Despite sluggish performance driven by a fall in steel prices, experts are optimistic about the steel industry’s recovery in 2024 as the Government's policies and the revised Land Law are put in place to support the realty market and the construction industry.

According to the Vietnam Steel Association (VSA), steel manufacturing output in September totaled nearly 2.34 million tonnes, up 2.41% month-on-month and down 4.2% year-on-year. Steel consumption was nearly 2.2 million tonnes, increasing 4.69% month-on-month, and 9.4% year-on-year.

The results were spurred by the Government's policies to remove bottlenecks and bolster economic growth from January – September, including those accelerating the disbursement of public capital for transport infrastructure development.

With recovery in demand, steel enterprises have recorded sound production results. Consumption of construction steel, hot-rolled coil steel and steel billets of Hoa Phat Group reached 596,000 tonnes in September, rising 7% against the previous month. Meanwhile, Vietnam Steel Corporation sold 268,000 tonnes of steel in September, the highest amount recorded since the outset of this year.

However, the VSA said although public investment and the realty market are heating up, which will boost steel demand for the remainder of the year, it is not until Q1 of 2024 that the steel market will see strong recovery.

Vietnam’s steel industry has been in a downward spiral, with steel prices falling 19 times since the start of 2023. Prices have been hovering around 13.5 million VND (548.56 USD) per tonne, due to gloomy real estate market, slow public investment disbursement, and fierce competition from China.

According to the steel industry's specialist Nguyen Van Sua, a slump in the realty market since the end of 2022 has driven steel demand down, while steel products imported from China at cheaper prices have created pressure on domestic steel prices.

In a bid to stabilise steel prices, it is necessary to accelerate the implementation of real estate and public investment projects, Sua said, adding that when the realty market becomes more vibrant, the steel market will heat up.

VNDirect Securities Corporation said that the steel industry will boom in 2024. The adoption of the amended Land Law will help remove financial bottlenecks for house buyers, throwing a charge into the real estate market.

Meanwhile, Director of Mercantile Exchange of Vietnam Pham Quang Anh believed that concerted efforts of the Government to promote the disbursement of public capital will stimulate demand and step up domestic business and production activities.

With robust signs from the realty and construction sectors, the steel market will recover soon, he added.

Việt Nam looks to develop, maximise modern seaports 

Việt Nam plans to develop a modern seaport system in the near future, but the question remains on how to optimise the facilities.

There are 286 terminals with over 96km of quays in total nationwide at present, capable of handling over 706 million tonnes of cargo. Among them, the seaport complexes in northern Hải Phòng City and HCM City are among the world’s 50 biggest container ports.

Deputy Minister of Transport Nguyễn Xuân Sang said that under the general plan for developing Việt Nam’s seaport system for 2021-30 with a vision to 2050, two special seaport complexes, Lạch Huyện in Hải Phòng and Cái Mép - Thị Vải in southern Bà Rịa - Vũng Tàu Province, will be developed to serve international vessels.

Lạch Huyện is currently the deepest-water seaport in the northern region, covering 57ha in total with 750m of main quays. From this port, cargo can be transported directly to the US and Europe without having to transit regional ports like Singapore and Hong Kong, thus considerably reducing logistics expenses and promoting the competitiveness of Vietnamese exports.

Meanwhile, the Cái Mép - Thị Vải complex was chosen to become an international transshipment port as it is one of the 23 facilities worldwide capable of handling vessels with deadweight tonnage (DWT) of up to 250,000. It is also among the world’s 50 seaports handling the biggest volumes of containers. It accounts for over 16 per cent of the total cargo throughput at seaports across the country, 35 per cent of the container cargo volume nationwide, and 50 per cent of the container cargo volume in the south.

The Ministry of Transport (MoT) will consider suitable policies to develop international transshipment ports in Vân Phong of the central province of Khánh Hòa. Besides, it assesses the Trần Đề Terminal in Sóc Trăng Province as potential for becoming a special seaport to serve as the gateway port of the Mekong Delta.

Meanwhile, though the soon-to-be-built Cần Thơ International Transshipment Port hasn’t been included in the general plan, HCM City is proposing the early construction of this facility and has received support from the MoT.

According to the MoT’s Việt Nam Maritime Administration, by 2030, the seaport system in Việt Nam will be developed to handle 1.14 - 1.42 billion tonnes of cargo, including 38 - 47 million TEUs (twenty-foot equivalent units) of container goods, and 10.1 - 10.3 million passengers. It will be developed on par with those in the region and the world by 2050.

To this end, about VNĐ313 trillion (US$12.7 billion) is needed to invest in the seaports providing goods loading services alone by 2030. The funding will come mainly from non-state budget sources, business investment, and other legal sources.

Deputy Minister Sang said attracting investment to seaports is not a worrying issue because over the past years, state investment in this field has accounted for just 16 - 17 per cent, with the rest coming from the private sector. Many seaport projects have garnered attention from large domestic and foreign investors.

