Farmers and businesses must improve product quality, and strictly follow the rules of origin and ensure food safety to boost fruit exports, experts said.

They made the affirmation at a recent conference jointly held by the United Nations Industrial Development Organisation (UNIDO), and the Vietnam Institute of Agricultural Engineering and Post-harvest Technology and the National Authority for Agro-Forestry-Fishery Quality, Processing and Market Development under the Ministry of Agriculture and Rural Development (MARD) in Ho Chi Minh City.

Describing fruit as a key agricultural export product, Deputy Director of the MARD’s Plant Protection Department Le Van Thiet said that fruit shipments in recent five years grow 10-15% annually, most of which are destined for China, the US, Japan, the Republic of Korea and the EU.

Negotiations to diversify export markets have made Vietnam one of the largest fruit exporters in Southeast Asia, while encouraging farmers and exporters to make more investment in their processing, packaging and transport facilities to ensure that Vietnamese fruit products meet foreign market standards, he said.

Pointing out several challenges that hamper fruit exports, including technical barriers, strict sanitary and phytosanitary measures and fierce competition, Thiet said farmers and businesses must comply with quality standards of importers, while promoting sustainable value chains for their products.

Additionally, as digital transformation still lags behind the industry’s development, he suggested competent sides complete and upgrade their database, e-training platforms and websites, making them more friendly with users.

Besides, the completion of guidelines to set up and manage packaging facilities and planting areas of key fruit, as well as sound plant quarantine measures in accordance with importer requirements will help boost fruit exports, Thiet added.

Manager of UNIDO’s project on quality and standard Bahramalian Nima said that total fruit export batches rejected to enter Australia, China, the EU, Japan and the US increased 42% in ten years, from 24 in 2010 to 34 in 2020.

The rejections were due to disease infection, poor hygienic control, and veterinary drug and pesticide residues, he said, stressing that Vietnam should improve its technical assessment capacity, improve food safety surveillance system, and work to better farmer and company capacity to control quality.

Regarding origin tracing, experts said Vietnam should focus on improving transparency through food supply chains to detect unsafe food, and find ways to identify whether farmers are planting their trees under good practice standards or not.

Most recently, the Plant Protection Department sent a document to several localities, asking them to temporarily halt planting areas and packaging facilities with codes that fail to meet requirements from the Chinese market.

The suspension was also applied for the batches related to violating growing areas and packaging facilities.

According to Deputy Director of the Plant Protection Department Nguyen Thi Thu Huong, the move aims to reduce risks for Vietnamese exporters as it could take them a long time to recover from the consequences when the codes are revoked by the Chinese authorities.

Latin America among most important markets for Vietnam: official

Latin America is always one of the most important markets for Vietnam, an official of the Ministry of Industry and Trade (MoIT) told the recent Vietnam International Sourcing 2023.

Over the past years, trade and investment relations between Vietnam and Latin America have continually developed and expanded, said Ta Hoang Linh, Director of the MoIT’s European - American Market Department, at the event, held in Ho Chi Minh City from September 13 to 15.

He cited statistics showing that bilateral trade doubled to 23 billion USD in 2022 from 14.2 billion USD in 2018. It stood at 13.4 billion USD in the first eight months of 2023, down 14% from a year earlier.

Despite the fall during January - August, it is encouraging that the decline has recently slowed down compared to the first months of the year. Particularly, the eight-month trade with some markets has posted year-on-year increases, signalling the recovery of Vietnam - Latin America trade, he went on.

Notably, aside from the biggest Latin American markets like Brazil, Mexico, Argentina and Chile, many others in the region such as Panama, Colombia, and Peru have also recorded impressive growth in trade with the Southeast Asian nation in recent years.

Considering Vietnam’s trade relations, Latin America is always one of the most important markets, Linh said. He added that it is not only a potential importer of Vietnam’s strong products such as textiles-garments, leather-footwear, farm produce and fisheries products, but also a supplier of important materials like corn, soya bean, and animal feed for the country’s manufacturing industries.

A representative of the Vietnamese Trade Counsellor in Chile said the Vietnam - Chile Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have provided mechanisms for Vietnam to step up exporting goods, including many entitled to zero tariffs, to Chile.

Chile is currently the third largest destination of Vietnamese goods in Latin America, after Brazil and Mexico, the representative said.

Meanwhile, Tatiana Prazeres, Secretary of Foreign Trade at the Brazilian Ministry of Development, Industry, Trade and Services, noted her country is the biggest trading partner of Vietnam in Latin America.

In 2022, bilateral trade rose 6.5% year on year to 6.78 billion USD. That consisted of 2.24 billion USD in Vietnam’s exports to Brazil, down 1.3%, and 4.55 billion USD in imports, up 10.8%.

