Connect with us

Business

Bridging the gap between policy and enforcement

Published

on

Even if the economic recovery programme is implemented well, the country’s growth this year may still decrease compared to the calculation at the beginning of this year. — Photo nhandan.com.vn

HÀ NỘI — Vietnamese economic growth is on the way to recovery and development, but is facing two problems, according to economist Võ Trí Thành.

First, global recovery momentum and economic growth are slowing down.

Specifically, the International Monetary Fund (IMF) previously forecast that global economic growth would reach 4.9 per cent this year, but it has decreased to 4.4 per cent in January and would decline further in the future due to the instability caused by political conflicts, many developed countries adjusting their monetary policies and the “shrinking” of support packages.

The second problem facing Việt Nam is the risk of macroeconomic instability, especially inflation, that started to appear last year.

When researching and implementing the economic development recovery programme over two years (2022-2023), the Ministry of Planning and Investment calculated that in addition to the positive impact of the support packages on social security, businesses can also face risks such as inflation, budget deficit or public debt.

Accordingly, even if the economic recovery programme is implemented well, the country’s growth this year may still decrease compared to the calculation at the beginning of this year; at the same time, inflation is also difficult to control below four per cent as required.

Along with that, the conflict between Russia and Ukraine will have a negative impact on economic growth, with supply chain disruptions and increases in input production costs.

Therefore, the implementation of the economic recovery programme is more important and urgent because the programme is designed to promptly remove the difficulties faced by businesses.

In particular, the implementation of the rapid economic recovery programme and the timely implementation of support packages also give businesses access to favourable and timely support policies.

Phan Đức Hiểu, permanent member of the Economic Committee of the National Assembly, also said that when developing the economic recovery programme, other factors of the COVID-19 pandemic were taken into account, so solutions were foreseen when designing the programme.

One of those solutions was a harmonious combination of fiscal and monetary policies to match macro fluctuations.

Deputy Minister of Planning and Investment Trần Quốc Phương said that since the issuance of Resolution No 11/NQ-CP of the Government on the programme of socio-economic recovery and development and the implementation of Resolution No 43/ 2022/QH15 of the National Assembly on fiscal and monetary policies to support Resolution 11, a group of mechanisms and policies had been promulgated and were being implemented, especially policies of the Ministry of Finance related to tax exemption and reduction, which are worth about VNĐ9 trillion.

Thành said that the implementation progress had been much better, especially the smooth coordination between the National Assembly and the Government in the development and implementation of the programme.

In order for the economic recovery programme to play its role, it was necessary to immediately solve the problem of implementing monetary and fiscal policies, he said.

In fact, Phan Đức Hiếu said that the Prime Minister was drastic in implementing the economic recovery programme.

This shows that 20 days after the National Assembly passed Resolution 43/2022/QH15 on fiscal and monetary policies to support the programme of socio-economic recovery and development, the Government issued a detailed programme on economic recovery.

“However, besides the policies that have been implemented, many policies are still in the process of being developed and are waiting to be implemented. This will affect the progress and effectiveness of the economic recovery programme, and at the same time, affect the resilience of the business sector,” said Hiếu.

Directly affected by policies to support recovery, Nguyễn Đức Thiện, General Director of Việt Nam Electricity’s Northern Power Corporation (EVNNPC), also agreed that the policy was right, but if the implementation was not good, the beneficiaries would be disadvantaged and there would be no spillover to the economy.

Lê Mạnh Hùng, Director of the Enterprises Development Department, Ministry of Planning and Investment, admitted that there were many policies that businesses could not access in the previous period, such as tax, credit, and policies for employees.

However, now there had been summative assessments, agencies had partially digitised, removed input conditions, beneficiaries were also clearer and especially the big change in the participation of local government, he added.

“Hopefully the policies implemented in the near future will not have the above problems,” said Hùng. —

Source: https://vietnamnews.vn/economy/1174399/bridging-the-gap-between-policy-and-enforcement.html

Business

Samsung workers in Vietnam bear brunt of slowdown in global demand for electronics

Published

on

Samsung Electronics Co Ltd has scaled back production at its massive smartphone plant in Vietnam, employees say, as retailers and warehouses grapple with rising inventory amid a global fall in consumer spending.

