Ho Chi Minh City attracted US$176.71 million in investment capital into the city's export processing and industrial zones in the first two months of 2024, equivalent to 32.13% of the target set for the whole year.

Two-month peppercorn export drops in volume, rises in value

Vietnam exported 35,000 tonnes of peppercorn worth 143 million USD in the first two months of 2024, down 12.3% in volume but up 12.9% in value, reported the Ministry of Agriculture and Rural Development (MARD).

The US was the biggest importer of Vietnamese peppercorn, accounting for 29% of the total shipments. It was followed by India 8% and Germany 6%.

Export prices averaged 4,041 USD per tonne during January - February, rising 28.7% from the same period last year. As a result, domestic prices have also increased continuously, especially after the Lunar New Year festival, the MARD noted.

Peppercorn prices on March 5 rose 500 VND per kg from the previous day to 93,000 - 96,000 VND (3.76 - 3.89 USD) per kg according to localities, statistics show.

Explaining the sharp increase, Hoang Phuoc Binh, Standing Vice Chairman and Secretary General of the Peppercorn Association of Chu Se district (Gia Lai province), said the production is not high because the harvest season has just started. Meanwhile, domestic speculators are racing to buy in bulk as they forecast peppercorn will soon enter the price hiking cycle that usually lasts for 10 years.

Growers are also no longer under a big selling pressure since most of them also cultivate other crops like durian and coffee or have other sources of income, he went on.

Binh added that rising demand for the orders delivered right in the first quarter in foreign markets such as the US, the EU, Asia, and Africa has also fuelled peppercorn prices.

The Vietnam Pepper and Spice Association (VPSA) predicted that the country’s peppercorn output this year will drop by 10 - 15% to 160,000 - 170,000 tonnes.

Among large producers, the harvest season already passed in Brazil and has just started in Vietnam while the main harvest season of Indonesia and Malaysia falls in July. The supply from Indonesia, Brazil, Malaysia, and Cambodia is unable to make up for the decline in Vietnam’s export volume, thus boosting prices since the beginning of the season, according to the VPSA.

Echoing the view, the Foreign Trade Agency under the Ministry of Industry and Trade held that global prices will keep going up in the first quarter due to the output decrease in the main producing countries, noting that adverse weather conditions due to El Nino are affecting peppercorn production.

Ba Ria-Vung Tau to auction land at prime location

The southern province of Ba Ria-Vung Tau has decided to auction nearly 14 hectares of land at a prime beachside location in Vung Tau City, which will be developed into a luxury resort and entertainment complex.

The site is Nghinh Phong Cape where visitors can see the East Sea on three sides, the huge statue of Jesus Christ on Tao Phung Mount and the snaking coastal road around Nui Nho Mountain.

The resort and entertainment complex would cost an estimated VND10.7 trillion. The winning bidder would have to make a one-time payment for a lease term of 50 years.

The project should feature tourist service, entertainment, 5-star hotel or commercial center.

In recent years, Ba Ria-Vung Tau has emerged as a major venue for resort real estate developers in southern Vietnam.

Vĩnh Phúc province grants investment certificates for $81 million project to SHINEC and partner

The People's Committee of Vĩnh Phúc province on Tuesday granted investment infrastructure certificates for the Phúc Yên Industrial Park project worth of VNĐ2 trillion (US$81 million) to two companies.

They are SHINEC Joint Stock Company and Vĩnh Phúc International Industrial and Service Park Joint Stock Company.

The infrastructure project of Phúc Yên Industrial Park, located in Phúc Yên City, Vĩnh Phúc province, has a total investment capital of nearly VNĐ2 trillion, covering an area of 111.3 hectares, and a 50-year operation period.

According to the committed schedule, it is expected to complete the investment and construction of infrastructure from Q2/2025 to Q1/2027 and commence operation from Q2/2027.

Phúc Yên Industrial Park will have a synchronised and modern technical infrastructure system. It targets projects in the fields of mechanical engineering, precision mechanics, medical equipment, electrical equipment, with modern and advanced technologies and minimal environmental pollution.

The park, developed by SHINEC and its partner, is expected to be one of the vibrant and high-quality investment destinations, promising to contribute significantly to the socio-economic development of Vĩnh Phúc province.

It has various advantages, being approximately 35 km from the center of Hà Nội, nearly 10 km from Nội Bài Airport, and 150 km from Hải Phòng Port and Cái Lân Port, adjacent to the Nội Bài-Lào Cai expressway.

SHINEC and its partner are committed to constructing and operating Phúc Yên Industrial Park in a professional manner, attracting secondary investors.

In recent years, Vĩnh Phúc province has been steadfast in its sustainable development strategy. It has been accelerating the adjustment and planning of industrial parks towards specialisation, ecological friendliness, and intelligence, gradually building exemplary industrial parks with coordinated and modern infrastructure.

