Vietnam has many more opportunities to increase export of fruits and vegetables to the European Union - the world's largest market, thanks to tariff incentives brought by the EU-Vietnam Free Trade Agreement (EVFTA), according to analysts.

Before the EVFTA took effect, Vietnam’s vegetables and fruits exported to the EU market enjoyed preferential tax rates under the Generalised System of Preferences (GSP), but still at a relatively high level of 10-20 percent.

However, after this agreement came into effect, the EU offers a substantial reduction of about 94 percent out of the total 547 tax lines on fresh and processed vegetables and fruits, including those of Vietnam's strength.

This brings about a huge advantage for Vietnam to compete against agricultural products of other Asian countries, especially Thailand and China that do not have FTAs with the EU.

Data from the General Department of Customs show Vietnam’s vegetable and fruit export turnover to Europe in 2021 hit 303 million USD, up 17.4 percent year-on-year.

To support Vietnamese businesses in increasing the shipments of spice, vegetable and fruit products to the EU market, Oxfam in Vietnam and the VCCI developed the project “Enhancing the Export Competitiveness of Vietnamese Small and Medium Enterprises in Spice, Fruit and Vegetable Sub-Sectors" (SFV-Export), which is funded by the EU Delegation to Vietnam, during 2022 – 2023. 

Vietnam boosting agricultural production in accordance with int’l standards: Minister

Minister of Agriculture and Rural Development Le Minh Hoan has said that his ministry will review and adjust policies to encourage and support businesses to invest in agriculture, and develop production in accordance with international standards and practices to better serve the export of agricultural products.

Hoan stressed the need to strictly comply with regulations related to labeling, traceability, cultivation area indication, quarantine, packaging, quality and types of agricultural products, and business code.

The ministry will maintain negotiations to remove barriers and increase the export of additional agricultural products to major and potential markets such as durian, bird nest, passion fruit, avocado, grapefruit and coconut to China; longan, grapefruit, and passion fruit to Japan; and shrimp, grapefruit, litchi, rambutan, processed poultry and cattle meat to the Republic of Korea.

It is important to invest more in improving the processing and preservation to increase the added value of products.

The ministry will maintain the effective implementation of free trade agreements (FTAs) signed with other countries and regions over the world, as well as the coordination with Vietnamese embassies, and trade and agriculture offices to collect and provide information about foreign markets and tastes for local businesses, and help them boost trade promotion, stated Hoan.

Updated edition of Vietnamese seafood company map to be released
     
The Viet Nam Association of Seafood Exporters and Producers (VASEP) will release an updated edition of the map of Vietnamese seafood companies in July, with some 5,000 copies.

The new edition of the map will provide up-to-date information and data about Vietnamese seafood producers, such as business names, contact information, website, EU code, certification, and list of products.

As the COVID-19 pandemic has had a major impact on the seafood industry over the last two years, the new map will help buyers and foreign markets get updates about and gain greater insights of the sector and the Vietnamese producers, according to VASEP.

The map will be distributed at numerous international trade fairs across the globe, including China Fisheries & Seafood Expo, Japan Seafood &Technology Expo, Fine Food, Vietfish and events in Boston (US), Brussels (Belgium), or Dubai, among others.

It will also be provided to Vietnamese trade offices overseas, foreign trade offices in Viet Nam and VASEP partners. 

Higher coverage helps SMEs recover faster
     
The Law on Support for Small- and Medium-sized Enterprises (SME) took effect on January 1, 2018, but its programmes have not provided adequate coverage to make any big difference.

According to the Viet Nam Chamber of Commerce and Industry (VCCI), ten programmes have been implemented under the law, but fewer than eight per cent of enterprises enjoyed the benefits from the programmes.

Notably, only 7.34 per cent got access to the SME Credit Guarantee Fund, 6.55 per cent got the consultancies from state agencies, and 4.75 got the subsidies for rentals in industrial parks, high-tech parks and industrial complexes.

Regarding other subsidies, just 6.17 per cent were granted legal aid services subsidies, 5.40 per cent market information consultancy subsides, 6.83 per cent training courses subsidies and 5.39 per cent vocational training subsidies.