The trade turnover reached 3.86 billion USD during the first seven months of 2023, down 7.5% from a year earlier, comprising 1.47 billion USD in Vietnam’s exports (up 14%) and 2.39 billion USD in imports (down 17.1%), data show.

Vietnam’s main exports to Brazil include mobile phones and components, computers, electronic devices and components, machinery and spare parts, vehicles, steel, and footwear. Meanwhile, the Southeast Asian nations mainly imports ores and minerals, cotton, animal feed and materials, soya bean, corn, timber and wood products, and garment and footwear materials from the Latin American country, according to Prazeres.

Linh said there remains much room for Vietnamese enterprises to boost cooperation with Latin America, but they need to take methodological and professional steps.

They should identify potential products for each market, work to meet quality standards, and distribute goods via retail networks of Latin American countries, he recommended.

Nguyen Manh Cuong, a representative of the Vietnam Organic Agriculture Association, noted that since 2024, some Latin American countries will begin enforcing regulations on imports of genetically modified products. This is a chance for producers and suppliers of clean farm produce to grow shipments to Latin America.

Market may continue trading negatively this week: experts

The Vietnamese stock market logged the second straight weekly fall last week, with the VN-Index breaking below the key psychological level of 1,200 points. The bearish trend is expected to extend this week, said experts. 

On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index only gained on September 20 and lost for the rest of last week. The index closed the week at 1,193.05 points. 

Similarly, the HNX-Index on the northern bourse, the Hà Nội Stock Exchange (HNX), experienced the same trend and was last traded at 243.15 points. 

For the week, both benchmark indices posted a weekly loss, with the former down 2.8 per cent and the latter down 3.8 per cent. 

Liquidity on the two main exchanges also declined over the previous session. In particular, on HoSE, liquidity slid 11.1 per cent in value to VNĐ118.5 trillion (US$4.86 billion), while it decreased 5.5 per cent to VNĐ11.66 trillion on the northern exchange. 

Meanwhile, foreign investors net sold strongly for the fourth consecutive week, focusing on stocks in steel, banking, financial services, and securities industries. They net sold a total of nearly VNĐ1.7 trillion on both main exchanges. 

Đinh Quang Hinh, Head of the Macro and Market Strategy Department of VNDirect Securities Company, said that the market would be able to stabilise and recover soon, so investors should consider increasing the proportion of stocks ahead of the third quarter business results reporting season.

The country’s stock market was under selling pressure in the last trading sessions, following less positive developments in the global stock markets, as well as exchange rate issues in the domestic market. 

The State Bank of Việt Nam (SBV) has issued treasury bills to absorb excess liquidity from the banking system to stabilise the exchange rate, limiting foreign exchange speculation. However, many investors took negative views and were concerned that this was a tightening move by the central bank.

"In fact, I think that this step by the SBV is not a step to tighten or reverse the current loosening policy, but is only a temporary, short-term solution to absorb the surplus liquidity to help limit exchange rate speculation,” Hinh said. 

“The move also aims to neutralise the State Treasury's previous purchase of foreign currency and injection of đồng into the market. The central bank itself said that it would continue to carry out solutions to maintain liquidity for the banking system to support the economy. Therefore, I think the market can soon reconsider the recent move of issuing T-bills by the SBV.”

Moreover, the market sentiment may stabilise again after rumours related to HoSE’s leadership and the adjustment of the margin portfolio of a top securities company are clarified, Hinh said, adding that the third quarter business results reporting season is approaching with expectations of more improvements.

The positive performance is expected to support the market in the next few weeks.  

According to Hinh, investors can take advantage of the corrections to restructure their investment portfolio and increase the proportion of stocks when the VN-Index reaches the support zone of 1,170 - 1,180 points. However, he suggested prioritising businesses whose business results will change positively in the last two quarters of the year such as exports (seafood, wooden furniture, chemicals), retail and public investment (construction and construction materials).

Meanwhile, Vietcap Securities JSC said that the VN-Index was likely to continue rebounding to retest the resistance area around 1,200 points.

If the demand force is strong enough to help the index close above this level, the market will have opportunities to return to upward momentum soon, according to the company. 

On the contrary, if the buying force is weak and is overweighed by the selling force at the 1,200 point-level, the index will continue to decline to test the support zone of around 1,170 points again. If this support is broken, the benchmark will retreat to the lower support area of 1,120-1,140 points.

Nearly 50 Vietnamese companies join trade promotion event in India

Nearly 50 enterprises from Vietnam attended a trade promotion and business matching programme on September 22-23 as part of the Uttar Pradesh International Trade Show (UPITS), held for the first time by the administration of the Indian state of Uttar Pradesh.

