The export prices of Vietnamese rice in the first two months of 2023 rose by 9.8% year-on-year to 528.5 USD/tonne, according to the Ministry of Agriculture and Rural Development (MARD).

Vietnam exported 789,000 tonnes of the grain in the reviewed period, earning 417 million USD, down 18.8% in volume and 10.8% in value compared to the same period last year.

The Philippines is the largest importer of the food from Vietnam in January with over 129,000 tonnes worth 64.55 million USD, accounting for 34.6% of Vietnam’s total export.

Vietnam recorded the highest increase price for rice exported to Taiwan (China) in January, with a surge of 54.6% year-on-year.

It is forecast to have favourable conditions for rice exports in 2023 as many countries such as the US and China, and those in Europe, are being affected by climate change and drought, which cause a shortage of rice supply.

Moreover, India - one of the largest rice exporters in the world, imposes a ban on broken rice exports and a 20-percent tax rate on white rice varieties.

Vietnam aims to export between 6.5 – 7 million tonnes of rice in 2023.

Its export is predicted to increase again as the demand in traditional markets such as Indonesia and Bangladesh has risen, and China – one of the largest importers of Vietnamese farm produce, has opened the market after the COVID-19 pandemic.

Over $809 million worth of bonds expires in March
     
Nearly VND227.6 trillion (US$9.6 billion) worth of corporate bonds is going to expire this year, of which about VND19 trillion matured or was repurchased before maturity in the first two months of the year, according to data compiled by the Ha Noi Stock Exchange (HNX).

Thereby, corporate bonds worth VND208.6 billion are set to mature in the last ten months of the year.

If there is no significant bond redemption, September will suffer the worst maturity pressure with the largest value of over VND33.2 trillion, followed by December with VND28.3 trillion worth of bonds expiring.

In March, the total value of matured bonds is VND19.2 trillion.

Two batches of Masan Group’s bonds are going to be due this month, one with issue value of VND3 trillion will expire on March 9 while the other with an issue value of VND2 trillion will mature on March 30.

According to the separate financial statement of Masan Group, it has VND14.9 trillion worth of bonds expiring this year.

Others having large bonds expiring this month are Novaland, CII, and Trung Nam.

Novaland Group has three lots of bonds, worth more than VND2 trillion, while CII has one lot worth VND2 trillion. Trung Nam JSC and Trung Nam Construction Investment JSC totally have VND1.3 trillion worth of bonds maturing in March. 

Bond issuers allowed to extend coupon payments

Debt-issuing organizations can extend coupon payments by up to two years and settle debt by assets, instead of cash, if they secure approval from bondholders, according to a new Government decree.

Government Decree 08 was issued on March 5 to revise and supplement some regulations on corporate bond offering and trading on domestic and international markets. It took effect on March 6.

It also suspends some articles of Decree 65/2020 until December 31 this year, which requires professional individual investors to hold an investment portfolio worth at least VND2 billion for 180 days or longer and debt-issuing organizations to report their credit ratings and sell their bonds within 30 days.

Decree 65/2020 was issued last September to tighten control over bond sales as the bond market expanded at an alarming rate and irregularities occurred.

According to the Vietnam Bond Market Association, corporate bonds worth around VND462 trillion and VND658 trillion were issued in 2020 and 2021, respectively.

However, the market saw a steep decline in 2022 due to securities market fraud, resulting in the bond issue value plunging to VND255 trillion.

Corporate bond issues have nearly ground to a halt since, as there was no corporate bond issued in January this year.

Burdens still to be tackled to ensure efficient DPPA pilot

Foreign investors have been closely monitoring a proposed pilot on the direct power purchase agreements in Vietnam, especially those with a long-term business strategy in renewable energy. However, the country’s limited mechanisms may mean the long-term goals will be difficult to attain.

The European Chamber of Commerce in Vietnam (EuroCham) recently noted that the objective of 100 per cent clean energy is a challenging target but it is one that has become commonplace for global companies.

