Despite difficulties and challenges, the capital city of Hanoi has still led the nation in foreign direct investment (FDI) attraction over the past years, drawing 2.53 billion USD in the first nine months of this year.

With its competitive edges such as sustainable socio-economic development, abundant workforce, promising market and diverse services, Hanoi not only showcases its strategic location but also receives high praise for its infrastructure, supporting services, and collaboration with businesses.

Since Hanoi was expanded, its economy has remained a locomotive, serving as a driving force of the northern key economic region and playing an increasingly important role in the national economy.

Notably, tourism has gradually become a spearhead economic sector, helping Hanoi to rank in the top 10 fastest-growing tourism cities worldwide and named in the list of the 25 most popular tourist destinations globally.

During the 2015-2022 period, Hanoi actively extended its external relations and promoted culture and friendship exchanges, contributing to trade promotion and FDI attraction. It has so far formed cooperative ties with over 100 capitals and major cities across the world, maintaining its active role in multilateral cooperation frameworks.

Deputy Director of the municipal Department of Planning and Investment Vu Duy Tuan said with its strategic location and special advantages, Hanoi is well-positioned to draw FDI in technology, especially the semiconductor industry.

CEO and Founding Partner of VinaCapital Don Lam said a number of organisations, firms and groups are interested in semiconductor manufacturing in Vietnam and Hanoi in particular. It is the biggest opportunity ever for Vietnam to access this multi-billion-dollar market.

According to Chairman of the municipal People’s Committee Tran Sy Thanh, Hanoi is in the process of rebuilding the Capital Law, with two master plans on its development orientations till 2045 with a vision to 2065.

Accordingly, the city has identified several priority sectors that could join the global value chain and fully tap the strengths of localities such as real estate, commercial infrastructure, high- and environmentally-friendly technology sector using less energy.

During the 2021-2025 period, it is striving to attract 30-40 billion USD in FDI and disburse 20-30 billion USD, with a focus on urban infrastructure, smart city development, supporting industry using modern and eco-friendly technologies, Thanh said.

Vietnamese culture, products shine in Russia

A programme, titled Vietnamese Days in Russia, is taking place at the Hanoi - Moscow multifunctional complex Incentra in the Russian capital, introducing Vietnam’s cuisine, culture, and products.

Lasting from October 12 to 15, the series of events feature musical performances, an expo, and a Vietnam-Russia business forum. The trade fair gathers about 50 Vietnamese firms running stalls of quality goods on demand in Russia such as apparel, food, farm produce, beverage, mechanics products, and perfume.

Addressing the opening ceremony, Minister of Industry and Trade Nguyen Hong Dien said the programme, which also offers business networking for more than 150 enterprises from both countries, is a practical activity to connect the two business communities and help Russian consumers access a source of affordable quality products.

Russian Deputy Minister of Economic Development Vladimir Ilichev affirmed that the Russia-Vietnam partnership is an example of a trusting and sustainable relationship even in current conditions.

Talking to the Vietnam News Agency correspondent in Moscow, Director General of the Vietnam Trade Promotion Agency Vu Ba Phu assessed that the Russian side has great demand for products in which Vietnam has strengths such as farm produce, processed food, fresh fruits, and consumer goods, so the Southeast Asian nation is pinning hope on becoming a large, stable and sustainable supplier to the Russian market.

HCM City strives to become smart city by 2030

The southern largest economic hub of Ho Chi Minh City has capitalised on digital transformation to develop itself into a smart urban area by 2030.

HCM City ranked second out of 63 provinces and centrally-run cities in the country in terms of the 2022 digital transformation index (DTI), the Ministry of Information and Communications has announced.

The digital economy contributed about 18.66% of the city's gross regional domestic product (GRDP), equivalent to 1.5 quadrillion VND (61.5 billion USD) last year.

This was the third consecutive year that the city was highly evaluated based on its effective digital transformation programmes.

The city earned high rankings in digital transformation, including the first position in digital institutions and digital infrastructure, the second place in digital administration, and fourth position in digital economy.

So far, the city has successfully launched a centralised IT infrastructure for State agencies on the cloud computing platform at the city’s database centre. Security has been ensured for valuable information and network facilities of State agencies and Party units.

The quality of both telecoms networks and the Internet via broadband fiber optic cables in the city has improved so that these networks cover all households of all wards and communes citywide.

The city’s Local Government Service Platform (HCM LGSP) is linked to the counterparts in other nations for smoother connections.

The city is one of the first localities in the country to successfully integrate a system of electronic authentication and identification for citizens with the National Population Database managed by the  Ministry of Public Security, the National Public Service e-portal, the Database on Administrative Procedures managed by the Government Office, and other essential national databases (social insurance and justice).

Until now, more than 1,000 State departments and organisations, businesses, hospitals, and schools in the city have formed connections to this important system to accelerate the digital transformation process in state management activities and provision of public services to citizens.

The southern hub has carried out an array of activities to bolster digital transformation in 2023.

The Digital Transformation Week 2023 with the theme “Digital data mining, successful digital transformation” will be organised in the city from October 17-18 with a wide range of workshops on digital transformation and development of urban areas as well as an exhibition of outstanding digital platforms and solutions.

Meanwhile, the municipal Department of Information and Communications, in collaboration with the Vietnam Software & IT services (VINASA), also held a conference on digital transformation themed “Technology for life” - Tech4life 2023 on October 4 and 5 in response to the National Digital Transformation Day 2023 (October 10).

During the event, the municipal People’s Committee introduced a digital map, helping local residents look for necessary information on healthcare, transport, environment and education, among others.

According to Deputy Director of the municipal Department of Information and Communications Vo Thi Trung Trinh, HCM City will work to form an integrated database that serves the digital transformation process in the city and the country at large.

Thai Binh’s investment potential, advantages introduced to British enterprises

The northern province of Thai Binh introduced its potential and advantages to British enterprises at an investment promotion conference in London on October 12, pledging the best possible environment for all investors.

Secretary of the provincial Party Committee Ngo Dong Hai said Thai Binh, envisioned by the Government to become a province with the developed industrial, trade and service sectors, is growing strongly, boasts an attractive investment climate, and has incentives for industrial, healthcare, educational, and cultural investments. Its administration also strongly supports foreign investors, including British ones.

