VIETNAM BUSINESS NEWS SEPTEMBER 10
Amid the severe fuel disruption, the inspectors of the Ministry of Industry and Commerce decided to delay sanctions on five fuel wholesalers to ensure a sufficient fuel supply to the market.
As announced earlier, five major fuel distributors in South Vietnam will be subject to confiscation of their operating licenses as a punitive action against the wrongdoing.
The five companies comprise Dong Thap Petroleum Trading Import Export JSC, Tin Nghia Petroleum Import Export JSC, Saigon Petro, Hung Hau Petroleum Company and Orient Oil.
Following deliberations on the serious fuel shortage in the country, the inspectors of the ministry have decided to halt sanctions on the five companies.
However, the aforementioned companies will comply with paying penalties in accordance with administrative sanctions.
Agricultural sector on track for annual target
The agricultural sector is still on track for the annual agro-forestry-fishery export target of US$50 billion set by the Prime Minister, according to Deputy Minister of Agriculture and Rural Development Phung Duc Tien.
Tien revealed that Viet Nam saw agro-forestry-fishery export revenue of US$36 billion in the first eight months of 2022, up 13.1 per cent year-on-year.
Seven products with revenues of over US$2 billion each comprise coffee, rubber, rice, fruit and vegetables, cashew, shrimp, and timber.
"The whole sector has managed to maintain its growth, achieve food security and keep major balances of the economy," he said.
He also noted that the storm season is well underway so the sector needs to take preventive measures to reduce the risk of disease outbreaks on crops and livestock.
He was concerned that global economic and political uncertainties, including fuel price hikes, would drive up transportation costs, causing adverse effects on the domestic market.
Credit tightening amid mounting inflation in some countries, China's strict control on the movement of goods, and origin fraud charges against domestic goods are expected to pose further difficulties to agricultural exports, according to the deputy minister.
Tran Quang Bao, Deputy Director General of the Vietnam Administration of Forestry, underscored the Russian-Ukrainian conflict and the COVID-19 pandemic as the major factors holding back timber exports.
However, he had an optimistic outlook for the future as wood pellet exports have been surging by up to 200 per cent, which is expected to make up for the slowdown in total exports.
He held that wood-derived exports would reach US$16.3 billion this year, or over US$1.4 billion each month, if the sector could keep the August growth pace.
Nguyen Quang Hung, Deputy Director General of the Directorate of Fisheries, revealed that eight-month fishery exports hit US$7.59 billion.
He said annual fishery exports would rake in US$10 billion if the sector could keep the momentum going by earning roughly US$900 million per month from trade.
New regulations on importing cars and motorcycles for non-commercial purposes
The General Department of Taxation (GDT) recently requested tax departments in centrally-run cities and provinces to enhance tax administration for cars and motorcycles permitted to import or temporarily imported for non-commercial purposes.
The GDT has asked tax departments to transfer dossiers to the police or work with authorised agencies to handle those who import and temporarily import or transfer cars and motorbikes for non-commercial purposes.
However, they then announced plans to dissolve the companies and tax payments and declarations, or final settlements, had not yet been made.
When making registration fees, tax departments are asked to work closely with tax authorities to keep track of organisations and individuals who transfer cars or motorcycles imported or temporarily imported for non-commercial purposes to determine their legal fulfilment of tax declaration and payment.
The GDT has also required tax departments to assign their representatives who will be in charge of regularly exchanging and coordinating with local customs authorities and customs offices to conduct timely measures on tax management.
In another development, the Ministry of Finance has just issued Circular No. 45/2022/TT-BTC amending and supplementing several articles in Circular No. 143/2015/TT-BTC regulating customs procedures and managing cars and motorbikes permitted to import or temporarily import for non-commercial purposes.
Circular No.45/2022/TT-BT amends regulations on “Conditions for imported and temporarily imported cars and motorbikes.”
The policy on managing imported or imported cars and motorbikes in the form of gifts, samples, and movable property shall comply with the Government and Prime Minister’s regulations.
Circular 45/2022/TT-BTC takes effect from September 10, 2022.
Once falling to a standstill due to the impacts of the Russia-Ukraine conflict, Vietnam’s seafood exports to Russia are now showing inspiring results after the last few months.
According to the Vietnam Association of Seafood Exporters and Producers, in March and April, Vietnam’s seafood exports to Russia shed 86 per cent and 46 per cent, respectively, due to transportation and payment disruptions.
However, from May, seafood exports to Russia have gradually resumed pace and seen a turnaround from July with a 36 per cent jump on-year, before shooting to 98 per cent in August.
Basa fish continued to take the lead, representing 22 per cent of Vietnam’s total seafood exports to Russia, bringing in nearly $21 million of the export value in the first eight months.
Exports of white-claw shrimp generated $16 million, accounting for 17 per cent, while exports of grilled chopped fish and surimi brought in more than $12 million, making up 13 per cent of the total.
While exports of most seafood products to Russia saw a decline due to disruptions in the early months of the year, exports of snapper, tuna, and anchovy to Russia have still managed to grow, of which tuna exports soared 97 per cent on-year in the first eight months, reaching $16 million. Exports of snapper rose 6 per cent reaching $14.6 million, and export of anchovy showed a 27 per cent jump, amounting to $4.6 million.
This year, six more firms were allowed to export seafood to Russia, pushing up the number of businesses liable to export seafood to Russia to a total of 54.
During the eight-month period, 39 Vietnamese firms were engaged in seafood exports to Russia.
Danang keen on MICE guests
This is the third consecutive year that Danang has organized a support program with incentive policies for Meeting Incentive Conference Event (MICE) tours.
As per the plan recently approved by the Danang People’s Committee, the city is expected to welcome and support the first domestic MICE tour of 2023 with 30,000 guests.
Domestic MICE tours will start mainly from HCMC and Hanoi. Tours with 100 to 299 guests, 300 to 899 guests and 900 guests and above, and special groups will receive different conditional support, including welcome services, greetings, communications support, local souvenirs, MICE event organizing support, service incentives and travel agent honoring.
This year’s program has a new feature — Danang’s extension of its support to 15-20 international MICE tours from Thailand, Malaysia, Singapore and Korea, among others, in late 2022 until 2023 with around 5,000 guests.
International MICE tours with 20-49 guests, 50-199 guests, and 200 guests and above will also be offered conditional support.
In the year to August, Danang had welcomed 15,600 MICE guests.
This September, the city is expected to receive over 3,000 MICE guests, including locals and expats.
Borrowing turns harder as interest rates rise
Businesses find it tough to gain access to bank loans as interest rates are increasing.
Speaking at a conference held yesterday (August 31), Ly Kim Chi, chair of the Food and Foodstuff Association of HCMC (FFA), said enterprises are in dire need of capital to buy raw materials.
This year has seen raw material prices soaring over 20%, thereby increasing producers’ capital expenditures, estimated to rise 50% to 60%.
As almost 97% of companies in the food industry are small- and medium-sized, they have to seek financial sources and collateral for bank loans, “but banks have used up their credit growth quotas,” she said.
Responding to Chi, Vo Minh Tuan, director of the State Bank of Vietnam’s branch in HCMC, said during the meeting that raising credit growth quotas for banks would make it easier for corporate clients to borrow.
Banks’ corporate clients do not complain much about higher interest rates, but they are concerned over being unable to take out a loan, said Pham Ngoc Hung, vice chair of the HCMC Union of Business Associations.
The general director of an HCMC-based commercial bank said a client preferred applying for a standard corporate loan over taking out a loan under the interest subsidy package due to sluggishness in paperwork and disbursement.
Banks in August adjusted lending rates up 10 to 30 basis points, Rong Viet Securities Corporation reported.
The figures showed lending rates have spiked dramatically, mainly for loans with a tenor of at least one year.
Nguyen Hoang Minh, head of the Vietnam Banks Association’s Office in HCMC, said interest rates are agreed on by lenders and borrowers, depending on the market demand and borrowers’ creditworthiness.
According to him, interest rates for short-term loans ranging from around 5% to 7% and from 7% to 10% annually for medium- and long-term loans are appropriate under the current circumstances, given that many countries have tightened their monetary policies over runaway inflation.
Hanoi speeds up work on several key traffic projects
Hanoi City is speeding up work on key traffic projects, including the Nhon-Hanoi Station metro line, Beltway No. 2, the Vinh Tuy bridge and a road tunnel.
Data from the Hanoi Statistics Office indicated that the city disbursed an estimated VND4.18 trillion of public investment capital sourced from the State budget in August, increasing by 1.8% month-on-month and by 2.2-fold year-on-year.
The city government has ordered departments and districts to closely supervise the progress of key projects, saying they will be held accountable for delayed public investment projects, the local media reported.
Besides, the city’s districts and investors were asked to promptly report the progress and the quality of the key projects to the municipal government to remove obstacles and impose harsh sanctions on those who delay the work.
Among the key projects, the 12.5-kilometer-long Nhon-Hanoi Station metro line is over 75% complete. The competent agencies and investors of the project, which requires VND32.9 trillion in investment, are focusing on checking and assessing the quality of the urban railway. The 8.5-kilometer-long elevated section of the metro line is set to be opened to traffic in late 2022 as it is over 96% complete.
As for the Beltway No. 2 project, its investor and contractor are speeding up work on a 5.1-kilometer-long section stretching from Vinh Tuy bridge to Nga Tu So Ward in Dong Da District and elevated sections to put the entire elevated part of the metro line into operation in 2023.
In addition, the second phase of the Vinh Tuy bridge project commenced in January 2021, with a total cost of over VND2.5 trillion. The project, including the bridge and approach roads with a total length of over 3.5 kilometers, will be completed in June 2023.
Another key traffic project is the Le Van Luong-Ring Road No. 3 tunnel project, with a total length of 475 meters. Workers are stepping up work to complete the VND700-billion project by October as scheduled.
Apart from this, the city is also expediting the construction of the Hanoi Children’s Palace project, which will cost over VND1.3 trillion. The first phase of the project is underway. The palace, which got off the ground in March last year, will be completed in 2024.
Cooking gas prices maintain downward trend
The local market has recorded its fifth consecutive month of cooking gas price slumps after it was revised down by VND7,000 to VND423,500 per 12-kilogram cylinder starting today, September 1.
The domestic cooking gas price from May to September declined by a total of VND92,500 per 12-kilogram cylinder, reported the local media.
According to a representative of Saigon Petro, a major fuel distributor based in HCMC, the cooking gas price in September declined after global suppliers announced that fuel prices dipped by US$25 against the previous month at an average of US$640 per ton.
The local gas price has been moving on par with the global trend.
Domestic supply satisfies some 60% of local demand.
Changes proposed to aid package requirements for companies
The loan conditions of the financial aid package with an interest rate discount of two percentage points should be modified, according to the Vietnam Chamber of Commerce and Industry (VCCI).
VCCI has written to the Government Office and the Ministry of Planning and Investment underlining difficulties plaguing businesses in accessing the loans and suggesting modifications to the economic recovery solutions in the Government’s draft resolution.
The State Bank of Vietnam should be tasked with adjusting the loan conditions for the aid package as many enterprises, especially small and medium ones, find it extremely hard to meet the conditions of the package as prescribed in Government Decree 31/2022/ND-CP.
Particularly, loan conditions, including collateral requirements, loan limits, and interest rates, should be modified in favor of small and medium enterprises, VCCI said.
For the Small and Medium Enterprise Development Fund, the Government should find ways to call for funding from organizations and individuals, instead of just receiving and managing loans from the budget.
Additionally, the target of supporting 30,000 businesses in digitalization is not suitable to the current situation as the number of businesses is expected to reach 1.5 million in 2025, according to VCCI.
The Government should change the target of supporting businesses in digitalization and clarify the levels of digital transformation in the draft resolution.
Moreover, VCCI proposed additional solutions to promote start-ups and encourage business households to transform into enterprises as well as policies to support newly established business groups.
Vietjet inaugurates two new routes connecting Phu Quoc to New Delhi and Mumbai
Vietjet has launched two new routes connecting the "Pearl Island" Phu Quoc in the southern province of Kien Giang with New Delhi and Mumbai in India to further tourism and trade opportunities between the two countries.
The Phu Quoc-Mumbai route, inaugurated on September 8, will have two return flights per week while the Phu Quoc-New Delhi route, inaugurated on September 9, will offer three return flights per week.
Fares on these routes are being sold starting from only 668,000 VND (28.4 USD - excluding taxes and fees) under weekly attractive promotions.
Domestic firms show strong capacity in making use of CPTPP
Over three years since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) took effect, Vietnam’s exports to member economies, especially Canada, Mexico and Peru have significantly increased, showing high adaptation capacity of domestic firms.
Statistics showed that last year, Vietnam enjoyed growth in exports to all CPTPP markets, including Singapore, Malaysia, Japan, Australia, Canada, Mexico and Chile.
In the first seven months of this year, the figure reached 31.47 billion USD, up 21.43% year on year, accounting for 14.48% of the country's total export revenue in the period.
According to To Hoai Nam, Vice President and Secretary-General of the Vietnam Association of Small and Medium Enterprises, over the past three years, Vietnamese firms have shown their strong capacity to adapt to the new normal situation and make full use of CPTPP to increase their exports.
However, he stressed the need for domestic businesses to be more active in thoroughly studying the market, consumers’ culture as well as the standards and technical barriers of the CPTPP economies, especially regulations on origin, while improving their products’ quality by investing more in production technologies.
Tran Thanh Hai, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, said that the ministry has launched a support programme to help businesses take advantage of free trade agreements, including the CPTPP.
In addition, the ministry will continue to popularise commitments as well as rules related to origin, he said.
Hai said that the ministry will also strengthen export promotion activities on the digital platform, while supporting enterprises to avoid the risk of being imposed trade remedies when exporting goods to CPTPP markets.
The CPTPP consists of 11 members, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. It officially came into force on December 30, 2018.
ASEAN forum discusses sustainable green economy
Sustainability commitment is a key driver for growth and investment, panelists told an ASEAN++ business forum in HCM City on Friday.
Ng Jiak See, Deloitte Asia Pacific Financial Advisory Leader, said due to its strategic geographical location, ease of doing business, tax incentives and free trade agreements, ASEAN is one of the most attractive destinations for investors seeking to expand their global footprint.
But it needs to take immediate action to maintain this attractiveness, she said.
Viet Nam is one of four ASEAN countries among the faster growing economies in the world and one of three to get large FDI inflows, she said.
Viet Nam is also a top choice when multinational companies consider relocating a growing proportion of their manufacturing from China to ensure supply chain resilience, she added.
Cao Thi Ngoc Dung, president of the HCM City Association for Women Executives and Enterprises, said disruption of value chains, supply chains and trade connections are major issues that need to be promptly addressed.
Connectivity and co-operation activities in ASEAN play a vital role in promoting trade exchanges, strengthening regional supply chains and contributing to the economic recovery of the bloc post-COVID, she said.
Sustainable development is an inevitable trend for businesses and crucial to international trade, and consumers in developed markets, especially younger generations, prefer products from businesses that pursue sustainable development, she said.
Top 10 Vietnamese ICT Companies of 2022 honoured
The Vietnam Software and IT Services (VINASA) held a ceremony on September 10 to announce and honour the top 10 Vietnamese ICT companies in 2022.
The total revenue in 2021 of the enterprises honoured in the top 10 this year reached 162.33 trillion VND, equivalent to 7 billion USD, accounting for 51% of the total industry’s revenue.
Chairman of VINASA Nguyen Van Khoa said: “Despite the complicated world situation, Vietnam’s economy is witnessing very strong development, with positive predictions from all rating agencies. The process of digital transformation in Vietnam is also entering an accelerated phase, including agencies, businesses and people, creating momentum for the comprehensive development of Vietnam. The digital technology enterprises carrying on the mission and taking a pioneer role in national digital transformation are also transforming strongly to become digital transformation partners for domestic and international agencies, organisations and businesses.”
The Top 10 enterprises honoured in each category are those with impressive business results in 2021. They not only have good growth rates but also possess high technology capacity and have the potential to become pillars for the future development of Vietnam’s IT industry.
FSI was honoured in two important categories including Top 10 enterprises providing digital transformation services and solutions and Top 10 enterprises providing digital government solutions in Vietnam. This is the 4th year in a row in which FSI was honoured in the Top 10 Vietnamese IT enterprises by VINASA.