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According to Hang, the Prime Minister has demanded the State Bank of Vietnam effectively manage credit operations to ensure the suitable provision of credit capital, and continue to reduce interest rates to support businesses, especially those in aquatic export.
The bank has been required to implement supportive and preferential policies, including proposing a credit package worth 10,000 billion VND (over 425.4 million USD) to support businesses operating in forestry and aquatic production and processing industries.
Credit programmes should be prioritised for the fisheries sector, towards creating favourable conditions for businesses involved in the industry to access credit sources serving their production and business activities, thus promoting livelihoods for fishermen.
It is also tasked with protecting brands of export-import goods in international markets in the event of trade disputes, and providing guidance on legal mechanisms and regulations to help individuals and businesses comply with legal requirements and international commitments.
The PM has asked the Ministry of Agriculture and Rural Development to closely coordinate with relevant agencies and localities to implement effective measures to fight illegal, unreported and unregulated (IUU) fishing in an attempt to get the European Commission (EC)’s “yellow card” warning against its seafood exports removed.
The ministry is also tasked with exploring and promoting new markets for Vietnam's export activities, and continuing efforts to promote sustainable fisheries management and development.
Meanwhile, the Ministry of Natural Resources and Environment have been required to build land policies to ensure that they are favourable for enterprises to develop in the direction of specialised and large-scale production.
China, the US, and Japan remained the top three importers of Vietnamese aquatic products in the period.
The Ministry of Agriculture and Rural Development attributed the situation to the global economic downturn, high inflation rates in some developing countries, and tightened monetary policies in major markets, saying that businesses are facing difficulties in securing orders.
However, it said that these difficulties are only temporary, adding that the demand for Vietnam's seafood products in major markets has gradually recovered and recorded growth again.
According to Deputy Minister of Agriculture and Rural Development Phung Duc Tien, the export turnover of the sector is expected to enjoy a rebound and achieve growth again from the fourth quarter of this year.
Da Nang improves investment attraction quality
The central city of Da Nang is working to build a business environment conducive for investors, based on the pillars of hi-tech industry, tourism and sea-based economy.
In its planning orientations till 2030 with a vision to 2050, the city targets attracting capital to information and communications technology (ICT), biotechnology, micro-electronic technology, mechatronics, precision engineering, environment and nano technology, among others, toward becoming a socio-economic hub in the region.
The Da Nang Hi-Tech Park (DHTP) is one of the three national advanced hi-tech parks and the only of its kind in the central – Central Highlands regions. Its infrastructure have been completed after three stages and it is striving to contribute a minimum of 10-15% of the local gross regional domestic product (GRDP) during the 2025-2030 period. Da Nang has also prepared urban infrastructure facilities in three other industrial parks to draw foreign investors.
Recently, the Da Nang Investment Promotion and Support Board, the Da Nang Hi-Tech Park and Industrial Zones Authority (DHPIZA), and Long Hau Corporation have signed a cooperation agreement, under which Long Hau Corporation is the provider of factory infrastructure for hi-tech and supporting industries on a 29.6ha site in the DHTP.
Vu Quang Hung, head of the DHPIZA, said Da Nang has incentives exclusively designed for investors besides those offered by the central government. Specifically, those investing in DHTP are exempt from taxes for the first four years and enjoy a 50% reduction in taxes for the following nine years. They also benefit from a preferential tax rate of 10% for a period of 15 years. Importantly, they are completely exempt from import taxes on machinery, goods, and equipment used for the formation of factories.
The city also partners with the Da Nang University of Science and Technology to train skilled workforce for investors.
DHPIZA statistics showed that local hi-tech and industrial parks have so far attracted a total of 516 projects, including 391 domestic ones worth over 31.6 trillion VND (1.37 billion USD) and 125 foreign-invested ones valued at more than 1.8 billion USD, or 46.5% of the total foreign direct investment in the city. At present, the city is home to 984 foreign-invested projects valued at over 4 billion USD.
Lawyer Nguyen Thanh Hoa, Deputy General Director of the KPMG Law Company that provides investment attraction counseling for DHTP, suggested that Da Nang should work with nearby cities, provinces and the entire country to build policies to draw investment into hi-tech industries, and hold investment promotion conferences in the northern and southern regions.
Buerstedde Peter, Vietnam Director of the Germany Trade & Invest, proposed that apart from developing a land fund for hi-tech industry, Da Nang should come up with a plan to strengthen goods transportation connectivity and develop logistics services when the Lien Chieu Port is put into operation.
