SBV extends debt restructuring policy till year-end

The State Bank of Vietnam (SBV) has announced a six-month extension of its debt restructuring policy, keeping debt classifications unchanged until the end of this year, instead of expiring on June 30.

Circular 06/2024/TT-NHNN, introduced on June 18, revises and supplements Circular 02/2023/TT-NHNN on debt restructuring and debt classifications. This extension aims to support clients facing financial difficulties.

The SBV’s extension of the policy on debt restructuring and debt classifications outlined in Circular 02 will remain in force until December 31, 2024.

The central bank has told credit institutions to swiftly support clients in overcoming obstacles during the execution of Circular 06.

As of June 14, 2024, credit had expanded by 3.79% against the end of 2023, showed SBV data. The credit growth rate has been improving over the months, with a higher volume of credit supplied to the economy in the first six months of this year compared to the previous three years.

Vietnam represents priority partner of Brazil in Asia

The country is Brazil’s priority partner in Asia, Vice President and Minister of Development, Industry, Trade and Services of Brazil Geraldo Alckmin said during a recent working session held with Vietnamese Ambassador to Brazil Bui Van Nghi in Brasilia.

The Brazilian Vice President expressed his positive impression of the Vietnamese growth rate and international economic integration as it has joined 16 free trade agreements (FTAs).

Vietnam is currently an attractive economic, trade, and tourism destination, he said, adding that the country connects supply chains, semiconductor production, and logistics services.

He therefore suggested operating a direct route linking Brazil and Vietnam, thereby further contributing to promoting tourism and trade exchange with Southeast Asia.

Brazil is also interested in promoting co-operation in science and technology, innovation, and high technology, especially in the semiconductor industry and clean, renewable energy, Alckmin said.

For his part, Ambassador Nghi emphasized that in addition to the fine political and diplomatic relations that exists, economic and trade ties between both sides continue to grow strongly. Indeed, Brazil is the largest Vietnamese trading partner in Latin America and second in America, behind only the US. Meanwhile, Vietnam is Brazil's leading trading partner in ASEAN.

According to data compiled by the General Department of Vietnam Customs, trade between the two nations reached US$7.11 billion, of which Vietnamese imports stood at US$4.7 billion.

The past five months of this year witnessed Vietnamese export turnover to Brazil reach US$1.14 billion, up 1.48% over the same period from last year. The nation's key export items to Brazil included phones and components, vehicles and spare parts, and computers and electronic products.

Ambassador Nghi hailed Brazilian aviation technology, including Embraer's narrow-body aircraft, which is suitable to meeting the needs of Vietnamese air transport and tourism development.

Accelerated green economy transition efforts needed for 2024 GDP target

Việt Nam’s 2024 economic growth target of 6.5 per cent is challenging, with weak consumption demand and exchange rate risks, so signals a pressing need for hastening energy transition towards a green economy, a conference to launch the Việt Nam Annual Economic Report 2024 heard.

The conference was hosted by the VNU University of Economics and Business (UEB) on Thursday in Hà Nội.

Researchers project a baseline GDP growth of 5.85 per cent this year and inflation at 4.5 per cent, with the possibility of a devaluation of the Vietnamese đồng of around 5-6 per cent, if public spending meets all its targets and foreign direct investment does not see any unusual developments in the second half of the year.

If economic polices are adjusted, such as reducing interest rates and exports remain robust and there is increased public investment spending, the GDP growth is expected to hit 6.01 per cent.

“The Vietnamese economy is operating at a level below its potential in both scenarios,” Nguyễn Quốc Việt, Deputy Director of the UEB’s Việt Nam Institute for Economics and Policy Research (VEPR) said.

He added that over the short term, the focus should continue to be on fiscal policy to stimulus demand, especially speeding up the disbursement of public investment in the remaining months.

The policy of the two per cent reduction of value added tax should be extended to the end of the year and possibly even to June 2025, together with bigger reduction to promote consumption.

In addition, it is necessary to develop more credit packages to encourage investments in sustainable production and business, accelerate digital transformation, promote science and technology application, he added.

