Ho Chi Minh City’s economic growth is expected to climb to 5.87% in the second quarter of 2023, its leader has said. It was only 0.7% in the first quarter.

Speaking at a meeting on May 30, Phan Van Mai, Chairman of the municipal People’s Committee, said the city’s economic growth in the first half is expected to be 3.55%.

Public spending in the first five months is expected to be worth 10.2 trillion VND (436.4 million USD), up 24% year-on-year, he said.

The global economic decline and high inflation will continue to affect the city’s economy across the board, hindering its recovery, he said.

In May, the index of industrial production (IIP) rose by an estimated 1.5% month-on-month and 5.5% year-on-year. It was up 1.6% year-on-year in the first five months.

The services sector is expected to post the highest growth rate in the second quarter of 7.6%. Retail sales of consumer goods and services rose by 10% in May and 6.2% in the first five months.

Experts have warned the city would continue to face headwinds for the rest of 2023 due to the impacts of the global recession and inflation. The city’s real estate, stock and bond markets have slumped, they said.

Many firms lack export orders, and the situation is unlikely to improve this year. Many have also complained that while the central bank has steadily cut rates, bank lending interest rates remain too high.

The country’s largest city has lowered its growth target for 2023 to 7.5-8% from 9% last year. Vietnam’s GDP growth slowed to 3.32% in the first quarter, the second lowest rate in 12 years.

Vietnam Airlines a star among world’s top airlines for 2023

Vietnam Airlines has been listed as one of the world’s top 25 airlines for 2023 by AirlineRatings.com, an Australia-based aviation safety and product rating agency.

The national flag carrier of Vietnam stands at the 20th position in the rankings.

AirlineRatings.com considered safety and government audits, the age of airline fleets, passenger reviews, profitability, investment rating, products and services , and staff relations to compile the list.

In 2022, Vietnam Airlines received many domestic and international awards, including the World's Leading Cultural Airline and Asia's Leading Airline - Economy Class of the World Travel Awards. It also had its air transport service recognised as a national brand by the Ministry of Industry and Trade and the National Brand Council.

Singapore’s COT Group to expand investment in Hung Yen

COT Group, one of Singapore's major corporations in the field of electronic and electro-optical technology, has a plan to expand investment in Thang Long Industrial Park II in the northern province of Hung Yen, the group's representative announced on May 31 at a working session with the provincial People’s Committee.

The representative said that after the survey, the group chose Hung Yen as a location for its investment expansion. According to the plan, in the first phase, the group will lease more than 6 ha of land in the industrial park to invest in an electronics, optoelectronics, and virtual reality project which is expected to start in November 2023.

In the next five years, the group will expand its investment scale with a land use demand of about 20 ha and a total investment capital of about 500-800 million USD.

To serve its production, the group will use the most advanced equipment in the production line.

In the immediate future, the group wants to learn about the investment environment, legal procedures, and preferential policies of the province in land leases.

First book on Vietnam’s overseas direct investment launched

The Vietnam - Myanmar Friendship Association and the International Investment Research Institute (ISC) on May 31 launched a book on Vietnam’s direct investment abroad and in Myanmar.

The book, the first featuring Vietnam's outward direct investment (ODI), provides necessary information for Vietnamese state management agencies and business community, especially those that have been planning to invest abroad, to be more aware of the role of ODI for developing countries like Vietnam.

It also reviews Vietnam's overseas investment in the the 1999-2022 period and gives recommendations to the Government on orientations and solutions to promote the ODI in line with the country's socio-economic development strategy from now to 2030.

In the appendix, in addition to the opinions of experts and managers on overseas investment experience, the authors introduce the analysis and assessment of the investment environment of some countries that are major strategic partners of Vietnam for readers' reference.

The book consists of four chapters: outward investment activities in the world; overview of Vietnam's overseas investment; Vietnam's direct investment in Myanmar; and orientations and solutions to promote Vietnam's investment overseas and in Myanmar.

Domestic retail gas prices fall in June

The retail gas prices in domestic market decreased on June 1 following the falling prices in world market.

