Electricity of Vietnam (EVN) suggested in the document sent to the Ministry of Industry and Trade (MoIT) last week that consumers requiring a voltage of 110 kV or higher must purchase electricity directly from the electricity market.

The proposal will allow consumers to participate in VREM instead of being required to purchase electricity at the retail tariff set by the government in July 2021.

However, the MoIT has no specific intention to deploy VREM as of this date. According to EVN, the hold up in implementing the market risks delaying the roadmap for the competitive retail electricity market outlined in Decision No. 63/2013/QD-TTg of the Prime Minister.

According to the roadmap, VREM must be piloted between 2021 and 2023 and then fully implemented after 2023. Therefore, EVN proposes that ERAV examine their proposals and reports to rapidly implement the competitive retail electricity market in accordance with the prescribed timeline.

EVN have also proposed that the MoIT and ERAV request consumers connected to the grid with a voltage of 110 kV or greater purchase electricity directly on the electricity market. This means that consumers will be able to choose when to purchase electricity from power supply units at an acceptable price, rather than being required to purchase electricity from EVN as they do today.

This proposal is based on EVN's belief that the estimation and release of distribution costs for voltage levels of 110 kV and above are simpler and that the number of consumers connecting to other voltage levels is lower.

If this mechanism is approved, these large consumers will no longer be required to purchase back electricity from EVN, the solitary buyer on the electricity market. Currently, the number of customers connecting to the grid with voltages of 110 kV or higher is small, but they account for a significant output, approximately between 40 and 45 per cent of the nation's electricity demand.

Habeco reports losses for the first time in three years

In the first quarter of 2023, Habeco - the owner of the Hanoi Beer and Truc Bach Beer brands - reported VND3.7 billion ($158,000) in consolidated losses due to the dual effects of changes in alcohol content policy and a sharp increase in input costs.
 
Habeco's net revenue decreased by 13.5 per cent on-year in the same period to VND1.17 trillion ($50 million), which is the lowest reported by the company since the first quarter of 2020.

At that time, Habeco's revenue reached a bottom of around VND770 billion ($33 million) due to the double impact of Covid-19 and a decree that raised penalties for administrative road traffic offences and rail transport offences that had just come into effect. This pushed Habeco's losses to about VND100 billion ($4.3 million) for the year and was the first time the beer giant has reported a loss in ten years.

Habeco's financial statement explained that these quarter's losses were caused by tight controls on alcohol content policies, as well as a drop in consumer spending.

Moreover, input costs for the company also rose sharply compared to the same period last year, such as the price of filter aids, hops, sugar, and rice. Malt, in particular, which accounts for the largest proportion of production costs, has increased by about 50 per cent compared to the average purchase price in 2022.

In a similar situation is Sabeco, Habeco's southern competitor, also reporting a decrease in revenue of 15 per cent on-year to around VND6.2 trillion ($264 million). Sabeco made a net profit of about VND1 trillion ($42.6 million) this first quarter, down nearly 20 per cent on-year, its lowest return in six quarters.

However, Sabeco is aiming to grow by 15 per cent in revenue and 5 per cent in profit this year, to reach VND40.25 trillion ($1.72 billion) and VND5.77 trillion ($246 million) respectively, as it aims to hit new peaks.

Ideas rendered for precarious renewables position

Luring investment into renewable energy in Vietnam will only happen if revised policies are crafted, industry leaders have insisted. 

Stuart E. Jones, president for Regions and Corporate Affairs at Bechtel, visited Vietnam earlier this year with a proposal for a collaboration plan, technical assistance on green hydrogen, carbon sequestration from fossil energy sources, and promotion of inter-regional cooperation in electricity production and transmission of renewable energy in Vietnam.

He said that the American engineering, construction, and project management company has “the ideas and the potential to obtain investor funding for Vietnamese businesses”.

