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The Ministry of Industry and Trade asks to ensure sufficient supply of petrol |
The Ministry of Industry and Trade forecasts that the supply from Nghi Son Refinery and Petrochemical plant will be interrupted from mid-August to the end of September and early October for routine maintenance.
Therefore, the Ministry of Industry and Trade requires the Vietnam Oil and Gas Group and the Binh Son Refinery and Petrochemical plant to develop technical plans and mobilize human resources to operate at full capacity for sufficient supply as per their commitment.
The Ministry of Industry and Trade also required large enterprises to base themselves on the quota at the beginning of the year and an additional quota for petrol import in July, ready to meet the market's demand.
According to the Domestic Market Department under the Ministry of Industry and Trade, the total supply of petroleum from two sources of import and production in the first five months of 2023 reached about 9.779 million tons and imports accounted for 42.64 percent, and the volume inventory is about 1,577 million tons to meet the demand for consumption and production.
Vietnam-Canada business forum held in British Columbia province
A delegation of the Ho Chi Minh City People's Committee and Consul General of Vietnam in Vancouver Nguyen Quang Trung on June 27 organised the Vietnam - Canada Business Forum which attracted more than 100 participants.
The event is one of the activities within the framework of the celebration of the 50th anniversary of the establishment of diplomatic relations between Vietnam and Canada, and aims to strengthen the relationship between Ho Chi Minh City and Vancouver, and between the city and British Columbia.
Vice Chairman of the committee Vo Van Hoan said that economic, trade, and investment relations between Ho Chi Minh City and Canada have strongly developed but yet to commensurate with its potential, especially in the context as Vietnam and Canada are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
He called on Canadian investors to pay attention to the areas that the city is prioritising such as supporting industry, high technology, ecological industrial parks, green energy, health care, and education.
British Columbia province's Minister of State for Trade Jagrup Brar spoke highly of the dynamism of Vietnam's economy and the role of Ho Chi Minh City.
Participants discussed market connections for businesses, measures for trade promotion, especially for aquaculture products, furniture, the supply chain for Canadian restaurants, and tourism.
HCM City leader calls for development support from French businesses
Secretary of the Ho Chi Minh City Party Committee Nguyen Van Nen has called for support from the French business community for the Vietnamese southern economic hub’s building of suitable sustainable development solutions at a recent working session in Paris.
At his June 27 meeting with the Mouvement des entreprises de France (MEDEF), or the Movement of the Enterprises of France, and French firms investing in Vietnam, Nen elaborated that the city has approximately 300,000 active businesses, which account for a significant proportion of Vietnam's economy. However, it is facing numerous challenges in terms of transport, education and healthcare infrastructure, and is projected to be among the top ten major urban areas in the world heavily affected by climate change.
The metropolis aspires to sustainable development, he affirmed.
François Corbin, President of the Vietnam-France Business Council and a special representative of the French Minister for Europe and Foreign Affairs for economic relations with ASEAN countries, expressed his belief in the high growth that Vietnam and HCM City is about to reach in the near future.
He pointed to the fact that the countries’ economic exchange remains limited and is not on par with their relations in the cultural, educational, or healthcare fields. He said he is confident that the sides can do better.
Nen went on to recommend French investors in Vietnam cooperate with local authorities to address difficulties. He said the southern hub has established a centre for trade, tourism, and service promotion that can help French firms get their issues quickly handled.
Gerard Wolf, Chairman of MEDEF task force for sustainable cities, French businesses participating in the group can provide services across the areas of clean water and water resource management, wastewater, clean energy, waste treatment and public transport, which are perfectly suited with the vision of the city.
Tax authorities urged to accelerate VAT refunds for businesses
The General Department of Taxation has requested local tax authorities to expedite the processing of value-added tax (VAT) refund requests by businesses.
In accordance with the guidance of the Prime Minister and the Ministry of Finance, the General Department of Taxation issued official dispatch No. 2099 on VAT refunds in late May.
As of June 16, tax authorities at all levels have resolved VAT refund requests for 7,893 cases, with the refunded VAT amount reaching 30% of this year’s estimate, and being 12% lower than that in the same period last year.
To facilitate the timely processing of tax refund requests and support business operations, tax authorities at all levels are asked to quickly work with relevant departments to expedite the handling of documents for businesses, while ensuring compliance with Decision 679 issued by the General Department of Taxation on May 31, 2023.
