A top priority among Vietnamese businesses is to diversify their supply sources, as shown in a recent survey by Vietnam Report, a market research company in Việt Nam.

According to the report, 72.7 per cent of all participants said they want to seek out new suppliers at lower prices and they want to do so in the near future.

Businesses said the main objective is to cut down costs and improve competitiveness. In addition, a more diverse supply will help minimise risks of interruption.

However, many said they have been struggling in their quest to find new suppliers, especially for imported raw materials.

Meanwhile, economists and industry experts have long voiced their concerns over the low utilisation rate of tariff advantages from the free trade agreements (FTAs) that the Southeast Asian economy has signed.

For example, Dr Nguyễn Thái Chuyên from RMIT University, an Australian university in Việt Nam, said there is a lack of understanding and initiative among businesses regarding the Vietnam-European Union Free Trade Agreement (EVFTA).

He said a recent report by the Vietnam Chamber of Commerce and Industry (VCCI) indicated that more than half of participating businesses did not possess a deep understanding of the EVFTA.

The trade deal has been hailed as an opportunity for Vietnamese businesses to import raw materials, adopt advanced technologies and develop new industries.

However, according to the chamber Vietnamese businesses currently benefit from very few tax cuts from the trade deal including preferential import tax rates. Numerous businesses said they were not aware of existing preferential policies or that they failed to prepare the required documents to benefit from them.

Meanwhile, China remained Việt Nam's largest supplier. According to the Ministry of Industry and Trade's data, China remained Việt Nam's largest supplier with an estimated turnover of US$ 68.13 billion in the first 8 months of 2023

Most businesses have a preference for Chinese suppliers as they can provide raw materials at very competitive prices. This, however, could result in complications later when they attempt to leverage tariff advantages when exporting to some key FTA markets, including the EU.

Chuyên said EU markets have strict rules over quality, safety requirements for industrial goods, and sanitary and phytosanitary standards for agricultural and food products. This has been a major obstacle for Vietnamese businesses due to their reliance on imported raw materials from China and ASEAN countries, making it difficult to control quality standards.

Economists and industry experts have long urged businesses to be more proactive and diversify their supply sources.

Some progress has been made on that front. In the first eight months of 2023, Việt Nam imported 1.18 million tonnes of corn from India, 22 per cent of the total amount imported for the period, an increase of 74 per cent from the same period last year. 

Over 100 Singaporean firms to explore investment opportunities in Nam Dinh

A Singaporean delegation made up of more than 100 firms is anticipated to arrive in the locality to seek business opportunities in the northern province of Nam Dinh, revealed Singaporean Ambassador to Vietnam Jaya Ratnam.

The Singaporean diplomat was speaking at a working session with representatives of Nam Dinh’s authorities during a working trip on October 10.

He hailed the locality’s modern infrastructure facililties as an important factor in attracting foreign investors, saying Nam Dinh boasts key transportation projects connecting to seaports, highways. and airports.

At the reception, representatives of the Singaporean Embassy in Vietnam proposed that Nam Dinh send a delegation to the island nation to train in the fields of health, the environment, and human resource development to gain greater insights into green and digital transformation to devise proper strategies in line with current development trends.

With many Singaporean tourists heading to Vietnam over recent times, Nam Dinh was recommended to pour additional investment into the development of tourism infrastructure to turn the locality into a bright tourism spot for foreign tourists in the future.

For his part, Pham Gia Tuc, secretary of the Nam Dinh Provincial Party Committee, emphasised that many Singaporean businesses have arrived in the locality to explore investment opportunities over recent years.

Most notably, Sunrise Material of Singapore signed an agreement with a Vietnamese company in August to develop a polymer wrap film production project worth US$100 million.  

He expressed his hope that the Singaporean Embassy would act as bridge to help the province successfully build the Hai Long Industrial Park to welcome secondary investors in the near future.

Deputy PM: price control in nine months effective

Price control work was effective in the first nine months of this year, with the average consumer price index (CPI) in the period up 3.16% year on year, leaving plenty of room to maintain stability in prices, said Deputy Prime Minister Le Minh Khai.

Chairing a meeting of the Steering Committee for Price Management in Hanoi on October 11, Deputy PM Khai, who is also the committee's head, said thanks to synchronous measures such as reducing lending rates, stabilising the foreign exchange market, accelerating public investment disbursement and supporting real estate and corporate bond markets, the supply of essential goods has been ensured with prices of goods kept basically stable, in line with the pricing scenario set by the committee. 

A representative from the Finance Ministry said as early as late 2022, the ministry had proposed price control solutions related to tax, fee, and land rent applicable for 2023, with an estimated total support value of about 196 trillion VND (8.16 billion USD), including 121 trillion VND with payment deadline extended and about 75 trillion VND exempted and reduced.  

It also suggested a 2% reduction in the value-added tax (VAT) from July 1 until December 31, for most items subject to a 10% VAT rate. With this measure, it is estimated that the reduced tax amount will be some 24 trillion VND.

The ministry submitted to the Government and the National Assembly Standing Committee for approval a resolution on environment protection tax rates for gasoline, oil and lubricants, effective from January 1-December 31, 2023, which is expected to reduce State budget revenue by approximately 38 trillion VND.

About solutions for 2024, the ministry will continue to consider extending the reduction of environment protection tax and the VAT, and reducing some export and import taxes to support domestic production and trade, and certain fees and charges to encourage the use of online public services.

Regarding monetary policy management, the State Bank of Vietnam made four consecutive reductions in interest rates to support production and trade and promote economic growth.

