As ESG standards (Environmental, Social, and Governance) have gone from a nice-to-have to the new norm in the global business community, a set of criteria will be launched in Q3 by the Ministry of Planning and Investment for measuring ESG performance.
Trinh Thi Huong, deputy director of the Enterprise Development Agency (EDA) under the Ministry of Investment and Planning, remarked that large-scale enterprises in Viet Nam had actively incorporated ESG into their operations, while small- and medium-sized ones had just considered embarking on the ESG journey.
The good news is that their mindset is changing. In a recent survey conducted by EDA, 83 per cent of the respondents think ESG would improve their brand image and reputation, and 57 per cent think pursuing the notion is essential to comply with the Government's regulations.
The deputy director also said the Programme on Support for Private Enterprises in Sustainable Business between 2022-2025 had highlighted the importance of a set of criteria for evaluating ESG performance among enterprises.
EDA, in the implementation of the programme, is working on a set of criteria to have it in place in Q3. The set will be available free of charge on the national portal for enterprises, together with a package to support them in the ESG transition.
The deputy director believes that the set would promote ESG practices by providing an ESG self-assessment tool for enterprises, which is a starting point for a course of action to transform their business model into ESG-centered.
Vu Chi Cong from VinaCapital remarked that ESG was gaining traction in the global business community since customers and investors had become more environment-conscious and set the bar high on social responsibility.
He said a failure to integrate ESG into enterprises' operations could mean dire consequences for their viability. He took Vietnamese enterprises operating in the footwear industry as an example.
Cong also underlined the surge of ESG-promoting funds in the world. Under his estimation, the number of such funds has reached over 4,000 and their capital has amounted to hundreds of trillions of US dollar.
He urged domestic enterprises to quickly embrace ESG to leverage such a vast source of capital and improve their operational efficiency. For instance, the Vietnam National Textile and Garment Group has saved 30 per cent of its energy and water bills thanks to its factories reaching LEED Platinum standards.
According to the PwC Global Consumer Insights Pulse Survey in April, 96 per cent of Vietnamese respondents said they will pay more for products by companies with a reputation for ethical practices, whereas 93 per cent for products with sustainability cues.
Legislators discuss ceiling and floor prices for air tickets
Raising or keeping the current ceiling price and floor price for domestic air tickets remained a contentious issue among National Assembly deputies.
Deputy Tran Van Lam from the northern province of Bac Giang told reporters on the sidelines of the ongoing 5th session of the 15th National Assembly that deputies had been showing great interest in this particular issue.
Regarding the draft Law on Pricing, which has been put on the floor during this NA meeting, Lam said the law favoured the abolishment of the floor price, based on conditions of the current market.
Deputies stressed the importance of regulating domestic airfares. While ideally, the state should not have to intervene but rather leave it to the market to determine prices based on market principles, the domestic air travel market was not yet mature enough.
Lam said there were still monopolies in the market with a number of routes having just one operator. In addition, the state must still reserve the right to intervene in the market in the event of natural disasters and abnormal weather conditions that may distort the rules of supply and demand.
"We have observed over the years while there are many airlines in the domestic markets monopoly has yet to disappear," he said.
"There are routes with numerous operators with fair pricing and competition, while there are routes with just one operator. This is despite the aviation authority's encouragement for other airlines to jump in due to low demand and operational difficulty," he added.
In addition, demand for air travel tends to be heavily seasonal, with demand shooting through the roof during certain times of the year.
Deputies said even when demand is large it would not be easy for airlines to scale up their operations. Without the complete elimination of monopoly in the market, the state must continue to intervene to ensure the rights and benefits of consumers are protected.
Some argued that the floor price was still required to prevent unhealthy competition among airlines, preventing some bigger players from going below cost to eliminate all competition.
Regarding promotional events in which airlines advertised zero dong tickets, deputies said those were few and far between with very limited seats sold, which should be considered a marketing tactic.
Techfest Vietnam 2023 launched in Hanoi
The Ministry of Science and Technology on May 23 launched the National Innovative Entrepreneurship Day 2023 (Techfest 2023) in Hanoi.
The annual event for Vietnamese innovative start-ups is jointly organised by the ministry, agencies, and localities, particularly the State Committee for Overseas Vietnamese Affairs.
Speaking at the event, Deputy Minister of Science and Technology Tran Van Tung said he expects that Techfest 2023 will promote the results achieved in previous years, maintain models of the innovative startup ecosystem, and operate technology villages in localities.
