The taxation sector is taking concerted efforts to have 70% of enterprises and business households using e-invoices generated from cash registers later this year under an initiative launched since December 15, 2022.

Accordingly, the General Department of Taxation asked tax departments to strive to reach 30% by the end of the second quarter, 50% by the end of the third quarter and 70% later this year. In Hanoi, Ho Chi Minh City, Hai Phong, and Quang Ninh, the rate must reach 100% in dining and restaurant services.

As of late May, there were 18,963 businesses registering to use e-invoices with tax codes generated from cash registers.

Assoc. Prof Le Xuan Truong, head of the Vietnam Academy of Finance’s Tax and Customs Department, believed that expanding the use of e-invoices from cash registers helps tax authorities better monitor the supply of goods and services from businesses, contributing to more effective and fair tax management.

Ho Chi Minh City is one of three localities that have piloted the use of e-invoices generated from cash registers. However, after more than two months of implementation, the number of taxpayers successfully registered in the city remains low, reaching only 278 as of February 26 this year.

Through a preliminary survey, HCM City has 266 enterprises and 5,268 business households, which are trade centres, supermarkets, restaurants, hotels, entertainment service providers, are the targets of the scheme.

Vietnam, China seek to promote trading of agro-forestry-fisheries products

The Ministry of Agriculture and Rural Development (MARD) has sent a working group to China’s Guangxi and Yunnan provinces to seek measures to promote the trading of agro-forestry-fisheries products between Vietnam and China, one of the major export markets of Vietnam, said Deputy Minister Tran Thanh Nam.

According to Nam, the Chinese economy has shown strong recovery with GDP growth reaching 4.5% in the first quarter of this year. The neighbouring country has high demand for Vietnamese agro-forestry-fisheries products.

However, the border gates of both countries are often overloaded, especially during the harvest season of many agricultural products, leading to congestions at the gates, he said.

Meanwhile, high requirements of the Chinese market, along with strict customs clearance, have prevented many kinds of Vietnamese agricultural products from entering China, said Nam.

The official said that during the working group’s visit, the two sides organised many straightforward discussions to deal with the situation.

Nam said that 70% of Vietnamese agricultural products are exported to China through border gates in Guangxi and Yunnan.

The two Chinese localities agreed with the MARD on the need to connect the farm produce supply chain after COVID-19 pandemic is controlled. They will organise an annual meeting with Vietnam in November to review and evaluate their cooperation outcomes in a year and seek orientations for cooperation in the following year.

They also agreed with Vietnam’s proposal to form an association of agricultural businesses of Vietnam and Guangxi, and another of Vietnam and Yunnan, aiming to build sustainable agricultural supply chains.

The customs authorities of Guangxi and Yunnan also concurred to create favourable conditions for customs clearance activities through border gates, Nam said.

He also stressed the need for upgrading the infrastructure system in border gates to meet the import-export demands between the two countries.

The Kunming customs department has agreed to propose to the General Administration of Customs of China to expand the list of aquatic products eligible to be exported to Yunnan, said Nam.

The two sides also agreed to set up connecting points to coordinate in settling problems in trading of agro-forestry-fisheries products.

Nam said that the MARD working group’s visit was fruitful, with both sides agreeing to finalise procedures for the signing of a memorandum of understanding on agricultural cooperation between the MARD and the administrations of Guangxi and Yunnan in September on the occasion of the China-ASEAN Expo.

The MARD Deputy Minister also revealed that the Chinese side agreed to open additional border gates with Vietnam, which will be built towards smart border gates using digital technology. The MARD concurred to develop single-window customs services in the country’s border gates.

According to Nam, during the visit, two agricultural trade promotion forums were held in Guangxi and Yunnan, drawing more than 100 Chinese and 20 Vietnamese firms, during which many cooperation issues were discussed.

The official held that in order to further boost the import-export activities between Vietnam and China in general as well as Guangxi and Yunnan in particular, it is necessary to build a sustainable value chain between the two countries to maintain connectivity between the two sides.

Ben Tre targets to be Mekong Delta’s top three exporters by 2030

Ben Tre province aims to become the Mekong Delta’s top three in terms of export turnover by 2030.

The target is set in an action plan to implement the commodity import-export strategy to 2030, which has been issued by the provincial People’s Committee.

Accordingly, the province focuses on boosting import and export activities, toward gradually increasing the scale of production and consumption of agro-forestry and aquatic products. Special attention will be paid to building concentrated raw material areas and exploiting the sources reasonably. The cultivation of key commodities will be expanded along with pouring investments into offshore fishing vehicles, creating a stable and high-quality source of raw materials.