Furthermore, local tax authorities are asked to promptly issue decisions on VAT settlement for businesses with eligible VAT refund requests to meet the specified timeline.
For businesses with ineligible tax refund requests, they will receive a notice from the tax authorities in accordance with template No. 04 attached to Circular 80 of the Ministry of Finance.
Data of the General Department of Taxation showed that in the year to May 17, there had been 4,760 requests for VAT refunds, but 199 of them had not been settled with a total amount of VND1,119 billion.
Cargo throughput declines at Vietnam’s seaports
Vietnam’s seaports saw an 8% year-on-year decrease in cargo throughput in the first five months of this year, reported the Vietnam Maritime Administration.
Between January and May, a total of 9.71 million twenty-foot equivalent units (TEUs) of cargo were handled at seaports nationwide. The overall cargo throughput during this period reached 296.1 million tons, down 3% compared to the year earlier.
Imported cargo volume slid by 3% to 84.4 million tons and export volume edged down by 7% to 71.7 million tons. The transportation of domestic products through local seaports reached 140 million tons, a slight 2% decrease.
In May alone, goods throughput at the country’s seaports inched down by 3% to 63.3 million tons. The total volume of cargo handled was over 2,000 TEUs, a 7% drop.
Most seaports across the country experienced a decline in goods throughput, particularly those in Bia Ria-Vung Tau Province, HCMC and Haiphong City. Ports in provinces such as Thai Binh, Quang Ngai and Binh Dinh reported significant drops ranging from 23% to 51%.
For the first half of 2023, cargo throughput in the country is projected to fall by 7% year-on-year.
More challenges mount for woodworking enterprises
The situation has been exacerbated for the wood processing industry, resulting from falling prices and rising manufacturing costs amid fewer fresh orders.
Importers are imposing higher standards on production and delivery times, pushing manufacturers to expedite production despite receiving fewer orders, according to Nguyen Phuong, director of Minh Thanh Company. He made these remarks during a press briefing on the upcoming 2023 BIFA Wood Vietnam exhibition on June 22.
Meanwhile, Nguyen Anh Tuan, director of Dai Phuc Vinh Company, pointed out that Vietnam’s timber industry is losing its competitive edge against international rivals due to growing manufacturing costs driven by labor-intensive processes and complex production procedures. He suggested implementing measures to streamline manufacturing operations.
Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association (VIFOREST), stressed the importance of enhancing the competitiveness of local woodworking enterprises during periods of falling prices.
Customs data showed that Vietnam’s wood and wooden product exports reached only US$4.96 billion from January to May, a US$2.06 billion decrease compared to the same period last year.
The 2023 BIFA Wood Vietnam exhibition is scheduled to take place at the WTC Binh Duong New City Expo Center in the southern province of Binh Duong from August 9 to 12.
Organized by Vietnam Forestry Fair JSC in collaboration with ZhongFuYing Fair, the four-day exhibition will focus on technological advancements, cost reductions in production, and material consumption, with the aim of improving the competitiveness of Vietnamese woodworking companies.
It is expected to help diversify the sources of wood materials and boost wood exports, contributing to Vietnam’s target of achieving US$20 billion in wood exports by 2025.
The event is anticipated to attract more than 5,400 participants from over 100 enterprises in the industry, both from Vietnam and various countries and territories worldwide, who will showcase their products at nearly 800 booths.
Ministry proposes methods for determining land prices
The Ministry of Natural Resources and Environment has proposed four methods of land price establishment and coordinated with local authorities to build the initial land price list, according to Minister Dang Quoc Khanh.
During the National Assembly session, Minister Khanh addressed some key points regarding the draft of the revised Land Law. Building the initial land price list would require significant time and effort, particularly as it would be based on four proposed methods of price determination, he said. However, the minister assured that the annual adjustment of land prices would become easier once the initial list is established.
The Ministry of Natural Resources and Environment has outlined four methods for calculating land prices: direct comparison, income, deduction and coefficient.
However, some deputies expressed concerns that the use of multiple methods for calculating land prices could lead to difficulties in price management and potentially result in corruption and misconduct.
Minister Khanh further explained that a single method would not be suitable for all cases in reality. He provided an example, stating that the direct comparison method aligns with market principles and is closest to market prices, assuming accurate input data.
