Fitch Ratings has affirmed Vietnam’s long-term foreign-currency issuer default rating (IDR) at “BB” with a positive outlook.

A report released on March 28 by the rating agency said the affirmation reflects Vietnam’s continued strong medium-term growth prospects, despite the COVID-19 pandemic and the global economic spillovers from the war in Ukraine, and strong external finance metrics relative to peers.

Fitch Ratings noted the rapid recovery of economic activities thanks to the Government's flexible approach in response to the pandemic and high vaccination rates.

Vietnam continues to benefit from the export sector thanks to the implementation of important trade agreements, foreign direct investment (FDI) inflows still maintain high growth and tourism flows gradually resume from 2022, it said.

Fitch forecasts that the country’s GDP growth to accelerate to 6.1 percent in 2022 and 6.3 percent in 2023 from 2.6 percent in 2021, led by a recovery in domestic demand, strong exports and high FDI inflows.

According to Fitch Ratings, Vietnam's success in stabilising public debt, its growth potential in the medium term and the rise of foreign exchange reserves which are reaching a record high are offering a cushion for the country to cope with external shocks.

It forecasts that efforts to maintain macroeconomic stability, strive for a high economic growth rate, reduce the disparity in GDP per capita compared to its peers and further improve public finances through sustained fiscal consolidation, expansion of the collection base, and medium-term debt stabilisation, overcoming weaknesses in the banking sector in terms of capitalisation, transparency regarding asset quality and regulatory frameworks, will be positive factors to help further enhance the country's credit rating in the coming time.

Bac Giang to kick off many infrastructure projects in Q2

The northern province of Bac Giang has planned to begin a host of basic infrastructure projects within the second quarter, focusing on speeding up the progress of and tackling hurdles facing major ones.

The province is striving to start the construction of the Nhu Nguyet bridge on April 30, and of the Dong Viet bridge on May 19.

Local authorities are set to pay a special attention to investment preparations and compensation for site clearance at the Viet Han, Quang Chau, Hoa Phu, Tan Hung and Yen Lu industrial parks.

Tourism development, particularly at existing destinations like the eco-spiritual site Tay Yen Tu and the Truc Lam – Phuong Hoang Zen monastery, is also another focus.

Vietnam’s nickel demand expected to increase

Vietnam has the opportunity to be at the forefront of the global movement towards the electrification of transport, so demand for nickel in Vietnam will continue to rise, experts have said.

It is forecast that the demand for metals used to produce electric batteries, including nickel, will increase due to the rise in electric vehicles. Worldwide nickel reserves are currently estimated at around 89 million tonnes.

Nickel is one of many sought-after global resources, as is widely used in technologies such as batteries for vehicles.

The proportion of nickel-metal used in producing batteries currently accounts for about 4 percent of the world's nickel production.

As the amount of nickel used in batteries for electric vehicles is higher, the demand for nickel will increase significantly.

Moreover, in the context of the growing stainless steel manufacturing industry, nickel consumption is expected to continue to increase (from 2.4 million tonnes in 2019 to 2.8 million tonnes by 2025), with a growth rate of about 2.2 percent a year.

Vietnamese exports regain strong growth momentum

The first half of March saw Vietnam's overall export turnover reach US$15.32 billion, marking a sharp increase of nearly 76% over the same period from last month, while import turnover hit roughly US$15.23 billion, a rise of 20.3%, according to the General Department of Vietnam Customs.

Most notably, the country’s trade surplus hit approximately US$100 million throughout the reviewed period.

During the first half of March, import and export turnover enjoyed strong growth compared to the first half of February, with key export groups such as phones, computers, equipment, garments and textiles enjoying signs of recovery with high growth in turnover compared to the same period from last year.

Between the beginning of the year and March 15, the total export turnover reached nearly US$69.78 billion, with the nation enduring a trade deficit of roughly US$500 million. 