Nguyễn Anh Thu, VNU-UEB’s Vice Rector said that in the long term, Việt Nam must improve its national digital transformation strategy and accelerate factors which create real added value for the digital economy such as in the software industries and in e-commerce and innovation.

The social housing development model should also be improved, Thu said, adding that establishing State-owned enterprises in charge of developing social housing projects should be put into consideration.

It is necessary to develop feasible policies to encourage investment, especially private investment to promote growth and support enterprises overcome difficulties.

Thu added Việt Nam also needs to raise policies to improve labour productivity and competitiveness of industries and the national economy.

Việt Nam’s net zero ambition and the pressure from stringent standards of developed markets is requiring a faster energy transition towards a green economy in Việt Nam, posing not only challenges but also opportunities for it to strengthen economic restructuring, enhance competitiveness and promote investment and trade cooperation, researchers said.

Researchers pointed out that Việt Nam is exploiting, almost to the limits, domestic fossil resources and has to import more coal and gas, making the country a net-energy importer.

The electricity infrastructure development and integration of renewable energy into the national grid remain major challenges.

Investing in renewable energy to reduce the dependence of fossil fuels becomes vital, researchers said, quoting the Việt Nam Energy Association warning about energy uncertainty over coming years, when demand is forecast to increase by around 8.5 per cent annually.

Incentive policies and appropriate financial mechanisms should be raised to attract investments from both private and international sectors into renewable energy development in Việt Nam. Smart grid development is an important factor to ensure the efficiency of renewable energy management and stability of energy supply.

Việt Nam also needs to invest in energy storage technology and improving transmission capacity as well as developing new energies such as hydro and e-fuels, while energy savings need to be promoted nationwide.

Researchers cited findings of the World Economic Forum that Việt Nam is not yet completely ready for energy transition due to barriers such as the absence of technical standards, limitations in capital raising, uncertainty in tax incentives and electricity pricing mechanisms.

Thus, the Vietnamese Government needs to increase communication to improve the community’s awareness about efficient use of energy.

Support policies in terms of credit and taxes should be raised to encourage investments in renewable energy together with the development of a consistent and clear legal framework for the generation, distribution and use of renewable energy sources.

Enterprises should cooperate to share renewable energy infrastructures, such as developing common solar power stations in industrial zones to lower costs.

Researchers also urged the development of a competitive electricity retail market to be sped up with an appropriate roadmap.

It is necessary to reform electricity pricing mechanisms towards a market-based to ensure transparency.

A proper roadmap must be developed to gradually enable different groups of customers to participate in the competitive electricity retail markets. 

The capital city sets a target of creating 10,000 digital technology businesses by 2025

The Hà Nội People's Committee has approved a plan to develop Vietnamese digital technology enterprises in Hà Nội until 2025, with an ambitious target of at least ten thousand technology companies working by next year.

The decision, to grow and promote Vietnamese digital technology enterprises, came with the Prime Minister approving the National Digital Transformation Programme to 2025 and onwards to 2030.

Hà Nội aims to form 10,000 digital technology businesses by 2025 and in tandem, form ten groups of digital technology products as key industrial markers.

In addition, the city wants to incubate ten innovative digital technology start-ups, capable of providing digital technology products and services to the market to serve as the core for a digital government, a digital economy and the digital society.

Hà Nội City will focus on a number of key groups of solutions and tasks.

Specifically, under Directive No 01/CT-TTg the capital city will promote information and communications, expand and promulgate appropriate mechanisms and policies, develop a digital infrastructure, promote scientific and technological research and create a market for digital businesses.

The highlight will be the soon to be launched 'Ha Noi-S' application providing many utilities for people and businesses.

A number of practical applications will come under that system, such as connecting electronic health records.

Ministries and localities to look into delays paying out the multi billion social housing package

The Government has directed ministries and local authorities to conduct a study into the delays in disbursing the VNĐ120 trillion (US$4.7 billion) credit package for social housing and how to address them.

The Government has reaffirmed its commitment to supporting the country's real estate market with the continuation of various exemptions, reductions and extensions for tax, fees, charges and other land use expenses.

Key priorities identified by the Government included issues related to value-added tax refunds, fire prevention and control and traceability of ownership.