Meanwhile, the deduction method would apply to land lots with assets, which would be combined with the comparative method to calculate land prices.
The income method would be practical in underdeveloped or agricultural areas where land transactions are scarce, while the coefficient method would be utilized in areas with limited land transactions and relatively stable land prices.
Considering deputies’ feedback, the Ministry of Natural Resources and Environment pledged to conduct further research and incorporate relevant input data to determine land prices. The amended Land Law is expected to be approved by the National Assembly by the end of this year.
Over 150 Indian companies to explore opportunities in Dong Thap
More than 150 Indian companies are set to visit Dong Thap Province in southern Vietnam to explore investment and trade opportunities next week.
They will participate in a conference focused on promoting trade and investment in the province, scheduled to take place from June 27 to 29.
The event will feature products from the One Commune, One Product Program and will include trade promotion activities, industry conferences, yoga performances, and tours to the Go Thap relic site, industrial clusters, and Sa Dec Flower Village.
This conference aims to foster collaboration between Indian enterprises and local companies in Dong Thap Province and the wider Mekong Delta region.
During a press conference held on June 20 to introduce the event, Nguyen Phuoc Thien, vice chair of the Dong Thap People’s Committee, said that the goal is to attract investment and enhance trade cooperation with Indian businesses.
Madan Mohan Sethi, Indian Consul General in HCMC, highlighted the significance of the event, as it is expected to draw more than 100 commercial enterprises, 20 venture capitalists in the textiles, food processing, and seafood sectors, 20 tourism service providers, and 10 information technology companies.
Sethi stated, “The event will mark an advancement in India-Vietnam diplomatic ties.” He also noted that bilateral trade between India and Vietnam reached US$15.1 billion in 2022, a substantial increase from the US$3 billion recorded in 2013.
Sethi expressed optimism about facilitating exports of agricultural products, seafood, and flowers from Dong Thap Province and the region to India.
Excelsior Asia Capital considers investment in Vietnamese male grooming chain
Excelsior Capital Vietnam Partners, a private equity arm of Excelsior Asia Capital, is looking to invest in Vietnamese male grooming chain 30Shine.
The deal, reportedly at $15 million between Excelsior Capital Vietnam Partners (ECVP) and 30Shine, is almost complete, according to DealStreetAsia.
A 30Shine representative told The Hanoi Times that he had no confirmation on the date of the deal.
Founded in May 2015 and backed by Simple Tech Investment (STI), 30Shine is the largest and only chain of male hair salons in Vietnam. Its unique model combines traditional male grooming with modern technology.
In 2020, 30Shine was a phenomenon in the male grooming industry in Southeast Asia, according to the Korean newspaper Asia Economy.
Currently, the chain has over 80 salons across the country, with an expansion plan in Thailand.
According to Statista, Vietnam's beauty and personal care market is expected to grow steadily between 2023 and 2027, with revenue to reach an estimated $2.69 billion in 2027.
Foreign coffee chains take it slow and steady with expansion plans in Vietnam
Foreign coffee chains are more cautious than ever in their expansion plans in the country even though they still consider Vietnam a strong market for their brands.
Japanese coffee chain %Arabica, which has opened more than 150 stores in about 20 markets around the world, has suddenly cancelled its plans for a second store at Diamond Plaza in Ho Chi Minh City.
Just over a week ago, the brand said it was looking for an independent, larger store front with plenty of space that would have a roastery in the heart of the new store.
“After all your feedback since opening our first store, we made the hard decision to sadly say goodbye to the announced Diamond Plaza store. We’re now focused on a bigger and better coffee experience for you,” %Arabica said.
The company opened its first brick-and-mortar coffee shop in Vietnam at the well-known “cafe apartment” building at 42 Nguyen Hue in February. Soon after, the brand embarked on the construction of a second store at Diamond Plaza, but before it could open, decided to change direction.
Vynce Nguyen, general manager of investor The Kho Group, said, “We are still very optimistic about the plan to open new stores in Hanoi, Hoi An, and Phu Quoc and will bring a new speciality coffee experience to consumers in Vietnam’s long-standing coffee market.”
According to Euromonitor, the value of the Vietnamese food and beverages (F&B) chain market is around $1.3 billion per year, but the penetration rate of foreign brands is only 5 per cent. Vietnam is one of the countries with the most beverage shops in the world, with up to 19,000, marginally fewer than the United States, China, and South Korea.
