In the first four months of this year, textile apparel exports were hit by an economic slump and high inflation on a global scale, leading to a 19.3 per cent plunge in value on-year, falling to $9.57 billion.

Export of fabric also took a dive, falling 33.6 per cent on-year to just $1.28 billion.

Textile apparel and spinning firms all face a critical shortage of orders amid hardly predictable market circumstances.

That explains why at their 2023 annual general shareholders meetings in late April, many such firms have set forth business targets much lower compared to 2022 performance.

A major unit under state-owned conglomerate Vietnam National Textile and Garment Group, last year Danang-based Hoa Tho Textile Garment Corporation eyed consolidated revenue touching $223.6 million, up 33 per cent and consolidated profit reaching $14.66 million, up 52 per cent on-year. In which, the consolidated revenue and profit figures of the parent company witnessed a 35 per cent and 79 per cent jump on-year, respectively.

The situation this year, however, presents a stark difference, with a critical shortage of orders.

Hoa Tho Corporation has therefore set forth the consolidated revenue target down nearly $28.26 million and consolidated profit target down $5.97 million in 2023.

Nguyen Van Hai, Hoa Tho Corporation CEO, has attributed the company’s reduced business figures to unpredicted market situation and declining global textile apparel aggregate demand, citing that the current time is unprecedented when the market was dented by diverse bad factors.

Similarly, as rebound signs are yet on the horizon, Phu Bai Spinning JSC, based in the southern province of Thua Thien Hue, has cut its revenue target by over $17.39 million and pre-tax profit more than a half to just $217,390 in 2023.

Last year, though the spinning sector faced more hardships than the apparel sector, Phu Bai still reaped $58.9 million in revenue, up 120 per cent compared to 2021 and took over $488,000 in pre-tax profit.

Last year was a bumper year for Hung Yen Garment Corporation (Hugaco) as the company posted $36.17 million in revenue, equal to 117 per cent of 2021 levels and $5.08 million in pre-tax profit, equal 139 per cent of 2021 levels.

Amid unfavourable market conditions, Hugaco has reduced its revenue target to $32.6 million, down $3.47 million and pretax profit to $3.04 million, down $2.04 million compared to 2022.

Likewise, Viet Tien Garment Corporation has set its revenue target in 2023 equal 95 per cent of 2022, to $349.1 million, and pre-tax profit equal 96 per cent of 2022, at $8.69 million.

The latest report by the General Statistics Office shows that in the first four months of 2023 woven spinning rate shed 4.9 per cent, costume production was cut 7.9 per cent, and casual wear production reduced 10.4 per cent on-year.

Many firms assumed it is rather hard to present remedies in the face of stagnant total aggregate demand, meanwhile the local textile apparel sector is confronting big challenges following China’s reopening with a raft of policy incentives such as lower electricity cost, or delayed tax payment.

Other countries like India, Pakistan or Bangladesh have maintained cheap home currency to stimulate their exports, while the VND has even inched up in the first quarte, and the retail power price has increased by 3 per cent since May 4.

Experts assume that flexible production, small orders and high specification are now smart measures to textile apparel units in the current context.

US extends duty evasion probe on Vietnamese goods

The US Department of Commerce (DOC) recently unveiled an extension of the deadline for issuing its final conclusion on a trade remedy duty evasion probe that has been taking place into several goods imported from the Vietnamese market.

According to details given by the Trade Remedy Authority of Vietnam under the Ministry of Industry and Trade, the DOC is set to lengthen the time taken to issue the final conclusion on trade remedy tax evasion on plywood products using hardwood materials and solar panels imported from the nation.  

Specifically, the deadline for issuing the final conclusion on hardwood plywood and solar panels will be on May 26 and August 17, respectively.

In order to ensure the legitimate interests of enterprises, the Trade Remedy Authority recommends that local producers and export businesses continue to stay updated on developments of the case.

Furthermore, domestic enterprises are required to properly and fully comply with the requirements set by the US’ investigation agency, whilst closely co-ordinating efforts with the DOC during the course of the investigation process in order to avoid unfortunate damages.

Government proposes to extend 2 percent VAT reduction until this yearend

The Government proposed a continuance of a two-percent reduction in the value-added tax (VAT) on goods and services until the end of this year.
 
The proposal was made in accordance with Resolution 43/2022/QH15 on fiscal and monetary policies supporting socio-economic recovery and development programs and opinions collected at the 23rd meeting of the National Assembly (NA) Standing Committee which was held at the beginning of May.