Director of the Da Nang Investment Promotion and Support Board Huynh Lien Phuong opined that the city should expand cooperation with other educational establishments to train a highly skilled workforce, thus meeting demand of investors.
This year, DHPIZA will partner with units concerned to remove obstacles in site clearance, helping three to four more projects to start in the DHTP.
Vietnam spends over 2 billion USD on animal feed, material imports in 5 months
Vietnam spent 2.04 billion USD to import animal feed and raw materials for the production of this kind of commodity in the first five months of this year, according to the Ministry of Agriculture and Rural Development (MARD).
The figure marks a year-on-year decrease of 2%.
Animal feed and raw materials from Argentina to Vietnam accounted for 25.8% of the total market shares, followed by India (18.3%) and the US (15.2%).
Compared to the same period last year, the imports from the three countries increased by 3.9%, 130%, and 28.3%, respectively.
MARD recommends that to reduce reliance on imported animal feed, farmers in localities should make use of available domestic raw materials, produce animal feed by themselves to reduce cost, and find sources of raw materials for animal feed production.
Ministries and agencies were asked to tighten control over the import of meat and by-products, support importers to reduce the costs of products, as well as create favourable conditions for the development of material zones for animal feed production.
Quang Ninh welcomes about 7.1 million tourist arrivals in five months
The northeastern province of Quang Ninh attracted about 7.1 million tourist arrivals in the first five months of this year, 1.7 times higher than the figure of the same period last year, according to the provincial Department of Tourism.
The province earned 13.14 trillion VND (559.1 billion USD) from tourism activities, 1.83 times higher than that of the same period last year.
In May alone, the number of visitors to Quang Ninh is estimated at 1.15 million, bringing the province tourism revenue of nearly 2.3 trillion VND.
In June, the province expects to attract 1.76 million holidaymakers.
In 2023, Quang Ninh strives to become a "can't-miss" destination in Vietnam. It aims to attract 15 million visitors, 500,000 visitors higher than the figure in 2019 before the outbreak of the COVID-19 pandemic.
Vietnam needs to modify policies to foster offshore wind power
According to Vietnam's new electricity strategy, the objective is to ensure the overall capacity of offshore wind power reaches 6 GW by 2030 and 7-9GW by 2050. This will assure energy safety as well as meet the rising needs of the whole nation, in pace with its socioeconomic development.
According to Electricity of Vietnam (EVN) deputy general director Nguyen Tai Anh, "It will be crucial to implement a swift legal framework on investment, building, and operating offshore wind power projects while simultaneously drawing in investment and enhancing the existing transportation system."
According to international practice, bringing an offshore wind power project into action requires about 8–9 years of planning and execution. Some analysts predict that Vietnam will require a vigorous preparatory process with suitable regulations to expedite the implementation time to meet the target of 7GW of power from offshore wind by 2030.
The German Development Agency's Energy Support Programme and Vietnam Energy Partnership Group (VEPG) gathered specialists to share their international knowledge with EVN in this field. Sven Ernedal, Chief of the Offshore Wind Power Task Force, Vietnam Energy Partnership Group, said, "Vietnam is a nation with tremendous opportunities for offshore wind power expansion. However, the discipline to do so is still novel to Vietnam."
At COP26, the government of Vietnam made a significant pledge to be carbon-neutral by 2050. In 2017, the government, along with several foreign development agencies, formally launched VEPG, with the goal of strengthening partnerships, communication, and knowledge sharing and expertise in the energy sector.
Energinet has a strong background in pushing the effective adoption of offshore wind power in its native Denmark, and its specialists happily provided additional information about their offshore wind energy expansion model from the early stages of diplomatic agreement formulation to the completion of the project.
The Danish experts shared common obstacles to large-scale projects such permits at the state and local levels, ambiguity about timelines, as well as the danger of delays and adjustments.
Banks to promote online lending through national population database access
Through a series of newly-issued regulations and access to the national population database, banks are planning to expand their online money-lending services.
Deputy Governor of the State Bank of Vietnam (SBV) Pham Tien Dung said accessing the national population database will help banks to check and authenticate new customer information more easily.
Commercial banks will promote lending services on their electronic platforms based on this database.
The draft amending the Law on Credit Institutions has many regulations specifying banking services via electronic devices.
Besides that, several provisions supplemented by the Civil Law and the Law on Electronic Transactions are necessary to complete the legal framework for online lending.