Despite possessing the advantage of being the world’s largest producer and exporter of robusta coffee, as well as being a large coffee and beverage consumption market, international chains continue to find it tough to expand here.
Mellower Coffee, a Chinese brand, announced the permanent closure of its operations in Ho Chi Minh City at the end of April. Mellower opened its first outlet in Ho Chi Minh City in 2019 and opened a second store in this city with drinks prices up to $10. Despite expanding rapidly in China and owning more than 50 stores worldwide, the brand failed in the Vietnamese market.
Gloria Jean’s Coffees, a chain from Australia, quietly left the Vietnamese market in 2017 after more than 10 years of joining. But only four years later, this brand once again returned to look for development opportunities with two stores in Ho Chi Minh City in 2021.
Meanwhile, some foreign coffee chains that are considered successful, such as Highlands Coffee and Starbucks, are also struggling to open more stores and find suitable a development direction.
Highlands Coffee, the market leader, decided to target the lower end of the market to seek new customers and sell cheap coffee for less than $1. It has also been locked in several rental disputes at major locations.
In 2021, two Highlands Coffee shops, in the Artemis building in Hanoi and the Pax Sky building in Ho Chi Minh City, were accused by landlords of not paying rent for many months with a total debt of more than $50,000.
Highlands Coffee currently has about 600 stores nationwide. According to the owner of Highlands Coffee chain, Jollibee Group, the coffee brand generated approximately $160.8 million in revenue in 2022, a record for the brand after many years of doing business in Vietnam.
Meanwhile, by late 2022, Starbucks had 87 outlets in the country despite entering the local market 10 years ago. Instead of opening outlets in prime locations, Starbucks had to close three large stores located in the heart of Hanoi and Ho Chi Minh City to switch to a small store model in new urban areas.
The coffee chain Café Amazon, despite receiving financial support from Thai groups PTT Oil and Retail Business and Central Group, is also hesitant to expand.
According to A-tathak Srinon, marketing director of Café Amazon Vietnam, the brand does not intend to move to the north but will continue to focus on the southern market.
“We have opened new stores while continuing research to understand the consumption behaviour of Vietnamese people more deeply. Our plan to expand the chain will depend on the specific needs of the market,” said Srinon.
In 2020, Café Amazon opened its first store in Vietnam at BigC Go! Shopping centre in the Mekong Delta province of Ben Tre. So far, the chain has 16 stores in the Ho Chi Minh City area and three more in Tra Vinh, My Tho, and Dong Nai.
According to a market report by iPOS last year, the total revenue of the F&B market reached nearly $25.6 billion in 2022, but only 5 per cent of the revenue belonged to chains. The report said that competition in the “sidewalk economy” and prices at F&B chains were still high compared to the average income of Vietnamese people.
Vietnam has over 1,500 coffee chain outlets, according to a 2022 report by Q&Me. The World Coffee Portal predicted that the country will have more than 5,200 coffee shops from different chains by 2025.
CPMB discusses solutions to foster of 500kV transmission line, circuit 3 and circuit 4
Accelerating the implementation of the Quang Trach – Quynh Luu – Thanh Hoa 500kV transmission line is an urgent mission to contribute stable power supply for the north.
On June 19, the Board of Directors of the Central Power Projects Management Board (CPMB) organised an urgent meeting with leaders of divisions to discuss the work of 500kV transmission line, circuits 3 and 4, which face the risk of missing the schedule of putting into operation in 2025.
Currently, the project documents for the transmission line were approved by the prime minister in the National Power Development Master Plan for 2021-2030 with a vision towards 2045 (PDP8).
The transmission line is in Group A, which is the special grade project. According to the plan, the construction will be implemented in 50 months for a length of 316km, excluding the delay in land clearance.
The line goes through four provinces, Quang Binh, Ha Tinh, Nghe An and Thanh Hoa. The problem is the construction site has complex terrain and may be impacted by the harsh weather of the central region.
On the other hand, it takes between 10 and 18 months to complete the procedures to convert the forest land use purpose to submit to the prime minister for approval.
In addition, the project’s investment planning has yet to be approved, so these barriers may cause delays compared to the schedule for 2025.
The Board of Directors of CPMB said that in recent times, there are many changes in regulations in construction investment activities. The allocation of land and compensation for site clearance has become more complicated in the context of the lack of synchronisation and overlapping local planning, mechanisms and policies in compensation and site clearance. These barriers cause difficulties for the investors during the process of implementing the project.