Vĩnh Phúc emphasizes that the development of industrial parks must be accompanied by environmental protection and sustainability. When attracting investment in industrial park infrastructure, Vĩnh Phúc requires investors to allocate a minimum of 10 per cent of land funds for green planting. The province has also issued many directives to overcome difficulties and obstacles in environmental protection work. 

Currently, Vĩnh Phúc has several industrial parks that have well-planned infrastructure. An exemplary case is the Thăng Long Vĩnh Phúc Industrial Park, owned by the Sumitomo Group (Japan), which has comprehensive and modern infrastructure and environmental landscape.

Vĩnh Phúc province issued investment registration certificate to Sumitomo Group in October 2015. Thăng Long Vĩnh Phúc Industrial Park covers an area of over 213 hectares of Thiện Kế and Tam Hợp communes, Bình Xuyên district.

By November 2018, the park completed phase I, and shortly after, dozens of production and business investors registered for occupancy.

Thăng Long Vĩnh Phúc Industrial Park so far has attracted 42 projects, including 9 domestic investment projects with a total investment capital of over VNĐ1.2 trillion and 33 foreign direct investment (FDI) projects with a total investment capital of over $953 million, providing employment for more than 10,000 laborers. The investor has focused on establishing a green tree and grass system, allocating over 20 per cent of the total area for greenery, water surfaces, and transportation roads. 

Móng Cái aims to become a national key economic zone

Móng Cái City must prioritise the development of the Móng Cái Border Gate Economic Zone into a national key border economic zone, serving as nexus for trade, industry, seaport, logistics and general services within Quảng Ninh Province and the Northern key economic region.

During Monday's session discussing the city's development in 2023 and the first two months of 2024, Nguyễn Xuân Kỳ, Secretary of the Quảng Ninh Provincial Party Committee, said the Trà Cổ national tourist site should be transformed into a high-quality island tourism area, associated with commercial tourism products and border gates.

Móng Cái City needs to focus on attracting projects aimed at developing high-quality tourism products and services, as well as strengthening import-export trade and logistics activities in the area, Kỳ said.

The city must achieve the income target in communes of over VNĐ100 million (US$4,167) per person per year by the end of next year.

Along with Hạ Long and Vân Đồn, Móng Cái City must be the key to develop high-quality tourism products and services.

In addition, the city must also develop a detaied plan to achieve the goal of turning Quảng Ninh into a key Vietnamese tourism market of Guangxi (China) and building a model of border tourism co-operation of Việt Nam - China, especially between Quảng Ninh and Guangxi.

Móng Cái city has attracted over 310,000 tourists from the beginning of the year until now, an increase of over 330 per cent over the same period. 

HCMC attracts US$177 million in industrial investments

HCMC’s export processing and industrial zones secured nearly one-third of their annual investment target in the first two months of the year, attracting around US$177 million, according to the HCMC Export Processing Zone and Industrial Park Authority (HEPZA).

Foreign investments dominated the total figure, amounting to US$174.19 million, with US$4.84 million stemming from two new projects and three others receiving capital adjustments. In particular, investment capital for the Green Planet project rose by US$158 million in this period.

Domestic investment capital in HCMC’s export processing and industrial zones totaled VND22.42 billion, equivalent to US$0.97 million. This includes two new projects with registered capital of VND11.2 billion and one adjusted project with a capital increase of VND10.52 billion.

In addition to attracting investment, HEPZA prioritizes environmental stewardship, infrastructure development, and proactive initiatives to minimize natural hazard risks impacting business operations, said Hua Quoc Hung, head of HEPZA.

Samsung plans to invest US$1 billion annually in Vietnam

South Korean conglomerate Samsung has plans to invest an additional US$1 billion annually in Vietnam, according to the Vietnam News Agency.

The plan was announced by Choi Joo Ho, general director of Samsung Vietnam, during his meeting with Deputy Prime Minister Tran Luu Quang on March 4.

In 2023, Samsung invested an additional US$1.2 billion in Vietnam, bringing the total so far to US$22.4 billion. The company aims to sustain this level of investment, pledging to invest an annual US$1 billion into the Vietnamese economy.

Samsung also expressed interest in expanding collaboration with the Vietnam National Innovation Center (NIC) and supporting the country in semiconductor workforce development.

Deputy PM Tran Luu Quang said that Vietnam commits to improving the investment environment to create favorable conditions for foreign businesses to operate in the country.

Samsung Vietnam and NIC have signed a memorandum of understanding to cooperate in high-tech development initiatives in Vietnam. Samsung has also partnered with the Vietnam National University of Hanoi to train students in the semiconductor industry.

Soil from Long Thanh airport project proposed for expressway construction 

Dong Nai authorities have proposed utilizing soil excavated from the Long Thanh International Airport project as fill material for the Bien Hoa-Vung Tau Expressway. This proposal was conveyed in a document sent to the prime minister, outlining the progress of the airport project in late February.