Online lending, mostly small loans, has been implemented by many banks for a long time. However, this lending form has not been specified in the law. So many banks have carried out online lending with fear that the lending contract will be declared invalid in the case having a legal dispute.
In addition, due to a large amount of junk data and virtual accounts, banks are not interested in promoting online lending because of having many risks.
Since the national population database was formed, the SBV has coordinated with the Ministry of Public Security to verify 25 million customers in the credit information database and focuses on verifying the remaining 26 million customers within the next few months.
Owning this huge amount of clean customer data is a golden opportunity for banks to promote digital services and products, especially online lending.
Allowing the banks to access the population database together with completing the legal framework on digital banking is an opportunity for the banking industry to grow strongly in the future. A solid legal corridor and clean database are the foundation to move towards all banks operating in the digital environment, said economist Le Xuan Nghia.
Nguyen Thi Kim Oanh, Vietcombank Deputy General Director, said the development of online lending would solve the needs of people and banks.
In the past, the banks were still cautious of online lending because the customer database still had junk information and was not authenticated.
The other problem is the automatic credit appraisal and approval due to data limitations and unclear legal basis. One more thing is to lack of customer information to collect debts.
But accessing the national population database and applying the automatic appraisal and approval mechanism is a good opportunity for State-owned joint-stock commercial banks to solve those problems, helping individuals easily get online banking loans with reasonable interest rates, Oanh told Đau tu (Investment) newspaper.
A representative of Techcombank said in the past, the traditional lending process was often carried out through many steps, spending a lot of time and human resources. Now, thanks to the bank's large data on customers and the national population database, the bank hopes to improve the speed of processing lending procedures and enhance risk management.
Several banks have coordinated with the Police Department for Administrative Management of Social Order (C06) under the Ministry of Public Security to start testing a citizen credit scoring system based on population data.
The banks will initially provide unsecured loans for small loans based on the citizen credit scoring system. This solution will promote the retail lending of the banks.
According to a leader of the Bank for Investment and Development of Vietnam (BIDV), the central bank must have official regulations on implementing this solution.
In addition, Oanh from Vietcombank said the Ministry of Public Security needs to update population data promptly to ensure a smooth connection between the banking system with VNeID - the electronic identification application and the citizen credit scoring system not to affect the customer's experience.
According to Oanh, the SBV and other State management agencies must also adjust relevant legal provisions to create favourable conditions for providing loans in the digital environment.
Ngo Minh Sang, director of individual clients at Viet Capital Bank, said that the legal documents have not kept up with the changes in the market, so it is necessary to change the legal documents soon and to synchronise data.
For example, the tax code is managed by the tax authority, while the bank manages the credit information. The national data must synchronise the information.
Job cuts continue for the leather and footwear industry
Due to a severe reduction in orders caused by economic concerns in Vietnam's main export markets, the leather and footwear industry has been compelled to once again scale back its labour force.
Due to a decline in orders, PouYuen Vietnam, a shoe manufacturer whose clients include Nike and Adidas, has announced it will eliminate nearly 6,000 permanent positions between late May and early June. This will be the largest series of terminations since the corporation began operations in Ho Chi Minh City in 1996.
With an estimated 50,000 employees, the company is one of the commercial capital's largest employers. However, it made a similar move in February, laying off nearly 3,000 permanent employees and not renewing the contracts of another 3,000 temporary workers.
Pham Hong Viet, president of the Hanoi Leather and Footwear Association, said, "The export market has experienced a grave decline in orders."
The size of the drop-off in orders ranges from 50 to 70 per cent, with some domestic companies suspending production entirely, with currently no orders for export.
The market has shown little sign of recovery thus far. "Even though Nike and Adidas are such well-known brands, they have so much inventory that there is no need to place new orders," Viet explained.
Indonesia's leather and footwear industry is a major competitor for Vietnam. Wages in Indonesia are approximately $150 per month, in Bangladesh approximately $120 per month, while the Vietnamese industry pays approximately $350 per month. In the context of a lack of orders and the current economic climate, businesses are likely to choose Indonesian or Bangladeshi suppliers.
In light of the global market's declining consumption, Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear, and Handbag Association, said, "The association's export target of $27 billion for 2023 has become more daunting. When the main markets for export, such as the United States, the EU, and Japan, battle inflation concerns, purchasing power reduces and the appetite for holding large fashion product inventories decreases. These factors have had a significant impact on orders."
