The State Bank of Vietnam (SBV), the nation’s central bank, has told banks to make sure that their clients can fully understand the difference between bank deposits and investments in corporate bonds and fund certificates.

The central bank has written to commercial banks telling them to revise or issue rules on consulting and sale of corporate bonds and fund certificates.

They must keep clients informed about the difference between bank deposits, corporate bonds and fund certificates, as well as their associated risks and benefits and buyers’ and sellers’ responsibilities.

Banks must clamp down on the practices that do not align with the SBV’s instructions.

HCMC’s CPI drops in April

The consumer price index (CPI) of HCMC in April dropped a slight 0.11% month-on-month, but it was still 4.23% higher than the same period last year after a three-month rising streak in January-March, according to the city’s Statistics Office.

Among the 11 groups of consumer goods and services in the basket of items used to calculate the CPI, five groups marked up in price.

Cultural, entertainment and tourism services recorded the highest rise, 1.42%, followed by transportation with 0.37% and beverages and tobacco with 0.31%.

The prices of other goods and services inched up 0.47%, while education services saw a slight increase.

The prices of pharmaceutical products and medical services remained stable.

Five other groups saw a decline in prices. Housing, electricity, water, gas and construction materials had the sharpest fall, 0.64%.

Household equipment and appliances edged down 0.23%, followed by food and catering services with a 0.22% drop and footwear, hats and textiles with a 0.03% slip.

MWG lays off thousands of workers in Q1

Weak consumption led Mobile World Investment Corporation (MWG) to cut almost 6,000 jobs between January and March, marking the second consecutive quarter of its mass layoffs.

MWG’s financial statement in the fourth quarter of 2022 showed that its workforce had been reduced to just over 73,200 employees, meaning that the company had cut over 7,000 employees, or 4% of its workforce, in just three months.

Overall, MWG has laid off 13,000 employees over the last six months, bringing its workforce back to the end-2021 level; yet the company is currently seeking to hire nearly 3,000 new workers, as advertised on its website.

In the first quarter of 2023, MWG’s employment costs decreased by around VND900 billion over the same period last year, from over VND3,000 billion to over VND2,100 billion.

MWG made over VND27,105 billion in revenue between January and March, down 25.7% year-on-year. Its after-tax profit stood at over VND21 billion, plunging by 98.5%, while the gross profit margin declined from 22.3% to 19.2%.

MWG’s thegioididong.com and Dien May Xanh saw a 34% decrease in revenue, with most phone and electronics products dropping 25-35%. Bach Hoa Xanh posted a 5% increase in its accumulated revenue during the first three months.

As of March 31, MWG’s total assets fell by 3.4% compared to the beginning of the year, to VND54 trillion, with inventory being the main asset valued at VND21 trillion.

This year, MWG aims to achieve revenue of VND135 trillion, up 1% compared to the previous year, and an expected after-tax profit of VND4,200 billion, up 2%. However, it only completed 0.5% of the annual profit plan at the end of the first quarter.

April sees foreign investment in Vietnam’s securities down

Foreign investment in Vietnam’s securities in April plunged by nearly half versus its peak in 2022 and hit a 12-month low.

Foreign investors bought over VND17.8 trillion worth of stocks, fund certificates and warrants listed on the Hochiminh Stock Exchange (HOSE), while they sold securities worth around VND20.6 trillion.

This means that nearly VND2.8 trillion has been withdrawn by foreign investors from the stock market.

Sacombank (STB) came under the strongest selling pressure, with foreign investors net selling over VND1.1 trillion worth of STB shares, followed by other large-cap stocks such as VND, VNM and DGC. However, they net injected around VND700 billion into shares of steelmaker HPG.

The Hanoi exchange and the Unlisted Public Company Market also faced the same issue.

According to Yuanta Securities, following a strong net injection in late 2022 and early 2023, foreign capital has tapered off and may be channeled to other markets such as Korea, Taiwan and India.

However, the trend has not been confirmed as net foreign capital inflow in the stock market in the first four months of the year amounted to more than VND3 trillion, according to HOSE.

Tien Giang greenlights two urban projects worth VND2.9 trillion

The government of Tien Giang Province has approved two large urban projects with a total investment cost of nearly VND2.9 trillion.