Nguyen Van Toan, vice president of the Vietnam’s Association of Foreign Invested Enterprises, said that some of the 52 US firms that came to Vietnam at the same time were engaged in the renewable energy area. ExxonMobil, Murphy Oil, General Electric, and Chevron are among the American energy giants that already have a presence in Vietnam.

Throughout the years, Vietnam’s growth in renewable energy has been astonishing. The nation has become a global leader in attracting and retaining international investment in the energy industry, thanks in part to net-zero pledges made in 2021. The Ministry of Industry and Trade (MoIT) reports that the total capacity of renewable energy in Vietnam amounts to 54 per cent of the country’s installed capacity, comprising 20.6GW of hydroelectricity.

In the last three years, Vietnam has experienced a strong expansion of renewable energy, particularly solar and wind power, with over 16.5GW of solar capacity linked to the national grid. With 24.3 per cent of installed capacity and 44 per cent of potential consumption capacity in 2020, around 4GW of onshore and nearshore wind power is operational.

At present, the bulk of renewable power investments in Vietnam have originated from domestic sources, fuelled by attractive feed-in tariffs for a particular time period. Mekong Infrastructure Tracker data indicates that around 60 per cent of renewable energy projects in the country are produced solely by Vietnamese enterprises, while 27 per cent are built by a Vietnamese company together with an overseas partner. Only a handful of projects have been established without a Vietnamese collaborator.

With the development of Vietnam’s economy, the need for energy has skyrocketed. Over the past two decades, the annual growth rate of Vietnam’s electricity demand has been in the double digits, typically 1.5-1.8 times the GDP growth rate, which was 13 per cent in 2000-2010 and 10.5 per cent in 2011-2019, according to figures from the MoIT.

It is not yet known how precisely the Power Development Plan VIII would outline solar and wind power production, but it is certain that this output has expanded to roughly 26 per cent of Vietnam’s power structure by 2030 and may climb to 50.6 per cent by 2045. The draft estimates that Vietnam will need about $165.7 billion for energy development over this decade in order to meet this objective.

The topic of how to fund the massive amount of new renewable energy required to achieve net-zero emissions by 2050 is now a hot one. According to the Vietnam Country Climate and Development Report from the World Bank, investments in the clean energy transition might increase from $7-8 billion per year to $15-17 billion per year in the coming years.

Some energy producers believe that these benefits outweigh the disadvantages. Ørsted, the biggest offshore wind firm in the world, has launched an office in Vietnam in partnership with T&T Group to construct a series of offshore wind power projects in the south-central provinces of Binh Thuan and Ninh Thuan.

Two further large projects revealed in Binh Thuan demonstrate the province government’s interest in wind energy: Enterprize Energy announced its Thang Long wind power project, and Copenhagen Infrastructure Partners proposed the La Gan wind power project.

In addition, Nexif Energy, a power firm located in Singapore, has formed a partnership to start a project in the Mekong Delta province of Ben Tre.

The energy industry has a direct impact on the economy and incomplete policy is now the greatest obstacle to the growth of renewable energy in Vietnam, according to the European Chamber of Commerce in Vietnam.

Presently, Electricity of Vietnam and investors have not agreed on the electricity purchase price for transitional renewable energy projects, and offshore wind power is awaiting the implementation of a system.

Hai Phong licenses 4 new investment projects

The northern port city of Hai Phong on May 9 granted investment registration licenses to a project to build Berths No.7 and 8 at Lach Huyen deep-water port area, and three others in the city’s industrial parks.

The berth-building project is invested by Saigon Newport One Member Limited Liability Corporation with 12.79 trillion VND (545 million USD).

The berths, 450m long each, can serve container ships of 12,000 TEU - 18,000 TEU and are supported with a 200m-long barge dock.

Construction is expected to start in the first quarter of 2025 and the berths be put into operation in the fourth quarter of 2027.