Ben Tre sets a target of obtaining a 13.5-14.5% growth rate in export turnover in the 2021-2030 period.

It will promote import and export activities in the direction of both expanding markets and commodities and improving import and export efficiency in line with sustainable development and minimising environmental pollution. Specifically, the group of industrial and handicraft products continues to make up a high proportion of total export turnover with 88% by 2025 and 90% by 2030; vegetables and fruits will account for 8% by 2025 and 10% by 2030, and the group of processed aquatic products 4% by 2025 and 6% by 2030.

According to the provincial People's Committee, in the 2021-2025 period, thanks to the advantage of new generation free trade agreements (FTAs) that have taken effect including the Vietnam - Korea FTA (VKFTA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which will eliminate up to 90% of tariff lines, local export products are expected to increase sharply, especially coconut-related products, electronic components, auto parts, footwear, garment-textiles, agricultural products and handicrafts. The export value of coconut-related products will reach 560 million USD by 2025, up 10.05% year-on-year while the export of vegetables and fruit will hit 165 million USD, an increase of 6.99% per year.

To this end, the People’s Committee of Ben Tre province asked the Department of Agriculture and Rural Development to coordinate with other departments, agencies and People's Committees of districts and cities in developing the value chain of key agricultural products in the 2020-2025 period with orientations to 2030.

The Department of Industry and Trade was assigned to work with other agencies in the implementation of a programme on developing key industries and local businesses in the 2020-2025 period with a vision to 2030.  Priority will be given to attracting clean energy industry, manufacturing and processing aquatic products and industries to serve agriculture and rural areas.

Nguyen Van Be, the department’s director said that it will continue to popularise local goods at home and abroad. Every year, the department collaborates with agencies and units under the Ministry of Industry and Trade and media outlets to promote products under One Commune One Product (OCOP) programme and specialties of the locality, he said.

ASEAN wants to expand RCEP membership

ASEAN Secretary-General Kao Kim Hourn has said the Association of Southeast Asian Nations (ASEAN) is striving to increase the membership of the Regional Comprehensive Economic Partnership (RCEP).

Speaking at the ASEAN-Japan Business Week in Tokyo on June 5, Kao said the ten-member grouping also plans to establish a unit in the ASEAN Secretariat in support of the RCEP, which accounts for 32% of the world’s total GDP.

ASEAN economic ministers are also working on procedures to allow other economies to join the agreement.

The RCEP gathers the 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and China, Japan, the Republic of Korea (RoK), Australia and New Zealand.

The deal has recently come into full effect in all the 15 member countries after it officially took effect in the Philippines on June 2.

The RCEP will eliminate up to 90% of tariffs on goods traded among the signatories within 20 years, starting from the agreement's entry into force.

Kao called the RCEP – the largest free trade agreement in the world – a crucial initiative in support of businesses, especially those from Japan. According to him, more than 14,000 Japanese companies are operating in ASEAN countries.

Listed companies expected to recover in second half of 2023

The profits of listed companies are expected to recover in the second half of the year after performing poorly in the first quarter, buoyed by the recent supportive policies from the Government, said analysts at securities firms.

In its latest report, Mirae Asset (Vietnam) Securities said that the total after-tax profit of listed companies decreased by 18% year-on-year in the first quarter of 2023. But business results will recover this year, even though not strongly due to the challenges that the economy is facing. 

Exports are showing signs of improvement in May on Vietnam’s strong trade promotion, despite persistently weak global demand, the securities firm said. 

Data from the General Statistics Office showed that export turnover was estimated at 29.05 billion USD last month, up 4.3% over April but down 5.9% year-on-year. 

Mirae Asset expects the recovery from the Chinese market after opening will partly offset the decline from the US market. Thereby, the country’s exports and industrial production activities are expected to be more positive in the second half of the year.

Meanwhile, disbursements of FDI remained stable in the first five months of the year, reaching about 7.65 billion USD. 

The analyst team at Mirae Asset believes that Vietnam remains an attractive destination when businesses consider the China plus one strategy, in which companies avoid investing only in China and diversify their activities to other nations, as well as when global economic conditions improve. 

Similarly, VNDirect Securities Corporation said that the whole market’s profits might recover from the third quarter of 2023 onward.

Accelerating disbursement of public investment, lower interest rates, and the recently passed Power Development Plan 8 are attributed to the rebound in profits of listed companies, said both securities companies. 

Mirae Asset said that public investment in infrastructure development and the national Power Development Plan 8 will be important drivers to attract FDI in the long term. At the same time, stable human resources and efforts to reform administrative procedures are also positive points. 

Particularly, public investment is a key growth driver in the remaining months of 2023 but disbursement progress needs to accelerate, Mirae Asset added.