He emphasised that for the national innovation startup ecosystem to develop, joint efforts are needed.
Techfest 2023 brings together more than 30 technology villages and the emergence of new technology villages to solve problems in fields of smart agriculture, clean medicinal herbs, metaverse, Techconnect Global, and digital transformation.
More than 30 technology villages, particularly new ones, will join the Techfest 2023 to solve problems of potential fields such as smart agriculture, clean medicinal herbs, metaverse, Techconnect Global, and digital transformation.
Key activities of Techfest 2023 include National Innovative Startup Talent Competition; investment connection activities to institutes/universities’ projects; multilateral dialogues between local authorities, innovative enterprises, and domestic and foreign experts on analysis and assessment of root problems in local socio-economic development; and in-depth training programmes on innovative entrepreneurship.
Techfest 2023 will also conduct activities to promote international cooperation with technology powers like Australia, the US, Canada, and the Republic of Korea, thus providing opportunities for Vietnamese startups to develop markets, attract international investment, and popularise and promote a dynamic and creative startup ecosystem of Vietnam.
Maintain ceiling price for airfares important: NA deputies
On the sidelines of the 15th National Assembly’s ongoing fifth plenary session, deputies stressed the need to maintain a cap on airfares, as the legislature plans to discuss different opinions of the draft Law on Price (amended) on May 23 afternoon.
Pham Thi Thanh Mai of Hanoi said that from the perspective of competition, the Law on Competition has provided a clear regulation scope and principles to ensure laws on competition.
As for the perspective of price, in the draft Law on Price (revised), it is necessary to keep the ceiling price for domestic airfares so as to ensure State regulations in the context that Vietnam does not have ideal conditions like other countries in terms of means of transport.
In the future, if other types of transport such as high-speed rail develop further, resulting in a decrease in the pressure on air travel, the removal of the cap could ensure compliance with the market mechanism.
Sharing the same view, Tran Van Lam from Bac Giang province said that keeping the regulation on the ceiling price in the draft law is a tool for the State to regulate prices to meet the statutory criteria of goods and services that are priced by it.
In a report on acquisition, explanation and adjustment of the draft Law on Price (amended), the National Assembly Standing Committee assessed that keeping the ceiling price regulation is necessary.
Along with the proposal to remove the bottom price, if there is no regulation on the ceiling price, it means that the State will give up the regulatory tool and let service providers have full authority to decide the service price.
If airlines were able to set air ticket prices by themselves, it would most certainly lead to high airfares, adversely impacting the interests of consumers, production, business, and society.
Vietnam asks businesses to keep close watch on US investigation into boltless steel shelving imports
The US Department of Commerce (DOC) has commenced anti-dumping investigation into boltless steel shelving units from Vietnam, Trade Remedies Authority of Vietnam said, recommending enterprises producing and exporting related products keep a close watch on the next developments of the case.
On 25 April 2023, Edsal Manufacturing Co., Inc, the largest producer of boltless steel shelving in the US, filed a petition to the DOC and the US International Trade Commission (USITC) to initiate an anti-dumping duties investigation into certain boltless steel shelving allegedly dumped from Malaysia, India, Taiwan (China), Thailand and Vietnam. The product under investigation is packed boltless steel shelf with HS code 9403.200075.
The petitioner has alleged that boltless steel shelving imported from Malaysia, India, Taiwan, Thailand and Vietnam are being, or are likely to be, sold at less than fair value in the US. The petitioner further alleged that these imports, which have cumulatively surged by 68.5% from 2020 to 2022, are causing, or threatening to cause, material injury to the US boltless steel shelving industry.
The anti-dumping duties investigation started on May 15, 2023. The investigation period is from October 1, 2022 to March 31, 2023.
Preliminary data from the USITC shows that in 2022, Vietnam exported about 32.7 million USD of products subject to investigation, accounting for about 15.5% total exports of countries to the US.
Vietnam ranked 4th among the above exporters to the US, after Taiwan (China), China and Thailand, with alleged dumping margin ranging from 92.60% to 224.94%.
According to the Trade Remedies Authority of Vietnam, the DOC has issued a questionnaire on Quantity and Value (Q&V) for Vietnamese businesses. The deadline to respond is May 30, 2023 and businesses can apply for an extension if needed.
