Many manufacturers in HCMC are facing bankruptcy due to a sharp plunge in revenues caused by a lack of new orders, while steeling themselves to continue paying salaries.
Thu Duc City now has 97 enterprises scaling down production due to fewer orders, said Nguyen Dinh Cuong, vice chair of the Labor Union of Thu Duc. Most of these businesses are active in labor-intensive industries like footwear, textile and wood processing.
Weaker growth in orders would make it difficult for those businesses to resume operations at the end of the year, including those who have steadily expanded over the years. To date, some of these businesses have only reached half of the full-year plan, which is even lower than during the social distancing period in 2021.
Earlier, Le Van Thinh, director of the HCMC Department of Labor, Invalids and Social Affairs, said 27 companies in the city had reduced their staffing by 2,860 workers due to technology restructuring and economic problems.
Ministry proposes amending rice import regulations
The Ministry of Industry and Trade (MOIT) has written to the prime minister proposing amending Decree 107/2018/ND-CP on rice exports.
The ministry said Vietnam usually exports 6-6.5 million tons of rice annually while statistics from the General Department of Vietnam Customs showed that the nation imported one million tons of rice last year for food and beverage production, increasingly competing with domestic products and affecting local farmers.
The draft on amending Decree 107 brings new regulations on rice import management. The ministry will join hands with the Ministry of Agricultural and Rural Development (MARD) and the Ministry of Finance to manage rice imports.
They were also tasked with reporting the results of the import management measures to the PM.
Meanwhile, the General Department of Vietnam Customs will send updates on rice imports to the MOIT monthly, quarterly and yearly or as required by the ministry.
The draft aims to enhance the legal framework and eliminate the flaws of Decree 107, requiring rice merchants to report on rice import agreements and the amount of rice in stock every quarter and year.
On the export side, the MARD said Vietnam would be able to ship some 6.8-7 million tons of rice this year if rice exports in November and December remain over 400,000 tons per month.
Meanwhile, the Vietnam Food Association reported that Vietnamese rice prices have risen by US$30 per ton on average since India limited rice exports. Vietnam’s 5% broken rice now sells for US$428 per ton, and Vietnam’s 5% broken rice is for US$408 per ton.
In the short term, Vietnam’s rice prices would continue to stay high thanks to a strong demand fueled by economic and political turbulence, market observers said, adding that exporters should grasp the opportunity to expand to new markets.
Viet Nam imports nearly 145,000 cars in first 11 months
As of mid-November, Viet Nam spent about US$ 3.24 billion on importing 144,726 cars of all types, up 6.4 percent in value and 5.9 percent in number in comparison with the same period last year, according to the General Department of Viet Nam Customs.
In the first half of November, Viet Nam imported 5,872 cars for a total value of US$ 305.29 million, including 14,313 9-seat cars valued nearly US$266 million.
Indonesia, Thailand and China were the biggest car exporters to Viet Nam. Specifically, Viet Nam bought 54,356 cars from Indonesia with a total value of US$ 792.6 million, 50,333 others from Thailand (US$ 993 million) and 15,744 cars from China (US$ 649.8 million), which altogether accounted for 93.46 percent of the total cars imported to Viet Nam.
Previously, a total of 201,840 units of automobiles were sold in the Vietnamese market in the first half of this year, up 34 percent on year. The sales of domestically assembled automobiles surged 37 percent to 116,066 units, while those of imported ones rose 30 percent on year to 85,774.
In 2021, 304,149 units of automobiles were sold in Viet Nam, up 3percent from 2020.
Rising credit demand puts pressure on Vietnam's economy
Increased demand for credit in the economy, at a time when banks have their credit quota stretched to the limit, is putting pressure on companies struggling to raise new sources of capital.
In recent months, the fact that the State Bank of Vietnam (SBV) has increased its official interest rates has led to a rise in commercial bank interest rates.
A bank’s representative in Hanoi said the move is necessary to ensure their liquidity and retain customers. At present, some banks offer the average interest rates in Hanoi at 12-14% per annum or even 16% per 12-month deposit. But even with such high-interest rates, many businesses still struggle to access credit.
The Ho Chi Minh City Real Estate Association (HoREA) has recently suggested that the SBV expand banks' credit quota by 1-2 percentage points.