He expressed his hope that following the conference, cooperation opportunities for Thai Binh and the UK will be opened up in all fields, particularly education, clean energy, industry, finance, and the ones matching the Vietnamese province’s demand and the European country’s strength.

Thai Binh always accompanies and creates optimal conditions for enterprises to make investments, expand production and business activities, and operate profitably in the long term, the official stated.

Vietnamese Ambassador to the UK Nguyen Hoang Long said Vietnam is an emerging, dynamic and fast growing economy, with its localities acting as a driving force for development. Among them, Thai Binh is expected to become a new impetus for economic development in the northern region.

The province is a potential destination for British investors thanks to its favourable investment climate, comprehensive infrastructure, and a contingent of young and dynamic leaders, he went on, adding that the Vietnamese Embassy in the UK will stand side by side with Thai Binh and both countries’ enterprises during the formation and implementation of cooperation projects.

Nigel Evan, Deputy Speaker of the UK House of Commons, noted the two countries’ relations are now in their prime, especially since the signing of the UK - Vietnam Free Trade Agreement (UKVFTA) in 2020. With its participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2023, the UK will have chances for further promoting trade ties with Vietnam, an emerging economy among the CPTPP members.

Paul Hoang, Chairman of the Vietnam Business Association in the UK (VBUK), held that with a strategic location, a skilled workforce, a sustainable development strategy and efforts to improve the business environment, Thai Binh is an attractive investment destination and, in fact, has attracted a growing number of domestic and foreign investors.
         
He pointed out chances for Thai Binh, famous for agricultural production, to export farm produce, especially high-quality rice and seafood, to the UK. He also suggested cooperation with British companies in electronics and textile - garment manufacturing, renewable energy, education, technology transfer, and financial services.

The VBUK is ready to help Thai Binh and British enterprises to connect and cooperate with each other for the sake of both sides’ interests, Hoang affirmed.

Southeastern region has great potential to attract green investment

The southeastern region, which leads the country in foreign direct investment attraction, has great potential and motivation to attract high-quality investment, particularly those to green and sustainable development areas, heard a conference held in Dong Nai province on October 12.

Speaking at the conference, which focused on green investment attraction to the region, Do Thien Anh Tuan, lecturer at the Fulbright School of Public Policy and Management said that the Southeast region has 692 businesses subject to the requirement to make greenhouse gas (GHG) emissions inventory under the law.

This is a big challenge, so a framework programme for the implementation of the GHG emission inventory is needed, he said, adding that the programme should be integrated into other programmes in the field of ministries and agencies.

Financial solutions such as green credit, green stocks, green bonds, and tax policies are also needed to provide incentives and form carbon credit markets.

Meanwhile, localities need to promote inter-regional mechanisms, business environment reform, and human resource training as well as have specific policies to encourage businesses to innovate technology and shift to green growth models.

Associate Professor Dr. Pham Tien Dat, Rector of the University of Finance and Marketing, said that green investment brings not only positive impacts in terms of climate change adaptation and environmental protection but also great economic benefits.

Investment in green projects, green technology, and green products helps change the community’s consumption lifestyle and increase the competitive advantage, and reputation of businesses, and countries.

Moreover, businesses that apply green technology will attract more capital from investors, and gain more customers, thereby increasing the value of the business. On the other hand, green projects can mobilise capital from banks at lower costs than usual.

Nguyen Dinh Cung, former director of the Central Institute for Economic Management, said that the southeastern region has seen rapid development but its growth model for many years has not changed.

Innovating the growth model of the region is an inevitable need, he said, suggesting the region select investors with high technologies, environmentally friendly, those using little labour, and planting more trees.

The southeastern region must also focus on waste treatment, especially wastewater treatment, he said.

Foreign shipping companies interested in Vietnam’s containers

Many of the world’s leading shipping companies joining Intermodal Europe in Amsterdam, Netherlands, have expressed their interest in containers produced by Vietnam’s Hoa Phat Group.

Vu Duc Sinh, Director of Hoa Phat Container JSC, said participating in Intermodal Europe 2023, Europe’s leading event for container shipping and intermodal transport, marks a milestone for Hoa Phat to enter the international container market.

With long-term experience in steel production as well as its investment in cutting-edge equipment and technologies, the company is committed to providing containers that satisfy international standards, thus meeting the needs of the marine transportation sector, he said.  

Tarun Somani, Chief Operating Officer of Boxhub that provides global container services, said he was impressed by Hoa Phat’s sturdy containers that meet special ISO standards.

He held that Hoa Phat has many advantages and production capabilities to participate in providing services in the international market.

A representative from Coin Container Inspiration praised Hoa Phat for its good prices and reputation, saying it would be a good option for his company in the time ahead.

This is the first time Hoa Phat has introduced its products at Intermodal Europe, which took place from October 10-12.

Penalties imposed on expressway contractors over delays

The Ministry of Transport has instructed the My Thuan Project Management Board to enforce penalties on contractors who fail to adhere to project schedules while working on the My Thuan-Can Tho Expressway.

The My Thuan Project Management Board, along with contractors and relevant units, has been urged to mobilize manpower and equipment to expedite the progress of Phase 1 of the My Thuan-Can Tho Expressway so that it can be completed by the end of this year as originally planned.

The Construction Investment Management Agency under the Ministry of Transport has pointed out that the delays in the expressway project are partly due to unfavorable weather conditions. However, the primary reason for the setbacks is the failure of contractors to adequately allocate personnel and equipment for the project.

To meet the year-end deadline, the My Thuan Project Management Board has been tasked with maintaining a regular presence at the construction sites to oversee the project’s implementation and address any technical issues that may arise.

The management unit is also responsible for directing contractors and consultants to review outstanding work, establish detailed plans for remaining tasks, and commit to project schedules.

Penalties will be applied to contractors who do not adhere to their project schedules and do not take corrective action after receiving warnings from the management board. Contractors are also prohibited from relocating equipment, machinery, or personnel from construction sites without prior consent from the investor.

The My Thuan Project Management Board has reported that the project is currently 72% complete.

The My Thuan-Can Tho Expressway, spanning nearly 23 kilometers in Vinh Long Province, is being developed by the My Thuan Project Management Board and requires over VND4,800 billion. Once completed, the expressway will provide a crucial link between HCMC and Can Tho City.

Central bank continues T-bill issuance to stabilise exchange rate

The State Bank of Vietnam (SBV) on October 9 continued to offer 28-day treasury bills (T-bills) through the interest rate auction mechanism.

Four out of 10 participants won the bid with the total amount of nearly 5 trillion VND (204.89 million USD), and an interest rate of 1%, as compared with six winners and the interest rate of 1.18% in the October 3 auction.

Over the past 13 trading sessions, the central bank has net withdrawn some 145.7 trillion VND from the banking system through the T-bill channel.

T-bills are short-term debt securities with maturities typically ranging from a few days to one year. Issued by the State Treasury, T-bills serve as a means for the Government to raise short-term funds to finance its operations.

According to economic experts, the central bank's continuous issuance of T-bills is aimed at adjusting the short-term liquidity in the banking system, thus stabilising the USD/VND exchange rate and addressing the issue of excess capital.

The BIDV Securities Joint Stock Company (BSC) said this is a common practice of the central bank to regulate the abundant liquidity in the interbank market.

Following the continuous issuance of T-bills by the SBV, the exchange rate has shown signs of cooling down. The bank set the daily reference exchange rate at 24,069 VND/USD on October 10, down 5 VND from the last weekend.

With the current trading band of +/- 5%, the ceiling rate applicable for commercial banks during the day is 25,272 VND/USD and the floor rate 22,865 VND/USD.

Long An revokes 67 long-delayed projects in 9 months

The authorities of the Mekong Delta province of Long An withdrew 41 domestic investment projects and 26 foreign direct investment (FDI) ones with a total capital of 250 million USD in the last three quarters.

Accordingly, the revoked are long-delayed projects with activities not aligning with objectives, or those that have not reported investment activities.

In addition, the local authorities have conducted inspections of 58 other projects, including 19 in industrial parks; and issued 31 decisions on imposing sanctions against administrative violations related to planning and investment activities, with a combined amount of 2.1 billion VND.

Chairman of the provincial People’s Committee Nguyen Van Ut has demanded leaders of local departments and sectors, localities, and investors to continue to proactively coordinate to review and propose measures to handle long-delayed investment projects.

Dialogues with businesses must be arranged to remove difficulties and obstacles facing them, he said, noting that the biddings and bid invitations must be conducted transparently.

Vietnamese rice still selling well in global market on increasing demand

Several regional countries such as Indonesia and the Philippines have recently moved to increase their imports of Vietnamese rice, opening up bright prospects ahead for the global and Vietnamese rice markets during the last months of the year, according to insiders.

Specifically, Indonesia recently invited bids for 500,000 tonnes of rice, including 300,000 tonnes in rice supplies from Vietnam, Thailand, and Myanmar, and 200,000 tonnes from Pakistan. The winning bidder is expected to deliver their shipment to Indonesia before December 25.

Due to the continued purchase, Indonesia has surpassed China as the second largest importer of Vietnamese rice. The past nine months of the year saw Indonesia import 871,000 tonnes of rice from Vietnam, representing a 16–fold rise compared to the same period last year.

As the largest importer of Vietnamese rice, the Philippines also placed export orders again after the Philippine Government removed the ceiling placed on domestic rice prices.

Vietnamese rice exports to the Philippines in the nine-month period reached 2.4 million tonnes worth US$1.5 billion, up nearly 20% in turnover against last year’s corresponding period.

China, which is among Vietnam’s top three rice importers, also increased its purchases of sticky rice and ST 24 and 25 rice in October. The rice export volume to the northern neighbour during the nine-month period surged by 35% year on year to over 850,000 tonnes.

Aside from these major markets, Vietnamese rice exports to Ghana, Turkey, and Chile also skyrocketed by 46% or more year on year, showing no signs of decreasing throughout the reviewed period.

A representative of an export firm in the Mekong Delta province of An Giang pointed out that Indonesia's opening of a bid package for rice in October will help both the global and Vietnamese markets grow rapidly ahead in the remainder of the year.

Sharing this perspective, the director of an export enterprise in Dong Thap province revealed that Vietnamese rice is dominating the global market in terms of output and delivery time, hoping Vietnamese businesses would win Indonesia’s bidding contracts.

On October 9, the price of  5% broken rice of Vietnam hovered between US$600 and US$613 per tonne, while fragrant rice was traded at US$640 and US$650 that are US$30 and US$65 per tonne higher than those of Thai and Pakistani rice.

Cashew exports flourish, Vinacas warns of food safety

The Vietnam Cashew Association (Vinacas) has advised firms to pay attention to ensuring quality and food safety to avoid unnecessary export-related risks given growing overseas shipments of cashew nuts, which are forecast to soar in the final months of the year.

Talking to the press in Ho Chi Minh City on October 10, Vinacas Chairman Pham Van Cong said the exports faced many difficulties in the first half due to the impact of inflation, economic recession, and conflicts between countries. However, from the third quarter onwards, the market has been picking up, with the two major ones – the US and China – increasing their imports contributing to the growth in both export volume and value.

Between January and September, 456,000 tonnes of cashew nuts were sold abroad for 2.6 billion USD, up 19.6% and 14.3% year-on-year, respectively.

According to the association, the demand for cashew nuts in the last three months of the year will increase in all markets, especially the US and the EU, to meet holiday and festive season demand, driving further growth in Vietnam’s exports of the product.

However, while the market outlook is promising, Vinacas has also noted an increasing number of incidents where shipments are flagged by importers due to pests and pesticide exceeding permissible levels.

Vinacas Standing Vice Chairman Bach Khanh Nhut said this not only affects individual businesses but also tarnishes the reputation of the entire Vietnamese cashew industry. This is also the reason why the export prices of the Vietnamese nuts are currently lower than those from India.

