Vietnam supports a rules-based multilateral trading system and the World Trade Organization’s (WTO) role in the global trade system, Deputy Minister of Industry and Trade Tran Quoc Khanh stated at the Asia-Pacific Economic Cooperation (APEC)’s 28th Ministers Responsible for Trade (MRT) meeting.
In his speech at the event, which took place in both face-to-face and virtual forms in Bangkok, Thailand, on May 21-22, the deputy minister affirmed that Vietnam is ready to coordinate with WTO members to promote and approve key contents at the WTO’s 12 ministerial conference slated for June this year.
Regarding measures in APEC to reconnect the region after the COVID-19 pandemic, the Vietnamese official spoke highly of initiatives and efforts to remove barriers, contributing to the resumption of safe and seamless travel, and economic recovery.
Vietnam supports the promotion of regional cooperation towards facilitating mutual recognition of vaccine passports, Khanh said, stressing that Vietnam will continue to closely coordinate with APEC member economies to develop and implement viable initiatives.
As an open economy that signed and implemented 15 free trade agreements (FTAs) with more than 60 partners, Vietnam has been working with APEC member economies to promote regional economic integration in accordance with the APEC Putrajaya Vision 2040, including the future realisation of a Free Trade Area of Asia-Pacific (FTAAP).
Petrol prices adjusted up over 600 VND per litre
The retail prices of oil and petrol continued to rise from May 23 following the latest adjustment by the Ministry of Industry and Trade and Ministry of Finance.
Accordingly, from 3pm, the price of RON95 bio-fuel RON95 was raised by 670 VND per litre to 30,650 VND (1.32 USD) per litre, while that of E5 RON92 rose by 680 VND per litre to 29,630 VND (1.28 USD) per litre.
Meanwhile, the price of diesel oil was down by 1,100 VND per litre to 25,550 VND (1.1 USD) per litre. A decrease of 660 VND per litre was also seen in the price of kerosene to 24,400 VND (1.05 USD).
Since the beginning of this year, the retail prices of petrol have been adjusted up nine times and down for only three times.
According to the General Statistics Office (GSO), the hike in petrol prices is the major factor pushing up CPI in the first four months of this year. Domestic petrol prices surged 48.84 percent year on year, which led to a 1.76 percentage point rise in CPI.
The average CPI for the first four months of this year rose 2.1 percent year on year, higher than 0.89 percent recorded in the same period last year, but lower than the increases in the January-April period in 2017-2020. The core inflation was also up 0.97 percent.
Vietnamese Gov’t extends excise tax payment deadline for domestic cars
The Government has further extended the excise tax payment deadline for domestically-produced cars until November 20.
The move was part of the Government’s decree No.32, according to which tax payment for domestic cars bought during the June-September period would be extended until November 20.
This would be the third extension of the excise tax payment deadline for local cars since 2020, with the Ministry of Finance (MoF) expecting the amount subject to a tax break of VND20 trillion ($US$863 million).
Once the extended deadline is expired, payment for an excise tax on domestic cars would be reverted to normal.
The MoF previously put in place a 50% cut in the registration fee for local vehicles. Such support, along with this latest policy, is considered an urgent solution for the car industry to recover from severe pandemic impacts.
According to the MoF, turnover from an excise tax on locally manufactured cars was estimated at VND2.45-2.8 trillion ($107-122 million) per month. Assuming growing demand for electric vehicles in the coming time, the MoF expected a decline of VND2-3 trillion ($87-130 million) in state budget revenue or a drop of VND170-250 billion per month.
Firms eligible for the delay in tax payment deadline could either send the request in soft or hard copies to the tax authorities, noted the ministry.
The total excise tax amount subject to relief in October and November of last year stood at VND5.44 trillion ($237 million).
Gia Lai seeks partnerships with Japan in agriculture, renewable energy, tourism
The Central Highlands province of Gia Lai held a workshop on May 22 to introduce its potential and seek chances for investment cooperation with Japan in agriculture, processing, renewable energy, and tourism.