Although 80 per cent of enterprises which managed to access the programmes said procedures were easy to follow, the figure does not capture those who never applied. In fact, 51.3 per cent were unaware of the programmes.

The law's low coverage has led to policy ineffectiveness and left many struggling enterprises in the lurch.

Given nearly 35,700 enterprises had to temporarily cease their operation and 11,300 awaited dissolution in Q1/2022, the VCCI urged the authorities to step up the programmes to expand their coverage, helping more SMEs back on their feet.

SMEs account for 98 per cent of enterprises in Viet Nam, 45 per cent of the country's GDP and 31 per cent of the State Budget, with over 5 million workers on the payroll.

The pandemic and the Russian military operations in Ukraine have put many SMEs at risk. They are struggling to keep afloat, are not so optimistic about the long-term, and are in urgent need of support, according to the VCCI. 

Proposed minimum wage insufficient to make ends meet: insiders
     
As the Ministry of Labour, Invalids and Social Affairs has been gathering comments on a draft on the minimum wage, insiders say the proposed wages are insufficient to make ends meet.

Under the draft, minimum wages are set by region with an hourly wage of VND22,500 (US$0.97) for Region I, VND22,000 for Region II, VND17,500 for Region III and VND15,600 for Region IV. Lawmakers expect the wages to maintain a decent living standard for workers, notably those working part-time.

Le Dinh Quang, Deputy Head of the Labour Relation Department under the Vietnam General Confederation of Labour (VGCL), thinks otherwise.

Quang said workers are currently paid VND18,000-23,000 per hour, already low compared to the price level. He opined that minimum hourly wages between VND20,000 and VND30,000 would be more suitable for labour contracts.

Tran Van Trieu, Director of the Legal Consulting Centre, shared this view and attributed the low proposed wages to payroll miscalculations.

Specifically, hourly wages have been calculated by dividing minimum monthly wages by total working hours in a month, which are the product of 26 working days per month and eight hours per day.

The director also believed that current minimum monthly wages are not high enough to meet workers' basic needs, so the wages should be adjusted up. He suggested minimum hourly wages increase to VND30,000-40,000.

Tran Huu Tin, head of the Tin and Partners Law Office, remarked that full-time workers are entitled to social insurance, healthcare insurance, unemployment insurance and bonuses in addition to wages. Meanwhile, hourly workers are normally eligible for wages only, putting them at a disadvantage. He proposed insurance and bonuses be included in hourly wages to improve workers' incomes.

Vu Minh Tien, Director of the Institute of Workers and Unions, stressed that part-time workers are normally not entitled to benefits, allowances and bonuses like full-time workers.

Accordingly, the minimum wage should be adjusted up to cover such a disparity, ensuring equal treatment for both types of workers.

Nguyen Thi Bong, a full-time worker at Pou Yuen Viet Nam JSC., revealed that she often works as a waitress during her free time to make extra money for her family. The part-time job earns her around VND16,000-20,000 per hour, comparable to the proposed minimum wages.

Green finance represents a tremendous opportunity for Vietnamese banks
     
Nearly seven out of 10 Vietnamese consumers (68 per cent) would consider switching from their current financial services providers for a bank or financial institution with a stronger commitment to sustainability.

The information was released in Mambu’s survey on the customers’ understanding and interaction with green finance.

The “Is the grass greener on the sustainable side?” report survey was conducted with more than 6,000 people globally, including more than 500 in Viet Nam, within a situation where increased consumers have shifted their purchase behaviour to become more sustainable in the past five years. This consumer trend of purchasing with a purpose does not just exist in commerce.

According to the survey, the result has shown that over two thirds (67 per cent) of consumers want their bank or financial institution to become more sustainable in the future.

The survey also clarified two key definitions of ‘green’ and ‘ethical’ finance which may be common parlance among industry experts - but they are causing a level of confusion among consumers.

Globally, only 41 per cent of consumers have heard of either ethical finance, green finance, or both, rising to 47 per cent of consumers in the Asia Pacific. Meanwhile, Viet Nam has a higher rate of 56 per cent more than the other countries, only behind Thailand with 64 per cent.