Not only real estate firms but also those in the manufacturing sectors are facing a shortage in working capital and waiting for the SBV to expand the credit quota for banks.
Vice Chairwoman of the Hanoi Association of Women-Owned Small and Medium Enterprises (HAWA SME) Nguyen Thu Ha said the need for capital is set to increase in the year-end period due to rising orders and higher consumer demand.
Meanwhile, Vice Chairman of the Hanoi Supporting Industries Business Association Nguyen Van said rising operation costs and prices of input materials are putting pressure on local businesses to remain profitable.
Van called for banks to provide more support for businesses regarding preferential lending rates and restructuring debt payment schedules, saying these moves are necessary for them to maintain operations.
From the banks’ perspective, General Secretary of the Vietnam Banks Association Nguyen Quoc Hung said the banking sector is in distress.
According to experts, the SBV could consider raising the credit growth target to 15-16% instead of the current 14% to cope with the growing demand for credit during the year-end period.
In addition, banks with higher credit room could inject more capital into the economy and help improve the financial situation of companies, but the main issue should be to ensure that credit is channeled to the right sector to maximize efficiency.
Building tools to "screen" FDI projects with potential risks
Mr Dau Anh Tuan, Vice Secretary-General of the Viet Nam Chamber of Commerce and Industry, commented that after 35 years since the 1987 Law on Foreign Investment was promulgated, Viet Nam had become an attractive investment destination for foreign investors.
The production and business activities of enterprises in the FDI sector also maked an important contribution to creating jobs and promoting international trade, cluster linkages, value chain linkages and labor productivity.
The export value of the foreign investment sector (FDI) was equivalent to about 72 percent of the total export turnover of Viet Nam, contributing to Viet Nam's trade surplus in recent years.
Although FDI inflows are one of the important resources for economic development, the operation of foreign investment projects has arisen inadequacies. For example, according to the tax agency's report, there are some FDI enterprises, which transfer prices and evade taxes in Viet Nam.
Additionally, some businesses have not complied well with the environmental regulations of Viet Nam's law, creating many consequences for society. Also, the state of labor relations in some enterprises is not good.
In recent years, the legal framework has been adjusted to create more favorable conditions for investment activities in general and foreign investment in particular, such as the Law on Investment revised in 2020 and many other specialized laws.
However, there is urgent need for a "filter" in attracting FDI to attract quality FDI projects, responsible business projects. To gradually realize this, with the support of UNDP, VCCI has developed a screening tool for foreign direct investment projects.
The tool includes mandatory assessments of whether the project complies with investment laws in Viet Nam; mandatory assessments of potential economic, social and environmental risks; and criteria based on international best practices and responsible business practices.
Vietnam attends Francophonie Economic Forum in Tunisia
A delegation of Vietnam attended the Francophonie Economic Forum (FEF) in Djerba, Tunisia, on November 20-21.
Themed “For a shared growth in the Francophone space”, the forum was organised by the Foreign Investment Promotion Agency (FIPA-Tunisia), in partnership with the Tunisian Union of Industry, Trade and Handicrafts (UTICA) and the Chamber of Commerce and Industry of Tunisia (CCIT), with a view to boosting economic cooperation among the French-speaking countries in many fields, including investment and digitalisation.
General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) Tran Thi Lan Anh said that Vietnam has to date traded with 44 out of the 54 official members of the OIF. The total trade turnover between Vietnam and French-speaking countries reached US$33 billion last year, up 36.5% year-on-year, and $24 billion in the first eight months of this year.
Banks race to attract low-cost capital sources
The race to lure deposits among banks is becoming fiercer as more customers are selected medium- and long-term savings to get higher interest rates.
Deposits at banks are mainly from customers’ payment accounts. Previously, due to low interest rates on medium- and long-term deposits, a number of customers did not pay much attention to transferring idle money in their payment accounts to term deposit accounts. Banks therefore benefited significantly from the low-cost capital source.
VPBank last week continually increased interest rates for deposits under 10 billion VND (402,536 USD) with terms of 12, 24 and 36 months by 0.2-0.4 percentage point per year. The highest savings rate at VPBank is currently 9% per year, applied to online 18-month deposits.