The Government's key focus is to promote the disbursement of public investment capital, as a driver to guide private investment and public-private partnerships. It has set a target to pay out more than 95 per cent of the money available.

It has called for stronger development of key economic sectors, growth in advantageous service sectors and the wider application of technology.

Meanwhile, the aviation sector will continue as a main beneficiary of various government support policies to ensure the sector maintains its flight routes and number of aircraft without increasing prices, limiting people's ability to move and hindering domestic tourism.

In an earlier development, the Government said it will aim for a higher GDP growth this year within the 6.0-6.5 per cent range, while keeping the CPI growth rate low in the 4.0-4.5 per cent range. 

Vietnam, Algeria step up trade-investment cooperation

The potential for Vietnam and Algeria’s Boumerdes province to bolster their economic-trade cooperation was spotlighted at a workshop held in the Algerian locality on June 20.

Vietnamese trade counsellor Hoang Duc Nhuan briefed the participants on the country’s economy and foreign trade as well as its trade-investment ties with Algeria.

He invited Algerian enterprises to several trade events this year such as the Vietnam Food Expo and Vietnam Expo in Ho Chi Minh City, and introduced them to prestigious Vietnamese exporters.

According to the General Department of Vietnam Customs’ statistics, the 2023 two-way trade surged 68% year-on-year to some 250 million USD.

Meanwhile, President of the chamber of commerce and industry of Boumerdes province Charef Rabah said that the locality, boasting many industrial parks that house more than 14,800 enterprises, is an important trade and industry pole of Algeria.

The province is renowned for honey, olive oil, and cheese, he said, highlighting several local firms are importing coffee from Vietnam and exporting chicken legs to the country.

He also said that the locality holds huge potential to develop agriculture and tourism, and has benefitted from its 1.3-billion-USD development programme with 653 projects on healthcare, public facilities, sports, education, housing, agriculture and tourism, among others.

A representative from the local department of investment highlighted Algeria’s investment law adopted in 2022, including improvement in investment climate, rational conditions to promote innovation, stable legal investment framework, and practical approach for the settlement of foreign direct investments.

The Boumerdes administration called on the Vietnamese firms to land investment in the locality, and committed to creating favourable conditions for foreign investors with various tax and industrial land lease inentives.

Enterprises from the province said they want to directly buy coffee, parboiled rice, soybean and corn from, and sell olive oil, dried fig, margarine, sauces, and cosmetics to the country.

They also hope to seek partners in such the areas as electronic product assembly, aquaculture and animal food production./.

Vietnamese businesses in Indonesia collaborate for development

The Vietnamese Business Association and the Vietnamese Embassy in Indonesia jointly organised a business forum in Jakarta on June 20,

The hybrid event brought together more than 30 Vietnamese companies operating in Indonesia, including Yeu Saigon, Dien May Xanh and Vingroup.

In his opening remarks, Vietnamese Ambassador Ta Van Thong highlighted the booming economic and trade cooperation between Vietnam and Indonesia, alongside the extensive and effective development of their ties.

The ambassador affirmed that the embassy is ready to provide maximum support to Vietnamese businesses in Indonesia, creating the most favourable conditions for their operations and growth, helping to boost trade cooperation between the two countries, especially in potential areas such as green economy, logistics, digital economy, electric vehicles and halal food.

Participating companies shared their experience, success stories and ways to overcome obstacles, as well as challenges and opportunities in the Indonesian market.

Through the forum, many companies have made contacts, pledging to support each other, supply or use each other's products and services, contributing to the creation of a strong Vietnamese business ecosystem in Indonesia.

Dao Quy Phi, a representative of Vingroup Xanh SM Indonesia, said that Indonesia is a large market with a population almost three times higher than that of Vietnam, which his group considers a key market.

He went on to say that their main difficulties in entering the market come from regulations, particularly those relating to electric vehicles.

Indonesia is Vietnam's third largest trading partner, and Vietnam is Indonesia's fourth largest in the Association of Southeast Asian Nations (ASEAN). Their bilateral trade in 2023 amounted to nearly 14 billion USD, which is expected to hit 18 billion USD by 2028./.

