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Vietnam faced a host of challenges last year, particularly in its economic landscape, with key driving forces enduring periods of stagnation. Moreover, due to difficulties arising from the decline in global market demand, its exports had experienced negative growth for the first time since 2009.
Statistics showed its total trade turnover in the year was estimated at 683 billion USD, a year-on-year decrease of 6.6%. Specifically, exports dropped by 4.4%, and imports down 8.9%.
However, the country earned up to 113.96 billion USD from exports-imports in the first two months of this year, a year-on-year rise of 18.6%, with exports up 19.2% and imports up 18%, and a trade surplus of 4.72 billion USD.
US firms excessively ordered “Made in Vietnam” products during the COVID-19 supply chain disruptions and then subsequently slashed their purchases last year to reduce their bloated inventories, according to Michael Kokalari, chief economist at investment fund VinaCapital.
Besides, Vietnam's inventory also sharply decreased in the first month of this year. The Purchasing Managers' Index (PMI) rose, for the first time in four consecutive months, above the threshold of 50 points, reaching 50.3 points in January, turning itself a crucial driver of the domestic manufacturing sector.
Increased production implies higher income for labourers, providing strong support for consumer spending growth, and subsequently pushing manufacturing, business, and services.
According to the General Statistics Office under the Ministry of Planning and Investment, the total retail sales of goods and revenue from consumer services in the first two months reached 1.03 quadrillion VND (41.72 billion USD), up 8.1% month-on-month.
Notably, the foreign direct investment (FDI) influx continued to rise in the two months, hitting 2.8 billion USD, up 9.8% year-on-year, demonstrating strong confidence of foreign investors in the country’s economic potential.
Kokalari, however, forecast that Vietnam’s exports will continue to face challenges as global demand for goods could persist at low levels due to the ongoing high inflation.
At a recent meeting with the Co-operative Bank of Vietnam (Co-opBank), National Assembly Chairman Vuong Dinh Hue stressed that to achieve the socio-economic targets set for 2024 and the 2021-2025 period, it requires joint efforts by the Government, business and people, with the banking sector playing an important role.
The sector, therefore, was asked to improve its forecast ability, keep a close watch on the regional and global economic situation, especially energy prices, to devise appropriate money policies and ensure the harmony between reducing interest rates and stabilising exchange rates.
Vietnam-Australia trade ties expected to grow further
Vietnamese Prime Minister Pham Minh Chinh’s official visit to Australia is expected to create new momentum for the bilateral relations, including their trade ties.
The PM left Hanoi on March 4 morning for the ASEAN-Australia Special Summit to commemorate the 50th anniversary of ASEAN-Australia dialogue relations, and official visits to Australia and New Zealand from March 5 – 11.
Over the past years, trade between Vietnam and Australia has grown strongly thanks to free trade agreements (FTAs). The General Department of Vietnam Customs reported that the two-way trade stood at nearly 14 billion USD last year, with Vietnam’s exports reaching 5.2 billion USD.
With the figures, the two countries were the 10th biggest trade partners of each other in the year, according to the Asia-Africa Market Department under the Ministry of Industry and Trade (MoIT).
Notably, Australia supplied important materials for a number of Vietnam's industrial and energy sectors such as coal, accounting for up to 45.77% of the Southeast Asian nation’s total import of the material, and ores and minerals 44.78%.
In the first month of this year, the bilateral trade was valued at 1.25 billion USD, up 43.4% year-on-year, said Nguyen Phu Hoa, head of the Vietnamese Trade Office in Australia.
Vietnam’s major exports included phone products and components, machinery, electronic components, computers, crude oil, garment-textiles, footwear and aquatic products.
Meanwhile, it mainly imported coal, ores, cotton, wheat, metal and vegetables from Australia.
Hoa attributed the result to the two governments’ attention to the economic-trade ties, considering them a crucial pillar in the bilateral relations, and the most important in the Plan of Action for the Strategic Partnership for 2020–2023.
The ASEAN-Australia-New Zealand Free Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP), to which both are signatories, have also played a role in the growing economic and trade ties.
Furthermore, for the first time, the two countries have agreed on and released a plan to implement the Enhanced Economic Engagement Strategy (EEES) announced by their Prime Ministers in November 2021 with specific measures until 2025.
There is firm ground for Vietnam to be optimistic about the prospects for economic and trade cooperation with Australia as the two economies are reciprocal, Hoa affirmed.
According to Nguyen Dinh Tung, General Director of Vina T&T Group, his company and GAP Cu Lao Giang Cooperative shipped 6 tonnes of mango from the Mekong Delta province of An Giang to Australia in January.
Nguyen Nam Phuong Thao, Deputy Director of Hoang Phat Fruit Co., Ltd, said apart from traditional markets like China, her company has exported fresh fruits to others, including Australia and New Zealand.
The MoIT’s Vietnam Trade Promotion Agency (VIETRADE) said it has sent a delegation to Australia from March 1-9, which is engaging in a wide range of trade and investment promotion activities in Brisbane, Sydney and Melbourne.
The Vietnamese Trade Office pledged to help businesses maximise advantages generated by the above-said FTAs, and advised Vietnamese firms to study carefully the market, local law and Australians’ taste, and pay more attention to packaging and product quality.
Education-training – important pillar in Vietnam-Australia relations: Expert
Education and training have been important cooperation pillars in the Australia-Vietnam relations since the “Doi Moi” (Renewal) cause was implemented in Vietnam, held Suiwah Edna Leung, Honorary Associate Professor at the Australian National University (ANU) Crawford School of Public Policy.
In an interview granted to Vietnam News Agency (VNA)’s correspondents in Sydney on the threshold of Prime Minister Pham Minh Chinh’s official visit to Australia, the scholar said that Australia can deepen bilateral cooperation in the fields by providing “soft infrastructure” to Vietnam, including training Government officials in the areas of finance, environment and business.
Such programmes may be linked to undergraduate degree programmes in public administration, he proposed. However, these programmes need to be supplemented by internships in Australian state and federal government agencies so that Vietnamese officials not only learn theory but also observe the practices and culture of Australian management agencies, he added.
Dr. Leung said that the growth of the private sector is especially relevant in Vietnam today as it allows Vietnam to move up the value chain in the electronics sector to engage in component manufacturing rather than just assembly activities. A stronger private business sector in Vietnam will provide more investment opportunities for Australian companies, thus creating a “complete circle,” he stated.
The expert asserted that sound financial and business regulation will help promote growth and development of Vietnam's formal private sector, which is quite small by regional standards. The sector accounts for only about 11% of GDP in Vietnam compared to 30% in Thailand and 50% in China.
The orderly growth and development of private companies in a market economy depends on market-friendly regulations from the Government, a type of "soft infrastructure" for which Australia is capable to provide, he underlined.
Dr. Leung expressed his hope that Vietnamese Prime Minister Pham Minh Chinh will have a successful visit to Australia and that the relationship between the two countries will continue to develop more profoundly through a number of channels, including education and training.
Strong e-commerce growth forecast for 2024
Business-to-consumer sales in the e-commerce sector this year are projected to grow by almost 40% year-on-year to VND650 trillion (US$28.1 billion), according to a report by the Ministry of Industry and Trade (MoIT).
The report, jointly released by the MoIT’s Department of E-commerce and Digital Economy and the Vietnam E-commerce Association (VECOM), put B2C online sales last year at US$20.5 billion.
Rapid internet and smartphone penetration rates in Vietnam, at 70% and 60% respectively, ad the fast-growing middle class, are primary drivers of strong online shopping growth.
The Government has plans to prioritize infrastructure improvement, provide business support for e-commerce adoption, and bolster efforts to enhance consumer confidence in online transactions, as outlined in the national e-commerce development strategy until 2025.
Food firms proactively finding solutions
Tensions in the Red Sea have driven up shipping costs by 30-50 per cent, as well as prolonging transportation times by as much as 15 days, with negative consequences for Vietnamese food exporters.
Nguyen Dinh Tung, CEO of major fruit exporter Vina T&T based in Ho Chi Minh City’s Phu Nhuan district, said, “Longer transportation times are having the largest impact and negatively affecting the quality of our fruit. It used to take 30 days to transport a container, now it takes 45 days. Fruits such as grapefruit and coconut can stay fresh for up to 70 days, but several others cannot.”
Global Trading Connection Co., Ltd, specialises in exporting canned fruit juice and powdered coffee, and its CEO Nguyen Ngoc Luan revealed that besides the soaring transportation expenses, businesses are also facing a hike in energy fees and input material costs, with coffee experiencing a 30 per cent jump.
“Negotiating with our partners in the Middle East and Europe on price to cover the spike in input costs is proving difficult,” said Luan.
To reduce transportation costs, local firms and importers are scaling up efforts to bring costs down.
Chairman of GC Good JSC Nguyen Van Thu said, "Logistics accounts for a large share of the pricing structure of agricultural products. To mitigate the Red Sea situation, Vietnamese exporters must seek alternative routes such as the Cape of Good Hope, which requires higher costs and more time. This eats into our profit margins severely."
As a result, GC Food is now attempting to tap into markets much less affected by the current conflicts, such as ASEAN and northeast Asia.
SSC proposes new Information Disclosure System
The State Securities Commission (SSC) is seeking feedback from market participants on the proposed regulations governing the use of its Information Disclosure System (IDS).
As outlined in the draft regulations, public companies listed or registered for trading on the Hanoi Stock Exchange (HNX) or the Ho Chi Minh Stock Exchange (HSX) are required to submit information for disclosure via its IDS.
Public companies would utilise accounts provided by the SSC and their public digital signatures to report and disclose electronic information through the IDS. Upon receiving their login credentials, public companies access the IDS to update their company profile in accordance with the regulations. The disclosed information covers basic company information, internal personnel and related parties, shareholder lists, offering profiles, financial data, and the history of company changes.
Public companies are also responsible for promptly updating their company profile information on the IDS whenever changes occur, aligning with their disclosure submissions.
It is compulsory for companies listed on the HSX to report and disclose information using the IDS, while those registered on the HNX follow the exchange’s reporting and disclosure procedures. Organisations listed or registered for trading on HNX are not required to duplicate their disclosures if they have already been submitted through the HNX system.
Additionally, public companies are required to register individuals responsible for disclosing company information with the SSC. Any changes to these individuals must be promptly updated on the IDS.
Public companies that fail to utilise or register with the IDS will undergo regulatory review and processing.
First two months see four export items hit over US$5 billion
There were 4 products with export turnover of US$5 billion during the first two months of this year, including phones and components at US$9.58 billion; computers, electronics and components at US$9.55 billion; other machinery, equipment, tools and spare parts at US$6.82 billion, and textiles and garments at US$5.23 billion. These items accounted for 52.5% of the country's total export turnover.
According to a report released by the General Statistics Office (GSO) throughout the reviewed period, export turnover was estimated to reach US$59.34 billion, up 19.2% over the same period from last year. Of which, the domestic economic sector brought in US$16.14 billion, an increase of 33.3%, accounting for 27.2% of total export turnover, while the foreign invested sector (including crude oil) fetched US$43.2 billion, a rise of 14.7%, making up for 72.8%.
In the billion US$ turnover group, computers, electronics and components recorded the highest growth rate of 6.3%. In contrast, machinery, equipment, tools, and spare parts dropped by 17.5%; phones and components fell by 4.6%; textiles and garments down by 8.4% and footwear decreased by 6.8%.
Securities companies engage in fierce competition, offering low-Interest margin lending to Investors
Securities companies are engaged in a fierce competition to offer low-interest margin loans to investors. Compared to the previous year, the current margin interest rates have significantly dropped, ranging from 6 per cent to 8 per cent per year, almost half of what they were before.
For instance, DNSE Securities Company has introduced the Rocket X programme, offering a margin loan with an interest rate starting from 5.99 per cent for a duration of six months. The programme includes a 10-day interest-free period, after which the interest rate becomes approximately 15 per cent per year.
Yuanta Vietnam Securities Company has launched a promotion where investors who open margin accounts between February 19th and March 19th can enjoy a zero per cent interest rate. This zero-interest rate applies to the first VNĐ100 million (US$4,055) of outstanding debt. Yuanta Vietnam also provides various other margin packages with interest rates ranging from 8 per cent to 9 per cent per year, depending on the borrowing amount and decreasing interest rates.
Mirae Asset Vietnam Securities Company (MAS) has introduced a promotional margin programme for new account holders until March 31st. The programme offers a discounted interest rate of 7.99 per cent per year on margin loans, with a maximum debt limit of VNĐ500 million per account.
Leading securities companies, including SSI Securities Corporation, are actively participating in this race by offering enticing promotions. SSI Securities Corporation provides a refund of up to VNĐ50 million in margin interest to investors. They also offer a margin interest rate of 9 per cent per year for customers with large outstanding debts and follow a T+7 margin policy, which means the first seven days are interest-free. By utilising margin for approximately 25 days, investors can significantly reduce their interest expenses compared to the rates of 13.5 per cent to 15 per cent per year offered by other companies.
Furthermore, many securities companies are adopting "zero fee" policies, where they charge no fees, to attract investors to open accounts and leverage their financial resources.
Industry experts believe that the competition to lower margin interest rates among securities companies aims to attract more investors and increase trading volume, thereby gaining a larger market share. The increased demand for margin loans is driven by improved market liquidity and securities companies' increased capital, allowing for more margin lending. With ample bank funding and low interest rates, banks are readily providing capital to securities companies.
However, experts caution investors against fully utilising margin and advise them not to use maximum leverage to purchase stocks in any situation. Excessive financial leverage carries the risk of margin calls or forced selling of stocks if the market experiences a sharp decline.
The VN-Index is expected to continue its upward trend as it enters the season of shareholder meetings for listed companies, with prospects of business recovery. Investors can take advantage of margin to potentially achieve higher returns. Nevertheless, it is crucial for investors to exercise control over their margin usage, avoid chasing stocks with recent significant price increases, and refrain from using margin to purchase overheated stocks.
According to HCM Stock Exchange's statistics, until the end of the fourth quarter of 2023, the top 10 brokerage firms with the largest market share are VPS Securities Joint Stock Company (VPS), SSI Securities Corporation (SSI), Techcombank Securities Joint Stock Company (TCBS), VNDirect Securities Corporation (VNDS), HCM Securities Corporation (HSC), MB Securities Joint Stock Company (MBS), MAS, Vietcap Securities Joint Stock Company (Vietcap), FPT Securities Joint Stock Company (FPTS), and KIS Vietnam Securities Company (KIS).
Apart from the competition to increase market share, the expansion of margin lending plays a significant role in the revenue of securities companies. By the end of 2023, outstanding margin loans at securities companies reached approximately VNĐ180 trillion, a VNĐ15 trillion increase compared to the end of the third quarter of 2023. This marks the highest level of outstanding margin loans in six quarters since the second quarter of 2022.
Credit continues to decline in February 2024
After declining in the first month of 2024, credit of the banking system continued to decrease in February this year.
A Viet Dragon Securities (VDSC) report released recently said, according to estimates by the State Bank of Vietnam (SBV), the credit of the banking system as of February 16 this year decreased by 1 per cent compared to the end of last year. In January, credit decreased by 0.6 per cent.
Low credit growth in the first months of a year is common. The average credit growth in the first two months in the 2013-23 period was 0.56 per cent. Credit declines in the first two months were also seen, in 2014, 2018 and 2024.
However, according to VDSC experts, although there is no official data as of the end of February 2024, the credit decrease in the first two months of 2024 seems more serious because this year's conditions are different from the previous years, as the State Bank of Vietnam (SBV) this year assigned the entire credit growth quota of 15 per cent for commercial banks right in the first month of this year, instead of only allocating a part of the quota at the beginning of the year as previously.
Early this month the SBV also sent an official dispatch to credit institutions stating that despite the application of supporting policies to boost credit from the beginning of the year, credit growth this year is still quite low compared to recent years.
To boost credit growth, the SBV requested credit institutions to firmly implement effective credit growth solutions right from the beginning of the year. Credit must focus on production, business and the Government’s priority sectors, as those are the country’s economic growth drivers. Banks also need to strictly control credit for potentially risky sectors to ensure safe and effective operations.
Not only was credit growth negative in the first two months of this year, capital mobilisation of the economy was also not positive. According to VDSC, as of February 16 this year, raised capital is estimated to decrease by 1.6 per cent compared to the end of 2023.
Though capital mobilisation growth in the first months of a year often slowed in the past years, the capital raising as of February 16 was lower than previous years.
The capital mobilisation decline in the first two months of this year has exacerbated a liquidity shortage in the banking system in the period, which pushed up the overnight interest rate in the interbank market to more than 4 per cent last week, the highest level in the past nine months.
Việt Nam's shrimp exports expect growth this year
The Việt Nam Association of Seafood Exporters and Producers (VASEP) believes that Việt Nam will have an increase of about 10-15 per cent in shrimp exports this year due to recovery in shrimp consumption of some markets.
In addition, the demand for protein from aquatic products is increasing. Therefore, in the future, seafood production will have more chances to develop, especially shrimp.
Vietnam targets shrimp export turnover of US$4 - 4.3 billion this year.
Regarding export markets, the US and China will continue to be the two largest markets for Vietnamese shrimp exports in 2024, accounting for about 40-45 per cent of the shrimp industry's export value.
To overcome transportation cost hikes due to tensions in the Red Sea, some shrimp exporters have promoted exports to nearby markets, such as China and Japan.
For example, Sao Ta Food Joint Stock Company will pursue the goal of exploring the large market neighbouring Vietnam, haiquanonline.com.vn reported.
Especially, the company will continue to strengthen the development of the Japanese market, maintain existing markets, and focus on understanding and, step by step, penetrating the Chinese market.
At the same time, it will promote the production of deeply processed and value-added products.
VASEP said that Sao Ta Foods is now the largest Vietnamese enterprise exporting shrimp to Japan, ranked 5th to the US market and 9th to South Korea. Focusing on taking advantage of the strength of deep processing and high product quality has helped Sao Ta Foods win many large orders from Japanese partners.
According to Lê Hằng, businesses may have to change export markets and export products, and turn challenges into opportunities.
For example, China will likely attract more businesses to export shrimp from Việt Nam this year, because of its close geographical location, low transportation costs and easier control.
Moreover, China will certainly experience a reduction in supply from Ecuador due to both security instability in this South American country and difficulties in shipping and increased costs.
Therefore, China will have to increase supply from Việt Nam and other Asian countries.
Along with that, businesses will also tend to convert some export products in the context of war, conflict and inflation, the demand for canned, bagged and dried goods, including seafood, with the characteristics of easy preservation, long expiry and reasonable prices, will increase this year.
In addition, the growth of small markets is also a driving force for Việt Nam's shrimp exports to increase this year.
Analysts at FPT Securities (FPTS) now believe that the positive recovery of domestic shrimp supply from the second half of 2024 will not create significant pressure on raw shrimp prices for shrimp processing enterprises. It is forecast that the average price of raw shrimp this year will increase by 5 per cent compared to 2023.
Meanwhile, based on the market outlook, FPTS forecasts that the average export price of Vietnamese shrimp to the US, EU and Japan this year will reach $11.4 per kilo, an increase of 7 per cent compared to 2023.
For the US, Việt Nam's largest shrimp consumption market accounting for nearly 20 per cent of the total export value, FPTS forecasts that demand will begin to recover from the first quarter of this year because frozen shrimp inventories decreased significantly from the fourth quarter of 2023 thanks to year-end holiday stimulus programmes of retailers.
At the same time, US consumers' spending power is expected to improve as food inflation declines and real incomes continue to rise.
For the EU and Japanese markets, FPTS believes that demand will recover one quarter after the US market, due to greater inventory in the EU market and the low likelihood of improved Japanese Yen/US dollar exchange rate this year.
In 2023, Vietnamese shrimp exporters had an advantage in the processed shrimp segment, but Japan's Yen devaluation against US dollar and high inflation caused demand for shrimp in Japan decline.
However, Japan is still considered a potential market for deeply processed seafood products with high added value, which is an advantage of Việt Nam's shrimp industry.
In 2024, climate change is still a problem that needs to be resolved, and adapting shrimp production to climate change will be an urgent solution for the future. Investment costs continue to increase faster than in other countries. Vietnam will continue to have difficulty in price competition with Ecuador and India.
According to Deputy Minister of Agriculture and Rural Development Phùng Đức Tiến, to further increase the value of shrimp and to have sustainable shrimp industry development, localities, especially the Mekong Delta provinces, need to pay attention to developing high-quality seed sources to have proactive production, reduce production cost and limit diseases.
At the same time, investment is also needed to perfect the infrastructure system for the development of farming areas and logistics, towards green production, low emissions and the application of digital technology in aquaculture.
Debates on proposed VAT Law Amendments over revenue thresholds
Many stakeholders argue that the Ministry of Finance's proposed threshold of VNĐ150 million is still relatively low.
In the proposed amendments to the Value Added Tax (VAT) Law, the Ministry of Finance has put forward a revision that would require individuals and household business with an annual revenue of VNĐ150 million (US$6,250) to pay VAT, an increase of VNĐ50 million from the current threshold. However, this proposal has sparked a range of differing opinions and concerns.
The ministry argues that since the 2013 amendment to the VAT Law, which supplemented some provisions of the 2008 VAT Law, the Consumer Price Index (CPI) has seen a significant increase. Therefore, adjusting the revenue threshold for individuals and household business to reflect these price fluctuations is deemed necessary.
Furthermore, the Ministry of Finance asserts that increasing the revenue threshold for VAT would not result in additional compliance costs or administrative procedures. Instead, it would enhance tax transparency.
However, many stakeholders argue that the proposed threshold is still relatively low. They suggest that industry-specific considerations should be taken into account.
In its feedback to the Ministry of Finance, the Vietnam Chamber of Commerce and Industry (VCCI) recommends the drafting agency consider raising the revenue threshold for tax-exempt households and individual businesses to a range of VNĐ180 million to VNĐ200 million.
Moreover, VCCI suggests that the Ministry of Finance should consider industry-specific classifications, similar to the direct tax calculation method used in the distribution and supply sector. This would involve setting a higher threshold for goods distribution compared to services and construction.
The highest proposed threshold came from representatives from Quảng Ngãi Province who have suggested to raise it to VNĐ300 million, while other agencies proposed believed lower levels were the best way forward. The Ministry of Transport suggested VNĐ250 million, while the Vietnam Tax Consultants' Association (VTCA) recommended a threshold of between VNĐ180 million and VNĐ240 million.
According to VTCA, Decree 07 stipulates that the standard income for poor households in rural areas is VNĐ1.5 million per person per month, and in urban areas is VNĐ2 million per person per month. Therefore, someone earning VNĐ18 million a year would be considered "poor or near-poor".
VTCA's calculations suggest that, assuming a 10 per cent tax rate for the commercial business sector, the taxable income would be around VNĐ10 million. This means that after a business earns VNĐ150 million, the additional value would be VNĐ15 million, even below the national poverty standard.
Meanwhile, Dr Nguyễn Ngọc Tú, a lecturer at Hanoi University of Business and Technology, highlighted a discrepancy in the tax rates for business households and individuals. He explained that under current regulations, business households and individuals are subject to a flat corporate income tax rate of 1.5 per cent per year, calculated based on the previous period's revenue. This tax rate includes a 1 per cent VAT and a 0.5 per cent personal income tax.
Tú noted that this tax rate for individuals with revenue over VNĐ100 million is not in line with the Personal Income Tax Law, which the Minister of Finance has also considered outdated. Currently, the Ministry of Finance is seeking feedback on a draft Resolution to adjust the current personal income tax deduction of VNĐ11 million per month for taxpayers, equivalent to VNĐ132 million per year, excluding personal deductions. Therefore, personal income tax payers with two dependents will not be required to pay tax.
Tú argued that the proposal to increase the revenue threshold to VNĐ150 million per year is unreasonable because the VAT and personal income tax rates are not aligned. While individual wage earners must pay personal income tax, business individuals must pay both personal income tax and VAT simultaneously.
He recommended that when making adjustments to tax laws, the tax authority should consider the compatibility of the entire tax system. Additionally, Tú suggested that the Ministry of Finance could regulate tax calculations using the self- method, which would be adjusted annually based on the CPI price slide announced by the Ministry of Planning and Investment.
Considering the impact on the State budget, in the latest draft amendment to the VAT Law, the Ministry of Finance maintains the proposed VAT revenue threshold for individuals and household business at VNĐ150 million.
According to the Ministry of Finance, this threshold is "based on inflation and actual conditions".
Raising the tax reduction threshold for household business to VNĐ180 million as some proposals suggest, the Ministry of Finance believes, would affect the State budget revenue in localities, especially those with low revenue.
In addition, this regulation would not encourage household business and individuals to switch to enterprises, as enterprises must pay VAT when they generate revenue.
For this matter, Nguyễn Văn Được, head of the Consultancy Board of the Vietnam Tax Consultants' Association, believes that internal sources can offset budget revenue shortfalls. He highlights the inadequacy of the advisory rate for presumptive tax on business households, leading to revenue loss. He suggests that taxation should review the process and check for fraudulent acts to ensure the security of flat tax revenue.
Được emphasised that the revenue threshold of VNĐ150 or VNĐ180 million is not the primary factor influencing households' decisions to start a business. Instead, they consider factors such as the institution, business environment, tax policy, and administrative procedures.
The Ministry of Finance plans to submit the draft law to the National Assembly for consideration and feedback at the 7th session meeting in May 2024 and to be passed at the 8th session in October 2024.
Car imports decrease sharply in first 2 months
The latest data from the General Statistics Office of Việt Nam (GSO) revealed that the number of imported CBU cars was estimated to reach 6,000 units with a value of US$117 million last month, down 13.7 per cent in volume and 19.3 per cent in value compared to January.
On a yearly basis, these figures represented represented declines of 51.3 per cent in volume and 54.9 per cent in value compared to the same period last year.
The total number of imported CBU cars was estimated to reach 12,955 units in the first two months with a value of $262 million, down 51.6 per cent in volume and 54.3 per cent in value year-on-year. This is the lowest number in the past few years.
The number of imported CBU cars in the first half of February (February 1-15) decreased sharply with 3,925 units of all types worth $76.3 million, down more than 50 per cent year-on-year in both volume and value.
The most imported cars were those with nine seats or less with 3,587 cars, turnover of $61.86 million.
The majority of imported cars continued to originate from Asia, with notable import markets such as Indonesia and Thailand.
Last year, the country imported 118,942 CBU worth $2.83 billion, down 31.5 per cent in volume and 26.3 per cent compared to 2022.
Haiphong to auction resort project on Cat Ba Island
The northern city of Haiphong will auction a tourist resort project on Cat Ba Island with a reserve price of VND3,063 billion, said local news reports.
This price is VND900 billion higher than the level at the November 2022 auction.
Covering 45 hectares of land, the tourism, commercial and service complex project allocates 17.3 hectares for trading and services, with a one-off payment for a 70-year lease.
The designated land parcel is earmarked for the development of shophouses, condotels, hotels, and restaurants, with the potential capacity to accommodate up to 6,500 staying guests when the project is operational.
Interested investors can register for participation in the auction from now until March 18, with a deposit of VND600 billion required. The auction is scheduled to take place on March 21 at the Haiphong City Property Auction Service Center.
Haiphong conducted an auction for this project with a starting price of VND2,125 billion, but unsuccessfully.
HawaExpo in HCMC to feature 2,500 furniture booths
HawaExpo, Vietnam’s largest export furniture fair, is set to take place from March 6-9 in two locations in HCMC, featuring 2,500 booths.
Organized by the Handicraft and Wood Industry Association of HCMC (HAWA), this year’s fair will be three times larger than its 2023 edition due to growing demand from exhibitors.
More than 500 companies will participate, with over 80% hailing from Vietnam and 20% from other ASEAN countries, according to the organizing committee.
HawaExpo 2024 will have two venues: the Saigon Exhibition and Convention Center (SECC) in District 7 and the White Palace Pham Van Dong in Thu Duc City.
Nguyen Quoc Khanh, chairman of HAWA and head of the organizing committee, said the event will showcase the industry’s latest strengths and provide insights into Vietnam’s expanding manufacturing capabilities.
Exhibitors at HawaExpo 2024 will have opportunities to engage with a diverse range of customers, facilitated through direct trading, online connections via the Hopefairs platform, and cross-border e-commerce sales channels with support from Amazon and Wayfair.
HAWA will also ink a cooperation agreement with Amazon Global Selling to offer training sessions for Vietnamese companies interested in selling on Amazon. The training will commence with a workshop and one-on-one counseling sessions in SECC.
F&B industry revenue of HCMC increases in first two months of 2024
Revenue of the food and beverage (F&B) industry in Ho Chi Minh City in February decreased over the previous month, but its cumulative growth in the first two months of the year still increased by 8.3 percent over the same period last year.
The Statistics Department said that a total revenue from accommodation and food and beverage services in the city was estimated at VND9,271 billion (US$374 million), down 11.5 percent over the previous month and up 10 percent over the same period in 2023.
Of which, the accommodation revenue decreased by 22.1 percent over the previous month, but rose by 27.9 percent over the same period.
The F&B services revenue decreased by 9.6 percent over January but increased by 7.7 percent over the same period last year.
The total accumulated revenue for the accommodation and F&B services in the first two months of the year was estimated to be worth VND19,751 billion (US$797 million), an increase of 13.6 percent over the same period in 2023.
Vietnamese export growth impresses Uruguayan press
Uruguayan newspaper El Popular has expressed its positive impression of the strong Vietnamese export growth recorded in January, with an increase of 42% over the same period from 2023 to reach nearly US$33.6 billion, the highest figure recorded since April, 2022.
The media outlet emphasised that Vietnamese export turnover increased sharply thanks to two groups of agro-forestry-fishery products climbing by 97% and the processing industry which rose by 38%.
Exports to several major export markets all recovered well in the initial month of the year, with the United States being the country’s largest export market with US$9.6 billion, an increase of 56% on-year.
El Popular newspaper, the mouthpiece of the Uruguayan Communist Party, quoted the Ministry of Industry and Trade as saying that Vietnamese trade surplus in January reached US$2.92 billion, whilst the country’s trade turnover is forecast to grow by 6% in the year ahead.
Businesses start to feel impact of Red Sea shipping crisis
The Red Sea shipping crisis may put a squeeze on Vietnam-based businesses as it lingers on with no foreseeable end in sight.
Tran Viet Huy, managing director of Tracimexco – Supply Chains and Agency Services JSC (TRA-SAS), told VIR that, "The Red Sea disruption is impacting ocean freight via the Red Sea and Suez canals. It is mainly hitting shipments from Asia to Europe and some US routes. The cost of ocean freight to EU ports from Asia has gone from less than $2,000 per 40-foot shipping container before December 2023 to over $5,000."
Almost shipping lines must turn it routes via the Cape of Good Hope instead of Suez Canal which increases expenses and transit time. The lack of empty containers has also been raised by shipping lines.
"However, the increasing freight costs seem unreasonable. They have been amplified by shipping lines to cover the cost of new vessels that are set to launch in 2024. Container warehouses are running under capacity. The extra cost incurred from shipping a container via the Cape of Good Hope is less than $300 versus the increase of $3,000 per 40-foot shipping container," Huy added.
Huy emphasised that some industries which have big volume of trade between the EU and Asia are feeling the impact such as textiles and garments, agriculture, and seafood.
Echoing this view, Jan Segers, general manager of Noatum Logistics Vietnam Co., Ltd, said, "In the short term, Red Sea shipping disruption is increasing the rates by adding a ‘war risk’ surcharge or by going via the Cape of Good Hope route which is longer and needs more fuel.”
He further noted that the Red Sea issue is being escalated might last for years. It will be difficult for buyers and sellers to adopt different strategies to deal with it. However, the challenge facing shipping lines needs collaboration at a government level.
According to Fitch Ratings, shipping costs have increased by more than 150 per cent since December 2023 as a result of disruptions to maritime traffic in the Red Sea. These increases are likely to be reflected in rising import prices in the coming months, and longer shipping times will reduce supplies of intermediate inputs and consumer goods. The outlook for shipping costs is uncertain, but a plausible scenario is that they will remain high for several quarters.
Economist Brian Lee Shun Rong at Maybank said, “The Red Sea ship disruptions are one risk worth watching, as any major and prolonged escalation may disrupt supply chains, inflate shipping costs and dampen trade. Indeed, rising tensions in the Red Sea have led to delivery delays and surging container freight costs, which may have disrupted shipments.”
He cited data by the General Statistics Office showing declines in production of phone components (down 15.3 per cent), televisions (down 11.3 per cent) and mobile phones (down 3.5 per cent). A slump in production volume runs contrary to rising phone exports, and may suggest that companies are cautious about the demand recovery and/or disruptions in the Red Sea.
US the largest buyer of agro-forestry-fishery products from Vietnam
There was a change in the structure of the agro-forestry-fishery export market during the first two months of the year as the United States accounted for the largest proportion with US$2.1 billion, thereby putting the Chinese market in second place with US$2.065 billion.
According to details given by the Ministry of Agriculture and Rural Development (MARD), the total agro-forestry-fishery export turnover was estimated to be at US$9.84 billion during the two-month period, marking a surge of more than 50% over the same period from last year, with a trade surplus of US$2.68 billion, a nearly 2.9-fold increase.
Export turnover witnessed a drastic upturn thanks to increases recorded in all export commodity groups. In particular, contributing to this result were agricultural products with US$5.18 billion; forestry products with US$2.9 billion, these two commodity groups increased by nearly 60%; and aquatic products with US$1.37 million, up 29%.
Key products all achieved higher export value than the previous year, including wood products with US$1.68 billion, coffee with US$1.38 billion, fruit and vegetables with US$970 million, rice with US$708 million, cashew nuts with US$595 million, and shrimp at US$403 million.
Deputy Minister of Agriculture and Rural Development Phung Duc Tien, assessed from the market structure that the quality of local agricultural products meets the demands of high-end markets. This shows that the recovery of markets, as well as the restructuring of the agricultural sector, is more closely linked to the industry.
In addition to the markets of China, the US, Japan, and the EU, moving forward the MARD will focus on exporting agro-forestry-fishery products to Halal, Middle Eastern, and African markets.
Also according to Deputy Minister Tien, the MARD is currently directing De Hues Group to focus on exporting chicken meat to the Halal market. It is expected that next May, the group will sign co-operation agreements with the first two countries for exports. The Ministry has also directed the fisheries industry to focus on promoting and opening the Halal market.
“Even though we have exported to many markets and trade promotion has been effective, we must enter demanding markets with special characteristics so that Vietnamese agricultural products can access more segments, many more markets for greater export revenue," Deputy Minister Tien added.
Vietnamese coffee promoted in Algeria
The Trade Office of Vietnam in Algeria on March 2 coordinated with the Bab Ezzouar Commercial Centre in Algiers to organise an event to promote Vietnamese coffee products.
At the event, visitors and local consumers had the opportunity to learn about Vietnamese coffee, listen to presentations about the coffee processing methods, and enjoy the products.
On this occasion, the trade office also displayed catalogs and sample products of Vietnamese businesses and connected with customers.
Bab Ezzouar is the largest shopping mall in Algeria with stores covering an area of 45,000 sq.m, offices 20,000 sq.m, and UNO - a hypermarket 7,200 sq.m.
Algeria is considered one of the major coffee-consuming markets as it spends over 300 million USD importing about 130,000 tonnes of coffee beans on average each year, of which Vietnam's Robusta green coffee beans usually account for 25-30%.
In December 2023, for the first time, the trade office held an event to promote Vietnamese coffee and tra fish at the Carrefour hypermarket – another major distribution system in Algeria.
SOEs asked to play more active role in implementation of strategic breakthroughs
Prime Minister Pham Minh Chinh on March 3 called on state-owned enterprises (SOEs) to engage more intensively in the implementation of strategic breakthroughs regarding institutional perfection, personnel training and infrastructure development.
At a meeting with outstanding SOEs nationwide, the Government leader shared difficulties facing businesses in general and SOEs in particular last year.
He also lauded the sound, timely leadership and instruction by the Party Central Committee, efforts by the entire political system, the involvement of people and businesses, including significant contributions by SOEs, as well as cooperation and support from international friends to Vietnam in socio-economic development, making the country an economic bright spot globally.
Chinh asked the participants to propose solutions to challenges, and stressed the need to renew the existing growth drivers of investment, consumption and export, while promoting new ones such as digital transformation, green transition, circular economy, and knowledge-based economy.
The assets and resources of state enterprises should be brought into full play, and these firms should truly play a key role in the national economy, the leader continued.
The government always accompanies businesses, whether private or state-owned, to overcome difficulties and challenges together and spur development, he pledged.
The PM also commended SOEs for their efforts in utilising cutting-edge technologies, and improving production and business efficiency, with many large firms at the forefront of new technologies.
Pointing to limitations and weaknesses of SOEs in administration, production and business, and competitiveness, Chinh requested them to make changes by their own mindset and expertise, as well as lessons learned from the world.
He also emphasised the need for them to conduct restructuring in administration, finance, production, business, and supply chains, respect competition and market rules under state management, and raise their competitiveness and resistance to shocks, both internal and external.
The leader urged accelerating the implementation of major, key national projects in important, strategic fields, saying SOEs must play the pioneering role in innovation and digital transformation.
Ministries, agencies and localities were also asked to boost administrative reform, better the business environment, and work to untangle knots for businesses, and facilitate their operations.
The Ministry of Planning and Investment reported that as of the end of 2023, Vietnam counted 676 state-owned enterprises, operating in various sectors.
At the beginning of 2023, their total assets were valued at 3.82 quadrillion VND (154.93 billion USD), including nearly 1.7 quadrillion VND of State capital.
Last year, their combined revenue stood at 1.65 quadrillion VND, and the total amount of taxes and other payables to the budget reached 166.21 trillion VND, the ministry said.
On this occasion, the PM launched an emulation movement to implement tasks set for this year.
State budget collection reaches 24.3% of 2024 projection in two months
The total State budget revenue in the first two months of 2024 reached over 361.67 trillion VND (nearly 14.67 billion USD), equivalent to 24.3% of the projection for the whole year, and 112.9% compared to the figure recorded in the same period last year, the General Department of Taxation reported on March 1.
The agency said 53 out of the country's 63 provinces and centrally-run cities have seen an increase in budget revenue compared to the January – February period in 2023.
By the end of February, the tax authorities issued 3,017 decisions on value-added tax refunds with a total amount of 21.68 trillion VND, equivalent to 12.7% of the value-added tax refund projection for 2024.
According to the general department, as many as 84 foreign suppliers have been issued taxpayer-identification numbers through the electronic portal so far. Among them, 67 have declared and paid taxes following legal regulations. Cumulatively for the last two months, the total tax value paid by foreign suppliers hit 2.03 trillion VND.
To effectively fulfill the task of budget collection management as directed by the Government, the Prime Minister, and the Ministry of Finance, the tax sector has been vigorously implementing measures to enhance revenue management and avoid revenue losses along with speeding up administrative reform to facilitate businesses and taxpayers.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes
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