The local people’s committees ask for the government’s approval to unify the policy of converting forest land into land for project construction. At the same time, localities will be responsible for supporting investors in land clearance and compensation work and related work to ensure the construction schedule.
Reorganisation in hand for 2023’s electricity supply
Vietnam can only reduce demand and alleviate the current electricity shortage by utilising energy economically and efficiently, energy leaders are warning.
The National Load Dispatch Centre (NLDC) predicts that extreme temperatures will prevail well into July. If Hoa Binh Hydroelectricity’s stagnant water level falls below 1,920MW, in particular, the scenario will be extremely fraught.
Last week, the centre’s deputy director Nguyen Quoc Trung said, “We require the assistance of our customers to keep up a stable electricity system in the north.”
The Vietnamese government is considering energy conservation as a remedy for the current electricity shortage. Phuong Hoang Kim, director of the Energy Efficiency and Sustainable Development Department at the Ministry of Industry and Trade (MoIT), stated that it is feasible to save energy in Vietnam’s industrial sector, with a potential area of 30-35 per cent.
Vietnam’s industries use more than half of the nation’s total energy, according to a survey by the National Energy Efficiency Programme. Kim estimated that if industrial enterprises conserve at least 2 per cent of their annual electricity consumption, the nation will save approximately 1.6 billion kWh annually, which is equivalent to over $136 million in electricity savings.
The MoIT launched the National Electricity-Saving Movement in 2023 with the support of all provinces as well as power companies and major energy consumers. The majority of businesses are familiar with the laws and regulations governing the economical and efficient use of energy. However, Kim discovered that a great many firms have not implemented it or enacted it properly.
The related data also highlights Vietnam’s inefficient energy consumption. Vietnam’s current primary energy intensity index of approximately 400 TOE generates $1,000 in GDP.
This number is 30 per cent higher than Thailand, 60 per cent higher than Malaysia, and 4-5 times higher than developed nations like Japan and the United States. Moreover, the electricity elasticity coefficient – the ratio between the growth rate of electricity demand and the growth rate of the GDP – of Vietnam in recent years has tended to decrease but is still at 1.3-1.4, demonstrating that energy consumption is inefficient.
The likelihood of a power shortage persists when annual economic growth exceeds 6-7 per cent. The MoIT has submitted a report to the prime minister regarding the issuance of a directive to increase electricity savings by 2 per cent per year between now and 2025 and in subsequent years, highlighting that electricity demand remains significant at 8.5 per cent.
In sweltering and arid conditions for an extended period of time, each kWh of electricity saved is “extremely precious,” according to Lam. In the past, the country has conserved more than six million kWh of electricity per day.
Manufacturers feel the heat through erratic power cuts
A series of power cuts without specific schedule or durations has impacted the production and export activities of local manufacturers.
The Korean Chamber of Commerce in Vietnam (KoCham), the representative of over 10,000 Korean-invested enterprises generating more than one million jobs in Vietnam, on June 5 sent a document to the prime minister, the Government Office, and Electricity of Vietnam to report the impact of the interruption on its business community.
The chamber has received feedback on the unannounced power interruptions, which had forced firms to suspend operations and miss deadlines for orders, while impacting the working time of their employees.
Chairman Hong Sun said that the operation in factories was consecutively halted due to the unstable power supply. In many cities and provinces, power cuts have gone on for over three days a week, cutting capacity by half at many factories.
According to KoCham, although there are no specific statistics about the damage to South Korean groups due to power interruption, they are sure it causes serious damage to the business community.
Pham Van Tuan, general director of An Phat Holdings, an environmentally friendly plastic group in Vietnam, is worried about the rotational power cut at its factory.
Tuan said that the capacity of the factory is 300 tonnes per day, however, at present, the unstable power has suspended operation. Employees have to work on their day-off to offset the diminished capacity. The company also has to negotiate with partners to offset the remaining goods in the following months.
In Hanoi and the northern provinces, power outages can last anywhere from half to an entire day. In areas where electricity is heavily needed for production, electricity is prioritised for production during the day and only provided to residents at night.
According to the Ministry of Industry and Trade (MoIT), the total accessible capacity of the northern power system (including imported electricity) that can be mobilised to satisfy electricity demand is around 17,500-17,900MW, approximately 60 per cent of the installed capacity.