Da Nang may become world’s semiconductor centre: workshop

The central city of Da Nang has many opportunities to become a semiconductor centre of Vietnam and the world, heard a workshop on developing human resources to serve the semiconductor industry in the city on October 10.

Speaking at the event, Chairman of the municipal People’s Committee Le Trung Chinh cited the Ministry of Information and Communications as saying that last year, the digital economy contributed 19.76% to the city’s gross regional domestic product (GRDP).

To date, Da Nang has 2,450 enterprises operating in the field of digital technology with 46,000 employees.

On August 16, the municipal People's Committee issued a plan on developing the information technology sector in the city to 2030, which identifies priorities for developing the chip design and manufacturing industry.

Da Nang set goals of digital economy accounting for at least 30% of the city's GRDP, and having at least 8,950 digital technology enterprises with 115,000 employees and at least seven IT and software parks, Chinh said.

Truong Gia Binh, Chairman of the Board of Directors of FPT Corporation, said that with its available conditions, the city can attract domestic and foreign investors to build semiconductor factories in Da Nang to help it become a location with many semiconductor factories, thus contributing to localising the supply chain by completing the process of design, production, packaging, and sales.

Da Nang needs to provide a friendly environment and attract investment by optimising management processes, tax incentives and protection of intellectual property rights; while developing a supply chain and warehouse centre, becoming a distribution network for Southeast Asia and Asia - Pacific.

FPT is ready to accompany the city to improve the quality of human resources in the semiconductor industry by sending them to work abroad; promote cooperation and call on FPT's partners around the world in this field to invest in Da Nang, thus creating a “launching pad” for the city's young personnel to participate in semiconductor production, added Binh.

Trinh Thanh Lam, Sales Director of SYNOPSYS South Asia, said that Da Nang is the most suitable location for chip design, with suitable human resources. In particular, the city always pays attention and has policies to encourage the development of information technology and incubate startups in chip development.

Vietnam to work to raise position in global innovation rankings

The Ministry of Science and Technology (MoST) will work with relevant agencies to conduct innovation evaluation and help localities identify right directions to follow to help raise Vietnam’s position in the Global Innovation Index (GII) rankings, an official has said.

The MoST in coordination with the World Intellectual Property Organisation (WIPO) and the Permanent Mission of Vietnam to the United Nations, the World Trade Organisation (WTO) and other international organisations in Geneva held a hybrid workshop on October 10 to provide information about the GII 2023.

Speaking in Hanoi, Deputy Minister of Science and Technology Bui The Duy said that in the GII 2023 recently released by WIPO, Vietnam ranks 46th among the 132 listed countries and economies, up two places from 2022. It is also assessed as one of the seven middle-income countries showing the most progress in innovation over the last decade.

The country has jumped two places to the 57th from last year in terms of the innovation input sub-index, and one place to the 40th in the innovation output sub-index.

Among ASEAN countries, Vietnam follows Singapore (5th), Malaysia (36th), and Thailand (43rd).

 Vietnam stands at the 46th position among the 132  countries and economies listed in the GII 2023 rankings. (Photo: VNA)
Duy held that if some factors such as the ICT services exports, copyright payments, fees and licences had been updated, Vietnam’s position in the GII 2023 would have been higher.

Coordination from input to output among all parties is needed to promote innovation, the official said, expressing his hope that with support from WIPO experts, the MoST and related units can carry out innovation evaluation, especially for localities, so that they can identify right directions to follow to help raise Vietnam’s position in the GII rankings.

Ambassador Le Thi Tuyet Mai, Permanent Representative of Vietnam to the UN, the WTO and other international organisations in Geneva, said via videoconference that Vietnam’s position in the GII 2023 rankings is encouraging but also poses a big challenge for the coming time, especially amid numerous political and economic uncertainties in the world, along with changes in investment and trade strategies of many countries.

Therefore, Vietnam needs to take measures to tap into its enormous potential and further boost technology transfer and innovation to develop the brands of high-quality Vietnamese goods and services in foreign markets. This requires efforts by all-level authorities and sectors, particularly localities, scientists, the private sector and business associations, to step up innovation and science - technology application, she continued.

The ambassador pledged that the Permanent Mission of Vietnam to the UN will assist the country to cooperate with WIPO and related organisations in innovation and technology transfer to develop products and services.

Japanese businesses seek investment opportunities in Mekong Delta

The Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI) on October 10 organised a meeting between Japanese businesses and Vietnamese firms operating in the Mekong Delta, aiming to provide them with opportunities to connect and seek cooperation.

Speaking at the event, Director of VCCI Can Tho branch Nguyen Phuong Lam said that the Mekong Delta is a major agricultural production region and has huge demand for transportation and logistics infrastructure. The Vietnamese Government is making major investments in express ways, sea ports and logistics infrastructure in the region.  

Meanwhile, Japan is the third largest investor in Vietnam and the second largest investor in the Mekong Delta, just after Singapore. In recent years, especially after the COVID-19 pandemic, Japanese investors have moved to the region, Lam said.

Participating Japanese companies informed the meeting on the fields that they want to invest in in the Mekong Delta, while local authorities introduced their potential projects calling for investment.  

Fukuda Yasuhisa, Chairman of Senko Group said that the group wants to build a logistics centre with warehouses serving the export of agricultural and aquatic products in the south of Vietnam to expand the group's logistics system to the lower Mekong region and Southeast Asia. 

In response, a representative of Dong Tam Group said that the group hopes to join the Senko Group in finding solutions for connecting ports in the Mekong Delta region, synchronously developing waterway transportation infrastructure to maximise the region’s advantage relating to its river network, thus optimising logistics costs.