VietinBank also raised the highest deposit interest rate to 8.2% per year for online deposits from 12 months to under 36 months. With a rate hike of 0.8 percentage point per year for online deposits against those at the counter, VietinBank is becoming the bank to offer the highest interest rate among State-owned banks.
Notably, though SCB had listed the highest interest rate in the banking system, it last week continued to sharply increase interest rates to approach the 10% threshold per year for terms of more than six months. The highest deposit interest rate at this bank currently increased to 9.75% from 9.3% per year for 13, 15, 18, 24 and 36 month deposits. Interest rates for terms from 7 to 12 months range from 9.4-9.65% per year and 9.35% per year for six-month term.
According to industry insiders, demand deposits, or current account savings account (CASA), of many banks has started to decline since the second quarter of 2022. They said the sharp interest rate hike for medium- and long-term savings has caused a large amount of demand deposits in current accounts to shift to savings accounts to enjoy higher interest rates.
Q3 2022 financial statements of banks showed the average CASA ratio of 27 listed banks by the end of the third quarter of 2022 decreased by 1.6% to 16% against the beginning of the year. Eighteen out of 27 listed banks recorded a decrease in demand deposits.
According to experts, the high CASA ratio will create a premise for banks to improve their net interest margin (NIM) while keeping the lending rates at competitive levels in the market.
High CASA ratio is considered a remarkable achievement for banks. For example, MSB recorded NIM of 4.34% in the first nine months of the year, the bank’s most effective rate in recent years. The bank’s NIM growth has partly come from effective CASA attraction strategies in recent times such as promoting digitalisation, launching various utility products and services.
Petrol prices drop after four consecutive hikes
The retail prices of petrol and oil dropped in the latest adjustment by the Ministries of Industry and Trade, and Finance on November 21 after four consecutive hikes.
The price of RON 95-III bio-fuel went down 80 VND per litre to 23,780 VND (0.96 USD) per litre from 3pm on November 21.
Meanwhile, the retail price of E5 RON 92 decreased by 40 VND to 22,670 VND per litre.
Diesel 0.05S is now sold at 24,800 VND per litre, down 180 VND.
The two ministries also decided to extract 250 VND per litre from E5 RON 92 price, 200 VND from RON 95-III price and 300 VND per litre from diesel price for the petrol price stabilisation fund.
Vietnam attends sixth China-South Asia Expo
Vietnamese businesses from 12 provinces and cities attended the sixth China-South Asia Expo and the 26th China Kunming Import and Export Fair, held in Kunming of Yunnan province, China, from November 19 to 22.
Most notably, the fair introduced Vietnam – China tea cakes – a new product between China’s Pu'erSunwah Tea Co Ltd (SunwahPu'er) and Vietnamese firm Tay Bac Tea and Special Food Company Limited. The cakes received great acclaim from officials, associations, businesses, and local residents of Yunnan province visiting the fair.
MoF continues to consider adjusting costs of petrol: expert
The Ministry of Finance (MoF) is taking steps to stabilise domestic gasoline prices and supply while removing difficulties for petroleum traders, said Nguyễn Tiến Minh Director of the MoF’s Price Management Department.
The Fuel Price Stabilisation Fund has been used consistently for the purpose of stabilising petrol prices in line with the law, according to the department. The fund has been effectively used to stabilise petrol prices to help curb inflation and stabilise the macro economy.
From April 1, 2022 to the end of December 31, 2022, there will be a 50 per cent cut in the environmental protection tax on gasoline (excluding ethanol), diesel fuel, mazut, lubricants and grease and a 70 per cent cut in the environmental protection tax on kerosene.
The Government has also halved the most-favored-nation (MFN) import tariff on unleaded gasoline to 10 per cent from 20 per cent.
In the time to come, under the Prime Minister’s Official Dispatch 1085/CT-TTg dated November 11, 2022, the Ministry of Finance will work with the Ministry of Trade and Industry and key petrol businesses to review and calculate petroleum-related expenses and consider price adjustments in accordance with market developments.
The Finance Ministry has collected data from petroleum traders and worked with the Ministry of Trade and Industry to consider price adjustments in accordance with regulations.