The Vietnamese delegation accounted for over 10% of the international guests invited by the Uttar Pradesh administration to the UPITS, organised in coordination with the Federation of Indian Export Organisations (FIEO).

With support from the Trade Office of Vietnam in India, the delegation attended business matching events and export promotion forums held by FIEO.

Addressing a forum, FIEO Director General Ajay Sahai noted by building an export ecosystem, Uttar Pradesh will become an export hub of India and make tremendous contributions to the country’s gross domestic product.

Meanwhile, FIEO Deputy Director General Ashish Jain highlighted India’s growing role in the global market and the marketing strategies for promoting the country’s stature amid global uncertainties, high inflation, and dwindling consumption demand.

The UPITS, taking place at India Expo Mart in Greater Noida from September 21-25, attracts over 15,000 purchasers and 50,000 visitors. It aims to introduce small businesses and products made in Uttar Pradesh.

Nearly 50 Vietnamese companies join trade promotion event in India

Nearly 50 enterprises from Vietnam attended a trade promotion and business matching programme on September 22-23 as part of the Uttar Pradesh International Trade Show (UPITS), held for the first time by the administration of the Indian state of Uttar Pradesh.

The Vietnamese delegation accounted for over 10% of the international guests invited by the Uttar Pradesh administration to the UPITS, organised in coordination with the Federation of Indian Export Organisations (FIEO).

With support from the Trade Office of Vietnam in India, the delegation attended business matching events and export promotion forums held by FIEO.

Addressing a forum, FIEO Director General Ajay Sahai said by building an export ecosystem, Uttar Pradesh will become an export hub of India and make tremendous contributions to the country’s gross domestic product.

Meanwhile, FIEO Deputy Director General Ashish Jain highlighted India’s growing role in the global market and the marketing strategies for promoting the country’s stature amid global uncertainties, high inflation, and dwindling consumption demand.

The UPITS, taking place at India Expo Mart in Greater Noida from September 21-25, attracts over 15,000 purchasers and 50,000 visitors. It aims to introduce small businesses and products made in Uttar Pradesh.

SK Group to pour US$500 million into DEEP C Hải Phòng

South Korea’s second-largest conglomerate is investing US$500 million in a high-tech biodegradable materials plant in the northern city of Hải Phòng, the first of its kind in South East Asia.

At the recent conference on granting investment registration certificates for investment projects in industrial zones (IZs) and economic zones (EZs) in Hải Phòng, the Hải Phòng Economic Zone Authority (HEZA) granted a new investment registration certificate to the ECOVANCE high-tech biodegradable materials factory project of SK Group (South Korea) with a total investment capital of $500 million. The project aims to produce biodegradable materials PBAT, PBS, and PBATS. The project covers an area of 32,089 sq.m, located in the CN5.5G2 land lot, DEEP C Hải Phòng I Industrial Zone (in the Đình Vũ - Cát Hải Economic Zone). Phase 1 of the project will start construction in mid-December 2023 and complete construction in nine months. It is expected that by the end of this year, the project capacity will reach about 35,000 tonnes of products per year, and after expanding to phase two, it will be 70,000 tonnes per year.

Woncheo Zone, CEO of SKC Group (a member of SK Group), said: “SK Group was founded in 1953, with main areas of activity including energy and chemicals, telecommunications, semiconductors and materials, pharmaceuticals, and logistics services. We have invested in Việt Nam for five years now, with a scale of about $3 billion. Currently, Hải Phòng is one of the cities with modern infrastructure and strong investment attraction mechanisms, which is why we decided to invest here. SKC is a leading Korean enterprise and possesses advanced technologies, so we decided to bring them here to produce biodegradable materials and lay the foundation for our first investment in Hải Phòng. At the same time, we have fulfilled the commitment signed with the city this June. We will continue to encourage more Korean businesses to invest in Hải Phòng. In the future, we hope our development will contribute to local growth.”

Koen Soenens, General Sales and Marketing Director of DEEP C Industrial Zones, said that the significance of SKC Group's large-scale high-tech ecological investment project at the DEEP C Hải Phòng Complex should not be underestimated. This is a crucial milestone in developing Việt Nam's economy and moving towards a more sustainable future. Two ESG business leaders, ECOVANCE and DEEP C, are collaborating to successfully develop the first biodegradable materials factory in Southeast Asia. Together, the two parties will establish Hải Phòng as the high-tech and eco-business centre in Northern Hải Phòng.

“The ECOVANCE project also emphasises the growing importance of ESG factors in business decision-making. Investors and consumers are increasingly demanding that companies take responsibility for their environmental and social impact. The ECOVANCE and DEEP C projects illustrate how businesses can collaborate to craft a more sustainable future,” he added.

In addition to the above project, DEEP C’s industrial zones in Hải Phòng also welcome four other projects. These include: an investment expansion project for the construction of warehouses and storage tanks by Soft Industry Co Ltd from Japan, which increased capital by $15.2 million; Daimay Investment's project from Hong Kong to produce spare parts and accessories for cars with a new grant of $15 million; the warehouses and storage tanks project of Top Solvent Vietnam Co Ltd from Thailand, which increased capital by $12.8 million; and the optical equipment manufacturing project by GoodWe Singapore with a new grant of $10 million. Consequently, the total increased investment capital into DEEP C amounts to $553 million.

All of these projects hail from countries that possess a high level of industrialisation, advanced production technologies, and modern management skills and capacity, all in alignment with the world's criteria for environmentally friendly production.

Lê Trung Kiên, Head of the Hải Phòng Economic Zone Authority, commented that the trend towards producing high-tech, environmentally friendly products is the predominant industry trend today. South Korea is among the leading nations in Asia and the world in investment and high-tech industrial production. The projects undertaken in Hải Phòng are set to introduce many applications of new, modern, and leading technologies to the city's industrial production. Concurrently, they will enhance the skills of the city's workforce, establish R&D centres, and augment budget collection.

Harvard, Yale, and Columbia luminaries weigh in on Vietnam's ambitious blueprint

Vietnam's Prime Minister Pham Minh Chinh consulted top academics from Harvard, Columbia and Yale during his US visit on September 21, seeking strategies for sustainable economic growth amid global uncertainties.
 
The landmark state visit of US President Joe Biden to Vietnam on September 10-11 has been a historic pivot, elevating Vietnam-US ties to a Comprehensive Strategic Partnership. The essence of this partnership, PM Chinh said, lies in deepening economic, trade, and investment collaborations.

He emphasised the gravity of scientific, technological cooperation, and innovation as game-changers.

"The Biden visit signals an enhanced strategic alignment, centred on economic partnerships and technological collaboration," he said.

As reported by Tuoitre, Prof. Thomas Vallely, director of the Vietnam programme at Harvard Kennedy School, praised Vietnam's deft management. "Vietnam's response to major crises, especially its handling of the COVID-19 pandemic, is commendable," Vallely said. "Despite its nascent experience in some sectors, Vietnam has proactively sought knowledge, established global ties, and opened doors for partnerships, with the US being a case in point."

Prof. Anthony Saich, who helms the Rajawali Research Institute for Asia at Harvard Kennedy School, spotlighted Vietnam's influential role in the shifting sands of global commerce.

"Vietnam stands out as a beacon of trade liberalisation," asserted Saich, acknowledging the country's latent economic dynamism.

"In the present global backdrop, Vietnam faces myriad questions on safeguarding its economic interests and balancing multifaceted relationships. The immediate challenge, he pointed out, is the lingering sluggishness in the global economic environment," he said, cited Tuoitre.

He advised Vietnam to consider enhancing its investment climate and mobilise finance to further stimulate innovation, especially in the semiconductor sector, and foster an environment conducive to the application of AI.

As reported by VNExpress, David Dapice, senior economist at Harvard Kennedy School, posited that the country's extensively open economy would remain susceptible to international economic adversities.

He underlined the importance of self-reliance, saying, "Vietnam's economy reveals several bright spots, but the road ahead also presents challenges."

Prof. Shang Jin-Wei of Columbia University underscored the need for Vietnam to continue investing in high-quality human resources equipped with superior skills.

He recommended refining institutional structures, prioritising investments in high-tech sectors, ensuring energy supply stability, diversifying export commodities, and enhancing the nation's social security framework.

Vietnamese-origin billionaire Chinh Chu heralded Vietnam's prosperous future and strategic position. Advocating accelerated development trajectories, Chu endorsed enhanced US collaboration in high-value sectors like technology and semiconductors, according to VNExpress.

"Vietnam should consider instituting investment funds akin to Singapore's Temasek model," he said.

Prof. Erik Harms, head of Southeast Asian Studies at Yale University, illuminated the urban planning narrative within Vietnam.

"I often hear more about planning mishaps than success stories," Harms said. He urged Vietnamese authorities to put the public's voice front and centre in their development blueprints.

Drawing a parallel with Singapore's commendable urban strategy, Harms said, "Vietnam has the potential to become a global frontrunner in urban planning, provided it deftly amalgamates international insights, local perspectives, and cutting-edge technology."

Prof. Nguyen Thi Lien Hang from Columbia University saw Vietnam poised to emerge as a regional and global powerhouse.

"A revamp in curricula and pedagogical techniques is essential for fostering world-class human capital," she said. "I eagerly anticipate an influx of Vietnamese students joining Columbia's acclaimed programmes."

Addressing the scholars' inputs, Chinh said all the suggestions aligned with Vietnam's national prerogatives.

"These insights resonate with Vietnam's ongoing economic transitions and are synchronous with contemporary trends and supply chain shifts," said

Concluding the discussions, the Vietnam’s PM acknowledged the pivotal role of human capital in determining the nation's fate.

"Our government will concentrate on refining the calibre of our workforce, aligning educational methodologies with evolving realities, and meeting the developmental demands across priority sectors and phases," he said.

Chinh also articulated his belief in the country’s prodigious potential, primarily rooted in its human resources.

"Our youthful population, characterised by diligence, an insatiable quest for knowledge, and a penchant for mathematics and IT, represents an unparalleled advantage,” he said. "Vietnam remains committed to harmonising its intrinsic national strengths with global trends, synergising internal and external prowess."

He assigned government agencies to assimilate and apply the exchanged viewpoints, to aid the government and himself in strategic governance across sectors.

"I eagerly anticipate more profound policy dialogues and thematic research discussions with experts, furthering Vietnam’s developmental journey,” PM Chinh said.

Emphasising the continued collaboration, the PM conveyed his hope for ongoing support from Harvard University, Columbia University, and other US educational institutions, especially in education, training, and policy advice.

Central bank issues short-term bonds to withdraw money from market

The State Bank of Vietnam, the central bank, has withdrawn nearly VND10,000 billion from the market through a Government bond issue, reported the local media.

The banking system is sitting on mountains of cash due to the woefully low demand for new loans in the economy. The central bank’s debt sale is expected to ease pressure on exchange rates in the near future, according to the Vietnam News Agency.

After almost 15 weeks of no transactions through open market operations (OMO), the SBV conducted a debt auction on September 21, offering VND9,995 billion worth of 28-day Government bonds through OMO.

These bonds carry a coupon rate of 0.69% per year, which is higher than the average interbank interest rate of 0.15% recorded on September 19.

Four state-run commercial banks – BIDV, Vietcombank, VietinBank and Agribank – have lowered their term deposit interest rates by 0.2 to 0.3 percentage point. These rates now range from 3.5% to 5.5% per year, the lowest since the outbreak of the Covid-19 pandemic.

Construction of HCMC Beltway No. 4 in Binh Duong set to commence next year

Binh Duong Province, one of the localities traversed by HCMC Beltway No. 4, is seeking public feedback on site clearance in preparation for the construction of the HCMC Beltway No. 4 project next year.

On September 21, the Binh Duong Traffic Works Construction Authority held a meeting with local residents to announce the investment policy for HCMC Beltway No. 4.

As per the plan, Binh Duong authorities have endorsed a 47.8 kilometers section of the Beltway No. 4 from the Thu Bien bridge to the Saigon River, which will be developed under the public-private partnership format in phase 1.

The project, which comprises site clearance and construction at a cost of VND18,247 billion, is scheduled for execution from 2023 to 2026.

The route will pass through Bac Tan Uyen District, Tan Uyen City, Thu Dau Mot City, Ben Cat Town, and various crucial locations in Binh Duong Province, including Vietnam Singapore Industrial Park III and interchanges with the future HCMC-Chon Thanh Expressway.

HCMC Beltway No. 4 will be developed as an expressway, featuring between four and ten lanes for vehicles, with a maximum speed of 100 kilometers per hour.

Vo Ngoc Sang, deputy director of the Binh Duong Traffic Works Construction Authority, emphasized the project’s significance, stating that it will act as a catalyst for the development of Binh Duong, HCMC, Dong Nai, and several other surrounding provinces.

Upon completion, the Beltway No. 4 section in Binh Duong is expected to reduce travel time from the province to Long Thanh International Airport in neighboring Dong Nai Province and other parts of the southern key economic region, while also stimulating the socio-economic development of the region.

Export carbon tax options on the table

Two options for enacting a carbon tax scheme have been proposed to mitigate the impact of the EU’s carbon border adjustment mechanism on exporters.

A Southeast Asia energy transition partnership under the MoU between the Department of Climate Change of the Ministry of Natural Resources and Environment and the United Nations Office of Project Services has highlighted the two options to enact a carbon tax, based on existing policies.

Under the partnership’s proposals, the first option is to amend and supplement the draft decree stipulating the environmental protection fee for emissions which is being developed by the Ministry of Finance and expected to be adopted by the year’s end. The second option is to include a carbon tax in the amendment of the environmental protection tax (EPT), which the Ministry of Finance expects to amend around 2026. This option allows a longer preparation time.

Commenting on the first option, Nguyen Anh Minh, a lawyer at NHQuang and Associates, said, “To be in line with the EU’s carbon border adjustment mechanism (CBAM), the EPT should be targeting carbon emissions explicitly, setting a price per tCO2e that would be emitted.”

In principle, the integration of the carbon tax into the EPT is possible: they both would target goods that have negative impacts on the environment, Minh explained. “Certain products such as coal and petrol are already covered by the EPT. The EPT could be expanded to explicitly include the emissions that result from production processes and use of the selected goods.”

According to Minh’s analysis, among the subjected goods, coal, petrol, and diesel oil are widely used as fuel and/or material in the covered sectors. The current EPT does not provide the same level of rate based on the carbon content of the fuel and may reflect other considerations, such as coal. The tax rate is too low to generate real mitigation and reduce emissions.

“It is thus crucial to ensure that the carbon tax is directly linked to the greenhouse gas (GHG) emissions of a good, and further products could be included in the EPT to be aligned with the mechanism, for instance cement sector and steel,” Minh added.

Mai Kim Lien, deputy director of the Department of Climate Change, said, “To achieve the goal of reducing emissions, in addition to applying advanced technology, many countries apply carbon pricing tools. The three common carbon pricing tools are carbon tax, GHG quota trading systems, and carbon credit mechanisms.”

In parallel with the roadmap to establish and run the domestic carbon market, the prime minister has also assigned relevant ministries and agencies to research regulations and propose a roadmap for applying carbon tax in Vietnam.

“Therefore, the partnership has supported the impact assessment of CBAM and proposed carbon pricing tools, including a carbon tax policy for the country,” Lien said at a consultation workshop on the issue, organised by the partnership on August 30.

Those at the workshop said that instead of paying for the CBAM, a well-designed carbon tax will help to decarbonise the economy. Part of the state revenue is retained domestically to reduce the impact of the mechanism on Vietnam’s exports and raise Vietnam’s competitiveness.

Meanwhile, the experts stated that the yet-to-be-approved fee on emissions appears closer, at least to a certain extent, to the carbon tax in terms of the underlying logic. Both can be applied to the level of emissions, although the environmental protection fee is assumed to be not directly linked to the GHG emissions nor to the harmful impacts on the climate these emissions have. If the fee is actually defined on the level of emissions, it would be aligned with the CBAM.

According to the Vietnam Initiative for Energy Transition, currently the country indirectly imposes a tax on carbon through the EPT on fossil fuel producers and importers. However, this rate does not really reflect the nature of carbon pricing, it said.

US$600 million Lotte Mall West Lake Hanoi opens

South Korean conglomerate Lotte Group inaugurated the Lotte Mall West Lake project in Hanoi on September 22, with a total investment of over US$600 million.

With an area of 354,000 square meters, it is one of the largest commercial complexes in Vietnam. The total cost of the project is $634 million, second only to the $1.05 billion investment in Hanoi's tallest building, Keangnam.

Speaking at the opening ceremony, Tran Sy Thanh, Chairman of the Hanoi People's Committee, said that the opening and operation of the high-end Lotte Mall complex not only demonstrates the strength, scale, and vision of the Lotte Group in its development path, but also symbolizes the friendship and effective cooperation between Vietnam and South Korea, and the capitals of Hanoi and Seoul.

The Chairman stressed the importance of the opening of Lotte Mall in Hanoi, which marks the success of the construction process by the investor, Lotte Group, and the official launch of the Lotte Mall project.

Calls for establishment of national productivity committee

At the Vietnam Socioeconomic Forum 2023 on September 19, Can Van Luc, member of the National Fiscal and Monetary Policy Advisory Council, emphasised the need for a national productivity committee to launch projects to make enhancements in this area.
 
By 2025, a number of key drivers are expected to continue to make Vietnam one of the fastest-growing and most sustainable emerging markets.

In addition to traditional growth drivers such as production, export, investment, and consumption, some new trends are set to become new driving forces for Vietnam's economic growth in the medium and long term.

Firstly, the strong development of the digital economy. By completing the legal framework and overcoming the limitations in terms of infrastructure, human resources, innovation ecosystems, and network, information, and data security, Vietnam's digital economy is expected to continue to grow strongly up to 2030.

Secondly, accelerating labour productivity and total factor productivity (TFP) is a driving force for Vietnam's economy to improve over the coming years, with predicted increases of about 4.5-5 per cent over the 2021-2025 period and 6-6.5 per cent from 2026 to 2030. TFP's contribution to GDP growth is forecast to reach about 40-45 per cent by 2025 and 50-55 per cent by 2030.

In addition, the private sector will play an increasingly important role in the economy, supplementing and enriching resources to support state-owned enterprises. However, a breakthrough is needed in terms of mechanisms to facilitate a contribution of about 45 per cent of GDP by 2025 and 50-55 per cent of GDP by 2030.

Furthermore, depending on the scale and quality of the institutional improvement of economic institutions, they could contribute 0.05-0.27 percentage points per year to GDP growth.

Additional practical benefits can also be derived from the green economy and Vietnam's proactive approach to climate change. The national strategy on green growth sets the goal of levelling up the green economy to generate $300 billion in GDP by 2050 (around 10 per cent of the total). Its contribution is set to increase by an average of about 15 per cent per year from 2021 to 2050.

Finally, motivation comes from the determination to improve Vietnam's position in the global value chain. Vietnam's deeper participation globally will enable local businesses to access capital, technology, management skills, new markets, and partners, thereby raising both the competitiveness and value of products, goods, and services.

To promote and exploit new growth drivers for rapid, sustainable, and inclusive development, it is necessary to accelerate the process of building and perfecting institutions for the digital, green, and circular economies, including sandbox policies.

To maximise the gains, there have been calls to establish a national productivity committee, mirroring the most successful models from other countries.

CBAM may hinder EVFTA advantages for steel industry

As the EU's Carbon Border Adjustment Mechanism (CBAM) takes effect on October 1, 2023, steel manufacturers are still confused about how to meet the new requirements.
 
Nghiem Xuan Da, chairman of the Vietnam Steel Association (VSA), said, "The CBAM is the latest challenge for Vietnam's steel industry amidst an already tough business climate as it tries to increase exports to Europe under the EU-Vietnam Free Trade Agreement (EVFTA)."

The CBAM is the EU's landmark attempt to put a fair price on carbon emissions produced from carbon-intensive goods entering the EU. It aims to encourage cleaner industrial production in non-EU countries.

According to the VSA, Vietnamese steel exports to the EU have been on a positive trajectory thanks to the implementation of the EVFTA in August 2020, along with the recent shortfall in steel supply to the EU. Steel exports in the first six months of 2023 reached 1.36 million tonnes, with export turnover reaching about $1 billion, an increase of 1.5 times compared to the same period in 2022.

In response to the new policy, Posco Yamato Vina Steel (Py Vina), under South Korea's Posco Group, is researching a new advanced technique using hydrogen to produce steel. Py Vina is aiming for a 50 per cent reduction in carbon emissions by 2040, and to be carbon-neutral by 2050.

Net-zero production is an important condition for steel manufacturers to access the EU market. However, this is not an easy process. "Some foreign financial institutions can offer loans with preferential interest rates for businesses to switch to carbon-free production. However, it is not the right time to make large investments," said Le Khac Giang, deputy head of the Production Department at NatSteelVina.

"Currently, we are gradually reducing emissions through energy-saving measures and applying technology to improve productivity," Giang added. "Further reductions in emissions and progress towards net-zero goals require major technological breakthroughs. This process requires huge investments at a time when the steel industry is facing many difficulties."

Emissions are an ongoing challenge for Vietnam's iron and steel industry, which is home to about 300 small and medium-sized enterprises. According to a survey by the Energy Efficiency and Sustainable Development Department under the MoIT, to produce 10 million tonnes of steel, large factories such as Formosa or Hoa Phat emit about 21 million tonnes of carbon.

Emission intensity at factories using electric-arc furnace (EAF) technology in Vietnam is also 1.5–2 times higher than the global average. This can be attributed to the large proportion of fossil fuels being used in electricity production. It is estimated that industry-wide emissions will reach about 122.5 million tonnes of carbon in 2025 and about 133 million tonnes of carbon in 2030, accounting for 17 per cent of the country's total emissions.

Le Huyen Nga, head of the Division for Supporting Industries at the MoIT's Industry Agency, said, "Once CBAM takes effect, importers in the EU must receive satisfactory carbon-emission data from exporters and report it to the relevant EU agencies. These procedures may become an import barrier for Vietnamese firms unless the mechanism becomes a driving force that motivates domestic steel firms to innovate their production processes."

Nga stressed the importance of Vietnamese producers remaining competitive in the global market, saying, "According to estimates by the World Trade Organisation, Vietnam's steel industry is likely to reduce in export value by about 4 per cent following the impact of the CBAM. This shrinking demand will lead to a decrease in output of about 0.8 per cent, along with the associated adverse impact on market competitiveness."

"Steel manufacturers should pay close attention to the different declaration processes and closely monitor developments in CBAM implementation, so they have the opportunity to devise a response," she added.

Nga encourages businesses to proactively seek information and expand their network by participating in relevant cooperation mechanisms under the EVFTA. They can consult the Domestic Consulting Group within the framework of Chapter 13 - Trade and Sustainable Development, and seek support from the relevant state management agencies when declaring information and completing procedures for exporting to the EU.

According to the decision of the European Commission, the CBAM will begin implementing the transition period from October 1, 2023, to December 31, 2025. This will initially apply only to selected products from the most carbon-intensive heavy industries. This includes iron, steel, cement, aluminium, fertiliser, electricity, and hydrogen. To facilitate smooth deployment, EU importers will not have to make financial adjustments during this time.

Once fully implemented in 2026, importers of goods covered by the CBAM in the EU will need to purchase a CBAM certificate. The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances, expressed in €/tonne of CO2 emitted.

Multiple open-end funds record positive performance in 9 months
 
Multiple open-end funds have reported significant profits since the beginning of 2023, although last year many suffered losses or low profits due to market declines.

Many open-end funds have recorded higher rates of return compared to the market average. Among them, the VinaCapital-VESAF Fund recorded the highest rate with a 37% increase in profits, followed by SSISCA with a nearly 36 per cent increase, VCBF-MGF with 35 per cent, DCDS 34.8 per cent, DCBC 28.7 per cent, while the benchmark VN-Index only 20 per cent.

Nguyễn Hoài Phương, the Investment Director and Fund Manager of VinaCapital-VESAF, stated that in the early months of 2023, the portfolio of the fund underwent significant changes in the proportions of stock groups based on assessments of macroeconomic policies and growth prospects of the economy.

"We have increased our investment in stocks benefiting from infrastructure development (from 11.7 per cent of the net asset value of the fund at the end of 2022 to 13.6 per cent at the end of August 2023), financial stocks (from 13.2 per cent at the end of 2022 to 17.2 per cent at the end of August 2023), and recently, export-oriented stocks with attractive valuations, with the hope that Việt Nam's export situation to improve significantly in the early months of 2024," said Phương.

Stock selection of Vietcombank Fund Management Company (VCBF) is based on in-depth analysis and valuation of each company. With careful selection of companies, the fund's portfolio tends to decrease less when the market declines and increase more when the market rises, said Nguyễn Thị Hằng Nga, Deputy General Director of VCBF.

The fund pursues long-term investments and holdings. The company does not engage in continuous buying and selling of stocks because it believes that consistently predicting short-term market trends is impossible, while the fund has the ability to predict the long-term growth of companies. With this strategy, the oldest equity fund managed by VCBF, VCBF-BCF (established in August 2014), has held stocks that have increased in value by 5 to 7 times, such as FPT Corporation (FPT), Asia Commercial Bank (ACB), Phú Nhuận Jewelry (PNJ) and Military Bank (MBB).

VCBF maintains a diversified portfolio, which helps minimise risks during market declines and benefits from market recoveries, she said.

According to Nga, the VCBF-MGF Fund was established when market valuations were very high, but since its inception, the fund recorded an increase of more than 3 times, while the VN30 index increased by 1.9 times.

"We patiently waited for our preferred stocks to adjust to the target buying price and held them through the difficult period of Q4, 2022. In 2023, when the market recovered, the fund achieved a 35 per cent profit in the first eight months of the year," said Nga.

DC Corporate Investment Fund (DCBC), the second public fund managed by DCVFM, allocates about 20 per cent of its investment capital to bonds and cash and 80 per cent to equities, mainly stocks of large-cap companies with good growth potential. The allocation ratio between these two types of securities can fluctuate +/- 10 per cent, depending on market conditions.

Open-end funds with outstanding results compared to the general market are gradually attracting more investors. However, the prices of fund certificates fluctuate according to the laws of supply and demand and market prospects. Therefore, investors are advised to be patient when investing in fund certificates, especially to maintain investments during market downturns, Nga said.

In uncertain situations, investors should allocate their investments into multiple instalments, and when the market declines, they need to maintain discipline and continue to implement their investment plans.

Risk management has been a priority for open-end funds in recent years, contributing significantly to their effectiveness amidst unpredictable macroeconomic conditions in both domestic and global markets, said Nguyễn Hoài Phương, the Investment Director and Fund Manager of VinaCapital-VESAF.

The selection of stocks based on strict criteria and risk management for the investment portfolio becomes particularly important. Currently, assessing the valuation and growth potential of individual companies and stocks is much more important than looking at the overall market valuation, she said.

"These perspectives help us identify stocks with reasonable valuations and long-term growth potential. Additionally, the capability and reliability of corporate leadership are essential factors in our investment decisions," she said.

Open-end funds are demonstrating flexibility in investment decisions. Currently, as the market has experienced an impressive upward trend for nearly five months since the end of April 2023, causing stocks in general to no longer be cheap, the correct selection of stocks, portfolio restructuring, and appropriate adjustments to the proportions of industry sectors will determine the effectiveness of the fund's investments.

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