EVN proposes to extend coal payment
Vietnam Electricity (EVN) proposed Vietnam Coal-Mineral Group (TKV) and Northeast Corporation extend the coal payment date to ensure the electricity supply.
The decision was made based on the Government’s direction to improve financial conditions which includes negotiations with investors and suppliers.
According to EVN, the unexpected increase in fuel prices and the cessation of power-generating activities have created numerous challenges for the company's business and finances as well as those of its member units. Due to this, the power supplier is experiencing a lack of cash flow for payment.
EVN also requested a 52,000-tonne coal loan from the Song Hau 1 Petroleum Power Project Management Board and the Vietnam Oil and Gas Group (PVN) for the extended Duyen Hai 3 and Duyen Hai 3 thermal power plants.
In the first four months of 2023, dry weather occurred across the country causing a serious shortage of water for hydropower reservoirs, while the unavaibility of supply resources such as coal, oil, and gas for power production and the prolonged breakdown of some thermal power plants caused a huge shortage of electricity supply.
According to the request, EVN will also return the coal loans for Song Hau 1 Petroleum Power Project Management Board at the end of May 2023.
PM orders supervision of cross-border poultry trading
Prime Minister Phạm Minh Chính has ordered border localities to step up supervision at border gates, opening roads, sea ports and border-crossing rivers to prevent illegal trading, slaughter and transport of poultry and poultry products into Việt Nam.
The order was made in the context of reports from media and the Việt Nam Poultry Association on increasing cases, especially in the central and southern regions.
This poses a high risk of avian influenza virus and other dangerous infectious diseases from overseas.
PM Chính asked authorities of centrally-run localities, ministers and heads of national steering committees against smuggling, counterfeit goods and trade fraud (National Steering Committee 389) to take drastic measures.
Local authorities have been asked to return or destroy the poultry once the illegal ones are detected and impose sanctions on violating individuals and organisations.
Police, border soldiers, customs officers and the National Steering Committee 389 are responsible for working with local authorities to detect and impose fines on illegal imports and strengthen public communication campaigns so that people living in the border areas are aware of the dangers of avian influenza and adverse impacts of illegal poultry trading.
Localities must focus on building areas and facilities that are safe from animal diseases following the regulations of Việt Nam and the World Organisation for Animal Health to promote exports.
The PM also requested the Ministry of Agriculture and Rural Development to strengthen quarantine procedures and step up surveillance to early detect avian influenza outbreaks.
The ministry has also asked to quickly identify avian influenza virus strains and evaluate the effectiveness of vaccines.
The PM also assigned tasks to the ministries of national defence, public security, industry and trade, finance, information and communications, health and big media agencies to coordinate and take measures against illegal trading, slaughter and transport of poultry and poultry products into Việt Nam.
Việt Nam recorded a human case of bird flu caused by the A/H5N1 virus in northern Phú Thọ Province last October, the first human bird flu infection after eight years without such cases across the country.
Since the first bird flu outbreak in 2003, the total number of A/H5N1 avian flu patients in Việt Nam has reached 128. Of those, 64 patients, accounting for 50 per cent, died.
Viet Nam - an example of using trade to accelerate economic development
World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iweala praised Viet Nam as an example of using trade to accelerate economic development and expand opportunities for people during her visit to the Foreign Trade University (FTU) on Thursday.
According to Our World in Data, the rate of the population living in extreme poverty in Viet Nam (living below US$2.15 per day) was dramatically reduced from 45.1 per cent in 1992 to 1.23 per cent in 2018.
The WTO Director-General also shared about current issues related to the multilateral trading system in the context of globalisation as well as the implementation of Viet Nam's trade policies in the context of increasingly deep integration into the global economy.
As more businesses seek to diversify and deconcentrate production networks to better manage climate, economic, and geopolitical risks, Viet Nam has attracted investment. The country's participation in global value chains grew by an annual average of 14.3 per cent through the 2010s. Nominal merchandise trade (exports and imports) grew from $111.3 billion in 2007 to $730.2 billion in 2022. GDP per capita more than quadrupled from $843 in 2007 to $4,086.5 in 2022.
Together with Viet Nam's impressive public health response to COVID-19, international integration helped the country weather the pandemic relatively well. Growth remained positive, at 2.9 per cent in 2020 and 2.6 per cent in 2021, before rebounding to 8 per cent in 2022.