Renewable energy investment challenges in Vietnam: risks and delays
Minister of Industry and Trade Nguyen Hong Dien has noted that many investors have neglected procedures and violated regulations in their rush to meet the Feed-in-Tariff deadline.
Vietnam's renewable energy sector is facing significant challenges, leading to concerns among investors and potential risks of bankruptcy. The director of the Legislative Institute, Nguyen Van Hien, highlights the abrupt shifts in renewable energy investment policies as a major contributing factor to these issues.
The consequences include delayed commercial operations, missed opportunities to benefit from favourable feed-in tariff (FiT) rates, and substantial wastage of untapped wind and solar power. Hien warns that this situation could have long-term implications for the investment climate and hinder the inflow of funds into renewable energy projects.
According to Hien, over 4,600 MW of renewable energy from various projects remains unexploited due to the delayed implementation of FiT rates. Meanwhile, Vietnam faces a power shortage and is forced to rely on electricity imports from other countries.
Acknowledging the inefficiency resulting from under-utilised investment projects, Minister of Industry and Trade Nguyen Hong Dien said that most investors rushed to meet the FiT deadline, neglecting procedures and violating the legal framework. Dien emphasises the need for authorities, investors, and ministries at all levels to collaborate in resolving these issues.
According to local media, the MoIT reveals that many renewable energy project investors violated legal regulations concerning planning, land, and construction investment, resulting in their failure to fulfill legal procedures.
Despite being required to supplement their documentation since late March, these investors have been unable to do so even after two months, preventing them from negotiating prices with Vietnam Electricity (EVN), the state-owned power company.
Furthermore, many investors have not completed the necessary legal documentation to obtain electricity operation permits for their projects. These permits, as per the Electricity Law, are crucial for ensuring the effective utilisation of power projects. The delay in preparing and submitting documents to the relevant authorities has contributed to the overall sluggishness in the sector.
The MoIT also highlights the challenges posed by the instability of wind and solar power, primarily concentrated in the Central region with low-power demand. Developing these renewable energy sources requires substantial investments in transmission lines and storage systems. Moreover, a stable power source capable of continuous generation is necessary to compensate for the intermittent nature of wind and solar power.
Vietnam heavily relies on hydropower, coal, oil, gas, and biomass, while many countries have incorporated nuclear power as a reliable energy source. Despite the higher costs and increased carbon emissions associated with conventional energy sources, Vietnam continues to utilise them to ensure the reliability of its power system.
Minister Dien said that the validity period of FiT rates was explicitly stated in the Prime Minister's decision and should not be abruptly terminated. Projects that fail to commence commercial operations before the deadline cannot benefit from FiT rates and must negotiate prices to share risks and align the interests of the state, businesses, and the public.
Dien emphasised that the cost of renewable energy depends on equipment, technology, and an average annual price reduction of 6-8 per cent. He believes that renewable energy can be the most cost-effective source of electricity, excluding transmission and storage costs.
The pricing framework for electricity issued by the MoIT is based on the Electricity Law, the Price Law, and extensive consultations with international organisations, as well as statistical data from existing solar and wind power plants.
In Vietnam, the preferential pricing framework implemented in 2020 (FiT 2) reduced prices by 8 per cent compared to the 2017 preferential rates (FiT 1), with a further decrease of approximately 7.3 per cent compared to FiT 2.
Currently, it is estimated that 85 renewable energy plants with a total capacity of over 4,730 MW do not meet the requirements to benefit from FiT rates. By the end of May 2023, 59 of these plants, with a capacity of 3,389 MW, have submitted documents to EVN.
Among them, 50 projects have proposed temporary prices equal to half of the pricing framework, ranging from VND 754-908 per kilowatt-hour (excluding VAT), depending on the type of solar or wind energy.
However, several projects are not willing to negotiate within the ministry's pricing framework due to incomplete legal procedures and transmission difficulties.
As of May 31, updated data from EVN reveals that nine transitional renewable energy projects have submitted documents for Commercial Operation Date certification, a prerequisite for grid connection. Seven of these projects, with a total capacity of over 430 MW, have already started generating electricity, effectively doubling the operational capacity within two days.
The MoIT has approved provisional prices for an additional 40 projects, highlighting efforts to address the challenges faced by the renewable energy sector in Vietnam.
Dong Thap to supply sand for Can Tho-Ca Mau Expressway project
Dong Thap Province has pledged to provide seven million cubic meters of sand for two expressway projects, Can Tho-Hau Giang and Hau Giang-Ca Mau, to address the shortage of sand faced by expressway developers.