The problem now is how to maximise the “super” ports that are about to come into being, he noted.

Trần Khánh Hoàng, Vice Chairman of the Vietnam Seaports Association, considers the development of high-quality seaport infrastructure and the effective exploitation of the facilities as the prerequisite for successfully building a marine economy development strategy, especially for exporting countries like Việt Nam.

To guarantee effectiveness, authorities and businesses should be prudent during investment consideration, understand cargo transportation demand, and detail investment roadmaps to avoid infrastructure redundancy, unnecessary competition, and resource scattering that may lead to increased expenses and financial risks, he suggested.

Pointing out weaknesses that hamper Vietnamese seaports from attracting large shipping companies, experts said quays of seaports aren't linked, making it hard for cargo from small vessels to be transferred onto larger ones. The country also lacks on-site specialised examination forces, a logistics ecosystem, an inter-regional and multi-modal transport system. Logistics costs are still high, and the clearance duration is long.

If major ports are built, and those problems remain unsolved, investment effectiveness will be very low, he added.

Minister of Transport Nguyễn Văn Thắng has asked the Maritime Administration to quickly tackle those bottlenecks and build a medium-term capital allocation plan for 2026-30. This will help to develop transport infrastructure facilities connecting the areas housing major seaports in order to elevate the stature of Vietnamese ports in the near future. 

Ministry puts forward mechanism enabling direct renewable energy purchase

The Ministry of Industry and Trade has proposed a mechanism under which large buyers can purchase electricity from renewable energy producers through direct power purchase agreements (DPPA).

The ministry stated that the mechanism has three key objectives.

Firstly, it aims to cater to the growing demand for clean energy from large buyers. Secondly, it seeks to incentivise investments in the sector. Lastly, it strives to create a more competitive electricity market in Việt Nam.

Under DPPA, the producers who sell electricity to buyers through the national grid are required to issue some documents beforehand, which elaborate on the calculation of electricity prices and other related fees.

They are also required to have a generation capacity of 10MW and above, which is the threshold for entrance to the electricity market. On top of that, their buyers must use the electricity for production purposes at a voltage level of 22kV and above.

Meanwhile, for the producers who engage in electricity sales through a separate grid, a different procedure would apply, which has been fully specified in relevant legal documents. The same goes for their buyers.

It is worth noting that the Vietnam Electricity Group, the bodies in charge of operating power grids, and electricity retailers also fall into the scope of the Regulations on DPPA.

The regulations also lay down three rules governing the power deals among electricity producers, buyers, and retailers.

Under the first rule, producers who are connected to the national grid are allowed to sell electricity on the spot market. The second rule states that buyers who purchase electricity from retailers will do so at predetermined prices.

The last rule applies to forward contracts between producers and buyers. It states that both parties have to settle the price difference between the spot market price and the contractual price for a specific quantity of electricity in every period.

In May 2022, the ministry conducted a survey to gauge renewable energy producers' stance on the mechanism. Among 95 wind and solar farms of 30MW and above being surveyed, 67 responded.

Twenty four respondents, with a total capacity of 1,173MW, expressed a strong desire to participate in a DPPA pilot programme; 17 respondents, totalling 2,863MW, said they were weighing the criteria for DPPA participation and evaluating the feasibility of striking a contract with large buyers.

The remaining 26 respondents did not express any interest in taking part in a DPPA pilot programme.

In another survey of 41 large electricity buyers, 24 responded with a yes to the question of whether they desire to enter into a DPPA. Their total demand is estimated at 1,125MW. 

Mechanical industry needs State supports for market development

Domestic mechanical enterprises have proposed that the State strengthen mechanisms and policies on developing the market for the mechanical industry.

Lê Văn Tuấn, general director of the Việt Nam Construction and Machinery Installation Corp (Lilama) and vice chairman of Vietnam Association of Mechanical Industry (VAMI), said the domestic mechanical industry has recently lacked a fundamental factor being the market. There must be a market to get jobs and innovation. The market factor greatly determines the development of the mechanical industry.

To have a market for the mechanical industry, Tuấn has suggested that the State needs to have a separate mechanism for the industry. Specifically, policies to encourage the use of domestically-made mechanical products. Việt Nam imports only products that are not able to be produced at home. That will help the domestic mechanical industry have a market for development.

Many businesses have proposed that it is necessary to create good conditions for businesses in terms of finance, technology, development of human resources, trade promotion, and connection between supply and demand.

Deputy Minister of Industry and Trade Đỗ Thắng Hải said that the mechanical sector is one of the industries acting as a driving force for economic growth.

The ministry with State management responsibility for the mechanical industry has proposed that the Government promulgate many important policies and strategies to develop the industry.

It has also synchronously implemented many measures to support domestic production and business, diversify supply sources, enhance trade promotion and expand markets.

At the same time, it has coordinated with ministries, branches and localities to support mechanical enterprises in responding to trade barriers and trade defence measures to develop the domestic mechanical industry.