The WTO Director-General also praised the efforts and contributions of the FTU’s teachers and students in using global trade to drive growth and development, especially when the FTU was selected as part of the WTO Chairs Programme.
Speaking at the meeting, FTU President Bui Anh Tuan said that FTU was recognised as the leading university in Viet Nam in its fields of education, especially in international trade.
Participants also focused discussion on various topics, such as the impact of re-globalisation on global supply chains; how the WTO can support the resilience of Vietnamese supply chains in the fishery, textile and agriculture sectors; and regulations in new-generation FTAs and their impact on countries, especially developing countries.
Challenges for banks in luring non-term deposits
It is much more difficult for banks to attract cheap capital from non-term deposits, or current account savings account (CASA), in the context of high interest rates on term savings.
With an interest rate of almost zero, CASA is always an important component in capital mobilisation of banks because it creates a cheap capital source, helping banks to reduce input costs and increase business efficiency.
In the past few years, besides having invested huge resources in digital transformation, technology, and experience enhancement, many banks have also raced to offer a series of free transactions on digital banking channels to attract CASA. Therefore, the CASA ratio of some banks sometimes reached 40-50 per cent of total deposits.
However, the CASA race passed its peak and has been reducing. Q1/ 2023 business results of banks reported a sharp decline in CASA at 27 out of 28 listed banks and this was not the first quarter that has seen a decline for CASA.
Specifically, Techcombank, which topped in terms of CASA for many years, saw its CASA ratio decline in the fourth consecutive quarter. By the end of the first quarter of 2023, the CASA ratio at Techcombank was only 32 per cent, down 5 percentage points compared to the beginning of 2023 and down 18 percentage points compared to the record high level of 2022. Techcombank's CASA value by the end of March was only VND124 trillion.
Military Bank's financial report for the first quarter of 2023 also showed the CASA ratio was at 35.5 per cent with a balance of more than VND160.8 trillion. The bank’s CASA ratio decreased by more than 5 percentage points compared to the beginning of 2023.
Similarly, although Vietcombank still topped the banking system in terms of CASA balance with more than VND387.7 trillion, the ratio of CASA to total deposits at this bank decreased from 33.9 per cent at the beginning of the year to 30.4 per cent at the end of the first quarter of 2023.
The ratio of CASA to total deposits at many other banks, such as MSB, ACB, VietinBank, Sacombank and BIDV by the end of Q1/ 2023 also decreased by 2 to 10 percentage points compared to the beginning of this year.
In general, 28 listed banks are holding more than VND1.5 quadrillion in demand deposits, down nearly 11 per cent compared to the beginning of the year.
According to a bank leader, who declined to be named, due to economic difficulties and less attractive investment opportunities while the interest rate on term savings from the end of 2022 to the beginning of the first quarter of 2023 increased sharply, customers have tended to transfer their money from current accounts to term deposits to enjoy higher interest rates.
However, based on data analysis, SSI Securities Company forecast the CASA ratio has been affected negatively only in the short term and will soon recover in the near future.
Credit package for social housing development not yet disbursed: SBV
The credit package of VND120 trillion (US$5 billion) for social housing development has not yet been disbursed due to many challenges.
Nguyen Xuan Bac, deputy director of the Department of Credit for Economic Sectors, the State Bank of Viet Nam (SBV), made the statement at a conference held by the Ministry of Construction on Friday.
The conference saw discussions and updates on the implementation of the project to build at least one million social housing apartments for low-income people and workers in industrial parks in the 2021-30 period.
Implementing Resolution 33/NQ-CP issued by the Government on solutions promoting the safe, healthy and sustainable development of the real estate market, SBV set a credit package of VND120 trillion for social housing development and a project on developing one million social houses.
This credit package is carried out by four State-owned commercial banks, Vietcombank, Agribank, BIDV and VietinBank, with annual interest rates 1-2 per cent lower than the average interest rates offered for middle- and long-term deposits by commercial banks. This programme has been implemented since April 1, 2023. The package will also provide loans for rebuilding old apartments with preferential interest rates.
The package will focus on lending to both investors and homebuyers of eligible projects, creating conditions to promote the strong development of the social housing market.
However, Bac said the implementation of this loan programme still faces many challenges. At present, the supply of social housing is still limited due to the difficulties relating to finding investors for social housing projects and land fund for those projects. The challenges also include a lack of attractive incentives for investors and difficulty in determining the selling price of social houses.