In addition, the Hai Phong Economic Zone Authority (HEZA) also presented investment licenses to the 331-billion-VND Starcharge energy equipment factory project of Singapore-based Starcharge Energy Pte.Ltd., the 1.16-trillion-VND HW Energy project of HW International Investment Holdings Pte.Ltd., both at the Maritime Service and Industrial Zone; and the  633-billion-VND) Thinking Electronics Vietnam project of Taiwan (China)’s Thinking Electronics Industrial Co., Ltd in Nam Cau Kien Industrial Park.

HEZA head Le Trung Kien pledged to create all favourable conditions for the implementation of the project.

Besides the new projects, Hai Phong’s industrial and economic zones has so far this year attracted 17 new foreign-invested projects, and seen nine existing ones adding capital, with a combined capital of 498.5 million USD. The port city has also attracted two new domestic-invested projects and four existing ones was increasing their capital, with a combined investment of 46.58 million USD.

To date, they have drawn 477 FDI projects worth 23.35 billion USD, and 205 foreign-invested ones totaling 12.63 billion USD.

Payment deadlines proposed for domestic vehicles

The Ministry of Finance has asked the government to postpone the payment of special consumption tax on domestically manufactured and assembled automobiles to support businesses that face rising loan rates, low credit limits, and uncertainties in the financial market.

Under the proposal to the government at the end of April, the deadline for the payment of the tax would be no later than November 20. The total amount of the tax extension is about $452-486 million.

According to the Ministry of Finance (MoF), the proposal to unify the extension to mid-November is to avoid accumulating payables to businesses at the end of the year and shun affecting the completion of the state budget revenue estimate in the coming year.

If the policy of extending the excise tax is not implemented, many domestic vehicle manufacturers and assemblers may face difficulties due to rising bank interest rates, low credit limits, and reduced market purchasing power.

This will be the fourth time since 2020 the special consumption tax on domestically manufactured and assembled cars would have been extended if approved. There are a total of 12 automobile manufacturing and assembling enterprises nationwide.

The MoF said that based on the declared data of these enterprises, the output and the amount of excise tax on such cars has been gradually decreasing in recent months.

According to the General Statistics Office, in the first four months of 2023, the index of industrial production decreased by 1.8 per cent on year due to the slow recovery of the world economy along with tight monetary policy in many countries, reducing consumption demand of major trading partners, and leading to a decrease in production orders and in export turnover.

Sales of key industrial products in the period decreased compared to the same period last year, such as automobiles down 19.3 per cent, and mobile phones down 13 per cent on-year.

Domestic automobile manufacturers and assemblers are concerned that the car market is at risk of losing over 35 per cent of sales volume in the next five years, equivalent to 1.8 million vehicles. Along with that, the long-term goal of exporting nearly 90,000 vehicles and reaching $10 billion in export of spare parts by 2035 will be difficult to achieve without timely promotion policies in the short and medium term.

According to automotive expert Nguyen Vinh Nam, this extension of excise tax does not affect the selling price of cars. “The continuation of the extension of excise tax payment will help domestic automobile enterprises solve immediate financial problems and take advantage of this financial source to reinvest in production lines to assemble cars in the near future,” said Nam.

Earlier this year, the MoF insisted that it was not possible to reduce the registration fee for domestically manufactured and assembled cars by half.

Last week, the government proposed a draft on VAT reduction that could get approval at the National Assembly’s upcoming session in May.

Recovery in bond issuance not yet confirming turnabout

The recent influx of defaulted bonds is primarily due to an increase in restructured bonds caused by recent regulation adjustments, according to a new report.

According to a FiinGroup report on corporate bonds default in Vietnam, there were 89 defaulted issuers with a total value of over $4.8 billion as of April 25, a 20 per cent increase on the previous month.

Of the defaulted issuers, real estate constitutes the largest proportion, with 43 such issuers accounting for over 30 per cent of the total defaulted issuers and almost one-third of the total outstanding bond value.