The Finance Ministry and relevant ministries and bodies will be proactive and strictly implement solutions enacted under the Prime Minister’s Official Dispatch 1085/CT-TTg to ensure that there will be no gasoline shortages nor disruption of supplies, at any cost, so as to meet the demands of the whole society, according to Minh.
The Finance Ministry has also asked key petrol traders to be more proactive in seeking supply sources of fuel and negotiating with foreign sellers to get the best prices. In addition, the Finance Ministry will continue to use the fund in a flexible manner in relation to global fuel price developments.
Sharp October rise in Vietnamese fruit and vegetable exports to China
Vietnam’s fruit and vegetable export value to China in October reached USD152 million, up 44 percent on-year. This was the first month Vietnam saw positive growth in fruit and vegetable export value to China so far this year.
However, fruit and vegetable exports to China between January and October this year posted an on-year decline of 26 percent to USD1.2 billion.
Vietnam Fruit and Vegetable Association General Secretary Dang Phuc Nguyen said China’s zero-Covid policies had badly impacted fruit and vegetable exports to the country. Recently, many Vietnamese agricultural products, including durians, bananas, sweet potatoes and bird nests have been allowed to enter China.
In the first ten months of this year, Vietnam’s fruit and vegetable exports to the world market reached USD2.75 billion, down 8 percent year-on-year, with USD219 million worth of produce shipped to the US, USD153 million to Thailand and USD141 million to Japan.
PNE AG and Binh Dinh cooperate to develop $4.6 billion wind farm
Binh Dinh People’s Committee and PNE AG – a multinational wind power group – signed an agreement to develop a $4.6 billion offshore wind farm on November 21.
In September 2020, leaders of the company met with the leadership of Binh Dinh People’s Committee to share this plan. However, at the time, the investor just proposed an investment of $1.3-1.5 billion and a total area of 2,200-2,500 hectares.
Following this, in October 2020, the province approved in principle for PNE AG to survey a sea area in Phu Cat and Phu My districts. At the time, the German company proposed building a 2GW project in three phases, with 700MW by 2025, then another 700MW by 2026, and the last 600MW in 2027.
VinFast to export batch of VF8 electric vehicles
VinFast, the electric vehicles (EV) manufacturer subsidiary of the conglomerate Vin Group, will export the first batch of VF8 electric vehicles to the US, Canada, and EU on November 25.
VinFast will organise a ceremony to celebrate the event at MCP Port of Dinh Vu – Cat Hai Economic Zone in Haiphong. The electric vehicles are expected to be handed over to clients in December.
The company also has plans to open more than 50 VinFast Stores across Germany, France, and the Netherlands.
In the framework of Los Angeles Auto Show 2022, VinFast struck a deal for 2,500 VF8 and VF9 with Autonomy – the US’s largest subscription service company.
Pizza 4P's to receive $10 million investment from Cool Japan Fund
Cool Japan Fund (CJF) has made the decision to invest roughly $10 million into 4P's Holdings Pte., Ltd., which runs the chain of Japanese-Italian pizza restaurants 4P's. With a population of around 100 million, Vietnam is a lucrative market for Japanese companies. With an average age of just 31, Vietnam is also a very young nation with steady economic growth. Furthermore, Vietnam and Japan have friendly relations, thus it is anticipated that the popularity and dissemination of Japanese cuisine will increase in the Vietnamese market.
Vietnam faces challenges in organic agriculture development
Vietnamese organic agricultural products are now present in 180 countries around the world, including large and fastidious markets such as the European Union, the United States, Japan, and the Republic of Korea.
The Ministry of Agriculture and Rural Development held a forum in Ho Chi Minh City on November 21 to discuss the development of organic agriculture according to value chains.
Vietnam had about 174,000ha of organic farming land in 2020, an increase of 47% compared to 2016.
Most localities across the country have participated in organic agricultural production or are converting to organic farming, with the participation of more and more individuals and organisations.
The whole country has seen many groups of organic products certified according to production value chains in the fields of cultivation, husbandry, fisheries and forestry. There are more than 17,000 organic agricultural production establishments, about 550 organic agriculture processors, 60 exporters and 40 importers in the field.