According to Bac, up to now, the central bank has not yet received the list of eligible projects according to the Ministry of Construction's Official Dispatch No. 1551/BXD-QLN. Therefore, although it was effective from April 1, 2023, so far, the VND120 trillion package has not yet have any borrowers.
In addition, the existing regulations on conditions of buying social housing such as conditions on residence and personal income tax, and increasing house prices are obstacles for low-income home seekers.
The central bank recommends that coordination of ministries, agencies and localities in carrying out this credit programme be boosted to contribute to reaching the goal of building at least one million social houses by 2030.
Accordingly, ministries and agencies need to review and amend relevant legal documents to remove obstacles in terms of legality and procedures in the investment and construction of social houses.
In addition, local authorities should pay attention to arranging land funds for social housing development and soon announce the list of eligible projects so their investors can access the loans in this credit package.
They should also provide information to investors of social housing projects as well as people about the loan programme.
At the conference, Deputy Minister of Construction Nguyen Van Sinh said the Ministry of Construction will continue to coordinate with related ministries and sectors in amending a number of laws, such as land and bidding laws, as well as policies and order of procedures.
The country completed 41 social housing projects for low-income people and workers of industrial parks by May 18, 2023 with a supply of about 19,516 apartments. About 294 social housing projects are under construction with a supply of about 288,499 apartments.
Network operators compete to receive 4G and 5G bands
There will be four operators participating in the auction of 4G and 5G frequencies to get three frequency licences to provide 4G and 5G services.
A representative of the Viet Nam Telecommunications Authority (VNTA) under the Ministry of Information and Communications has confirmed that the four carriers are Viettel, VNPT, MobiFone and Vietnamobile.
These four carriers are eligible to participate in the auction to receive licences to provide telecommunications services.
After passing the review round of this profile, the carriers will officially participate in the auction to get three frequency licences to provide 4G and 5G services.
Band blocks A1 (2300 – 2330 Mhz), A2 (2330 – 2360 Mhz), A3 (2360 – 2390 Mhz) have a starting price of VND5.8 trillion (US$245.75 million) and have a shelf life of 15 years.
Within 15 days after receiving the auction minutes, the Minister of Information and Communications shall issue a decision approving the auction results and publicly announce them on the portal of the ministry.
Thus, there will be only three carriers licensed for the 2300-2400 MHz frequency.
With Viettel, VNPT and MobiFone, they will need this band to improve service quality, especially 4G service.
In terms of the most necessary level, Vietnamobile is in dire need of new bands to provide services to customers, because they are currently the network operator with the fewest bandwidth resources.
Previously, the Ministry of Information and Communications has licensed telecommunications businesses to test 5G in 40 provinces and centrally-run cities.
The ministry encourages businesses to continue testing 5G applications, assessing market needs, and technical resources to build the most effective business plan when officially licensed.
According to international telecommunications equipment suppliers, 5G will be a digital infrastructure that will almost replace physical infrastructure in building future social connection platforms.
This digital infrastructure creates connections not only between people, but also between people and machines, and between machines and machines. Those are the bases that create automation as well as the transformation among industries.
However, international telecommunications experts said that, for Viet Nam, 4G was still important and would exist for a while.
Continuing to invest in 4G was also important, because in the next few years, 4G would still be the ubiquitous network, said experts.
But 5G will be deployed in hot spots, industrial zones, big cities and then can develop rapidly from 2025.
By 2030, 5G is expected to bring Vietnamese operators a revenue of $1.5 billion.
More than 200 businesses at Autotech & Accessories 2023
The 19th international exhibition on automobiles, motorcycles, electric vehicles and supporting industries (Autotech & Accessories 2023) opened on Thursday in HCM City with the theme "Breakthrough Transformation".
Autotech & Accessories 2023 with a display area of nearly 10,000sq.m in the Saigon Exhibition and Convention Center (SECC) has attracted over 200 domestic and foreign enterprises, showcasing more than 300 booths.
The event offered various activities and opportunities for individuals and companies to connect, trade, seek investment cooperation and promote domestic support industries.
The four-day event showcased a wide range of products, including complete vehicles such as cars, motorcycles, trucks, and electric vehicles, as well as spare parts, accessories, and advanced technology solutions. Besides prominent brands, newcomers also present their products including Blueone (exhaust treatment solutions), Jaan-E-Car (brake systems), Daichi (motorcycle components and spare parts), Minamoto (vehicle parts) and Tung Lam (electric cars for golf courses, resorts and hospitals).