Đào Phan Long, former VAMI chairman, said it is forecast that the mechanical industry will continue to face difficulties, including reduced market demand due to lower consumption in the unstable international political situation.

Additionally, the devaluation of many strong currencies has led to price increases of raw materials and services, reducing production. 

Đinh Hồng Quân, standing vice chairman of the Association of Mechanical Enterprises of Bắc Giang Province, said that Bắc Giang's mechanical industry has manufactured advanced equipment in many plants such as hydropower, wind power and garbage incinerators. However, most businesses are small scale and lack connection.

Therefore, his association recommends that the ministry creates favourable conditions for the businesses to participate in trade promotion programmes. Along with that, the State should have a policy to require FDI enterprises to increase the localisation rate for mechanical products.

Trương Thị Chí Bình, vice chairwoman and general secretary of the Vietnam Supporting Industry Association, said that mechanical products are very diverse, so Vietnamese trade counsellors abroad need to provide more information about the market and customers for local enterprises. This is also an opportunity for domestic mechanical enterprises to improve production ability.

Vietnamese mechanical enterprises have never faced difficulties as they do now; they do not have consumption because domestic public investment is extremely stagnant. 

Mechanical enterprises do not enjoy any incentives in terms of loans, land lease or export tax, while the mechanical industry needs large and long-term capital investment, and large factories.

Therefore, VAMI would propose to adjust the mechanical development strategy for the new development period and develop key mechanical products. The association also suggests the State issue mechanisms and policies that the mechanical industry can provide services, machinery and equipment for key national projects.

Besides, it will strengthen the connection among businesses in the association to have proposals on mechanisms and policies and to remove difficulties for them.

VAMI will also focus on proposing to the Government mechanisms and policies to increase localisation in products for projects in fields such as wind power, gas power, railway, airports and seaports, and agricultural machines.

The association will propose a localisation roadmap with the participation of domestic mechanical enterprises to help them improve their capacity, creating momentum for exports.

Meanwhile, the ministry requests VAMI to further strengthen coordination with the Government and localities in building and completing important strategies and policies to develop the industry.

They include to adjust the Vietnam Mechanical Industry Development Strategy; preferential policies on taxes, land and credit for mechanical enterprises; and policies for market development and industry localisation. 

In addition, VAMI needs to coordinate with the Government to build a mechanism to develop and attract high-quality human resources for the mechanical industry; and promote cooperation between the businesses and vocational training facilities.

The enterprises should also continue to strengthen information connection among them to avoid overlapping investments and unfair competition.

According to VASI, the domestic mechanical market has seen orders decrease by about 20 per cent, while some businesses see reduction by 30 per cent to 40 per cent.

In recent years, the domestic mechanical industry has been heavily affected by the global COVID-19 pandemic, so the market has reduced consumption, while the industry faces increased raw material prices and supply chain disruption.

The US-China trade war and the prolonged Russia-Ukraine conflict have also increased difficulties for the businesses. 

Many businesses are struggling to survive, so they could not access new technology and pay attention to digital transformation.

The Government has issued supports in technological innovation, capital, supporting industry development, import tax exemption and reduction, but many domestic enterprises, especially mechanical businesses, still have difficulty accessing them. 

Restructuring of State budget gains positive results

The restructuring of the State budget has achieved positive results after three years of implementing the National Financial Plan and the Public Debt Repayment Plan for the 2021-25 period, the Government said in a recent report.

Specifically, the total State budget revenue in the past three years is estimated at VNĐ5 quadrillion, equal to 61 per cent of the plan, while the average rate of State budget revenue is at 17.9 per cent of GDP against the 16 per cent goal set in the Financial Strategy until 2030, issued by the Prime Minister on March 21, 2022.

In the 2021-25 period, the Government expects total State budget revenue to reach more than VNĐ8.4 quadrillion, equal to 101 per cent of the plan; and the rate of State budget revenue to be about 16.4 per cent of GDP.

Meanwhile, the total expenditure in the past three years is about VNĐ5.9 quadrillion, equal to 57.5 per cent of the plan.

According to the Government, State budget spending has been strictly managed, with priority given to development investment and minimising regular expenditures. The budget has ensured funding for pandemic prevention, security, national defence, social security, important political tasks, socio-economic recovery and development programme and salary increase in 2023.

Specifically, the total budget spending for development investment is estimated at more than VNĐ1.7 quadrillion. If excluding the expenditure for socio-economic recovery and development programs, it is about 56 per cent of the plan.

The expenditure is very positive in the context of a large deficit in revenue from selling State capital at enterprises, according to the Government.

The total regular expenditures in the past three years is at about VNĐ3.3 quadrillion, equal to 52 per cent of the plan.

The Government estimated the total State budget expenditure for the 2021-25 period is about VNĐ10.14 quadrillion, equal to 99 per cent of the plan.

Meanwhile, the average State budget overspending rate in the 2021-23 period is estimated at about 3.4 per cent of GDP, within the range approved by the National Assembly. The rate for the 2021-25 period is also expected to be within the target range of 3.7 per cent of GDP.