The 110-kilometer Can Tho-Ca Mau Expressway is a key component of the eastern North-South Expressway project.
A joint team from the ministries of Natural Resources-Environment and Transport recently held discussions with Dong Thap Province to ensure the sand supply for these expressway projects.
Dong Thap authorities have reported that the province has 14 mines with licenses set to expire by June 30, 2023. In the first half of this year alone, these mines supplied over 972,500 cubic meters of sand. The total remaining sand volume in the authorized mines is currently 25.18 million cubic meters, which will decrease to 21.59 million cubic meters after June 30, 2023. These licensed mines have a combined annual capacity of nearly six million cubic meters of sand.
With the increasing demand for sand in construction projects within the province and the expressway projects, Dong Thap is facing limited sand supply. The provincial People’s Committee revealed that they require around 19.9 million cubic meters of sand for their own use this year.
However, they are striving to allocate 6.6 million cubic meters of sand for the Cao Lanh-An Huu and My An-Cao Lanh expressway projects, in addition to the seven million cubic meters of sand for the Can Tho-Hau Giang and Hau Giang-Ca Mau expressway sections.
Till now, Dong Thap has already supplied 1.9 million cubic meters of sand for Can Tho-Ca Mau Expressway project and is assessing the capacity of mines in the province to extract the remaining amount.
Bank loans in low demand
The food industry is performing better than labor-intensive sectors such as wood, apparel and footwear. Even though food is essential, food producers have not been spared by inflation and impacts of military conflicts in certain parts of the world, according to Nguyen Dang Hien, vice chairman of the Food and Foodstuff Association of HCMC (FFA) and general director of Tan Quang Minh Manufacture and Trading Company.
At a press conference on the second HCMC International Exhibition of Food and Beverages held on May 19, Hien said lower spending in major markets such as the U.S. and Europe have led to a plunge in export orders, which has significantly affected producers in Vietnam. They have launched promotions and discounts on the domestic market but they have not worked well due to weak demand.
Hien said supply chain disruptions have driven raw material prices up 25% in certain industries. The increase has eased to 12-13% thanks to fuel and transportation cost falls. As product costs rose, manufacturers were in dire need of capital in late 2022 and early 2023, but high interest rates made it difficult for them to borrow from banks.
According to Ly Kim Chi, chairwoman of the FFA, the industry-specific profit margin would range from 10% to 12% after bank loan interest is deducted. Lower interest rates could help them survive the current difficult situation, but they would make little or no profit, she noted.
Thai Nhu Hiep, vice chairman of the Vietnam Coffee Cocoa Association, said businesses could not bear such high interest rates. Interest rates should be further cut, Hiep said, adding incentive policies for agriculture, including coffee, should be taken.
At a press conference on the HCMC Economic Forum 2023, Nguyen Ngoc Hoa, chairman of the HCMC Union of Business Associations (HUBA), said businesses have had trouble selling their products at home and abroad due to falling demand. Some businesses have had no other choice but to sell their assets to pay debt.
He said enterprises have called for more interest rate cuts. However, since rates were lowered, banks have found it hard to look for borrowers. Under the current poor business conditions, producers have little appetite for money.
On the other hand, if banks want to find a way out for their money, they would have to make more interest rate cuts. Half of the businesses in HCMC are grappling with difficulties. They have reduced production, employment and working hours due to a lack of new orders.
Phan Van Mai, chairman of the HCMC People’s Committee, speaking at a banking conference on boosting production in southeastern provinces on May 11, pointed out these hardships.
Ly Kim Chi of the FFA proposed the central bank reduce interest rates by 50 basis points in May to enable banks to decrease interest rates to 7-8% per year. The current annual lending rate of 10% is still excessively high for businesses, she said. Besides, banks should roll out loan packages that require minimal paperwork to provide much-needed help to struggling businesses and facilitate money injection into the economy. In addition, the central bank should issue regulations on assessment of properties used as collateral for loans.
According to the World Bank’s report on Vietnam’s economic update released in May, the Vietnamese economy is facing external headwinds as global demand weakens, which exerts pressure on exports and leads to industrial production dropping. Although domestic consumption remains strong, credit growth has slowed despite monetary loosening, reflecting the low capital absorption of the economy.
Some cash-strapped businesses have taken back their loan requests even though the loans have been approved with preferential interest rates, said the chairman of HCMC. He attributed this to possible problems with paperwork and inspections.