According to the Department of Agricultural Product Processing and Market Development under the Ministry of Agriculture and Rural Development, the total annual domestic consumption of organic agricultural products is about 500 billion VND, with 80% of the consumption recorded in Hanoi and Ho Chi Minh City.
The export turnover of Vietnamese organic agricultural products has reached over 335 million USD per year to 180 markets around the world. The organic products shipped being abroad include tea, shrimp, rice, cashew nuts, pepper, cinnamon, anise, essential oils, spices, and others.
Textile and garment exports aim to reach over 44 billion USD
In the second half of 2022, Vietnam’s textile and garment industry is facing many difficulties in terms of prices and order decline, seriously affecting operation maintenance and job security for workers. With the flexibility in deploying solutions to adapt to the market and boost production, businesses have gradually overcome difficulties and are determined to strive towards the goal of reaching an export revenue of more than 44 billion USD.
In the past 10 months, the total export revenue of the textile and garment industry reached about 38 billion USD, an average of 3.8 billion USD per month. With inflation and high inventories, the main export market of Vietnam's textile and garment products is saturated, and businesses are trying to prevent a deep decline, trying to keep a revenue of more than 6 billion USD in the last two months of the year.
According to the General Director of Vietnam National Textile and Garment Group (Vinatex) Cao Huu Hieu, the textile and garment industry has been facing both opportunities and challenges during the past ten months. Market instability due to the COVID-19 epidemic and the Russia-Ukraine conflict almost did not affect Vinatex’s production and business activities in the first six months of the year, production and business results were very favourable for businesses. Revenue and profit exceeded the whole year plan.
Vice President and General Secretary of the Vietnam Textile and Apparel Association (VITAS) Truong Van Cam, said that the total export revenue of Vietnam’s textiles and garments in the 10 months of 2022, still reached about 38 billion USD.
However, from September and October, export volume decreased compared to previous months, due to difficulties in orders, and high inventory; in particular, in the US and EU, the main export markets of Vietnam's textile and garment, the unit price decreased by about 30%, the supply progress of raw materials was slow due to China's implementation of the Zero-Covid policy, causing a logistics chain crisis, labour fluctuations, etc.
Although businesses in the industry find all solutions to boost production and keep exports, due to the Russia-Ukraine conflict, which has a strong impact on energy prices, the market is located near and in the war zone, which cannot receive exported goods. There is also another paradoxical problem from the beginning of the year to July, customers ordered a very large amount of goods but fell at the right time, when developed countries did not achieve the desired economic growth, high inflation made people tighten spending and reduced consumer demand.
According to experts, the textile and garment market is forecasted to be quiet until the end of the fourth quarter of 2022 and lasts until 2023. Besides, the financial-monetary market also has a negative influence on the operation, production and business of enterprises.
Many wind power projects in Quang Tri Province behind schedule
The Department of Industry and Trade of Quang Tri Province, on November 22, said that there were 12 wind power projects in the province with a total capacity of 454MW. However, only two projects had completed construction and installation, while the remaining projects were behind schedule.
Accordingly, in Quang Tri province, there are currently 12 wind power projects underway with a total capacity of 454 MW. However, only two projects, Huong Linh No.3 and Huong Linh No.4 wind power plants, with a capacity of 30 MW per plant, have completed construction and installation, and are waiting for the power generation price bracket of the competent authority to deploy connecting to the national grid, testing, adjusting, and preparing to put into commercial operation.
The remaining ten wind power plant projects, including Tan Hop, Hai Anh, Huong Phung No.1, LIG Huong Hoa No.1, TNC Quang Tri No.1, TNC Quang Tri No.2, LIG Huong Hoa No.2, Huong Linh No.5, Huong Hiep No.2, and Huong Hiep No.3, are all behind schedule.
Most projects are behind schedule because of adverse weather factors, the Covid-19 pandemic, and site clearance work. There is also another reason that comes from the Government's policy mechanism when there is no transition mechanism to encourage the development of wind power projects after October 31, 2021, resulting in investors being unable to sign credit contracts to purchase equipment and implement projects in moderation due to the lack of mechanisms and policies for the development of wind power projects, including the power buying price mechanism of the Vietnam Electricity.