However, according to the Government's view, the process of restructuring the State budget still has many shortcomings. Notably, State budget revenue tends to decrease and will depend on the recovery of the economy.

Some targets of the National Financial Plan for the 2021-25 period are also predicted to be difficult to meet. The targets include the average proportion of domestic revenue in total budget revenue; revenue from equitisation and divestment of State capital; expenditure for development investment from foreign capital sources; and the Government's direct debt repayment obligation compared to State budget revenue.

The average proportion of domestic revenue in total State budget revenue is unlikely to reach the target of 85-86 per cent by 2025 as set by the Financial Strategy to 2030, while revenue from equitisation and divestment of State capital at enterprises is very low, according to the Government. 

Land database identification adopted for real estate market transparency

The Public Security Ministry yesterday announced the plan to implement national digital address identification for more transparency in the real estate market.

Accordingly, besides this digital address identification, accounts of individuals, organizations, or businesses are integrated into the national real estate exchange system, the national land database system, and banks for real estate market transparency.

Deputy Director Vu Van Tan of the Police Department for Administrative Management of Social Order (under the Public Security Ministry) stated that for the sake of transparency in real estate transactions, a task force in his organization is going to adopt Project 06 of the Government. This project aims at identifying house addresses and establishing a national real estate trading floor where identified individuals, organizations, and businesses can enter and conduct transactions.

To carry out this project, there must be cooperation among the Natural Resources and Environment Ministry, the Culture – Sports – Tourism Ministry, the Public Security Ministry, and Vietnam Post Corporation to develop a feasible solution for house numbering management nationwide, followed by house number plate installation. Detailed instruction on this solution must be distributed to the People’s Committees of all provinces and cities for synchronous implementation.

The national real estate trading floor will then be introduced. It is integrated with the national population database, the electronic identification and authentication system, and the national land database.

The Ministry of Natural Resources and Environment is going to digitize and perfect the national land database, to collaborate with the Public Security Ministry in cleaning data on owners of land use rights and attached assets on the land.

Yesterday, the HCMC People’s Committee also held a formal discussion on how to carry out Project 06 above in the city.

Vice Chairman of the municipal People’s Committee Duong Anh Duc proposed that in the upcoming time, HCMC should complete necessary features of the management system for the population database as well as VneID app.

Particularly, the city is considering delivering prizes to those who report errors in the management system or give sound suggestions to amend those errors. It is hoped that this action can help address problems when citizens register for a birth or death certificate, for temporary or permanent accommodation.

Head Le Van Hai of the Police Division for Administrative Management of Social Order (PC06 – under the HCMC Department of Public Security) said that HCMC has received and processed documents online for 25 services under Project 06 via the public service e-Portal.

Development of Southern region’s ports and logistics corridors important

The Waterway Projects Management Board proposed to develop ports and logistics corridors in the Southern region.

In its document to the Ministry of Transport, the Waterway Projects Management Board asked for the Ministry’s approval of the Project to develop waterway and logistics corridors in the Southern region to improve infrastructure, reduce congestion and accidents, and reduce freight transportation costs in the region.

According to the board, ministries and localities should take heed of the project to accelerate it because this project is significant.

With a total investment capital of VND3,900 billion (US$158,505,182), the Southern Regional Logistics and Waterway Corridors Development Project - the largest waterway infrastructure project implemented in the region - will be carried out for the upgrade of two important waterway corridors. One is the East-West corridor with a length of about 197km, running through Hau, Tra On, Mang Thit, Co Chien rivers, Cho Lach Canal, Tien River, Ky Hon Canal, Cho Gao Canal, Vam Co River, Nuoc Man Canal, Can Giuoc River, Soai Rap River and the other is the North-South corridor with a length of about 82km through Dong Nai, Nha Be, Long Tau, Dong Tranh, Tac Cua, Go Gia, Thi Vai rivers.

Deputy Director of the Ministry of Transport’s Department of Planning and Investment Nguyen Anh Dung said that the renovation of the above two corridors is especially important to meet transportation needs in the region. The volume of goods is currently being transported on the North-South corridor to the Cai Mep port in the Southern Province of Ba Ria - Vung Tau by inland waterway reaches more than 80 percent. Under the Ministry of Transport’s guideline of increasing the volume of goods by inland waterway to seaports, the project will renovate and upgrade this corridor for self-propelled seagoing vessels up to 5,000 tons, class four freighters, creating favorable conditions for Facilities for vehicles, especially SB ships to enter ports located deep inland through Dong Tranh River.

At the same time, the project will improve capacity and increase waterway connectivity between ports in Dong Nai, Binh Duong, Tay Ninh to ports on the Saigon River and Ho Chi Minh City for the import and export of goods at the wharf with the largest container throughput in the country, Cai Mep; therefore, it will promote the advantages of the Cai Mep - Thi Vai port cluster in the logistics chain in the southern region.