The two projects are the Nguyen Trong Hop urban area and a residential project along the Eastern Beltway in Long Hung Commune, Go Cong Town.

The Nguyen Trong Hop urban project in Go Cong Town comprises an area of 14,960 square meters for commercial townhouses and another area of 35,566 square meters for semi-detached and resettlement houses.

The project will cover 22.7 hectares and accommodate around 4,000 people. It is estimated to cost over VND2,073 billion, exclusive of land use fees, and to be completed in 2026.

The residential project along the Eastern Beltway in Long Hung Commune, Go Cong Town will have a road which is 1,524 meters long and 22 meters wide, and two rows of houses along the road.

The project comprises 310 commercial attached houses, 37 villas, 26 attached houses for resettlement, and a social housing area covering around 11,392 square meters.

The total cost of the project is VND818 billion. It is expected to be completed and put into use in 2025.

Budget spending in 2022 accounts for 3.6 percent of GDP

The Finance Ministry reported to the National Assembly that the state budget expense in 2022 was VND342.6 trillion, making up 3.6 percent of the national GDP. This is a drop of VND61.7 trillion compared to estimation of 4.3 percent of GDP.

Accordingly, the central state budget spending decreased by VND45.9 trillion (US$1.96 billion) while the figure for local one also fell by VND15.8 trillion ($673 million). At the end of last year, the public debt balance, the Governmental debt balance, and the country’s foreign debt occupied 38 percent, 34.7 percent, and 36.8 percent of the national GDP, respectively.

The total budget revenues of Quarter 1-2023 reached VND494 trillion ($21.1 billion), equal to 30.5 percent of the estimation. This is a rise of 2.2 percent compared to this time last year. Meanwhile, the total budget expenses were at VND363.4 trillion ($15,5 billion), accounting for 17.5 percent of the estimation and an increase of 7.2 percent as opposed to 2022.

The national economy for the rest of the year is forecast to face several challenges from inflation pressure, risks in the finance-banking market, disasters and epidemics, climate change. They, to a large extent, negatively affect the fulfillment of missions for socio-economic growth and finance-budget this year. Therefore, the Finance Ministry has proposed certain solutions to overcome these obstacles.

Firstly, it will continue to administrate the state budget expenses effectively and economically within the amount decided by the National Assembly. Secondly, it will review and cut any regular spendings allocated to ministries and central state agencies but not yet disbursed to budget-using units by June 30, 2023.

As to financial aids to the public and businesses, the Finance Ministry said that the total volume of tax, fee, and land rent exemption, reduction, and extension until the end of 2022 reached VND200.3 trillion ($8.54 billion).

At the same time, by the end of last year, the state budget had supplied VND4.4 trillion ($185.9 million) to 32 areas in the country to support laborers in paying house rent fee in compliance with Decision No.08/2022/QD-TTg, issued by the Prime Minister on March 28, 2022. The national budget has also compensated commercial banks and Vietnam Bank for Social Policies for the gap in credit interest rate of 2 percent with the amount of VND859 billion ($36.6 million).

Empowering large-scale fields via cooperation

The application of the large-scale field model in the Mekong Delta has helped Vietnamese farmers increase produce quality to easily export goods to demanding markets.

Starting in the Mekong Delta provinces of An Giang and Dong Thap in 2009, the model of large-scale field was then formally encouraged nationwide by the Ministry of Agriculture and Rural Development. In this model, there is a close link among the four stakeholders in the supply chain: the Government who introduces suitable policies; scientists who teach appropriate farming techniques; businesses which provide high-quality seeds, fertilizers, and then ensure produce consumption; and farmers who directly grow rice crops on their land.

64-year-old farmer Tu Tan in Thoai Son District of An Giang Province proudly shared that in the winter-spring crop this year, he harvested nearly 60 tonnes of rice on a surface area of 6.5ha. With the price of VND7,000 (US$0.3) per kilo, he earned about VND50 million ($2,100) profit per hectare. He adopted the model of ‘field without footprint’, also known as large-scale fields where most growing steps (land tilling, seed sowing, fertilizer and water spraying, crop harvesting) have been mechanized.

Such a model proves convenient, labor- and cost-effective. Because there are only 1-2 seed types in each field, the chances of plants being infected with pests are lower, leading to less fertilizer use. Thanks to a significant reduction in expenses by 15-20 percent, the profit of farmers increases correspondingly. They will, in turn, invest more in advanced machines like agridrones (unmanned aerial vehicles) to further rise their revenues.

