Prudent monetary policy and effective price controls would keep inflation in check at 3.8 per cent this year and 4.0 per cent for next year.
Viet Nam’s economy has been bouncing back faster than expected in the first half of 2022, according to Andrew Jeffries, ADB Country Director for Vietnam.
The director was speaking at the launch of the Asian Development Outlook Updates 2022 yesterday.
He attributed the bounce-back to strong economic fundamentals, flexible monetary policy and stable recovery of manufacturing, services and domestic consumption.
He also said prudent monetary policy and effective price controls would keep inflation in check at 3.8 per cent this year and 4.0 per cent for next year, unchanged from the projection made in April’s Asian Development Outlook.
However, risks to the economic outlook remain elevated. The global economic slowdown could weigh on exports whereas labour shortage is expected to impede the fast recovery of services and labour-intensive export sectors.
The low delivery of public investment and social spending, especially the implementation of the governmental Economic Recovery and Development Programme, could compound the situation, slowing growth this year and the next.
Nguyen Minh Cuong, Principal Country Economist at the Asian Development Bank (ADB), remarked that high vaccine coverage and milder symptoms of Omicron variants have allowed Asian countries, except China, to reopen their economies.
The switch from stringent pandemic preventive measures to flexible measures lifted Viet Nam’s PMI (purchasing managers’ index) to 52.7 points in August, against the figure of 40.2 points in the same month last year.
The country achieved GDP growth of 7.7 per cent in the second quarter of 2022 and a six-month average growth of 6.4 per cent.
Public revenues rose by 19.4 per cent in the first eight months of the year and outpaced public expenditures, resulting in a fiscal surplus of 5 per cent GDP.
Bank credit grew by 15.2 per cent in late June compared to the same month last year. Credit growth caps were kept at 14 per cent. Treasury Bills were issued to absorb VND100 trillion from the economy so far.
Services saw an increase of 6.6 per cent in the first six months of the year. Tourism fared better with 7 per cent. Banking services and financial services followed suit with growth rates of 9.5 per cent and 9.1 per cent, respectively.
Manufacturing and processing industries were riding high with a six-month growth of 9.7 per cent, fuelled by exports.
Economic recovery, coupled with stable exchange rates, pushed eight-month exports up by 17.1 per cent and imports by 13.6 per cent, equivalent to a trade surplus of US$4 billion.
Manufacturing export orders were weakening. The possibility of higher Fed rates would fuel the situation, leading to remittance drops and current account deficits.
ADB forecast that Viet Nam’s agricultural sector would grow by 3.5 per cent, industrial sector by 6.5 per cent and service sector by 6.6 per cent.
Vietnam, RoK ink MoUs on innovative startup, technology transfer support
Vietnam and the Republic of Korea signed a number of memorandums of understanding on cooperation in innovative startup and technology transfer support at a business connectivity festival (Mega Us Expo 2022) underway in Ho Chi Minh City on September 21 – 22.
The MoUs include those between the Saigon Innovation Hub (Sihub) and centres for supporting startups in seven RoK universities, between the HCM City Center for Biotechnology and the Korean Society for Applied Biological Chemistry, between the HCM City High-tech Agricultural Park and the Jeonbuk Center for Creative Economy and Innovation (JBCCEI), and between the Agricultural High-tech Business Incubation of HCM City and the Korean Society for Applied Biological Chemistry.
The cooperation documents will help foster technology transfer, commercialization of research results, trade and investment promotion, and startup support among business communities between the two countries, said Nguyen Manh Cuong, an official of the Ministry of Science and Technology, at the festival.
Currently, Vietnam has nearly 4,000 startups, of which 4 unicorn startup companies are valued at more than US$1 billion, and more than 10 businesses valued at over US$100 million. In 2021 alone, investment for Vietnamese startups reached more than US$1.3 billion. Meanwhile, the RoK is the country with the largest number of startup investment deals in Vietnam.