Notably, the Vietnam Engine and Agricultural Machinery Corporation (VEAM) has chosen Autotech & Accessories 2023 as the platform to launch their new truck model, the S80, featuring the EURO 5 emission standard and modern design.
Nguyen Ngoc Minh, chairman of Asia Trade Fair and Promotion JSC (ATFA), emphasised the exhibition's commitment to expanding opportunities for trade connections, catering to both individual customers (B2C) and business customers (B2B).
The exhibition employed a diversified strategy in the display industry and customer approach, combining offline and online trade connection activities.
Trade Ministry backs car registration fee cut again
Given the difficulties faced by local car manufacturers, the Ministry of Industry and Trade finds it necessary to apply some support measures, including registration fee reduction for locally manufactured and assembled automobiles.
The Ministry of Trade and Industry repeated its proposal at a press conference held yesterday, May 18, adding that protracted economic uncertainties, foreign exchange market volatility, inflation and high-interest rates had impacted car manufacturers.
Earlier, car manufacturers under the Vietnam Automobile Manufacturers’ Association (VAMA) and localities proposed that the Government allow for a payment extension of value-added tax and special consumption tax and a 50% registration in fee reduction for domestically made and assembled cars to stimulate demand.
The Ministry of Industry and Trade report shows that in the first four months, car manufacturing dropped 19.3% over the same period last year, and VAMA sales in the market continued to slide.
China spends nearly US$400 million purchasing cassava from Vietnam
China spent more than US$397 million buying one million tonnes of cassava in the first four months of the year, thereby becoming the largest importer of Vietnamese cassava, according to statistics released by the General Department of Vietnam Customs.
April alone witnessed the nation export 189,820 tonnes of cassava and cassava-based products worth US$76.03 million, duly representing a fall of 19.5% in volume and 27.4% in value compared to figures from April, 2022.
The average export price of cassava and cassava-based products stood at US$400.6 per tonne, up 4.6% compared to March, but down 9.9% on-year.
Meanwhile, this year has seen cassava exports to Japan in the first four months of the year enjoy robust growth with 2,280 tonnes worth US$1.16 million, representing a sudden increase of 3,357% in volume and an increase of 1,742% in value against the same period from last year.
According to details given by the Import-Export Department under the Ministry of Industry and Trade, the supply source and price of corn and wheat has been heavily impacted by the Russia-Ukraine conflict.
Most notably, developed countries have switched to use clean energy from ethanol, of which cassava is one of the important raw materials used to create the substance. Therefore, the demand for cassava in the global market is anticipated to continue to increase moving forward.
At present, the export price of sliced cassava to the Chinese and the Korean markets hovers around US$305 per tonne and about US$355 per tonne, respectively.
Sector's assets risk being stranded by climate change and energy shift
Viet Nam energy sector's assets face high risk due to climate change and the country's commitment to a shift towards greener energy and economic structure in accordance with the 26th UN Climate Change Conference of the Parties (COP26), according to economists and industry experts.
Dr Vu Sy Cuong from the Vietnam Academy of Finance said climate change will likely have a significant impact on Viet Nam's energy sector, especially its thermal power plants.
Higher temperatures tend to decrease the plant's power generation efficiency while increasing water temperatures can have adverse effects on their cooling systems. Commitments to reducing the country's carbon footprint will also affect Viet Nam's numerous coal-fired power plants.
Fueling such power plants will likely run into a host of problems in the future as coal mining in the northern province of Quang Ninh and in the Red River Delta region has been facing growing issues due to higher frequency and intensity of storms and floods, leading to higher production cost and lower output.
Adverse effects of climate change such as heavier rainfall and extreme weather events will likely increase the cost of maintaining the energy grid, as well as repair, upgrade and installation.
Extreme weather events will also cause more damage to the country's energy systems while raising the cost of new investments and energy transport, including the petroleum refining industry.
On top of mounting challenges faced by the energy sector, Viet Nam's transition to greener energy and economic structure is already putting many assets in the energy sector at risk of being stranded, especially coal-fired power plants, said researchers and industry experts.
Coal-fired plants face a significant risk of being shut down earlier than their designed life spans due to the government's commitment to shifting to more environmental-friendly energy sources.
Meanwhile, many European countries and Japan have announced a halt in financing support for coal-fired plants, meaning investors will now have to borrow at higher costs, hurting their ability to recover investments in the shorter term. A vast majority of energy projects that enjoy preferential rates in Viet Nam are in the renewable energy sector.
Given the nature of energy projects, which often require large amounts of capital investment, the cost of borrowing has a significant impact on coal-fire plants' operational efficiency.
The government, bounded by CO2 emission commitments, may also step in to shorten the life spans of such plants. This could give rise to future legal disputes with investors, especially in build-operate-transfer projects.
According to a report by the Ministry of Construction, Viet Nam had 29 coal-fired power plants in operation in 2021 with thermal energy accounting for 32 per cent, a significant chunk of the country's total output.
In order to fully meet COP26's commitments as well as to reach Viet Nam's net-zero target by 2050, the government has announced a ban on all thermal power plants after 2030. It has also set a goal to bring down coal-fired plants' output to 37,476MW, or just a quarter of the country's total output.
Challenges for banks in luring non-term deposits
It is much more difficult for banks to attract cheap capital from non-term deposits, or current account savings account (CASA), in the context of high interest rates on term savings.
With an interest rate of almost zero, CASA is always an important component in capital mobilisation of banks because it creates a cheap capital source, helping banks to reduce input costs and increase business efficiency.
In the past few years, besides having invested huge resources in digital transformation, technology, and experience enhancement, many banks have also raced to offer a series of free transactions on digital banking channels to attract CASA. Therefore, the CASA ratio of some banks sometimes reached 40-50 per cent of total deposits.
However, the CASA race passed its peak and has been reducing. Q1/ 2023 business results of banks reported a sharp decline in CASA at 27 out of 28 listed banks and this was not the first quarter that has seen a decline for CASA.
Specifically, Techcombank, which topped in terms of CASA for many years, saw its CASA ratio decline in the fourth consecutive quarter. By the end of the first quarter of 2023, the CASA ratio at Techcombank was only 32 per cent, down 5 percentage points compared to the beginning of 2023 and down 18 percentage points compared to the record high level of 2022. Techcombank's CASA value by the end of March was only VND124 trillion.
Military Bank's financial report for the first quarter of 2023 also showed the CASA ratio was at 35.5 per cent with a balance of more than VND160.8 trillion. The bank’s CASA ratio decreased by more than 5 percentage points compared to the beginning of 2023.
Similarly, although Vietcombank still topped the banking system in terms of CASA balance with more than VND387.7 trillion, the ratio of CASA to total deposits at this bank decreased from 33.9 per cent at the beginning of the year to 30.4 per cent at the end of the first quarter of 2023.
The ratio of CASA to total deposits at many other banks, such as MSB, ACB, VietinBank, Sacombank and BIDV by the end of Q1/ 2023 also decreased by 2 to 10 percentage points compared to the beginning of this year.
In general, 28 listed banks are holding more than VND1.5 quadrillion in demand deposits, down nearly 11 per cent compared to the beginning of the year.
According to a bank leader, who declined to be named, due to economic difficulties and less attractive investment opportunities while the interest rate on term savings from the end of 2022 to the beginning of the first quarter of 2023 increased sharply, customers have tended to transfer their money from current accounts to term deposits to enjoy higher interest rates.
However, based on data analysis, SSI Securities Company forecast the CASA ratio has been affected negatively only in the short term and will soon recover in the near future.
Gold remains a potential investment channel
Gold remains a potential investment channel until the end of this year, though the global economy in general, and Vietnam in particular, still possess potential risk factors related to recession and inflation, which make it difficult to forecast the gold price.
This statement was made by Shaokai Fan, Head of Asia-Pacific (ex-China) and Global Head of Central Banks of the World Gold Council (WGC), at a recent press conference to release the WGC’s latest gold consumer demand trend report for the first quarter of 2023.
The latest WGC gold demand trend report showed that in Vietnam, gold demand decreased by 12 per cent from 19.6 tonnes in the first quarter of 2022 to only 17.2 tonnes in the first quarter of 2023.
Similarly, the demand for gold bullion and coins also experienced a decline of 10% from 14 tonnes in the first quarter of 2022 to 12.6 tonnes in the first quarter of 2023. Meanwhile, jewellery demand fell by 18% from 5.6 tonnes in the first quarter of 2022 to 4.6 tonnes in the first quarter of 2023.