The survey also revealed that the top way Vietnamese consumers want banks to demonstrate their sustainability commitments is through adding or creating incentives or loyalty programmes for customers, which reward them for making financial decisions that support the sustainability transition (52 per cent). This is closely followed by making customers aware of their sustainability commitments during the application progress for all products and services (49 per cent).

In spite of what preceded, almost six in 10 Vietnamese consumers would value green savings accounts and bonds, and approximately half (49 per cent) would like sustainable credit and debit cards. Another priority in Viet Nam is sustainable cryptocurrency services (48 per cent) - joining Thailand as the only other country where this offering was cited as a top-three priority among consumers. 

Officials clarify measures to control credit in risky areas, petrol prices
     
The State Bank of Viet Nam (SBV) has been consistent in its policy to strictly control credit flows into areas with high risks, such as real estate and securities, and this policy will continue to be implemented in 2022 and beyond, SBV Deputy Governor Dao Minh Tu said at a regular Government press conference last week.

Tu emphasised that SBV has always encouraged credit provision for areas that help facilitate economic development, including low-cost and social housing projects, and houses for workers.

He reported that the SBV and commercial banks, as well as ministries and sectors, are working hard to implement the VND40 trillion credit support package, which provides interest support of 2 per cent to enterprises, business households and cooperatives, as part of the Government’s efforts to speed up post-pandemic socio-economic recovery and development. Under Decree 31/2022/ND-CP and Circular 03/2022/TT-NHNN guiding the enforcement of Decree 31, the support is also applicable to low-cost housing projects and housing projects for workers as well as those to upgrade old apartment buildings.

SBV's deputy governor said the real estate sector has continued to see normal growth. As of mid-April, the sector had a total loan balance of VND2.2 quadrillion (US$94.86 billion), up 10.19 per cent over the figure at the end of 2021, representing faster growth compared to the same period last year.

Total lending in the real estate sector accounts for 19.16 of that for the whole economy, he underlined.

Meanwhile, regarding the petrol price hike recently, Deputy Minister of Industry and Trade Do Thang Hai said that the ministry is working hard to ensure petrol supply sources for daily life and production activities, and coordinating closely with the Ministry of Finance in managing petrol and oil prices

Hai pointed to three major solutions to reign in petrol prices, including effectively and flexibly utilising the fund for the stabilisation of petrol and oil prices, adjusting taxes and fees related to petrol and oil, and designing social welfare policies and measures to support businesses.

He noted that the rise in domestic petrol prices at 27.29-47.89 per cent recently is lower than the increase in other countries.

Deputy Minister of Finance Ta Anh Tuan said that after recent adjustments, taxes currently account for 29-31 per cent of petrol prices and 13.3 per cent of diesel oil prices, which are at low levels compared to the world average of about 45-60 per cent, excepting for countries with large oil reserves.

Following the NA's adoption of a resolution on cutting 50-70 per cent in the environmental protection tax rate on gasoline, oil and grease, the Finance Ministry has submitted to the Government a proposal on reducing the import-export tax rate on petrol from 20 per cent to 12 per cent. 

Promising outlook ahead for the market: analysts
     
The stock market is resuming its uptrend following a recent steep decline after receiving positive information, creating a driving force for a new recovery phase.

After falling from 1,530 to 1,160 points in less than two months, the VN-Index has recovered more than 110 points over the past two weeks.

S&P Global Ratings raising Viet Nam's credit rating from BB to BB+ with a stable outlook, reflecting a strong recovery of Viet Nam's economy, also contributes to helping the market gain investors’ confidence.

The movement in the past two weeks shows that investors are still cautious after the plunge of the stock market, but analysts believe that this is a good time to accumulate stocks. A series of stocks with good business results are at their two- or three-year lows.

According to analysts, the recent handling cases of a series of leaders and business managers related to securities manipulation, have helped investors regain confidence. Foreign investors net bought VND2.12 trillion from May 30 to June 3.

Can Van Luc, chief economist of BIDV Bank, said that the stock market would continue to make necessary adjustments, but this helped it become more stable and healthier. The VN-Index could rise to 1,610 points, according to a positive scenario.

EVN to boost clean energy development

The Electricity of Vietnam (EVN) will invest more in clean energy in the years ahead to meet the rising demand for power in national development.