Nghiem Xuan Cuong, head of the Commercial and Civil Gas Sales Department under Petrolimex Gas JSC said that the average contract gas price in the world in June is at 445 USD per tonnes, down 110 USD per tonnes compared to May.

Specifically, the retail prices of Petrolimex gas (including VAT) in June in Hanoi is 371,600 VND (15.8 USD) per 12 kg civil cylinder; 1,486,300 VND per 48 kg industrial cylinder, down 33,640 VND and 134,660 VND respectively.

From the beginning of the year, the retail gas prices in the domestic market have declined four times in January, March, April, and June and increased twice in February and May.

On the world market, at 8 am on May 31, the price of gas futures contracts delivered in July 2023 is at 2,319 USD per mmBTU, down 0.004 USD per mmBTU due to falling demand for natural gas in Europe as the winter is over and demand for electricity in summer peak has not yet begun. Gas consumption by industries also weakened.

According to data from Gas Infrastructure Europe, as of May 24, natural gas storage sites in the EU was 66.71% full.

Over 222 million USD set to be disbursed for North-South expressway project in June

More than 5.22 trillion VND (over 222.6 million USD) are set to be disbursed for component projects of the North-South expressway project in June, including more than 1.6 trillion VND in the first stage and the remainder in the second stage, reported the Transport Ministry’s Department of Planning and Investment.

Since the beginning of 2023, the ministry disbursed around 28.6 trillion VND, or 30% of the yearly plan, higher than the country’s average of 15.65%.

This year, the Prime Minister assigned the Ministry of Transport to disburse a total amount of over 94.16 trillion VND in public investment, which is the biggest sum allocated to the ministry so far.

According to the ministry’s leaders and economists, it is a challenge for the ministry to fully disburse the sum, hence it requires breakthrough ways and solutions, especially amid potential risks related to the deployment of projects.

In addition to the volatile increase in raw material prices that can lead to a shortage of supply when the ministry is embarking on numerous large-scale projects in several areas, experts also believed that ground clearance remains a complex task that could affect the progress of the projects.

Ninh Thuan's grapefruit receives code to export to US

Grapefruit grown in Phuoc Binh commune, Bac Ai district in the south-central province of Ninh Thuan has received a farming area code, making it eligible for export to the US in the coming time.

Dang Kim Cuong, director of the provincial Department of Agriculture and Rural Development said that grapefruit is the first agricultural product of the province to get the code granted by the US Department of Agriculture (USDA)'s Animal and Plant Health Inspection Service (APHIS). The code for 23ha of grapefruit in Phuoc Binh commune will come into effect from June 22.

The Plant Protection Department under the Ministry of Agriculture and Rural Development said it has requested the Ninh Thuan Sub-Department of Cultivation and Plant Protection to notify the representative of the growing area with the code to seize export opportunities and ensure compliance with US regulations.

Agencies were also asked to keep supervising to ensure that the growing area always follow the regulations of the importing country; conduct physical inspections and submit plant protection reports within 90 days before the next harvest to serve as a basis for maintaining the code.

At the same time, they will supervise the representative of the planting area in informing all households about the code approval and use.

Vo Khanh Khang, head of the Agriculture and Rural Development Department of Bac Ai district, said that Phuoc Binh commune has favourable conditions for growing green-skinned grapefruit, which is considered a key crop of the locality.

Now, the district has 236ha of grapefruit, including 192ha in Phuoc Binh commune. Over the past time, the commune authorities and Phuoc Binh National Park Management Board organised training courses instructing people to apply clean agricultural production in grapefruit farming.

Agro-forestry-aquatic product exports likely to rebound in Q4: official

With the ongoing recovery momentum of agro-forestry-aquatic product exports in recent months, the export turnover of the sector is expected to enjoy a rebound and achieve growth again from the fourth quarter, said Deputy Minister of Agriculture and Rural Development Phung Duc Tien.