Vietnam Customs abides by World Customs Organisation standards: official

Vietnam Customs has proactively strived to make changes in line with World Customs Organisation (WCO)’s recommendations and standards in harmonising and simplifying customs procedures, according to WCO Secretary-General Kunio Mikuriya.

With the current generation of talented young people, the Vietnamese customs sector can develop even stronger, he told the press on October 10 on the sideline of the Technology Conference and Exhibition of the World Customs Organisation 2023 which is underway in Hanoi.

Technology is a very important part, especially in the current context of global trade development, Mikuriya said, suggesting that Vietnam should attach importance to personnel training and development alongside technology, making humans the centre of development.

WCO is providing technological support to help customs agencies fulfil their tasks, facilitating trade while ensuring trade security, he said.

It will continue to work with customs authorities to develop standards to harmonise customs procedures around the world, Mikuriya went on, elaborating that people will be the focal point of development. Human is the most valuable resource, he stressed.

The WCO Secretary General held that the event serves as a venue for parties to introduce their experiences in applying technology in their countries, as well as existing products being adopted in the customs sector. Thus, Vietnam Customs will have many opportunities to learn about what other customs agencies around the world are doing, to be able to self-assess and apply possible solutions to improve the quality of human resource training and vice versa, it can also share its good experiences.

Regarding fostering the young generation of customs experts, he said WCO is ready to support the Vietnamese Customs sector in this regard, adding that the government’s strategy relating to digital transformation should be applied to the customs sector. 

Holidaymakers keen on sustainable tourism after pandemic: workshop

Both Vietnamese and foreign tourists are keen on sustainable tourism after the COVID-19 pandemic, heard a workshop held by the Institute for Tourism Development Research under the Ministry of Culture, Sports and Tourism in Hanoi on October 10.

According to a research study released by the institute, the pandemic has changed travel habits. It cited a survey by online travel agency Booking.com, which interviewed more than 29,000 respondents in 30 countries and territories, including Vietnam, showing 84% of Vietnamese respondents expressed their desire for authentic travel experiences that respect local communities.

A significant 64% of Vietnamese tourists agreed to avoid popular tourist destinations to limit overcrowding.

For international tourists, they want to travel more sustainably and responsibly, targeting rural areas and nature-based tourist sites. Most of them want to travel independently and organise their own trips with flexible schedules and lower cost. Many are also interested in leisure tourism in the sites surrounded by greenery.

With the findings, the institute suggested adding such services as wellness tourism, sports tourism, cruise tourism and community-based tourism to Vietnam’s major tourism topics of marine tourism, eco-tourism, cultural tourism and food tourism.

The participating experts proposed solutions to attract more holidaymakers like building a friendly tourism environment and ensuring safety for visitors, saying to that end, the sector needs to pay more attention to the information work to build the image of a friendly, safe and hospitable Vietnam, as well as to human resources development, especially high quality personnel.

Long An aims for 10 logistics centers by 2030

The Mekong Delta province of Long An has devised ambitious plans to establish 10 logistics centers by 2030 to fuel economic growth within the southeastern and Mekong Delta regions.

To achieve this goal, the province is centering on logistics infrastructure development, especially roads, warehouses, and hi-tech logistics solutions.

These 10 logistics centers are planned to be strategically located in the districts of Can Giuoc, Ben Luc, Chau Thanh, Can Duoc, Duc Hue, Tan Tru, and Kien Tuong.

The Long An International Port, occupying a sprawling 147-hectare area in Can Giuoc, is envisioned to serve as a comprehensive sea port service complex. It will feature a range of auxiliary facilities, including high-quality warehouses, to support trade activities within the port, both inbound and outbound.

In addition to these developments, the province is focused on enhancing the transportation network by creating intersections that link national-level and provincial-level traffic infrastructure. It also plans to add more entrances and exits along the Eastern North-South Expressway in Ben Luc and Thu Thua districts, aiming to improve inter-regional traffic connectivity and drive socio-economic development.

Simultaneously, Long An aims to renovate 53 existing provincial roads, construct 29 new provincial roads, and upgrade five waterway transport routes.

The province also has plans to construct and upgrade 18 cargo ports, designed to handle both general and bulk cargo vessels with tonnages ranging from 1,000 to 2,000 tons. Additionally, it will establish 17 specialized ports, including petroleum terminals and ports catering to various factories and industrial parks, capable of handling ships ranging from 200 to 5,000 tons.

Long An’s ambitious agenda also includes the development of 14 passenger ports aligned with passenger transportation routes in line with the province’s urban planning initiatives.

Two dry ports, Ben Luc and Tan Lap, are set to be established in Ben Luc and Thu Thua districts. Each dry port will cover an area of 10 to 15 hectares and have a capacity of 150,000 TEUs.

HCMC’s GRDP growth below expectations

HCMC’s gross regional domestic product (GRDP) is far below the 2023 target, so the city will have to make every effort to improve the performance of its economy in the final months of the year, said Nguyen Van Nen, secretary of the HCMC Party Committee.

At the meeting on HCMC’s January-September socio-economic performance, the HCMC Department of Planning and Investment reported that the city’s GRDP growth in the third quarter is 6.71%, which is higher than in the previous two quarters.

However, the overall growth rate for the first nine months of the year is a mere 4.58%, significantly lower than the full-year target of 7.5% to 8%.

Nen acknowledged that the city had a slow start to the year, resulting in poor performance in the first quarter. However, efforts from various departments and agencies have led to better results in the second and third quarters.