Nguyen Thi Hoang, vice chairwoman of Dong Nai Province, said the demand for funding is still strong. Still, businesses are hesitant to ask for loans under the relief package with an interest subsidy of two percentage points due to fears of inspections and audits. Dong Nai has only 59 enterprises benefiting from the loan package. The disbursement is much lower than expected, at over VND1.4 trillion.
Duong Van Thang, vice chairman of Tay Ninh Province, said businesses in the province have weighed the benefits of the incentive package against its costs, with disbursements moving at a snail’s pace, at VND677 billion.
So far, only 0.82% of the VND40-trillion package has been disbursed, the governor of the State Bank of Vietnam, Nguyen Thi Hong, said in a report on the implementation of the National Assembly’s (NA) Resolution 62/2022 sent to NA deputies.
She said some enterprises have refused to borrow under the package due to concerns about inspections.
Meanwhile, lenders and borrowers have found it difficult to meet the requirements for business resilience as enterprises could repay their debts but may not improve their business performance, especially in this difficult time.
Flicking through business situation
The Ministry of Planning and Investment’s 2022 white book on Vietnamese enterprises showed that there were 811,538 businesses in Vietnam as of December 31, 2020, but only 684,260 produced goods and generated revenue during the year.
This translated into 16% of Vietnamese enterprises without an income or generating goods and services.
Sector-wise, 56.6% of agricultural, forestry, and fishery firms posted revenues. The figures stood at 82% for construction and industrial companies and 86% for service providers.
Meanwhile, service providers accounted for 67% of the total registered businesses, of which 40% were retailers. Companies in the industry and service sectors accounted for 31.5%, while agricultural, forestry, and fishery businesses made up 1.5%. Thus, it could be drawn from the nation’s sector structure that Vietnamese service providers and retailers did not generate wealth for society.
The white book also indicated that the average debt ratio of all Vietnamese enterprises in 2020 registered at 2. In other words, their debt doubled their equity in 2020, on average. The service sector posted the highest ratio of 2.7, while the industrial and construction sectors recorded a debt-to-equity ratio of 1.3. Financial leverage at agricultural, forestry, and fishery companies was the lowest, with a debt ratio of 0.6.
The debt ratio of the service sector remained unchanged in 2020 compared to the previous year. However, the industrial-construction and agro-forestry-fishery sectors saw their debt ratio rise in 2020 by 0.87 and 0.79 compared to 2019.
By category, the average debt ratio of state-owned enterprises, domestic private companies, and foreign direct investment (FDI) firms registered at 3.5, 1.9 and 1.7, respectively.
By debt structure, state-owned enterprises accounted for 14.3% of the nation’s total corporate debt, while domestic private companies and FDI firms made up 62.7% and 23%.
Domestic firms’ debt was 332% higher than the country’s gross domestic product (GDP) in 2019, and the figures rose to 336.7% in the following year. Of the total, state-owned enterprises’ debt was equal to 97.5% of the 2019 GDP and 101% of the 2020 GDP, compared with domestic private companies’ debt-to-GDP of 224% in 2019 and 235.7% in 2020.
Despite the mountain of debt, enterprises’ return on asset (ROA) ratio in 2020 dropped 5% over 2019 to 2.1%. By sector, the industrial and construction sectors had the highest ROA ratio of 3.6%, followed by agro-forestry-fishery sectors with 2.3% and the service sector with 1.3%. By category, state-owned enterprises recorded the ROA ratio at 1.9%, FDI firms at 1.9%, and domestic private businesses at 5.2%. Meanwhile, the ROA ratio of enterprises is reduced by scale, with large companies posting a ratio of 3.1%, medium-sized enterprises seeing a ratio of 1%, small-sized firms having a negative ratio of 0.1%, and microenterprises recording a negative ratio of 0.7%.
Fundamentally, enterprises’ operations contributed to GDP growth. However, the book pointed out that only 60% of companies that generated income and commodities contributed to Vietnam’s GDP expansion over the past few years. And who contributed the other 40% to the GDP growth? Was it coming from non-income-generating activities such as state management, non-profit organizations, or the household sector? According to the System of National Accounts, the added value of those activities must be included in GDP calculations, as they stemmed from workers’ base salary and fixed asset depreciation. Should such an economy be considered deviant?
In 2023, domestic manufacturers grapple with difficulties, which is a grave risk for the banking system and the economy.
Inspection cycle for private-use vehicles extended by six months
The Ministry of Transport has released a new circular regarding the automatic extension of inspection certificates for privately owned vehicles with up to nine seats.
Under the new regulation, the roadworthiness stamp and certificate for automobiles will be automatically renewed for an additional six months, starting from June 3, 2023.
This circular applies specifically to privately owned vehicles with up to nine seats and no commercial transportation purposes.
Furthermore, the vehicles must have had their roadworthiness stamp and certificate issued before May 22, 2023, and still be valid as of June 3, 2023. The vehicles should also fall within the manufacturing date range of seven years or between 13 to 20 years.
The objective of this measure is to tackle the backlog of auto inspection centers in the country and alleviate the pressure of urgent inspections for vehicle owners.
Over VND5,200 billion to be disbursed for North-South expressway project in June
The North-South Expressway project will receive a disbursement of VND5,229 billion this month, reported a local media.
From January to May, the Ministry of Transport disbursed an estimated VND28,600 billion for all projects under the ministry’s jurisdiction, meeting nearly 30% of the full-year target.
Of this, VND21,075 billion was allocated for the North-South Expressway project, including components in Phase 1 executed from 2017 to 2020 and Phase 2 from 2021 to 2025.
With the above result, achieving the full disbursement target of over VND94,000 billion for the year poses a challenge for the ministry.
The Planning and Investment Agency under the Ministry of Transport stated that the disbursement of public investment capital for sections of the expressway including National Highway 45-Nghi Son, Nghi Son-Dien Chau, Cam Lo-La Son, and Dien Chau-Bai Vot was behind the scheduled disbursement.
Regarding Phase 2, the capital disbursement in May only reached 87.5% of the plan. Some projects, such as sections passing through Bai Vot-Ham Nghi, Ham Nghi-Vung An, Bung-Van Ninh, and Van Phong-Nha Trang, also faced disbursement delays.
To expedite the disbursement of public investment capital from now to the year-end, developers of some components are requested to complete handover and acceptance procedure and settlement of works.
The delay in the execution of most components of the expressway project is attributed to material supply shortage and site clearance bottlenecks.
The Ministry of Transport has been allocated a record high of VND94,161 billion for this year.
HCMC speeding disbursement for site clearance of projects
Ho Chi Minh City is speeding up disbursement for site clearance of projects which were allocated funds in 2022 and 2023.
Chairman of the People's Committee of Ho Chi Minh City Phan Van Mai has just sent an official letter to the Secretary of the Thu Duc City Party Committee and secretaries of the district and district party committees to urge the local machinery of the state to disburse the projects which were allocated funding for the site clearance and compensation work in 2022 and 2023.
In particular, the city Chairman requested local authorities to organize meetings with project-affected people to listen to inhabitants and persuade them to agree on the project implementation policy as well as compensation policy, support and resettlement approved by competent authorities.
In 2022, the southern metropolis' disbursement results of public investment capital were still not as good as expected.
Specifically, Ho Chi Minh City has 191 projects with a total capital of nearly VND12,000 billion and the city disbursed more than VND7,880 billion or more than 65 percent. This year, Ho Chi Minh City has 136 projects with allocated capital of more than VND20,600 billion, but the disbursement rate has so far not met the requirements of the plan and schedule.
The Department of Transport has just proposed that the People's Committee of Ho Chi Minh City submit to the City Council for consideration and approval at the scheduled meeting this July about 11 important transport infrastructure projects of the city including a number of specific projects such as the Ring 2 construction project; the construction of Thu Thiem 4 bridge.
Moreover, the city will dredge channels, build embankments to protect the riverbanks of the Dem - Ben Luc market, build embankments to prevent landslides on the right bank of Can Giuoc River, upgrade and expand alleys in District 7 and the D3 Street in Ward 10 of Go Vap District.
Shares of agribusiness companies see strong growth
Shares of agribusiness companies have increased strongly recently thanks to more positive supportive information.
The first group that can be mentioned is sugar stocks. From the beginning of this year, shares of Thành Thành Công – Biên Hòa Joint Stock Company (SBT) increased by more than 10 per cent, Quảng Ngãi Sugar (QNS) rose by 23.6 per cent, Sơn La Sugar (SLS) gained by more than 32.5 per cent, Kon Tum Sugar (KTS) increased by 77.4 per cent, and Lam Sơn Sugar Joint Stock Corporation (LSS) even increased by more than 90.4 per cent.
The growth of sugar stocks was attributed to rising sugar prices. Sugar prices have skyrocketed to their highest levels in more than a decade as concerns about tight global supply are weighing on global food security.
