licenses withdrawn, including 135 international travel ones and 17 domestic travel ones, the local media reported.

Some large private companies have appointed some employees to be on guard at their headquarters, while State-owned ones are operating perfunctorily.

A plunge in the number of tourists has led to a reduction in the number of guest rooms and their prices. As a result, many lodging facilities have reduced the number of employees or even closed temporarily.

In the city, more than half of three-star lodging facilities have suspended their operations. Four- and five-stars ones are operating far below capacity.

In addition, the revenue from lodging services has plummeted 70% against 2019; catering services, 80%; and other services, 68%. The number of laborers in lodging facilities also fell 35% versus 2019.

Providers of tourist transport services are also facing the same fate. Since May last year, their activities dropped 60%-80%. They have sold their vehicles to pay bank loans, maintenance fees and the salaries of drivers.

Some have transported the workers of enterprises and people to centralized quarantine centers.

Therefore, the HCMC Department of Tourism proposed the Government direct the Ministry of Finance to halve the value added tax rate from 10% to 5% in 2021 to reduce the prices of tourism products and services and continue reducing the land rentals for tourism companies this year.

In addition, the Government should ask the Ministry of Labor, Invalids and Social Affairs to consider extending the period to suspend the contribution to the payroll tax for those affected by the pandemic.

Moreover, the minimum working period to be entitled to unemployment allowance should be cut from 12 to three months and the unemployment allowance should be raised from 60% to 80% of the employees’ average monthly salaries subject to the insurance calculation.

The Ministry of Finance should coordinate with the State Bank of Vietnam to propose the Government allow tourism companies to reduce their deposits at banks by 80% to help them maintain their operations.

The HCMC Department of Tourism also proposed the municipal government seek the municipal People’s Council’s approval to use the budget that the city has given to the HCMC Branch of the Vietnam Bank for Social Policies to offer non-collateral loans with no interest for tourism firms facing difficulties.

HCMC currently has more than 5,000 tourism companies with some 31,500 employees. Therefore, the amount needed is nearly VND209 billion.

The department also suggested support policies for public tourist and relic sites and museums to help stimulate the development of the tourism sector after the pandemic is controlled.

Entrance fees to the War Remnants Museum, the Museum of Vietnamese History, the HCMC Museum, the HCMC Museum of Fine Arts and the Cu Chi Tunnels should be exempted from August to the end of this year.

The city has also proposed to pay the salaries of employees and regular expenditures of these five units for five months with a total amount of VND21.7 billion.

The department also expected the municipal government to prioritize Covid-19 vaccines for employees in the tourism sector and speed up the vaccination for all residents to resume tourism activities at the earliest.

In related news, the HCMC Tourism Association on June 15 sent a document to the State Bank of Vietnam, the Ministry of Culture – Sports and Tourism, the HCMC People’s Committee and related units to propose expanding policies to support businesses affected by Covid-19.

Accordingly, Circular 03 of the State Bank of Vietnam needs to be amended and a number of articles of Circular 01 supplemented with more information on rescheduling payments, exemptions and a reduction in the interest and fees.

Commercial banks have considered rescheduling debt payments for another 12 months, but in reality, tourism businesses are having a hard time paying off their debts as the fourth Covid-19 wave is still turning more complicated.

The hardships of the tourism industry, including travel, hospitality, resorts, restaurants and service supply chains have led to a significant impact on other industries such as road transport, aviation, railways and waterways.

Therefore, creating special mechanisms and incentives will help tourism businesses overcome difficulties, while resuming operations will also contribute to creating motivation to revive related industries and fields.

Aviation sector sees long, uneven recovery

During the third wave of the coronavirus in early 2021, the revenue of the aviation sector plummeted by 80% year-on-year due to a sharp decline in cargo and passenger transport, making life tough for the sector if the pandemic is not controlled soon.

Revenue from air transport in 2020 dipped by over 61% against 2019, according to a draft prepared by the Ministry of Planning and Investment.

Due to the complicated development of Covid-19 and passengers’ worries about the risks of infection, the aviation sector is expected to continue a bumpy ride this year as the fourth wave of Covid-19 now is proving more devastating.

If the pandemic is brought under control soon this year, it is not until 2024 that the aviation industry can recover to the way it was before the pandemic, Thanh Nien Online reported.

Vietnam Airlines’ first quarter losses are estimated at VND4.8 trillion and the losses might reach VND10 trillion in the first six months of the year, according to the ministry.

The carrier reported an overdue debt of VND6.24 trillion, moving to the verge of bankruptcy, while commercial banks have refrained from disbursing or lending Vietnam Airlines as they were yet to access the Government’s relief package worth VND12 trillion for the national flag carrier.

As for private airlines such as Bamboo Airlines and Vietjet, the Ministry of Planning and Investment said that in 2020, these airlines managed to optimize their transport activities and maintain their business by transferring assets and financial investment projects. However, the airlines are forecast to face hardships this year as their financial sources are running out.

To rescue the aviation sector, the ministry proposed the Prime Minister direct the State Bank of Vietnam to map out a plan to offer interest rate support of 4 percentage points to the airlines in the 2021-2023 period to help them maintain their operations.

Besides, the ministry also proposed the Government ask the Ministry of Transport to extend the 50% cut in fees for take-off, landing, aircraft navigation and many other flight-related services until the end of 2021.

HCMC pilots seaport fee collection

The HCMC Department of Transport began piloting the collection of fees for using infrastructure facilities and public services at seaport terminals in the city on June 15 before officially beginning the collection from July 1.

Accordingly, the HCMC Inland Waterway Port Authority will use the pilot results to assess the security of the system, the local media reported.

According to the fee collection plan, the collection will be conducted automatically. Fee payers will make declarations of their cargo on the customs agencies’ e-customs clearance systems and then fill in the customs declaration number in the system of the HCMC Inland Waterway Port Authority.

The fees will be publicized to payers and they can use the payment services of commercial banks or e-wallets to pay them.

The fee revenue, after deducting the fee collection costs, will be submitted to the city budget. The municipal Department of Finance will coordinate with the Department of Planning and Investment to propose using the revenue to develop or maintain traffic facilities connecting with seaports, which are proposed annually by the municipal Department of Transport.

The fee revenue in the 2021-2025 period was expected to be some VND16 trillion.

HCMC Trade Dept proposes supporting traders in traditional wet markets

The HCMC Department of Industry and Trade has proposed using the city’s budget to support traders in all traditional wet markets in the city for six months, starting next month, as many of them have closed business due to Covid-19.

Accordingly, the department urged the municipal Department of Planning and Investment to propose the municipal government offer the support depending on the market grade and amounting to half of the maximum stall rentals, the local media reported.

Specifically, traders in 14 grade-1 markets were proposed to be given VND100,000 per square meter of their stalls per month. The amount will be VND70,000 and VND50,000 for traders in 52 grade-2 markets and 168 grade-3 markets, respectively.

The total amount needed was estimated at over VND76 billion.

The support will be offered for traders fulfilling financial obligations to the market management boards and tax obligations to the State in traditional markets invested by both the State budget and private resources.

This is the second time this month the HCMC Department of Industry and Trade has proposed solutions to support traders in markets to overcome the difficulties triggered by the Covid-19 pandemic. On June 8, it suggested supporting traders for three months, from May to August.

Last year, the department also coordinated with the Department of Finance to halve stall rentals for six months, from June to December.

Dragon fruit prices plunge steeply in Mekong Delta provinces

Currently, the prices of dragon fruits in the Mekong Delta have fallen drastically.

In Tien Giang and Long An provinces, high-quality red-flesh dragon fruits fetch only VND6,000-VND7,000 per kilogram, and white-flesh ones are priced below VND4,000 per kg.

As for low-quality, deformed, and over-mature dragon fruits, the price is merely VND1,000-VND2,000 per kg, and traders even refuse to buy them, so dragon fruit farmers have to give them as feed to fish or cattle.

The prices of dragon fruits are low because it has entered the peak harvest season, while the outbreak of the Covid-19 pandemic makes the export of dragon fruits encounter difficulties.

Many enterprises and establishments collecting dragon fruits in Tien Giang Province have closed due to losses.

The Mekong Delta currently has more than 23,000 hectares of dragon fruit plants, concentrated in Long An and Tien Giang provinces, supplying the market with more than 500,000 tons of dragon fruits per year.

MoT proposes reduction of airfreight rates for Bac Giang lychees

The Ministry of Transport (MoT) yesterday proposed Vietnamese airlines including Vietnam Airlines, Pacific Airlines, Vietjet Air, Bamboo Airways and Vietravel Airlines to consider the reduction of airfreight rates for Thieu lychees from Bac Giang Province.