Pham Trung Kien, deputy director of the HCMC Department of Planning and Investment, highlighted some positive indicators. Despite difficulties, the index of industrial production (IIP) of the city has increased by 3.2%, with key industrial sectors growing by 5.8%.

Total retail sales of goods and services are estimated to have expanded by 8.6%, and total tourism revenue has surged by 35.8% compared to the same period last year.

In the year to date, the city has seen 7,224 new businesses set up, a 13% year-on-year increase. However, foreign direct investment inflows have dropped by 34.1% year-on-year, with the city attracting nearly US$2 billion.

Regarding public investment disbursement, the city has disbursed more than VND20.5 trillion by September 22, reaching only 30% of the total allocated capital. The slow disbursement is attributed to delays in compensation, land clearance, resolution of investment and construction procedures, and limitations in the capabilities of some investors and construction units.

Given this situation, Nen called for greater efforts from relevant departments and agencies to accelerate public investment disbursement in the final quarter of the year.

MoPI predicts a potentially more challenging economy in 2024

Deputy Minister Do Thanh Trung noted that the socio-economic situation in 2023 continued to experience gradual and positive changes.

The Ministry of Planning and Investment predicted that 2024 will be a year of opportunities and challenges, and the economic outlook will encounter numerous difficulties and hurdles, potentially more than in 2023.

The ministry underscored the importance of resolute measures to expedite the disbursement of public investment capital right from the beginning of 2024, especially for key national projects, infrastructure initiatives and national target programs.

Speaking at the 13th session on the implementation of the economic and social development plan for 2023 with the National Assembly’s Economic Committee on Wednesday, Deputy Minister Do Thanh Trung noted that the socio-economic situation in 2023 continued experiencing gradual and positive changes.

Reports from the ministry showed that the Consumer Price Index gradually recorded an average increase of 3.1 percent in the first eight months. Interest rates decreased positively, with average deposit and lending rates for new transactions decreasing by about 1.0 percent compared to the end of 2022.

The domestic foreign exchange market and exchange rates remained relatively stable, maintaining market liquidity and meeting legal foreign exchange demands.

State budget revenues for the first eight months reached 69.4 percent of the estimated target, with efforts to achieve 100 percent of the annual target while implementing tax exemptions, reductions, and extensions to support and alleviate difficulties for businesses and people.

Investment in development continued to yield positive results and remained a significant driver of economic growth. Disbursement of public investment capital reached 42.35 percent of the plan by the end of this August, surpassing the same period in 2022 by nearly VND87 billion (US$3.5 million). Total registered foreign direct investment (FDI) capital for eight months reached $18.15 billion, an 8.2 percent increase compared to the same period, with actual FDI reaching $13.1 billion, a 1.3 percent increase.

Business development continued to show positive signs, with more than 149,000 enterprises entering the market in eight months.

However, Trung acknowledged there were still significant difficulties and challenges.

Economic growth in certain quarters fell short of the set targets. Although growth in the later quarters exceeded the previous ones, the gross domestic product (GDP) for the first six months only increased by 3.72 percent, particularly in the industrial and construction sectors. State budget revenues for eight months decreased by 8.8 percent compared to the same period last year.

Business activities faced numerous challenges. The domestic market demand contracted, and exports to key markets decreased compared to the previous year. Access to credit remained challenging, credit growth was low, and non-performing loans tended to increase. Real estate and corporate bond markets posed potential risks.

The rate of unemployment and reduced working hours, plus a one-time increase in social insurance withdrawals remained high.

The ministry reported that inadequate monitoring and forecasting of the socio-economic situation, delayed policy responses at certain levels, and missed opportunities for recovery and development were among the main causes.

Ineffective mechanisms and policies, unaddressed legal barriers and reluctance of administrative agencies also contributed to the issue.

Deputy Minister Trung outlined the expected socio-economic development plan for 2024, which comprised 15 key targets following the five-year plan for 2021-2025 approved by the National Assembly.

Specifically, the GDP growth rate was expected to achieve approximately 6-6.5 percent; the per capita GDP would be around $4,700 - $4,730.

The share of manufacturing and processing industries in GDP must maintain at approximately 24.1 - 24.2 percent while the average Consumer Price Index (CPI) growth rate would remain at about 4-4.5 percent.

Trung said the primary goal was to promote growth while simultaneously consolidating and maintaining macroeconomic stability, controlling inflation, and ensuring significant economic balances. There will be a focus on substantial transformations in the implementation of strategic breakthroughs and restructuring of the economy.

Apart from addressing existing limitations to expedite the disbursement of public investment capital, ministries, agencies and localities should enhance mechanisms and policies to streamline and simplify administrative procedures and business regulations to create a more favorable environment and reduce costs for businesses.

Measures will also be taken to resolve difficulties and obstacles in order to achieve sustainable, stable, and healthy development in various markets, especially in the corporate bond and real estate markets, he said.

Hanoi encourages semiconductor investment

Hanoi will create conditions for domestic and foreign investors to develop the semiconductor industry in the city and the whole country, said Deputy Chairman of Hanoi People's Committee Nguyen Manh Quyen at the seminar "Development of Semiconductor Ecosystem and Connection for Investment in Hanoi" on September 27 in Hanoi.

He stated that the semiconductor industry is of great interest to the Government and the Prime Minister as it enhances Vietnam's participation in regional and global value chains and the development of high technology, electronics, semiconductors, financial centers and innovation.

"Prime Minister Pham Minh Chinh encouraged US semiconductor companies to deepen and expand their investments in Vietnam at various stages, including infrastructure development, technology transfer, design, production, and distribution," Quyen said.

At a meeting with Semiconductor Industry Association (SIA) CEO John Neuffer and executives from leading US semiconductor companies in Washington on September 19, Pham Minh Chinh acknowledged their contribution to promoting Vietnam-US bilateral relations.

This cooperation should also include human resource training involving businesses and research and training institutions from both countries. This approach will help enhance the quality of human resources and capabilities of Vietnamese enterprises and progressively integrate Vietnam into the global semiconductor industry's value and supply chain, covering various stages from design and assembly to packaging, testing and production.

For his part, US President Joe Biden sees an opportunity to strengthen the relationship between the two countries in various fields, including investment and innovation, for shared prosperity.

The US is willing to cooperate with and support Vietnam in chip technology, semiconductors, innovation, green transition, and human resource development, with a focus on deeper engagement in regional and global value chains, he said at a Vietnam-US High-Level Conference on Investment and Innovation chaired by Prime Minister Pham Minh Chinh in early September.

According to Minister of Planning and Investment Nguyen Chi Dung, semiconductor giants such as Intel, Amkor, Marvell, Global Foundries, and the Semiconductor Industry Association (SIA) are working together to develop chip and semiconductor ecosystems and will establish a joint training and research center for chip and semiconductor product design in Vietnam.

Hanoi also focuses on attracting investment in high-tech fields, including the semiconductor industry. In addition, the city is concentrating on developing 25 industrial zones, 10 of which are already occupied and operational.

The remaining 15 industrial zones are planned for investment, infrastructure development, and support systems to attract investment.

In recent years, Hanoi has adopted specific policies to attract foreign investment and support enterprises to invest and operate in the city, said Vu Duy Tuan, deputy director of the Hanoi Department of Planning and Investment.

Hanoi has a selective approach to attracting investment, prioritizing projects in high-tech, clean-tech, and environment-friendly sectors. He added that it also encourages participation in global value chains with products of high commercial value.

Tuan said the city is ready to assist enterprises in project implementation, managing investment procedures, and ensuring the supply of basic infrastructure services such as electricity, water, sewage treatment, waste management, and logistics. In addition, the city actively supports enterprises in training high-quality human resources to serve investment projects.

Currently, industrial enterprises in Hanoi enjoy investment incentives such as exemption from corporate income tax for the first four years, a 5% tax rate for the next nine years, and a 10% tax rate for the next 15 years.

Hanoi also exempts import duties on imported goods for fixed assets, raw materials and components used in investment projects according to the approved list, according to the deputy director of the city's Department of Planning and Investment.

The city has policies to reduce land lease and land use fees, provide support for enterprises to access loans with preferential interest rates, participate in trade fairs and exhibitions, logistics services and product branding.

Regarding policies, Deputy Chairman Nguyen Manh Quyen said the Capital City Law and Government Decree No. 74 are being revised and refined to facilitate the development of the semiconductor industry.

Leading multinational companies in the semiconductor manufacturing sector, including Foxconn, Synopsys, Marketech International, and MediaTek Capital, attended the seminar to discuss and propose solutions and policies to develop the semiconductor industry and encourage domestic and foreign investment.

Vietnam-US Comprehensive Strategic Partnership heralds new waves of trade

On the back of the newly-signed Comprehensive Strategic Partnership between Vietnam and the US, American exporters are setting their sights on delivering a wider range of agricultural products to Vietnamese consumers.

US Ambassador to Vietnam Marc Knapper said bilateral trade was growing steadily over the past decade, reaching 130 billion USD in 2022, of which 10 billion USD went to agriculture.

Following the elevation of the relationship to a Comprehensive Strategic Partnership, there's no doubt that bilateral trade, particularly in the agricultural sector, would continue to thrive.

In other words, a wider range of American agricultural products would make their way into Vietnam in the short term and so would Vietnamese products into the US.

Francis Lee, a representative of the Washington Apple Commission, said American apples were in high demand in Vietnam with about 2 million baskets being consumed annually. Other products such as grapes and cherries were also gaining popularity among Vietnamese consumers.

He expected that the upgraded relationship would facilitate the entry of more American fruits into Vietnam in the years to come. He said Vietnam and the US could consider reducing import tariffs to make each country's fruits more competitive in the other country.

Currently, American apples and grapes are subject to import tariffs of approximately 8%, while other fruits ranging from 10-15%. If the tariffs are reduced or cut down to 0%, it would be a significant opportunity for American fruits to enter the Vietnamese market.

Vu Ngan Giang, a representative of the US Grains Council, said the US remained the largest producer and exporter of sorghum in the world, producing over 11.5 million tonnes and exporting 7.4 million tonnes in 2021.

Vietnamese consumers purchase sorghum mostly in the form of mixed ingredients. There is no data about sorghum import as a single ingredient, but what is known is that sorghum products were gaining favour in the country.

"Sorghum is what Vietnamese consumers need for their healthy eating pattern," said Giang.

Le Van Anh Tu, a representative of the US Meat Export Federation, said Vietnamese consumers had a great appetite for American tri-tip beef. However, current import tariffs of between 14-20 % have made the product less affordable to them.

He hoped that the upgraded relationship would pave the way for some tariff cuts on agricultural products in the future, making American beef more competitive when entering the country.

In the fruit sector, seven types of fruits from the US have been permitted to be exported to Vietnam. Peach is expected to make the eighth on the horizon.

Roadblocks remain in apparel production recycling

The textile and apparel sector is making efforts to recycle input materials to reduce waste while preserving natural resources, although barriers persist.

The issue was discussed at the Texfuture Fall-Winter Vietnam 2023 exhibition on September 20-22 in Ho Chi Minh City.

At the exhibition, Hua Phu Doan, standing vice president of the Vietnam Waste Recycling Association, said that many difficulties persist with implementing recycling in textiles and garments because the cost is still quite high when businesses need to both reduce impacts on the environment in production practice and lower the production cost.

Using recycled material in the sector has a price equal or even higher than that of a conventional product, so that manufacturing businesses tend to choose regular products instead of using recycled materials.

"Particularly, the community awareness about using recycled products is not high. Therefore, with improved people’s awareness and consumers willing to buy recycled products at higher price, the pressure on the sector could be abated," said Doan.

Vu Duc Giang, chairman of Vietnam Textile and Apparel Association (Vitas), added that based on current requirements from importers, several kinds of textile apparel items need to use recycled materials in their production, in which some items mandate using from 30-60 per cent of recycled materials in each item production.

At the event, Phoebe Truong, CEO of Lien Phuong Textile and Garment Corporation (LPTEX) said that as using entirely recycled polyester in production would affect the product purity compared to conventional items, manufacturers therefore need some blending in the use of production materials.

Along with this, based on customer requirements, the rate of blending averages 30-70 per cent, sometime reaching 100 per cent with products using recycled polyester, and 30-40 per cent with products using recycled wool.

For instance, LPTEX’s several partners in the Japanese market demand the use of 30 per cent of recycled polyester in each item production, and those in the EU mandate using about 30 per cent of recycled wool in each item production.

Increasing sustainability footprints through creating recycled items helps Vietnamese firms to boost order intake.
Currently, for its products entirely made of wool serving the domestic market, the company uses 10-20 per cent of recycled wool in the production.

Tran Thi Tra My, representing Hanoi-based VietKai Co., Ltd. which is specialised in producing Microfiber high-quality industrial leather, has concerns over what to do to make recycled materials become more competitive.

My said that their company mostly imports environmentally friendly materials from China, as Vietnam has yet to have production facilities capable of turning out quality recycled materials at competitive price.

“Our country already has environmentally friendly materials for leather production, such as lotus leaves or corn powder, yet due to the lack of advanced technics, the production cost is often higher compared to imported products from China,” said My.

This is deemed a major challenge in the production of recycled items. For the part of LPTEX, the company imports fibre made from recycled materials from China and imports from Australia items purely made from wool.

Their finished products therefore have price higher from 5-15 per cent, depending on market supply sources and the value of recycled materials in the production.

“If not leveraging the tax advantages through new-generation free trade agreements Vietnam has with the international community, Vietnamese-made recycled products couldn’t compete with those from China,” said Phoebe Truong.

According to Giang, increasing sustainability footprints through creating recycled items helps Vietnamese businesses to boost order intake.

Vitas and its management authority, the Ministry of Industry and Trade, have been turning to the government for guidance to materialise the textile apparel development strategy for the period 2021-2035, with vision towards 2045. Based on that, localities are tasked with embarking on land planning for the construction of industrial zones on par with environmental and waste standards.

Cashless society ambitions offered a helping hand

Vietnam is swiftly revolutionising its financial sector by phasing out outdated card technologies, embracing non-cash solutions, and enacting laws to enhance security.

Pham Anh Tuan, head of the Payment Department at the State Bank of Vietnam, asserted that the nation’s legal frameworks are well-poised to bolster non-cash transactions and facilitate the growth of the card market.

“The legal framework to encourage non-cash payments and enhance card usage is remarkably robust,” Tuan stated at last week’s conference on future payment trends, underscoring the nation’s committed approach to modernising its financial landscape.

Accordingly, the Vietnam’s card market has witnessed swift and substantial growth in recent years, marking a significant stride towards diminishing cash transactions. By July, the total number of cards in circulation exceeded 140 million, reflecting an 8.27 per cent augmentation since the close of 2021. Of these, nearly 10.8 million were procured via electronic know-your-customer, a method now employed by 27 banks in the country.

Vietnam’s conducive environment and the flourishing digital ecosystem ensure seamless integrations between banks and various service-providing entities, creating a fluid, user-friendly experience for consumers. “A single application can cater to a diverse array of payment needs, from cinema tickets to dining out,” Tuan said, highlighting the evolving consumer experience in the digital age.

Despite these advances, experts believe the realm of domestic credit cards still harbours substantial untapped potential.

Nguyen Quoc Hung, secretary-general of the Vietnam Banking Association, said, “Several academic institutions are collaborating with banks for tuition fee payments through domestic cards. This innovation, albeit novel, still lacks the convenience offered by the likes of Visa and Mastercard. Substantial enhancements are imperative.”

Meanwhile, economist Can Van Luc believed that Vietnam’s journey towards a cashless society is reportedly outpacing its regional peers, with the frequency of transactions escalating by approximately 70 per cent and the transaction value by 35 per cent over the last three years.

“However, the country is still grappling with high cash usage, constituting 47 per cent of personal transactions as of 2022, parallel to Indonesia,” Luc said. “It implies there is ample scope to reduce cash transactions to levels seen in Malaysia and India, which stand at around 30 per cent.”

This year, significant legislation including the laws on land, real estate business, and housing has been passed, all of which Luc and his team have advised to include non-cash payment options in transactions once they are enacted. “From a policy perspective, I urge the government to provide a more updated, comprehensive legal corridor to foster card market development,” he said.

Concerns surrounding data integrity continue to loom over individuals, corporates, and banks. With the presence of a national database system, Luc emphasised the necessity of continued refinements and integrations in the system to ensure security, convenience, and low costs. “In the long run, integration is inevitable, but it must be synchronised. Research on cards related to digital payment trends, including future digital currency, is crucial,” he added.

According to Nguyen Quang Minh, CEO of the National Payment Corporation of Vietnam (NAPAS), Vietnam currently boasts over 140 million active cards, including 103 million domestic and 36.7 million international ones, with more than 40 banks and four financial institutions engaged in card issuance.

“The ongoing transition from magnetic stripe to chip cards as an inevitable stride towards enhanced security in the sector,” Minh said.

He further unveiled NAPAS’ ventures in advanced payment technologies aimed at elevating user experiences, and is set to launch a Tap to Pay service within the year.

Le Phuong Hai, deputy general manager of Vietcredit, also outlined their concentration on domestic credit cards, especially targeting segments like students and individuals with unstable incomes. “Introducing students early to credit concepts fosters prudent financial habits and adept financial management in their future,” he expressed.

Disbursement of public investment – a turbo booster for economic growth

Amidst global headwinds, Vietnam has worked to step up disbursement of public capital to bolster the economy as Prime Minister Pham Minh Chinh has reiterated the significance of public investment disbursement as a motive to fuel economic growth in short term as well as put in place uniform and modern infrastructure to lure more investment for sustainable development.

At an economic seminar on October 5, Deputy Minister of Planning and Investment Tran Quoc Phuong highlighted that the disbursed capital during January-September topped 363 trillion VND (14.89 billion USD), up 46.7% from the same time last year.

The disbursement of investment sourced from the State budget was estimated at 51.38% of the yearly plan, the highest rate ever, Phuong said.

Director General of the General Statistics Office Nguyen Thi Huong said that the result is a vivid illustration of the Government and localities’ resolve to bolster implementation of projects right from the beginning of the year so as to create a driving force for economic growth in Q3, first nine months and the whole year.

A large volume of public capital will be disbursed in 2023, including for the socio-economic recovery and development programme, she said, adding procedures have been completed for projects under the investment plan during the 2021-2025 period, creating favourable conditions for promoting the implementation of public investment.  

Localities with highest disbursement rates included Long An (68%), Tien Giang (61%) and Dong Thap (55%).

Meanwhile, Tra Vinh, Vinh Long, Soc Trang, An Giang and Ho Chi Minh City experienced the lowest disbursement rate. Particularly, the figure in Ho Chi Minh City was only 30% due to bottlenecks in site clearance process.

Phuong stressed that enhancing discipline is critical to deliver on the target of disbursing at least 95% the public investment budget.

Ministries, sectors and localities should make concerted efforts to remove bottlenecks in a timely and effective fashion, Phuong said, adding strict punishment should be meted out to any officials who delay the disbursement.

According to economist Nguyen Bich Lam, former General Director of the General Statistics Office, the disbursement of 95% of public investment will spur the GDP to rise 1.3%.

Public investment is an important booster for the economic growth in 2023 and the coming years, he said.

VCCI questions effectiveness of mandatory vehicle cameras

The Vietnam Chamber of Commerce and Industry (VCCI) has called on the Ministry of Transport to reconsider its requirement that surveillance cameras be installed on commercial vehicles, citing high costs and questionable effectiveness.

According to the VCCI, the regulation, which took effect on July 1, 2021, requires that all vehicles with nine seats or more and those used for container transport must have surveillance cameras.

The VCCI’s survey of over 100 businesses found that compliance could cost around VND17 million per vehicle. This includes VND5.8 million for camera installation, and VND1.2 million for data transmission among others.

Meanwhile, the Department for Roads of Vietnam has estimated that about 200,000 vehicles are subject to this regulation. The total cost for camera installation alone could reach VND1.16 trillion, with an additional monthly expense of VND240 billion for data transmission.

The Ministry of Transport introduced the regulation to monitor driver behavior and improve road safety. However, the VCCI said that the still images captured by the cameras may not provide an accurate representation of driver actions. The organization also notes a lack of comprehensive data on passenger violations that would warrant such surveillance.

The VCCI said that the regulation is unclear on the type and number of cameras required. It also raised concerns about passenger privacy, stating that the law does not adequately address the issue.

According to the VCCI, the data processing system for the cameras is still in the experimental phase. Local Transport Departments are facing difficulties in data extraction, making effective management difficult.

The VCCI has urged the Ministry of Transport to conduct a comprehensive review of the regulation, considering its impact on businesses, legal systems, and individual privacy.

Government proposes to borrow over VND676 trillion

The Government is suggesting borrowing more than VND676 trillion (approximately US$27.5 billion) to address budget deficits, service principal debt, and provide funds for the on-lending of loans.

This exceeds the borrowing limits approved by the National Assembly and the actual borrowing figures for 2023, which stood at VND55 trillion and VND71.67 trillion, respectively.

According to a recently submitted Government report to the National Assembly's Standing Committee on the state of public debt in 2023 and the borrowing and repayment plan for 2024, the Government is suggesting borrowing more than VND676 trillion to address budget deficits, service principal debt, and allocate funds for on-lending. This exceeds the borrowing limits approved by the National Assembly and the actual borrowing amounts in 2023, which were VND55 trillion and VND71.67 trillion, respectively.

The primary sources of funding for the above-mentioned borrowing are mainly through bond issuance, Official Development Assistance (ODA), and foreign concessional loans. The government also emphasizes that, if necessary, they will mobilize funds from other legal financial sources.

Considering the projected borrowing and debt repayments, it is estimated that the public debt in 2024 will be in the range of 39-40 percent of GDP, government debt at 37-38 percent of GDP, and the nation's external debt at 38-39 percent of GDP. The Government's direct debt repayment obligations are expected to be approximately 24-25 percent of the total budget revenue, ensuring compliance with the limit established by the National Assembly.

Accordingly, direct debt payments for the following year will be approximately VND395.9 trillion, an increase of more than VND84.3 trillion compared to 2023. Of this amount, nearly 73 percent will go towards repaying the principal debt, with the remainder covering interest payments.

The Government is set to allocate around VND58.3 trillion for the repayment of loans acquired for on-lending, with over 96 percent of this sum dedicated to principal repayment. This debt repayment level will ensure that the direct debt servicing obligations remain below the 25 percent limit endorsed by the National Assembly.

In 2024, the Government will not entertain new guarantees for programs or projects seeking domestic or foreign loans. The existing guarantees for domestic business loans amount to around VND9.1 trillion while the guarantees for foreign loans total over VND88.4 trillion.

Based on the Government's estimates, local budgets for 2024 are projected to incur expenditures of VND26.5 trillion. Localities will seek borrowing of approximately VND30.6 trillion, primarily sourced from on-lending of ODA, government-concessional loans, and other domestic channels. The total debt repayment for localities exceeds VND4.1 trillion, and the year-end outstanding debt is 23 times the repayment amount, totaling over VND96 trillion.

Concerning foreign debt through self-borrowing and self-repayment, the Government has indicated that the projected net disbursement of medium and long-term loans is expected to be approximately $7.5-8.5 billion, and the short-term foreign debt is expected to grow by around 15-18 percent compared to the end of 2023.

In 2023, the Government ensured that the public debt safety thresholds, as determined by the National Assembly, were ensured. Specifically, expenditures amounted to approximately 4 percent of GDP, public debt stood at about 39-40 percent of GDP, Government debt was in the range of 36-37 percent of GDP, and the nation's foreign debt accounted for 37-38 percent of GDP. The Government's direct debt servicing obligations constituted around 20-21 percent of the total budget revenue, while the foreign debt repayment of the country was approximately 7-8 percent of the total merchandise and service export turnover, remaining within the limit of 25 percent approved by the National Assembly.

Int'l exhibition on precision engineering and machine tools kicks off in Hanoi

Hanoi welcomed the opening of the International Precision Engineering, Machine Tools and Metalworking Exhibition (MTA Hanoi 2023) on October 11, with the event attracting foreign businesses from more than 17 countries globally.      

The occasion is expected to create opportunities for businesses in the region to gain access to advanced machinery and solutions, thereby further improving competition for the Vietnamese mechanical engineering and manufacturing industry.

On display across more than 140 booths a range of cutting-edge products and services in the field of automation technology, cutting and machining tools, measurement and testing technology, metal cutting machine, modelling system and software, welding technology, and other auxiliary system and equipment.

These products are expected to meet the demands for investing in equipment and machinery in order to improve the production productivity of industrial parks in Hanoi and neighbouring provinces such as Bac Ninh, Vinh Phuc, Ha Nam, Hung Yen, Hai Duong, Ninh Binh, Phu Tho, Hai Phong, and Quang Ninh.

A series of thematic seminars will be held during the course of the function, with a specific focus on analysing smart manufacturing technology, semiconductor materials, artificial intelligence (AI), Internet of Things (IoT), and Deep Learning applications.

The event is due to run until October 13 and is expected to attract 5,000 visitors. Back in July, the MTA Vietnam 2023 was organised in Ho Chi Minh City by Informa Markets, one of the world's leading exhibition organisers in the UK.

World Customs Organisation meeting promotes digital era, renews customs services

The 2023 World Customs Organisation (WCO) Technology Conference and Exhibition opened in Hanoi on October 10 with the theme of “Embracing the Digital Age: Leveraging Technology, Fostering Innovation, and Nurturing the Next Generation of Customs Professionals”.

The three-day event brought together leaders and experts of international organizations, customs organisations of countries, and multinational companies that provide customs technology solutions. In particular, the conference is scheduled to comprise 10 plenary sessions, 9 thematic sessions and technology talks, while the exhibition is expected to welcome about 50 booths introducing new technologies from businesses related to customs and trade.  

Plenary sessions are to focus on the application of technology in customs operations, such as: application of big data analysis, machine learning, artificial intelligence in risk management, the Internet of Things in goods screening, and blockchain technology and data to increase data quality.

Delegates will also examine the application of technology to solve the challenges of global trade, including exchanging information through the single-window system, developing safe and sustainable e-commerce, and ensuring security, safety and continuity of the customs system capable of responding to disasters.

In his opening speech, Deputy Prime Minister Tran Luu Quang reaffirmed Vietnam’s goal to develop a modern and synchronous customs industry, in accordance with the country’s socio-economic development orientation and international standards and practices.

Vietnam will continue to promote international cooperation on customs in a comprehensive, extensive, and effective manner, seriously implement international agreements with partners, and internalize international commitments to synchronize with the domestic legal system, he stressed.

He also said that in addition to maximizing internal resources, Vietnam expects to further receive close cooperation and effective support from the WCO and customs agencies of partners, through technical support, sharing of information, knowledge, and experience, support in digital transformation, modernization of facilities and equipment, and human resources training and development.

The 2023 World Customs Organisation (WCO) Technology Conference and Exhibition marks 30 years of Vietnam’s admission to the WCO. Currently, Vietnam has developed trade relations with more than 200 countries and territories worldwide, with its import-export turnover last year reaching more than US$732 billion, ranking among the group of 20 countries with the largest trade turnover in the world.

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