Ho Chi Minh City Economic Forum scheduled for mid-April

Ho Chi Minh City will host its economic forum 2022 themed "Digital economy: Growth engine and future development of HCM City" from April 14 to 16, the municipal People's Committee announced on March 28 at a press conference.

The forum is expected to provide an ideal venue for local and international experts, along with business representatives, to seek solutions to accelerate digital transformation and strengthen human resources in the city.

The forum is expected to attract the participation of more than 900 delegates from relevant Vietnamese ministries, diplomatic missions, and international financial institutions such as the World Bank, International Monetary Fund (IMF), International Finance Corporation (IFC), and Asian Development Bank (ADB), as well as international organisations including the World Economic Forum (WEF) and the Organisation for Economic Co-operation and Development (OECD).

Farm produce exports set sights on US$50 billion target this year

By utilising various free trade agreement (FTAs) and focusing on advantageous products, the agricultural sector is likely to exceed its export target of US$50 billion set for this year, said Deputy Minister of Agriculture and Rural Development Phung Duc Tien.

According to the Ministry of Agriculture and Rural Development, agro-forestry and fishery exports during the initial months of the year surged by 15.8% to reach nearly US$14.2 billion against the same period from last year.

Despite recording positive signs in exports, the sector continued to face numerous difficulties caused by the complicated nature of COVID-19 and other external factors.

Deputy Minister Tien pointed out that the pandemic has served to ramp up costs of input materials, including animal feed for the domestic livestock and aquaculture industries. 

Visa expands funding programme for women entrepreneurs in Vietnam

Visa, the world’s leader in digital payments, on March 28 announced the expansion of the She’s Next Grant Programme in Vietnam to support women entrepreneurs in capital mobilisation, business governance and development.

Accordingly, the programme will continue to receive applications from March 28 to the end of April 29, 2022. Eligible entrants must be Vietnamese citizens who acquire at least 51% women-owned enterprises that have operated for at least one year.

The programme will be built based on Visa's commitments to improve the digitalisation capacity for more than 50 million small-sized businesses across the globe.

Alongside, Visa will also implement a number of other useful programmes that encourage consumers to support local firms and accompany small and medium-sized enterprises in the digital transformation process.

Corporate bond yields expected to rise this year

In 2021, corporate bond yields were at their lowest level in history at just 7.86 percent a year. The interest rate may have created a bottom and will support corporate bond yields inching up in 2022.

In a recent report, SSI Research said that last year, enterprises issued a total of 722.7 trillion VND (31.6 billion USD) worth of bonds, up 56 percent year-on-year. The net number of corporate bonds issued in 2021, excluding the amount of matured and called away bonds, was estimated at 438 trillion VND, up 63 percent.

The total amount of corporate bonds in circulation at the end of 2021 was estimated at about 1,390 trillion VND, equivalent to an average growth rate of 46 percent per year in the period from 2017 to 2021. The size of the corporate bond market increased sharply, from 4.93 percent of GDP in 2017 to 16.6 percent of GDP in 2021.

SSI said that this growth was in line with the capital market development orientation, reducing the dependence of enterprises on bank credit.

The average maturity of corporate bonds issued in 2021 decreased to 3.86 years from the average of 4.32 years in 2020. It was mainly because banking and real estate bonds have shorter maturity dates, down by 0.5 years and 0.3 years, respectively, to 4.2 years and 3.6 years.

Construction of bridge spanning Hau River begins

Construction of Chau Doc bridge which connects Kien Giang province’s Chau Doc city and Dong Thap province’s Tan Chau town started on March 28.

The bridge, which crosses the Hau River, is 667m in length and 14m in wide. It has a designed capacity of 60 kilometres per hour and is estimated to cost 534 billion VND (23.4 million USD).

The bridge, which is expected to be put into operation in 2024, is part of a regional linkage project with a total investment of more than 2.1 trillion VND (93 million USD).

Once completed, the project will help shorten the travel time from Chau Doc to Tan Chau as well as from the western region to Ho Chi Minh City, promoting economic development and tourism in southwestern border areas. 

Vietnam National Trade Repository to make debut

The Vietnam National Trade Repository (VNTR) has been completed and is set to make its debut on March 30, according to the Ministry of Industry and Trade (MoIT).

According to the ASEAN Trade in Goods Agreement (ATIGA), each member country will build its own national trade repository which will be connected with the ASEAN Trade Repository so as to ensure policy transparency, facilitate regional trade, and support businesses.

The MoIT said the portal, developed by the ministry with support from the British Government through the British Embassy in Vietnam, provides updated trade information in both English and Vietnamese.

It is connected with the ASEAN Trade Repository at https://atr.asean.org/ to guarantee the country’s compliance with the rule on information transparency in ATIGA.

Foreign arrivals to Vietnam in March surge

The number of international arrivals to Vietnam in March increased by 41.4 percent over the previous month and 2.2 times against the same period last year as Vietnam has fully reopened and many international flights have been restored, according to General Statistics Office (GSO).

In the first quarter of this year, the number of foreign tourists to the country reached nearly 91,000, a year-on-year rise of 89.1 percent. Among them, visitors arriving by air accounted for nearly 90.5 percent of the total international arrivals to Vietnam, an increase of 165.2 percent.

Revenue from accommodation and food services in the January-March period increased by 1.2 percent year on year, while tourism revenue rose by 1.9 percent year on year.

CPI inches up 1.92 percent in Q1

The Consumer Price Index (CPI) in the first quarter of 2022 posted a year-on-year rise of 1.92 percent, the General Statistics Office (GSO) reported on March 29.

The office said CPI in March increased by 0.7 percent month-on-month, the highest monthly increase since 2012. Among the 11 groups of key commodities and services, 10 experienced price hikes from the previous month.

According to GSO General Director Nguyen Thi Huong, hikes of petrol and gas prices in tandem with global fuel prices, and prices of construction materials, contributed to the increase in the overall CPI in the last quarter.

The price of rice in January-March increased by 1.1 percent year-on-year, contributing 0.03 percentage points to the CPI.

Notably, house rent strongly fell by 15.14 percent year-on-year due to a cut in support of the people facing difficulties caused by the COVID-19 pandemic. Core inflation in the quarter was up 0.81 percent compared to a year ago, the GSO said. 

Consultations to promote Vietnam’s export-import activities

The Trade Promotion Agency under the Ministry of Industry and Trade announced that it will host 30 consultation events for enterprises in 2022.

These will be part of a chain of programmes to support businesses in accessing foreign markets, and applying regulations and standards, and international commitments on export-import goods.

Accordingly, representatives of Vietnamese trade offices abroad, domestic and foreign market experts and those specialising in various fields, will give consultations to localities, business associations and enterprises on issues of their concern.

How to help agricultural businesses promote exports to Turkish market

Turkey currently represents the nation’s second largest export market in West Asia, just behind the United Arab Emirates (UAE), with the surplus in bilateral trade balance between both sides in recent years frequently belonging to Vietnam.

However, the proportion of Vietnamese exports in terms of Turkey's total imports remains low at about 0.5%.

Many Vietnamese products exported to Turkey account for a small proportion, lower than those of their direct competitors, except pepper, cashew nut, fiber, and rubber.

In order to provide updated information on the market situation, regulations, standards, as well as the import and export conditions of the Turkish market for local products such as pepper, cashew nut, rubber, fruit, handicrafts, the Vietnam Trade Promotion Office in Turkey will hold a consultation on exports. This will look at the Turkish market in both in-person and offline formats, with the event taking place on March 30 in the northern province of Hung Yen.

Vietnamese exports regain strong growth momentum

The first half of March saw Vietnam's overall export turnover reach US$15.32 billion, marking a sharp increase of nearly 76% over the same period from last month, while import turnover hit roughly US$15.23 billion, a rise of 20.3%, according to the General Department of Vietnam Customs.

Most notably, the country’s trade surplus hit approximately US$100 million throughout the reviewed period.

During the first half of March, import and export turnover enjoyed strong growth compared to the first half of February, with key export groups such as phones, computers, equipment, garments and textiles enjoying signs of recovery with high growth in turnover compared to the same period from last year.

Between the beginning of the year and March 15, the total export turnover reached nearly US$69.78 billion, with the nation enduring a trade deficit of roughly US$500 million.

Escalating food and petrol prices push up CPI to 1.92% in Q1

The recent surges in the price of food and petrol has led to the consumer price index (CPI) to rise by 1.92% in the first quarter of the year while core inflation also soared by 0.81%, the General Statistics Office (GSO) announced on March 29.

The GSO pointed out that gasoline prices soared in line with global fuel prices, while rental housing prices also edged up again after the COVID-19 pandemic was finally brought under control in the nation.

Furthermore, the price of essential consumer goods and services also inched up due to the escalating prices of input materials and petrol.

These factors resulted in the CPI in March expanding by 0.7% compared to the previous month, marking a climb of 1.91% compared to December last year and up 2.41% against the same period last year.

The GSO’s latest report highlights that core inflation in March also rose by 0.29% over the previous month, marking a rise of 1.09% on year.

The first quarter of the year saw average core inflation increase by 0.81% compared to the same period last year, lower than the general average CPI.

Domestic air fares rise ahead of national holiday travel rush

Despite Reunification Day on April 30 and International Labor Day on May being a month away, local airlines are already hiking up prices for flights during the holidays amid soaring demand for travel.

In line with the increased interest for travel, a one-way ticket from Hanoi and Ho Chi Minh City to the southern island of Phu Quoc costs between VND1 million to VND3.2 million, equivalent to between US$44 and US$140, excluding tax.

Furthermore, a one-way ticket price for flights from Hanoi and Ho Chi Minh City to Da Nang hovers between VND1.4 million and VND2.4 million, equal to between US$61 and US$105, including tax. After the holiday, airfares are expected to see a decline of roughly VND700,000 to VN 1.1 million, equivalent to between US$31 and US$48.

Several agencies reported that package tours to Da Nang and Phu Quoc continue to be in high demand during the holidays, with ticket prices two to three times higher compared to normal days.

VND2 trillion supports households, businesses in Ha Noi

Ha Noi has set aside more than VND2 trillion (US$87 million) in funds to support poor households, vulnerable groups, and small-to-medium sized businesses in a bid to speed up the capital's economic recovery.

The funds will be distributed through the Social Policy Bank of Vietnam's network in collaboration with district and commune-level government to ensure the intended beneficiaries will promptly receive much-needed financial aid.

In a recent announcement, city officials said it had prepared different plans for different scenarios of pandemic development and economic recovery. The idea is to remain vigilant and flexible to ensure production stays uninterrupted.

Do Anh Tuan, head of the city's planning and investment department, said the city had formed several task forces to closely work with businesses, cooperatives and households affected by the pandemic.

Consumer goods and services survey to start

The Vietnam Consumer Protection Association (VCPA) will start a survey programme for consumer-trusted goods and services in 2022.

To effectively implement the Party Central Committee’s Secretariat on strengthening the campaign “Vietnamese people give priority to using Vietnamese goods,” goods and services will be surveyed according to quality, information, consumer choice, models and reasonable and competitive prices.

The survey will be posted on the VCPA’s website.

From April 1 to November 20, customers will take the survey through a questionnaire, which will then be appraised through the council. After the survey, the top 100 goods and services will be chosen.

Yen Bai approves $64 million of investments

The People's Committee of the northern province of Yen Bai handed over a decision approving investment to nine investors with a total capital of more than VND1.475 trillion (US$64 million) at a meeting of businesses and investors on Sunday.

To accompany businesses, the provincial chairman of the people's committee Tran Huy Tuan affirmed that the province would promote comprehensive and synchronous administrative reform, focusing on simplification and shortening processing time for administrative procedures in the field of land, investment, construction, tax and customs.

In addition, the province seriously implements tasks and solutions to improve the business environment and enhance competitiveness in order to improve the efficiency of investment attraction in the province in the direction of selecting real investors having financial potential, prestige, and using modern eco-friendly technology.

Low level of car production holds back Vietnamese auto part suppliers

50,000 vehicles per year is the minimum production level needed for the growth of the Vietnamese auto part industry. Unfortunately, few car producers in Viet Nam have reached such a level.

Only Toyota and Hyundai crossed the threshold in 2021, with 64,172 and 56,028 vehicles, respectively.

Meanwhile, Kia fell short of the threshold with just 35,181 vehicles. VinFast followed with 34,746 and Mitsubishi with 26,346.

Truong Thi Chi Binh, an expert at Vietnam Institute of Strategy and Policy for Industry and Trade, underlined the low level of car production as a setback for the Vietnamese auto part industry.

She said low production meant low demand for domestic auto parts, discouraging suppliers from investing in new production lines.

Without new production lines, the suppliers become less competitive in price as they cannot achieve economies of scale.

Consequently, car producers have to find their auto parts elsewhere.

Nascent model of open banking entices institutions

Financial institutions are placing premiums on open banking services following global trends – but the cutting-edge implementation is fraught with obstacles owing to a flimsy legal framework.

Nguyen Quoc Hung, general secretary of the Vietnam Banks Association (VBA), assessed that open banking is a potential business model that helps banks access a wide range of customers at low cost through partners’ applications, build optimal solutions, and provide the most comprehensive and convenient services for customers.

Can Van Luc, BIDV’s chief economist, believed that open banking is a fairly novel concept as Asian banks only began experimenting with this approach in the last few years.

Likewise, deputy general director of VietinBank, Tran Cong Quynh Lan, said that the bank has been working on an open banking implementation strategy since 2017.

As Lan underscored, the lack of a complete regulatory framework for open banking in Vietnam would be a substantial impediment to banks’ efforts to implement these collaborative services.

However, there are currently no official norms for open application programming interfaces or what type of services can use what data partners, among other open questions. Simultaneously, there is no standard for IT systems, data storage, security, or connection.

A representative from Viet Capital Bank told VIR that, as a customer-centric bank, it aims to provide convenient and seamless services to its customers.

Pham Tien Dung, Deputy Governor of the State Bank of Vietnam, said that the existing legislative framework for open banking in Vietnam is in place, but it is not sufficient to meet the evolving needs of the current state.

The provisions are scattered throughout some major laws, such as on electronic transactions, credit institutions, cybersecurity, and several more. Some documents on handling violations related to personal information also have content on the issue.

Direction steady for low interest rates

The local central bank is anticipated to maintain its accommodative stance while keeping a close eye on inflationary concerns and, as a result, economists expect that a likely larger interest rate rise would further boost credit growth.

Fresh data from the State Bank of Vietnam (SBV) showed that the credit growth rate for the whole system reached 3.11 per cent as of March 10, up 2 per cent on-year. Increasing capital requirements by businesses are reflected in the rapid recovery of lending in the early months of 2022.

According to the SBV, credit might grow by 5.3 per cent in Q1/2022 and by 14.1 per cent for the whole year. The rate of credit growth has increased significantly since the beginning of the year as compared to the same time last year as businesses began relaunching manufacturing and other commercial activities.

Fund management group Vietnam Holdings believed that, unlike in several developed countries where expectation of potentially sustained inflation is putting pressure on central banks to raise interest rates, Vietnamese interest rates have remained low, and more easing is expected.

According to SSI Securities Corporation, deposit rates jumped 0.2 per cent at some major banks for a tenure of more than six months.

Deposits grew at a positive pace of 15.7 per cent during the same time, and capital mobilisation grew at a low rate of just 3.1 per cent.