As many as 120 innovative Korean businesses are showcasing more than 650 products in the fields of cosmetics, chemicals, cosmetics, pharmaceuticals, information technology, household appliances, food, functional foods at the September 21-22 festival.
The festival is expected to provide business information and opportunities in the RoK market as well as a lot of knowledge on investment, trade promotion, and e-commerce, through Talkshow sessions with leading speakers in Vietnam and the RoK. There will be more than 800 business-to-business matching sessions between Korean and Vietnamese businesses.
Local consumers will also have the opportunity to test and experience new and high-quality products and technologies, as well as buy to products at Mega Us Expo 2022.
Be, Cake, Visa launch co-branded credit card
Digital bank Cake, ride-hailing platform Be and Visa announced their first co-branded credit card product called the Be-Cake Visa credit card, offering many exclusive benefits without annual fees and the highest cash-back rate in the market at 20%.
With the technological platform of Cake, Be-Cake Visa credit card applications are approved instantly. This enables clients to begin shopping online even before receiving the physical card.
Notably, cardholders will get a 20% refund, the highest on the market, for payments on the Be app and refunds for spending at other merchants.
In addition, cardholders can convert transactions into installments and even set up an automatic payment schedule through their Cake account.
Global investment shift to benefit Vietnam
Global investors are planning to restructure their investment flows, a move predicted to take place strongly from now to 2023 and create opportunities for Vietnam, heard a conference on September 21.
Registered foreign investment totaled 16.7 billion USD as of the end of August, down 12.3% from a year earlier. However, the investment disbursement rose 10.5% to 12.8 billion USD and capital addition to existing projects up 50.7% to 7.5 billion USD.
Notably, the average value of each project reached 14.7 million USD, compared to the over 10 million USD in 2021, Do Nhat Hoang, Director of the Foreign Investment Agency (FIA) at the Ministry of Planning and Investment, told the event in Binh Duong province.
In the southern region, Ho Chi Minh City took the lead in foreign investment attraction, followed by Binh Duong, Dong Nai, Ba Ria – Vung Tau, Long An, and Tay Ninh. Binh Duong alone recorded nearly 2.6 billion USD, surging 72% year on year, statistics show.
Hoang pointed out that due to recent global uncertainties and disrupted supply chains as a result of the COVID-19 pandemic and China’s “zero-COVID” policy, investment flows are being shifted to new markets, and this is a chance for Vietnam in general and southern localities in particular.
To seize opportunities, localities should connect with one another to develop an attractive ecosystem for technology investors, he recommended.
Vietnam is to become a destination for power, electronics, processing and manufacturing projects from investors from the Republic of Korean who are seeking new places for their export production facilities. Such sectors as wholesale, retail, non-manufacturing, and support industry will also continue attracting Japanese investors and enterprises, he added.
Vietnam Business Integrity Index launched
The Vietnam Business Integrity Index (VBII), the first of its kind in the country to assess enterprises in this regard, was launched on September 21.
The index, introduced by the Vietnam Chamber of Commerce and Industry (VCCI) and UNDP Vietnam, has been designed for enterprises of all sizes, forms of ownership, sectors, and structures, regardless of whether they are a listed company, a domestic private company, a foreign invested firm, or a State-owned one.
It was built with support from FairBiz, a UNDP regional initiative funded by the British Government within the framework of the ASEAN Economic Reform Programme, which aims at promoting a fair business environment in Indonesia, Malaysia, Myanmar, Philippines, Thailand, and Vietnam.
Lam Dong ships its first 70 tonnes of durian to China
The Central Highlands province of Lam Dong on September 21 exported its first 70 tonnes of durian to China.
The shipment came following the signing of the protocol concerning the work between the Ministry of Agriculture and Rural Development of Vietnam and the General Administration of Customs of China (GACC) over two months ago.
Deputy Director of the provincial Department of Agriculture and Rural Development Nguyen Van Chau said that the export is of great significance, as China is currently the world’s largest durian consumer market.
This will help businesses and farmers in Lam Dong in particular and Vietnam in general gain higher profits from this fruit, he added.
Petrol prices continue to drop
Petrol prices continued to be adjusted down in the latest adjustment made on September 21 by the Ministries of Industry and Trade, and Finance.
The retail price of E5RON92 bio-fuel dropped by 450 VND to a maximum of 21,780 VND (0,92 USD) per litre while that of RON95-III was cut by 630 VND to 22,580 VND per litre.
The prices of oils also reduced, with that of diesel oil cut by 1,650 VND to 22,530 VND per litre, and that of kerosene down by 1,970 VND to 22,440 VND per litre. Mazut oil 180CST 3.5S was priced at 14,650 VND per kg, a decline of 380 VND.
The two ministries also determined to extract 450-451 VND per litre from petrol price and 300-741 VND per litre from diesel and kerosene prices for the petrol price stabilisation fund.
So far this year, petrol prices have been adjusted 25 times with 13 times up and 11 times down and one kept unchanged. The petrol prices are now at the lowest level this year.
Indian media workers explore tourism potential in central Vietnam
Representatives from Indian press agencies scoped out Vietnamese tourism products in the central province of Thua Thien-Hue on September 21.
The 15-member delegation represent Indian agencies such as Stardust, Nat Geo, The Times of India, and the Maharashtra Times.
They visited a number of tourist attractions throughout the locality, including the Hue imperial citadel, Thien Mu pagoda, the royal tomb of King Khai Dinh, and the tomb of King Tu Duc.
They also tried on some traditional outfits in Hue, travelled around the city by cyclo and double-decker bus, sampled some local delicacies, and toured around Tam Giang langoon and Huong (Perfume) River.
HCMC to develop Hiep Phuoc into eco-friendly industrial park
The city is planning to develop the Hiep Phuoc Industrial Park into an eco-friendly industrial zone, according to Vo Van Hoan, vice chairman of the city.
The city will work closely with the Ministry of Planning and Investment and the United Nations Industrial Development Organization to deploy the project to develop eco-industrial parks in HCMC.
As planned, the Hiep Phuoc Industrial Park will be included in the blueprint.
Some 24 enterprises at the Hiep Phuoc Industrial Park have registered to participate in the initiative. They will build a cleaner manufacturing system using materials and energy more efficiently and sustainably.
HCMC expects to take the case of the Hiep Phuoc Industrial Park as a model to scale up the project throughout the city.
In addition, the city intends to build a new eco-friendly industrial park based on the proactive use of advanced technologies.
The project is supported by the Swiss government under the name, “Deploying eco-industrial parks in Vietnam under the approach of the Global Ecological Industrial Park Program”.
It will take three years to be completed in HCMC, Haiphong, Danang, Can Tho and Dong Nai, beginning in 2020.
Fuel price stabilization fund suggested not to be abandoned yet
Minister of Finance Ho Duc Phoc confirmed at yesterday’s meeting about legal issues that the draft Law on Price (amended) maintains regulations on the fuel price stabilization fund since the global price for this item is still unpredictable. The fund still plays its necessary role of regulating domestic gas prices to minimize negative impacts on the prices of other merchandise.
In the meeting, Chairman of the National Assembly Vuong Dinh Hue raised the concern that in the first draft Law on Price, the Finance Ministry commented it was then suitable to eliminate the fuel price stabilization fund so that this commodity can run in accordance with the market signals. However, in this second draft, the Government suggests keeping this fund without any evaluation or review of the matter.
He then stressed that the Government should clearly mention different opinions on this issue, along with corresponding handling methods for each case.
In explanation, the Finance Minister said that the proposal to still maintain this fund is because after evaluation, it is clear that the fund has created positive influences on the market, leading to impressive benefits for the economy, especially in such an instable year for fuel as 2022. Without this fund, the dependence only on tax and service fee reduction can only address the issue for a short term.
New order growth picks up speed in manufacturing
Vietnam witnessed a quicker pace of growth in the manufacturing sector in August amid improving demand, with faster increases in new orders, output, and employment.
The latest survey by S&P Global revealed that the Vietnam Manufacturing Purchasing Managers’ Index posted 52.7 points in August, up from 51.2 points in July and signalling a solid improvement in the health of the manufacturing sector midway through the third quarter of the year. Business conditions have now strengthened in 11 consecutive months.
Production growth regained momentum in August, after having slowed in July. The fifth successive rise in output was solid as firms reported a continued recovery and greater new orders.
Manufacturers reported higher new orders from both domestic and export customers. In line with the picture for output, the rise in total new orders was solid and sharper than seen in July. The increased customer numbers, improving demand and competitive pricing was all behind the latest expansion.
Firms were helped in their efforts to price competitively by waning cost pressures. The rate of input price inflation slowed sharply for the second month in a row and was the weakest in 27 months of rising costs.
In turn, firms also increased their own selling prices at a softer pace, and one that was only marginal. The survey’s respondents mentioned lower costs for oil and other raw materials, although some firms continued to report rising transportation costs.
Rising new orders encouraged manufacturers to expand their staffing levels again in August. As was the case with output and new orders, the rate of job creation quickened midway through the third quarter.
Backing up Vietnam’s COP26 goals
Vietnam’s strong commitment to reduce greenhouse gas emissions over the next few decades is receiving major support from the international community.
Looking to drive Vietnam’s progress on a clean energy transition ahead of the COP27 climate summit to be held in November in Egypt, COP26 president Alok Sharma last week paid his third visit to Vietnam since Prime Minister Pham Minh Chinh last November impressed the international community by making a 2050 net zero commitment and other strong ones.
Sharma is driving forward discussions on a just energy transition partnership and seeing the impacts of climate change in the country.
The partnership will be a long-term political agreement between the Vietnamese government and a group comprising the United Kingdom, European Union, France, Germany, Japan, and the United States.
The COP26 president wants Vietnam to review and update the provisions of the law to create favourable conditions for private investors to participate in the energy transition, phasing away from coal and supporting PDP8.
Andrew Jeffries, country director for Vietnam at the Asian Development Bank told VIR that it can help Vietnam access highly concessional climate finance to help bring down the borrowing costs for energy transition investments.
According to the World Bank, to ensure sufficient funding for responding to climate change, mobilising domestic finance is possible but external support is needed. Overall, Vietnam’s total incremental financing needs for the resilient and decarbonising pathways could reach over $368 billion between now and 2040, or approximately 6.8 per cent of GDP per year. The resilient pathway alone will account for about two-thirds of this amount as substantial financing will be required to protect the country’s assets and infrastructure as well as vulnerable people.
The cost of the decarbonising pathway will mainly arise from the energy sector; investments in renewables and managing the transition away from coal might cost around $64 billion between now and 2040. All the figures are in net present value terms at a discount rate of 6 per cent.
This $368 billion in financing needs will include $184 billion from private investments or about 3.4 per cent of GDP annually, $130 billion or about 2.4 per cent of GDP annually from the state budget; and $54 billion or about 1 per cent of GDP per year from external sources. “Satisfying the funding gap associated with implementing the resilient and decarbonising pathways will require a reallocation of domestic private savings toward climate-related projects, an increase in public savings, and external financial support,” said the World Bank’s Climate and Development Report for Vietnam, released in July.
Agro-forestry-fishery trade surplus reaches US$6.4 billion in Jan-Aug
The agricultural, forestry and fishery sector’s trade surplus in the first eight months of 2022 amounted to US$6.4 billion, the Ministry of Agriculture and Rural Development reported.
The sector’s January-August exports rose 13.1% againts the same period last year to US$36.3 billion, while its imports inched up 3.9% to US$29.9 billion, leaving a trade surplus of US$6.4 billion.