A DPPA would allow businesses in Vietnam to purchase electricity directly from private firms producing renewable energy, instead of through local power utilities. The measure would help individual companies to achieve their own clean energy supply targets.

It was noted that electricity from liquefied natural gas (LNG) plants will not assist EuroCham members in achieving their clean energy goal, as LNG is not a clean fuel from extraction to consumption. Therefore, the rising use of LNG to produce electricity will not increase the attractiveness of Vietnam as a manufacturing location when judged by the clean energy objective, according to the Green Growth Sector Committee.

The Ministry of Industry and Trade (MoIT) has prepared several draft legislative instruments since 2020 on the DPPA pilot scheme, including a May 2021 draft circular and October 2021 report, together with a May 2022 draft decision. These core documents provide an insight into the DPPA pilot’s likely structure and conditions, but no specific launch date for the scheme has been confirmed by the prime minister.

Unlike the latest draft circular, the decision does not describe the implementation and pricing mechanisms of transactions in significant detail, nor specify the criteria for participation in the programme. In addition, although it is not explicitly stated in the draft decision, a difference in the pricing mechanism is that power consumers will purchase power from Electricity of Vietnam at retail price rather than spot price, plus applicable fees and charges, as was stipulated under the draft DPPA circular.

Global firms had been ramping up calls for such a pilot over the years, with 26 top international companies and organisations purchasing more than 16 million mWh of electricity and boasting total investment in Vietnam of $1.57 billion, as well as signing a declaration of support for DPPA in Vietnam in 2019.

Vietnam has experienced a rapid deployment of solar (18GW) and wind (4GW) assets over the past three years. This has resulted in material issues around grid congestion and curtailment, requiring wholesale upgrades to Vietnam’s transmission infrastructure. As a result, the DPPA scheme is limited to an aggregate capacity of only 1,000MW.

The current draft Power Development Plan VIII acknowledges Vietnam’s existing grid overload and curtailment issues, with the MoIT committing to building 86 gigavolt-amperes of additional capacity for 500kV stations and nearly 13,000km of transmission lines, requiring up to $32 billion in investment to 2030.

Vietnamese IT firms get support to go global

In 2023, the Ministry of Information and Communications (MIC) will focus on working with Vietnamese associations, foreign diplomatic missions, and trade and investment.

In 2023, the representative offices will enhance support for Vietnamese digital technology enterprises in global digital cooperation, MIC Deputy Minister Phan Tam told a recent conference.

The conference “Vietnamese digital companies going global: Global digital cooperation – Trusted partners in building the digital world” was the start of this effort, Tam stressed.

Nguyen Thien Nghia, Deputy Director in charge of the MIC’s Department of Information and Communications Industry, affirmed that the world technology market has many opportunities while Vietnam's market is too small compared to the current and future scale of the IT service personnel.

Vietnamese technology enterprises have not only the advantage of dynamic and creative human resources but also the capacity of competing in price in comparison with the global IT market. This is the reason for Vietnamese digital technology enterprises to go global, he added.

"Going together" is one of the ways that the ministry is guiding technology businesses. Accordingly, big enterprises will lead smaller ones, and experienced ones will provide support for newcomers.

At the conference, leaders of several businesses shared their experience, lessons, methods of approach, and good and effective solutions to exploit foreign markets.

MIC also officially established a consulting group to support digital technology businesses in going global.

Ca Mau looks to the future with renewable energy projects

The southernmost province of Ca Mau continues to invite investments into key projects this year, especially those in renewable energy in an effort to effectively tap its potential and advantages in sustainable development.

Accordingly, the provincial People’s Committee issued directives to focus on developing projects that include wind, solar, biomass and gas power.

Ca Mau now has 16 approved wind power projects with a total capacity of 1,000 MW. Two other projects have a combined capacity of 200 MW and are pending approval.