Ho Phuoc Thanh, Vice Chairman of the provincial People’s Committee, said Gia Lai is inviting investment to hi-tech agriculture, agricultural services, intensive processing, renewable energy, and tourism, which are among the pillars identified in its socio-economic development strategy for 2021 – 2030.
Although most of local enterprises are of small or medium size, many are turning out products meeting European standards such as the Vinh Hiep Co. Ltd and the Dong Giao Foodstuff Export JSC, which were also the first of Vietnam to export to Europe under the EU – Vietnam Free Trade Agreement (EVFTA), he noted.
Vietnamese rice must increase brand recognition in ASEAN
ASEAN has been a huge potential market for Vietnamese rice, and export firms should have a strategy to expand in the market of nearly 700 million people with similarities in culture and lifestyles, Nguyen Thi Thu Thuy, deputy director of Export Support Centre under the Viet Nam Trade Promotion Agency has said.
Among ASEAN countries, the Philippines is the largest export market for Vietnamese rice, with a volume of 2.45 million tonnes worth US$1.25 billion and an average price of $509.7 per tonne in 2021, a rise of 10.7 per cent, 18.5 per cent and 7.1 per cent against 2020, respectively.
Despite being the world’s third-biggest rice exporter after India and China, Indonesia is a potential market for Vietnamese rice.
Pham The Cuong, trade counselor of Viet Nam in Indonesia, said that each Indonesian consumed an average of 93kg per year, bringing the total annual demand to around 30.1 million tonnes.
Indonesia had to import rice to ensure the national reserve with the import volume of 407,000 tonnes worth $184 million in 2021, mainly from Pakistan (12.8 per cent), Viet Nam (16.1 per cent), Thailand (17 per cent) and India (52.8 per cent).
Tran Le Dung from the Viet Nam Trade Office in Malaysia said that although rice was the staple food for most Malaysians, this country of 32.7 million had only 700,000 hectares available for cultivation.
Malaysia’s rice production could meet around 60 per cent of the domestic demand, forcing this country to import around one million tonnes each year.
Viet Nam’s rice export to Malaysia kept expanding from 26.3 per cent of Malaysia’s rice import in 2018 to 41.9 per cent in 2020 but saw a drop to 23.1 per cent in 2021 as export contracts ended and Indian rice was cheaper.
According to Cuong, Viet Nam should increase the trade promotion for high-quality rice such ST24 and ST25 in Indonesia as this market has an increasing demand for high-quality rice.
Dung said that the focus should be placed on building brands for Vietnamese rice and increasing brand recognition.
Cao Xuan Thang from the Viet Nam Trade Office in Singapore said that the Vietnamese came third in exporting rice to Singapore, after Thailand and India, with a market share of 26 per cent.
Rice exports to the EU quadruple in Q1
Viet Nam exported 22,500 tonnes of rice to the EU for nearly $18 million in the first quarter of 2022, roughly a four-fold increase in both volume and value compared to the same period last year, thanks to preferential tariffs enjoyed under the EU-Vietnam Free Trade Agreement (EVFTA).
In the first four months of this year, over 30,000 tonnes of Vietnamese rice were shipped to EU nations, earning the country some $23 million, according to the Ministry of Industry and Trade’s Agency of Foreign Trade.
Italy rose to the top of EU importers, with spending on Vietnamese rice surging 26-fold year on year. Other major buyers included Germany, France, the Netherlands and Sweden.
Under the EVFTA, the EU is committed to purchasing 80,000 tonnes of rice annually from Viet Nam, which will enjoy zero duty for 3-5 years.
The shipments include 30,000 tonnes of milled rice, 20,000 tonnes of unmilled rice and 30,000 tonnes of fragrant rice.
Q3 set to be tough period for inflation
The third quarter will be the most stressful period for inflation, said Tran Toan Thang, head of the National Centre for Socio-Economic Information and Forecast, at a conference on the Viet Nam Annual Economic Report 2022.