Another advantage of the large-scale field model is a yield increase. Chairman Pham Tan Hao of the Directors Board of Hung Thanh Commercial-Agricultural Cooperative (sited in Long An Province) informed that following a traditional growing method, on 1 hectare of rice field, farmers need 160kg of seeds. The figure drops to 100-120kg in the former model, which means a saving of VND1 million (US$42.6).

Besides, sowing seeds by a machine brings a more equal distance between each plant, resulting in better nutrition absorbance, and thus higher yield, not to mention the fact that these plants can hardly fall even in heavy rain and can better cope with climate change.

Chairman Luu Van Nga of the Directors Board of Hung Phu Agricultural Cooperative (Long An Province) also reported that when following the large-scale field model, the average costs drop by 10 percent while the output reaches 8-10 tonnes of rice per hectare (long-term rice) or 5.5-6 tonnes per hectare (short-term rice), earning an extra profit of VND4 million ($170) a hectare.

The Department of Crop Production also shared that the average-quality rice used to account for 80 percent of the export volume, but now decreases to only 20 percent. The rest belongs to high-quality aromatic rice, mostly coming from large-scale fields.

Deputy Director of Long An Province Department of Agriculture and Rural Development Nguyen Chi Thien commented that the most prominent benefit of this model is business’s guarantee of produce consumption according to contracted prices. This has put the mind of farmers at ease, which accounts for half of the model’s success already.

He added that the reasonable prices for fertilizer and herbicide offered by business partners, along with careful consultation and instruction have also contributed to yield increases. Meanwhile, any farmers in short of capital can ask for a cost advance for machine renting and material purchasing and return them after selling their crops without having to ensure high loan interest rates.

General Director Pham Thai Binh of Trung An Hi-tech Agriculture JSC., which has worked for over 25 years in the industry in Can Tho City, said that large-scale fields have eliminated small-scale production and formed stable, synchronous areas of high-quality crop fields following a fixed growing process to satisfy the demands of foreign markets.

He cited that in 2012, right after the Ministry of Agriculture and Rural Development introduced the large-scale field model on a surface area of 428ha in Co Do District of Can Tho City with his company as a stakeholder, the first batch of 2,000 tonnes of 5-percent broken rice was bought at a price higher than market ones by $70 per tonne, which was quite surprising and exciting.

Following this model, the quality and value of Vietnamese rice have been affirmed and appreciated in international markets. More and more foreign partners have reached domestic agricultural businesses for export orders. From the first 428ha, Trung An Hi-tech Agriculture JSC. has expanded the rice fields to over 10,000ha in various provinces in the Mekong Delta now. All observe the organic growing method under Global GAP standards in order to win the demanding markets like the US, Europe, and Japan.

Minister of Agriculture and Rural Development Le Minh Hoan stated that the large-scale field model is an inevitable trend of modern agriculture when it increasingly applies mechanization in crop planting to have stable output and quality. What is more, this model can address the problem of laborers migrating to urban areas seeking better jobs. Instead, they now can live nearer their hometown when working in produce processing factories and warehouses.

Economic growth to rebound in H2, now ideal time to selectively buy stocks: VinaCapital

With the Government’s initiatives to address disappointing GDP growth in the first quarter and the fact that foreign companies’ orders are likely to increase in the second half of the year, the economy is expected to rebound then, Michael Kokalari, chief economist at investment fund VinaCapital, has said.

In his latest report, he said GDP growth in Viet Nam slowed precipitously in Q1 as consumers in the US and other developed markets cut purchases.

Manufacturing accounted for a quarter of Viet Nam’s GDP, and output contracted slightly in Q1 as against 9 per cent growth a year earlier since most products made in the country were exported to the US and other developed countries.

Viet Nam’s international trade accounted for a higher percentage of its GDP than in any other nation in modern history (excluding city-states like Hong Kong and Singapore), and so weaker demand in the rest of the world weighed fairly heavily on its economy.

“Viet Nam’s exports fell 12 per cent year-on-year in Q1, driven by a 20 per cent drop in exports to the US. Meanwhile, inventories at US retailers and other consumer-facing firms such as Nike and Lululemon are now contracting, which is why we expect FDI factories’ order books to start recovering later this year (inventories’ year-on-year growth looks likely to fall to 0 per cent in H2, which should prompt a resumption of order growth for Viet Nam).

“Finally, domestic consumption continues to grow at a healthy pace and consumer confidence has remained remarkably resilient despite the sharp slowdown in GDP growth.

“In addition, foreign tourist arrivals skyrocketed to over 60 per cent of pre-COVID levels in Q1 despite the fact that Chinese tourists have not yet returned to the country en masse - which is another reason we expect Viet Nam’s economic growth to recover in H2.”

GDP growth slowed from 8 per cent in 2022 to just 3.3 per cent in Q1, prompting the Government to launch several initiatives to boost growth.

The Ministry of Finance has finalized plans to cut the VAT rate from 10 per cent to 8 per cent in H2, equating to a stimulus of around US$1.5 billion for Viet Nam’s $450 billion economy.

The Government will also allow companies and individuals to defer payment of various taxes by three to six months.

Last month the State Bank of Vietnam cut policy rates by 50-100bps, including a 50bp reduction in the refinancing rate to 5.5 per cent, and a 50bp reduction in the maximum interest rates banks are allowed to pay savings deposits of up to 6 months to 5.5 per cent.

The Government also walked back some stricter conditions it introduced in late 2022 on the issuance of corporate bonds, Kokalari said.

It had directed ministries to address various administrative bottlenecks impeding real estate and infrastructure development.

“The Government has taken a series of initiatives to address the country’s slowing growth, the most concrete of which are tax cuts and interest rate cuts, but administrative measures intended to ease bottlenecks impeding real estate development and infrastructure projects could have an even bigger impact on growth in 2023 and beyond.

“The fact that stock markets tend to start climbing in advance of economic rebounds, coupled with the fact that the VN-Index is trading at around a 10-year low valuation, leads us to believe that now could be an ideal time for investors to selectively purchase Vietnamese stocks.”

Interest rates on short-term deposits in Viet Nam had peaked in late-2022, and the policy rate cut last month would create additional downward pressure on those rates.

Bracing for upcoming challenges

Obstacles to economic growth were found as shown by statistics at the end of 2022 and became more serious in the first quarter this year. Currently, most key economic indicators are much poorer than in the same period last year.

The value of textile and garment exports hit rock bottom, while the revenue from seafood exports plummeted by 28% in the first three months of 2023. The export value of shrimp, tra fish, tuna, squids and octopus all saw a simultaneous increase in the previous year, yet they fell throughout this year.

The result of the third inspection (announced on February 3, 2023, in Danang) shows that the European Commission (EC) has yet to lift the yellow card for Vietnam due to continued cases of fishing vessels caught in foreign waters. Without the yellow card, the administrative procedures for Vietnamese products to enter the EU market only took one to three days. However, it takes up to a month to complete now.

Similarly, the export of wood and wood products has experienced a significant decrease and will likely face lots of challenges ahead due to waning consumer demand.

Vietnam’s exports to the EU market have received a substantial boost with tax exemptions for many products in 2023. However, some businesses expressed concerns that the increasing costs may offset the tax reduction benefits and warned that Vietnam might gradually lose the chance to expand its foreign markets.

Moreover, Vietnamese exporters face tough competition from other countries in the target markets. Some have been investigated for tax evasion and anti-dumping practices by large trading partners. It may lead to a gloomy outlook for export growth in the near future.

Difficulties in exports will negatively impact the domestic manufacturing industry and potentially lead to an increase in massive layoffs.

Although the target for export growth in 2023 is lower than that of 2022, it seems hard to achieve. Global trade in 2023 will continue to face lots of difficulties due to geopolitical tensions, increasing competition among major countries, rising inflation, waning consumer demand and tightening monetary policies in many countries. These factors will strongly impact the domestic market and exporting activities of Vietnam.

Vietnamese enterprises could consider implementing the following four solutions to overcome the upcoming challenges.

First, tariff reductions and exemptions will continue to be implemented for various products in the future, according to the free trade agreements (FTAs). Enterprises must proactively seek new markets and exploit the advantages of FTAs. Each FTA has its own advantages, but they all serve as a pathway to success. Vietnamese enterprises should closely work with their partners to choose the most suitable options for their business plans. Managers and expert teams are highly committed to the task.