During the upcoming heatwave, the demand in the north may reach 24,000MW and the northern grid will fall short by approximately 4,350MW. The MoIT warns that the shortfall of power will have a significant impact on the power supply, not solely in the north but on a national scale, until July.
The European Chamber of Commerce in Vietnam (EuroCham) and the broader business community have expressed growing concerns regarding the ongoing power shortages in Hanoi and northern Vietnam. Many European companies with production and manufacturing facilities in the region, including numerous EuroCham members, have been adversely affected. Swift action is imperative to preserve Vietnam’s reputation as a dependable global supplier, the chamber said.
EuroCham has intensified its advocacy efforts by writing a letter to the MoIT to propose a series of short- and long-term measures designed to alleviate the effects of the ongoing power outages.
Key road opens investing avenues
The megaproject of Ring Road 3, which started construction this month, can help more clearly shape the face of a multipolar Ho Chi Minh City urban area and create new development impetus for the real estate market.
According to Ho Chi Minh City People’s Committee, Ring Road 3 has investment capital of more than VND75 trillion ($3.12 billion), promising to create a breakthrough not only in the traffic system but also open up urban development space for the whole southern key economic region.
Ring Road 3 is more than 76km long, passing through the four localities of Ho Chi Minh City, Dong Nai, Binh Duong, and Long An.
According to Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association, the development radius of Ho Chi Minh City can reach up to 200 square metres. Within this, over the years, new urban development sub-cities have been more clearly present and increasingly far away from the inner city.
“In particular, the four ring roads of the city with a total length of more than 380km plays the most important role in developing the city to the outer areas. To date, more than 90km of the first two ring roads have been completed, and 76km of Ring Road 3 are being accelerated to be fully open to traffic by 2026,” Chau said.
According to real estate consultants, Ring Road 3 plays the role of the backbone connecting industrial parks, airports, and freight stations which all are the prospect of developing urban areas.
At a conference held at the end of last year, Tran Quoc Thai, director of the Urban Development Department under the Ministry of Construction, said that the new constructions of the arterial route helped the real estate segment to increase by more than 10 per cent compared to previously.
According to a report from the Ho Chi Minh City Institute of Development Research, the new price level of the real estate market is established by the resonance of a series of factors. Among these, when the state pours capital into infrastructure, then the price of projects around can increase by 45-50 per cent.
As an area with concentrated traffic projects with the highest density, the real estate market in the east of Ho Chi Minh City has always maintained an exciting rhythm and a stable price increase over time, the report added.
According to CBRE Vietnam, the average selling price of apartments in the first quarter of 2023 increased by 2 per cent compared to the previous quarter and 10.2 per cent over the same period last year, fluctuating at over VND60 million ($2,500) per sq.m.
Thu Duc city, which Ring Road 3 passes through, accounted for 70 per cent of the apartment supply in Ho Chi Minh City in the first quarter, and the majority of the transactions mainly came from this area.
Along the Ring Road 3 passing and directly connecting to Ho Chi Minh City - Long Thanh - Dau Giay Expressway, there are many real estate projects that have been or are being implemented, including Vinhomes Grand Park, MT Eastmark City, Dong Tang Long, Palm Marina, The 9 Stallars, and more.
Bancassurance takes on trust challenges
The bancassurance sector is facing challenges amid many partnerships and complaints, requiring stricter regulations and improved governance to restore customer trust.
Chubb Life Vietnam and Hong Leong Bank Vietnam last week formalised a strategic partnership pact to broaden the reach of Chubb Life’s insurance solutions through an innovative distribution channel.
Nguyen Hong Son, CEO of Chubb Life Vietnam said, “This collaborative effort guarantees that the solutions offered align perfectly with customers’ unique requirements. Furthermore, this partnership serves as a catalyst for fostering an understanding of the crucial role played by financial and insurance products in an individual’s life journey.”
Duong Duc Hung, CEO of Hong Leong Bank Vietnam, echoed the sentiments, expressing the bank’s commitment to providing financial solutions that cater to the needs of individual customers.
Elsewhere, FWD Vietnam last week officially announced a partnership with Be Group, a prominent multiservice consumer platform, to enhance public awareness of life insurance and facilitate customers access to simplified, online insurance products that are easily understandable and aligned with the modern lifestyle of the Vietnamese people.