The report highlighted that the Vietnamese economy is in the process of recovery but will continue to face many difficulties this year.
Inflationary pressure and production costs are increasing strongly. In addition, risks from the Russia-Ukraine conflict have a huge indirect impact on the country’s economy.
The slowdown of the global economy and important partner economies of Viet Nam, especially China, which is continuing its “Zero COVID” policy with strict measures, can stress the Vietnamese economy, disrupting supply chains.
Talking more about inflation risks, Thang said that from the middle of the year to the third quarter, there would be more inflationary pressure caused by the trend of rising input costs globally.
Economic expert Can Van Luc believed that this year’s inflation rate must be double that of last year or more, likely surpassing the target of 4 per cent set by the National Assembly. The current difficult policy was to raise interest rates or not, he noted.
Increasing interest rates to tighten cash flow would control inflation, but rising interest rates would curb the economy’s overall growth because capital for businesses was tight, he explained.
In addition, Luc also pointed out some other concerns with the Vietnamese economy that the quality of growth had been changed in the past two years due to the COVID-19 pandemic, labour productivity was very low, only growing by about 4-4.5 per cent, much lower than the pre-COVID years, while the financial market and the real estate market exposed too many problems.
VEPR offers three scenarios of economic growth this year. Specifically, Viet Nam’s GDP growth rate could reach 5.7 per cent in the base scenario, which is more likely to occur.
In the positive scenario, the growth rate could reach 6.2 per cent, and in the negative scenario, the growth could only increase by 5.2 per cent. Consumption demand will recover relatively well, and imports and exports can reach a growth rate of 13-14 per cent.
Experts emphasised the need to continue deploying the economic recovery supporting packages more effectively, targeting industries with positive spillover effects. Policies to support businesses needs to be more practical.
HCM City growth remains an X factor: foreign investors
Rising labour and production costs have prompted some relocation but HCM City remains an appealing investment destination given its market size and speedy recovery, experts say.
Speaking at a meeting between city leaders and foreign investors late last week, Hirai Shinji, chief representative of the Japan External Trade Organisation (JETRO) in HCM City, said while more manufacturers were looking to relocate their production to other provinces because of rising labour costs and land rents in HCM City, the city remained a popular investment destination. A recent JETRO survey attributed it to the city’s great economic growth potential and market size, he said.
Mary Tarnowka, executive director of the American Chamber of Commerce in Vietnam (AmCham Vietnam), said: “We continue to see a lot of interest from the US business community in the country, especially HCM City.
The city should continue to attract investment into high-value manufacturing, develop the service economy, especially the digital economy, as well as financial services and healthcare, she said.
It is also critical that the city builds a “complete” infrastructure for sustainable growth and train a workforce that is globally competitive, she added.
The recently launched direct flight service between HCM City and San Francisco will help promote bilateral trade and investment between Viet Nam and the US.
Allowing international tourism to resume will not only boost the local industry but also help speed up economic recovery, she said, reiterating that AmCham and its members are optimistic about the future here.
According to the Foreign Investment Agency, as of February 20, 2022, the US ranked 11th among 140 countries and territories investing in Viet Nam, with 1,145 projects worth over US$10.3 billion.
Jean Jacques Bouflet, vice president of the European Chamber of Commerce (EuroCham), recommended that the city improve its traffic infrastructure to enhance connection with surrounding localities.
He also said that “the fees for seaport infrastructure service in the city, applied from April 1, remain too high, worsening the cost burden, thus reducing the city’s competitiveness.”
Bouflet suggested that all city agencies, particularly its Department of Industry and Trade, use digital signatures for all administrative documents and processes.
Currently, not all processes are allowed to use digital signatures, though they have the same legal value in signing documents related to import-export activities and customs, he said.
The city should also develop policies to promote a green and energy-saving economy, he said, urging it to complete its socio-economic development plan for the 2021-30 period (with vision until 2045).
It needs to improve its investment environment further by upgrading infrastructure, reforming administrative procedures and applying new technologies to speed up digital transformation, Bouflet said.