Three projects with a combined capacity of 100 MW have been put into commercial operation while six others with a total capacity of 430 MW are to come on line in the near future.

The provincial authorities suggested the Ministry of Industry and Trade add 24 wind power projects with a total capacity of 12,018 MW, nine solar power projects with a combined capacity of 2,846 MW, and four gas powered projects of 10,700 MW into the National Power Development Plan for the 2021-2030 period with a vision to 2045.

Last year, Ca Mau generated about 4,200 million kWh of electricity, including over 3,900 million kWh of gas power, nearly 100 million kWh of solar power and around 165 million kWh of wind power.

Measures to boost trade underpins cautious stance

Despite a positive budget landscape last year, the government has mapped out a cautious projection for 2023 with a large deficit due to massive difficulties expected ahead.

According to the Ministry of Finance (MoF), based on forecasts that there will be massive difficulties both at home and abroad, the state budget overspending in 2023 will likely sit at $19.8 billion, equivalent to 4.42 per cent of GDP.

The central budget deficit will reach more than $18.7 billion or 4.18 per cent of GDP; and local budget overspending will touch over $1.08 billion or 0.24 per cent of GDP.

The budget revenues this year are expected to be $70.46 billion, which is far lower than the realised figures of $77.6 billion last year.

“As the world economy’s growth is forecasted to be slow down, a number of major economies are facing danger of depression, and a very high hike of prices of oil and input materials is creating big pressure on global inflation,” the MoF said.

“The political situation in the region and the wider world have become all the more complicated, coupled with climate change, natural disasters, and epidemics. All of these challenges have and will continue increasing risks and difficulties for the Vietnamese economy in 2023 and the country’s budget situation.”

According to an MoF report on Vietnam’s budget estimates for 2023, the state budget revenue structure will embrace $58 billion from domestic revenues – far lower than $61.8 billion recorded last year; $1.83 billion from crude oil exports if about eight million tonnes are exploited domestically and the average price stays at around $70 per barrel; $239.1 million from foreign assistance; and $10.39 billion from export and import activities – lower than $12.17 billion last year.

According to the World Bank, global growth is estimated to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022.

Risks include growth slowdown or stagflation in main export markets, further commodity price shocks, and continued disruption of global supply chains. Domestic challenges include continued labour shortages, the threat of higher inflation, and heightened financial sector risks, the World Bank warned.

The government has asked the Ministry of Industry and Trade (MoIT) to find sturdy measures to boost exports and closely control imports, and take advantages of commitments in signed free trade agreements. The MoIT also ordered to direct Vietnam’s trade offices overseas to seek more information from the markets where they are located to provide consultancy for the government and the prime minister on how to boost exports.

The MoF expects that the total central budget revenues in 2023 will be around $37.52 billion and the total local budget revenues will stand at $32.92 billion.

Meanwhile, it is estimated that Vietnam’s total state budget expenditure this year will be about $90.26 billion, up 16.3 per cent on 2022.

Spending for development investment will be $31.6 billion, and recurrent expenditures will be $50.96 billion. Other expenditures will also cover debt service of $4.47 billion; spending for salary reforms, retired salaries, and adjustments of subsidies, allowances, and social security pertaining to basic salaries ($543.47 million); and other expenditures ($2.68 billion).

To realise the budget targets this year, the government will carry out a raft of solutions.

In 2023, the government will also stringently control the state budget deficit, local budget overspending, and local debt levels. It will also continue strengthening the examination and inspection of the borrowing and use of loan capital and debt repayment. The government will also restructure public debt in accordance with the Law on Public Debt Management, Phoc added.

Last year, the total state budget recorded a surplus of $9.67 billion. Total budget spending was estimated to be over $67.93 billion, up 8.1 per cent on-year. Meanwhile, the state budget revenue was estimated to hit $77.6 billion, up 13.8 per cent on-year. Several revenues have registered an annual increase, reflecting recovery in almost all sectors of the economy.