And a recent report by MB Securities revealed that VIB will finalise the renewal of its bancassurance contract with Prudential in 2023, with an anticipated upfront fee of $100 million. This substantial support is expected to assist the bank in achieving its business objectives for the year.
While VIB has consistently ranked among top performers in terms of insurance revenue and branch-level effectiveness – ranking second in APE insurance revenue in 2022 and leading in branch-level effectiveness – its bancassurance segment is also affected.
During the first quarter of 2023, VIB recorded a revenue of VND11.8 billion ($491,700) from bancassurance activities, representing a 44.6 per cent decrease compared to the same period last year.
Despite recent partnerships in the sector, the overall outlook remains gloomy. The industry has been marred by numerous complaints and scandals, particularly concerning insurance sales through banks.
The Ministry of Finance (MoF) in mid-June assigned the Insurance Supervisory Authority the urgent task of conducting inspections at four insurance companies: Prudential Vietnam Life Insurance, MB Ageas Life Insurance, BIDV Metlife Life Insurance, and Sunlife Vietnam Life Insurance.
Among these tasks, the Insurance Supervisory Authority is required to promptly report to the MoF the results of a specialised examination on insurance sales through banks and credit institutions conducted at Manulife Vietnam.
This directive follows Manulife Vietnam’s recent release on June 5, in which the company announced its focus on addressing numerous customer complaints related to the “Tam An Dau Tu” insurance product offered in collaboration with the troubled lender, SCB.
To date, Manulife Vietnam has successfully resolved nearly 60 per cent of the complaints through direct dialogue initiated on April 26, with ongoing efforts to address the remaining 40 per cent. According to the Ministry of Public Security, Manulife has already refunded over VND800 billion ($34 million) as of May 31.
Pham Van Thinh, a National Assembly delegate of Bac Giang province, highlighted existing regulations that allow two common types of life, term, and mixed insurance, to offer a maximum discount of 40 per cent on the first-year premium.
He said that some commercial banks suggested customers obtain loans to purchase life insurance with premiums equivalent to approximately 3-4 per cent of the loan amount over the last three years
“In certain cases, purchasing life insurance became a requirement for expedited loan approval or favourable interest rates. Some commercial banks assigned insurance contract targets and premium revenue to their employees,” he said.
Recognising the inherent disadvantage of borrowers in loan relationships, Thinh proposed consideration of regulations governing commercial banks as insurance agents, particularly in life insurance, to avoid any conflicts of interest and protect borrowers.
Minister of Finance Pham Duc Phoc also stressed the significance of bancassurance in diversifying insurance operations but acknowledged its increasing complexity. “Consequently, a re-evaluation and adjustment of regulations is necessary to ensure the sound and proper functioning of bancassurance,” he said.
Tools within reach to establish robust stock market
A talk show in Hanoi last week provided valuable insights into the development narrative of financial products, regulatory frameworks, and potential investment opportunities.
At the talk show, themed “Unleashing capital influx in the stock market” and held by VIR, Ta Thi Thanh Binh, head of the Market Development Department at the State Securities Commission (SSC), noted that to establish a robust market presence, well-managed and publicly listed companies played a pivotal role.
Consequently, the SSC has directed efforts towards enhancing corporate governance practices by integrating state-of-the-art technologies in environmental, social, and governance management. This initiative seeks to create a solid business foundation that meets domestic standards while gaining access to the international capital market.
In light of recent volatility in the derivatives market, Binh highlighted the importance of diversifying the range of available commodities.
In a proactive move, Binh revealed that the SSC plans to introduce a secondary market for individual corporate bonds in July. This development is expected to play a vital role in addressing recent bottlenecks within the corporate bond market.
Dang Thanh Tam, chairman of Kinh Bac Urban Development Corporation, said that foreign capital essentially comes in two forms: long-term institutional investment and individual investments.
The former is usually linked to macroeconomic policies and the quality of commodities on the stock market. Additionally, individual investments are of crucial importance, with accounts from abroad increasing in Vietnam. If regulatory procedures from account registration to fund transfers become more convenient and liberalised, this will undoubtedly hasten the process, he added.
Tam is confident that with Vietnam’s increasing exports and subsequent growth in foreign currency, the government will gradually ease regulations, creating opportunities for foreign individual investors to effectively utilise short-term capital.