Banks under pressure despite positive credit recovery
Though credit demand is recovering quickly, banks still have to face big challenges related to rising bad debts, provisions and deposit interest rates.
According to Le Xuan Nghia, former deputy chairman of the National Financial Supervisory Commission, the US Federal Reserve (Fed) will continually increase interest rates this year, which will force Vietnamese banks to raise deposit rates.
Despite the high increase in saving rates, domestic banks will not be able to raise lending rates accordingly to support the economy as directed by the Government. The small gap between deposit and lending rates will cause the banks’ net interest margin (NIM) and net profit to reduce, Nghia explained.
Besides, for a long time, many banks have gained good profits from real estate credit, and investment in and issuance of corporate bonds. However, the tightening of cash flows into the two channels in the near future may affect the banks’ income.
In fact, many banks recorded high credit growth in Q1/2022 thanks to the strong increase in corporate bond investment.
By the end of Q1/2022, the largest corporate bond balance numbers were recorded in Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Military Commercial Joint Stock Bank (MB), Vietnam Prosperity Commercial Joint Stock Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank) and Saigon Hanoi Commercial Joint Stock Bank (SHB), baodautu.vn reported.
Rubber industry escapes excess supply
Analysts forecast bright prospects for the natural rubber industry this year, driven by increasing global demand which has helped the industry escape the prolonged excess supply, while firms were divided on their profit outlooks.
Rubber exports posted a good start in the first months of this year. The Ministry of Agriculture and Rural Development’s statistics showed that rubber exports reached 429,000 tonnes, worth USS$860 million in January-April, representing rises of 5.1 per cent and 10.9 per cent, respectively, over the same period last year.
The ministry pointed out that Việt Nam ranked third in the world in terms of rubber exports in 2021 and Việt Nam’s rubber products were present in more than 80 countries and territories with success in expanding in major markets like the US, European Union, Malaysia, the Republic of Korea and India.
In the EU market, the industrial production and consumption were developing strongly, including aircraft, car and motorbike manufacturing, equipment for the manufacturing and healthcare industry and consumer goods.
The ministry said that the EU’s demand for rubber and rubber products was huge, especially high-grade rubber products (SVR CV) and SVR10 and SVR20.
According to the Association of Natural Rubber Producing Countries, rubber prices recovered from February. The reopening of borders and economic activities would contribute significantly to the rubber demand this year, providing bright prospects for the industry which had been long affected by oversupply.
Vietnamese businesses need preparation to respond to cyberattacks on ICT supply chain
Recognising that cyberattacks targeting the ICT supply chain are increasing, experts said that organisations in Việt Nam needed to be prepared to respond by sharing and updating knowledge about this form of attack.
The Authority of Information Security under the Ministry of Information and Communications and the security firm Kaspersky co-organised a workshop titled “ICT Supply Chain Cyber Resilience” in Hà Nội on Thursday.
Emphasising that cyberattacks on the supply chain are a concerning threat, Lê Công Phú, deputy director of the Việt Nam Cybersecurity Emergency Response Teams/Coordination Center (VNCERT/CC), said that in a supply chain attack, if the target was a software or hardware provider, the attack on the supply chain would be amplified.
The expert said that the information security risks caused by the ICT supply chain needed to be controlled by many measures, including proactive monitoring and early detection of cyberattack risks, information about security vulnerabilities for timely warning and response.
Products and services developed by external vendors must comply with the DevSecOps (Development – Safety – Operation) model to ensure safety, he said, at the same time, ensuring that products and services are tested and evaluated for safety before being put into use.
In addition, Phú also recommended that the ICT supply chain should be considered the weakest security link in IT infrastructure, thereby implementing the assessment of the security status of the supply chain, and identifying and securing the connection between the organisations and its supply chain.
From an enterprise perspective, a Kaspersky representative said that a solution for stakeholders, including Government agencies and non-governmental organisations, to reduce risks was to improve information security capacity, thereby improving the ability to respond flexibly in the ICT supply chain.