In their proposal, Dong Nai authorities emphasized the advantages of transporting soil from the designated area for Terminal 3 (T3) construction to the Bien Hoa-Vung Tau Expressway project site. They underscored the benefits of this initiative, including mitigating environmental pollution, alleviating traffic congestion on National Highway 51, and reducing overall project costs, the report said.

If approved, Dong Nai authorities will directly assign contractors to excavate and transport soil to the Bien Hoa-Vung Tau Expressway construction site in accordance with regulations, said the authorities.

Site clearance for the Long Thanh airport project is 98.9% complete, setting the stage for the construction of the project’s first phase.

The 187-hectare area earmarked for T3 construction is located within the construction site for the first phase of the airport project.

The expressway section in Dong Nai Province needs over five million cubic meters of soil for leveling.

Hoa Phat plans US$4.8 billion investment in Phu Yen

Vietnamese steel conglomerate Hoa Phat Group (HOSE: HPG) plans to pump VND120 trillion (US$4.8 billion) into three projects – a seaport, an industrial zone, and an integrated iron and steel complex – in the south-central province of Phu Yen.

A memorandum of understanding to this effect was signed between Hoa Phat and Phu Yen at a recent investment promotion conference.

Tran Dinh Long, chairman of Hoa Phat’s board of directors, said these projects will generate jobs for 20,000 people and contribute around VND10 trillion to the local budget annually.

Hoa Phat is a major steel producer in Vietnam, with annual crude steel output of 8.5 million tons.

Despite operating across various sectors, including agriculture and real estate, the firm focuses its investment on the Hoa Phat Dung Quat 2 Integrated Iron and Steel Production Complex in the central province of Quang Ngai.

This project, currently 45% complete, is expected to be operational by 2025, boosting Hoa Phat’s annual crude steel production capacity to 14 million tons.

The steelmaker’s 2023 revenue dropped by 16% year-on-year to over VND120 trillion, while after-tax profit amounted to around VND6.8 trillion.

HCMC to intensify tourism promotions in key markets

The tourism sector of HCMC is gearing up to boost promotional programs in key foreign markets to attract more visitors this year.

The HCMC Department of Tourism will concentrate its promotional efforts on major source markets such as the U.S., the United Kingdom, Germany, Singapore, and Australia.

The southern city is aiming for six million international arrivals this year, up from 5.2 million in 2023.

To attain this target, the city will roll out a series of new tourism products and services, including theme tours, night tours, and MICE (meetings, incentives, conferences, and exhibitions) events.

The city also plans to participate in major international travel fairs and exhibitions, including the IMEX Frankfurt and WTM London.

The HCMC government will continue to enhance its tourism infrastructure, upgrade the transportation system, and improve the quality of local hotels and restaurants.

Tax collections from foreign trade slide 2.4% in Jan-Feb

Tax collections from Vietnam’s foreign trade in the first two months of 2024 slipped by 2.4% over the same period last year, according to the General Department of Vietnam Customs.

Total trade in January-February amounted to US$113.96 billion, up by 18.6% year-on-year. Exports in the two-month period grew by 19.2% year-on-year to US$59.34 billion, while imports rose by 18% to US$54.62 billion, resulting in a trade surplus of US$4.72 billion.

Vietnam Customs noted persistent challenges in combatting smuggling and fraudulent trade, highlighted by increased illegal transportation of fireworks during the Lunar New Year holiday season.

Illicit drug trafficking across borders continued, with significant activities observed through international airports such as Noi Bai, Tan Son Nhat, and Danang, as well as overland routes from Laos into Vietnam.

Customs authorities identified and handled 1,222 cases of customs law violations, with an estimated value of VND1.6 trillion.

This year, the National Assembly has assigned a budget revenue target of VND375 trillion to Vietnam Customs, with VND204 trillion expected to come from import and export activities.

Restrictions proposed on real estate transactions

The Ministry of Construction has proposed new regulations limiting the number of real estate transactions individuals can undertake within a year.

According to a draft Government decree circulating for feedback until April 27, individuals would be permitted to sell or lease only three to five landed houses or apartments annually. Beyond this limit, they would be obligated to establish a business for real estate trading.

These proposed measures are outlined in the draft decree aimed at guiding the implementation of several articles of the 2023 Law on Real Estate Business, set to take effect on January 1 next year. Under this law, individuals involved in small-scale real estate activities are exempt from establishing a business but must comply with tax regulations.

To define criteria for identifying individuals engaged in small-scale real estate business, the ministry presents three options in the draft decree. The first option restricts the number of properties—both ready and off-plan—that individuals can transfer or lease within a 12-month period to three to five.

The second option categorizes individuals engaged in small-scale real estate business based on property size, considering urban areas with properties ranging from 1,000 to 2,000 sq.m and rural areas with properties from 3,000 to 5,000 sq.m.

The third option identifies individuals involved in small-scale real estate business as those constructing separate houses with two floors and more and possessing fewer than 20 apartments.