HCMC attracts most new FDI projects

Ho Chi Minh City leads the whole country in terms of new projects (39.5 percent), number of adjusted projects (21.8 percent), and capital contribution and share purchases (69.3 percent).

According to information from the Foreign Investment Agency under the Ministry of Planning and Investment, from the beginning of the year to February 20, 2023, it is estimated that foreign direct investment (FDI) projects have disbursed about US$2.55 billion, down 4.9 percent over the same period in 2022.

In terms of registered capital, by February 20, 2023, the total newly registered and adjusted capital and capital contribution and share purchases from foreign investors reached nearly $3.1 billion, down 38 percent over the same period in 2022.

Thus, the total registered investment capital decreased due to a sharp decrease in adjusted capital. Meanwhile, new investment capital and capital contribution and purchases of shares still increased over the same period.

Specifically, 261 new projects were granted investment registration certificates, up 42.6 percent over the same period, with the total registered capital surpassing $1.76 billion, nearly 2.8 times higher than the same period last year. There were 133 times of projects registered to adjust investment capital, down 6.3 percent year-on-year, with a total additional capital of nearly $535.4 million, down 85.1 percent year-on-year. There were 440 times of capital contributions and purchases of shares by foreign investors, up 10 percent year-on-year, with a total value of nearly $797.9 million, up 3.7 percent year-on-year.

Foreign investors have invested in 17 industries out of a total of 21 national economic sectors. Among them, the processing and manufacturing industry led with a total investment of more than $2.17 billion, accounting for 70.1 percent of the total registered investment capital. The real estate sector ranked second with a total investment of nearly $396.9 million, accounting for more than 12.8 percent, followed by the wholesale and retail sector and the transportation and warehousing sector, with a total registered capital of nearly $202.1 million and nearly $141.9 million, respectively.

The manufacturing industry was also the leading industry in terms of the number of new projects, accounting for nearly 30 percent, and capital adjustment with 63.9 percent.

There were 51 countries and territories investing in Vietnam. Singapore was the top investor, with a total investment of more than $978.4 million, accounting for nearly 31.6 percent of total investment capital in Vietnam, down 42.7 percent over the same period in 2022. Taiwan was the runner-up, with nearly $407.1 million, accounting for 13.1 percent, 3.85 times higher than in the same period. The Netherlands came in third, with a total registered investment capital of nearly $369 million, accounting for more than 11.9 percent, tailed by China, South Korea, and Sweden.

China was the leading partner in the number of new investment projects, accounting for nearly 17.2 percent. South Korea led in the number of times of capital adjustment, accounting for 21.1 percent, and capital contribution and purchases of shares, accounting for 30.5 percent.

Foreign investors have invested in 39 provinces and cities across the country. Bac Giang attracted the most FDI capital with a total registered investment capital of more than $824.3 million, accounting for more than 26.6 percent of total registered investment capital, more than 8.4 times higher than the same period in 2022. HCMC ranked second with 103 new projects, with a total registered investment capital of more than $369.1 million USD, accounting for more than 11.9 percent. Binh Duong, Quang Ninh, and Dong Nai came next, respectively.

HCMC led the whole country in terms of new projects, accounting for 39.5 percent, number of adjusted projects, accounting for 21.8 percent, and capital contribution and purchases of shares, accounting for 69.3 percent.

Regarding production and business activities, the export turnover of the foreign investment sector decreased in the first two months of 2023, but the reduction level was smaller compared to January.

Specifically, export turnover (including crude oil) was estimated at more than $38.4 billion, down 5.3 percent over the same period, accounting for 76.7 percent of export turnover. Export turnover excluding crude oil was estimated at nearly $38.1 billion, down 5.5 percent over the same period, accounting for nearly 76 percent of the country's export turnover.