With the East-West corridor, the volume of goods from agricultural products such as rice, vegetables, fruits, and seafood needs to be transported inter-regionally to key seaports to serve domestic consumption and import and export needs.

According to the plan, the project will upgrade the channels on this corridor to ensure self-propelled seagoing vessels of up to 600 tons, class three container ships can travel around the clock while self-propelled seagoing ships of up to 1,500 tons can take advantage of the tides to travel.

When the project is completed, it will help shorten inland waterway traffic time on the East - West corridor from main ports in Ho Chi Minh City and Cai Mep - Thi Vai in Ba Ria - Vung Tau Province to ports in Can Tho in 10 hours as well as create favorable conditions for ships up to 5,000 tons and class four container ships not having to wait for rising water to travel in the East - West corridor.

Hopefully, it can reduce transportation costs and increase competitiveness compared to road transport. In particular, the project will contribute to increasing the connectivity of the regional transportation network, and socio-economic development.

According to the Waterway Project Management Board, it is necessary to arrange capital sources and site clearance for the project's progress.

According to related agencies, the project needs VND3,900 billion including a VND2,554.81 billion loan from the World Bank for construction costs, consultation of the survey, technical design and site clearance pile installation, construction supervision consulting and a VND13.89 billion non-refundable aid from the Australian Government for the cost of the feasibility study report, an environmental impact assessment report and compensation policy framework, and resettlement support.

The government will allocate VND1,331.31 billion for management, consulting, and site clearance costs. Total capital will be allocated in each phase, in accordance with the project's construction progress. The Ministry of Transport said that capital for the project in the 2021-2025 period will be balanced and fully allocated according to the capital plan assigned by the Government.

Mr. Tran Quoc Bao, Deputy Director of the Waterway Project Management Board, said that because the project will be implemented in Tra On District, Tam Binh District, Mang Thit District in Vinh Long Province, Cho Lach District in Ben Tre Province, Go Cong Tay District in Tien Giang Province, Chau Thanh District in Long An Province and Nhon Trach District in Dong Nai Province, the board will pay about VND720 billion for compensation, support, and resettlement to recover nearly 60 hectares of land in these provinces after it had carried out site clearance work.

People's committees of the provinces where the project goes through will be responsible for setting up different small projects for site clearance.

Minister of Transport Nguyen Van Thang requested the Management Board of Waterway Projects to conduct studies on the adjustment of technical solutions to avoid using forest land for the project so that the project can be approved at the earliest time.

Sluggish ODA-loan status unacceptable

Vietnam has been slow in disbursement of official development assistance and foreign concessional loans this year, the government has acknowledged.

The government has sent a report on Vietnam’s financial situation to the National Assembly Standing Committee for consideration, which stated that disbursement of official development assistance (ODA) and foreign concessional loans so far in the 2021-2025 period remains at a slow pace and lower than initial estimates.

Specifically, public investment from these sources sits at $12.6 billion, including a provisional sum of $1.26 billion for the medium-term public investment plan to 2025.

Under a resolution adopted in June, the legislature and the prime minister have so far allocated over $9.9 billion to ministries, central agencies, and localities, while $1.46 billion has been earmarked for provision as the aforementioned investment plan. In which, total public investment from these capital sources for the 2021-2023 period stood at $4.87 billion, which includes $1.22 billion for this year.

Disbursement results, however, showed that the disbursement hit 32.85 per cent of the initial plan in 2021 and 45.45 per cent last year – both lower than 50 per cent.

“Slow disbursement of foreign capital has been an issue that has been prolonging for many years, resulting in a reduction of capital usage effectiveness and the government’s prestige and in decreases in socioeconomic benefits from projects,” said Minister of Planning and Investment Nguyen Chi Dung.

The government has pointed out a series of obstructions behind the slow disbursement.

“In addition to objective causes and external challenges that have slowed down economic growth, and reduced the domestic demands for consumption and expenditure, while increased prices of materials, there have been many subjective reasons driving state-funded projects into delay,” read the government report.

One of the major causes is the low readiness of projects is slow-paced site clearance and resettlement. For example, Hanoi People’s Committee in July issued a decision on adjusting the 12.5km urban metro line of Nhon-Hanoi railway station. The project is scheduled to be completed in 2027, with total capital revised up to nearly $1.47 billion – up by close to $81 million from the figure stipulated a decade ago.

According to the Hanoi Management Authority for Urban Railways, the project’s implementation has been facing massive difficulties such as complicated and prolonged site clearance, while consultants, investors, and authorised agencies have failed to coordinate effectively. What is more, regulations about ODA allocation of Vietnam and those of donors are, in some areas, incompatible.

The government report also stated that in many cases, sluggishness can be seen in determining land compensation prices and boundaries of project components. Besides that, slowness is also seen in bidding activities and procedures, as well as implementing contracts.

“This can be seen in many projects such as the Nhon-Hanoi railway station metro line, the project to build the Yen Xa wastewater treatment facility, Ben Tre General Hospital, and the project to upgrade Hanoi Pharmacy University, Tan Vu-Lach Huyen expressway, and the project to develop the Lao Cai urban area,” the report said.