The characteristics of the ICT supply chain required better response capacity as well as closer linkages at each organisation, individual and region, said Genie Gan, head of Public Affairs for the APAC region at Kaspersky.
Many countries and international organisations had been step by step strengthening information and business experience co-operation and sharing, the representative added. International cooperation was a key to building a common defence against cross-border threats, she noted.
Rosy apparel and footwear exports in the year to date
The US, the EU, and Southeast Asian markets have all bolstered their imports of textiles and footwear from Vietnam, sharply boosting the export value of these sectors in the year to date.
In the first four months of 2022, the two major industries that contributed to Vietnam’s total export value have recovered faster than expected in terms of production and export performance.
Their combined export value surpassed $19 billion, of which the textile sector counted nearly $11.9 billion, up 22.5 per cent on-year, and that of footwear reached $7.32 billion, up 12.4 per cent on-year.
Vietnam’s textile export value to the US rose sharply to $6.6 billion, up 26.8 per cent on-year, corresponding to an increase of $1.26 billion. With this result, the US market contributed up to 59 per cent to the export value of this product.
In 2022, the leather and footwear industry is set to reach an export target of $23-25 billion, up 10-15 per cent on-year while the textile sector aims to post $42.5-43 billion in total export value.
The export value of this product group to the EU also increased significantly to nearly $1.3 billion, up 34.6 per cent on-year; to South Korea reached $1 billion, up 8.7 per cent; to Southeast Asia rose 32 per cent, reaching $662 million; and to Canada soared 57 per cent to $393 million.
Among the footwear export markets, the US witnessed the largest turnover touching $3.16 billion, accounting for 43 per cent of Vietnam’s total export turnover of this product group, showing a 20.6 per cent jump on-year.
The EU ranked second, counting more than $1.77 billion in total export value, accounting for 24.3 per cent of Vietnam’s total export value of the product, up 19 per cent on-year.
Exports to Canada picked up 37 per cent on-year, reaching $168 million, and Mexico $117 million, up 11.5 per cent. Two markets that recorded sharp declines were China, down 22 per cent and Russia, down 32 per cent, partly due to their specific indigenous conditions.
According to the Ministry of Industry and Trade, the domestic footwear industry has effectively availed of incentives associated with new-generation trade agreements.
In 2022, the leather and footwear industry is set to reach an export target of $23-25 billion, up 10-15 per cent on-year while the textile sector aims to post $42.5-43 billion in total export value.
Eureka Robotics plans to expand operations to Vietnam in July 2022
Eureka Robotics, a Singapore-based startup which develops software and systems to automate tasks, plans to establish an office in Vietnam’s Hanoi in July 2022.
The company plans to use the new capital raised to expand its operations beyond Singapore, where it is headquartered, and Paris, where it maintains an R&D office. The new office will be established in Hanoi in July. Eureka Robotics has also deployed factories in Singapore, China, and Japan.
Touchstone Partners on May 17 announced that it participated in Eureka Robotics’ recently closed a pre-Series A round, which raised $4.25 million from a handful of investors.
In this fundraising round, Touchstone joins the lead investor, the University of Tokyo Edge Capital Partners, and existing investor ATEQ.
Eureka Robotics was founded in 2018 by Pham Quang Cuong and Pham Tien Hung, Eureka Robotics’ CEO, who is also an associate professor of Engineering at NTU and led the team that developed a robot that could assemble Ikea furniture, an achievement that was widely covered by global media in 2018.
EVFTA boosts cashew exports to EU market
The enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) has served to create a range of competitive advantages for Vietnamese cashew products to make inroads into the demanding EU market, according to the Vietnam Cashew Association.
Most notably, tariffs placed on Vietnamese cashew nuts imported into the EU have been slashed to 0%, as opposed to the previous figures of between 7% and 12%.
Last year, Vietnam exported 135,000 tonnes of cashew nuts to the EU, representing a rise of 16.5% in volume and 7.9% in value compared to 2020.
