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VIETNAM BUSINESS NEWS OCTOBER 2

GDP growth to hit 8% this year in base-case scenario: Official
GDP growth to hit 8% this year in base-case scenario: Official hinh anh 1
Vietnam’s GDP growth will reach 8% this year in the base-case scenario, provided that there will be no upheavals in the market but favourable external factors for the economy during the remaining months of the year, according to Deputy Minister of Planning and Investment Tran Quoc Phuong.

It was one of the two GDP scenarios for 2022 announced by the Ministry of Planning and Investment (MPI) at a routine government press briefing on October 1.

In the worst-case scenario, the GDP will grow at 7.5%, provided that many challenges and uncertainties are expected in the fourth quarter of this year, Phuong told reporters.

Commenting on Vietnam’s economic outlook for 2023, he said there will be both challenges and opportunities, but the former are likely to outweigh the latter and be even tougher in the wake of inflationary pressure worldwide and gloomy global economic outlook.

He noted that global inflation, particularly in major economies as well as Vietnam's key partners, is unlikely to ease over the next one or two months but certainly will linger on in 2023.

The official also voiced concern over other threats to the Vietnamese economy, emphasising the ongoing Russia-Ukraine crisis and non-conventional risks like storms, flooding, and epidemics.

The MPI forecast the Vietnamese economy will expand around 6.5% in 2023 in a growth scenario submitted to the Government, he said.

Dung Quat refinery surpasses nine-month production target

 The Dung Quat oil refinery produced about 5.18 million tonnes of petrol and oil during January - September, up 6% from the nine-month plan and equivalent to 80% of this year’s target, its operator – Binh Son Refining and Petrochemical JSC (BSR) - said.

During the period, BSR sold more than 5 million tonnes of products, up 6% from the nine-month plan and equivalent to 78% of the target for 2022. It posted over 125 trillion VND (5.2 billion USD) in revenue and contributed nearly 14 trillion VND to the State budget.

BSR Director General Bui Ngoc Duong said in the year’s first half, global oil prices surged due to impacts of the Russia - Ukraine conflict and fuel demand soared driven by the post-pandemic global economic recovery.

Khanh Hoa asked to hasten moves to address IUU fishing

A delegation of agriculture, defence, and public security officials visited Khanh Hoa on September 30 - October 1 to inspect the south central province’s efforts against illegal, unreported and unregulated (IUU) fishing.

The trip was made ahead of a visit to Vietnam by a European Commission (EC) delegation from October 17 to 28 to examine the country’s moves to carry out recommendations about IUU fishing prevention. This is considered a great opportunity for Vietnam to persuade the EC to remove the “yellow-card” warning against IUU fishing.

Nguyen Trong Chanh, head of Khanh Hoa’s fisheries division, said the entire local political system has taken drastic actions to eradicate IUU fishing and obtained encouraging results.

The province has updated information about all the 3,199 fishing vessels on the national fisheries database (Vnfishbase) and granted fishing licenses to 3,184 vessels (equivalent to 99.5%). All vessels are examined before and after each fishing trip, according to the provincial Department of Agriculture and Rural Development.

In the first nine months of 2022, local authorities examined 2,724 tonnes of seafood and certified 2,082 tonnes. The fisheries division also organised 336 patrols and examinations, fining 54 violating cases nearly 600 million VND (25,100 USD).

Vu Duyen Hai, Deputy Director of the Capture Fisheries Department at the MARD’s Directorate of Fisheries, spoke highly of Khanh Hoa’s efforts in combating IUU fishing but also asked the province to address several shortcomings, including those related to the examination of food safety, monitoring system, fish catch, export, and import.

In particular, it is necessary to increase personnel for fishery ports and ensure control over the number of vessels, he noted.

Bright prospect ahead as nation welcomes new foreign investment wave

The country has a “golden chance” to attract a fresh wave of foreign investment, especially to its economic zones (EZs) and industrial parks (IPs), according to Deputy Minister of Planning and Investment Tran Quoc Phuong.

Annual foreign direct investment (FDI) poured into IPs and EZs currently accounts for 35% to 40% of the total FDI capital inflows, with the rate reaching between 70% and 80% in the processing and manufacturing industry, according to the Ministry of Planning and Investment (MPI).

The MPI stated that the nation is currently home to 403 IPs, 18 coastal EZs, and 26 border gate EZs, all of which have become key magnets for domestic and foreign investments. Indeed, many of them are accommodating large foreign enterprises such as Samsung, Canon, LG, Sumitomo, Foxconn, and VSIP.

Explaining why the country typically attracts new investment, especially in IPs and EZs, experts and international organisations stated at a recent forum that aside from political stability, the local economy is bouncing back quickly after the COVID-19 pandemic. In line with this, the Vietnamese economy boasts one of the fastest growth rates in the region, ensured major balances, and curbed inflation.

Many free trade agreements (FTAs) have also been signed and come into effect, thereby creating optimal conditions for international investment and trading activities. In addition, thanks to the State’s attention to building infrastructure, especially expressways, and the engagement of large businesses, infrastructure conditions for industrial development nationwide have been considerably improved.

However, Nguyen Anh Tuan, editor-in-chief of Nha dau tu (Investor) magazine, also pointed out certain challenges relating to the investment attraction of IPs and EZs, including complex administrative procedures. This is along with the lengthy site clearance for new IPs, issues related to law and policy enforcement, especially investment incentives and tax refunding, a general shortage of high-quality manpower, and housing and social welfare for workers in IPs and EZs.

According to economists, in order to welcome more investment, IPs and EZs need not only good infrastructure and excellent services, but also assistance for investors. In order to achieve this, they in turn also need support from the Government.

Favourable conditions provided for IPs by the Government will therefore facilitate investors, whilst difficulties facing IPs could also directly or indirectly affect investors, experts noted.

Deputy Minister Phuong noted that as the advisory body for the State management of IPs and EZs, the MPI will work alongside other ministries, sectors, and localities to continue overhauling mechanisms and policies, as well as assisting investors to create an increasingly transparent and positive environment in IPs and EZs.

Environment needed to promote impact business
     
Viet Nam needs to create an environment to encourage enterprises to attach more attention to social impact business (SIB) and attract investment in this model, experts have said.

SIB was emerging as a trend but remained vague in Viet Nam. This model aims to minimise environmental and social damage through balancing the 3P pillars – Profit, People and Planet.

According to the United Nations’ Sustainable Development Goals (SDGs), an impact business is one that lies at the intersection of a traditional enterprise and charity organisation. Impact businesses included inclusive businesses, start-ups and cooperatives, among which cooperatives were the majority.

Statistics of UNDP Viet Nam showed that there were about 22,000 impact businesses as of 2018, accounting for four per cent of the total number of firms.

A survey carried out by UNDP Viet Nam this year showed that 46.6 per cent of impact businesses in Viet Nam operated in agriculture, most were of small and micro scales.

Head of UNDP Viet Nam's Inclusive Growth Unit Do Le Thu Ngoc pointed out that the biggest difficulties of impact businesses were the shortage of capital coupled with the lack of information about the market output and financial support.

There was also a conflict that these impact businesses were struggling with raising capital while investment funds could not find a suitable place to pour money in.

Some businesses believe that making an impact was a must-do trend if they wanted to develop sustainably.

Viet Nam set an ambition of achieving net zero carbon emissions by 2050 and impact business was expected to contribute to realising this goal.

E-commerce needs better legal framework to prevent tax loss: insiders
     
The fast-growing e-commerce sector is making big money but its tax payments are not commensurate with its revenues, exposing the need for a better tax policy to prevent losses, according to insiders.

Nguyen Thi Lan Anh, Director of the Tax Administration Department for Small and Medium Enterprises, Business Households and Individuals, said the Ministry of Finance has launched a digital tax portal for foreign service providers (FSP) and an eTax Mobile app for individuals to facilitate tax collection.

Thirty-six FSPs have registered and fulfilled their tax obligations via the portal so far, including six big names - Meta (Facebook), Google, Microsoft, TikTok, Netflix and Apple - which collectively account for 90 per cent of cross-border e-commerce in Viet Nam.

The director also said the tax authorities have developed an AI-powered database to manage tax risks in e-commerce. The database will give warning signals any time it detects a case exceeding risk thresholds and put forward a solution to deal with the excessive risks.

Nguyen Thi Minh Huyen, Deputy Director of the Vietnam E-Commerce and Digital Economy Agency, noted that tax payments in e-commerce fall under the scope of Decree 85, which has been issued to add regulations to online trade and ensure traditional commerce and e-commerce be equally regulated.

Under the decree, e-commerce platforms are required to appoint a contact point, which is tasked with disclosing information to regulatory authorities on e-commerce violations. Disclosure must be made within 24 hours from the receipt of the authorities' request to facilitate ensuing investigations.

They are also required to settle consumers' complaints about goods and services provided by foreign sellers on those sellers' behalf and notify them of their tax obligations on the platforms.