Malaysian hospital group IHH weighs entry into Indonesia and Vietnam

Malaysia's IHH Healthcare, one of the largest hospital groups in Asia, is looking at opportunities to enter the Indonesian and Vietnamese markets through acquisitions as its existing markets become more saturated, according to Japanese news service Nikkei Asia

Prem Kumar Nair, CEO of the IHH Healthcare, said that there are "still a lot of opportunities" in the company's existing markets. However, countries such as Malaysia could reach a "saturation point" over the next five to 10 years, a factor in pushing the company to enter newer, growing markets.

The company boasts a capacity of over 12,000 beds in its hospitals across 10 markets, including Malaysia, Singapore, India, and Turkey.

Its hospitals include some of Southeast Asia's most prestigious names, such as Mount Elizabeth in Singapore and Gleneagles in Malaysia. In India, the company acquired Fortis, the country's second-largest player, back in 2018.

In the Vietnamese market, IHH's Singapore unit recently signed a memorandum of understanding with FPT Long Chau, a local pharmaceutical chain, aimed at further developing health care services in the country.

Competitors are already entering the nation through acquisitions. In October, Singapore's Raffles Medical Group said it would acquire a majority stake in the American International Hospital in Ho Chi Minh. In addition, Thomson Medical made an entry by acquiring the country's largest private hospital, Far East Medical Vietnam, for US$382 million last year.

"Of course, we will have to look at the Vietnamese market," Nair said, "But the factors are all the same -- the availability of good doctors and nurses, ability to get equipment and drugs. There are many things that go into looking at a market and seeing whether it's suitable for us to go in."

While looking at opportunities which exist in new markets, its core strategy remains increasing its presence in its existing markets, according to the CEO. Nair said that IHH is planning to add nearly 4,000 beds, or more than 30% of its capacity, globally over the next five years.

Businesses concerned over removal of VAT exemptions

The abolition of the 0 per cent value-added tax for export products and services will likely raise product costs and reduce Vietnamese products’ ability to compete internationally, said industry insiders.

The concern was raised by businesses about the scope of the draft VAT law, which has been discussed on the floor of the National Assembly this week.

Bùi Ngọc Tuấn, Deputy Director General of Tax Advisory Services at Deloitte Vietnam said for many, costs may go up as much as 6 per cent, on top of increased expenses on administrative procedures for tax refunds.

He added it took some businesses nearly two years to complete tax refunds, which was “a very, very long time” and has greatly affected their financial performance and cash flow.

"For medium-sized export manufacturing companies in Việt Nam, the absolute figure for additional input VAT could reach tens of millions of USD per year, not to mention the complications during tax refund procedures," he said.

Economists said careful consideration is required to ensure balance among the interests of investors, the economy and the government and that implementation must also be gradual to avoid negative responses from investors. 

Corporate income tax on smaller enterprises might be cut to as little as 15%

The corporate income tax on small and micro-sized enterprises might be cut to 15-17 per cent from a current common rate of 20 per cent, depending on previous revenues.

More appropriate tax rates for small and micro–sized enterprises is one highlight of the draft amendments to the Law on Corporate Income Tax, which with aims to promote the development of the private economic sector and encourage a transition from business households into enterprises, according to the Ministry of Finance.

The ministry said that most countries apply tax rates lower than the common rate on small enterprises. Tax rates can vary according to revenue scale and taxable income.

In comparison with ASEAN countries, the ministry said that the common tax rate of 20 per cent is equal to that of Thailand, Laos and Cambodia, lower than the Philippines (at 30 per cent), Myanmar (at 25 per cent) and Indonesia (at 22 per cent) but higher than Singapore (at 17 per cent) and Brunei (at 18.5 per cent).

Statistics show that there are about 900,000 enterprises in Việt Nam, of which small and micro-sized enterprises account for nearly 94 per cent.

It is necessary to encourage their development to generate revenue for the State budget in the long term, the ministry said.

The ministry is therefore proposing a tax rate of 15 per cent for enterprises with revenues of less than VNĐ3 billion per year and 17 per cent for enterprises with revenues between VNĐ3 billion and VNĐ50 billion.

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