Under the proposal, the Government suggested a VAT reduction from 10 percent to eight percent for a number of goods and services, excluding communications, IT, finance and banking, stock, insurance, real estate, trading activities of metal, fabricated metal products, and mining products (excluding coal mining), coking coal, refined petroleum products, chemical products, goods, and services liable to excise duties.

Korean district eyes co-operation with Phu Quoc

A delegation from a district in South Korea’s Incheon city is visiting Phu Quoc from May 15 to 19 to discuss co-operation opportunities between the two sides.

The delegation from Yeonsu-gu includes the head of its Urban and Metropolitan Transport Department and the leaders of many large companies operating in various sectors including construction, printing, food, and architecture.

At a meeting with the Phu Quoc People’s Committee on Tuesday, leader of the delegation and Yeonsu-gu mayor Lee Jae-Ho said his district wanted to strengthen ties with the island in a number of sectors such as education, trade and tourism and jointly develop eco-zones and resorts.

Korean businesses found Phu Quoc an attractive place for investment, a market with great opportunities and good policies for domestic and foreign investors to develop, he said.

Huynh Quang Hung, chairman of Phu Quoc, reciprocated the sentiments, saying his city would create favourable conditions to promote linkages and investment in a number of fields such as culture, health, education, trade, and tourism.

“Phu Quoc has a unique position in terms of economy, culture and society, and so the Vietnamese Government [seeks] to develop it into a special administrative-economic zone by 2030.

“It will be a national and international hub for eco-tourism, resorts and high-class entertainment, a regional financial hub, an important hub for domestic transportation and international aviation, and a scientific and technological research centre of the country and Southeast Asia.”

The two sides signed a MoU on friendly cooperation.

On May 17 and 18 the visitors will meet with Sun Group executives at the Sun Signature Gallery Art and Event Centre in Hoang Hon Town.

They will get a taste of “Kiss The Stars,” Asia's largest multimedia show on water and the world's longest three-wire cable car ride between Hoang Hon town and Hon Thom Island. 

Vietnam Airlines launches online check-in service at Mumbai airport

Vietnam Airlines is set to officially operate direct flights between Hanoi / Ho Chi Minh City and the Indian city of Mumbai, and launch online check-in services for passengers departing from Mumbai airport as of May 20.      

According to the plan, passengers will be able to check-in via www.vietnamairlines.com or the Vietnam Airlines app within 24 hours to one hour ahead of departure.

They will receive an online boarding pass via an electronic device or be able to print the card themselves before going through the online check-in counter at Mumbai airport with their boarding pass and identity documents being verified quickly.

With the goal of becoming a five-star international and digital airline, the national flag carrier has strived to deploy online check-in services simultaneously across many domestic and international airports.

At present, Vietnam Airlines’ passengers can check-in online at all domestic airports and 31 international airports, including London Heathrow (UK), Frankfurt (Germany), Moscow (Russia), Tokyo Narita, Tokyo Haneda, Osaka Kansai, Nagoya, Fukuoka (Japan), Seoul, Busan (the Republic of Korea), Guangzhou, Shanghai, Chengdu, Beijing, Hangzhou (China) Hong Kong (China), Taipei, Kaohsiung (Taiwan, China), Singapore, Bangkok (Thailand), Kuala Lumpur (Malaysia), Yangon (Myanmar), Jakarta, Bali (Indonesia), Siem Reap, Phnom Penh (Cambodia), Luang Prabang, Vientiane (Laos), Sydney, Melbourne (Australia), and Mumbai (India).

Starting from May 20 Vietnam Airlines will operate four flights per week on the Hanoi - Mumbai route on Tuesdays, Thursdays, Saturdays, and Sundays, and run three flights per week on the Ho Chi Minh – Mumbai route on Mondays, Wednesdays, and Fridays, using Airbus A321 aircraft.

Deputy PM greenlights infrastructure investment at VSIP Lang Son IP

Deputy Prime Minister Le Minh Khai on May 15 signed a decision approving an investment policy for the construction and operation of infrastructure at VSIP Lang Son Industrial Park in the northern mountainous province of Lang Son.

The project will be invested by the Vietnam Singapore Industrial Park Joint Venture Company (VSIP).

It will be located in Ho Son and Hoa Thang communes in Huu Lung district, covering a total area of 599.76 hectares, including about 200ha in the first phase, around 250ha in the second phase and 149.76ha in the third phase.

Its total investment is over 6.36 trillion VND (274.7 million USD), of which 954 billion VND will be contributed by the investor. The project's operating period is 50 years, starting from May 15, 2023.

PM calls for construction of East-West Highways and Ring Roads to begin before June 30

Prime Minister Pham Minh Chinh has requested that relevant ministries, agencies, and localities speed up preparations to kick off construction of three East-West Highways connecting socio-economic regions and also Ring Roads in Hanoi and Ho Chi Minh City before June 30, according to the Office of the Government.