In the sugar industry outlook update report, VNDIRECT Securities Joint Stock Company (VNDIRECT) expects sugar prices to remain high in 2023.
According to market research group Euromonitor International, sugar demand is forecast to increase by 1.7 per cent year-on-year in 2022. Meanwhile, according to the Việt Nam Sugar Association (VSSA), processed sugarcane output is expected to reach 8.7 million tonnes, up 16.5 per cent year-on-year against 2022, and sugar production reached 870,930 tonnes, up 16.6 per cent year-on-year compared to 2022.
Trade remedies measures will have a more obvious effect than in 2022, leading to a decrease in the amount of imported sugar while the inventory of cheap imported sugar in 2022 is gradually decreasing. Therefore, the price of imported sugar into Việt Nam will continue to increase in 2023. However, imported sugar still accounts for about 70 per cent of total supply, thus smuggled sugar will still put competitive pressure on domestic sugar prices, says VNDIRECT.
Shares of rice companies have also increased strongly since the beginning of this year. Specifically, Trung An Hi - Tech Farming JSC (TAR) increased by nearly 33 per cent, Lộc Trời Group Joint Stock Company (LTG) rose by more than 18 per cent, and The PAN Group JSC (PAN) gained by nearly 16 per cent.
For the rice industry, VNDIRECT estimates that the world rice demand will remain high in 2023 due to political and economic uncertainties along with unresolved conflicts between Russia and Ukraine, pushing up the demand for reserves. Rice export prices are expected to continue to increase in 2023.
According to the General Statistics Office, in May 2023, the total export value of agricultural products remained stable at a high level of US$2.1 billion, up 2 per cent from the previous month and up 19 per cent over the same period last year. Rice was still the export item with the highest value with $530 million, up 37 per cent over the same period last year and accounting for 25 per cent of total agricultural export turnover.
KIS Vietnam Securities Joint Stock Company (KIS) says that many countries such as China, Indonesia and the Philippines increased rice imports to compensate for their national food reserves. KIS predicts that rice export turnover will increase slightly in the second quarter of 2023 compared to the first quarter of the year.
In addition, lower fertiliser prices and the recovery of wheat and corn supplies in Ukraine, combined with lower oil prices, could help improve the net profit margin of crop producers in the second quarter of 2023.
As for the livestock sector, within the past month, this sector witnessed recoveries in stock prices, attracting strong cash flow. Specifically, from the beginning of May, Hoàng Anh Gia Lai (HAG) shares increased slightly by 6.5 per cent, BaF Vietnam Agriculture JSC (BAF) rose by 11.3 per cent, and Dabaco Group (DBC) gained by 35.6 per cent.
The price of feed ingredients gradually cooled down and the expectation of a reduction in the feed tax also opened up the prospect of profit growth for livestock enterprises, positively affecting the stocks of this industry group.
VNDIRECT says that the cooling of feed material prices, along with the recovering trend of pork prices, will create favourable conditions for meat producers in production and business. These companies will record more positive earning results from 2023.
For seafood businesses, SSI Securities Joint Stock Company (SSI) says that the reopening of China is expected to be a catalyst for the seafood industry in 2023, but more time is needed to assess the specific impact. The pangasius industry is expected to benefit the most, as China is Việt Nam's largest pangasius export market.
Vietravel Airlines opens route from capital to Da Lat, Cam Ranh
Vietravel Airlines on June 7 officially ran its first two flights linking Hanoi with Da Lat city in the Central Highlands province of Lam Dong and Cam Ranh city in the central province of Khanh Hoa.
Carrying 400 passengers together, the flights using the Airbus A321 aircraft landed in Da Lat’s Lien Khuong airport and the Cam Ranh international airport.
The new links have pushed the number of routes operated by the carrier between Hanoi and other localities to five, offering more flight options for passengers. Earlier, the airline had already run flights to Da Nang, Phu Quoc and Quy Nhon.
Vietravel Airlines on May 25 officially launched direct flights connecting two central localities of Vietnam – Cam Ranh and Da Nang with Macau (China).
As of the first quarter of 2023, Vietravel Airlines, which made its debut in late 2020, had operated over 11,600 flights safely and carried close to 2.5 million passengers, with an average occupancy rate of 93.7%.
The carrier aims to serve 900,000 passengers in the second and third quarters of this year.
In the first quarter, Lam Dong and Khanh Hoa served 1 million and 2 million visitors, respectively
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes
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