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VIETNAM BUSINESS NEWS MAY 7

Vietnam has huge biomass power potential, but more incentives needed

Vietnam has huge biomass power potential, but more incentives needed hinh anh 1

Vietnam expects to add 9,600 MW of power from biomass by 2030, but that will need added incentives.

Pham Huong Giang, an official of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade, pointed out the low rate of biomass power contributions to the national power grid.

Under Vietnam’s renewable energy development strategy by 2030 with a vision towards 2050, biomass power is set to make up 1 percent of the combined electricity output in 2020, 2.1 percent in 2030, and 8.1 percent in 2050.

However, the number stood at only 0.13 percent last year, a far cry from the target, despite incentives issued by the Government to spur the sector’s development, Giang added.

Nguyen Anh Tuan, former Director of the Centre for Renewable Energy under the Institute of Energy, said the modest contribution of biomass power is due to difficulties in material control and fluctuating material prices.

Huge investment capital and unattractive price mechanisms have also remained major obstacles, he said.

Luong Quang Huy, from the Department of Climate Change at the Ministry of Natural Resources and Environment, held that finance and technology are among the roadblocks. 

Other problems lie with unattractive policies and high operational costs, along with difficulties in material area development, he added.

According to the National Power Development Plan for the 2021 - 2030 period, with a vision towards 2045 (PDP VIII), the installed capacity of biomass power in Vietnam will reach 1,730MW by 2030.

To that end, the country needs more mechanisms to encourage and attract investment in this form of energy.

Giang suggested reviewing mechanisms and policies to lure more investment in both technology and finance, and assessing the efficiency of the feed-in tariff (FiT) mechanism.

Mathias Eichelbronner, an international expert in biomass power, said Vietnam’s FiT mechanism is not enough to encourage the development of biomass electricity as the price of 8.47 cent/kWH is much lower than that in Thailand, Malaysia and the Philippines.

Other experts also suggested the Vietnamese Government review the FiT price, amend legal documents and fine-tune administrative procedures to facilitate the development of the sector.

Shrimp, pangasius exports enjoy April surge

Pangasius and shrimp represent two key Vietnamese export items that maintained high growth in April, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The export turnover of pangasius in April reached US$297 million, a twofold increase compared to the same period from last year.

The April figure raised the four-month export value of pangasius to more than US$950 million, representing a year-on-year rise of 94% and meeting 60% of this year’s export target.

Meanwhile, the country’s shrimp export value in April reached US$406 million, up 35% compared to the same period last year. In total, the four-month export value of shrimp rose 41.5% year on year to US$1.36 billion.

According to the VASEP, Vietnam’s seafood exports in the first four months of the year reached approximately US$3.6 billion, up 44.5% year on year.

China and the United States continue to be the two largest importers of Vietnamese seafood. The past four months saw the US and China consumed US$842 million and US$578 million worth of Vietnamese seafood, up 74% and 94% respectively.

Shipments to China have also bounced back after months of decline due to its “Zero-COVID” policy, while the positive growth in exports to the US comes following a zero anti-dumping duty imposed in the 17th review (POR17) of the US Department of Commerce.

Pangasius exports to US enjoy record prices

The average price of Vietnam’s tra fish (pangasius) exported to the US increased sharply in the first quarter of this year to the highest ever level of US$4.5 per kilogramme, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Exports to the market grew by 123% year-on-year to US$160 million since demand was high and supply was modest. Increased transportation costs due to the impact of COVID-19 was a contributing factor to the increase in prices, not only to the US but to all markets.

Exports to the EU market fetched US$2.9-3.45 per kilogramme.

Total exports topped US$646 million, year-on-year growth of 88%, according to VASEP.

The high global demand drove up the average export price of frozen pangasius fillet to US$3.4, US$0.25 higher than in January this year.

After falling for many exports to the EU jumped by 86.2% in the first quarter of 2022 to US$46.7 million, with huge increases seen in shipments to all the major markets in the bloc like the Netherlands (86%), Germany (97%), Belgium (120%), and Spain (67%).

It is forecast that the demand for essential goods, including food and seafood, will increase sharply in the EU providing a good opportunity for Vietnamese companies to export frozen pangasius, VASEP said.

In the second quarter too exports to these major markets are likely to rise sharply due to a shortage of cod and pollock supply from Russia.

Norwegian energy firm eyes offshore wind power project in Vietnam

Norwegian energy company Equinor have outlined their desire to invest and develop offshore wind power in Vietnam, with the international company viewing the nation as a promising market.