Import of the foreign investment sector was estimated at more than $33 billion, down 10.9 percent year-on-year, accounting for 67.5 percent of the import turnover of the whole country.

“Despite the decrease in export turnover, in the first two months of 2023, the foreign investment sector still had a trade surplus of nearly $5.4 billion including crude oil and a trade surplus of more than $5 billion excluding crude oil," the Foreign Investment Agency said.

Accumulated to February 20, 2023, the whole country has 36,611 valid FDI projects with a total registered capital of more than $442.3 billion. The accumulated realized capital of foreign direct investment projects is estimated at more than $267.5 billion, equal to 62.5 percent of the total valid registered investment capital.

Vietnam an attractive destination for foreign investors, say news outlets

Amid global uncertainties, Vietnam has emerged as an important destination for foreign investors, serving as a driving force for economic growth moving forward, according to international news outlets.

As the economy is gradually recovering with many challenges still lying ahead, the country is trying to promote its strengths, especially in terms of attracting more foreign investment to garner resources for national economic development.

In its 2022 - 2023 White Book recently unveiled in Hanoi, the European Chamber of Commerce in Vietnam (EuroCham) reaffirmed that Vietnam is an attractive destination for FDI thanks to a stable macroeconomic environment and controlled inflation. It noted that the EU-Vietnam Free Trade Agreement (EVFTA) serves as a driving force for bilateral trade and investment, whilst it has also facilitated the flow of technology and expertise.

Sharing this perspective, Inventiva.co.in noted that Vietnam is one of the top countries in the list for attracting foreign investment in 2023, with this being put down to a favourable business environment, steady economic growth, and improved infrastructure, along with policy changes.

“With the growth in the country’s economy and favourable business climate, the country is attracting commendable larger international investments in order to capitalise on the growing opportunities,” said Inventiva.

“Comparably in the last few years, Vietnam has made significant improvements in its infrastructure and created a business-friendly environment for foreign investors,” added the website.

Meanwhile, Hong Sun, head of the Korean Chamber of Business in Vietnam (KOCHAM), pointed out that compared to other countries, the local investment environment holds great potential for Korean businesses. Indeed, the investment environment and culture in the country shares many similarities to the Republic of Korea, which has attracted a lot of attention and offers convenience for both Korean businesses and the Korean community based in Vietnam. 

“Korean businesses still attach great importance to Vietnam’s abundant and skillful human resources, tax incentives, concerns and efforts of the Vietnamese Government for foreign investors in general and Korean investors in particular,” he said.

Furthermore, business news outlet Nikkei Asia of Japan cited a survey by the Japan Trade Promotion Organization (JETRO) saying that the Vietnamese market is at centre of Japan’s supply chain transformation in ASEAN and is a priority location for Japanese enterprises seeking to expand production.

For its part, Swiss Daily Tribune de Gèneve hailed Vietnam as a new destination for foreign investors thanks to the overall attractiveness of its investment environment and 15 free trade agreements it has signed which have already come into effect.

The article outlined that the country recorded the strongest economic growth in Asia in 2022 at 8.03% following a period of closure due to the COVID-19 pandemic. Switzerland is therefore well-positioned to leverage advantages brought about by the Vietnamese economy.

Hundreds of Swiss firms are among the most important European investors present in the Vietnamese market. In particular, the Swiss industrial equipment sector should seek to fully tap into the growing trend of ‘Made in Vietnam’ products.

The country is being rated by foreign investors as a top priority for investment. Therefore, it will continue to witness the emergence of super factories in the future, Tribune de Gèneve concluded.

In her opinion, Michele Wee, CEO at Standard Chartered Vietnam, recently confided that attractive investment policies and diverse demographics have continued to help Vietnam become a market of choice for both foreign investors and businesses.

Vietnam boasts clear advantages in terms of labour, strong integration with global trade, modern supply chains, political stability, and potential resources, she said, adding that the Government is also keen to carry out reforms and meet its commitment in order to promote trade and sustainable growth.