In addition, according to the Ministry of Planning and Investment (MPI), other obstructions behind slow disbursement also exist. For example, detailed allocation of capital plans for projects remain slow and are often not adjusted in time. In numerous instances, capital has been arranged for projects that have not completed procedures for adjusting investment policies. The assigned capital plan is insufficient compared to disbursement needs due to the lack of a medium-term capital plan.

In addition, there have also been issues in adjusting projects, investment policies, and loan agreements, with lengthy design, appraisal, and approval procedures. Adjusting projects and loan agreements has been common, with an average of about 20-30 projects/loan agreements being processed each year.

“There are also differences in the laws and lending policies between Vietnam and donors, for example, when it comes to tax issues and exemptions for lenders, bidding, signing commercial contracts, compensation, resettlement, and social environmental standards,” the MPI said.

According to the ministry, problems can also be seen in application of laws due to different forms among donors, while ensuring compliance with the domestic law and the equality among donors. Differences between the domestic law and donor regulations will have to be submitted, leading to prolonged negotiation and signing of the loan agreement.

This would also mean mobilising and using capital has become increasingly difficult, slower than expected, and the scale of mobilisation as expected has been tough to achieve, the MPI added.

Authorities request response to Chinese apparel rules

The Ministry of Industry and Trade has emphasised the significance of China implementing a ruling on the third-party inspection of apparel products, particularly as exports to the market continue to decline.

Earlier in October, the ministry (MoIT) requested organisations to conduct research and devise plans to implement China’s Order No.259. China is Vietnam’s second-greatest import market for apparel, after the US.

The northern neighbour’s customs department issued the order specifying procedures for inspection and acceptance of imported goods into the Chinese market, and followed it up with a notice, effective December 2022, on the application of Order 259’s regulations on textile and garment products.

The late response to the move in Vietnam has, according to some business leaders, caused extra challenges for apparel businesses that have been dealing with declining orders, rising production costs, and plummeting profits in 2023.

To comply with the requirements of Order 259, commodities inspection organisations on the territory of Vietnam must concurrently update new regulations and guide firms in the implementation of inspection procedures in order to receive a quality certificate for related exports.

Vu Duc Giang, president of the Vietnam Textile and Apparel Association, told VIR last week that the order was comparable to the EU’s Extended Producer Responsibility rules as well as the new Carbon Border Adjustment Mechanism.

“The third-party examination required for the textile and garment sector under Order 259 is a significant technical as well as quality hurdle for Vietnamese items imported into this market,” Giang said.

According to HQTS, a Chinese goods inspection organisation in District 3 of Ho Chi Minh City, there is an evaluation laboratory for products that fail to comply with import regulations regarding technical and quality standards.

China has roughly 44,000 firms that operate in garments and textiles production, according to the HQTS.

However, China’s actions could create a new dilemma for Vietnamese exporters, who are already contending with a decline in orders, higher costs of production, and a precipitous decline in profits.

Several exporters hesitate to rule out the potential for China to implement new foreign trade policy barriers to safeguard domestic production. By implementing Order 259, the country’s authorities appear to acknowledge difficulties in exporting textiles and apparel to the global market.

“China’s recent changes will benefit domestic textile and garment producers, but at the same time put greater strain on product lines supplied from Vietnam,” said a representative of one export firm.

According to the General Department of Vietnam Customs, textile and apparel exports to China are still falling, reaching only $7.5 billion in the first eight months of this year, a decrease of 11.6 per cent from the same period last year.

China is Vietnam’s largest import market for fibres, accounting for almost half of the total export value. In addition, the reopening of some of China’s net export items may have contributed to a reduction in the input costs of apparel companies, as almost 70 per cent of Vietnam’s fabric materials originate from China.

Global supply chains are growing more sustainable and balanced, while transit times are decreasing and getting closer to consumer demand.

Tran Quang Huy, director of the MoIT’s Market Trade Office for Africa, West Asia, and South Asia, said, “The Chinese economy has a plan and strives for high-quality development across most economic sectors. This indicates that China has set and continues to establish higher export and import product criteria.”

Huy demanded that Vietnamese firms alter to adapt. Currently, exports to China have favourable scale factors, but have not completely exploited the opportunity in China’s Western and Eastern regions, Huy added.

Japan pledges support for multi-billion-dollar high-speed rail project

Japan has committed to assisting with the research and investment of the high-speed North-South railway project.

In a significant move signalling Japan's ongoing commitment to infrastructure development in Southeast Asia, Minister of Transport Nguyen Van Thang met with Japanese Ambassador to Vietnam Yamada Takio on October 30 to discuss enhancing cooperation on transport infrastructure projects.

Expressing his gratitude, Thang conveyed thanks to the Japanese Embassy and Ambassador Takio for facilitating a study visit to Japan, aiming to glean insights into the development of high-speed railways.