According to the official, despite a decrease of over 11% in agro-forestry-aquatic product exports in the first five months of 2023 compared to the same period last year, the rate of decline is gradually narrowing. In May, exports stood at 4.85 billion USD, down 3.5% from the same period last year and much lower than the decrease of 68% in January. Agro-forestry-aquatic product exports reached 20.26 billion USD in the January-May period and are forecast to hit 55 billion USD in 2023.

The Ministry of Agriculture and Rural Development (MARD) said shipments to major markets such as China, Japan, and other Asian countries are gradually regaining growth. However, due to global economic uncertainties, high inflation in some developed countries, and tightened monetary policy in some big markets like the US and EU, businesses are seeing difficulties in seeking and fulfilling orders.

Of the five-month export revenue, farm produce brought home 10.3 billion USD, up 9.9%; animal products 190 million USD, up 34.5%; aquatic products 3.47 billion USD, down 25.9%; and forestry products 5.52 billion USD, down 26.8%.

By mid-May, Vietnam exported nearly 3.9 million tonnes of rice worth 2.02 billion USD, posting year-on-year increases of 40.8% in volume and 49% in value.

The fishery industry has also recorded a 1.4% growth, mainly contributed by shrimp and tra fish farming, Tien noted.

China, the US, and Japan remain the biggest markets of agro-forestry-aquatic products from Vietnam during the five months. Exports to China accounted for 20.4% of the total, rising 2.9% year on year; the US 19.8%, down 35.2%; and Japan 7.8%, down 1.2%, the MARD reported.

Tien said the agriculture sector is implementing various solutions to complete the targets set for the first half and the whole year.

The sector is working hard to ensure food security and safety, contributing to stabilising the macroeconomy and ensuring major balances of the national economy, he noted.

Vietnam is actively promoting the exports of key farm produce with rapid growth such as rice, coffee, fruits, and cashew nuts to high-demand markets such as China.

In the context of market fluctuations, the agriculture sector will focus on enhancing trade promotion with specific sectors and target markets, including traditional and potential markets such as the US, China, Japan, and the European Union, Tien said.

Attention will be paid to speeding up trade negotiations toward diversifying the export of agricultural products to markets through official channels, he went on.

Regarding challenges and difficulties in production and consumption, Tien said, for the livestock industry, in addition to scaling up biosafety breeding models, there are measures in place to closely monitor raw material markets and supplies, and the price of animal feed and livestock breeds, thus taking measures to prevent sudden price spikes.

Research and proposed plans are being developed to establish livestock feed production zones in the Central Highlands and Northern mountainous regions, he added.

To ensure the targets set for the fishery sector in 2023, there will be continued collaboration and coordination with local authorities to rigorously implement measures to combat illegal, unreported, and unregulated (IUU) fishing, the official said.

Newly-established property businesses drop by more than 60%

As of the end of May, the number of newly-established real estate businesses stood at only 1,744 units, a decline of 61.4% over the same period from last year, according to data released by the General Statistics Office (GSO) under the Ministry of Planning and Investment.      

Meanwhile, the number of dissolved property enterprises stood at 554, up by 30.4% on-year.

Nguyen Hoang Hai, head of the Department of Housing and Real Estate Market Management under the Ministry of Construction, said that since the beginning of the year, real estate businesses have faced numerous difficulties and challenges in terms of business activities.

Currently, many businesses have been forced to change their business and management plans, with the majority of them having to restructure debts and business activities, narrow the scale of production and business investment, minimise the apparatus, and reduce labour forces.

In some cases, businesses stopped carrying out new projects and issuing shares to increase capital. Elsewhere, some firms have been forced to reduce their workforce by up to 50% to cope with the current difficult conditions.

Furthermore, real estate enterprises continue to face a host of major difficulties such as difficulty in accessing credit loans, issuing bonds and mobilising capital from customers, leading to a lack of capital, thereby forcing them to delay the progress and even halt project implementation.

Despite a fall in interest rates, it remains at a level that is difficult for businesses to access. Along with that, foreign exchange rates, petrol prices, and prices of construction materials fluctuated, a factor leading to higher costs of businesses, thereby affecting production and business activities.

Currently, a number of groups and property enterprises are narrowing the scale of production and business investment whilst simultaneously reducing the labour force, with some even scaling down their workforce by up to 50%.