These proposed regulations may pose challenges for short-term real estate investors by limiting property transactions, according to property brokers. Such investors would be required to establish a business, subject to rigorous requirements for conducting real estate investments.

Wind turbine blade collapse causes VND200 billion in damage

A wind turbine blade collapse at the Hoa Binh 5 Wind Power Plant in the Mekong Delta province of Bac Lieu has caused an estimated loss of VND200 billion, Pham Van Thieu, chairman of the Bac Lieu Province People’s Committee, said today, March 4.

The incident, which occurred on March 1 in Vinh Thinh Commune, Hoa Binh District, saw the blades of a wind turbine tower weighing over 100 tons falling to the ground from a height of more than 140 meters, shattering upon impact.

Prompt action was taken by Hacom Bac Lieu Energy JSC, the wind farm’s investor, who reported the situation to local authorities. Emergency response teams were dispatched to secure the scene immediately.

There were no casualties reported as the incident took place in a shrimp farming area, away from residential areas.

Thieu attributed the incident to technical faults and urged the company to swiftly address the situation and resume operations, the local media reported.

The Hoa Binh 5 Wind Power Plant is part of a larger project approved by the provincial government and has a total investment of VND3.2 trillion.

Bac Lieu is currently home to 10 wind power projects, with a total capacity of 660 MW. Eight of these projects are operational, with a designed capacity of around 470 MW.

Expansion of two-lane expressways prioritized

The Ministry of Transport has said it will prioritize expanding five two-lane and four-lane expressways without emergency stopping lanes, or shoulders.

Among the expressways set for expansion to four lanes soon are La Son-Hoa Lien, Hoa Lac-Hoa Binh, Yen Bai-Lao Cai, Thai Nguyen-Cho Moi, and Cam Lo-La Son. The Ministry of Transport will present the plan to the prime minister for approval later this month.

La Son-Hoa Lien has already secured funding, paving the way for construction to begin later this year, with completion expected by early 2026. The responsibility for overseeing the expansion of the Hoa Lac-Hoa Binh expressway falls on Hoa Binh Province.

The Vietnam Expressway Corporation (VEC) is actively exploring options to enlarge a section of the Yen Bai-Lao Cai Expressway. As for the Thai Nguyen-Cho Moi and Cam Lo-La Son expressways, the ministry is urging investors to propose funding sources and investment models in line with the approved plans.

The ministry has also presented investment plans for expanding four-lane expressways without shoulders to authorities, seeking substantial funding allocations.

In light of recent traffic accidents, authorities are conducting a comprehensive review of traffic infrastructure and operations to bolster safety on both two-lane and four-lane expressways without shoulders.

In related news, the Ministry of Transport has finalized the draft of national expressway standards, with plans to unveil these regulations in the first quarter of this year following evaluation by the Ministry of Science and Technology.

Farmers delighted with high buying prices of sugarcane at beginning of year

In recent days, sugarcane growers in the Mekong Delta are delighted to harvest the main sugarcane crop of 2023-2024 as bumper harvests of sugarcane accompanied by soaring prices have fetched farmers huge profits.

Nguyen Van Ut, a sugarcane farmer in Dai An 1 Commune in Soc Trang Province’s Cu Lao Dung District happily said that this sugarcane crop, his family planted 1ha and they so far yielded more than 120 tons per ha. They earned profits over VND75 million (US$3,034) per ha after deducting production expenses.

In addition, he also received initial investment support in fertilizers and seeds with low prices from Soc Trang Sugar Joint Stock Company, so his family’s profits increased by 10 percent to 20 percent over the same period last year.

Vice Chairman Huynh Thanh An of the People's Committee of Cu Lao Dung District said that currently, the district has nearly 3,000 hectares of sugarcane with an average yield of 120 tons a ha. Some 660 hectares have been harvested.

Currently, the price of sugarcane is VND1,320 a kg if traders buy the agricultural product in the field. Farmers thus earned a net income of nearly VND80 million per ha after deducting all expenses.

Furthermore, the locality cooperated with Soc Trang Sugar Joint Stock Company in implementing support policies such as the provision of seedlings, and fertilizer and buying all sugarcane to assure farmers of their income. Most sugarcane growers in Tra Cu District of Tra Vinh Province these days are all smiling brightly because their agricultural product was bought at VND1,280 a kg in the field.

This year is the third consecutive year that sugarcane farmers have had a successful harvest and good prices.

Director Tran Ngoc Hieu of Soc Trang Sugar Joint Stock Company said that the company has developed a raw material area of over 3,400 hectares in Soc Trang province with 12 cooperative groups, including over 3,000 hectares in Cu Lao Dung district and 400 hectares in My Tu district in the 2023-2024 sugarcane crop. Right from the beginning of the season, the company spent a total cost of nearly VND30 billion to buy fertilizer, and sugarcane seeds for farmers.