The call was part of the conclusion from the Prime Minister at a recent meeting of the Steering Committee for Key National Transport Projects, held to identify solutions to address difficulties and obstacles facing important works.

Key transport projects account for a major proportion of public investment during the 2021-2025 period and are being implemented nationwide, with the North-South and East-West Expressway networks, for example.

During this term, the State will allocate around VND400 trillion ($16.8 billion) to transport development, or 50 per cent of total public investment.

The government leader urged them to quickly complete site clearance tasks to ensure the clearing of at least 70 per cent of the ground needed to begin construction of the projects, which include the Chau Doc - Can Tho - Soc Trang, Bien Hoa - Vung Tau, and Khanh Hoa - Buon Ma Thuot Highways, Ring Road No. 4 in Hanoi, and Ring Road No. 3 in Ho Chi Minh City.

Vinacomin, Japanese firm sign coal mining training deal

The Vietnam National Coal - Mineral Industries Group (Vinacomin) and Kushiro Coal Mine Co. Ltd, an affiliate of Japan’s Oil, Gas and Metals National Corporation (Jogmec) signed an agreement on the training of safe technology and coal mining for the 2023 fiscal year in Hanoi on May 16.

Since 2002, Vinacomin, Jogmec, and Kushiro, formerly known as NEDO, have been engaging in a joint project on training and technology transfer in coal mining. Every year, JOGMEC and Kushiro directly send experts and equipment to Vietnam to provide training and transfer technology for staff of Vinacomin's coal mines. So far, approximately 90,000 experts and staff have been trained in the country through this project.

Speaking at the event, Vinacomin Deputy General Director Le Quang Dung said as of the late 2022, a total of 1,983 interns from Vinacomin had been sent to Kushiro city, Japan for study and training. The project has played a crucial role in enhancing production capacity and safety management at Vinacomin's coal mines.

In March, Vinacomin and Jogmec signed an agreement on the training of safe technology and coal mining in Tokyo, Japan, for the 2023-2025 period.

To realise the agreement, an action plan has already been signed between Kushiro and Ha Long and Ha Lam coal companies for the 2023 fiscal year.

HCMC sets up task force on urban space development

The Ho Chi Minh City People’s Committee has decided to establish a task force studying investment in and the development of urban space in the city center.

Headed by Director of the city’s Department of Planning and Architecture Nguyen Thanh Nha, the task force will comprehensively assess the actual state of the city’s urban space in terms of history, culture, socio-economic development, transport, and technical infrastructure.

It will then prepare plans on overall urban designs and propose investment plans for the city center, including development orientations for transport infrastructure, parking lots, and both ground and underground space.

It is also in charge of consulting with and submitting proposals to the People’s Committee on planning orientations, investment mode, and compensation and resettlement plans for site clearance for the construction of the Tran Hung Dao - Nguyen Thai Hoc - Pham Ngu Lao triangle and the Nguyen Cu Trinh quadrangle in District 1.

ASV Airports Taxi rents 500 VinFast electric cars

The Airport Services Company of Vietnam (ASV), the owner of ASV Airports Taxi brand, on May 16 signed a contract to rent 500 VinFast electric cars from Green and Smart Mobility JSC (GSM) for its airport taxi service.

Specifically, ASV Airports Taxi will rent 500 VinFast VF e34 cars from GSM to provide customers with green and smart transportation services.

As scheduled, GSM will deliver the 500 cars in stages, with the first 100 ones expected to be handed over this month. The lease term is 36 months from the date of delivery, with the possibility of extension based on actual usage need. It is expected that ASV's electric taxi service will officially commence operations in May.

Previously, several other companies such as Lado, Ahamove, and En Vang also inked deals with GSM to electrify passenger transportation services in Lam Dong, Binh Dinh, Da Nang, Hai Phong, and other cities and provinces nationwide.

It is expected that GSM’s Green SM Taxi will also be available in the central city of Hue in May, and in at least five cities and provinces with nearly 20,000 cars this year. Meanwhile, ASV's electric taxi service will quickly be available at major airports, including Noi Bai and Tan Son Nhat, as early as this month.

Creating a new attraction for Chan May - Lang Co economic zone

Despite having a "prime" geographical location, as well as a natural deep-water port, after 15 years of establishment and development, the Chan May - Lang Co Economic Zone has not yet developed commensurate with its outstanding advantages and initial planning expectations.

The economic zone covers an area of ​​about 27,108ha, with five main functional areas including a port area, an industrial park, a non-tariff area, an urban area and a tourist area.

The Management Board of the Economic and Industrial Zone of Thua Thien Hue Province said Chan May - Lang Co Economic Zone has basically completed the main traffic routes.

It has a wastewater treatment system with a capacity of 10,000cu.m per day and night, and a solid waste disposal site.

In addition, the economic zone also completed the construction of technical infrastructure for four resettlement projects with a total area of about 125ha, capable of arranging for about 3,000 households to move in.

The economic zone has 57 investment projects with a total registered capital of more than VND87 trillion (US$3.6 billion); in which 28 projects have been completed and put into operation, creating jobs for about 4,700 employees, with annual revenue of nearly VND4 trillion.

However, the economic zone's annual contribution to the budget of Thua Thien – Hue Province is only about VND280 billion, because most of the projects are in the period of exemption from land rent and corporate income tax.

Tran Dinh Thien, former director of the Viet Nam Institute of Economics, said that perhaps the economic zone was lacking in large investors to choose this place as a destination.

In addition, one of the very important conditions to attract large investors that this economic zone was lacking was a source of high-quality labour, he said.

In addition, the infrastructure system of Chan May Seaport is currently only serving the transportation of bulk cargo, and has only recently been implemented to attract container shipping.

Many enterprises investing in seaport infrastructure believe that although Chan May Port has great potential, the industrial development capacity of Thua Thien Hue Province is still limited, and the volume of goods circulated and imported is not high.

Therefore, in order to develop a strong seaport, it needs to be associated with attracting investors to industrial parks in the province, especially industrial park land in Chan May - Lang Co Economic Zone.

Thua Thien Hue Province is orienting the development planning of Chan May - Lang Co to become a modern coastal city in the future, with a total area of 447sq.km.

This will be a clean industrial city - seaport, one of the major and modern international trade centres; tourism, resort and commercial city of national and international stature of the central dynamic region, closely linked with Da Nang urban area.

Chairman of the Viet Nam Urban Planning and Development Association (VUPDA) Tran Ngoc Chinh said that the formation and development of Chan May - Lang Co city was the right vision.

In the future, this city will connect and share benefits with the development of Lien Chieu Seaport (Da Nang City) on the other side of Hai Van Pass, which can become a logistics port because of its large development space.

“Currently, Chan May Port is a destination for large cruise ships, bringing thousands of tourists each time. The development of a modern city here will create new breakthroughs for Thua Thien Hue,” said Thien.

If Thua Thien Hue could set an "unusual" goal and attach it to the national level, with good solutions, and have strategic investors, then there would be specific mechanisms and policies, and adequate support resources from the central government, he added.

Because the development of the modern Chan May - Lang Co urban area was not only for Thua Thien Hue but also for the country, said Thien.

In order to realise the vision of a modern coastal city, attracting a high-quality labour force to work and live, Thua Thien Hue Province is adjusting the planning of Chan May - Lang Co Economic Zone.

The new point in the adjustment of the general planning to build the economic zone this time was to expand the industrial development space, create a land fund to attract large-scale, brand-name infrastructure construction and investment projects, including VSIP Group, said Chairman of the provincial People's Committee Nguyen Van Phuong.

At the same time, the province also redefines the development space of Chan May Wharf area to increase the length of the wharf operation, form and develop logistics centres, and inland port systems.

In addition, it also plans to align with the development planning orientations of Lang Co – Canh Duong national tourist area by 2030 and review and adjust development orientations for high-class resort tourism, and casino entertainment services for the period up to 2045 in line with the vision of the whole economic zone. 

Weak demand drives down shrimp prices

Shrimp farmers in the Mekong Delta are facing losses as shrimp prices have plunged by 30% within a month.

A survey showed prawns are sold at around VND70,000-80,000 per kg of around 100 pieces, slumping by 30% against the previous month.

The prices of shrimp that weigh one kilogram of 30-40 pieces also dipped by 20% month-on-month to VND108,000-135,000, despite rising input costs.

The steep fall in prices has piled pressure on shrimp farmers in the Mekong Delta provinces of Soc Trang, Tra Vinh, Tien Giang and Ca Mau, the local media reported.

An immediate recovery of shrimp prices is not in sight.

The Ministry of Agriculture and Rural Development attributed the shrimp price plunge to weak demand amid abundant supplies.

According to the Vietnam Association of Seafood Exporters and Producers, many local enterprises are grappling with difficulties caused by weak demand in Vietnam’s key shrimp export markets, such as the U.S. and Europe, due to rising inflation.

Though China has reopened its economy, shrimp shipments to the northern neighbor in the first quarter of the year plummeted by 40% against the same period in 2022 at over US$54 million, showed customs data.

HCMC proposes automated collection of car parking fee

The HCMC Transport Department has just proposed the collection of car parking fees with an ETC (Electronic Toll Collection) card, said the department’s Deputy Director Vo Khanh Hung.
 
The Voluntary Youth Public Benefit Service Co. Ltd. will implement the project of the automated collection of on-street car parking fees in the city, he added.

Accordingly, the electronic toll collection (ETC) system does not require vehicle owners to pay fees in cash while money in their ETC accounts will be deducted. Accordingly, a vehicle must be affixed with an E-Tag identification card while traffic participants are required to register a VETC account to pay fees.

Mixed fortunes for major retail names in first quarter

Some electronics names in Vietnam have taken a hit in early 2023, but companies in other retail segments have crafted the right strategies thus far for the challenges they face.

According to Q1 financial reports for Mobile World and FPT, two of the biggest names in electronics retail in Vietnam, revenues and profits have plummeted.

Mobile World’s revenue reached over $1.1 billion, down 28 per cent over the same period last year. Although sales and administrative expenses were reduced by 19 per cent after cutting up to 4 per cent of staff, equivalent to 7,000 employees, the company’s profit after tax still decreased by nearly 99 per cent to just over $913,000.

In 2023, Mobile World set a revenue target of $5.8 million, up 1 per cent compared to the previous year, and profit after tax is expected to reach $182.6 million, up 2 per cent. But the company has only completed 0.5 per cent of the annual profit plan.

In the first three months of the year, FPT Retail also lost more than $217,000. According to a representative, the revenues of the FPTShop chain decreased by 20 per cent due to the continuous introduction of many discount policies to stimulate demand for electronic products in the face of competitive pressure and reduced consumption demand.

However, the pharmaceutical retail segment was strong for FPT Retail with a revenue growth of 52 per cent over the same period.

According to this year’s development plan, FPT Retail will be more cautious in expanding the store system. The company will proactively come up with policies and promotions to accompany customers in the context of high inflation, thereby leading to lower expected gross profit margin than last year.

FPT Retail also aims to open at least 400 more pharmacies this year, develop new services, and apply technology and digital transformation to enhance the customer experience.

Elsewhere, AEON Vietnam and Masan’s WinCommerce retail chain seem to be bright spots in the retail sector. AEON Vietnam recorded effective operations in the first quarter, with a stable growth of about 5 per cent compared to last year. In 2022, it also grew by more than 30 per cent compared to 2021.

Yasuyuki expects AEON’s business results this year to be the same or higher than last year. He demanded that one of the goals of the year is that newly opened supermarkets must be successful.

Meanwhile, the revenue of the WinCommerce retail platform increased by 0.5 per cent, reaching $1.1 billion. The increase in the number of stores and customers has helped it offset the decrease in the shopping carts. The company opened 55 more WinMart+ and one WinMart store in the first quarter, bringing the total to just over 3,440 convenience stores and supermarkets nationwide.

WinCommerce CEO Nguyen Thi Phuong said that the company will pursue the supermarket and minimart models because of possessing full advantages such as convenience, solving people’s concerns about food hygiene and safety, and thoroughly different customer experience. In 2023, WinCommerce aims to open 800 new stores and build corresponding models for urban and rural areas.

A strenuous year ahead in cement

Vietnam’s cement and clinker export in the first four months of this year continued to be hurt by high inflation in major cement export markets.

The local cement sector is suffering from a record fall in export business and stagnant domestic consumption, following on the downward trend in 2022 and resulting in a sharp fall in both export volume and value.

In April, Vietnam exported 2.4 million tonnes of cement and clinker, counting $109 million in value, equal to 73.5 per cent in volume and 73.3 per cent in value compared to one year ago, according to the General Statistics Office.

Cumulatively in the first four months, the export volume has shed 26.5 per cent on-year, fetching around 10.25 million tonnes, and export value fell 25.8 per cent on-year to $445 million.

Cement export to China was gloomy as the real estate market there has yet to revive. Accordingly, Vietnam just counted nearly $11.4 million from cement export to this market in Q1, down 95 per cent on-year.

Meanwhile, Vietnam’s second-largest cement market, the Philippines, in mid-April announced temporarily imposing anti-dumping duty on several types of Vietnamese cement products.

Earlier this year, several cement makers in that country filed a lawsuit against Vietnamese cement exporters, arguing that the firms sold cement at dumping prices and caused losses to the Philippines’ cement sector.

A raft of major cement businesses such as Long Son Cement, Thang Long Cement, Vissai Ninh Binh, Vicem Tam Diep, and Vicem Haiphong are all on the list imposed by the Philippines.

Meanwhile, the export duty on cement products being raised from 5 to 10 per cent from January has put pressure on firms due to soaring production costs and higher tax.

“In the context the export price of clinker has yet to rise, it has to bear higher tax, leading to diminished competitiveness in the global market,” said Nguyen Quang Cung, chairman of the Vietnam Cement Association.

For the rest of this year, cement firms are forecast to continue facing multiple hardships in both domestic and export market.

A representative of a major cement group based in Ninh Binh told VIR that the company’s cement export volume in Q1 was curtailed 30 per cent on-year, and is forecast to continue the shortfall in Q2 due to critically lacking orders against low export price.

In the current context of oversupply when domestic cement output exceeds 110 million tonnes and continues to be complemented with new production lines, domestic cement consumption stands at 64-65 million tonnes, and stiff competition persists among cement producers.

Currently, firms are ramping up efforts to pull down their production costs, find new markets, retain traditional partners in the Philippines, and adapt to trade protectionism policies.

At the moment, Vietnam’s three major cement export markets are the Philippines, the US, and Hong Kong, and major clinker export markets are China, Bangladesh, and the Philippines.

Total cement and clinker consumption of the cement sector (including export) approximated 20.76 million in Q1, down 19.9 per cent on-year.

In the period, state-owned conglomerate Vicem, which holds 35 per cent of the market share, reported selling about 5.39 million tonnes of products, generating $331.1 million in revenues and $17.78 million to state coffers, all lower compared to last year.

Meanwhile, Vicem Ha Tien, the largest unit in the Vicem system, saw a 14.6 per cent fall in its net revenues and 53.5 per cent drop in accrued profit on-year, just counting $73.5 million in net revenues and $3.3 million in accrued profits in Q1.

This year, domestic cement production output is forecast to surpass 120 million tonnes, while domestic consumption approximates 63-68.5 million tonnes. Exports are not projected to match 2022 figures.

Firms ponder impact of new electricity hike

Vietnam last week raised its average retail electricity price by 3 per cent, in a move that could put upward pressure on inflation.
 
Some companies have had a plan for some time in case electricity prices were ramped up, photo Le Toan
Annual inflation in the country has been easing since the beginning of the year, with April consumer prices rising 2.81 per cent from a year earlier. The government is targeting average inflation of 4.5 per cent for the year.

The widely anticipated hike in electricity prices (see box) is expected to help state utility EVN reduce losses as production costs remain elevated. The rise in electricity costs may also thwart the cost-cutting strategies of a number of businesses that are experiencing protracted order shortages.

The increase is significantly less than the price increase scenario previusly devised by Electricity of Vietnam (EVN) and submitted for review by the Ministry of Industry and Trade (MoIT).

General director of Saigon 3 Garment JSC, Pham Xuan Hong, does not wish electricity prices to be raised at this time. “Profits will be negatively impacted if input costs are increased, thereby reducing the competitiveness of products,” he said. For the past few years, Saigon 3 has spent more than $17,000 per month on electricity.

According to Dinh Van Chung, deputy director of Hoa Phat Dung Quat Steel JSC, rising electricity prices have become a “huge burden” for steel producers as orders have not improved and interest rates have surpassed the 10 per cent per annum threshold.

Nguyen Tien Thoa, president of the Vietnam Valuation Association, said, “A 3 per cent rise is a modest level and the impact will not be significant on the product prices of manufacturers that use a great deal of electricity.” According to his calculations, the cost of producing steel will increase by 0.18 per cent, cement by 0.45 per cent, and paper by 0.4 per cent.

Electricity manufacturing and company enterprises will continue experiencing issues if the price of electricity only rises modestly, Thoa said. However, the cost of purchasing electricity from coal-fired power plants in 2022 increased by 25 per cent, and from gas turbine plants by 11.3 per cent.

“The large proportion of power generation from thermal power results in greater electricity purchase expenses than the present average retail price computation criteria,” Thoa added.

The MoIT verified at the end of March that the ministry and EVN were not turning away from the proposal of rising electricity prices as a means to rebalance EVN’s finances, given that it suffered losses of over $1.12 billion in 2022, not including the exchange rate deduction of up to $628 million that was not allocated to electricity costs.

According to EVN’s deputy director general Nguyen Xuan Nam, the 3 per cent rise in electricity prices will help boost revenues for the remaining months of this year, estimated at $341 million.

“It will help the group minimise financial difficulties. Residences that produce electricity and pay an average of $450 per month will pay an additional $13 per month after the price of electricity is adjusted,” he said.

In the first four months of 2023, the consumer price index (CPI) increased by only 3.84 per cent compared to the same period the previous year, which is a favourable condition for electricity price adjustment. According to Dr. Bui Trinh, an independent analyst in Haiphong city, the effect of a raise in electricity prices can last through many manufacturing cycles.

“GDP will decline by 0.16 per cent in the next production cycle if businesses are unable to raise product prices and are willing to reduce added value by reducing labour, compensation, or profits,” Trinh said.

Trinh cited information from Vietnam’s intersectoral balance sheet indicating that the production cycle immediately following a 5 per cent rise in electricity prices will increase the CPI by 0.08 per cent and the producer price index by 0.048 per cent.

Increasing electricity prices “have nevertheless introduced a new price range” since output is falling, but Trinh cautions that consumer consumption will be impacted. Currently, consumer demand is feeble due in part to the impact of final consumption demand in 2022, which increased by just 7.8 per cent, while GDP by end-use method grew by 9.6 per cent and GDP by production method increased by 8.02 per cent.

HCMC wants to speed up public investment disbursement

Nguyen Thi Le, chairwoman of the HCMC People’s Council, has urged the relevant agencies to expedite the disbursement of public investment capital as the city saw a lower-than-expected disbursement rate in the year to April.

Only VND147 billion in public investment capital for the city’s civil and industrial construction projects was disbursed between January and April, representing a mere 4% of the full-year target.

Speaking at a working session on May 9 with the Management Board for Industrial and Civil Engineering Construction and Investment Projects of HCMC over 2021-2025 investments,  Le said the sluggish disbursement was due to inadequate coordination between the city’s departments and agencies, particularly during the land clearance stage.

She stressed the role of local investors, in addition the competency of contractors and consultancy service providers, in keeping the projects’ implementation on schedule.

Around VND70 trillion has been allocated to HCMC to fund public investment projects this year.

Hanoi maps out key infrastructure projects

The Hanoi City administration is seeking to finish work on two beltway projects, complete its centripetal expressway system and build an express rail link between the city and the north-central province of Nghe An.

By the end of 2027, Hanoi will focus on the Beltway No. 4 project in the Hanoi Capital Region and expand a 20-kilometer section of National Highway 6.

The Hanoi Capital Region covers Hanoi City and nine neighboring provinces — Hai Duong, Hung Yen, Vinh Phuc, Bac Ninh, Ha Nam, Hoa Binh, Phu Tho, Thai Nguyen and Bac Giang, according to the Government’s Decree No. 91 in 2021.

As for 2030, the city has sought to complete beltways No. 4 and No. 5, as well as the expressway network that links Hanoi and nearby regions.

In addition, an express railway between Hanoi and Vinh City in Nghe An Province has been scheduled to start construction by 2030. The line will be part of the big-ticket North-South express railway project.

Toll collection proposed for nine State-funded expressways

The Ministry of Transport has proposed a five-year pilot toll collection scheme for the HCMC-Trung Luong Expressway and eight sections of the North-South Expressway, which were all funded by the State.

The eight North-South Expressway sections comprise Cao Bo-Mai Son, Mai Son-National Highway 45, National Highway 45-Nghi Son, Nghi Son-Dien Chau, Cam Lo-La Son, Vinh Hao-Phan Thiet, Phan Thiet-Dau Giay, and My Thuan 2 Bridge.

Among the nine expressway projects, four are currently operational while five are expected to be completed before 2025.

The toll rates for the expressways are not yet determined.

The ministry plans to pilot toll collection on those expressways for five years, starting from the date of the plan being approved. Toll revenue will go to the central or local State budget.

Gov’t wants regulations eased to lengthen lifespan of rolling stock

The Government has requested relevant agencies to review and revise regulations on inspecting the quality, technical safety and environmental protection of locomotives and train cars when extending the lifespan of the rolling stock.

The Government Office issued Document 3244 on May 9 on Deputy Prime Minister Tran Hong Ha’s views on the service life of rail transport and amendment of Government Decrees 65 and 01.

The Deputy PM assigned the Ministry of Transport to conduct a study on revising regulations to extend the rail transport means’ lifespan while ensuring safety and appropriateness with the actual conditions of Vietnam.

Simultaneously, the Government requested the ministry to assess and complete standards on quality, technical and environmental issues for trains.

Meanwhile, Vietnam Railways (VNR) has been directed by the Commission for the Management of State Capital at Enterprises to build a roadmap for using locomotives and train cars running on clean energy pursuant to Decision 876 of the prime minister.

According to VNR, as of 2022, the railway sector had 258 locomotives, 980 passenger train cars and 4,318 freight train cars.

The service life of locomotives and passenger train cars pursuant to Decree 65 of the Government ranges from 40 to 45 years. Based on the above regulation, the number of locomotives out of service will increase in the coming years.

VNR estimated it would need at least VND8,000 billion to replace diesel locomotives and passenger train cars. However, replacing diesel locomotives with electric ones is not practical now as Vietnam’s railway uses diesel technology with a track width of 1,000mm, which is not designed for electric trains.

At the UN Climate Change Conference in Glasgow, Vietnam pledged to switch to using locomotives and train cars running on clean energy by 2050.

NA Economic Committee wants fuel trading rules revised

The National Assembly Economic Committee has proposed the Government address issues in fuel trading, as inadequacies in Government Decree 95/2021 on fuel trading and pricing management have surfaced after a year of the decree being in force.

Though fuel prices have been put under control and supplies secured over the past seven months, gas stations have kept shutting down one after another, leading to fuel shortages in some localities, the committee said in its report submitted to the National Assembly Standing Committee at a recent meeting.

It attributed the cause to the current pricing mechanism, saying it does not follow fuel market movements, disabling local retailers to maintain business as the low discount cannot compensate for operation costs.

Besides, the Ministry of Industry and Trade’s band-aid measures – revoking fuel trading licenses of traders that suspend operations without justified reasons – resulted in fuel stations limiting their sales volume as a countermeasure.

The fuel price stabilization fund made it challenging to read the market movements, and there may exist some irregularities in tapping the fund. However, removing the fund may make local fuel prices surpass global fuel prices, the committee noted.

Hanoi association hailed for helping with development of local SMEs

Vice Chairman of the Hanoi People’s Committee Nguyen Manh Quyen has appreciated contributions by the Hanoi Association of Small- and Medium-sized Enterprises (SMEs) to the development of local businesses.

He made the remark while attending the association’s sixth congress for the 2023 - 2028 tenure on May 14.

The event reviewed the association’s performance during 2018 - 2023, set up tasks and orientations for the new tenure, and honoured outstanding collectives and individuals.

It elected a 105-member executive board which later convened the first session to elect important positions. Do Quang Hien was re-elected Chairman of the association in the sixth tenure.

In his speech, Quyen said the organisation has connected local companies, collected and reported their opinions to authorities, and directly assisted members to boost production, business, and competitiveness.

Besides, it has promoted social corporate responsibility and coordinated with authorities, sectors, and credit institutions to tackle difficulties related to capital, market, tax, customs, and administrative procedures.

He called on enterprises of Hanoi to bolster digital transformation, apply scientific and technological advances to improve their productivity and efficiency, and comply with legal rules to deserve their role as an important impetus of local socio-economic development.

For his part, Hien pledged that the association will further promote innovation and effectiveness of operations to generate maximal benefits for SMEs, thereby contributing to local and national socio-economic development.

The association currently has nearly 10,050 members and 25 clubs, district-level associations, and centres of legal counselling, trade promotion, and business support.

Belgian firms explore Vietnamese business culture

A training conference was held in Brussels on May 15 to promote Belgian businesses’ understanding of the business environment and culture of Vietnam.

The event, jointly held by the Vietnam Trade Office in Belgium and the Belgian Vietnamese Alliance (BVA), provided Belgian firms with basic things that they need to know when doing business in Vietnam and contacting with locals.

Davy Jacob, supply chain manager of LIBEERT chocolate company that is operating in the central city of Da Nang, said that Vietnam has an attractive investment environment for foreign investors.

The country’s fast economic growth with the rapidly growing middle class has created good chances for foreign investors, including those from Europe, he held, expressing his hope to further expand the firm’s operations in Vietnam.

Joke Pattyn from Facil, a logistics company, said that her company has provided automobile spare parts for Vietnamese automaker Vinfast for three years. She stressed a wish to get a deeper insight into the traditional business practices of Vietnamese people to become closer to local customers and build up more relations.

Commenting on the Vietnam-EU economic cooperation outlook, Tran Ngoc Quan, Vietnamese Trade Counselor in Belgium and the EU said that despite facing many difficulties, European firms still pin high hope on the Vietnamese market, especially in the fields of garment and textile, leather and footwear, and agriculture.

Particularly, the EU-Vietnam Free Trade Agreement (EVFTA), which took effect in August 2020, has provided preferential tax rates to Vietnamese goods exported to the EU, he said, holding that this is a great opportunity for Vietnam and the EU to promote bilateral trade as the EU is prioritising countries sharing a FTA with the union to overcome difficulties.

The EU’s compulsory regulations for imported products will take effect in the next 3-5 years, he noted, advising Vietnamese firms to meet the regulations by switching to green and clean production and sustainable development, thus clinching their position in the EU market.

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