In the first quarter of 2023, realised capital from the state budget increased by 18.1% year-on-year to 91.5 trillion VND (nearly 4 billion USD), higher than last year's growth of 12.3%.

Meanwhile, VNDirect said that even though it has reached a sufficient and green option, the Power Development Plan 8 may be more difficult to implement than the adjusted Power Development Plan 7 due to the strong development of high-priced power sources such as gas and renewable energy.

According to the base scenario, the total investment in power is expected to reach 98 billion USD in the period of 2021-2030, or 9.8 billion USD per year, mainly allocated to gas power (30%) and wind power (35%).

Therefore, not only electricity producers but also related construction companies benefit from the plan, Nguyen Minh Hoang, Director of the Analysis Department at VietFirst Securities, told Vietnam News. 

In addition, continuous rate cuts from the central bank help reduce enterprises' expenses, especially in the manufacturing, power, and infrastructure construction industries, he added.

Rubber exports enjoy positive growth in May

Vietnam's rubber exports in May recorded positive growth, up 25.4% in volume and 22.6% in value compared to April, according to the Ministry of Industry and Trade.      

The average rubber export price in May stood at US$1,358 per ton, down 2.2% compared to the previous month and down 20.5% against the same period from last year.

During the five-month period, Vietnam exported 580,000 tons, worth US$803 million, down 3.3% in volume and 23.7% in value on-year. Vietnam's key rubber exports are a mixture of natural and synthetic rubber HS 400280,  making up 67.43% of the country's total rubber exports

Of which, exports to China accounted for 99.79% of the country’s total export of mixed natural and synthetic rubber.

In addition, exports of other types of rubber also grew well compared to last year's corresponding period, including RSS1, regenerated rubber, and SVR CV40.

Attention must be paid to improving quality of insurance agents

It is critical to improve the quality of insurance agents and consultants to consolidate trust of insurance buyers and bring the life insurance market back on track, experts said.

According to Pham Thu Phuong, Deputy Director of the Insurance Supervisory Authority, the life insurance market must be put under scrutiny, especially quality of consultancy, customer care service and claim settlement.

Many insurance companies did not pay adequate attention to the quality of training to consultants and controlling quality of agents. The claim settlement also caused frustration, she said.

Although bancassurance was considered to bring significant benefits, problems arose during the implementation due to the loose management, which caused a stir among insurance buyers, Phuong said, adding that most of the frustration came from buyers through bancassurance.

According to Tran Hong Nguyen, Deputy Chairwoman of the Law Committee of the National Assembly, problems of the life insurance market were a big lesson to all relevant parties, including the State management agencies, insurance companies and banks as well as insurance buyers.

The management agency should keep a closer watch on the market and improve market forecast to have timely measures to cope with arising problems before it went out of control, she said.

For insurance companies and commercial banks, it was critical for them to improve the training quality of their consultants and agents, not only sales skills but also knowledge about insurance products and professional ethics.

When insurance did not go in the right direction, the consequences were transparent as people would turn away from insurance and it was the insurance companies who would suffer, she said.

The settlement of claims should also be timelier and more satisfactory, she said. In addition, insurance buyers should study the terms of insurance contracts carefully.

Ngo Trung Dung, Deputy General Secretary of the Viet Nam Insurance Association, said that existing scandalous claims should be solved promptly and thoroughly based on the established laws and signed contracts to consolidate trust in the insurance life market.

Communications should also be enhanced to raise awareness about life insurance.

It was also necessary to have the base for handling when consultants or agents provided the wrong consultancies, he said.

The draft decree guiding the implementation of the Law on Insurance Business said that insurance companies were responsible for recording the consultancies and keeping the audio for five years as evidence for handling disputes. This solution was being applied in Hong Kong, he said.

According to Phuong, protecting the rights of insurance buyers was also a top priority.

She said that there would be decrees and circulars detailing the management on the consultancy of insurance agents, especially bancassurance.

Inspections would be increased this year to ensure market discipline, she stressed.

To date, there were 78 insurance companies and one branch of a foreign non-life insurance company operating in Viet Nam.

The insurance market saw an average annual growth of 20 per cent per year. 

Dutch investors explore opportunities for agriculture, logistics cooperation in Can Tho

The Mekong City of Can Tho hopes to promote trade cooperation and export its agricultural products to the Dutch market and Europe.

Tran Viet Truong, chairman of the municipal People’s Committee, delivered this statement during a reception for businesses from the Netherlands and Vietnamese enterprises who are involved in import-export activities to discuss cooperation opportunities relating to the import and export of agricultural products and logistics on Monday.