"This project is of immense importance, involving substantial total investment. We hope Japan continues to support Vietnam in researching and implementing the project," he said.

The ambassador highlighted Japan's readiness to assist Vietnam in achieving its 2045 goal of becoming a developed, high-income country, with a particular emphasis on infrastructure development, including high-speed railways.

"Japan stands ready to support Vietnam in the research and investment of transport infrastructure projects, especially in high-speed railways," he said.

Japan, a global leader in high-speed train technology, has been a focus in numerous discussions with Vietnamese leaders, especially concerning support for the North-South high-speed railway project.

Earlier, on October 10, Vietnamese Prime Minister Pham Minh Chinh met with Japan's Foreign Minister Kamikawa Yoko, requesting Japan's continued provision of new-generation official development assistance (ODA) for large-scale infrastructure projects like the North-South high-speed railway.

Additionally, in a meeting on September 6 with Japanese Prime Minister Kishida Fumio, PM Chinh also highlighted the North-South high-speed railway project, seeking Japan's support in its development.

In another demonstration of collaboration, PM Chinh, during a January meeting with Japan's Finance Minister Suzuki Shunichi, reiterated the request for Japanese support on the project.

In early October, a steering committee for the North-South high-speed railway investment project was established.

PM Chinh, at the opening session of the National Assembly on October 23, said the government planned to complete the project proposal by 2024, seeking approval in 2025. The government has also requested the National Assembly prioritise investment resources for this landmark project, encouraging local funding participation.

The Ministry of Transport is set to present the project proposal to authorities this month.

Currently, two investment options are being considered: a dual passenger and freight line with a maximum speed of 200 km/h, estimated at around $64.9 billion, and a passenger-only option exceeding 300km/h, estimated at about $58.71 billion.

The ministry is actively learning from developed rail networks in Europe, China, and Japan to refine its pre-feasibility report, embodying a proactive approach to this ambitious and strategic initiative.

Complete transport setup the end goal

Vietnam will continue to mobilise overseas loans to complete integral transport infrastructure, which in turn can help draw in foreign-invested capital.

The World Bank and the Ministry of Transport (MoT) on October 16 discussed loans of $5-7 billion to implement key railway and highway projects in Vietnam, which is a part of the country’s effort to make a breakthrough in infrastructure development.

The discussion came a month after a meeting between Vietnamese Prime Minister Pham Minh Chinh and Would Bank Group President Ajay Banga on the sidelines of ASEAN summits in Indonesia. The prime minister had asked the World Bank to allocate a loan worth $5-7 billion over a three-year period for major infrastructure projects.

“Several transport ventures that require funding include the first phase of a 140-km railway project connecting Bien Hoa and Vung Tau city in the southern provinces of Dong Nai and Ba Ria-Vung Tau, respectively. A pre-feasibility study is expected to be completed in the first half of next year for the World Bank to assess,” said Minister of Transport Nguyen Van Thang.

Other essential schemes are the 151km Pleiku-Quy Nhon highway and the 70km Cam Lo-Lao Bao highway. These two projects are costed at $1.91 billion and $630.4 million, respectively, and pre-feasibility studies for the four-lane highways will be ready by mid-2024, Thang added.

Local authorities at all levels are eager to implement the construction of transport infrastructure across the country. The MoT has directed the creation of a list of priority projects requiring investment in transport infrastructure for the rest of this decade across road, railways, inland waterways, coastal and sea shipping, and aviation.

Based on the issued criteria, some key road traffic initiatives need to be prioritised for resources, including the North-South Expressway, Ring Road 4 in the Hanoi area, and Ring Road 3 in Ho Chi Minh City, among others.

According to the MoT, the need for capital in transport infrastructure by 2030 for these modes of transport comes to about $95.6 billion, excluding infrastructure maintenance.

The amount that could be mobilised from society and from outside the budget accounts for around 52 per cent, the MoT said.

A more complete transport infrastructure system would likely impact the result of foreign-invested capital attraction overall. Danny Dung, a representative of the investment promotion sector at the Institute for International Investment Studies told VIR, “During my 17-year experience in investment promotion, I see that transport infrastructure plays an extremely important role in making the investors’ final decision.”

The central city of Danang is one example, Dung said. Despite being one of the five largest cities in the country, it reports a modest result in foreign investment capital.

“One of the reasons is due to the lack of a cargo terminal at the airport. The major part of foreign-invested projects is in the manufacturing and processing sector and then export. Thus they pay attention to the transport infrastructure system,” Dung said.

“They can’t transport their products from Danang to international airports to Hanoi or Ho Chi Minh City to export their products abroad. It is also the reason why Danang cannot engage larger investors,” he continued.

Meanwhile, these major manufacturers typically select surrounding localities such as Thai Nguyen, Bac Ninh, Nam Dinh, and Bac Giang in order to access stronger conditions to transport products abroad.

“Thus, logistics activity at cargo terminal airports in Hanoi and Ho Chi Minh City is always bustling,” Dung added.