This point of view was shared during a recent meeting held between Deputy Minister of Industry and Trade Dang Hoang An, Norwegian Ambassador to Vietnam Grete Lochen, and Equinor representatives to discuss a host of issues related to offshore wind power in the country.

Ambassador Lochen hailed the strong developments in the friendship and multifaceted co-operation between both sides over the years, especially in terms of the marine economy, renewable energy, climate change response, and sustainable development.

With longstanding expertise in marine and offshore operations, Norway can be viewed as being in a unique position to contribute to the growing offshore wind market.

Norwegian companies and industrial clusters are in the process of utilizing their offshore expertise, especially their experience, skills, and knowledge of offshore construction in order to assert their position in the global offshore wind market.

Jens Økland, senior vice president for business development in renewables, said that Equinor had officially opened a representative office in Hanoi. This demonstrates the Norwegian Government's long-term support for the nation in fulfilling its commitments on climate change response at the 26th session of the UN Conference of the Parties (COP26).

The opening of a representative office in Hanoi by Equinor is a good signal aimed at supporting the Vietnamese Government in policy making to realise its commitments to climate change adaptation and green transformation. This also represents an important milestone in the agenda of business co-operation between both sides, the Norwegian Ambassador emphasized.

Economist Intelligence Unit: Vietnam ranks mid-table for tourism recovery

Vietnam along with Thailand, India, the Philippines, Papua New Guinea, Indonesia, Mongolia, and the Republic of Korea, ranked mid-table for tourism recovery, according to the travel-ready index 2022 released by the Economist Intelligence Unit (EIU).

This comes after Aljazeera.com revealed the report by the EIU listed Fiji, Sri Lanka, Malaysia, and the Maldives among the countries with the strongest position to revive their pandemic-battered tourism industries among Asia-Pacific destinations.

The EIU also ranked Singapore, Australia, Bangladesh, New Zealand, Nepal, and Cambodia among the top 10 destinations which are best placed for tourism recovery.

Elsewhere, the index outlines that Hong Kong (China) has the worst prospects due to its restrictive border policies.

After Hong Kong (China), other destinations such as Brunei, Bhutan, Taiwan (China), Samoa, Vanuatu, Japan, China, and Laos also ranked as the destinations with the least favourable conditions for tourism moving forward.

The EIU said the top performers in the index have all moved to ease visa and entry restrictions since 2021 or earlier.

The index measures the positive conditions for tourism based on the importance of the sector to the economy, local vaccination coverage, ease of travel, and the convenience of returning home.

Laos to develop expressway linking Houaphanh with Viet Nam

The Government of Laos has agreed with contractors to conduct a feasibility study on the construction of an expressway from Houaphanh Province to the border with Việt Nam under a recent agreement, Vientiane Times reported.

Under the Memorandum of Understanding (MOU) inked between the Government, Daochaleun Construction and THB Group, the 80-km expressway will run from Huanmuang District in Houaphanh to the Nam Soi - Na Mèo International Checkpoint at the border between Laos and Việt Nam.

It will be constructed under a Build-Operate-Transfer (BOT) model as part of the fourth phase of a larger expressway construction project linking Vientiane with Houaphanh, for which a feasibility study is already underway.

It is expected that construction of the section linking Houaphanh to Việt Nam will take up to four years to complete. 

Vietnamese firms partner to upgrade telecoms network in Cambodia
     
MB Cambodia and the Viettel (Cambodia) Pte., Ltd (Metfone), two Vietnamese-invested firms recently signed a special credit package contract for 2022 to upgrade the telecoms network in Cambodia.

Under this contract, MB Cambodia, a branch of Viet Nam’s Military Commercial Joint Stock Bank, will provide a credit package with a limit of up to US$100 million for Metfone, an affiliate of the Viettel Military Industry and Telecoms Group, to upgrade the telecom services network and expand operations in Cambodia.

Govt asked to raise export taxes to reduce domestic fertiliser prices
     
The Ministry of Finance (MoF) has proposed a five per cent increase in the export tax rate, in an effort to cool down domestic fertiliser prices.

The move is part of MoF’s ongoing proposal to amend the export tariffs levied on fertiliser as prices in global and domestic markets have escalated recently, due to rising input prices.

The sharply-increased price of fertiliser is also attributed to the shortage of empty containers and apatite supplies, the main resource used in fertilisers production.

The proposal was compiled after the finance ministry received recommendations from agencies. The ministry reports that it has finished compiling a draft decree on export tariff, preferential import tariff, list of goods and absolute tax rates.

It is said that the total fertiliser production capacity of Viet Nam’s fertiliser makers reached 29.25 million tonnes per year, including organic fertiliser. If the production of local fertiliser producers runs smoothly, they can meet domestic demand for nitrogenous and phosphate fertilisers, particularly in potash and NPK.

Currently, domestic fertiliser producers still have relied on the import of raw materials due to a lack of potassium salt mines.

The demand for fertiliser for agricultural production in the country is about 10.5 million tonnes per year. Of this, domestic factories can provide about 7.5 million tonnes per year.

Fertiliser producers have now produced most of the major fertilisers such as phosphates, urea and NPK fertilisers, while still importing SA and Potassium fertilisers. Viet Nam has so far exported fertilisers to more than 20 countries around the world.

To lower the domestic fertiliser price and stabilise the supply, the Finance Ministry has submitted to the Government to lower export taxes on fertilisers by 5 per cent, without classifying the ratio of natural resources, or minerals. Accordingly, fertiliser with a value less than 51 per cent will be subject to 5 per cent instead of zero per cent currently. Export tax for other kinds of fertilisers remain unchanged.

Opportunities growing to export farm produce to US
     
The potential for exporting Vietnamese agricultural products to the US market is very large due to the high demand in the market, according to the Ministry of Agriculture and Rural Development (MARD).

The US needs to import vegetables, fruit, coffee, tea, pepper, rubber, cashew nuts and seafood. Viet Nam has gained significant revenues from exports of furniture and seafood to the US, but export values of rice, coffee and vegetables have been modest.

With a total export turnover of US$3.5 billion, the US became the largest export market of Viet Nam's agricultural, forestry and fishery products in the first three months of 2022. Of which, the export value of timber and wood products accounted for 68.2 per cent.

According to local businesses, agricultural products exported to the US still face many difficulties, especially fresh products. The US has licensed the import of six kinds of fresh fruit from Viet Nam, including mango, longan, lychees, dragon fruit, and rambutan. Other fruits such as coconut and durian are still exported to the US but as frozen products.

According to MARD, in the first quarter of 2022, the total trade value of agricultural, forestry and fishery products is estimated at $22.6 billion, up 6.3 per cent on the year, including an export value of $12.8 billion and import value of $9.8 billion. Agriculture gained a trade surplus of $3 billion, up 3.1 times over the same period last year.

Vietravel loses $4.7 ml in Q1
     
In its latest financial statement, Vietnam Travel and Marketing Transports JSC (Vietravel) posted net revenue of VND215 billion (US$9.4 million) in the first quarter of 2022, down 22 per cent year-on-year.

But its revenue structure saw a significant change as revenues from selling airline tickets fell sharply from VND70.6 billion in the same period of last year to VND2.6 billion, while revenues from tourism services increased strongly to VND196 billion from VND72 billion.

During the period, the company's financial income also declined by more than 98.6 per cent on-year to VND225 million from VND16.6 billion.

Meanwhile, other expenses all dropped dramatically, with financial expenses down 27 per cent, and selling and general administration expenses fell by 81.5 per cent and 51.6 per cent, respectively.

The loss of VND60 billion in affiliated activities was the main cause of the loss of VND108 billion in the first quarter of 2022. After losing for four consecutive quarters, the company posted a profit of VND228 billion in the last quarter of 2021.

This year, Vietravel set a revenue target of more than VND3.5 trillion and a profit before tax of VND5.8 billion.

As of March 31, Vietravel's undistributed profit after tax was negative VND293 billion. Its equity was negative VND100 billion, while at the beginning of the period it was still positive VND8 billion.

The loss in affiliated activities during the period came from Vietravel Airlines. Before December 15, 2021, Vietravel sold 55.58 per cent of Vietravel Airlines' charter capital for VND867 billion. However, by the time of issuing financial statements, Vietravel had not yet collected the fee from this transfer. 

New draft on bond issuances to suffocate market: experts
     
The Ministry of Finance has made numerous amendments to Decree 153 on corporate bond offerings but experts say the latest draft is so stringent that it would suffocate the market.

Notably, Article 5 of the amended draft stipulates that firms are not allowed to issue bonds to raise capital which will be used to purchase shares, bonds and contributed capital of other firms, to make capital contributions to those firms, or to lend them money.

Experts said the article would work against big corporations as it prevents them from issuing bonds to finance their projects and subsidiaries.

Some financial authorities, including the National Financial Supervisory Commission, propose that Article 5 be inapplicable to parent companies issuing bonds to finance their subsidiaries, thereby maintaining a common practice in corporate finance.