Recently, Deputy Prime Minister Tran Hong Ha signed for the promulgation of an official dispatch No 469 on removing difficulties aimed at promoting the safe, healthy, and sustainable development of the real estate market. According to the details of the plan, ministries and sectors should consider this to be an urgent and important task to focus on in order to solve the issue as swiftly as possible.

The Ministry of Construction has therefore been asked to co-ordinate with the Ministry of Planning and Investment in guiding localities to deal with difficulties and problems in the formulation and approval of projects related to investment and planning.

Petrovietnam generates over 10 billion kWh of electricy in five months  
 
The Vietnam Oil and Gas Group (Petrovietnam) generated over 10 billion kWh of electricity in the first five months of 2023 which equals 42.5% of the yearly target.

The figure represents an increase of 46.6% compared with the same period last year, thanks to the inauguration of Thai Binh 2 Thermal Power Plant in late April.

In May alone, the group generated 2.77 billion kWh of electricity, up 7.8% from April.

Along with power production, Petrovietnam continues to maintain strong growth momentum, ensuring the supply of strategic products, especially crude oil, gas and petrol, contributing to ensuring national energy security.

Specifically, crude oil output in the first five months of this year was estimated at 4.41 million tonnes, exceeding the set plan by 13.7% and equaling 47.5% of the year’s plan. Of the figure, domestic crude oil exploitation reached 3.66 million tonnes, equivalent to 48.6% of the yearly plan and gas production hit 3.42 billion cu.m, equaling 57.6% of the plan for the whole year.

This result reflects the efforts of Petrovietnam and its member units in applying measures to maintain output while ensuring safety in the context that most of Vietnam's key oil wells are on a decline.

Regarding domestic petrol production (including Nghi Son Refining and Petrochemical Company), the group’s output hit 1.47 million tonnes in May, up 32.6% year-on-year.

Petrovietnam’s petrol production reached 6.3 million tonnes in the first five months of 2023, a year-on-year increase of 18.1%.

HCM City to host int’l telecom, IT, and electronic products expo

Vietnam ICT COMM 2023, an international trade show on information technology, telecommunication, and electronic products (ICT COMM), is set to run from June 8 to 10 at the Saigon Exhibition and Convention Centre.      

Vietnam ICTCOMM represents Asia’s largest IT trade show organised annually by Adpex JSC and supported by the Ministry of Information and Communication, the Ministry of Industry and Trade, the Ministry of Science and Technology, together with the Vietnam Internet Association and others covering a wide range of IT fields.

One of the highlights of the show is the International Pavilion, a worldwide showcase for various national oil companies, ministries, and government agencies to promote a broad spectrum of potential opportunities in the Vietnamese market.

Furthermore, three co-located events which are parts of Vietnam ICT COMM 2023 will also be held at the expo, namely Vietnam Broadcast 2023, Vietnam Electronics, and the Telefilm Vietnam 2023.

The trade show is expected to attract approximately 550 booths from more than 450 local and foreign exhibitors representing 15 countries and territories.

It will showcase the latest products and technologies in the telecommunication, IT, and media sectors, as well as products, services, and technologies used in film and television, TV content and programmes, as well as broadcasting equipment and technology.

B2B match-making, conferences, and seminars will also be held during the expo.

Tien Giang Province expands code-granted fruit growing areas

The Mekong Delta province of Tiền Giang plans to have about 82,000ha of fruit growing areas that are granted production codes for export by 2025.

The country’s largest fruit producing province aims to have 25,000ha granted codes this year, according to its Department of Agriculture and Rural Development.

Võ Văn Men, head of the province’s Plant Cultivation and Protection Sub-department, said the province has 271 fruit growing areas with a total of 20,000ha that have been granted production codes.

Of them, 175 areas grow fruits to export to China.

Jackfruit, dragon fruit and durian growing areas account for the largest share of code-granted fruit growing areas.

A code-granted area must have a minimum of 10ha, grow one type of fruit and grow it to Vietnamese good agricultural practices (VietGAP) or other equivalent standards.