Nguyen Thi Thanh Huyen, Head of the Electronic Information Office, Authority of Broadcasting and Electronic Information, revealed that her authority is developing a draft amending Decree 72 on Internet services and online information.

Under the draft, social networking platforms are obliged to request online accounts, community pages and content distribution channels operating on the platforms to disclose information on revenue-generating activities to regulatory authorities.

Hoang Van Cuong, Member of the National Assembly's Finance-Budget Committee, called for a broader legal scope for e-commerce taxation to prevent tax loss.

He took cryptocurrencies as an example. He said cash-flow-based taxation does not cover transactions made in cryptocurrencies since such currencies have not been legally recognised in Viet Nam.

As cryptocurrency-denominated transactions generate revenues for taxpayers, the lack of recognition has held the transactions untaxable, causing tax loss.

Over 90 per cent of internet users in Viet Nam engage in online shopping. The country's e-commerce revenues were estimated at US$13.7 billion in 2021, up 16 per cent year-on-year and contributing to 6.5 per cent of total retail revenues. 

Logistics key to capitalising on EVFTA benefits
     
Logistics remain a key factor in Viet Nam's ability to capitalise on the benefits of the EU–Vietnam Free Trade Agreement (EVFTA), said experts and policymakers.

Two years since the FTA went into effect, the Southeast Asian economy has still been struggling to overcome the shortcomings and limitations of its logistics infrastructures, said industry experts.

Viet Nam's import-export turnover was recorded at over US$700 billion in the year 2021. The country has managed to top all ASEAN economies in trade with the EU with key commodities including textile, footwear and seafood, all of which were made possible with the development of the logistics industry.

Improved trade ties with the EU have allowed Vietnamese logistics firms access to modern EU logistics technologies, increased exchanges of expertise with EU partners and opportunities to join the EU's logistics value chain.

Mai Tran Thuat, director in charge of supply chain solutions from Bee Logistics Group, said there have been more investments by EU firms in the industry since the signing of the EVFTA, even amid the pandemic.

Ngo Chung Khanh, deputy head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MoIT), said along with opportunities Vietnamese firms must also face a number of challenges since the EVFTA went into effect.

The biggest threat, according to Khanh, is the EU logistics industry entering Viet Nam in full force. There is a real possibility that Vietnamese firms may lose their home turf to EU firms if they failed to modernise and improve.

Taking control of the industry is crucial to Vietnamese commodities' ability to stay competitive in the international market, according to Le Hoang Khanh Nhut, CEO of Rubber Joint Stock Company Da Nang.

He said logistics costs amount to a large part of the industry's input and output. During the pandemic, there were times in which logistics costs skyrocketed (as much as ten times in some instances), creating huge challenges for the company's balance sheet.

In addition, his company must spend more to meet quality and safety demands set by EU standards.

Thuat from Bee Logistics Group was optimistic about Vietnamese firms' prospects in the future. However, he stressed the importance of preparation, long-term planning, capital, technology and training.

On a national scale, Viet Nam should give priority to the building of major logistics hubs along the coast to first meet the demand of its sea-bound trade. In the long run, the country must support the development of its ship-building industry and large logistics companies, according to Tran Thanh Hai, deputy head of the import-export department under MoIT.

First mid-cap ETF listed on HOSE
     
DCVFMVNMIDCAP ETF, an exchange-traded fund managed and operated by Dragon Capital Vietfund Management Joint Stock Company, listed six million units on the Ho Chi Minh Stock Exchange on September 29 under the code FUEDCMID at par.

The reference price on the first trading day was the NAV on September 28, VND9,502.13.

DCVFMVNMIDCAP is the first ETF in Viet Nam that tracks mid-cap companies.

Speaking at the listing ceremony, Beat Schurch, CEO of Dragon Capital Vietnam, said, “After DCVFMVN30 ETF and DCVFMVN DIAMOND ETF, the introduction of DCVFMVNMIDCAP ETF provides investors with an additional opportunity to invest in the growing capital markets of Viet Nam.

The DCVFMVNMIDCAP ETF is a portfolio swap fund with no operating time limit. The founding members of the fund include HCM City Securities Corporation (HSC), KIS Vietnam Securities Corporation (KIS), and Viet Capital Securities Joint Stock Company (VCSC).

The custodian bank is Standard Chartered Bank (Vietnam) Limited, the transfer agent is the Vietnam Securities Depository (VSD). 

Vietnam's IT and electronics sector reaching $70 billion in export turnover

Vietnam raked in approximately $77 billion from the export of phones, computers, electronic products, and spare parts during the past eight months of the year, according to the information published by the Ministry of Industry and Trade.

The four major importers of computers, phones, and components include the US, the EU, China, and South Korea, grossing a total turnover of approximately $27 billion throughout the reviewed period.

In the first eight months, all major markets increased their imports of products from the Vietnamese market. Notably, the export turnover to the US was $9.25 billion, China with $8.97 billion, and South Korea $3.88 billion, signifying increases of 48, 11, and 23 per cent, respectively.

Regarding the EU, despite the export turnover to this market dropping by 5 per cent on-year to $4.61 billion, it still stands in the top four of the largest export markets for computers, phones, and components.

The four major importers of computers, phones, and components include the US, the EU, China, and South Korea, grossing a total turnover of approximately $27 billion throughout the reviewed period.
In recent years, Vietnam attracted global electronic firms to the production of phones, computers, and electronic components, including Samsung, LG, Foxconn, Fukang Technology, and LG Display Haiphong.

Hanoi remains bright spot in FDI attraction

Thanks to the development of a network of industrial parks and clusters as well as efforts to accompany investors, Hanoi has remained one of the bright spots of the country in foreign direct investment (FDI) attraction.

According to the municipal Department of Planning and Investment, so far this year, the city has attracted about 992.4 million USD in FDI, up 15% year on year, including 141.3 million USD invested in new projects.

The result helps the capital city remain among the top localities in FDI attraction.

Nguyen Ngoc Tu, Vice Director of the department, said that the FDI projects are mostly in the fields of import-export, goods distribution, construction, information technology, telecommunications, processing and manufacturing.

The majority of investment in the city is from Japan, the Republic of Korea and Singapore, while that from Europe and the US accounts for only 10% of total FDI capital, he said.

FDI projects have played an important role in promoting the city’s economic development, serving as a driving force for its exports and technology renovation, the official added.

First Danish-invested factory in An Giang starting operation

The $17 million Spectre garment factory, which is funded by a Danish investor, in An Giang will be partly powered by renewable energy and create more than 2,500 local jobs.

On September 30, Spectre, a Danish company, which specialises in technical outdoor sports garments, opened its first factory in An Giang province after two years of designing and building. This is the third Spectre factory in Vietnam and the first Danish-invested project in An Giang.

The new factory was built in accordance with high corporate social responsibility standards and was granted the LEED gold certification.

By using solar energy and advanced design features, the factory can reduce around 1,600 tonnes of CO2 emissions per year.

Denmark is now one of the biggest European investors in Vietnam. With the coming visit of the Royal Crown Couple of Denmark and a business delegation of 36 companies in early November, it is expected that more Danish investment deals, especially in the energy sector, will be finalised in the coming years.

Vietnam's tourism continues to recover positively in third quarter

In the first nine months of 2022, international visitors to Vietnam reached about 1.87 million arrivals, up 16.4 times higher than the same period last year.

The report on the socio-economic situation in the third quarter and September 2022, published by the General Statistics Office (GSO) on September 29, showed that, in the first nine months of 2022, international visitors to our country reached 1.87 million arrivals, up 16.4 times over the same period last year, but still down 85.4% compared to the same period in 2019, the year without the COVID-19 epidemic.

Out of a total of nearly 1.87 million international arrivals to Vietnam in the first nine months of this year, arrivals by air reached 1.6 million, accounting for 88.6% of international arrivals to Vietnam, up 22 times compared to the same period last year.

Visitors from Asia remained the mainstay in the first nine months of 2022 with 1.31 million arrivals (accounting for more than 70%), an increase of 13.3 times over the same period last year. Followed by visitors from Europe and America.

In September 2022 alone, international visitors to Vietnam reached nearly 432,000 arrivals, up 45.4 times higher than the same period last year, because Vietnam has opened up tourism and international flight routes have been restored.

According to the report of the GSO, the revenue from travel, accommodation and food services in the past 9 months continued to increase, due to the high demand for entertainment and tourism. In particular, domestic tourism continues to play a key role in boosting revenue growth.

Specifically, revenue from accommodation and catering services during the past 9 months was estimated at 430.9 trillion VND, up 54.7% over the same period last year.

Tourism revenue in the 9 months of 2022 is estimated at 18.2 trillion VND, up 3.9 times higher than the same period last year, due to the strong recovery of tourism activities, especially domestic tourism.

Some key domestic tourism destinations that recorded a high increase in travel service revenue are as follows: Da Nang increased by 634.7%; Hanoi increased by 386.3%; Hai Phong increased by 277%; Ho Chi Minh City increased by 151.9%; Quang Ninh increased by 90.3%.

Work on underpass project in HCMC suspended

Work on the Nguyen Van Linh-Nguyen Huu Tho underpass project in District 7, HCMC has been temporarily suspended.

This decision came after the HCMC Department of Transport received complaints from many units and agencies that major damage and potholes have appeared on Nguyen Van Linh road during the construction of the underpass but have not been repaired by the investor.

Despite the department’s constant requests for road restoration, the project’s main investor, the Management Board for Transportation Works Construction and Investment Projects, has not responded.

The construction will be restarted only after the damaged road in the project area is repaired.

The inspectors of the transport department have been asked to consider imposing sanctions on the main investor of the project, supervision consultant and construction contractors.

The first phase of the Nguyen Van Linh-Nguyen Huu Tho underpass project started in April 2020, with a total investment of VND830 billion. After more than two years of construction, the project is around 35% complete.

Danang sees high investment in Jan-Sept

The first nine months of 2022 saw the total investment capital of new projects in Danang reaching over VND28,600 billion, up 24.72% over the same period last year, according to the Danang Statistics Office.

The non-state sector’s investment capital made up 63.4% and its disbursements amounted to nearly VND18,200 billion, an increase of 48.7% over the same period last year.

Some major projects with high disbursements include a factory of the Danapha Pharmaceutical Company, a hotel and serviced apartment complex of Marriot, a housing project of Foodinco and a hotel complex of Thien Thai.

In the year to mid-September, Danang had issued investment certificates to 21 local projects worth VND8,704 billion, a year-on-year increase of 266.9%. Foreign investment approvals totaled US$129.129 million.

Swelling hydropower reservoirs in Nghe An told to discharge water

Due to torrential rains brought by Super Typhoon Noru, many hydropower reservoirs in Nghe An Province have been told to discharge water to ensure the safety of residents and property.

Nghe An is home to several hydropower reservoirs in mountainous districts such as Que Phong, Ky Son, Tuong Duong, Con Cuong and Quy Chau.

Having made landfall on September 28, Super Typhoon Noru prompted multiple hydropower reservoirs in Nghe An Province to discharge water urgently on the morning of September 28-30.

Lately, Nghe An’s search and rescue authority sent an urgent notice to the People’s Committee of Que Phong District regarding the people’s safety following the discharge of water at the Nhan Hac hydropower reservoir in the district.

The reservoir discharged 500-1,000 cubic meters per second at 10:00 a.m. on September 30.

US$11 million garment factory in An Giang Province inaugurated

The Embassy of Denmark in collaboration with the People's Committee of An Giang Province this morning held a ceremony at Binh Hoa Industrial Park, Binh Hoa Commune, Chau Thanh District to inaugurate a garment factory with a total area of more than 38,000 square meters, a total investment of nearly US$11 million. 

Speaking at the ceremony, Danish Ambassador to Vietnam Nicolai Prytz said that Denmark has had 130 companies in Vietnam so far, and the garment factory is a typical example of the development of commercial cooperation between Vietnam and Denmark, especially in the context of the 50th anniversary of the establishment of Vietnam-Denmark diplomatic ties.

After the factory is put into operation, it will create jobs for 1,200 employees, contributing to improving the income of local people and the province's socio-economic development in the upcoming years.

According to Chairman of the People’s Committee of An Giang Province Nguyen Thanh Binh, many investors and businesses have chosen the Mekong Delta province in general and industrial parks and economic zones of the province in particular to implement their production and business projects in the passing years that contributes to the socio-economic development of the locality.

Up to now, An Giang Province has issued 46 investment registration certificates to enterprises with a total registered investment capital of more than VND8.2 trillion (US$344 million). Of these, 34 projects have officially come into operation and created jobs for 20,000 workers.

HCMC’s tourist attractions, historical relic sites need to be connected

A delegation of officials of the Department of Culture and Society of the HCMC People’s Council on September 30 took a survey of a tour visiting tourist attractions and historical sites of District 1.

The delegation carried out a walking tour operated by Fiditour Travel Joint Stock Company to visit the head office of the HCMC People’s Committee, Uncle Ho’s statue at Ho Chi Minh Statue Park in front of the City Hall, Nguyen Hue walking street, Thu Ngu flagpole, Bach Dang Park, a statue of Tran Hung Dao, Saigon Opera House, Continental Hotel.

The trip takes travelers to visit the district’s popular historical sites and tourist attractions that have attracted a large number of local and international visitors for many years. If the tours are connected with tourist attractions and relics in districts 3 and 5, they will be expected to draw more domestic and foreign visitors, and promote the value of tourist attractions and historical sites, said the delegation’s participants.

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

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