America’s largest warehouse market is full and major U.S. retailers such as Best Buy and Target Corp warn of slowing sales as shoppers tighten their belts after early COVID-era spending binges.

The effect is acutely felt in Vietnam’s northern province of Thai Nguyen, one of Samsung’s two mobile manufacturing bases in the country where the world’s largest smartphone vendor churns out half of its phone output, according to the Vietnam government.

Samsung, which shipped around 270 million smartphones in 2021, says the campus has the capacity to make around 100 million devices a year, according to its website.

“We are going to work just three days per week, some lines are adjusting to a four-day workweek instead of six before, and of course no overtime is needed,” Pham Thi Thuong, a 28-year-old worker at the plant told Reuters.

“Business activities were even more robust during this time last year when the COVID-19 outbreak was at its peak. It’s so tepid now.”

Reuters could not immediately establish whether Samsung is shifting production to other manufacturing bases to make up for reduced output from the Vietnamese factory. The company also makes phones in South Korea and India.

Samsung told Reuters it has not discussed reducing its annual production target in Vietnam.

The South Korean tech giant is relatively optimistic about smartphone demand in the second half, saying on its earnings call last week that supply disruptions had mostly been resolved and that demand would either stay flat or even see single-digit growth.

It is aiming for foldable phone sales to surpass that of its past flagship smartphone, the Galaxy Note, in the second half. It is expected to unveil its latest foldables on Aug. 10.

But a dozen workers interviewed by Reuters outside the factory almost all said business is not good.

Thuong and her friends who have been working for Samsung for around five years said they had never seen deeper production cuts.

“Of course there is a low season every year, often around June-July, but low means no OT (overtime), not workday cuts like this,” Thuong said.

She said managers had told workers inventories were high and there were not many new orders.

Research firm Gartner expects global smartphone shipments to decline by 6% this year due to consumer spending cuts and a sharp sales drop in China.

Samsung town

Samsung is Vietnam’s biggest foreign investor and exporter, with six factories across the country, from northern industrial hubs Thai Nguyen and Bac Ninh where most phones and parts are manufactured, to Ho Chi Minh City’s plant making fridges and washing machines.

The South Korean company has poured $18 billion into Vietnam, powering the country’s economic growth. Samsung alone contributes one fifth of Vietnam’s total exports.

Its arrival nearly a decade ago in Thai Nguyen, about 65 km (40 miles) from the capital Hanoi, transformed the area from a sleepy farming district into a sprawling industrial hub that now also manufactures phones for Chinese brands including Xiaomi Corp.

Generous benefits including subsidised or free meals and accommodation have lured tens of thousands of young workers to the region, but reduced workhours have now left many feeling the pinch.

“My salary was cut by half last month because I just worked four days and spent the remaining week doing nothing,” said worker Nguyen Thi Tuoi.

Job cuts are on some workers’ minds but so far none have been announced.

“I don’t think there will be job cuts, just some working hour cuts to suit the current global situation,” said one worker, declining to be named because she did not want to risk her team leader role.

“I do hope that the current cut will not last long and we will soon be back to normal pace.”

Source: https://tuoitrenews.vn/news/business/20220804/samsung-workers-in-vietnam-bear-brunt-of-slowdown-in-global-demand-for-electronics/68444.html

Continue Reading

Business

Government debt drops by VND57 trillion when exchange rate fluctuates

Public debt is not much affected by the increase in the USD. The evolution of outstanding loans and debt repayment obligations is still under control.

Published

on

According to the Ministry of Finance, based on the selling rate of the State Bank, from the beginning of the year until August 1, 2022, one USD equals VND23,400  an increase of 1.1% compared to the beginning of 2022 estimated to increase the Government debt balance in USD in VND by about VND 5 trillion (compared to the end of 2021).

One EUR equals 24,385 VND, down 9.5% compared to the beginning of 2022. It is estimated to reduce the outstanding government debt in EUR in VND by about VND17 trillion ($727 million) compared to the end of 2021.

JPY is equal to 180 VND, down 13% compared to the beginning of 2022. It is estimated that the government debt balance in JPY in VND is about VND45 trillion ($1.9 billion) compared to the end of 2021.

According to the Ministry of Finance, only taking into account the exchange rate fluctuations of 3 main currencies USD, JPY, and EUR, the government debt balance by the end of 2022 is estimated to decrease by about VND57 trillion ($2.4 billion) down 2% compared to the last outstanding balance 2021.

Currently, the volume of domestic loans from the Government accounts for 90% and foreign debts only account for about 10% of the total annual value.

As reported by the Ministry of Finance, from the beginning of the year to July 31, 2022, repayment of government debt is about VND192,122 billion ($8.2 billion) (57.2% of the plan), of which domestic debt repayment is VND148,717 billion ($6.3 billion), foreign debt payment VND43,406 billion ($1.8 billion); direct government debt repayment is about VND 175,835 billion ($7.5 billion)  (58.6% of the plan), on-lending is about VND16,287 billion ($696 million) (45.3% of the plan). The Government’s direct loan repayment obligation compared with state budget revenue in the first 7 months is about 16.1%.

Source: VGP

Source: https://e.nhipcaudautu.vn/economy/government-debt-drops-by-vnd57-trillion-when-exchange-rate-fluctuates-3347118/

Continue Reading

Business

Vietnam’s THACO and philosophy of no surrender

Published

on

Truong Hai Auto Corporation (THACO), a typical successful firm in Vietnam’s automobile sector, has been investing heavily in mechanics and the manufacturing of accessories.

THACO leaders shared the firm’s journey to resolve the issue: increasing the localization rate or surrendering to auto imports flooding the local market.

They also shared the one-stop model to help other Vietnamese enterprises cooperate to develop, thereby improving the internal power of Vietnam’s industry.

THACO chairman Tran Ba Duong said at a meeting with mechanical enterprises that “you have technology and machinery. We will build factories and lease them at low prices.”

“If we fail to demonstrate our commitment, you can take your machinery away.

“We will not go back on our words. Only actual acts and thoughts will create values.”

Refreshing itself by enhancing investment

Returning to Chu Lai Industrial Park in central Quang Nam Province nearly three years after Tuoi Tre (Youth) newspaper held the forum ‘Last chance for Vietnam’s automobile industry,’ a series of factories mushroomed, and container trucks have been nose to tail.

The industrial park is home to not only THACO automobile assembly factories measuring thousands of hectares in area but also newly-built factories manufacturing accessories and mechanical products.

Enthusiastically sharing a project to develop THACO Chu Lai into a hub manufacturing mechanical products, accessories, and devices for industries in the central region, Do Minh Tam, general director of Truong Hai Supporting Industries and Mechanics Limited Liability Company (THACO Industries), an arm of THACO, expected the project to boost the development of Vietnam’s industry.

“At first, everyone seemed dubious. They only thought of automobiles whenever mentioning THACO. However, we separated mechanics from the automobile segment in November 2021,” Tam said.

From 17 factories producing automobile parts, THACO Industries has developed a complex of 19 factories whose strategy is to concurrently increase the localization rate and supply accessories and mechanical products to the domestic and foreign markets.

It is a must to develop the factories on a large scale and in a methodical manner as in 2019, THACO and many other automobile manufacturing and assembly enterprises faced a selection: increasing the localization rate or letting car imports flood the local market due to their competitive advantage given import tariff cuts.

Fruitful results and development ambitions

Nevertheless, it is not easy to develop an empire.

In 2021, a meeting on the restructuring of the firm was held by key leaders to choose a new business model, restructure a board responsible for the company’s products because of its more diversified product portfolio, develop a research and development (R&D) center, and boost digitalization, Tam remembered.

However, the results surprised many people. With revenue from mechanics amounting to VND5.7 trillion (US$244.2 million) in 2021, THACO Industries set a target to generate revenue of $1 billion by 2025 and invest in 15 more factories, operating in the mechanics, automobile, agricultural mechanics, construction, household appliance, and product design sectors.

“Mechanical accessories, electric wires, car seats, specialty chemicals, and bodywork will be localized first,” Tam said.

“Once our staff are experienced and we can research and develop as well as design products, we will expand to industrial equipment.”

Multifunctional model

According to Tam, together with changes in supply chains, purchasers have had a higher demand for the one-stop model, which is like a food market with multiple dishes.

With THACO Industries’ advantages in a closed manufacturing chain with lower logistics costs, THACO has repeatedly secured orders of foreign direct investment enterprises, including those ordering a combo of molds, plastic injection equipment, paint and packaging services, instead of sourcing them from four to five separate suppliers.

THACO has a plan to develop industrial parks in the north and the south of the country, thus establishing new-generation specialized industrial parks to suspend the transport of huge volumes of products from Chu Lai to other provinces.

“The close connection and support in the three regions will contribute to optimizing the effectiveness of our value chain, reducing logistics costs, improving the competitiveness, and opening up new business opportunities,” Tam noted.

He added that THACO had also sought to develop a mechanical engineering outsourcing center in association with R&D to support small and medium enterprises in southern Binh Duong Province. The center will be developed under the one-stop model.

This will not be a normal mechanic engineering outsourcing center. R&D services and core technology will be invested in heavily.

Employees monitor a spring production system at the THACO Chu Lai Industrial Park in Quang Nam Province. Photo: Huu Hanh / Tuoi Tre

Employees monitor a spring production system at THACO Chu Lai Industrial Park in Quang Nam Province, Vietnam. Photo: Huu Hanh / Tuoi Tre

The center is expected to attract enterprises with the same sense of purpose of getting involved in global production chains and forming a sustainable mechanical engineering ecosystem.

No rivals, only partners

In the past, THACO manufactured and assembled automobile models for KIA and Mazda and it could be considered a rival of Hyundai and Ford. 

However, with the policy of making friends with partners, THACO is currently manufacturing plastic bumpers for Hyundai Vietnam and Toyota at a lower price than those offered by Thai manufacturers. 

It is also a supplier of springs for Isuzu Vietnam, and will be a partner of Ford Ranger in the near future. 

THACO has launched four cooperation models: partners manufacturing and outsourcing products for THACO; THACO manufacturing and outsourcing the entire or part of products for R&D enterprises; THACO offering R&D services and manufacturing, outsourcing and providing products for enterprises having their own markets; and THACO and partners joining hands to manufacture products. 

These models are expected to enhance the cooperation and competitiveness of enterprises, creating a strong industrial ecosystem and manufacturing society to pave the way for the breakthrough of the mechanical engineering sector and supporting industries.

Methodical support needed

Tam said state agencies’ support should be more methodical and specific.

Amid the shift of foreign investment to Vietnam, if institutes and state agencies conduct macro-scale and specialized research, or assess the advantages and competitiveness of Vietnam’s mechanical engineering sector, enterprises will have more information to grasp opportunities.

It will be too late to make investments after securing orders. 

In addition, the mechanical engineering sector requires large capital while the rate of return is low. Therefore, to secure orders, the state should issue appropriate preferential interest policies for each sector. 

Moreover, it is advised to focus on labor training on the basis of support packages for schools and students in engineering majors to help them approach advanced technology and techniques. 

Incentives in taxes, land, and site clearance are also needed for companies to scale up their investment.

Notably, the development of industrial parks should involve plans to connect them with value chains, associated with expanding markets and seeking new customers.

 

Like us on Facebook or follow us on Twitter to get the latest news about Vietnam!

Source: https://tuoitrenews.vn/news/business/20220804/vietnam-s-thaco-and-philosophy-of-no-surrender/68420.html

Continue Reading

Trending