The group has submitted to the Government its proposal on mechanisms to encourage the development of renewable energy such as wind and solar power along with storage systems.

EVN expects to put into operation around 5,500 MW of electricity from renewables, with 4,000 MW from wind power and 1.500 MW from solar power by 2025, to prevent a shortage of power, especially in northern localities.

The group has also asked the Government for permission to develop offshore wind power in the northern region to increase electricity supply for the region and ensure national power security.

Those proposals by EVN are in line with the Party and Government’s policy on encouraging the development of renewables and delivering on Vietnam’s commitment at the COP26.

Electricity demand is surging in the context of Vietnam making all-out efforts for socio-economic recovery after the COVID-19 pandemic is put under control.

According to the power development plan in 2022, EVN can ensure sufficient power supply for the central and southern regions. The northern region may face a shortage at some points of time, particularly during severe heat waves.

Vietnam has yet to take advantages of FTAs for agricultural product export

Despite difficulties in export markets over the past time, Vietnam has earned a US$23.2 billion export turnover of agricultural, forestry, and fishery products in the first five months of 2022, up 16.8 percent while the trade surplus reached US$5.1 billion, up 3.1 times over the same period.

However, the Southeast Asian country has not so far taken advantage of the incentives from tariff reductions and implementation of free trade agreements(FTAs) that have come into effect for the export of many agricultural products.

In his report to the National Assembly right before the question-and-answer session on June 7, Minister of Agriculture and Rural Development Le Minh Hoan wrote this.

According to the report, of the total export turnover, the main group of agricultural products got over $9.4 billion, up 10.4 percent while key forest products achieved nearly $7.7 billion, up 7.6 percent, and seafood reached nearly $4.8 billion, up 46.3 percent and livestock products hit $138.9 million, down 16.2 percent.

Of the products and product groups, coffee, rubber, cashew, fresh vegetables, rice, pangasius, shrimp, and wood products, materials for production have had an export value of over $1 billion. In detail, the export value of vegetables and fruits reached $1.5 billion, rice $1.4 billion for 2.9 million tons, pangasius $1.2 billion, and shrimp $1.9 billion.

Investors' sentiment weigh on stock market performance: Finance minister

Investors' sentiment continues to weigh heavily on the performance of Vietnam’s stock market, which is still in the early stage of development.

Minister of Finance Ho Duc Phoc has assessed in a report submitted to the National Assembly.

According to Phoc, in the past months, many stocks' prices have been rising without any positive information on the business performance of the public firms, referring to cases of FLC or Louis Holdings with their respective executives having been arrested for market manipulation.

“False rumor, concern over the capital flow, and high inflationary pressure have led to recent market’s downtrend,” Phoc said.

Last week, the benchmark Vn-Index declined by 14% against late 2021, which resulted in a decrease of 13% in market capitalization.

Concern over the issue of market manipulation has also been echoed by the National Assembly’s Economic Committee, which calls for the Government to take steps to stabilize and ensure the transparency of the stock market.

Such issues, however, have not prevented the rise of the stock market. In 2021, the liquidity rose by 258% against the average of 2020, while the number of new securities accounts was around the cumulative figure in the past 10 years.

As of present, Vietnam has over 5.2 million securities accounts, up 21% against 2021.

The ministry's report also mentioned rising irregularities in the corporate bond market amid its fast development pace, with an example being the arrest of the Chairman of Tan Hoang Minh Group for an appropriation of assets by deceit.

China increases imports of processed fruits and vegetables from Vietnam

The Import-Export Department under the Ministry of Industry and Trade quoted statistics compiled by China Customs as saying that the import value of processed fruit and vegetable products (HS code 20) in April reached US$121 million, a year-on-year rise of 11.2%.

The opening four months of the year saw the Chinese import value of processed fruit and vegetables reach US$434.7 million, a decline of 2% over the same period from 2021.

During the initial four months of the year, the Chinese market imported processed fruits and vegetables, primarily from the United States, Brazil, Vietnam and Thailand. The import value from these four markets duly accounted for 52% of the total Chinese import value of processed fruits and vegetables.