Moreover, the company helped farmers to improve their land. Sugarcane prices in the Mekong Delta region in general and Soc Trang province increased VND500 kg higher than every year.

Ministry invalidates proposal to limit maximum sale of 5 houses annually

The Ministry of Construction yesterday announced that it had annulled the proposal that limited individuals to selling or leasing no more than five housing units in a year in its latest draft law.

Prior, the Ministry proposed an individuals can only sell or lease a maximum of five housing units a year and need to set up a company.

According to many experts’ opinions, the Ministry of Construction's proposal aimed to limit speculation and real estate investment in a short time. However, unscrupulous people will find ways to circumvent the law; therefore, management agencies will not find it easy to monitor the number of real estate transactions that individuals have conducted in a year.

In addition, individuals who use land or housing originating from inheritance, donation, or having land allocated, leased, or recognized by the State for land use rights can still freely transact regardless of ownership status.

Therefore, in the new draft, the Ministry of Construction proposed that individuals who engage in small-scale real estate activities do not need to establish a business but are required to pay taxes. Moreover, a person can conduct transactions according to the present civil law, notarization and declaration of taxes following the current regulations.

South American firms interested in Vietnamese market: Economist

Vietnam – a populous country with rapid economic growth and sound engagement in the global supply chain - has attracted interest from South American enterprises, according to Dr. Ignacio Bartesaghi, Director of the International Business Institute of the Catholic University of Uruguay.

In a recent interview granted to the Vietnam News Agency, he affirmed that Vietnam has made significant transformation in recent years, with a great ability to lure foreign investment.

Speaking highly of Vietnam’s foreign policy, he said it helps the country set up close relations with world’s powers and regional countries.

He particularly stressed that Vietnam and Uruguay hold huge potential for economic cooperation, given the complementary nature of the two economies.

Uruguayan exporters will find opportunities in the Vietnamese market, and Uruguay also stands ready to welcome Vietnamese investors, he said.

Regarding the resumption of the negotiations for a free trade agreement (FTA) between Vietnam and the Southern Common Market (Mercosur), Bartesaghi said the pact will be a wonderful opportunity for the bloc’s members, including Brazil, Argentina, Uruguay, and Paraguay, to bolster connectivity with Vietnam so as to diversify linkages with Asia-Pacific and open up new markets.

The negotiations between Mercosur and the EU has reached the stalemate, and this could be an opportunity for ASEAN countries after Singapore and the block clinched an FTA in 2023.

Mercosur could provide agricultural products for Vietnam and Indonesia while the two Southeast Asian countries could sell machines as well as technological and electronic products to Mercosur, he said.

Prospects for production remain patchy

Vietnam’s rebounding industrial production is still likely to suffer from slack consumption at home and slowly recovering demand in the international market.

The General Statistics Office (GSO) last week reported that while the index for industrial production (IIP) in the first two months of 2023 reduced 2.9 per cent on-year, it is estimated to have increased 5.7 per cent on-year in the same period this year.

The manufacturing and processing industry, which creates more than 80 per cent of industrial growth, expanded 5.9 per cent on-year.

The GSO said that the IIP was bouncing back but that the two-month rate of 2024 should have been higher. In February, production was almost halted for about 10 days because of the Lunar New Year taking place, leading to an 18 per cent on-month and 6.8 per cent on-year reduction.

In the first two months of the year, production of many key products in the economy witnessed an on-year decrease, such as machinery and equipment at 21.8 per cent; crude oil and natural gas at 9.4 per cent; drinks 6.6 per cent; electronics, laptops, and optical products 2.6 per cent; and transport 0.8 per cent.

What is more, despite the Lunar New Year break often inducing a soar in consumption, domestic consumption increased 8.1 per cent on-year, far lower than the on-year growth of 14.7 per cent in the same period last year.

Since Q3/2023, farm produce and garment producer Hoang Ngoc Trade and Investment JSC in Hanoi has been facing a 20 per cent reduction in outputs, while operational costs have increased by 15 per cent.

“We’re using about 300 workers instead of 500 as before, and we may have to continue our cutback in March or April if the situation fails to improve,” said company director Nguyen Thi Tuat. “Our revenues have also dipped by about 20 per cent since last October, and the rate is estimated to have reduced by about 8 per cent in the first two months of this year.”

This company has been unable to import materials from China, the biggest material provider, while local partners are also narrowing production. What is more, the company is now burdened by an obligation to pay a high lending rate of 15 per cent annually for bank loans.

In a Q4/2023 survey conducted by the GSO of over 6,500 manufacturing and processing enterprises nationwide, surveyed firms stated that they are facing massive difficulties both at home and in export markets.

Regarding industrial output, only one-third of respondents said there had been a rise in such output in Q4 as compared to Q3. In the current quarter, only 30 per cent of respondents reported an expected increase in production from the previous one.