Deposit interest rates are likely to rise somewhat in the second half of the year by roughly 0.2-0.25 per cent, which is expected to boost household capital mobilisation.

Bao Viet Securities Company also forecasted that the interest rate in 2022 would be difficult to reduce further. On the contrary, it could rise by 0.25-0.5 per cent.

Consultations to promote Vietnam’s export-import activities

The Trade Promotion Agency under the Ministry of Industry and Trade announced that it will host 30 consultation events for enterprises in 2022.

These will be part of a chain of programmes to support businesses in accessing foreign markets, and applying regulations and standards, and international commitments on export-import goods.

Accordingly, representatives of Vietnamese trade offices abroad, domestic and foreign market experts and those specialising in various fields, will give consultations to localities, business associations and enterprises on issues of their concern. 

Cost of Ring Road No. 3 section up by over VND1.6 trillion

The estimated cost of the Tan Van-Nhon Trach section of the Ring Road No. 3 project, which will connect HCMC, Binh Duong, Dong Nai and Long An, has risen by over VND1.6 trillion after six years of delays.

The My Thuan project management board has sent a report on the progress of the first phase of the section to the Ministry of Transport. The section was designed to have a length of 8.75 kilometers and connect provincial road 25B in Dong Nai with the HCMC-Long Thanh-Dau Giay Expressway in HCMC.

The Tan Van-Nhon Trach section will have 6.3 kilometers in Dong Nai and 2.45 kilometers in HCMC.

The Ministry of Transport approved the investment for the section at VND5.33 trillion in 2016. At the time, site clearance for the sections in HCMC and Dong Nai would need nearly VND149 billion and VND476 billion, respectively.

The figures have increased by VND1.45 trillion and VND175 billion to nearly VND1.6 trillion and VND651 billion.

VND18.6-trillion road project approved

The prime minister has approved the National Highway 50B project linking HCMC and the Mekong Delta provinces of Long An and Tien Giang at an estimated investment of VND18.6 trillion.

Director of the Long an Department of Transport Dang Hoang Tuan said the project was included in the road traffic system planning for the 2021-2030 period with a vision to 2050, the local media reported.

The road, which will be 55 kilometers long and 78 meters wide, will start at an intersection with Pham Hung Street in HCMC and end at the Trung Luong T-junction in Tien Giang Province. The section in Long An, Tien Giang and HCMC will be over 35, 14 and 5.8 kilometers long, respectively.

Of the total investment, more than VND13.8 trillion will be used for site clearance.

The section in Long An will pass through the Can Giuoc, Can Duoc, Chau Thanh and Tan Tru districts and include three bridges—Can Giuoc, Vam Co Dong and Vam Co Tay.

Production of pangasius fingerlings should be cautious

In the face of the price fever of commercial pangasius fish, causing the price of fingerlings to climb to over VND50,000 per kg for 30-35 pieces per kg, on March 28, the Vietnam Pangasius Association advised farmers not to raise pangasius fingerlings too much to avoid the recurrence of oversupply, leading to heavy losses.

The Department of Agriculture and Rural Development of Long An Province also recommended that people should not massively expand the scale and area of pangasius fish hatcheries. They should update information on the commercial pangasius market, the demand for fingerlings of the provinces raising commercial fish to make a suitable production plan.

According to the Department of Agriculture and Rural Development of Long An Province, over the past time, pangasius fingerlings have been raised on an area of about 1,300ha, mainly in the districts of the Plain of Reeds (photo).

However, the rearing of pangasius fingerlings in the province remains spontaneous, with many potential risks. For instance, the quality of fingerlings is not guaranteed, and farmers discharge water directly into the environment, causing pollution and spreading pathogens. 

Source: VNA/VIR/SGT/VNS/VOV/Dtinews/SGGP

VIETNAM BUSINESS NEWS MARCH 28

VN-Index loses nearly 14 points