The province has 257 fruit packaging establishments that have been granted production codes to serve export markets.

The sub-department has received 83 applications of fruit packaging establishments to register for production codes.

It has also received 204 applications asking for production codes for 8,900ha of fruits to export to China.

It is strengthening advocacy activities to enhance the awareness of farmers about the purposes of production codes and assist them to link with companies and co-operatives to grow fruits in code-granted areas.

It is also assisting farmers, co-operatives and companies to register to receive the code and providing them advanced farming techniques.

It instructs farmers to grow fruits to VietGAP, maintain a cultivation diary for origin traceability, and bag fruits on trees to meet the quality requirements of export markets.

Cai Lậy District’s Ngũ Hiệp Commune has a 1,500ha specialised durian growing area and its fruit has been granted a geographical indication certification by the National Office of Intellectual Property.

The commune is focusing on instructing farmers about procedures to register for production codes and targets all durian orchards in the specialised durian growing area to get codes.

Farmers, co-operatives and companies in the province are also expanding code-granted fruit growing areas.

The Cẩm Sơn Co-operative in Cai Lậy’s Cẩm Sơn Commune has been granted seven production codes for nearly 780ha of durian, or all of the commune’s specialised durian growing area.

Phạm Văn Nuôi, director of the co-operative, said the co-operative, through export companies, is expected to export its first batches of durian to China through official channels by the end of this year when it is the peak harvest time of off-season durian.

Chợ Gạo District, which is the province’s largest dragon fruit growing area, has created favourable conditions for farmers to link with co-operatives and companies to grow high quality dragon fruit and increase export value.

The district has encouraged dragon fruit farmers to use VietGAP and GlobalGAP to increase quality.

Dragon fruit farmers have earned high profits since March of this year because the selling price has increased after a period of declining.

Nguyễn Văn Hưởng in Chợ Gạo’s Qươn Long Commune has sold five tonnes of dragon fruit at a price of VNĐ33,000 (US$1.4) a kilogramme and earned a profit of VNĐ165 million ($7,000).

Nguyễn Văn Mẫn, director of the department, said the province has about 83,000ha of fruit with an annual output of 1.6 million tonnes, with many specialty fruits of high export value.

With the development of production codes for exporting officially to China and other countries, the province is taking opportunities to develop sustainably specialty fruit growing areas and improve income for farmers, he said.

HCM City to increase financial support for start-ups of young entrepreneurs

HCM City will increase funding to support start-ups of young entrepreneurs by VNĐ300 billion (US$12.7 million) over the next five years.

The municipal People’s Committee has issued a plan to launch a movement called "HCM City’s youth start-up business, innovation" in the period of 2023-27.

Accordingly, the city aims to support 800 youth start-ups and innovation projects, and provide preferential loans worth VNĐ2 trillion ($84.8 million) to support young people to start and develop businesses by 2027.

It will set up a database of start-ups and advise on policies to encourage young people to start business and promote innovation.

A dialogue between city leaders and young start-ups will be held every two years.

The city will organise an annual start-up and innovation contest for young people's start-up businesses and young entrepreneurs.

Each year, it will provide at least four training sessions to equip students, youth and young entrepreneurs with foundational knowledge on starting and developing businesses, and corporate governance; and two training sessions to raise their awareness about entrepreneurship, starting a business and innovation.

The National Credit Information Centre (CIC) will help to monitor their credit levels and view their own credit information and credit scores.

It will offer career guidance and counseling for at least 300,000 young people, introduce jobs for 120,000 young people, and training on social skills, focusing on digital skills, for 200,000 young people every year.

At least one activity per year will be held to support young people in rural areas to start and develop a business related to high-tech applied agricultural production, the "One Commune One Product" (OCOP) programme’s products, and safe and organic agricultural productions with clear origin.

The youth union in each commune level will support at least one efficiency and innovation-driven growth model for rural youths a year.

By 2027, at least 30 per cent of young people's start-up ideas and projects will be supported by businesses, investment funds, or other funding sources.

To achieve the above goals, the city will promote publicity campaigns to raise public awareness of entrepreneurship and innovation.

It will accompany students and young people to participate in start-ups, support newly established businesses, and build a networking community of young people to help them learn and support each other to develop their own businesses.

It will also honor and scale up outstanding business models of collectives, individuals, young entrepreneurs and young business owners. 

Central region propels fresh promotion for major ventures

The central region and its localities are actively refreshing in order to have a new direction of attracting foreign funding flows more effectively.

Last weekend, Ha Tinh province held a conference to announce provincial planning and promotion of new investment. It is hoped that the event, which has attracted the attention of numerous investors, will spur huge inflows to awaken the potential and aspirations of the province.

It is not the only locality pushing ahead with promotion events. The representative of one international investment cooperation organisation told a conference in Binh Duong province that while Vietnam-Singapore Industrial Park is growing stronger and expanding in many localities, and the occupancy rate at its IPs is good, the approach in terms of after-sales services for investors may not yet be up to scratch.

Localities in the region recognise that the similarity in development conditions can be an advantage for the whole region but also a significant challenge for each locality. The issue of regional links, even cluster links, was posed by economic experts at the event with the expectation of changing the approach to foreign investment inflows. However, they said, moving from policy to practice is always a major problem in this regard.

The most practical solution today is for localities to renew themselves and choose strategies in accordance with their local characteristics to attract foreign funding. Quang Binh province has pioneered in setting up a foreign investment cooperation plan. Its clear strategy is to build a roadmap to identify the locality’s advantages and create a difference between Quang Binh and other localities.

Nguyen Bay, director of Binh Dinh Investment Promotion Centre, said that financiers are very much looking forward to cooperation plans such as these. 

Elsewhere, Khanh Hoa was the first locality in the region to announce a provincial plan, and its conference on the issue was attended by 1,000 registered guests.

Le Huu Hoang, Deputy Chairman of Khanh Hoa People’s Committee, said the new planning is orienting the key local economic sectors that need to be developed, thereby helping investors to realise efficiency when choosing Khanh Hoa to place their money. Particularly for Van Phong Economic Zone, the government’s decision to adjust planning has opened up opportunities. 

Recently, localities in the central region have continuously welcomed international investors to explore opportunities, and some localities have licensed large projects.

The management of Southeast Nghe An Economic Zone granted a certificate to Foxconn Group, with capital of $100 million. The investor will build a factory for manufacturing wireless headphones, connecting wires, wireless chargers, speakers, and more at WHA Industrial Zone 1.

Nghe An is one of the top localities in the region in terms of luring in foreign direct investment. In addition to Foxconn, the province has licensed many important projects such as a Luxshare electronic components factory ($140 million); Goertek’s electronic product manufacturing project ($500 million), Everwin Precision Vietnam’s electronic component project ($199.8 million) and Ju Teng’s auto parts and electronic component factory ($200 million).

Meanwhile, other major developments have been proposed in the region. Previously, PETMAL Oil Holdings from Malaysia worked with the People’s Committee of Phu Yen province and proposed an oil refinery project in South Phu Yen Economic Zone, with an initial level of about $2 billion. Elsewhere, Binh Dinh People’s Committee received a proposal from Germany’s PNE Group to fund an offshore wind power project with a capacity of 2,000MW and total investment of up to $4.6 billion. Binh Dinh is considering proposals to put the project into planning and expedite procedures for investors to deploy.

Most localities are set to prioritise investment attraction in high technology. For example, Danang will give priority to attracting funding in industries that are ahead of the curve such as ICT, digital tech, nanotechnology, and the supporting industries.

Another area that international investors are interested in is logistics services. Danang People’s Committee announced 10 logistics service centre projects seeking investment before 2030; while Khanh Hoa People’s Committee aims to build the Cam Ranh urban area into a logistics service centre for the region.

Neighbourly efforts in tow to aid electricity prospects

Vietnam intends to boost its imports of electricity from Laos and China in order to avoid an electricity shortfall this summer.