Digital transformation helps enhance capacity, competitives for enterprises

Digital transformation is the most effective way to help businesses improve their capacity and competitiveness, and adapt to new trends and situations, according to Nguyen Duc Trung, Deputy Director of the Enterprise Development Department (EDD) at the Ministry of Planning and Investment (MPI).

The EDD reported that in the 2021-2023 period, the department has mobilised resources from international agencies and coordinated with agencies, associations and organisations to implement a programme to support businesses in digital transformation for 2021-2025. These activities focus on raising awareness, building databases, tools, documents and platforms to enhance awareness for businesses and develop an ecosystem to assist businesses in digital transformation.

The department cited a survey conducted by the MPI that shows positive changes in enterprises' awareness of the need for digital transformation. Many enterprises have entered the stage of digitising data, standardising processes, applying digital technology and moving towards digital transformation on a broader scale.

However, these results are still modest as businesses, especially small and medium-sized enterprises, are still facing many challenges in the digital transformation process, insiders said.

A representative of Vietnam Posts and Telecommunications Group (VNPT) said that digital transformation is not an easy journey and many difficulties will arise, requiring the unity and synergy of all enterprises. The group has accompanied ministries, localities, and associations to promote the digital transformation process of businesses through the oneSME platform, the representative went on. 

The MPI has set the goal that through the digital transformation support programme, by 2025 at least 100,000 businesses will benefit from the programme and 100 enterprises will receive assistance to become success models in digital transformation. 

Nguyen Thi Le Quyen, an EDD’s representative said that in 2024-2025, the programme will focus on in-depth training to improve digital transformation capacity for businesses, particularly via training of heads of departments, managerial staff in enterprises, digital technology engineers and consulting experts.

According to Phung Dinh Thong, Director of Thang Loi  Co. Ltd, integrating software and technology solutions into the company's management activities is very necessary because it helps solve its current problems, especially in the context of an increasing number of orders. However, to deploy them effectively, the company needs in-depth support from experts, he said, adding that it will enable the company minimise costs and the use of resources while making the most of functions of software and technology solutions.

Two new sections of Ho Chi Minh Road to be built in Mekong Delta

The Ministry of Transport has approved a project worth over 3.9 trillion VND (159.8 million USD) on building the two sections of Ho Chi Minh Road in the Mekong Delta provinces of Kien Giang and Bac Lieu.

The Rach Soi - Ben Nhat section, over 11km long, will start in Chau Thanh district and end in Giong Rieng district of Kien Giang province. Meanwhile, the Go Quao - Vinh Thuan section runs for nearly 41km, from Go Quao district to Vinh Thuan district of Kien Giang.

Of the total length of nearly 52km, about 6.6km will traverse the neighbouring province of Bac Lieu, according to the ministry’s report.

When completed, the four-lane stretches will have a designed speed of 80km per hour.

The project investment is more than 3.9 trillion VND sourced from the state budget.

The construction of the two sections of Ho Chi Minh Road, an artery from the north to the south of Vietnam, is expected to help complete the transport network, improve the transportation capacity, and reduce traffic accidents in Kien Giang and Bac Lieu provinces.

Southern industrial real estate market vibrant in Q3

The industrial real estate market in the south was vibrant and thriving in the third quarter, with many ready-built factories and warehouses entering the market, according to real estate research companies.

CEO of Cushman & Wakefield Trang Bui said after about 2-3 years without new industrial land supply in the southern key economic region, the third quarter of 2023 witnessed new supply from Long An with the entry of the Nam Tan Tap Industrial Park developed by Saigontel, which contributed roughly 171ha to the market.

The average occupancy rate reached nearly 82%, equivalent to a net absorption of 116ha, representing a quarterly increase of 66%. Long An and Ba Ria - Vung Tau provinces recorded the highest net absorption rates, with 59% and 28%, respectively.

It was attributed to the recovery of industrial production sector.

Cushman & Wakefield forecast that between now and 2026, the future supply is estimated at around 5,700ha, mainly coming from Binh Duong, Dong Nai, Long An, and Ba Ria - Vung Tau provinces. Amid high demand, land rental prices are expected to continue the upward trend.

It said the outlook for the ready-built factory market will remain vibrant, with approximately 2.5 million sq.m of ready-built factory space introduced to the market from late 2023 to 2026, with the participation of both domestic and foreign investors. The absorption rate is also expected to continue increasing in the coming quarters, benefiting from the relocation of manufacturing facilities from China to Vietnam.

The ready-built warehouse sector also noted the entry of two new projects into the market in Dong Nai and Binh Duong provinces, with a total area of some 110,000 sq.m.

John Campbell, Associate Director and head of the Industrial Services Department at Savills Vietnam, said as of 2023, Vietnam has a total of 397 IPs covering a total land area of 122,900 ha. Of which, 292 IPs covering more than 87,100ha are operating, while 106 others are under construction with a total area of 35,700ha.

IPs across the country have high occupancy rates of over 80%. The northern provinces record 83% while the southern region 91%.

According to him, the scarcity of land supply and rising land prices are driving the trend towards developing multi-story factories and warehouses outside Ho Chi Minh City, in order to optimise land investment costs.

Solutions required for competitiveness conundrum

Vietnam is under sustained pressure to lift enterprises out from the gloom in order to reach desired economic growth goals over the next few years.

National Assembly (NA) Chairman Vuong Dinh Hue last week warned that the Vietnamese economy’s competitiveness is on the decline, with a number of growth impetuses waning.

“The economic growth rate in the first half of this year hit only 3.72 per cent on-year, making it very hard to reach the desired goal of 6.5 per cent this year. This would also mean our growth target for the 2021-2025 will be affected,” Hue said at last week’s Vietnam Socioeconomic Forum 2023 in Hanoi.

The NA earlier set a target that the economy will grow 6.5-7 per cent a year for 2021-2025.

“In the first eight months of this year, industrial production and construction have failed to become a key driving force for economic growth. This is risky for the economy as it is now changing towards a new growth model in which industrial production is considered an important pillar,” Hue said.

According to the General Statistics Office (GSO), Vietnam’s eight-month index for industrial production (IIP) suffered from an on-year drop of 0.4 per cent.