Viet Nam’s major air traffic markets predicted to rebound in 2023: VNDIRECT
The international aviation sector is predicted to grow strongly in 2023, motivated by the recovery in the number of international tourists, according to analysts.
In its recent research, securities firm VNDIRECT held that most countries had removed restrictions on tourists, and this would boost both outbound and inbound travel demand.
It noted that international arrival throughput jumped 35 times year on year in the third quarter of 2022, recovering to 49.8 per cent of pre-pandemic levels.
In the base case scenario, the firm expected China to gradually relax travel restrictions from the second quarter of 2023. Thus, the international inflow recovery rate might reach 84 per cent in the second quarter of 2023 and 100 per cent in the fourth quarter to help the total international volume grow 195 per cent year on year in 2023.
Having high revenue exposure to international air travel, airport retailers would be the biggest beneficiaries of the recovery of international arrivals.
For airports, VNDIRECT held that the growth was crystal clear but might be dented from 2024 onwards due to capacity constraints. The recovery prospect of airlines would be overshadowed by high fuel prices, exchange rate volatility, and rising interest rates.
VNDIRECT experts also gave forecasts on the recovery of major air traffic markets of Viet Nam.
It noted that Viet Nam's major air traffic markets in Southeast Asia including Singapore, Thailand and Malaysia had all fully reopened and developed bilateral tourism with the country. It expected international visits from SEA to recover to the pre-pandemic level by the first quarter of 2023.
VNDIRECT also predicted that international arrivals from Europe would recover to the pre-pandemic level by the second quarter of 2023, and those from Russia by the third quarter of 2023.
Pharmaceutical firms report positive results in Q3
Pharmaceutical enterprises have reported strong business results in the third quarter of 2022, with some even achieving record-high profits.
According to estimates of KIS Vietnam Securities Joint Stock Company, the pharmaceutical industry announced revenue of VND10.9 trillion in Q3, up 12.7 per cent over the same period last year and up 2.3 per cent compared to the previous quarter.
Profit after tax reached VND827 billion, up 29.8 per cent over the same period last year and up 13.1 per cent from the previous quarter. The current top five companies in the industry are Vimedimex Medicine and Pharmaceutical Joint Stock Company (VMD), Vietnam Pharmaceutical Corporation - Joint Stock Company (DVN), Hau Giang Pharmaceutical Joint Stock Company (DHG), Codupha Central Pharmaceutical Joint Stock Company (CDP) and TRAPHACO Joint Stock Company (TRA), accounting for more than 52 per cent of total industry revenue.
In the third quarter of 2022, TRAPHACO’s profit after tax increased by 8.5 per cent over the same period last year, to nearly VND77 billion. In the first nine months of 2022, TRAPHACO recorded a net revenue of VND1.8 trillion, up 14 per cent over the same period last year. Profit after tax of the enterprise reached VND251 billion dong, up 28 per cent over the same period last year. After three quarters, Traphaco has completed 77.5 per cent of the revenue plan and 87.8 per cent of the profit plan.
Ha Tay Pharmaceutical Joint Stock Company (DHT) recorded net revenue of more than VND491.5 billion in the third quarter of 2022, up 51 per cent over the same period in 2021; gross profit was nearly VND51 billion, up 94 per cent over the same period last year. Profit after tax was 2.5 times higher than in the same period last year, reaching more than VND23 billion.
Pharbaco Central Pharmaceutical JSC No 1 (PBC) reported a profit after tax of nearly VND25 billion, 3.5 times higher than the same period in 2021. Accumulated in the first nine months of 2022, net revenue increased 13 per cent total to over VND750 billion and gross profit was over VND155 billion, up 12 per cent.
Imexpharm Pharmaceutical Joint Stock Company (IMP) reported Q3 revenue up by 63 per cent over the same period last year, reaching nearly VND418 billion and gross profit increased by 93 per cent to more than VND172 billion. Profit before tax was more than VND72 billion, up to 89 per cent and profit after tax also increased by 78 per cent, reaching nearly VND55.8 billion.
Pharmedic Pharmaceutical Pharmaceutical Joint Stock Company (PMC) announced extraordinary results. The company's third-quarter revenue reached VND121.6 billion, up 2.6 times over the same period in 2021.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes