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Four ‘economic commanders’ at NA forum share their vision about stimulus package



All four ministers of economy-related fields were asked to answer inquiries at the last National Assembly session, a rare occurrence in Vietnam.

Four ‘economic commanders’ at NA forum share their vision about stimulus package

Minister of Planning and Investment Nguyen Chi Dung

This showed that the National Assembly Chair Vuong Dinh Hue understands the urgent need for measures to recover the economy.

“We advocate a plan on raising overexpenditures and public debt to a new ceiling which is within our control. If not, we can hardly obtain economic growth. And if the GDP doesn’t grow, the goals set in 5-year or 10-year development strategy, as well as our aspiration of becoming a higher average income country by 2030-2045, will be unattainable,” said Minister of Planning and Development Nguyen Chi Dung.

“If this happens, we will miss all the great opportunities from the 4.0 industrial revolution, the golden population period, Free Trade Agreements and the new transformations and new structures taking shape. And we will once again fail to catch up with the ‘game’ and lag behind other countries,” he continued.

“If we don’t lift the overexpenditure and public debt ceilings now, we won’t have investments, and this won’t have development. If so, a vicious cycle will take shape: overexpenditure and public debts will always be at high levels, while we would miss all great opportunities for development,” he said.

However, he was cautious.

“We agree with National Assembly Deputies that it’s necessary to be very skeptical in designing the bailout,” he said. “If we extend overexpenditure and public debt too much, everything may get of our control, which would cause long-term consequences to the economy. Macroeconomic uncertainties and imbalances would be even more dangerous.

“We need to think carefully about the scale of extension, one or two percent or how much. And we need to think about how to mobilize resources and how to use resources in the most effective way,” he said.

According to Dung, ministries and branches are still figuring out the bailout amount and have not come to a final scenario. They still need to consider everything carefully and consult with agencies before submitting the plan to the National Assembly.

Monetary policy

Asked about the possibility of slashing interest rates to support businesses, State Bank of Vietnam (SBV) Governor Nguyen Thi Hong demurred.

Four ‘economic commanders’ at NA forum share their vision about stimulus package

SBV Governor Nguyen Thi Hong

The central bank has to protect the value of the Vietnam dong amid pressure on inflation in 2022. SBV has to ensure the safety of the banking system and payment capability.

She said that prices of many commodities have increased sharply. The petrol price soared by 55.2 percent in September compared with late 2020. The inflation rate has been very high in some developed countries. The inflation rate, for example, was 5.3 percent in September in the US. Central banks around the world have stopped loosening monetary policies, while 65 interest rate increases have been reported.

“The pressure on inflation and the monetary policy regulation is very high,” Hong said.

Meanwhile, bank bad debts are on the rise. If the financial situation of credit institutions worsens, this will affect payment capability and the safety of the entire banking system.

“We need to learn a lesson from what happened in 2008, when we launched interest rate subsidy packages and the high inflation rate returned in 2011, which once reached 18 percent,” Hong said.

Fiscal policy

An interest rate package was suggested by Minister of Finance Ho Duc Phoc at the latest National Assembly session.

Four ‘economic commanders’ at NA forum share their vision about stimulus package

Minister of Finance Ho Duc Phoc

He said if VND20 trillion is spent every year, or VND40,000 trillion in 2022-2023, with the interest rate of 4 percent, the economy would have VND1 quadrillion worth of capital, and this would not lead to overexpenditure and public debt increase. The money would be sourced from capital for investments for 2021-2025 which have not been allocated.

Phoc mentioned other packages, including the issuance of Government bonds, or bonds in foreign currencies to mobilize capital from the public. The VND180 trillion 2-year bond package would lead to a 1 percent increase in overexpenditures each year.

“However, we are concerned about whether the economy will be able to absorb the money, and where the money will be spent. We think the money should be spent only on public investment projects, which will lead to key investments, projects and works in the business fields which can create a breakthrough for growth,” he said.

Regarding the debt policy, Phoc explained that if considering the unrevised GDP (VND6.3 quadrillion), the public debt package would be 56.8 percent (44 provinces), higher than the safety line of 55 percent.

Citing the Government’s debt ratio of 51.5 percent of unrevised GDP (VND6.3 quadrillion) and 40.5 percent of revised GDP (VND9.1 quadrillion), and the the public debt of VND3,750,000 billion and VND3,397,000 billion this year, Phoc supported demand stimulus packages to develop the economy, increase the state budget collection and maintain the overexpenditures level.

Regarding budget expenditures, Phoc said there would be a further cut of 10 percent from the level set by National Assembly. Another 10 percent would be cut during the regulation process, and 5 percent of expenses on receiving guests.

Public investment

National Assembly Chair Vuong Dinh Hue asked Minister of Transport Nguyen Van The to explain why the disbursement for key national projects has been going slowly.

Four ‘economic commanders’ at NA forum share their vision about stimulus package

Minister of Transport Nguyen Van The

The disbursement amount for Long Thanh International Airport in 2021 and the accumulated disbursement has been low. As for the eastern highway project, the capital for three investment packages under the PPP (private public partnership) mode has not been arranged.

According to The, the average disbursement rate by the end of September 2021 was 47.8 percent, while the figure was 61.2 percent for transport projects. The disbursement of the two above/mentioned road projects has been slow because of reasons related to bidding, site clearance and credit shortage.

Meanwhile, Ministry of Planning and Investment’s Dung said 30 out of 63 cities and provinces had a disbursement rate of below 60 percent as of the end of October.

The four “economic commanders” agreed that there must be a bailout to support the economy but at a reasonable level to avoid affecting inflation and the macroeconomy. 

Tu Giang



Magnetic strip ATM cards to remain valid next year




A customer uses a chip card for payment at a point-of-sale (POS). VNA/ Photo

HÀ NỘI — The State Bank of Vietnam (SBV) this week issued a dispatch, noting that domestic automated teller machine (ATM) cards with magnetic strips will remain valid for normal use after December 31, 2021.

The dispatch was issued after some banks have recently started sending notices to their customers about stopping supporting cards from ATMs to meet the deadline of the SBV’s Circular 19/2016 on the roadmap to convert from issuing magnetic strip cards to chip cards from next year.

Under the new dispatch, the SBV clarified that Circular 19/2016 makes no mention of a suspension of transactions using magnetic strip cards that remain valid.

December 31 this year is the deadline for changing to chip cards, not the date that magnetic strip cards will become invalid, the SBV noted, adding customers can continue to use magnetic strip ATM cards for transactions at ATMs, point-of-sale (POS) and bank counters, and for internet and mobile banking services after December 31 this year.

Under the new dispatch, the SBV asked card issuers and card payment organisations to ensure card holders’ transactions are carried out smoothly, safely and do not affect the interests of cardholders. They were also asked not to issue policies and regulations that go against the law on bank card operations.

In addition, they were told to launch media campaigns to inform their customers that magnetic stripe cards can still be used after December 31 this year.

However, under the new dispatch, the SBV also asked card issuers to encourage and support their customers to convert magnetic cards to chip cards to enhance security and to warn them of the risks if magnetic cards continue to be used.

There are two common ways to convert magnetic cards to chip cards.

In the first way, customers only need to bring valid citizen ID card or passport to the bank’s transaction point and request to convert from magnetic card to chip card.

In the second way, customers can access digital banking applications and mobile banking to apply for and receive cards at home or at the bank’s transaction points.

Or at some banks, the process is even more convenient. For example, at TPBank, customers can exchange magnetic cards for chip cards at LiveBank 24/7 and receive cards in just a few minutes.

In order to encourage customers to change magnetic strip cards to chip cards, most banks offered this service free of charge and the change is still free at some banks.

For example, at NamABank, the bank will completely convert magnetic strip cards to VIP cards for free from now until December 31, 2021. Similarly, Techcombank is also offering this activity free of charge.

According to experts, the conversion of magnetic strip cards to chip cards is beneficial for users, contributing to improving the security level, transaction speed, safety and ensuring the interests of customers.

Specifically, a magnetic card is a card containing a magnetic strip storing customer’s encrypted information. The data is permanently stored on the magnetic strip and is encrypted only once, so it easily leads to the risk of card information theft and transaction fraud.

Meanwhile, chip cards, which are also known as “smart cards”, have a microchip attached to the surface of the card, and this is the basic difference between chip cards and magnetic strip cards. For chip cards, transaction data includes data stored on the chip and the transaction password that changes with each transaction. Specifically, every time a chip card is used for payment, the chip will generate a unique transaction code and never repeat. In case the customer’s card is stolen from a certain store, the fake card will never work because the stolen transaction code will not be reused, the card will be rejected. —      





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Exporters told to strictly comply with EU regulations to avoid losses



The European Union has a large demand for imported agricultural products and, thanks to the EU-Vietnam Free Trade Agreement (EVFTA), Vietnamese businesses have a unique opportunity to take advantage of this.

 However, local businesses need to strictly comply with European regulations to avoid losses when exporting to the region.

Exporters told to strictly comply with EU regulations to avoid losses
The EU applies strict requirements and regulations on imported food products. — VNA/VNS Photo Vu Sinh 

For food products, the EU has strict requirements and regulations on product quality and the maximum residue level (MRL) of pesticides.

Trade counsellor Tran Ngoc Quan, head of the Vietnam Trade Office in Belgium and EU, said that most regulations across the bloc are similar when it comes to agricultural and food products.

Germany, Austria, the UK, Netherlands and Belgium do have stricter and higher MRL levels than the standard EU regulations, though these vary with different active ingredients, fresh produce and processed products.

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said that while Vietnamese fruits and vegetables are more competitive than those from countries without a European trade agreement, exporters must focus on improving MRL levels.

Nguyen said: “If enterprises exporting to the EU do not comply with the regulations, they face the risk of increased levels of inspections, supervision and perhaps even being banned from exporting to these markets in the future.

“The EU applies these regulations very strictly. Enterprises that want to export to the EU must obtain certificates and production levels according to GlobalGAP.”

Nguyen added that violators run the risk of incurring heavy losses if they are caught.

According to the new EU regulation No 2021/1900, effective from November 23, the frequency of pesticide testing on Vietnamese herbs and fruits will increase. Of this, 50 per cent of testing will be applied to coriander, basil, mint, parsley, beans corn and pepper and 10 per cent will be applied to dragon fruit.

Nguyen said that as vegetable products in Vietnam often have pesticides, some samples and consignments will be tested for residue. The EU has also increased the frequency of testing, adding that the more enterprises violate the regulations, the more frequent inspections will be. 

He said bans on export to the EU could be applied to violators.

According to a representative of the Vietnam Pepper Association (VPA), the EU’s increase in testing will raise difficulties in exporting to the EU and will invite increased competition from other countries.

“In order to avoid violations, businesses must do better at testing products when exporting, as well as strengthening production links to create a clean and safe raw material area,” said a representative of VPA.

The EU also conducts post-inspections away from ports, so even though goods are being consumed or sold at supermarkets or shops, if they are not of good quality they can still be recalled, said Nguyen.

Using the example of a Vietnamese pepper export enterprise that was refused by Spain when its product was tested at the border gate recently, Nguyen said that if the violation was discovered when the product was already on shelves it would cause larger financial damage to the  Vietnamese exporter. 

Nguyen Minh Lien, General Director of Vinamex Company which purchases Vietnamese goods for export to the EU market, shared that some Vietnamese enterprises do not pay due attention to food safety issues. Lien added that due to the post-inspection of the EU market, some have had to pay fines and incur additional costs due to poor quality products.

In addition, Lien said some basic errors like incorrect packaging leads to products being returned or sold cheaper to other markets.

Lien noted when exporting goods to the EU, Vietnamese businesses must work closely with importers on product quality, packaging and contract inspection to avoid loss and damage.

She said supermarkets in the EU do not directly import goods from Vietnam, so local enterprises should cooperate with importers to arrange products at the warehouse before entering the retail market there.

She also suggested Vietnamese enterprises cooperate to diversify products, ensure sufficient output and take advantage of shared containers when exporting.

Considering EU customers are increasingly interested in buying products from businesses that contribute to community development and the environment, Nguyen said: “Sustainable development should be a long-term direction for export businesses in Vietnam.”

At the same time, even enterprises and manufacturers that follow the GlobalGAP requirements must pay attention to the plant protection ingredients that the EU bans or restricts, as some may be different from the GlobalGAP.

Source: Vietnam News


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Moody’s upgrades VPBank’s rating to Ba3



VPBank is one of the leading banks in Việt Nam. — Photo courtesy of the bank

HÀ NỘI — Global credit rating firm Moody’s Investors Services has upgraded Việt Nam Prosperity Bank (VPBank)’s foreign currency deposits from B1 to Ba3 which is equal to the country’s rating with positive outlook.

Moody’s BCA ratings reflect the independent intrinsic strength of the issuer. This credit rating is assessed based on the macro-environment, financial profile and qualitative assessment factors. In addition to upgrading the BCA rating, Moody’s also upgraded VPBank’s long-term local and foreign currency deposit ratings, rising to Ba3.

VPBank’s credit rating was announced after the bank completed the sale of a 49 per cent stake at its VPBank Finance Company Limited (FE Credit) to SMBC Consumer Finance Co Ltd (SMBCCF), a wholly-owned subsidiary of Japan’s Sumitomo Mitsui Financial Group, Inc (SMBC Group) at the end of October. Moody’s assessed that the capital sale brought about a significant improvement in the bank’s credit profile. Notably, according to Moody’s methodology, the bank’s capital adequacy ratio (CAR) increased from 11.4 per cent at the end of September 2021 to 13.5 per cent at the end of October 2021.

In addition to the improved capital base, the bank’s outstanding business results in recent months, despite the negative impact of COVID-19 on the economy, were also highly appreciated by Moody’s. The business results in the third quarter of the year showed that VPBank’s consolidated before-tax profit reached more than VNĐ11.7 trillion (US$513 million), up 24.9 per cent over the same period last year. The parent bank’s pre-tax profit alone reached VNĐ10.8 trillion, representing 75.2 per cent year-on-year increase. The bank’s total consolidated operating income reached VNĐ33.2 trillion, increasing 17.3 per cent over the corresponding period last year. Its consolidated return on assets (ROA) and return on equity (ROE) indices continued to be among the top of the market, reaching 2.8 per cent and 21.6 per cent respectively.

Moody’s believed that VPBank’s capital capacity will continue to be stable, as the bank has clearly demonstrated its plan to use capital obtained from the FE Credit deal to promote growth and seek new business investment opportunities. In addition, the assets scale will be further expanded thanks to the profit growth from business activities.

“VPBank’s asset quality and profitability will remain stable over the next 12-18 months,” Moody’s said in the announcement, emphasising the belief that VPBank’s asset quality will be well under control as Việt Nam’s economy recovers and vaccination rates increase.

The upgraded ratings from a prestigious international credit rating agency like Moody’s in the context that Việt Nam’s economy has suffered heavy impacts from the outbreak of the COVID-19 pandemic, has demonstrated confidence of international organisations in VPBank’s capital base and development plan this year and in the future. This also contributes to strengthening VPBank’s position, while further enhancing its ability to mobilise capital from reputable financial institutions. —


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