Second, one of the crucial solutions to support business development and boost exports is to carry out various activities to promote trade.

Third, businesses need to diversify their products. For agricultural products, there is an urgent need to deepen processing, especially processes with high added value, to satisfy customers’ requirements. Enterprises should cooperate in the production chains and improve the quality of the products following VietGAP standards, as well as create a good impression on foreign customers.

Forth, given the development of e-commerce and the digital economy, businesses need to urgently prepare adequate human resources, new business models, finance and digital platforms to ensure efficiency and effectiveness in exporting activities.

Int’l flights, passengers via Noi Bai airport surge during five-day holidays

Noi Bai International Airport in Hanoi has recorded sharp rises in the numbers of international flights and passengers during the holidays of Hung Kings Commemoration Day, National Reunification and International Labour Day from April 29 to May 3.

In total, the airport served nearly 2,700 flights with over 422,000 passengers in the five-day holidays.

The numbers of domestic flights and passengers were equivalent to those in the same period last year while the numbers of international flights and passengers surged 86% and 299%, respectively, data from the airport showed.

A leader of the Noi Bai Airport said that it has deployed aviation security control enhancement measures at Level 1 (the lowest in the three-level scale) from April 29 through May 3 to ensure absolute security and safety for all flights during the holidays.

It has also carried out different solutions during peak hours such as applying IT to estimate the transportation volumes to ready personnel and equipment in service, and increasing coordination with airlines, ground service companies, and police to quickly deal with any circumstances.

As a result, congestion has been avoided while passengers and flights have been served safely, according to the airport authority.

Coffee industry works to improve product value

The coffee industry of Vietnam is working to increase the value of raw coffee exports as low added value still makes up the majority of the product that is shipped overseas.

Vietnam is home to more than 710,000ha of coffee plants, generating 2.8 tonnes of beans per ha and over 1.84 million tonnes in total. The certified area in the Central Highlands, the coffee cultivation centre of the country, topped 184,000ha in 2022, accounting for 28.2% of the region’s total coffee area.

In 2022, Vietnam exported 1.78 million tonnes of coffee worth over 4.06 billion USD, the highest in more than a decade.

However, as raw coffee makes up the majority of export, this commodity’s added value remains modest.

To sustainably develop and raise the value of the coffee industry, the Ministry of Agriculture and Rural Development (MARD) has issued many plans and projects. Among them, a programme on coffee recultivation in the Central Highlands during the 2014 - 2020 period has proved effective as hundreds of thousands of hectares of coffee has been regrown to boost both productivity and quality and, subsequently, farmers’ income.

Another important measure is to form production chains, from developing material supplying zones, purchasing input materials, transferring production techniques, to signing sale contracts.

Aside from new cultivation measures, investment in intensive processing, market expansion, and brand protection are necessary to increase the value of Vietnamese coffee, according to insiders.

The coffee sector is also striving to apply international standards and align national standards accordingly, which is considered a focal task amid intensive economic integration into the world.

Not only foreign businesses but major domestic firms like Vinacafe, An Thai, G7, and Vinh Hiep have also equipped themselves with moden processing technology to produce high-quality products serving domestic consumption and exports.

Bach Thanh Tuan, Vice Chairman of the Vietnam Coffee - Cocoa Association (VICOFA), noted Vietnam, a leading supplier of raw coffee, has exported the commodity to more than 80 countries and territories. Its biggest markets include Germany, Italy, the US, Belgium, Spain, Japan, the Philippines, Russia, China, and the UK.

There remains much room for exports, which can bring home 6 billion USD, or even 10 billion USD, in revenue in the future, he went on.

To improve the Vietnamese coffee’s added value, it is important to continue optimising the free trade agreements with importing countries, step up advertising the brand of high-quality Vietnamese coffee, organise more trade promotion programmes, and provide businesses with further market information, Tuan recommended.

Addressing the opening ceremony of the recent 8th Buon Ma Thuot Coffee Festival, Deputy Prime Minister Tran Luu Quang asked the MARD and localities to push ahead with restructuring agriculture and the coffee sector, developing high-quality and specialty coffee meeting international standards, and increasing the value of the coffee production chain, especially to improve profit for local farmers.

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