Last but not least, the International Monetary Fund (IMF), quoted experts on its website, saying that in the context of headwinds against the global economy easing, developing economies such as Vietnam will have more favourable conditions for a stronger recovery in the near future.

Vietnamese travel firms optimise Japanese tourism rebound

Many Vietnamese travel companies are taking actions to make use of tourism recovery in Japan as cherry blossoms in the Far East country reach their peak between March and April.

According to the Japan National Tourism Organization (JNTO), the number of Vietnamese travelers to the Japanese market has soared, with an estimated 51,500 arrivals recorded in January alone.

This figure stood at 12,000 times more compared to same period from 2021 and up by a staggering 45.6% compared to 2019 before the start of the COVID-19 pandemic.

This growth can be considered as even more remarkable in the context that the number of foreign visitors to Japan during this period dropped by 44.3%, with about only 1.5 million arrivals.

JNTO said that Vietnam still ranked first in terms of the number of foreign visitors to Japan, affirming that the country is among the Far East country’s key source markets for tourism.

Meanwhile, Vietnamese travel firm Ben Thanh Tourist reported Vietnamese tourists are extremely excited at visiting Japan during the cherry blossom season and Vietnam’s national holiday on April 30 and May 1.

Currently, the firm is offering a number of tours to Japan with different destinations at various prices, meeting the growing demand of Vietnamese customers.

Representative from travel agency TST tourist also shared that the number of Vietnamese visitors to Japan will increase even more if visa procedures become more convenient and faster.

During a recent meeting held with Vietnamese and Japanese businesses, Consul General of Japan in Ho Chi Minh City Watanabe Nobuhiro said that this year there will be a number of activities to be held to celebrate the 50th anniversary of bilateral diplomatic ties between the two countries. Japan will focus on building relationships and co-operation with travel companies, airlines and media channels, aiming to quickly restore the number of Vietnamese tourists to Japan back to pre-pandemic levels.

Trade promotion centre, TikTok boost digital transformation among OCOP stakeholders

The Vietnam Trade Promotion Centre for Agriculture (Agritrade) has signed a deal on strategic cooperation with TikTok to improve the digital transformation capacity for the small- and medium-sized enterprises (SMEs) and cooperatives taking part in the One Commune, One Product (OCOP) programme.

Accordingly, TikTok will co-organise training courses on short video production and the TikTok for Business advertising solutions, open a section for OCOP products on TikTok Shop, and cooperate with Agritrade and other agencies to build marketing programmes for OCOP products as well as related events in 2023.

In particular, TikTok will continue expanding training courses in such provinces as Ninh Binh, Thanh Hoa, Thai Nguyen, Thua Thien-Hue, and Lam Dong. It will also reactivate hashtag #DacSanVietNam on its platform to promote interactions between sellers and buyers.

The diversification of trade promotion methods, including advertising products on digital platforms, is considered a necessary step to boost sellers’ access to buyers and generate bigger economic benefits for localities.

In 2022, TikTok held over 10 local training courses on digital transformation and recorded 200 users opening stores on TikTok Shop to sell more than 500 typical products of localities. Hashtags #OCOP and #DacSanVietNam attracted 305 million and 350 million views, respectively.

Nguyen Lam Thanh, a representative of TikTok Vietnam, said TikTok prioritises long-term activities to assist local enterprises, especially SMEs, to develop business on its digital platform, expected to contribute to the rural economy and help spread local cultural values in and outside the platform.

Nguyen Minh Tien, Director of Agritrade at the Ministry of Agriculture and Rural Development (MARD), said the positive results last year have consolidated the prospect of OCOP development on digital platforms and encouraged startup initiatives in agriculture and rural affairs.

He expressed his hope that TikTok will bring about new shopping experiences to users, thus opening up opportunities for OCOP stakeholders to get established.

The OCOP programme, initiated by the MARD in 2008, is based on Japan’s “One Village, One Product” programme and Thailand’s “One Tambon, One Product”. It is an economic development programme for rural areas and also to help implement the national target programme on new-style rural area building.

OCOP products are made based on the combination of local resources, traditional culture, and advanced technology. The programme looks to provide farmers with a chance to come together to form cooperatives, enabling them to create goods with higher quality and better design and packaging that meet higher standards and market demand.

Dong Nai banana exports to surge by 25% to half million tonnes
     
Dong Nai, Viet Nam’s top banana exporting province, is expected to ship over 500,000 tonnes of the fruit this year, 25 per cent higher than last year.

Nguyen Thi Hoang, deputy chairwoman of the province People’s Committee, said banana is one of the province’s main export products, with 80 per cent of the annual output sold abroad.

Dong Nai also has the largest area under the fruit in Viet Nam, 13,419 hectares.

Businesses should continue to invest in applying modern technologies and expand production to take more of Viet Nam’s bananas to international markets, she said.

Viet Nam’s major markets for bananas are China, South Korea, Japan, and Malaysia, with China being the biggest buyer.

Wei Huaxiang, consul general of the Chinese embassy in HCM City, said in his country there is rising demand but insufficient domestic supply.

He said authorities from the two countries should work together to facilitate Vietnamese exports, and his embassy would help local businesses promote their bananas, but they need to pay close attention to packaging to maintain product quality. 

Fuel price in check despite mounting difficulties: Minister of Industry and Trade
     
The Ministry of Industry and Trade has acted quickly to keep fuel prices in check amid the unfavourable situation, said Minister Nguyen Hong Dien.

Dien said some fuel sellers had deliberately tightened their supply to manipulate fuel prices and trigger fuel shortages since early 2022.

In the face of such illegal practices, the ministry has sent out three teams to inspect 33 fuel suppliers and taken measures to stabilise the market.

The team also inspected 2,700 fuel retailers nationwide between 2022 and 2023. They detected and fined over 600 violating fuel trading regulations, adding around VND20 billion to the State budget.

He also said his ministry had made some revisions to Decree No.95 and No.83 on petrol trading and reported to the Government on the revisions.

The revisions would centre around the price adjustment periods, the rights and responsibilities of fuel traders, the price-setting process, the price-stabilising funds, and the minimum discount for retailers.

He also said the national fuel reserve would be adjusted from 9 days to 15 days between 2023 and 2025, and to 30 days from 2026 to 2030. Under his estimation, the State budget would need at least VND4.1 trillion annually to pull off the adjustments, yet the target is currently beyond its means.

Meanwhile, speaking to the media ahead of the hearing, Giang Chan Tay, director of the Boi Ngoc One-member Company Ltd, said that the market is showing cracks as fuel retailers are being treated unfairly.

He said the retailers have been stripped of the entitlement to discounts as they are at the bottom of the supply chain. As such, they have been left with no choice but to buy fuel from suppliers without a discount, resulting in unprofitability.

The director called for a revision to the decrees to plug the cracks. He said the revision should specify a reasonable profit margin for fuel retailers to ensure equal treatment across the supply chain.

Ha Thanh Tung, a representative from the Ha Giang Petroleum Transport Trading Company Ltd, shared Tay's view, saying that at times over 9,000 fuel retailers had to sustain an aggregate monthly loss of VND900 billion (US$38 million) due to the no-discount practice.

Another representative from the Phuong Nam Petroleum Trading Investment JSC remarked that the lack of discounts has driven fuel retailers to unprofitability for quite a while.

To lift the retailers out of financial hardship, he suggested lawmakers revise the decrees so that profits would be distributed among suppliers, traders, and retailers in a prefixed proportion.

Nguyen Thuong Lang, a lecturer at the National Economics University, believed that a minimum discount should be put in place to keep fuel retailers afloat and add more transparency to fuel price management.

Nguyen Thi Sinh, director of the Chien Thang Petroleum Company LTD, was concerned that fuel retailers are finding themselves stuck between a rock and a hard place. They have to buy fuel without a discount and suffer a loss, or refuse to buy it and get a fine.

The Ministry of Planning and Investment earlier revealed that fuel retailers were calling for a minimum discount of between 5 to 6 per cent to turn their financial situation around. But the ministry was against the request, saying that a minimum discount would disrupt market self-regulation. The ministry insisted on a market being free from such state interference. 

90 percent of supporting enterprises remain small, medium-sized ones

In the supporting industry, the country currently has about 5,000 enterprises, but nearly 90 percent of them are small and medium-sized enterprises.

Ms. Bui Thi Hong Hanh, Managing Director of NC Network Vietnam, told a recent workshop that the manufacturing industry, especially in the field of supporting industry, has a large market space but the supply capacity of domestic enterprises is still low.

Currently, the proportion of GDP contribution of the processing and manufacturing industry accounts for 23.9 percent, lower than industrial countries with a level of around 30 percent.

Particularly, in the field of supporting industry, the country currently has about 5,000 enterprises, but nearly 90 percent of them are small and medium-sized enterprises with a production scale of 300 employees or less.

Explaining this issue, many people think that supporting industry enterprises, in particular, and processing and manufacturing ones, in general, are facing many inadequacies. These include significant dependence on foreign-invested enterprises (FDI), reliance on imported raw materials, and low autonomy in terms of raw materials, leading to low competitiveness.

So far, the domestic industry has not had a global-scale industrial enterprise that plays a leading role in forming the domestic supply chain. In the opposite direction, the policy system has not practically supported the development of the industry, lacking legal grounds and resources to implement solutions to promote industrial development. Financial policies have not created favorable conditions for industrial development. The State management of the industry still has many shortcomings.

Developing supporting industries is one of the important solutions to improve the quality of the economy, develop sustainably, and avoid the middle-income trap; help increase the ability to attract foreign direct investment, step up the reception and transfer of technology, and promote the development of domestic small and medium-sized enterprises; thereby, creating a strong spillover effect, helping domestic enterprises to deeply participate in the supply chain of FDI enterprises and the global value chain of multinational corporations.

At the same time, it is necessary to have a loan policy with low interest rates to support enterprises to invest in equipment, research and development, technological innovation, and capacity building to help domestic enterprises participate in the supply chain of FDI enterprises," said Mr. Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management.

Mr. Ngo Minh Chau, Vice Chairman of the HCMC People's Committee, said that the city has synchronously deployed specific solutions to support businesses, such as building a program to develop supporting industries, organizing the supply-demand connection program for supporting industrial products, and supporting human resource training and development.

The city wishes to listen to the opinions of experts, scientists, associations, and enterprises to solve difficulties and propose solutions and policies to develop supporting industries, thereby promoting the city's as well as the country's industrial industry to develop more strongly.

Deo Ca Group, Petro Trade join hands in Vietnam-Laos railway project

Local infrastructure developer Deo Ca Group JSC has signed a joint venture agreement with Laos’ Petroleum Trading Lao (Petro Trade) Public Company to develop a Vietnam-Laos railway project.

The railway line spans 554.7 kilometers, linking Vung Ang Port in the coastal province of Ha Tinh to Vientiane, the capital and largest city of Laos.

The project will be built under the public-private partnership, with a total investment of VND149,550 billion.

As part of the deal, Deo Ca Group and Petro Trade will construct a 103-kilometer section of the railway between Vung Ang Port and Mu Gia Pass in Quang Binh Province costing VND27,485 billion.

The section will have one terminal and seven stations. It is designed for a top speed of 150 kilometers per hour.

Once put into operation, the project is expected to enhance freight forwarding services between Vietnam and regional countries, notably from Vung Ang Port to the economic centers in the north of Laos and the southern part of China.

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