The renewable energy sector has the highest bond default ratio by far, at over 63 per cent. However, the size of the real estate sector makes it more impactful in terms of value.

According to Paul Coughlin, chair of the ratings committee at FiinRatings, the recent defaults can be traced back to bonds issued just before pandemic lockdowns. The issuers have faced a multitude of challenges, such as the slowdown in construction, regulatory issues, and high interest rates.

While the State Bank of Vietnam has organised delays in bond repayments, it remains uncertain whether this will enable property companies to complete projects and repay debts.

According to VNDirect Securities, from April 1-24, there were no new private corporate bond issuances. While early redemption activity saw a slowdown with more than $208 million of individual corporate bonds being bought back before maturity in April, the total value of pre-maturity repurchases in the first four months of 2023 reached more than $1.6 billion.

VNDirect said the negotiations to change bond conditions between issuers and bondholders took place actively in April. Currently, more than 20 issuers have reached an agreement to extend bonds terms with bondholders and have made an official report to the Hanoi Stock Exchange (HNX).

Explaining the recovery in bond issuance earlier this year, Nguyen Tung Anh, manager of Economic and Credit Research at FiinRatings, credited this to the rapid reactions from the government in terms of interest rate adjustments and specific regulations on the corporate bond market.

However, he emphasised that there may be hidden details to watch out for. “We’ve observed that many of them are real estate bonds, and they may be for refinancing purposes,” he said. “We still need to watch this. It could be a good sign, but we need some time to be sure that this is a reversal in market activities.”

VNDirect forecasts that the pressure of individual corporate bonds to mature will continue to increase in May, while the list of companies with late payment announced by the HNX continues to increase. It is estimated that in May, the amount of individual corporate bonds maturing will see an increase of 12.6 per cent compared to April.

As of April 24, there were 57 enterprises on the list of delayed payment of interest or principal debt of corporate bonds. It is estimated that the total outstanding corporate bonds of these enterprises accounted for about 13.9 per cent of the outstanding loans of individual corporate bonds in the whole market, in which the group of late-payment real estate enterprises accounted for 11.1 per cent of the system’s outstanding loans.

North faces 4,900 MW shortfall in May and June

EVN is considering reducing demand and mobilising more oil-thermal power sources during the main dry season months of May, June, and July as the northern provinces face a shortfall in available electricity.
 
According to a report by Electricity of Vietnam (EVN) to the Ministry of Industry and Trade (MoIT) on the 2023 electricity supply emergency, the North of Vietnam is at risk of lacking 1,600–4,900 MW during May and June, the hottest months of the year. This probability will increase if the capacity of wind farms is affected or if the water level in the region's hydroelectric reservoirs drops significantly.

EVN predicts that in the months of May, June, and July, the North will reach its hottest point, and the burden on the national power system will grow, with an expected 15 per cent rise compared to the same period last year.

The electricity provider stated that there were ways to offset this by supplementing power sources, reaching agreements on power purchasing, reducing electricity waste, or modifying capacity in extreme circumstances.

The National Load Dispatch Centre mobilised diesel units on April 17 in order to guarantee power supply, with April 21 seeing 2,498 MW mobilised.

However, EVN still requests that the MoIT evaluate and develop essential solutions to assist them in overcoming obstacles resulting from inadequate power sources. The hydroelectric, coal-fired, and gas-fired power sources all face challenges, whereas the procurement of electricity from China is minimal, reaching just 1.1 billion kWh, or 68 per cent of the plan.

As of 2022, unfavourable hydrological conditions have had an impact on hydroelectricity sources. The northern lakes continue to show a low water return, with water flowing at 70 to 90 per cent of the average capacity. The lakes' residual output is 4.5 billion kWh, which is 4.1 billion kWh less than the same period in 2022.

The fuel supply capacity of coal-fired power facilities is also constrained. The supply capacity of Vietnam National Coal and Mineral Industries Group and Dong Bac Corporation is 46 million metric tonnes (MT), which is lower than the 6 million MT approved, as coal imports remain challenging. EVN's power facilities specifically require 1.3 million MT of coal to operate.

Several fields are now officially in a period of decline, resulting in a reduction of gas supplies to gas-fired power plants compared to prior years. The anticipated gas output for 2023 is 5.6 billion cubic metres (cu.m), a decrease from 2022's 1.31 billion cu.m, while some fields continue to experience issues, making gas supply for electricity generation even more challenging.

The ability to produce gas this year is diminished compared to previous years due to the decline of critical fields, making it difficult to provide gas for electricity production. The anticipated supply in 2023 is 5.6 billion cu.m, approximately 1.3 billion cu.m fewer than in 2022.

Mobilisation from wind power is also constrained with the potential of an on-year decrease in power generation, particularly in the evenings, the prime time of day for electricity consumption.

State budget revenue drops in Jan-April

State budget revenue in the first four months of 2023 totaled VND645.4 trillion, down 5% year-on-year and reaching 40% of the year’s estimate, according to the Ministry of Finance.

Revenue from domestic sources dropped to around 89% of the previous year’s figure.

Budget revenue from value added tax, special consumption tax and personal income tax decreased by a slight 5%, 7% and nearly 3%, respectively.

Revenue from the environmental protection tax accounted for only 17% of the full-year estimate, less than half of the figure in the same period last year.

Revenue from fees and charges totaled only 32% of the 2023 estimate, down 8% compared to last year. Meanwhile, the amount of money collected from land and house-related sources achieved only 21% of the year’s projection, and plummeted by 54% from the year-earlier period.

Budget revenue falls have been reported in many sectors in various provinces, including real estate, automotive, securities and oil. Only 16 provinces and cities saw an increase in budget revenue over the same period last year.

Despite the State budget revenue decline, the accumulated budget expenditure in the first four months increased by 6% year-on-year to VND500.3 trillion, equivalent to 24% of the 2023 estimate.

Of the total budget spending, development investment amounted to an estimated VND110.6 trillion, up over 15%, while regular spending was VND355.4 trillion, equivalent to 30% of the plan, up nearly 5% compared to the same period last year.

Nhon-Hanoi Station metro line faces cost overruns

Hanoi City has proposed increasing the cost of the Nhon-Hanoi Station urban rail line by VND1.9 trillion and extending the deadline for the completion of the project until 2027.

The higher-than-expected cost is ascribable to foreign exchange rate volatility, adjustments to the workload, and higher compensation, site clearance and legal costs, according to the local authority.

The investment cost of the urban railway is expected to rise from VND32.9 trillion to VND34.8 trillion, up over VND1.9 trillion.

The city authority also proposed adjusting the implementation time of the project from 2009-2022 to 2009-2027, excluding the 24-month warranty. Specifically, the elevated section is slated to be opened to traffic this year, and the entire line will be put into operation in 2027.

The Nhon-Hanoi Station metro line comprises an 8.5-kilometer-long elevated section and a four-kilometer underground section.

Work on the project started in 2009 and was expected to be completed in 2015. However, the deadline for the entire project has been extended four times.

Social housing development in dire need of legal issue addressing

The supply for social housing in Vietnam, especially the Southeast region, is surplus thanks to promoting policies from the Government. The obstacle is legal issues. By addressing them, more investors will feel more encouraged pouring money here.
 
A corner of Zen Tower social housing apartment building in Thoi An Ward, District 12, HCMC (Photo: SGGP)
Along with the promoting policy to construct 1 million social housing apartments (in compliance with Decision No.338/QD-TTg by the Prime Minister on April 3, 2023), the credit package worth VND120 trillion (US$5.12 billion) for both apartment buyers and social housing investors was announced, signaling the prime time to boost the growth of reasonably priced accommodation.

At the 2023 Annual Meeting of Shareholders of Nam Long Group this April, President Nguyen Xuan Quang of the Directors Board informed that Nam Long Group has realized the high demand of social housing in various areas nationwide, and is working with the corresponding local authorities to build 20,000 below-market-price apartments for laborers in need in the near future.

Based on existing resources, including the land one of 100ha in the Southeast region, Thang Loi Group (sited in HCMC) plans to allocate 30ha for social housing development. President of its Directors Board Duong Long Thanh said that Thang Loi Group has already invested in various housing segments, and is hoping to build 10,000 social housing apartments by 2030.

Becamex IDC in Binh Duong Province also expects to construct 20,000 social housing apartments in Bau Bang District, Ben Cat Town, Thuan An City, Thu Dau Mot City in 2023, with an investment of VND9.5 trillion ($405 million).

The biggest concern of the real estate market, including the social housing segment, at the moment is legal procedures. Deputy General Director Van Thanh Huy of Becamex IDC said that although social housing development is a governmental policy, each locality introduces its own policies, leading to various legal-related obstacles to businesses and investors.

Meanwhile, General Director Ngo Quang Phuc of Phu Dong Group stressed that the land resource that is legally approved for this purpose is more important. “In reality, an enterprises must wait for a long time to complete necessary legal procedures, which severely affects its operation costs”, added Mr. Phuc. He suggested that the local authorities should prepare the land resource before calling upon investments from businesses in order to simplify needed procedures.

In 2022, the HCMC Department of Construction cooperated with several investors to hold groundbreaking ceremonies for five social housing building projects and one accommodation project for workers in the residential areas of Nguyen Son (Binh Chanh District), Tan Thuan Tay (District 7), Phu Huu Ward, Linh Trung II Export Processing Zone, Long Truong Ward (all in Thu Duc City).

Sadly, after that promising ceremony, not much work has been done since most of those projects are still trying to finish legal procedures (progress extension permission, assessment of the feasibility report for construction investment, adjustment of construction planning at the ratio of 1/2,000).

Head Pham Dang Ho of the Housing and Real Estate Market Development Office (HCMC Construction Department) informed that legal issues in social housing projects lie in the influences of so many laws and regulations.

To address this, it is necessary to re-introduce a specific instruction for steps to finish a social housing project in order to easily monitor the progress, along with rules for the cooperation among related state agencies, departments. Particularly, HCMC proposed that ministries and central state agencies release more needed mechanisms and policies, including the approval of investments for projects eligible to increase their planning target by 1.5 times without the need to wait for zone planning adjustments, or the approval to rearrange social housing areas in a commercial project.

Reducing loan interest rates an important policy to support businesses

The State Bank of Vietnam (SBV) has been drastically implementing measures, particularly those to reduce loan interest rates.

Deputy governor Dao Minh Tu said at a regular government press conference on May 5, calling it one of the important and practical policies to help businesses.

In the first four months of the year, the bank implemented eight policies to support businesses and since the beginning of the year, the SBV has reduced the regulatory interest rate twice, the official said.

Tu said that in general, credit institutions reduce deposit interest by 1-1.2 percent, and reduce the general lending interest rate of banks in the whole system by 0.5-0.65 percent. Particularly, state-owned commercial banks saw a more positive reduction with deposit interest rates being decreased by 1-1.5 percent, and lending rates by 1.5-2 percent. According to SBV’s statistics, for new deposits and newly made loans and credits, the average deposit rate is 6-6.1 percent and the average lending interest rate is 9-9.2 percent.

The figures show positive adjustments for interest rates, said Tu.

Responding to the public expectation of lowering interest rates in the coming time, the official said the bank will continue implementing flexible and reasonable monetary policies, ensuring the main objectives of controlling inflation and stabilizing the value of the local currency and the harmonization between the exchange and interest rates. Therefore, the SBV is continuing to instruct banks to cut interest rates, create conditions for enterprises to borrow, and expand credit from now to the end of this year.

Farmers store pepper with expectation for higher prices

Many Vietnamese farmers tend to store large amounts of pepper in order to wait for higher prices.

Traders in the southern provinces of Binh Phuoc, Binh Duong, and Dong Nai proposed to buy pepper at about VND70,500 a kg, an increase of VND1,000 per kg compared to a few days ago, however, a few farmers agreed to sell their agricultural product.

Ms. Nguyen Thi Bich, an owner of a pepper purchasing agent in Long Phuoc ward in Binh Phuoc Province, revealed that although pepper prices have increased continuously in recent days, just households in need of money sell pepper while others are still storing pepper to wait for the price to rise higher.

According to Mr. Bui Quoc Hai, Director of Hung Phuoc Sustainable Pepper Cooperative in Bu Dop District of Binh Phuoc Province, the current price is still 10 percent-15 percent lower than the same period last year, many members in the cooperative have been taking a wait-and-see attitude with expectation for higher prices.

According to pepper growers in Lam San Commune in the Southern Province of Dong Nai’s Cam My District, pepper prices tend to increase, so farmers continue to store and wait for better prices.

Businesses, farmers need to make more effort to boost rice export volume

Rice export is positive in the first months of 2023; however, boosting the export volume of rice into difficult markets such as the European Union (EU) requires a lot of effort from businesses and farmers.

The world rice market is expanding so farmers in the Mekong Delta - also known as the "Rice Bowl of Vietnam - are very delighted. In the last winter-spring rice crop, farmers in the region sold rice for VND5,500-VND8,000 per kg, the highest price in the past 10 years.

For more than 20 days, farmers in the Mekong Delta will harvest early summer-autumn rice. However, in some localities, traders have deposited to buy rice. For instance, trader Nguyen Van Hai in the Mekong Delta Province of Tien Giang’s Cai Lay District said that he had spent over VND100 million as a deposit to buy 500 tons of rice (50ha), equivalent to VND2 million-VND3 million a ha or the average price of rice is VND6,500 a kg.

According to calculations of many farmers in An Giang and Dong Thap provinces, the upcoming summer-autumn rice crop is likely to reach 7 tons a ha. With an average price of over VND 6,500 a kg, farmers can make a profit of VND25million-VND30 million a ha. However, many rice exporters are currently having difficulty accessing credit sources, especially when rice prices are high.

According to the Department of Crop Production, farmers are gradually tending to grow fragrant - specialty, high-quality rice accounting for over 80 percent while the group of medium-quality rice is only about 7 percent left. This helps to increase the export price of Vietnamese rice and increase farmers' profits.

Mr. Le Huu Toan, Deputy Director of Kien Giang Province's Department of Agriculture and Rural Development, said that in 2022, farmers whose paddy field is about 12,000 hectares associated with businesses and this year, more farmers who owned 27,000 hectares with high-quality rice for export will link with businesses for exports to the EU.

Every year, farmers in Kien Giang Province cultivate about 300,000 ha of two-crop rice and farmers whose rice paddy field is about 100,000 ha sign contracts with exporters, mainly Trung An, Loc Troi and Tan Long group. Currently, Kien Giang rice has been exported to at least 13 markets, including fastidious markets such as Japan and the US. Currently, rice exporting companies are looking for new prestigious partners in the markets of European countries, the US and Japan to promote rice exports in the high-quality segment.

Mr. Nguyen Van Hieu, Director of the Food Export Business - Loc Troi Group, said that the group is looking for partners in Europe to increase rice exports, contributing to the rice production chain.

Currently, the Ministry of Agriculture and Rural Development is completing the final steps to submit to the Prime Minister for approval the project ‘Sustainable development of ibe million hectares of high-quality rice cultivation associated with green growth in the Mekong Delta’.

According to the draft project, by 2025, the cultivation area of the rice-growing area will reach 500,000 ha and farmers will apply sustainable advanced farming processes certified or granted with planting codes.

Moreover, the volume of exported rice with Vietnamese brands accounts for 20 percent of the total rice exports of the specialized farming area.

According to the Vietnam Food Association, by mid-April 2023, the Southeast Asian country had exported nearly 2.4 million tons of rice, worth US$1.251 billion, up 33.70 percent in quantity and 44.55 percent in value compared to the same period in 2022. Especially, in the first months of 2023, the average export price of rice reached $531 per ton, up 9.2 percent over the same period. This is considered the highest level in the past 10 years. In particular, the average export price of rice to China reached $589 a ton, up more than 18 percent over the same period.

Machinery and equipment exports to RCEP markets up 23%

Viet Nam earned US$13 billion from exporting machines and equipment to the Regional Comprehensive Economic Partnership (RCEP) markets in 2022, up 23 percent against the previous year and accounting for 38.55 percent of the total export value of the sector.

The General Department of Customs announced that export of machines and equipment hit US$45.75 billion last year, up 19.4 percent and making up 12.32 percent of the nation's total export turnover.

The export of the items to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) members and EU members were estimated at US$6.14 billion and US$5.63 billion, up 21 percent and 38.5 percent, respectively. 

However, in the first four months of this year, the exports saw a year-on-year decrease of 5.9 percent, reaching US$12 billion due to the global trade slowdown. 

Viet Nam and Malaysia are expected to benefit the most from RCEP, according to a World Bank (WB) report released in April 2022.

The WB stated that, the average trade weighted tariff imposed by Viet Nam declines from 0.8 percent to 0.2 percent while the tariffs faced by the country are reduced from 0.6 percent to 0.1 percent between 2000 and 2035.

RCEP will help Viet Nam access consumer markets which is twice the size of the markets in the CPTPP, as RCEP includes China, the Republic of Korea and Japan. 

About 50 percent of the population in RCEP, or 1.1 billion people, contribute US$10 or more per day based on purchasing power. 

The agreement can help boost the middle class by 27 million people for all member countries by 2035, of which Viet Nam is expected to benefit the most when it has an additional 1.7 million people enter this class, according to the WB.

The RCEP was officially signed on November 15, 2020 between 10 ASEAN Member States and its five partners including China, Japan, the Republic of Korea, Australia and New Zealand. The trade deal has entered into force since January 1, 2022.

It has become the largest free trade agreement in the world, covering nearly one third of the population and about 30 percent of the global gross domestic product.

Vietnamese, Chinese business associations cooperate in industrial development

The Hanoi Supporting Industries Business Association (HANSIBA) and Association for Trade Promotion of Small and Medium-sized Enterprises (SMEs) of China’s Suzhou city on May 9 signed a Memorandum of Understanding (MoU) for cooperation in industrial development.

Speaking at the signing ceremony, Nguyen Hoang, Chairman of HANSIBA, said that Vietnamese businesses wish to cooperate with international partners, including those from Suzhou city to tap the potential market of industrial products and accessories in both the ASEAN region and the world.

Hanoi boasts specialised industrial parks for supporting industries and high technology developed under a new generation ecosystem with full facilities to serve the demand of manufacturers, Hoang noted. Enterprises in the city are also capable of operating hi-tech production chains.

The official emphasised that the association has offered preferential policies for high-tech enterprises manufacturing in Vietnam, including those from Suzhou city.

In terms of traffic and geography, Vietnam and China share a border of almost 1,400 km, which facilitates the transport of products to markets in the world in the most convenient and cheapest way, he said.

Pan DongMing, acting head of the Association for Trade Promotion of Small and Medium-sized Enterprises (SMEs) of Suzhou city said regarding geographical advantages, enterprises in Suzhou have a great advantage because Suzhou is close to Shanghai city and seaports.

It takes a week to transport goods from Shanghai to Hanoi by waterways, he said adding that it takes only 2-3 days via roads.

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