A series of obstructions have been reported to affect business performance, such as low domestic demand (58.2 per cent), domestically made goods’ low competitiveness (49.8 per cent), weak international market demand (35.7 per cent), and general financial difficulties (32.1 per cent).

The GSO reported that 2024 so far has seen 49,300 businesses with halted operations – up 27.1 per cent as compared to the corresponding period last year. Some 10,000 enterprises stopped operations or were waiting for dissolution procedures, up 6.5 per cent, and nearly 3,700 enterprises completed such procedures. On average, about 31,500 businesses left the market in each month.

According to the Ministry of Planning and Investment, businesses will continue facing numerous difficulties this year. The Russia-Ukraine conflict, high inflation in key markets, and continued geopolitical tensions are the main causes affecting business performance.

However, in its March forecasts for Vietnam released last week, FocusEconomics stated that based on its January data when Vietnam’s industrial production output increased 18.3 per cent compared to the same month of the previous year in January, which followed December’s 5.8 per cent increase, the country’s industrial production in the months to come expected to continue flourishing.

“The trend improved, with the annual average growth of industrial production coming in at 4.2 per cent in January, up from December’s 2 per cent. When it comes to the outlook, a recovery in overseas goods demand should boost manufacturing and by extension overall industrial production in 2024 as a whole; industrial production growth in 2024 is likely to be the fastest in ASEAN,” the analysts said.

“We see industrial production expanding 9.6 per cent in 2024, up by 0.6 percentage points from one month ago, and expanding 9.6 per cent in 2025.”

Shantanu Chakraborty, country director for Vietnam of the Asian Development Bank, said that Vietnam’s domestic consumption could be boosted with increased demand from fiscal measures, supported by accommodative monetary policy to keep interest rates relatively low.

“Coordinated policy can effectively support economic recovery, considering relative price stability and weak demand. In the near term, monetary policy should be accommodative and fiscal policy expansionary,” he said. “Slow credit growth indicates that monetary policy loosening must be closely coordinated with fiscal policy implementation to effectively boost economic activities.”

According to Chakraborty, there is an opportunity for Vietnam to strengthen its competitiveness and value creation in global production networks to improve its exports.

“This could be supplemented by stronger reforms to the business environment, further strengthen attraction of foreign direct investment inflows, and enhance competitiveness to gain trade demand recovery in 2024,” Chakraborty said. “However, significant downside risks remain. External demand recovery is uncertain, while domestic difficulties from the real estate sector and significant red tape hampers domestic demand recovery.”

Neighbouring nations take lead in direct investment projects

Foreign direct investment inflows have risen sharply in recent months, with most of the action coming from traditional partners, without a breakthrough from Europe and US investors.

After a series of large-scale projects were granted investment registration certificates in February, such as the $454-million Trina Solar Cell venture in the northern province of Thai Nguyen and a $275-million project from Gokin Solar Hai Ha Vietnam in the northeastern province of Quang Ninh, registered foreign direct investment (FDI) in Vietnam has accelerated strongly.

According to last week’s report from the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), as of February 20, total FDI inflows were $4.29 billion, up 38.6 per cent on year. This is in contrast to the trend of the first two months of last year, which saw a decrease of 38 per cent on-year. The number of newly registered projects also increased by 55.2 per cent to 405 projects in the period.

“New investment is raising in both the number of projects and capital,” said Do Nhat Hoang, director general of the FIA. “The sharp surge not only comes from the number of projects but also the contribution of large-scale ones, at about $400-600 million.”

However, the FIA indicated that contrary to the strong increasing trend of newly registered FDI, both adjusted investment and capital contribution and share purchase went down to $442.1 million (a decrease of 17.4 per cent on-year) and $255.4 million (down 68 per cent), respectively.

However, the agency is still optimistic that the rate of decrease in adjusted capital has improved on-year, with adjusted capital in the first two months of 2024 increasing by 5.7 per cent as compared to an on-year reduction of 85.1 per cent in the same period last year.

Despite the good performance, most of the FDI inflows currently comes Asian markets like Singapore, Hong Kong, Japan, China, and South Korea, accounting for 77 per cent of the number of new projects and nearly 85.5 per cent of the country’s total registered investment.

Meanwhile, funding from Europe and US partners is minimal. The total US registered investment in Vietnam in the past two months is only $5.6 million. US investors, predicted to be near the top of the list, are currently ranked 18th.

From Europe, the United Kingdom registered to invest $36.2 million in Vietnam, the Netherlands $29.24 million, Germany $5.86 million, and France $7.7 million.

Nevertheless, after a series of strong assessments and affirmations of interest in the Vietnamese market from US and European investors last year, especially in semiconductors and AI, a stronger acceleration of capital flows is expected, including large corporations such as Intel, Nvidia, and Marvell.

Last year, Nvidia chairman and CEO Jensen Huang pledged to do his best to “turn Vietnam into Nvidia’s second home”, noting that the corporation would establish a legal entity in the country. The capitalisation of the world’s biggest AI chip company has just reached $2 trillion, doubling the figure of last May.