Can Tho has more than 114,000ha of agricultural land, accounting for about 80 per cent of its natural land area. Of which, over 78,000ha are cultivated with rice with an annual output of over 1.3 million tonnes and nearly 31,000ha of fruit trees with an output of 170,000 tonnes of all kinds.

There are 40 rice processing enterprises in the city, along with 45 seafood processing facilities for export and about 478 agricultural and aquatic product production and processing establishments for domestic consumption. Its major export items are rice, aquatic products, fruits, and other processed agricultural products.

Truong said the logistics infrastructure of Can Tho City and the Mekong Delta is still limited. Due to the sedimentation at Dinh An estuary, ships of over 500 tonnes cannot enter local ports. Therefore, the Government has advocated dredging the estuary so that ships from 10,000 to 20,000 tonnes can dock at Hoang Dieu port in Binh Thuy District and Cai Cui port in Cai Rang District.

The city leader also said that Can Tho boasts an international airport, but it mainly carries passengers. Logistics services have not been developed, affecting the import and export of agricultural products of the city as well as the Mekong Delta region. Thus, the city is inviting investors with strengths in logistics and aviation sectors to come to the locality to explore investment opportunities.

Can Tho has planned to set up a logistics centre for linkage, production, processing and consumption of agricultural products in the region, which will cover an area of 3,300 ha, he said, adding that the project is expected to be approved by the Prime Minister next month.

At the reception, representatives of Dutch investors and Vietnamese import-export enterprises said that they would conduct further study to have a better view of projects in this regard. 

Industrial production continues recovery but difficulties remain

The Index of Industrial Production (IIP) in May continued to recover, but enterprises are still facing difficulties due to the impact of increasing input production costs, according to the General Statistics Office (GSO).

Do Thi Ngoc, head of GSO's Statistics Department, said national industrial production changed more positively with an IIP growth of 2.2 per cent in May over the previous month and 0.1 per cent over the same period last year.

However, due to the challenging situation of the world economy in the first months of 2023, the decrease in export orders affected domestic industrial production. Viet Nam's IIP in the first five months decreased by 2 per cent over the same period last year.

Of these, the water supply, waste-water treatment and management activities recorded the highest IIP increase of 6.4 per cent in the first five months. The electricity generation and distribution sector followed with 0.8 per cent.

Meanwhile, the mining industry and the processing and manufacturing sectors saw a decline of 3.5 per cent and 2.5 per cent in IIP, respectively.

In terms of localities, the GSO said in the first five months, 49 localities gained growth in this index compared to the same period of last year, while IIP decreased in the remaining 14 localities.

Of which, Gia Lai recorded the highest increase in IIP at 21.7 per cent. Tuyen Quang followed with the IIP growth at 18.6 per cent. Other localities achieving high growth rates included Bac Giang (15.9 per cent), Phu Tho (15.3 per cent), Hai Phong (13.4 per cent), Nam Dinh (13.3 per cent), Kien Giang (13.1 per cent), Phu Yen (12.3 per cent), and Hau Giang (8.3 per cent).

The GSO also reported that several essential industrial products showed an increase in IIP during the first five months of 2023, including sugar (31.1 per cent), gasoline (13.5 per cent), garments made from man-made fibres (10.6 per cent), NPK fertiliser (9.2 per cent), and televisions (7 per cent).

Meanwhile, some other products saw a reduction in IIP growth in the same period, such as automobiles (24 per cent), bar and angle steel (20.1 per cent), mobile phones (16.4 per cent), textiles from natural fibres and phone components (10.1 per cent each), and casual wear (9.8 per cent).

The office also pointed out that the businesses continued to face difficulties in the context of the global economic downturn affecting the domestic economy.

In the first five months, Viet Nam had 88,000 enterprises withdrawing from the market, up 22.6 per cent over the same period last year. The average registered capital of a newly established enterprise also decreased by 24.1 per cent.

According to Ngoc, in the context that the economy and business community need to be injected with capital to recover, the core inflation in the first five months of 2023 increased by 4.83 per cent, higher than the general inflation at 3.55 per cent is a challenge for monetary policy management.

Therefore, it is necessary to have a proactive and flexible monetary policy while ensuring inflation control and supporting economic growth.

In order to remove the difficulties as well as achieve the socio-economic development targets in 2023, GSO has proposed that the Government focuses on implementing solutions to maintain macroeconomic stability and proactive, flexible and efficient monetary policy in coordination with fiscal policies and other macro policies.

Especially, it is necessary to lower the policy interest rates and stabilise the lending interest rates to support the enterprises in recovery and development of production and business.

In addition, it should synchronously and effectively coordinate between monetary and fiscal policies to create favourable conditions for enterprises to access capital for production and business activities.

It needs to promote domestic production and consumption, especially the products made from domestic raw materials, and use domestic fuels to limit imports.

The Government is recommended to regularly review production and business activities to promptly remove difficulties such as lack of capital, high input material prices, and difficulties in product consumption.

The State must effectively deploy solutions to stimulate trade, service and tourism activities, expand and diversify export markets and products, and effectively exploit the signed free trade agreements (FTAs).

In addition, it focuses on drastically implementing solutions to promote disbursement of public investment capital, and the programme of socio-economic recovery and development. 

Viet Nam and Norway cooperate in marine aquaculture

Viet Nam and Norway will continue to collaborate in the development of marine aquaculture, Norwegian Ambassador to Viet Nam said at a workshop on Monday in Nha Trang City.

The workshop, themed “Viet Nam-Norway: Promoting Cooperation in Marine Aquaculture", aims to create opportunities for individuals and experts to discuss the roadmap for sustainable aquaculture development in Viet Nam and the role of stakeholders.

It also shares the importance of innovation technology, and a skilled workforce to meet the industry's requirements.

Hilde Solbakken, Norwegian Ambassador to Viet Nam, said that the countries have cooperated in the marine sector for 40 years. Norway has assisted Viet Nam in developing the first Fisheries Law in 2003 and related documents, and conducting surveys of aquatic resources, capacity-building projects, and fisheries activities.

Aquaculture is one of Norway's largest export sectors, accounting for 17 per cent of the country's GDP. The field has become a highly productive and specialised industry, creating employment opportunities for coastal communities.

Tran Dinh Luan, Director of the Fisheries Department, Ministry of Agriculture and Rural Development, said that with a long coastline, Viet Nam and Norway have many similarities and commonalities. Thus, Norway‘s research will give suggestions to solve difficulties and build appropriate policies for developing a sustainable marine aquaculture industry.

Khanh Hoa province aims towards sustainable marine economic development with high standards for seafood products and gradually forms marine farming areas of 3-6 nautical miles to reduce the pressure on coastal marine.

Le Van Hoan, Deputy Director of Khanh Hoa Department of Agriculture and Rural Development, said that the province is successfully implementing a project to develop high-tech marine aquaculture to increase productivity, product value, and people's income, therefore improving socio-economic conditions.

As Viet Nam implements a project to develop marine aquaculture in a synchronous, safe, efficient, sustainable, and environmentally friendly manner, switching to offshore farming, developing fish farming on an industrial scale, exporting, and improving the quality and value of Vietnamese seafood will be an inevitable trend. 

Banks find luxury cars and villas difficult to liquidate

Banks have been reportedly finding luxury cars and villas difficult to liquidate, even after significantly reducing their prices in an effort to attract buyers, according to industry insiders.

The Bank for Investment and Development of Vietnam (BIDV) has recently announced the auction of two high-end cars. The 2012 Audi A8L has a starting auction price of VND940 million, while the 2015 Land Rover Range starts from VND3 billion, both markedly lower price points (VND500-800 million lower) in comparison to similar used cars in the market.

These prices do not, however, include costs associated with ownership transfer, registration fees, and other potential expenses that may arise from the purchases.

The Vietnam Bank for Agriculture and Rural Development (Agribank) and the Vietnam International Bank (VIB) are also auctioning luxury cars, including Porsche, BMW, and Mercedes-Benz models. Agribank HCM City is auctioning a 2018 Porsche Panamera with a starting price of VND3.35 billion, for the seventh time. The bank's price has dropped by as much as VND2.2 billion from the initial asking price.

Meanwhile, BIDV is trying to sell a villa as collateral for the debt owed by one of its borrowers. The villa is situated in Hoai Duc District in Ha Noi with a total land area of 310 square metres and a floor area of 436.1 square metres. BIDV has dropped the price to VND22 billion, lower than its previous asking price of VND26.6 billion in August last year.

Apart from luxury cars and villas, banks are publicly auctioning various assets, such as machinery and equipment, fishing boats, production workshops, stocks and land use rights.

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has held no fewer than 14 auctions for an unfinished industrial complex located in northern Hai Duong Province. The bank's asking price for the complex, which includes production workshops, operational buildings, material storage warehouses, finished product storage facilities, and all machinery and equipment, as well as the land lease, has dropped by nearly VND50 billion since last listing in May last year.

According to economists and industry experts, difficulties in the liquidation of collateral assets held by the banks are mainly due to the current economic downturn, which significantly reduces demand for luxury assets.

In addition, legal quagmires, which typically further complicate such transactions, remain a major obstacle for potential buyers.

Dr Can Van Luc, Chief Economist at BIDV, said there should be amendments to the draft Law on Credit Institutions to address such issues with an aim to provide clearer criteria for determining the value for bad debts and associated collateral assets.

According to recent data released by the State Bank of Vietnam (SBV), the non-performing loan ratio in the domestic banking system stood at 2.88 per cent as of the end of March 2023 with the gross non-performing loan ratio currently standing at around 5 per cent, up from 4.5 per cent at the end of 2022. 

Profits plunging for cement businesses

The cement industry’s financial performance continues to slide, with Q2 losses piling up due to sluggish consumption and rising input costs.

According to Cong Thanh Cement’s post-AGM report released on May 19, the company incurred losses of up to $50.3 million in 2022, a substantial rise from the $37.5 million incurred in 2021.

This year as a whole, the company anticipates revenues of $82 million, a rise of 21 per cent from its performance in 2022, and a loss of $33.9 million after taxes.

In Cong Thanh’s 2022 audited financial statement, released the following day, it was noted that the company’s accumulated losses surpassed its equity by $220 million by the end of 2022.

In addition, the company has yet to carry out plans to repay outstanding long-term loans and bonds of $55 million for VietinBank, $12.3 million for SHB, and over $13.5 million in accrued interest.

Meanwhile, at its April AGM, Luu Dinh Cuong, general director of Ha Tien 1 Cement JSC, stated that the market in the first half of 2023 has been “extremely challenging”.

First-quarter net revenue for Ha Tien 1 was roughly $72 million, a significant decrease from $83.3 million in the same period last year. Gross profit was $3.2 million, as opposed to $7 million during the same time frame in 2022.

Cong Thanh and Ha Tien 1 have been described as typical instances of loss-making cement companies. According to the Vietnam Cement Association (VNCA), export volume declined by 25 per cent in the first quarter of 2023, reaching only 8.1 million tonnes with a revenue of $345 million. This result, according to a VNCA representative, is “not shocking” because it is a consequence of an overall decrease that has persisted since the third quarter of last year. The total net profit for the first quarter was -$4 million, compared to $11 million in the same period last year.

According to the General Statistics Office, the export volume fell by 26.5 per cent in the first four months of the year, reaching approximately 10.25 million tonnes, while the export value dipped by 25.8 per cent to $445 million. In line with a report on the cement industry published earlier this year by SSI Research, the country’s domestic cement consumption in 2023 will remain stable compared to the previous year.

Thai Van Sam, general secretary of the Vietnam Association for Building Materials, stated that the demand for construction materials was tremendous in April of prior years, but is currently meagre. Sam reported that consumption of cement in the southern region decreased by 25 per cent in Q1 alone.

From now until the end of the year, it is anticipated that cement producers will continue to confront significant cash flow challenges. However, according to Pham Hong Quan, a senior researcher at Vietcombank Securities, the medium-term public investment plan for 2021-2025 is $123 billion, which is significantly greater than previous cycles.

According to SSI Research data, the value of the public investment plan for 2023 is projected to increase by 25 per cent compared to 2022, serving as one of the cash flow exits for domestic cement businesses. In addition, SSI predicts that the export market may recover in the second half of this year as a result of China’s reopening, thereby reducing the competitive pressure on businesses in Vietnam’s northern and central regions.

The current level of coal prices is the lowest it has been since January 2022. The price of a conventional Newcastle coal futures contract has fallen by 63 per cent compared to its apex of $457.80 per tonne in early September 2022. In comparison to the $404.15 per tonne price at the beginning of the year, the price of coal has fallen by 58 per cent.

It is anticipated that the subsequent decline in coal prices will enable Vietnamese cement companies to increase their profit margins, particularly in these challenging circumstances.

Export dents expected to continue in second half

The General Statistics Office (GSO) last week reported that Vietnam’s export turnover has gradually revived since early this year, thanks to strong trade promotion activities.

The value is estimated to come at $29.05 billion for May, higher than $27.86 billion recorded in April, but still lower than the $29.71 billion in March. The figure hit $25.88 billion in February, after standing at $23.61 billion in January.

In May, the export turnover of Vietnamese enterprises sat at $7.79 billion, up 1 per cent on-month while that of foreign-invested enterprises (FIEs), including crude oil exports, came at $21.26 billion, up 5.5 per cent on-month. “However, as compared to the same period last year, Vietnam’s total export turnover in May decreased 5.9 per cent. In which Vietnamese enterprises’ reduced 5.9 per cent, and FIEs’, including those in crude oil, went down by 5.8 per cent,” the GSO said.

For the first five months of this year, the economy raked in an estimated $136.17 billion in exports, down 11.6 per cent compared to the corresponding period last year. In which Vietnamese enterprises’ turnover hit nearly $35.2 billion or an on-year reduction of 5.9 per cent, and FIEs turnover including crude oil export value sat at nearly 101 billion, an 11.1 per cent on-year decline.

Mobile phones and their spare parts saw a five-month export turnover of $21.178 billion, down 16 per cent on-year.

Meanwhile, electronics, computers, and their spare parts – which are largely produced by many FIEs such as Samsung, LG, Jing Gong, Daewoo Vietnam, Genesistek Vina, and FC Vietnam, have hit a total five-month export turnover of $20.33 billion – down 9.8 per cent as compared to that in the same period last year.

From an initial investment of $670 million in the northern province of Bac Ninh, Samsung has invested $20 billion in Vietnam. That said, the figure will continue to grow. During a visit to Vietnam in 2022, Roh Tae-Moon, president and head of Samsung Electronics’ Mobile Experience Division, said that Samsung would invest an additional $3.3 billion in Vietnam.

Between 2018 and 2022, Samsung contributed over $306 billion in export turnover to Vietnam. In particular, in 2022 alone, the achieved figure is still up to $65 billion, making an important contribution to bringing Vietnam’s total export turnover to surpass $700 billion for the first time, reaching more than $732 billion.

According to the GSO in the first five months of this year, Vietnam has seen 23 export items with an export turnover of more than $111 billion, accounting for 87 per cent of the country’s total export turnover.

There have also been seven export items with an export value of over $5 billion, or 65.4 per cent of the total value. They include mobile phones and their spare parts at $21.17 billion); electronics, computers, and their spare parts at $20.33 billion; machinery and equipment $16.55 billion; garments and textiles $12.32 billion; footwear $8.18 billion; transport means and their spare parts $5.43 billion; and wood and wooden products $5 billion.

Vietnam’s total export-import turnover in the first five months is estimated to reach $262.54 billion, down 14.7 per cent on-year. Total imports were worth $126.37 billion, representing an on-year reduction of 17.9 per cent, in which the import turnover of Vietnamese enterprises stood at $43.95 billion, down 18.5 per cent, while that of FIEs hit $82.42 billion, down 17.5 per cent.

In the first five months, the economy has seen a trade surplus of $9.8 billion, far higher than the $7.56 billion trade surplus in the first four months. In which, Vietnamese enterprises suffered from a trade deficit of $8.76 billion while FIEs recorded a trade surplus of $18.56 billion including crude oil exports.

The National Assembly Economic Committee reported that in the second quarter of this year, the country’s trade landscape will “not get better due to continued shortages of export orders, and if there are orders, they are just of small scale with a limited number and low values,” and the situation “will continue lasting until the end of Q3.”

The government earlier set a target that this year, Vietnam’s total goods export-import value will be about $795 billion, up about 8 per cent against this year. In which the export turnover will be $398 billion, up over 8 per cent on-year. The trade surplus will stay at about $1 billion, far lower than the $11.2 billion recorded last year. However, the government reported that since early this year, Vietnam’s key and traditional export markets have been narrowing (see box), and many exporters in the country have been suffering from serious shortages of export orders. This has made it difficult to achieve the export goal for 2023.

Green credit initiatives highlight positive advances

New insights have been revealed into the sustainable debt market in Vietnam and ASEAN more broadly, showing diversification and government support for sustainable finance.

The ASEAN Sustainable Finance State of the Market 2022 report, published last month by the Climate Bonds Initiative with the support of HSBC, highlighted that the market for green, social, and sustainability debt experienced an on-year decline of 32 per cent across ASEAN, mirroring the global trend of a 24 per cent decrease to $858.5 billion in the same year. Despite the decline, the issuance volume in the region remained robust, reaching twice the level observed in 2020.

Some positive developments deserved recognition, the report said, such as the increased issuance of government bonds and the implementation of several policy initiatives aimed at enhancing the legal framework supporting sustainable finance. These initiatives are expected to strengthen the sustainable finance landscape in the ASEAN region.

The last few weeks have witnessed some notable movements. Standard Chartered Bank (Vietnam) last week granted Tung Ho Steel Vietnam a transition trade finance facility worth $25 million, signifying a notable progression towards sustainability in the steel sector, as the funds aim to support Tung Ho Steel’s eco-conscious steel production method utilising scrap materials.

Also in May, BVBank partnered with ResponsAbility Fund Management Company from Switzerland to launch a green credit programme, offering a competitive annual interest rate of 8.9 per cent for production and business projects that promote environmentally friendly practices.

In 2022, the region experienced significant advancements in policy and market development initiatives. This included the introduction of the ASEAN sustainable bonds standards system and extensive stakeholder consultation on the initial version of the ASEAN Taxonomy.

Additionally, member countries implemented various national sustainable financial initiatives and measures, encompassing important areas such as information disclosure, financial sector translation, and classification systems.

The Vietnamese market specifically has witnessed increasing diversification over the past two years. Previously limited to green loans, the market has now embraced the issuance of green bonds, sustainability bonds, and sustainability-linked loans (SLLs). While the use of sustainability-linked bonds (SLBs) has yet to be explored, this situation may change with the recent introduction of ASEAN’s SLB standards.

The Vietnamese government has also demonstrated its support for sustainable finance through various efforts and policies, including the introduction of environmental risk management guidelines in the State Bank of Vietnam’s credit extension activities, as well as the announcement of a national programme aimed at supporting private enterprises in developing sustainable businesses by 2025.

At the conference on accelerating environmental, social, and governance (ESG) adoption in Vietnam’s financial services held by PwC and the Vietnam Banks Association last week, industry experts evaluated the challenges faced by Vietnam’s green finance sector, including a lack of a common set of green taxonomy for the local market.

As of now, each bank planning on issuing green bonds in Vietnam will have its own set of definitions, rather than having a unified green taxonomy aimed at setting out common standards on environmental sustainability. The conference suggested that classification harmonisation will allow for further growth.

While SLBs and SLLs are not yet popular in Vietnam, the conference highlighted the expansion of ASEAN’s sustainable bond and loan markets, with the volume of those issued in seven ASEAN countries (Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, and Thailand) consistently increasing since 2018 and experiencing a significant three-fold growth in 2020-2021.

Vietnam's industrial rents are rising swiftly

Land and industrial infrastructure rental costs are increasing by approximately 10 to 15 per cent annually in Vietnam, but according to the most recent analysis by Vietnamese real estate market research firms, land rents for development and infrastructure in the country's industrial parks (IPs) remain competitive compared to other emerging markets.
 
Currently, land rents in IPs in Vietnam are roughly 20 per cent less than in Thailand and Indonesia, according to Vu Minh Chi, senior manager of Industrial Services at Colliers Vietnam. "The reason is the quality and diversity of this market is inadequate," remarked Chi.

Land tax has been reduced by 30 per cent this year, and it is proposed that the VAT rate be reduced to 8 per cent to support production enterprises. All showcase the appealing qualities of industrial real estate in Vietnam.

Vietnam is still considered an attractive investment destination. According to the Foreign Investment Agency, the total registered foreign investment capital in Vietnam reached nearly $8.88 billion in April, representing an increase of 82.1 per cent on-year.

The figure includes750 new projects receiving investment registration certificates, with a total registered capital of more than $4.1 billion. In addition, 386 projects were registered to modify investment capital, an increase of 19.5 per cent in projects but a decrease of 68.6 per cent in capital over the same time period.

According to Thomas Rooney, senior manager of Industrial Services at Savills Hanoi, it has not been difficult to observe a sharp increase in the number of projects with capital adjustment, which in part, strengthens investor optimism in the Vietnamese market and continues to prompt decisions to expand current initiatives.

Over 200 companies join Hanoi PlasPrintPack 2023

The 11th Hanoi International Plastic, Rubber, Printing, and Packaging Industry Exhibition (Hanoi PlasPrintPack 2023) was opened in Hanoi on June 8, attracting 200 companies with 340 booths.

The companies are from 11 countries and territories including China, India, Indonesia, Japan, Malaysia, the Philippines, Taiwan (China), Hong Kong (China), Thailand, the UK, and Vietnam.

Speaking at the opening of the exhibition, Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry, said that along with the development of the domestic manufacturing industry, the plastic, packaging, and printing industries also see rapid growth. They are supporting industries with great potential and require high-tech products, modern production processes, and management to increase competitiveness in the market.

Ho Duc Lam, Chairman of the Vietnam Plastics Association, said that Vietnam now counts nearly 4,000 plastics businesses, 90% of which are small and medium enterprises.

Over the past time, Vietnam's plastics industry has grown strongly for years with an annual average rate of 10-12%. Industry revenue in 2022 topped 25 billion USD, up 5.7% over the same period in 2021.

However, the growth rate of Vietnam's plastics industry have been seeing signs of a slowdown from the beginning of 2023 due to the global economic recession in general and the lingering impact of the COVID-19 pandemic in particular, Lam said.

Moreover, Vietnam’s plastics industry still largely depends on imported raw materials, machinery, and equipment, he said.

The exhibition will run through June 11.

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