The eight-month IIP of 2023 for the processing and manufacturing, which creates more than 80 per cent of industrial growth, reduced 0.6 per cent compared to the same period last year when it went up by 10.1 per cent on-year.

“Our economy is facing massive difficulties, in which the resilience of enterprises is weakening as they almost have no markets for their products,” Hue said. “It is urgent now to help enterprises out of difficulties as soon as possible. Once they become stronger, the economy will be stronger.”

Jochen Schmittmann, resident representative of the International Monetary Fund (IMF) in Vietnam, said that like many other economies, Vietnam has been hit hard by global headwinds, which have dented the country’s economic growth in the first six months.

“Such headwinds have affected Vietnam’s exports and industrial production. However, I believe the economy will recover in the second half of the year thanks to global demands bouncing back and nations’ efforts dealing with issues related to finance and property,” Schmittmann said.

Prompted by economic difficulties, the IMF reduced its 2023 prediction for Vietnam’s growth from 6.2 per cent in January to 4.7 per cent in July.

“Nevertheless, Vietnam will still be affected by interruptions in global supply chains. The country will need more support for enterprises,” Schmittmann said.

According to the Ministry of Finance, in 2023, a package of about VND200 trillion ($8.44 billion) is earmarked for assisting enterprises in the form of tax exemption and reduction. So far, more than $5.48 billion has been released. Going forward, another $2.74 billion worth of budget revenue from last year will be added to the package, said Deputy Minister of Finance Vo Thanh Hung.

Tran Dinh Thien, former general director of the Vietnam Economics Institute said many enterprises have become exhausted due to a lack of capital and markets, while banks in general cannot provide them loans for a variety of reasons.

“If enterprises want loans, they must have collateral, but many are poor enterprises without valuable assets to mortgage at banks. This is a big paradox in the economy,” Thien said. “Often, even when enterprises are offered loans, they cannot boost production and business activities as there are no output markets for them. They cannot sell their products.”

So far this year to the end of August, 71,800 businesses halted operations, up 20.5 per cent compared to the corresponding period last year; 41,100 enterprises stopped operations and waited for dissolution procedures, up 26.7 per cent; and 11,800 enterprises completed such procedures, according to the GSO. On average, about 15,600 businesses were kicked from the market each month.

The Asian Development Bank has revised its growth forecast for Vietnam down from 6.5 to 5.8 per cent in 2023, and from 6.8 per cent to 6.2 per cent in 2024.

According to the Ministry of Planning and Investment (MPI), so as to promote growth, the government has been implementing many measures such as accelerating public investment disbursement, increasing exports, and stimulating consumption demand in a drastic, synchronous and effective manner.

“This is a very heavy task, because if growth fails to meet the target this year, it will affect the implementation of the Socioeconomic Development Plan for 2021-2025, the Socioeconomic Development Strategy for 2021-2025, and even further targets for 2030 - 2045 as proposed by the Resolution of the 13th National Party Congress,” said Deputy Minister of Planning and Investment Tran Quoc Phuong.

Export boost paramount for recovery

The domestic export landscape is deemed to be on the right tack, but barriers remain up ahead in terms of overseas markets, which have dampened the situation over recent months.
 
The most updated figures from the Ministry of Industry and Trade (MoIT) show that Vietnam’s goods export turnover in August reached $32.4 billion, up 7.7 per cent on-month.

Vietnamese exporters raked in $8.43 billion, up 8.7 per cent, and foreign exporters fetched $23.9 billion, including crude oil exports, up 7.3 per cent. This hints at domestic exporters performing better than foreign ones.

“August is the month with the highest export turnover over the past year, and it has marked the fourth consecutive month with export growth,” said Deputy Minister of Industry and Trade Phan Thi Thang.

Vietnam’s export turnover has been bouncing back, at $27.86 billion in May, $29.4 billion in June, and $30 billion in July. It is expected that the export situation will continue improving from now until the year’s end, with global demand for exports to increase on the back of the Christmas period, the MoIT said.

The ministry attributes the export recovery to the government’s synchronous and positive solutions to help enterprises deal with difficulties and expand export markets.

“We have been able to obtain new loans at banks with preferential lending rates. Export and import procedures have also been simplified, enabling us to boost exports to the US, South Korea, and Japan,” said Cao Hoang Huong, vice general director of Tan Viet Garment JSC in Hanoi.

Tan Viet’s export revenue reached about VND600 billion ($25.3 million) last year, and about VND300 billion ($12.76 million) in the first eight months of this year.

Its performance is improved compared to the whole garment and textile sector, which has suffered from an on-year 15 per cent reduction in export turnover so far this year.

However, Huong said, as compared to the same period last year, her company’s eight-month export value is still 5 per cent lower.

“This is due to difficulties in other markets such as ASEAN and Europe. Currently, we have export orders for October only, and not November or December, meaning we are having to seek more foreign partners both online and offline now.”

Despite signals of recovery, Vietnam’s August export turnover remained 7.6 per cent lower than that in the corresponding period last year due to weak demand from global markets. Vietnamese and foreign exporters (including crude oil exports) suffered from an on-year drop of 2.5 and 9.3 per cent, respectively.

The World Bank forecasted that Vietnam’s economy is expected to grow by 4.7 per cent in 2023, with a slow projected recovery to 5.5 per cent in 2024 and to 6 per cent in 2025.

“The growth projection assumes a moderate recovery in goods exports during the second half of 2023, especially the fourth quarter, based on a gradual recovery of demand from the European Union and United States,” the World Bank stated.

Looking ahead to 2024, economic growth is projected to be driven by a moderate recovery in exports and imports, in line with the expected rebound in global growth, as well as improvements in private investment, it added.

However, the MoIT has also issued a warning that Vietnam’s key growth momentum such as investment, export, and consumption are facing massive challenges, which have dented the country’s exports.

In the first eight months of this year, Vietnam’s total export turnover is estimated to have hit $227.7 billion, down 10 per cent on-year. Vietnamese exporters earned $59.9 billion, down 9.2 per cent and accounting for 26.3 per cent of the country’s total export turnover; and foreign-invested exporters fetched $167.8 billion, down 10.3 per cent and holding 73.7 per cent of total.

The MoIT ascribed the 2023 export situation thus far to global geopolitical tensions causing a shrink in demand for exports in many key export markets of Vietnam, especially in the first half of this year.

“Many major economies which are Vietnam’s major export partners reduced the spending on ordinary and luxury items. This has caused a drop in such export orders, while the country’s industrial sectors are largely export-oriented, relying on the global market as domestic outputs has far exceeded the domestic demand,” said Deputy Minister of Industry and Trade Do Thang Hai.

Especially when it comes to many sectors such as garments and textiles, footwear, aquatic products, and electronics, only 10 per cent are consumed at home and the remainder is for export, Hai explained.

In an example, mobile phones and their spare parts are reported to have reached an eight-month export turnover of $33.94 billion, down 15.4 per cent on-year.

Meanwhile, electronics, computers, and their spare parts – which are mainly produced by firms such as Samsung, LG, Jing Gong, Daewoo Vietnam, Genesistek Vina, and FC Vietnam – have earned a total eight-month export turnover of 36.15 billion, down 18.3 per cent as compared to that in the corresponding period last year.

Adjusting electricity tariff vital to the energy sector

Maintaining low electricity prices is the main reason behind the supply and demand pressure, which hinders investment in the energy sector and the shift to green economy.
 
The increase in electricity prices remains a hot topic as it has a major impact on households and businesses alike. Vietnam Electricity (EVN) has proposed another increase in retail electricity prices to compensate for its losses.

Speaking at the state capital management in enterprises seminar last week, Nguyen Xuan Nam, vice president of EVN, said, "EVN accepts selling electricity at much lower prices than feed-in-tariffs (FiT). Although electricity prices have climbed three per cent in 2023, it only minimizes some parts of lingering difficulties since 2022. This year, retail electricity prices were not adjusted in a timely manner. As a result, EVN has incurred a loss of $1.48 billion."

He added, "EVN's main task is to ensure a sufficient supply of electricity to the economy. However, the company encounters many challenges in mobilising and balancing its capital to fund its initiatives and ensuring safe operation and sufficient electricity supply in the following years. In 2023, EVN plans to allocate $3.88 billion for its investment activities. This plan is affected due to the losses."

To ensure the supply and demand balance in 2024, EVN calculates that electricity demand will increase by 8.96 per cent compared with 2023.

In the last four months of this year, the total output of electricity generation and imports is estimated to reach 95.6 - 97.2 billion kWh for the entire system, up 10-12 per cent on-year.

In addition, the government is promoting the green economy, but the current FiT mechanism is not attractive enough to lure renewable energy developers. The top priority for businesses is making returns on investment. At this time, many businesses do not dare invest in renewable energy projects.

Many renewable energy projects are facing legal bottlenecks. This can be changed if policymakers issue mechanisms for research and development activities and invite international investors to co-develop sustainable energy in Vietnam. Prior to October 30, many businesses made heavy investments in renewable energy thanks to good policy and FiT.

At present, Vietnamese authorities have yet to unveil the FiT regime for renewable energy.

Nguyen Xuan Thanh, a lecturer at the Fulbright School of Public Policy and Management in Vietnam said, "The increase in electricity prices will spark the public's concerns without promoting the green transition. This is particularly true if renewable energy is not developed due to a lack of an attractive roadmap for the FiT increase."

According to Thanh, electricity prices should be updated with a comprehensive calculation of new and arising production costs. There has been a proliferation of new energy sources, many of which are more expensive than the present average price of power.

As a rough estimate, if the cost of renewable energy stands between 5-7 US cents per kWh, with the addition of transmission costs, the retail price should rise to 10-12 US cents per kWh. However, the average retail price hovers around 8 US cents per kWh.

Thanh further noted that it was vital to accelerate electricity price bidding for renewable energy plants. This helps take advantage of wind and solar energy projects with low operation costs. The renewable energy sources will also balance the shortage of electricity.

"Renewable energy producers prefer guaranteed contracts. However, they would be equally happy with a transparent bidding process that was supervised by a separate regulatory authority," he added.

In September, the Ministry of Industry and Trade issued Report No.158/BC-BCT to the prime minister on researching and building a direct power purchase agreement between renewable energy generators and big customers.

"While the auction process is still being developed, an alternative solution is long-term fixed contracts at set rates, which is similar to fossil fuel energy projects. Such contracts might make it easier to obtain bank loans and longer-term, less expensive international borrowings,”Thanh said.

However, he warned, since the risk of energy dispatching is transferred from wind and solar plants to electricity buyers, these contracts may impose additional costs on the state.

"People and businesses are willing to pay for clean electricity. Businesses are paying attention to electricity prices for transitional renewable energy projects," said Hoang Xuan Co, general secretary of the Vietnam Association of Environmental Economics.

"However, renewable energy developers are facing challenges due to a lack of basic research and technology, as well as conversion and grid connection equipment, leading to higher expenses for electricity generation. There is a shortage of scientific ground to figure out the feed-in tariffs for wind and solar energy. With comprehensive research, it is possible to figure out the expenses for developing wind and solar energy projects in specific areas. This will facilitate the shift to green energy."

- According to National Power Development Plan VIII, by 2030, the total capacity of power plants serving domestic demand will be almost 150,500MW, excluding exports, existing rooftop solar power, and renewable energy to produce new energy. Among them, onshore wind power is 21,880MW (14.5 per cent of the total capacity of power plants); offshore wind power is 6,000MW (4 per cent); and solar power is around 12,840MW (8.5 per cent).

- Before the end of September, the Ministry of Industry and Trade will report to the government on the retail electricity tariff structure. The ministry submitted the supplementary report for the decision on the mechanism to adjust retail power tariffs in August.

Hoa Binh promotes trade, investment in UK

The northern province of Hoa Binh introduced its potential and strengths as well as investment opportunities to British investors at an investment, trade and tourism promotion conference in London on October 11.

Addressing the event, Vietnamese Ambassador to the UK Nguyen Hoang Long said that Hoa Binh, which borders the capital city of Hanoi, has a favourable location and abundant investment opportunities.

He suggested British investors seek opportunities in partnering with Hoa Binh in the fields of exploring tourism, high-tech agriculture, and tertiary education development, as well as resort real estate.

Bui Van Khanh, Chairman of the provincial People’s Committee, said that Hoa Binh is focusing on four strategic areas for socio-economic development, including planning, infrastructure development, improvement of institutions and the investment and business environment, and human resources development.

He highlighted prioritised investment areas such as green, clean and high-quality agricultural production, agro-forestry-aquatic production and processing, resort tourism development, and ecological urban development.

The provincial leader underlined that Hoa Binh plans to further expand its basic infrastructure system to facilitate investment activities, while providing preferential policies to investors, including exemption and reduction of land rent, and import-export taxes, and support in vocational training.

Khanh called on British investors to invest in Hoa Binh in the fields of agriculture, industry, services, tourism, and development research, pledging that the local administration always supports and accompanies them for the benefits of both sides.

Chairman of the Vietnam Business Association in the UK (VBUK) Paul Hoang said that the association is ready to connect Vietnamese and British partners and support them in dealing with problems during the cooperation process such as differences in business culture.

Hoang Le Hang, First Secretary of the Vietnam Trade Office in the UK, said that Vietnam and the UK have enjoyed positive economic partnership, with two-way trade reaching over 5.26 billion USD in the first nine months of this year, representing a year-on-year rise of 0.8% amid global economic downturn.

Particularly, a number of fruits of Hoa Binh have been sold in the UK, including Cao Phong orange, Cao Phong tangerine, Tan Lac red pomelo, Dien grapefruit, dragon fruit and about more than 100 local specialty products, she noted.

The conference was part of a programme of Hoa Binh to promote trade and exports in the UK market. On October 13, the province is scheduled to sign a memorandum of understanding with Longdan Group, a leading importer of Vietnamese products in the UK, on cooperation in exporting Hoa Binh products to the European market.

Meanwhile, R.Y.B JSC – a pioneer in bringing Vietnamese fruits to the world - and Longdan Group will also sign a deal on the import-export of Dien pomelo after the fruit was welcomed by consumers when it was first exported to the UK in late last year.

Hoa Binh, a northwestern mountainous province, has a natural area of 4,590 sq.km and a population of nearly 950,000, which is home to six ethnic groups.

The province is adjacent to Hanoi and National High-Tech Park, connecting the Northern Delta with the Northwest mountainous regions. It has a transport system connecting with Noi Bai international airport, Tho Xuan airport in Thanh Hoa, Hai Phong seaport, and Huu Nghi international border gate to China.

In 2022, the province’s growth rate reached 9.03%, while its export revenue hit 1.43 billion USD, and urbanisation rate was 33.5%.

Hoa Binh currently has eight industrial parks with a total area of over 1,500 hectares, along with 15 industrial clusters covering more than 1,200 hectares. By 2025, the total area of local industrial parks and clusters is expected to account for 1% of the natural area of the province.

To date, the province has attracted 736 projects, including 36 foreign-invested projects with combined capital of over 600 million USD.

Trade fair kicks off Vietnam Days in Russia

A trade fair displaying a range of high-quality products of the two countries opened the Vietnam Days in Russia, with the event being held at the Hanoi-Moscow multifunctional complex (Incentra) in Moscow on October 12.

Addressing the opening ceremony, Minister of Industry and Trade Nguyen Hong Dien said the function would serve to boost co-operation between Vietnamese and Russian firms, whilst also providing many chances for Russian consumers to make use of quality Vietnamese products at reasonable prices.

Deputy Minister of Economic Development of the Russian Federation Vladimir Ilyichev noted that Vietnam represents an important partner of Russia, with the Russian side keen to create favourable conditions for Vietnamese businesses to operate effectively in the Russian market.

Immediately after the opening ceremony of Vietnam Days in Russia, over 150 Vietnamese and Russian businesses participated in a trade fair put on to introduce high-quality products and services, including garments, footwear, handicrafts, gifts, and agricultural products.

Art performances were also held as a means of promoting both Vietnamese food and traditional culture to international friends.

Furthermore, a business forum was organised at the Hanoi-Moscow multifunctional complex, drawing the participation of more than 100 businesses. They discussed urgent issues in trade and investment co-operation between the two countries, such as import and export prospects, as well as resolving some obstacles in payment and transportation of goods.

Vietnam Days in Russia has been co-organised by the Vietnamese Embassy in Russia, the Ministry of Industry and Trade, the Vietnamese Business Association in Russia, and Incentra Company, with the event due to last through to October 15.

Forum seeks ways to improve SMEs’ competitiveness

The forum "Pioneering the entrepreneurial spirit, fostering a sustainable Vietnam" got underway on October 13 in Hanoi to encourage businesses, especially small and medium-sized enterprises (SMEs), to improve their competitiveness.

The event was jointly held by the Ministry of Planning and Investment and the United States Agency for International Development (USAID), attracting the participation of more than 150 delegates from relevant ministries, international organisations, investment funds, and financial institutions.

It has contributed to enhancing the internal strength of the national economy as it moves towards sustainable and inclusive development.

The past two years has seen the Ministry of Planning and Investment and the USAID-funded “Improving Private Sector Competitiveness” Project implement a range of support activities for pioneering businesses and firms that have applied environmental, social, and governance (ESG) practices, as well as those which have achieved remarkable results.

Upon addressing the forum, Deputy Minister of Planning and Investment Tran Duy Dong emphasized that pioneering businesses are the core force to lead and create changes in multiple fields for the Vietnamese economy at present and in the future.

Deputy Minister Dong noted that these will be exemplary businesses that will spread the pioneering spirit of Vietnamese people on the journey to bring "Made by Vietnam" products to the international market.

Furthermore, Aler Grubbs, mission director for Vietnam of USAID, revealed that the USAID is fully committed to accelerating economic growth and improving the overall competitiveness of the Vietnamese private sector.

Through close co-operation with the Ministry of Planning and Investment, the USAID will support businesses in promoting sustainable business and applying ESG practices effectively, she added.

She emphasized that the USAID has helped Vietnamese businesses to improve their competitiveness, achieve their long-term development goals, meet international standards, and join deeply in global value chains for a sustainable and prosperous Vietnam in the future. 

Hanoi introduces products at Australia’s Home Show

Hanoi’s Industry and Trade Department and the Vietnamese Consulate General in Sydney have collaborated to open the “Hanoi- Vietnam” pavilion at Sydney Home Show – Australia’s largest home improvement expo from October 13-15.

The activity aims to help Hanoi’s businesses, producers and exporters introduce their goods and services to foreign customers as well as seek business opportunities. The event is an opportunity for Hanoi to show its potential to attract investment.

Exhibitors from Hanoi also attend forums, conferences, and seminars held on the sidelines of the event. In addition, their products are also promoted on the expo's website.

Tran Thi Phuong Lan, Acting Director of Hanoi Department of Industry and Trade, said that Australia is a very potential market. Vietnam and Australia are among leading trading partners of each other.

She hoped that via the expo, Hanoi businesses, especially those operating in handicrafts, wooden furniture, stone furniture and other home products, can find new cooperation opportunities after the COVID-19 pandemic.

Hanoi firms hope to tighten trade, investment links with Australian partners

Hanoi businesses had a chance to explore the market, seek cooperation and business opportunities, and advertise their brands to companies of Australia at a trade and investment promotion conference held in Sydney on October 12.

Addressing the event, Nguyen Thu Huong, Trade Counsellor at the Vietnamese Trade Office in Australia, underlined the unceasing growth of Vietnam - Australia relations, which has created favourable conditions for the countries to further develop economic ties.

The Australian Government identified Vietnam as the centre during the making of its strategy on relations with Southeast Asia. Another critically important factor is the increasingly enhanced trust in Vietnamese brands thanks to businesses’ efforts and authorities' brand building programmes, she noted.

Tran Thi Thanh Hoa, head of the export, import, and foreign markets and entrepreneurs division at the Hanoi Department of Industry and Trade, introduced local businesses’ potential for investment and trade partnerships.

Highlighting the capital city’s advantages in interior furniture production, she expressed her hope that businesses of both sides will step up connections after the promotion event.

Luke Magee, President of Parramatta city’s Chamber of Commerce, pledged to assist enterprises in his city and Australia to learn more about potential and opportunities for cooperation with Hanoi and Vietnamese firms.

Meanwhile, Schon Condon, Managing Principal of Condon Advisory Group, highly valued the potential and advantages of businesses of Hanoi and Vietnam. He perceived that both sides hold numerous chances to work with and learn from each other’s experience.

At the conference, representatives of Hanoi enterprises introduced their firms and demand for goods trading. Australian companies also showed their interest in and willingness to partner with the Vietnamese side.

Vietnamese corporation's 25-year journey in Cuba

Thai Binh Corporation, which produces essential consumer goods, has affirmed its position as the leading Vietnamese business in Cuba over the past 25 years.

The corporation marked its 25th year of operation in the Caribbean nation with a ceremony held at the Vietnamese Embassy’s headquarters in Havana on October 12, which saw the attendance of Gladys Martínez Verdecia, Politburo member of the Communist Party of Cuba Central Committee and Secretary of the Party Committee of Artemisa province, and other senior officials of the host country.  

In his opening remarks, Ambassador Le Thanh Tung commended the corporation’s contributions to enhancing economic, trade and investment ties between Vietnam and Cuba over the past time, and expressed his belief that entrepreneurs of the two countries will seek new cooperation forms, optimise existing advantages and opportunities, and overcome difficulties to raise the efficiency of the bilateral relations, for the sake of both nations.

Chairman and General Director of the Thai Binh Corporation Tran Ngoc Thuan said since 2016, Thai Binh’s annual turnover has stood at about 100 million USD, accounting for nearly half of Vietnam’s total export revenue to Cuba, with more than 10,000 products of 12 sectors, from electronics, household utensils and garments-textiles to construction materials.

Present at the ceremony, Deputy Director of the Mariel Special Development Zone Yanet Vázquez Valdés said the corporation has expanded and diversified its operations, and it now has the largest number of projects in key areas serving Cuba’s socio-economic development.  

The business has also taken the pioneering role in the application of new technologies, contributing to making Vietnam the biggest Asian investor in Cuba, she went on, lauding Thai Binh’s support to the host country in responding to natural disasters and other emergency cases.

Three best performers of Vietnam ESG Initiative 2023 announced

The three best performing businesses in the Vietnam Environmental, Social, and Governance (ESG) Initiative 2023 were unveiled at a forum held in Hanoi on October 13.

The winning firms are HHP Global Joint Stock Company, Vietnam Food Joint Stock Company, and Vietnam Star Aniseed Cassia Manufacturing and Exporting Joint Stock Company (VINASAMEX).

They will receive technical assistance and in-depth advice to pilot, carry out, or expand their sustainable business initiatives.

The Vietnam ESG Initiative 2023 is under the cooperation between the US Agency for International Development (USAID) and the Vietnamese Ministry of Planning and Investment (MPI).

Aiming to help enterprises adopt sustainable business practices, it is part of efforts to carry out Vietnam’s green growth strategy for 2021 - 2030 and the Prime Minister’s Decision 167/QD-TTg on promoting sustainable and inclusive growth in the private economic sector.

Nguyen Duc Trung, Deputy Director of the MPI’s Enterprise Development Agency, said that Vietnam ESG Initiative 2023, launched in March, attracted 144 entries from private companies, cooperatives, and business households.

The 10 best performers were announced in June and then received intensive training. They presented their sustainable business, inclusive business, or circular economy models before the jury in September.

The initiative, lasting until 2025, is expected to encourage sustainable practices among enterprises, thus helping enhance their competitiveness, create a basis for their long-term development, and support them to meet international standards and join global supply chains, he noted.

Via the Vietnam ESG Initiative, the MPI and USAID will provide technical support for 300 enterprises, cooperatives, and business households.

The initiative is part of USAID’s Improving Private Sector Competitiveness (IPSC) project, implemented from 2020 to 2025 with the aim of tackling policy and market problems that hamper small and growing enterprises, including those owned or run by women and people of vulnerable groups.

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