Rising petrol prices challenge inflation control efforts

The goal of maintaining inflation at 4% this year will be threatened unless viable solutions are introduced in a bid to rein in rapidly-increasing petrol prices, according to economic experts.

Statistics compiled by Singapore’s petroleum market updated by the Ministry of Industry and Trade indicate that fuel prices continued to increase sharply on May 27. Indeed, petrol RON92 and petrol RON95 were traded at US$146.08/barrel and US$154.26/barrel, respectively, while diesel was capped at US$149.49/barrel, all representing increases from US$146.32/barrel, US$150.32/barrel, and US$141.15/barrel recorded 10 days earlier.

In their price adjustments which are poised to take place on June 1 by the Ministry of Finance and the Ministry of Industry and Trade, the retail price of petrol in Vietnam is likely to rise by up to VND800/litre and will be close to VND32,000/litre. According to a petroleum trading business in Ho Chi Minh City, the domestic retail price of petrol is even projected to skyrocket to an all-time high of VND35,000/litre this year.

The General Statistics Office, while announcing major socio-economic indicators in May and the initial five months of the year on May 29, reported that the consumer price index (CPI) for May increased by more than 0.38% from the previous month, by 2.48% compared to December 2021, and by 2.86% over the same period last year. Together with food and essential commodities prices, rising prices of petrol can be viewed as a major reason behind the sharp increase in CPI.

Most notably, petrol products have experienced 13 price adjustments during the opening five months of the year, with the retail prices of petrol RON95, petrol E5 RON92, and diesel edging up by VND7,360 VND/litre, VND7,080/litre, and VND7,980/litre, respectively. On average, five-month petrol prices rose by 49.95% over the same period last year, prompting the overall CPI to climb by 1.8%.

Moving forward, petroleum prices are likely to rise over the coming months due to unpredictable oil market fluctuations resulting from the ongoing conflict in Ukraine. The Government has utililsed the petrol price stabilisation fund and axed the environmental protection tax in an attempt to cool down the domestic fuel market. However, the latest market developments indicate that without more radical solutions being introduced, the goal of controlling inflation and stabilising the macro-economy will be threatened by the sharp increase in petrol prices.

Trade expert Vu Vinh Phu forecasts that prices of consumer goods will increase by a further 15% to 17% ahead in the final two quarters of the year in the event that gasoline prices continue to increase in a consistent manner.

Sharing this view, economic expert Ngo Tri Long points out the current difficulty in controlling petrol prices, explaining that tax reductions require the approval of the National Assembly, while the price stabilisation fund which can be used as an effective tool to cool down prices is running a deficit.

Concurring with Long, Dr Vu Dinh Anh, another economic expert, suggests that the Government further reduce the excise tax, value-added tax, and environmental protection tax placed on petroleum.

Export prices of Vietnamese rice trend down

Export prices of Vietnam’s rice moved in the range of US$415 and US$420 per ton in May, down US$3 month-on-month, marking the second straight falling month.
Data from the Agro Processing and Market Development Authority indicated that between January and May, the country’s exports of rice amounted to 2.9 million tons worth US$1.4 billion, up 10.3% in volume year-on-year, but down 1% in value.

The steady decrease in rice prices was attributed to the surging global supply of rice. Besides, the export prices of rice from India, the world’s biggest rice exporter, are trending down as its domestic rice supply is soaring, while the Indian rupee is trading at record lows.

Like India, many other countries are witnessing export prices of rice plunge. For example, the export price of Thailand’s 5% broken rice stands at US$445 per ton, down US$5 against the start of the month.

The Philippines was Vietnam’s largest rice buyer in the first four months, importing 915,000 tons of rice from the latter with a total value of US$442.2 million, up 28.3% in volume and 11% in value year-on-year.

Air passenger, cargo transport surges in Jan-May

Local airports received nearly 41 million passengers between January and May, up 56.8% year-on-year, while handling 765,000 tons of cargo during the five-month period, up 30.6% against the same period last year, according to the Civil Aviation Authority of Vietnam.
Among the air passengers, the number of inbound passengers was 1.8 million, skyrocketing 904.6% year-on-year.

Local airlines transported a total of 20.1 million passengers in the first five months, surging by 56.1% year-on-year. Inbound air passengers onboard the local carriers’ flights reached 667,000, up over 1,000%, while 19.5 million passengers flew on domestic air services during the same period.

The local airports are forecast to serve some 87.8 million passengers in 2022, up 190% year-on-year. Of the total, nearly five million international passengers are expected to fly to the country, shooting up 844%.

Given the gain in air cargo transport between January and May, the total air cargo volume via the local airports is estimated at 1.5 million tons this year, up 5% year-on-year, the local media reported.

Five-month exports of agro-forestry-aquatic products up nearly 17 per cent
     
The total import and export value of agro-forestry-aquatic products in the first five months of 2022 has been estimated at US$41.3 billion, up 8.6 per cent year-on-year, according to the Ministry of Agriculture and Rural Development (MARD).

Of the total, export turnover was estimated at $23.2 billion, up 16.8 per cent, while imports reache $18.1 billion, down 0.3 per cent.

In the period, the export value of main agricultural products surpassed $9.4 billion, up 10.4 per cent; that of main forestry products reached nearly $7.7 billion, up 7.6 per cent; and aquatic products nearly $4.8 billion, up 46.3 per cent.

Nine products/product groups surpassed export value of $1 billion, namely coffee, rubber, rice, cashew nuts, fruits and vegetables, tra fish, shrimp, wood products and production materials.

Regarding export markets, the value of agricultural, forestry and aquatic product exports to Asia accounted for 41.6 per cent of the market share, America 30.4 per cent, Europe 12 per cent, Oceania 1.7 per cent and Africa 1.5 per cent.

HCM City seeks to enlarge proposed industrial park
     
The HCM City People's Committee wants the Government to increase the size of the proposed Pham Van Hai Industrial Park in Binh Chanh District to 700ha from the planned 330ha.

It said it would be a giant IP and replace three other planned ones, the 200ha Bau Dung and 175ha Phuoc Hiep in Cu Chi District and the 300ha Xuan Thoi Thuong in Hoc Mon District.

The place, which has alum soil, can only support short-term crops with high alum tolerance like sugarcane, cassava and banana, wood production and commercial crops such as rubber, tea, and hybrid acacia and cajuput.

The Pham Van Hai IP will focus on science and technology, start-ups and supporting industries, according to the People’s Committee.

It is expected to attract investors, especially in the hi-tech, electronics and supporting industries, and become a highly competitive industrial park.

In a report, HEPZA said new IPs are behind schedule while existing ones are almost fully occupied.

HEPZA has set a target of attracting US$500 million worth of investment in the city’s industrial and export processing zones this year, $100 million less than last year.

To achieve the target, it plans to enhance the pandemic response and strengthen support for enterprises and reforms, Trung said.

It also plans to develop high-rise factories to make land use more efficient, monitor land use for investment projects and appropriate lands from investors who do not meet deadlines.

Its other key targets include speeding up land clearance for building the Le Minh Xuan 2 Industrial Park and expanding the Le Minh Xuan, Northwest Cu Chi, Vinh Loc, and Hiep Phuoc (third phase) IPs, he said.

Under the master plan for IP development by 2025, the city is shifting its economic structure towards services, industry and urban construction, focusing on high-tech industries and services.

It will make existing zones green and clean and build new hi-tech zones for supply industries with priority given to existing investors and industry 4.0 technologies.

The city has 17 export processing and industrial zones and high-tech parks covering a total area of more than 3,800ha.

Online exchanges to connect Vietnamese and Korean firms

The Korea Trade and Investment Promotion Agency (KOTRA Hanoi) plans to organise online trade exchanges from June 13 to June 17 in order to connect local businesses with those from the Republic of Korean province of Chungbuk.

The five-day event is expected to attract several major industrial manufacturers from Chungbuk that operate across multiple fields, including food, cosmetics, household appliances, and agriculture.

It will provide Vietnamese enterprises with opportunities to co-operate alongside reputable RoK’s manufacturers and suppliers.

All trade promotion support activities for Vietnamese enterprises are completely free of charge and will be carried out with budget given by the RoK Government.

As part of activities, KOTRA Hanoi will also host a trade meeting on June 9 between Vietnamese enterprises and eight Korean firms from Ulsan.

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