During the initial four months of this year, cashew exports to this market reached 48,680 tonnes worth US$290.23 million, up 21.8% in volume and 21.4% in value month on month.
The Netherlands, Germany, the UK, and Italy are currently Vietnam’s ten leading cashew export markets within the EU.
The Netherlands alone makes up the largest consumer with a market share accounting for approximately 60%, followed by Germany (47%), the UK (40.6%), France (48%), and Spain (37.5%).
Dang Hoang Giang, general secretary of the Vietnam Cashew Association, said the EU is currently the country’s second largest cashew nut export market, representing 23% of the output and 22% of the total value of the entire industry that is anticipated to open up bright prospects ahead for local cashew nuts to retain its leading position in the market.
Quy Nhon-Pleiku expy project proposed
Gia Lai, Kon Tum and Binh Dinh provinces are seeking the prime minister’s approval to build a 160-kilometer expressway at a total cost of VND56 trillion.
Speaking at a working session with Prime Minister Pham Minh Chinh on May 22, Ho Van Nien, Party secretary of Gia Lai, proposed the Government allocate the 2026-2030 public investment or assign the relevant ministries and agencies to help seek partners to build the road before 2030, VnExpress news site reported.
The expressway will start from the National Highway 1 section in Binh Dinh’s Tuy Phuoc District to the North-South expressway section in the west of Pleiku City in Gia Lai Province. The four-lane route will run parallel with National Highway 19. Its investment will be backed by the State budget, ODA loans and other sources. It is expected for completion in 2030.
Earlier, the three provinces said in a statement sent to the prime minister that the Quy Nhon-Pleiku expressway project will play a vital role and will tap the potential for economic growth in the area. This east-west route will link to some north-south sections of the North-South expressway project, thereby helping perfect the expressway network in the country.
The east-west route will also help connect seaports in central provinces with the Vietnam-Laos-Cambodia development triangle area.
If the proposal gets the PM’s nod, this will be the fifth expressway linking to the Central Highlands. The previous four, which are scheduled to get off the ground in the 2021-2025 period, comprise Khanh Hoa-Buon Ma Thuot, Tan Phu-Bao Loc, Bao Loc-Lien Khuong, Gia Nghia-Chon Thanh.
Public investment identified as urgent task for economic recovery: Gov’t
The government’s task force groups are now working with provinces/cities and ministries to accelerate public investment, seen as an urgent task to ensure economic recovery.
Data from the Ministry of Finance (MoF) revealed the disbursement of public investment funds in the first five months of 2022 stood at a modest rate of 22.37%, of which the disbursement of domestic funds accounted for 23.53%, and that of foreign capital at 6.26%.
The MoF added 41 out of 51 Government ministries and 21 from 63 provinces/cities posted disbursement rates below 20%, including five ministries with no disbursement at all.
Meanwhile, localities pointed to unfavorable weather conditions, difficulties in site clearance or rising construction materials are among the major factors leading to the slow disbursement, not to mention complicated investment procedures in project implementation plans.
Last week, four Government taskforce groups led by deputy ministers of Pham Binh Minh, Le Minh Khai, Vu Duc Dam, and Minister of Finance Ho Duc Phoc held separate meetings with leaders of provinces/cities to assess their public investment performance and also solutions to speed up the process.
Given the public investment amount for this year at VND700 trillion (US$30.2 billion), an increase of VND200 trillion ($8.6 billion) against 2021, the challenge would be huge for localities and Government agencies to complete the task.
At the meetings, the heads of the task force groups called for local authorities to continue pushing for the completion of the site clearance process before project implementation, as well as review the operation of project management units.
In addition, leaders of ministries and provinces/cities should be directly responsible for the disbursement of public investment funds in 2022, and failure in realizing their respective goals would result in disciplinary measures.
Minister of Finance Ho Duc Phoc noted that 2022-2023 is a key period for socio-economic recovery, for which the pressure is high on localities to step up public investment.