According to Vo Quang Lam, deputy general director of Electricity of Vietnam (EVN), the state utility will increase its imports of electricity from China and Laos to supplement domestic power supply. EVN is attempting to ensure electricity supply for the rest of this quarter, which is the most challenging time of year in terms of ensuring supply.

EVN is currently in negotiations with Yunnan International Co., Ltd. to raise output and purchasing capacity on current 220kV lines and to purchase additional electricity through 110kV lines. Vietnam imports electricity from China via the provinces of Ha Giang and Lao Cai, but it is “challenging to expand its capacity due to the constraints of 220kV lines,” according to Lam.

This plan is anticipated to be operational after 2025, after addressing frequency and generator fluctuations, improving the line, and installing a voltage transfer gateway to bring electricity to Vietnam.

The Ministry of Industry and Trade (MoIT) had established the electricity production and import plan for 2023 based on a scenario with a 6.5 per cent GDP growth rate and commercial electricity consumption near 251.3 billion kWh, a rise of nearly nine billion kWh from 2022. According to the power system supply and operation plan authorised by the MoIT, the total output of produced and imported electricity in 2023 will be 284.5 billion kWh.

Currently, Vietnam hopes to accelerate its electricity import initiatives, but there remain numerous hurdles in the way. Nguyen Khang, vice head of EVN’s Power Projects Management Board 2, stated that the intricate landscape and slow ground clearance are the biggest obstacles that influence the building of the Bo Y 220kV switching station and 220kV transmission line to import electricity from the Nam Kong 1-3 Dam Hydropower Cluster in Laos.

The efforts of energy industry authorities are essential, but according to analysts, it may be insufficient to regard electricity imports as an effective means of ensuring the economy’s electricity supply. The policy of importing electricity was outlined in the fifth Power Development Plan at the turn of the century, but the strategy of importing electricity from neighbouring countries is not yet explicit and synchronised, and both the output and imported power capacity are still quite modest.

According to the MoIT, Vietnam imported 953 million kWh during the first quarter of 2023, representing just 1.5 per cent of the system’s electricity source.

Burdensome procedures and low average electricity prices are a significant barrier to electricity imports at present. Additionally, technical and operational obstacles impact the magnitude of electricity imports. The inability to synchronise the power systems of Vietnam, China, and Laos has resulted in the distinct operation of the complete power infrastructure, which receives electricity from those countries and sends it to Vietnam.

A number of analysts concur that Vietnam’s reliance on imported energy will increase. Regarding Vietnam’s three neighbours of China, Laos, and Cambodia, the potential to import electricity from the former two by 2030 is approximately 7,000MW. However, Cambodia’s hydropower potential is insufficient to support significant long-term imports of electricity.

One energy developer told VIR that Vietnam must promptly establish a profitable, open, and strictly controlled domestic electricity market if it wishes to increase the amount of electricity imported from abroad. The macro and long-term commitments on electricity trade between Vietnam and Laos and Vietnam and China must also be authorised; consider this a prerequisite for the construction of a dedicated transmission infrastructure for long-term electricity import, which will help to optimise grid investment capital and reduce land funds for transmission lines.

A representative of one energy institution added that, given that conventional sources of electricity are becoming more challenging to construct, the increase in electricity imports becomes significant. As a consequence, analysts concur that imports of electricity from neighbouring countries, such as Laos and Cambodia, should be considered a significant source of energy.

Coal still with part to play in energy mix

In light of the possibility of electricity scarcity, Vietnam is aware of the continuing usefulness of coal as an energy resource, according to industry insiders.

The clearance of 200-300 coal wagons per day via the La Lay border gate in the central province of Quang Tri is being deemed impractical, affecting Logistics PTS Vietnam’s future aim of importing five million metric tonnes of coal annually.

According to him, if Vietnam fails to strengthen infrastructure, improve National Highway 15D, and invest in warehouses, it will miss the chance to compete with Thailand in purchasing coal from Laos.

In February, Laos’ energy ministry announced findings of coal field surveys in the provinces of Sekong and Saravane, indicating that reserves may be as high as 500 million MT.

Vietnam may experience a power scarcity if the availability of coal becomes constrained. According to Electricity of Vietnam (EVN), the total quantity of electricity generated using coal during the months of May, June, and July can reach a demand of 7.17 million MT.

However, under the terms of the contract EVN signed with Vietnam National Coal and Mineral Industries Group (Vinacomin) and Dong Bac Corporation, the volume of coal is only 6.59 million MT. Ngo Son Hai, deputy general director of EVN, admitted two weeks ago that the coal supply for electricity “is still inadequate” compared to actual needs.

The present supply capacity from Vinacomin and Dong Bac is 46 million MT, less than the coal supply chart for 2023 electricity production approved in February.

EVN factories are lacking 1.3 million MT and, due to market constraints and inadequate coal import infrastructure, it is difficult to purchase coal to augment the quantity of coal that cannot be supplied by Vinacomin and Dong Bac. It is utilising contingency solutions to provide sufficient coal for power production in the current quarter.

The requirement to purchase coal for electricity generation is putting EVN’s financial stability to the test. Its recent request for Vinacomin and Dong Bac to extend the payment deadline for coal demonstrates the company’s finances are severely deficient. In 2022, EVN’s electricity production, trading, and affiliated activities resulted in a loss of $1.12 billion.

According to EVN, the 3 per cent average increase in electricity prices since 2019 is insufficient to counterbalance the high production and business costs of electricity.

After the May 4 decision to raise the average retail price of electricity to 8.2 cents per kWh, it is anticipated that EVN’s revenues will rise by more than $341 million between now and the end of the year.

Analysts have noted that there will be renewed interest in coal imports, which means that the price of purchasing electricity from coal-fired power facilities will remain high. EVN is currently required to mobilise a large output of coal-fired power, despite paying a substantially higher price for electricity compared to other power sources. In the first three months of 2023, the average price of coal-generated electricity was between 8.3 and 9 cents per kWh, while the average price of electricity from other sources was 7.9 cents per kWh.

Coal was the cheapest option for Vietnam’s electricity generation for many years, but it is no longer affordable. EVN has had to purchase electricity from factories using imported coal at a cost of 17 cents per kWh since the price of imported coal soared. EVN is currently purchasing imported coal from Vinacomin for approximately 17 cents per kg.

As households and businesses use more electricity during the summer months, the energy sector is under increasing pressure to guarantee a sufficient supply of electricity for those months. In Q2 as a whole, Vinacomin will need to provide 10.8 million MT of coal for power production, but primary coal production is only estimated to be 11.25 million MT, so it will still need to import 2.8 million MT more. Vietnam will be compelled to import from countries such as Indonesia, Australia, and South Africa, but the global coal market is extremely limited, particularly for anthracite coal, which is used in the majority of EVN’s facilities.

According to the Technical and Production Department of EVN, it is particularly challenging to import anthracite coal because it only accounts for about 3 per cent of global coal production.

HCMC’s GRDP may rise 5.87% in Q2

HCMC’s gross regional domestic product (GRDP) may expand 5.87% in the second quarter of the year, said HCMC Chairman Phan Van Mai.

HCMC’s GRDP growth in the first half of the year is estimated at 3.55%, due to the city’s GRDP first-quarter growth of 0.7%, data from the General Statistics Office (GSO) showed.

The industry-construction sector is expected to grow 4.77% in the second quarter but may edge up merely 0.8% in January-June due to a contraction of 3.6% in the first quarter.

Sector-wise, the service sector will rise the sharpest, estimated to increase 7.6% in April-June and 4.96% in the first six months of the year.

The nation’s engine of economic growth came alive in May with substantial increases in commerce and revenue from services and tourism.

Statistics from the GSO showed that industrial production conditions improved in May, with the index of industrial production (IIP) growing 1.5% month-on-month and 5.5% year-on-year. However, the IIP between January and May inched up 1.6% over the same period in 2022.

Total retail sales of consumer goods and services in the month picked up 10% against last May and 6.2% in January-May.

Disbursement of public investment capital in the first five months of the year improved markedly with a year-on-year increase of 24%, at around VND10.2 trillion.

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