Webinar seeks to boost export of Halal products to Indonesia

A webinar was held by the Export Support Centre under the Ministry of Industry and Trade’s Vietnam Trade Promotion Agency on November 3 to seek ways promoting the export of farm produce, processed and Halal food to Indonesia.

Vietnamese Trade Counsellor in Indonesia Pham The Cuong said there remains room for Vietnam to export goods to Indonesia which is a more accessible market compared to the US, the European Union, and Japan. More than 87% of the country's population are also Muslims.

He advised the Vietnamese firms to proactively seek Halal certificates from Indonesia, obtain Indonesian National Standard (SNI) standard, join the Indonesian e-commerce market, and leverage the channels of overseas Vietnamese and Vietnamese businesses operating in Indonesia.

Le Chau Hai Vu, Director of Consultech JSC, said at present, Vietnam has only about 20 kinds of products exported to the Halal market, which is a very modest number considering the demand. As much as 40% of Vietnamese localities have not exported any products to this market. Therefore, the potential remains huge.

To successfully navigate Indonesian Halal market, exporters should apply for Halal certificates, create products that meet Halal standards for the target market, enhance marketing and trade connections, he said.

Vietnam attends 2023 China International Import Expo

A Vietnamese delegation led by Deputy Prime Minister Tran Hong Ha is attending the 6th China International Import Expo (CIIE) that kicked off Shanghai, China on November 5.

Apart from a 256sq.m national pavilion of Vietnam as an honourary country at the expo, displaying products, as well as video clips, photos and documents featuring its achievements and potential in economy, trade and tourism, there are 34 booths by prestigious Vietnamese businesses, covering 400sq.m.

Vietnam's participation in CIIE contributes to promoting the country's image in economy, investment and tourism, and fulfilling its economic goals such as increasing exports to China via the official channel and in a sustainable fashion.  

The expo attracts more than 150 countries and territories and international organisations worldwide, with a total area of 300,000sq.m2. Notably, up to 289 of the world's top 500 enterprises are participating in the event.

On the sidelines of the expo, Deputy PM Ha met with Shanghai Mayor Gong Zheng on November 4, during which he suggested strengthening cooperation between Vietnamese and Chinese localities.

Ha spoke highly of Shanghai’s outstanding socio-economic achievements over the past years, as well as its important role in China’s development and the world’s economy, saying trade promotion initiatives like CIIE have contributed to boosting global trade and accelerating digital transformation and green transition.

The Vietnamese Government always values and stands ready to facilitate friendly cooperation between localities of the two countries, especially those with traditional relations and great cooperation potential like Shanghai, he affirmed.

He suggested carrying forward existing cooperation mechanisms, especially those between Shanghai and Ho Chi Minh City and some other localities in Vietnam such as Hanoi and Hai Phong.

The official stressed the need to maximise the potential and strengths of each side, further improve the effectiveness of economic - trade, investment and tourism cooperation, and facilitate Vietnamese goods' access to Shanghai's market.

He also proposed enhancing the sharing of experience in urban development and management, innovation, investment attraction, and monetary financing.

Both officials noted his hope for more cultural exchanges as well as exchanges between residents of the two countries, especially young generations.

Vietnam promotes rice exports to China

A delegation of the Ministry of Industry and Trade (MoIT) led by Deputy Director of the ministry’s Agency of Foreign Trade Tran Quoc Toan and representatives from 19 Vietnamese rice exporters have paid a working visit to Beijing, China to promote Vietnamese rice in the market.

During the visit, the Vietnamese delegation worked with representatives from the Ministry of Commerce of China, the China Animal Agriculture Association, and Xinfadi Group and visited the Vietnam Trade Office in China.

According to the MoIT, in the structure of exports from Vietnam to China, rice shipments have seen good growth in recent years, accounting for nearly one-fifth of China's total rice imports. In 2022, Vietnam's rice exports to China reached 834,200 tonnes, worth 423.2 million USD.

In the first nine months of 2023, China imported nearly 869,000 tonnes of rice from Vietnam, an increase of 41.1% over the same period in 2022.

Notably, Vietnam is capable of supplying popular rice varieties in China and has established long-term traditional partnerships.

Vietnamese rice exporting businesses always recognise that China is an important market, ranking 2nd among Vietnam's rice importers, thereby constantly making efforts to improve product quality and packaging to better meet the regulations, demands, and tastes of Chinese consumers.

To consolidate the trade relations between the two countries in general and their rice trade in particular, especially for the Northern China area, the delegation proposed and reached an agreement with Chinese agencies, associations, and agricultural and food businesses, especially Chinese rice businesses.

Specifically, the two sides will strengthen trade support and establish information exchange channels to jointly solve arising issues and promote Vietnam's rice exports to China.

Besides, they will consider signing memoranda of understanding to promote exports and trade promotion between the two countries while supporting Vietnamese rice products to enter deeply into China's traditional retail and e-commerce channels.

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