Experts also mention Article 8 as a legal setback for the market.

Article 8 stipulates that professional securities investors are allowed to purchase privately-placed bonds issued by only public companies with collateral or payment guarantee.

Experts say the article sets the bar too high for bond issuers as only public companies with collateral or payment guarantee are eligible to offer privately-placed bonds.

According to the State Securities Commission of Vietnam, Viet Nam had around 2,809 public companies by late March 2022. Meanwhile, the number of firms in the country is about 683,590. That means less than 0.5 per cent of firms are eligible for public placement of bonds under Article 8.

The economic expert attributes the chaos in the bond market to inexperienced F0 investors who have little understanding of financial systems.

He said the investors have insufficient information about bond issuers and do not know how to evaluate issuer-related risks. As a result, those investors normally come up with bad investment decisions.

He suggests the establishment of credit-rating agencies that would help reduce the risk of asymmetric information, thereby better safeguarding investors.

The Asian Development Bank (ADB) shares the view, saying that credit-rating has become the norm in other Asian markets, notably Thailand, India and China. Viet Nam should follow their model to incorporate credit-rating into the draft.

Thinh proposes that the agencies are in charge of supervising bond issuers and publishing the credit-ratings assigned to them with or without their consent.

Some experts, however, disagree with Thinh's proposal as they are concerned about the quality of the ratings. 

Vietnamese gold demand increases in Q1
     
Gold demand in Viet Nam increased significantly in the first quarter over inflation fears.

The World Gold Council’s report on demand trends showed that consumer demand for gold in Viet Nam was estimated to total 19.6 tonnes from January to March, representing a year-on-year rise of about 6 per cent.

Demand for gold bars and coins totalled 14 tonnes, a year-on-year increase of 4 per cent, while demand for jewellery was 5.6 tonnes, up by 10 per cent.

According to Andrew Naylor, head of ASEAN and Public Policy of the World Gold Council, Viet Nam’s gold demand increased on rising inflation and the weakening Vietnamese dong, making gold more attractive.

The gold demand was also supported by several festivals in the first quarter, including the Lunar New Year holidays, Valentine's Day and God of Wealth Day, coupled with the recovery of business activities to pre-pandemic levels.

The global gold market saw a solid start to 2022, with first-quarter demand up 34 per cent year-on-year, thanks to strong ETF flows, reflecting gold’s status as a safe haven during geopolitical and economic uncertainty.

According to the World Gold Council, geopolitical crises weighed heavily on the global economy and reinvigorated investor interest, pushing the gold price briefly to US$2,070 per ounce in March, just shy of its all-time high.

The report revealed that gold ETFs had their strongest quarterly inflows of 269 tonnes since the third quarter of 2020, more than reversing the 173 tonnes annual net outflow from 2021 and driven in part by the rising gold price.

Vietnam’s easing monetary policy unlikely to reverse amid Fed’s rate hike

The Federal Reserve (Fed)’s biggest rate hike in 22 years by a half-percentage point and the current high inflationary pressure may not be enough to reverse Vietnam’s current easing monetary policy, at least in the upcoming three to six months, according to the VnDirect.

For the past two years, the State Bank of Vietnam (SBV), has cut the policy rates three times and kept a low-interest-rate environment to support the economy against pandemic impacts.

Skyrocketing strategic commodities in the global market as a result of the Ukraine-Russia conflict, however, have raised concerns that the inflation in Vietnam may exceed the 4% target in 2022.

In the first quarter of 2022, the average price of Brent crude oil stood at US$100 per barrel, an increase of 59.7% year-on-year, while experts suggested prices of gas and crude oil may not return to the pre-crisis level any time soon.

The high crude oil prices would no doubt pile pressure on Vietnam’s efforts to control inflation, especially with rising high transportation costs.

The consumer price index (CPI), a gauge of inflation, expanded by 1.47% in April, taking the four-month rate to  0.97%.

Commercial banks have also raised interest rates for 3-month deposits and capital mobilization rates of 12 months by seven and eight percentage points, respectively, in the first quarter against late 2021.

VnDirect’s report, however, anticipated the SBV to maintain its easing monetary policy by at least the end of the second quarter, as the CPI in the first half of 2022 is estimated to expand by 2.5% year-on-year, significantly lower than the 4%-threshold.

Another factor pointed out by the report is the demand that has not fully recovered after the pandemic.

While the SBV may not further cut its policy rates, VnDirect expects support could come in the form of injecting more liquidity into the market, purchasing foreign currency, or raising credit quota for commercial banks.

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

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