The importance of trust was also underscored, particularly following the recent decrease in confidence domestically and internationally.
Tam said that if there were specific guidelines, the implementation process would be smoother. Even though progress has been made in the past year with more favourable trade and investment policies, further refinements were necessary since individual investors significantly impact the market.
Helping businesses in times of need is essential for the economy, according to Tam. Immediate action is needed to boost falling GDP, and the government should expedite legal procedures and increase the money supply, he said.
Tran Huy Doan, director of the Derivatives Market Division at ACB Securities Company (ACBS), believes that in the second half of the year, a continued push for public investment disbursement will improve capital inflows and stimulate the economy.
Nguyen Vu Long, chairman of VNDIRECT, also highlighted two main themes for potential investment opportunities, including interest rate reduction and accelerated public investment disbursement.
Three people from one family drown in Lam Dong
Three people from the same family died after drowning in a lake in Cát Tiên District in Lâm Đồng Province on Thursday afternoon.
At around 3.30pm Thursday, Lê Thị Huế, 29, along with her son Đinh Đức Vỹ, 10, and her 16-year-old nephew Đinh Gia Bảo, 16, went to play at the Bê Đê lake.
Vỹ slipped and fell into the water. Huế and Bảo swam to rescue him but also got into difficulties and also lost their lives.
Some nearby children saw the incident and ran to the village to get help, but they arrived too late.
An hour later, the Fire Department and Search and Rescue team of Lâm Đồng Province Police recovered the bodies of all three victims.
According to an estimate in 2020, more than 2,000 children under 16 years old have lost their lives each year due to drowning in Việt Nam.
Hanoi fulfils 70% of yearly job creation plan
The capital city of Hanoi has created jobs for 113,418 workers in the first six months of this year, achieving 70% of the year’s plan thanks to the implementation of numerous solutions, including increasing the frequency of job fairs, according to the municipal Department of Labour, Invalids and Social Affairs.
The Hanoi Employment Service Centre (HESC) has organised 124 job fairs during the review period with the participation of 3,635 enterprises, during which more than 8,800 people were recruited.
The centre has also coordinated with enterprises and vocational education institutions to speed up the training of labourers. Students and trainees have been helped to find jobs right after graduation.
However, the number of jobs generated in the first six months of 2023 fell by 4.5% compared to the same period last year. The decrease in job creation is attributed to difficulties faced by many businesses as a result of a decline in orders from major markets, rising fuel prices and high interest rates.
A shortage of staff for labour and employment affairs in some localities has resulted in a low number of workers who take part in vocational training.
To achieve the target of helping 162,000 workers find employment this year, the municipal Department of Labour, Invalids and Social Affairs will suggest the city’s administration issue a plan on collecting labour market information for 2023.
The department will direct the HESC to gather and provide information on recruitment and labour export through various channels for labourers and increase orientation work for vocational training and employment opportunities for workers.
Last year, Hanoi created jobs for 203,027 people, surpassing the set target of 160,000 people a year by 2025. Of the total, more than 116,742 people found jobs through employment counseling services, and 62,700 others obtain employment through preferential loans for job generation.
Interest rates cut expected to attract borrowers
The fourth cut in a row of regulatory interest rates by the State Bank of Vietnam (SBV) has provided an opportunity for commercial banks to reduce interest rates, thus attracting borrowers.
General Director of Eximbank Tran Tan Loc said the bank has still recorded credit growth in terms of short-term lending.
The demand for loans in the market is on the rise, he said.
According to SBV governor Nguyen Thi Hong, credit growth in the first months of 2023 remained limited but many sectors still have great demand of capital.
The demand for loans of production and manufacturing businesses has decreased due to a lack of orders, while the non-production sectors have the need to borrow to address liquidity problems.
Experts have quoted the forecasts of commercial banks as saying that the credit demand was low in the second quarter of 2023, and it is unlikely to increase sharply in the second half of the year because businesses are still facing many difficulties, although lending interest rates have dropped significantly after central bank's three policy interest rate cuts from March to May.
According to the latest data of the SBV, the average lending interest rate for new loans is at 9.07% a year at present, down 0.9% compared to the end of last year.
Commercial banks have all lowered lending rates to stimulate investment and consumption demand, but the new interest rates are mainly applied to new loans. Only a few commercial banks (mainly state-owned commercial banks) reduce interest rates on existing loans.
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