The January-August period saw shipments of key agricultural products totaling US$15 billion, up 7.4% year-on-year, forestry products rising by 6.2% to US$11.8 billion, and aquatic exports soaring 35.3% to US$7.5 billion.
There were five items generating export revenue of over US$2 billion each, namely coffee, rice, shrimp, rubber and wood and wooden products.
The export value of Vietnam’s agriculture, forestry and fishery products to markets in Asia accounted for 43.1% of the total, followed by the Americas (28.9%) and Europe (11.8%).
The U.S. remained Vietnam’s biggest buyer, with a total import bill of US$8.7 billion. China came second with US$6.5 billion, and Japan third with $US2.7 billion.
Gov’t okays Dau Giay-Tan Phu expy project
Deputy Prime Minister Le Van Thanh has signed a decision approving a project to develop the Dau Giay-Tan Phu expressway under the public-private partnership format.
The 60-kilometer expressway in Dong Nai Province will allow for a maximum speed of 100 kilometers per hour and cost over VND8.3 trillion, sourced from the State budget and the private sector.
Once in place, the expressway will facilitate transport and traffic and share the rising burden of National Highway 20, boosting socio-economic growth in Dong Nai Province and elsewhere in southeastern Vietnam.
The expressway will contribute to completing the traffic connectivity between HCMC, Dong Nai and Lam Dong.
The project will be executed from now until 2025.
Cargo throughput at HCMC seaports declines
Cargo throughput at ports countrywide climbed in the first seven months of the year, HCMC’s ports saw a considerable decrease in goods volume, according to the Vietnam Maritime Administration.
The total volume of cargo passing through the country’s seaports hit 433.83 million tons in January-July, up 2% year-on-year.
Quang Ninh, An Giang, Dong Thap, Quang Tri, Quang Nam and Dong Nai provinces saw sharp rises, with the largest increase reaching 110%.
However, the cargo flow and transit at key ports plummeted, with HCMC’s throughput dropping by 7.35% to 95.8 million tons and Ba Ria-Vung Tau Province’s throughput falling by 5% to 66.1 million tons.
Goods throughput in the provinces of Binh Thuan and Kien Giang fell sharply, from 17% to 19%.
Vietnamese-made products increasingly selected by consumers
With competitive prices, guaranteed quality, constantly improved designs and packaging as well as the support of retail channels, domestic products are increasingly selected by Vietnamese consumers.
Many Vietnamese consumers have become used to Vietnamese goods in the shopping cart over the past time. Ms. Pham Thuy Hong from the Mekong Delta Province of Dong Thap’s Hong Ngu Town said that almost all the essential items in her family such as clothes, shoes, and food are Vietnamese goods.
She remembered last week, she had several days off on the occasion of the National Day holiday, she bought a lot of Vietnamese products such as Nam Duong soy sauce, Neptune premium rice, milk boxes of Nutimilk, Ajinomoto MSG, Omo washing liquid with reasonable price.
As observed by reporters at the supermarket systems of Co.opmart, housewives choose up to 90 percent of domestically produced goods in their shopping carts. Explaining why she chooses Vietnamese goods, Mai Anh Thy in HCMC’s Tan Phu District said that domestically produced goods now have beautiful designs and quality on par with foreign products, not to mention regular promotions; customers can enjoy knockdown prices. Therefore, for a long time, Ms. Thy’s family has completely used Vietnamese-made essential goods and household commodities.
In fact, statistics from the Department of Domestic Market under the Ministry of Industry and Trade have shown that, up to now, Vietnamese goods have accounted for over 90 percent of the distribution facilities of domestic enterprises meanwhile the rate of Vietnamese-made commodities at foreign supermarket chains in Vietnam range from 60 percent to 96 percent. In the traditional retail channel, markets, and convenience stores, the percentage of Vietnamese goods accounts for 60 percent or more. Especially, since the Covid-19 epidemic until now, 76 percent of Vietnamese consumers prefer domestic products, especially branded products, ensuring quality and good health.
According to experts, domestically-made products are increasingly chosen by consumers because of their competitive prices, guaranteed quality, and constantly improved designs and packaging. Another special thing is the cooperation and help of distribution systems across the country in prioritizing shelves and policies for domestic businesses. Typically, Saigon Co.op is distributing more than 90 percent of domestic products in its retail channels. This retailer also works closely with domestic suppliers to easily control the supply, thereby stabilizing prices, especially for essential goods.
Vietnam seeing high potential in green project implementation
Environmental experts confidentially stated that Vietnam still has much room to approach green finance sources for its sustainable growth.
Energy expert Vu Tuong Anh from International Finance Corporation (IFC) shared that the 26th UN Climate Change Conference of the Parties (COP26) has created favorable conditions to increase capital for emerging markets. Green bonds reached US$354.2 billion at the end of the third quarter of 2021. The issuance of green bonds with green labels, society labels, and sustainability labels also reached $767.5 billion in the third 3 quarters of 2021.
This means great opportunities for emerging markets like Vietnam, whose enterprises can benefit from green project development, qualified carbon credits, and higher profits from these green projects, besides cost reduction from natural resource saving.
CEO Hoang Anh Dung of Investment and Trade Consulting Co. Ltd. (INTRACO) said that its member company – Sustainable Investment Promotion and Development JSC – signed a collaboration agreement with Citigroup to launch a project against climate change, including the two programs of ‘Green Kitchen in Vietnam’ and ‘Sanitary Water for Citizens’, to be carried out in all provinces and municipalities of Vietnam. This project is expected to create about 26.6. million voluntary carbon credits from the distribution of around 850,000 stoves and 364,000 water purifiers to households nationwide.
The stoves in the first program improve household energy efficiency by reducing combustible biomass necessary for daily activities at home like cooking and heating; while the water purifiers in the second one can eliminate the need to boil water for drinking. Both are certified to reduce carbon emissions, bringing large-scale social benefits to the community. This results in 7.9 million carbon credits (worth $10 each) to be sent from SIPCO to Citigroup from now to 2024, an action to protect the environment and increase company revenue simultaneously.
Similarly, Chairman of the Board of Director of Vu Phong Energy Group Pham Nam Phong informed that at the end of last year, his company signed a collaboration agreement with Construction No.47 JSC. and INTRACO for the project ‘Provide Hygienic Drinking Water Stations and other Greenhouse Gas Reduction Programs’, aiming at installing around 1,000 water purifier stations per year in various provinces, each with a capacity of 2,000l an hour. These stations help poor families to access sanitary water.
The project will then be expanded to the fields of afforestation and marine ecosystem protection, in hope of creating more carbon credits through the sustainable development mechanism, and thereby more revenues alongside with social benefits.
Chairman Phong admitted that this cooperation marks an important milestone to establish an ecosystem of businesses which are launching practical projects for the sake of social benefits and sustainable growth, especially in the aspect of water resource and water sanitation. The project’s long-term goal is to reduce greenhouse gas emission as committed by the Vietnamese Government at COP26 – achieving net zero emission by 2050.
State capital for waste treatment accounts for 75 percent
Investment in infrastructure for solid waste treatment is mainly taken from the state budget with 75 percent and ODA loans whereas just a few private companies poured money into this field, said the Ministry of Natural Resources and Environment (MONRE).
The Ministry cited a study conducted by the World Bank which shows that 75 percent of waste treatment costs in Vietnam are funded by the government.
According to the General Department of Environment under MONRE, in 2021, households nationwide produced nearly 52,000 tons of domestic solid waste a day. It is estimated that daily-life solid waste will increase by 10 percent-16 percent a year. Currently, about 71 percent of waste is being treated by the landfill method.
According to statistics from the Ministry of Construction, in the 2012-2020 period, there have been 143 investment projects to build solid waste treatment plants with a total investment capital of about VND21,600 billion. However, spending on waste treatment plants is mainly taken from the state budget.