Accumulating to the end of February, the United States ranks 11th in the list of foreign investors in Vietnam with $11.83 billion and 1,347 projects, while European nations like the UK, France, Germany, and Luxembourg rank 15-18th.

Stock market can become noteworthy regional entity

The eagerly anticipated advancement of Vietnam’s stock market, with strategies involving addressing foreign limit cap issues and infrastructure investment, holds the capacity to draw in around $25 billion in new investments by 2030.

Johan Nyvene, chairman of Ho Chi Minh City Securities (HSC), emphasised the shifting perception of Vietnam’s stock market during a major conference on market upgrades last week.

“Despite global classifications placing Vietnam in the Frontier Market category, there is a growing recognition among foreign investors that Vietnam’s domestic stock market is emerging as a noteworthy player,” he said.

Yoon Sang Key, the South Korean Embassy to Vietnam’s commercial attaché in Vietnam, meanwhile stressed the market’s vital role in providing stable, long-term capital for business development, a feature distinct from traditional bank loans.

“The Vietnamese stock market not only enhances the prosperity of its citizens by allowing stock investors to increase their asset value through rising stock prices but also offers bond investors higher returns compared to bank savings,” Key stated.

He also believed that pension funds investing in stocks and bonds generate substantial profits, which are then distributed to citizens as pension income, supporting those planning for retirement to engage in long-term investment funds.

Key proposed recommendations for the development of stock market, emphasising the need for market expansion. This includes diversifying the listed stocks on the Ho Chi Minh Stock Exchange (HSX) by transitioning Unlisted Public Company Market (UPCoM) stocks to the platform. Currently, half of UPCoM’s market capitalisation is in the industrial goods/services as well as food and beverage sectors, while the banking and real estate sectors predominantly occupy HSX’s market cap.

Nguyen Viet Quang, CEO of Vingroup, noted that the company has been a frontrunner in Vietnam’s stock exchange. The conglomerate, housing VinFast, Vinhomes, and Vincom Retail, is listed on HSX with a market capitalisation of over $17 billion.

“Vingroup has effectively raised billions of US dollars through both the Vietnam and international stock markets. However, the local authorities should consistently review and refine current legal framework. As part of promoting market development, we strongly support exploring and implementing new financial product regulations to attract investors,” he said.

Nyvene of the HSC proposed crucial enhancements for the Vietnamese stock market.

“Firstly, we recommend removing restrictions on foreign limit ownership (FOL) ratio in Vietnamese companies. Secondly, revising or eliminating the pre-trading deposit requirements, especially for foreign institutional investors, would enhance the appeal for them and contribute to bringing Vietnam’s market upgrade closer to reality. We are actively working to find solutions and are confident in the high success potential of achieving this in the near future,” Nyvene said.

In addressing the coordination required between financial institutions and regulatory bodies, Nyvene stated, “The collaboration and alignment between these institutions, managing, supporting, and regulating foreign investors’ depository and investment accounts, will soon overcome this hurdle.”

To increase the supply of stocks for foreign investors, Yoon Sang Key of the South Korean Embassy believed that easing FOLs through non-voting depository receipts is feasible. This move aligns with the state management objectives for each industry, alongside facilitating listings for startups and foreign-invested enterprises to enhance market diversity,

“On the demand side, encouraging banks and insurance companies to invest in stocks, promoting asset management strategies with diversified and high returns, is crucial. The introduction of a public equity system to distribute shares of reputable state-owned enterprises at lower prices aims to foster citizens’ asset growth. Implementing pension funds is also advised to encourage long-term investment planning for retirement,” he said.

Moreover, regular investor relations conferences should be held to continuously showcase Vietnam’s reputable companies to foreign investors. Upgrading infrastructure and trading systems is essential for safely processing various orders, including stocks, futures, and options, in large volumes, Key added.

Ketut Ariadi Kusuma, senior financial sector specialist at the World Bank, said that Vietnam’s stock market upgrade could attract up to $25 billion in new investment from international investors to the Vietnamese market by 2030, provided certain conditions are met.

“Firstly, Vietnam needs to be upgraded by both international index providers, FTSE Russell and MSCI. We appreciate and agree with the current approach of prioritising an upgrade to an emerging secondary market by FTSE Russell. However, it is crucial to acknowledge that a substantial portion of new investment will come from an upgrade by MSCI,” he said.

Secondly, addressing issues related to the FOL and continuing the equitisation of large state-owned enterprises is vital. Solutions include improving disclosure, increasing access to stocks that have reached their FOL, and most importantly, raising the cap.

“If the cap remains a constraint, Vietnam could only attract a maximum net flow of $5 billion, as the market would then account for less than 1 per cent of the global emerging market index. However, if the FOL issue is fully resolved, Vietnam’s proportion in the index could increase to more than 1 per cent, potentially attracting an additional $8-15 billion,” Kusuma explained.

Thirdly, a healthy global investment environment is essential for Vietnam to enjoy the natural growth of global investment into emerging markets, estimated at 7 per cent per year. This could mean an additional $8-12 billion in investment by 2030.

Kusuma also noted the importance of developing a domestic investor base to accompany and balance the influx of foreign investment.

“Diversification of investments by Vietnam Social Insurance (VSS) into corporate securities not only makes the investment fund more effective in the long term but also expands the investor base and helps stabilise and develop the domestic capital market,” he explained. “A modest allocation to corporate securities by VSS could mean billions of US dollars in funding for the corporate sector. Comprehensive pension reforms could bring new investments of up to $25 billion into the corporate sector by 2030.”

Furthermore, reforms in the insurance and investment fund sectors, if implemented correctly, could bring an additional $28 billion to the corporate sector through the capital market, Kusuma added, estimating the potential for new mobilisation for the capital market at $78 billion.

Luu Trung Thai, chairman of MB, also stated the importance of augmenting capital inflow and raising market standards while underscoring the need to enhance the quality of listed companies.

“With substantial market values, foreign investors are more likely to pursue profitable investment opportunities,” shared Thai. “Hence, market quality and the integrity of central counterparty clearing are a focal point in the upgrade process, as both the FTSE and MSCI consider it a crucial aspect in the upgrade.”

Chairwoman of the State Securities Commission Vu Thi Chan Phuong mentioned that the commission is collaborating with market entities to address obstacles in the upgrade of the Vietnamese stock market.

“This year, the commission continues to implement solutions to remove barriers, attracting more indirect foreign investment and aiming towards an upgrade,” stated Phuong.

Prime Minister urges banks to cut lending rates further

The Government leader has called for the publication of average lending rates to allow individuals and businesses to choose their banks.

The average lending rates have been reduced, but remain high compared to the deposit rate, Prime Minister Pham Minh Chinh said in a directive issued on March 5.

Vietnam’s credit growth in the first two months of 2024 is at a negative rate of 1.12% compared to the end of 2023.

Apart from the seasonal factors and the reduced demand for borrowing at the beginning of the year due to economic challenges, experts attribute the low credit growth to the difficulty individuals and businesses face in accessing capital, despite the decline in interest rates, which remain high.

In this context, Prime Minister Pham Minh Chinh has called for the publication of average lending rates to allow individuals and businesses to choose their lending banks.

Chinh noted that this requirement is one of the solutions to empower people and businesses in selecting suitable lending institutions.

Earlier this year, the State Bank of Vietnam (SBV) issued Directive 01, which requires credit institutions to publicly disclose and take responsibility for the average lending interest rates.

At a banking sector conference on February 20, SBV’s Deputy Governor Dao Minh Tu emphasized that public disclosure is a "management discipline" that all banks must adhere to. The interest rates disclosed will be the average rates, not specific rates for each target, business, or type.

From the perspective of banks, this measure is expected to promote fair and objective competition. Currently, the SBV has no penalty on this issue, but the Deputy Governor warned that "if banks do not disclose, they will be sanctioned by public opinion."

In order to further improve access to capital, the directive calls on the SBV to instruct credit institutions to reduce costs, simplify administrative procedures, and apply information technology and digital transformation.

The SBV has proposed solutions to reduce lending interest rates by reviewing the results of lending by sector. Tu emphasized that credit should be directed to production and business, priority sectors, and traditional growth drivers such as consumption, investment, exports, science and technology, and innovation rather than risky sectors.

Additionally, the head of the government has instructed the SBV to closely examine lending activities that do not conform to preferential targets, such as lending to board members, executives, and related individuals, as well as businesses within the ecosystem and shadow businesses.

The banking sector must ensure the economy has sufficient capital to enable businesses and individuals to invest in development. The directive emphasizes the importance of avoiding obstacles, delays, and untimeliness in this process.

The SBV is responsible for implementing tools to control inflation, minimize and limit non-performing loans in credit institutions, and is accountable to the Government and the Prime Minister for monetary policy management and credit growth.

In 2023, Vietnam’s credit growth reached 13.71%. In terms of value, the banking system injected around VND1,500 trillion ($60.7 billion) into the economy last year, resulting in a total outstanding credit of approximately VND13,560 trillion ($548.7 billion).

The SBV is targeting a credit growth target of around 15% in 2024. If this target is achieved, the banking sector would contribute nearly an additional VND2,000 trillion ($81 billion) to the economy.

In 2023, the SBV actively managed interest rates to support and address economic challenges, with four successive reductions in policy rates, ranging from 0.5% to 2.0% per annum. This was done in the context of rising global interest rates. Additionally, there were various directives and direct engagements with credit institutions, urging them to reduce costs and lower deposit rates in order to lower lending rates.

So far, interest rates have fallen significantly, with the average deposit and lending rates for new transactions in VND dropping by 2-3% compared to the end of 2022.

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