Accordingly, agricultural products in general and lychee in particular are transported by air customers in the Southern region to ensure the quality and safety of the products.

However, current airfreight rates are still high and the number of cargo transported by air does not meet the great consumption demand of customers. For this reason, the Ministry of Transport required the Vietnamese airlines to cut airfreight rates for Thieu lychees from Bac Giang Province to the Southern region following the suggestion of the People’s Committee of Bac Giang Province.

Flexible monetary policy in response to coronavirus crisis 

The Government has earmarked VND14.5 trillion (US$631.8 million) for the purchase of Covid-19 vaccines.
The flexible management of fiscal policy, especially in payment deferral and waiver of taxes and fees for the first five-month period, has been a useful instrument in helping the businesses and people cope with Covid-19 impacts.

Minister of Finance Ho Duc Phoc made the statement in a meeting of the National Assembly’s Standing Committee on June 15.

In the January-May period, the Vietnamese Government has extended the payment deadline for taxes and land rental fees worth VND21 trillion (US$915.6 million), while around VND2.46 trillion (US$107.1 million) in taxes and fees were exempted or reduced to support production and business activities.

“The government has been actively managing the budget to ensure sufficient fund allocation for the Covid-19 fight, as well as the general elections held in May,” Phoc added.

According to Phoc, in 2020, nearly VND21.1 trillion (US$919.4 million) from the State budget has been spent to aid the Covid-19 prevention and control efforts, while VND14.5 trillion (US$631.8 million) was earmarked for Covid-19 vaccines purchase.

Despite the severe Covid-19 impacts, State budget revenue in the first half of this year is expected to reach 55.5% of the estimate, up 11% year-on-year and around the same level of 2019, while budget expenditure would be around 34.15% of the plan.

While there has been progressed in State budget management, Phoc acknowledged current shortcomings, including the low budget collection from the ongoing privatization process of State-owned enterprises, along with growing tax evasion and tax losses from online businesses.

The disbursement rate of public funds in the five-month period remained low compared to the plan, including the modest disbursement rate of projects financed by ODA funds at 2.97%, indicating “public investment has not been serving as a driving force for economic growth,” Phoc suggested.

A clear roadmap for the Covid-19 vaccination program required

For the last half of the year, Minister Phoc expected growing risks and challenges for the economy amid growing uncertainties surrounding the Covid-19 situation.

“High inflationary pressure, natural disasters, and the modest contribution from the private sector to growth compared to their foreign peers are among issues that put pressure on the State budget,” he added.

“Failure to soon contain the pandemic would cause major impacts on economic activities and state budget,” Phoc stressed.

During this context, Phoc called for the Government to continue pursuing the twin goal of both containing the pandemic and boosting economic recovery.

At the meeting, Vice Chairman of the Finance-Budget Committee under the National Assembly Dinh Van Nha suggested the Government continue drafting new policies to support the people and business community affected by the pandemic.

“Drastic measures are needed to put the pandemic under control, including a clear roadmap for vaccination program to achieve herd immunity,” said Nha.

Green growth planning set for tourism sector

The Prime Minister has approved a task on planning the tourism system for 2021 – 2030 with a vision to 2045, which aims at a sustainable development toward green growth, harmony between tourism development and conservation; environmental protection; climate change adaptation; and ensuring national defence-security.

The task will set goals to clarify growth orientations for national tourism sites and areas with tourism potential; manage the development of the sector and build middle- and long-term plans and programmes for it, and lay basis for the mobilisation of social resources for such development, among other matters.

Solutions to achieve these targets include those related to the promotion of products and market; businesses; human resources; trans-sector and regional cooperation; investment; policies; environment protection; and community engagement.

The Ministry of Culture, Sports and Tourism is assigned to undertake the task in line with the law./.

Squid, octopus exports to China remain on the rise

Vietnam has recorded continual growth in squid and octopus exports to China over the last three years, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Shipments of these commodities to China last year rose by nearly 61 percent from 2019 and by 21 percent year on year in the first four months of 2021 to more than 9.7 million USD.

Thanks to the COVID-19 pandemic partly contained in China, this country has gradually eased restrictions, helping to recover demand for mollusc imports, VASEP said, noting that squid and octopus products remain one of Vietnam’s key aquatic exports to the neighbouring market.

Vietnam shipped almost 3.3 billion USD worth of aquatic products abroad in the first five months of 2021, up 14 percent year on year.

Up to 60 percent, or nearly 2 billion USD, of the revenue was contributed by the 13 Mekong Delta localities while six others in the southeastern region made up 18 percent, 602 million USD, VASEP reported.

Between January and May, overall agricultural exports to China posted impressive growth with shipments of some produce even matching or surpassing the corresponding figures for the entire 2020, according to the Plant Protection Department under the Ministry of Agriculture and Rural Development.

In particular, Vietnam shipped over 468,000 tonnes of mango to this market, equivalent to 112 percent of last year’s figure; 348,000 tonnes of banana, 87 percent; 301,000 tonnes of jackfruit, 92 percent; and 1.1 million tonnes of dragon fruit, 63 percent.

Hoang Trung, Director of the Plant Protection Department, said China has long been the main importer of farm produce from Vietnam, and it will remain the largest buyer of Vietnamese agro-forestry-fishery products in the time to come./.

Industrial, trade growth trend sustained despite COVID-19: official

Industrial and trading activities of Vietnam have sustained their growth trend although the COVID-19 resurgence has hit some provinces and cities with large industrial parks, Deputy Minister of Industry and Trade Do Thang Hai said on June 17.

Speaking at the ministry’s regular press meeting for the second quarter, he added exports have maintained high year-on-year growth, which is relatively sustainable thanks to the even growth in shipments of all the important commodities such as electronics, textile-garment, footwear, machinery, and farm produce, and to major markets like the US, China, the EU, the Republic of Korea, Japan, and ASEAN.

Regarding problems in industrial and trading activities, Hai said COVID-19 outbreaks in large industrial parks have had certain impacts on industrial production growth as well as supply chains.

Besides, the import of production materials accounts for a “very big” proportion, about 90 percent, thus pushing up the import value and affecting the trade balance.

Lockdowns or social distancing measures driven by coronavirus outbreaks in some localities have also eroded consumption demand, especially for non-essential goods, which has influenced retail sales, according to the official.

So far, he said, industries and trade have basically developed as planned, with total retail sales achieving about 38 percent of this year’s target and exports over 44 percent.

The increase in index of industrial production is currently higher than expected, rising by 9.9 percent in the first five months compared to the targeted 8 percent. The figure is forecast to maintain at some 9 percent in the first half of 2021, compared to the 8-percent target for the whole year.

Exports are set to increase by about 21.7 percent while total retail sales and service revenue 7.1 percent during January - June, compared to the year’s respective targets of 4 - 5 percent and 8 percent.

The industry and trade sector will keep making efforts to achieve its growth targets as well as those of the country, the Deputy Minister said.

Particularly, the ministry will continue working to promote overseas shipments, diversify both export and import markets, optimise opportunities generated by free trade agreements, and remove barriers to enter new markets./.

Vietnam-Laos trade posts growth in first five months

Vietnam-Laos trade expanded in the first five months of 2021 after a decline triggered by COVID-19, according to the Vietnamese Trade Office in Laos.

The figure surpassed 570 million USD in the period, a year-on-year rise of 25 percent. Exports hit over 280 million USD, up 23.6 percent.

In May alone, two-way trade hit 113 million USD, surging 56.7 percent against the same period last year. Import turnover reported growth of 83.8 percent.

Vietnam’s major exports included machinery, equipment, tools and spare parts in excess of 13.4 million USD; ceramics worth over 1 million USD; and garment-textile about 900,000 USD.

The country also shipped iron and steel products nearing 6.8 million USD and petrol and oil worth 1.9 million USD to its neighbour.

Meanwhile, Vietnam imported close to 10.3 million USD worth of timber and wooden products from Laos, along with ores and minerals, and rubber.

Trade Counsellor at the Embassy of Vietnam in Laos Le Thi Phuong Hoa said that the bilateral trade is projected to marginally rise next month as the countries are striving to curb the spread of COVID-19.

To support businesses, the trade office has devised a list of firms wishing to promote their products in Laos, helped them seek distributors and address bottlenecks in freight transportation, she added./. 

EPC contract signed for power plant in Quang Binh

A contract on a bidding package worth 30 trillion VND (nearly 1.29 billion USD) on engineering, procurement and construction (EPC) of the Quang Trach 1 thermal power plant in the central province of Quang Binh was signed in Hanoi on June 17.

The signatories are the Electricity of Vietnam (EVN), and a consortium of contractors comprising Japan's Mitsubishi Corp, Hyundai Engineering and Construction Company (HEC) of the Republic of Korea (RoK), and Construction Corporation No.1 of Vietnam.

The construction of the project, which has a total investment of over 41.1 trillion VND (nearly 1.79 billion USD), is expected to begin in the third quarter of this year, and complete in 2025. It will cover an area of 48.6 ha in Quang Trach district’s Quang Dong commune.

The plant, which has two turbines with a combined design capacity of 1,200 MW, is expected to supply about 8.4 billion kWh of electricity to the national grid per year, contributing to ensuring national energy security.

The plant will use the ultra-supercritical coal combustion technology (USC), and be equipped with synchronous treatment systems of wastewater and exhaust gas, and dust filtration systems, in line with Vietnam’s environment standards./. 

PV GAS receives first LPG batch from Saudi Aramco

The PetroVietnam Gas Trading Company (PV GAS Trading) received a batch of 46,000 tonnes of refrigerated liquefied petroleum gas (LPG) from Saudi Aramco in early June, making it the first direct customer of the Saudi Arabian public petroleum and natural gas company in Vietnam.

The batch worth some 560 billion VND (24.06 million USD) resulted from a decade of exchanging, seeking opportunities, and building trust for cooperation between the sides.

Most of the imported LPG will be used for domestic consumption, with a fraction of its earmarked for export.

Established for nearly 15 years, PV Gas Trading now supplies close to and more than 70 percent of the Vietnamese and Cambodian markets’ demand for LPG, respectively.

In 2020, its international sales of LPG exceeded 300,000 tonnes.

Based in Dhahran, Saudi Aramco owns the second largest crude oil reserve in the world and is also the largest LPG producer and supplier in the Middle East with about 27 million tonnes of output. Its export volume is estimated at 8 million tonnes, mostly to the Asian market./.

Ha Noi promotes consumption of farming products amid COVID-19

Ha Noi’s Department of Agriculture and Rural Development has been supporting farmers, cooperatives, and enterprises to promote the consumption of farming products via modern distribution channels in the context of the COVID-19 pandemic.

Deputy director of the department Nguyen Ngoc Son said that, to expand the agricultural product market, the department has strengthened the connection between Ha Noi and other provinces and cities in consuming safe agricultural products.

Of which, it has cooperated with Ha Noi Department of Industry and Trade to support localities’ trade promotion activities in the capital city to increase the consumption of agricultural and seafood products.

“Besides that, the department has also organised direct connection activities among manufacturers - distributors - consumers in the city, and launched the website https://chonhaminh.gov.vn to promote connections on the e-commerce platform,” Son said.

“Ha Noi has also supported businesses in building and advertising their brands of agricultural products to promote consumption via supermarkets, food chains, restaurants, and hotels."

Specifically, the department has connected with supermarket chains, such as Central Group, MM Mega Market, Vinmart and BRG, to consume more than 130 tonnes of Chi Linh chicken of Hai Duong Province; 56,000 tonnes of mango and 98,000 tonnes of longan of Son La Province; 12,000 tonnes of vegetables, fruits and seafood products of Hai Duong, Quang Ninh and Ha Giang provinces, and Vinh Chau purple onions of Soc Trang Province.

The first-ever livestream promoting products of Ha Noi’s “One Commune, One Product” (OCOP) programme was held early this month by the Hanoi Coordination Office for New-style Rural Area Building together with the ASEAN Digital Conversion Research Institute (ASEAN Academy).

This event aimed to support stakeholders in the production, sale and marketing of OCOP products through digital technologies and e-commerce platforms, especially against the backdrop of COVID-19.

Nguyen Van Chi, standing deputy chief of the Coordination Office for the New Rural Development Programme in Ha Noi, said: "Ha Noi considers livestreaming one of the effective solutions to promote online consumption of agricultural products, especially OCOP products and regional specialities."

Dang Thi Cuoi, director of the Cuoi Quy Hi-tech Organic Vegetable Cooperative in Dan Phuong District, Ha Noi, said that due to the impact of the COVID-19, collective kitchens and restaurants must close while foreigners to Viet Nam are also limited, so it is difficult for her cooperative to sell vegetables. However, with online trading channels, the cooperative has stability in vegetable consumption with an average volume of 200-300 kilos of vegetables per day.

According to Dao Thi Luong, director of the Tam Anh Cooperative for Production and Trading of organic vegetables and fruits in Phu Xuyen District, Ha Noi, with the support from the Ha Noi Women’s Union, the cooperative has sold 200 kilos of vegetables every day. Along with that, the cooperative has been promoting online trading activities, especially on Facebook.

Director of the Ha Noi Department of Agriculture and Rural Development Chu Phu My said that the department will continue to coordinate with the Ha Noi Department of Industry and Trade and the Ha Noi Trade and Investment Promotion Centre to promote the implementation of a programme on regional cooperation, and support consumption between Ha Noi and other provinces and cities.

This programme includes support in introducing farming products and connecting Ha Noi and other provinces and cities to promote the consumption of those products, especially products facing oversupply in harvest seasons.

It will support connections between domestic and joint venture enterprises with foreign partners abroad in the distribution and processing of those products, and encourage the businesses to develop e-commerce platforms and apply information technology in consumption activities. 

Viet Nam’s digital economy presents chances for investors, start-ups

Viet Nam’s digital economy has been steadily growing, presenting multiple opportunities for investors, start-ups, and businesses alike, according to an article on techwireasia.com.

In recent years, the Southeast Asian region has been seeing rapid and sustained efforts and investment into various digital economy initiatives by both the public and private sectors. Tech giants have been creating waves, most recently the Tokopedia-Gojek merger, and earlier, Grab pushing for a US listing with a valuation of over US$40 billion.

Estimates by Google, Temasek, and Bain & Co predicted that the Vietnamese sector could grow to $52 billion by 2025, which comes up to about a sixth of the massive $300 billion regional digital economy pie.

Backed by a stable political climate, progressive economic policies, and sustained growth, a lucrative opportunity exists for both local players and investors alike to tap into Viet Nam’s potential for economic greatness, the article said.

Opportunities include e-commerce services, digital finance, online gaming, and tech-enabled services to power Industry 4.0 progress. Like its ASEAN peers, a majority of Vietnamese residents remain underbanked, making digital financial services a highly attractive option for loans and payments.

In 2015, the Vietnamese Government announced a ten-year plan for a broad digital transformation of the country, with an ambitious plan to produce 10 start-up unicorns (valued at over $1 billion) apiece by 2030.

Aiming to incorporate at least 10 per cent of digital adoption across all sectors and Internet penetration of 80 per cent for all households, the plan appears to be on track.

Southeast Asia’s largest unicorn, Grab, has been investing heavily in accelerators for start-ups around the region from as early as 2018. Collaborating with both private and public players, Grab has been attracting start-ups intending to scale via mentorship opportunities, access to Grab’s customer bases, and even potential direct investment.

In 2020, the decacorn (start-ups valued over $10 billion) recognised the potential of Viet Nam’s digital economy and launched an accelerator for early-stage start-ups. Under their Grab Ventures Ignite accelerator programme, five winners emerged, who won over $1 million in investment and in-kind prizes from Grab and its programme partners. They span the breadth of fields such as retail, insurance, logistics, and communications, the article said. 

An Giang Province seeks to foster cross-border exports

The Cuu Long (Mekong) Delta province of An Giang targets increasing trade through border gates by 15 per cent in 2021-25 from the previous five years to US$9 billion.

Tran Anh Thu, deputy chairman of the province People’s Committee, said border trade infrastructure would be improved along with the circulation of goods, regional linkages and international integration. He said this would hopefully turn the An Giang border economic zone into one of the country’s eight key ones.

Authorities will also implement tax and fee measures to help businesses revive and resolve tax-related difficulties.

The province has called on customs authorities to pay special attention to clearing goods, specialised supervision and combating smuggling and trade fraud, especially of conditional import goods, independent shipments and temporary imports for re-export and temporary exports for re-import, according to the People’s Committee.

Thu also emphasised the importance of communication to raise public awareness about the dangers of smuggling and illegal cross-border trafficking of goods and to urge people not to assist illegal acts.

Under the plan, An Giang will invest more in infrastructure, solicit investments and implement its co-operation agreements on border trade with Cambodia’s Takeo and Kandal provinces.

An Giang shares a border of nearly 100km with Cambodia and has two international and national border gates each. 

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes

VIETNAM BUSINESS NEWS JUNE 18

Vietnam’s digital economy presents chances for investors, start-ups