Explaining the above trend, Shaokai Fan said that the increase in gold price affected the demand for buying gold jewellery and bullion in the Vietnamese market. In addition, the decline of the real estate market and concerns about inflation caused the demand to buy gold to decrease.
Louise Street, a senior market research specialist at the WGC, said that the complex movement of the gold market in Q1 2023 highlighted the diversity in gold demand and underpinned the role and efficiency of the asset. Against the backdrop of various economic and demand drivers in the world gold market, growth in some regions has offset declines in others. The commonality across major markets is investor interest in gold to protect its value in times of financial uncertainty.
Particularly in Vietnam, Shaokai Fan said that gold demand in the first quarter of 2023 decreased compared to the same period last year, partly due to the strong growth of gold in the first quarter of 2022. However, Q1 2023 demand still showed a positive sign when compared to previous years.
Therefore, he said, when investing in gold, investors should not base their decisions only on gold price, but also need to consider many different factors, such as investment allocation ratio and investment portfolio, and investors certainly should not invest in just one type of commodity.
High-quality Vietnamese products to be introduced at Thaifex Anuga Asia 2023
As many as 33 Vietnamese businesses and a number of the nation’s trade and investment promotion agencies will attend the Asia's largest food and beverage trade exhibition and business matching Thaifex Anuga Asia which is scheduled to run in Thailand from May 23 to 27.
This information was unveiled by Vu Kim Hanh, chairwoman of the Business Association of High Quality Vietnamese Products.
Hanh revealed that the majority of participating businesses boast high-quality Vietnamese products, with many having got involved in the USAID Improving Private Sector Competitiveness (IPSC) project.
Vietnamese enterprises are expected to display their food, agricultural, and processed products with high added value, including Phu Quoc fish sauce, confectionery, fruit juice, dried fruit, rice vermicelli, dried noodles, and spices, and instant herbal tea.
The Business Association of High Quality Vietnamese Products plans to organise a "Common House" which will showcase all goods for the local business community.
During the event, the association will also coordinate with the Vietnamese Trade Office in Thailand and the Thai Commerce Ministry in order to host a number of seminars on the development of green economy and sustainable products.
Furthermore, a number of trade exchanges will be held to help businesses strengthen connectivity, keep up with the latest food trends, and meet potential purchasing partners in the Thai retail system.
This year’s event is expected to attract more than 1,000 businesses from over 100 countries and territories around the world, providing a platform to showcase their products across 4,000 booths.
Vietnamese, Thai localities seek multi-faceted cooperation
Vietnamese Ambassador to Thailand Phan Chi Thanh held a working session with Governor of Thailand’s Nakhon Phanom province Wanchai Janporn on May 19 to discuss measures to promote cooperation between their localities in the fields of investment, trade, economy, tourism, culture, and people-to-people exchange.
The governor welcomed the visit of the Vietnamese delegation on the occasion of President Ho Chi Minh's 133rd birthday, adding that the memorial site dedicated to the late leader of Vietnam and the Thailand-Vietnam Friendship Village in Nakhon Phanom, where the late President lived and worked in 1928 and 1929, is a historic and cultural relic with important significance for their bilateral relations.
He expressed his desire to promote multifaceted cooperation with Vietnamese localities, through road and rail transportation connectivity between Vietnam, Thailand, and Laos.
Acknowledging the contributions of the Vietnamese community to the local socio-economic development, Wanchai affirmed his support for the community in the province, and for the maintenance of the memorial site of President Ho Chi Minh.
For his part, the Vietnamese Ambassador highlighted the fruitful results of the ties between the two nations in various sectors and indicated that Nakhong Phanom has great advantages in strengthening cooperation with Vietnamese localities.
The same day, the Vietnamese diplomat visited the International Aviation College - Nakhon Phanom University, the only facility that offers pilot and flight attendant training in the northeast region of Thailand.
Nakhom Phanom University has cooperated with many higher education establishments in central Vietnam for more than 20 years. More than 500 Vietnamese students have studied at this institution. Every year, about 300 Thai students at the university choose Vietnamese as their foreign language subject.
To further promote collaboration between the two countries in the field of education, the ambassador suggested that the university continue to promote the teaching and learning of the Thai and Vietnamese languages for students from the two countries, and form sisterly relations with Vietnamese institutions.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes