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GDP to reach 3.5-4 per cent this year

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Việt Nam’s exports this year would increase by 10 per cent which is quite impressive in the current world context. — Photo vietnamplus.vn

HÀ NỘI — The country’s GDP this year is expected to reach 3.5-4 per cent if the COVID-19 pandemic is controlled in September and a ‘new normal’ achieved from the fourth quarter, said Minister of Planning and Investment Nguyễn Chí Dũng.

Việt Nam’s exports this year would increase by 10 per cent while State budget revenue will exceed the estimate. The growth will be low but quite impressive in the current global context.

“This forecast is lower than the set target of 6.5 per cent this year, but achieving this level needs a huge effort, requiring more drastic actions of both the political system and localities,” Dũng said.

If GDP reaches the level, this will be the second year that Việt Nam’s GDP has not completed its growth plan. In 2020, GDP grew by 2.92 per cent due to the impact of the COVID-19 pandemic. This would affect the implementation of the overall goal of the five-year plan in the 2021-25 period.

He said that social distancing has seriously affected production, business, labour and employment. Meanwhile, the country has spent large resources on the fight against the pandemic, affecting State budget revenue and expenditure. The pandemic also affects the establishment of businesses and attracting FDI.

In particular, domestic consumption of agricultural products faces difficulties due to low purchasing power. The increasing input prices have affected the psychology of production expansion and re-herding. In addition, the price of animal feed continued to increase due to the difficulty of importing raw materials and high transportation costs, which greatly affected livestock development.

The minister said localities need to take advantage of the recovery momentum of major economies that have a great influence on Việt Nam’s economy. The country should rapidly restructure the economy and add elements of innovation and promote the values ​​of Vietnamese culture and people.

He asked localities to give priority to preventing the pandemic so as it doesn’t re-emerge, leading to social distancing, disrupting production and supply chains. In addition, they should have regular dialogues with businesses to create a favourable investment environment while closely following new trends to build socio-economic development plans, including public investment.

He added that during the current difficult time, the local authorities’ attitude to businesses is even more important than the above support.

The localities were also asked to ensure social security and support for affected people as well as actively develop local economic recovery plans, take advantage of the world’s new opportunities to achieve growth targets, and contribute to the overall growth of the country.

“Researching and proposing solutions to build an economic recovery programme after COVID-19 is important and urgent. The solutions should be implemented immediately after the pandemic is under control, focusing on recovering key sectors and areas,” he added.

Accordingly, the Ministry of Planning and Investment will submit to the Government an economic recovery project in October. It is expected that the next two years would be the economic recovery time of the whole country.

“The world changes very quickly. If we don’t build an economy that is autonomous and adaptive, we will be unexpectedly passive. For example, the pandemic could last for a long time, not to mention natural disasters. Currently, the ministry is developing a project to build an autonomous economy.”

Many international experts said that the economy has many optimistic signals to be able to return to a good growth trajectory if the pandemic is controlled. The Government has been on the right track in defining and implementing a vaccine strategy and key economic policies.

Tim Leelahaphan, an economist in charge of Việt Nam and Thailand at Standard Chartered Bank, said that Việt Nam is on the way to its goal of becoming a regional supply chain centre, a modern industry and a future high-income country. Việt Nam has also benefited from the recent supply chain shift. However, it should be noted that the ability to control COVID-19 would play an important role in Việt Nam’s economic prospects in the short term.

Economists also said that the driving force of economic growth depends heavily on the implementation speed of support solutions for people and businesses; expanding commercial activities, taking advantage of opportunities from free trade agreements (FTAs), digital transformation, and accelerating disbursement of public investment capital. This is the short-term and long-term driving force for Việt Nam’s economic growth and also the measures that Việt Nam has taken since the outbreak of COVID-19 in early 2020.

Economist Võ Trí Thành said the Government’s solutions to continue implementing security and business support packages are timely. However, the important issue is the implementation speed of support policies, with more accessible criteria to maximise support for businesses, ready to prepare for the post-COVID-19 period. —

Source: https://vietnamnews.vn/economy/1032214/gdp-to-reach-35-4-per-cent-this-year.html

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Insurance stocks get boost thanks to State divestment

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Military Insurance’s application on a mobile phone. Photo

HÀ NỘI — Revenue of the whole non-life insurance market recorded modest growth this year, but most insurance stocks on the stock market rose sharply.

In the past two months, most insurance stocks have rebounded, with some stocks like Military Insurance Company (MIG), Bảo Minh Insurance Corporation (BMI) and Post – Telecommunication Joint Stock Insurance Corporation (PTI) up about 60 per cent compared to the beginning of the year. Vietnam National Reinsurance Corporation (VNR) even jumped 145 per cent.

This stands in contrast to the sideways trend that occurred a few years ago. 

On the stock exchange, there are currently seven insurance stocks, including VNR, PTI, MIG, BMI, Petrolimex Insurance Corporation (PGI), PVIRe (PRE) and BIDV Insurance Corporation (BIC).

These companies are operating in the field of non-life insurance. In Việt Nam, there is no life insurance company listed or registered for trading on the stock exchange.

Two other stocks, including Bảo Việt Holdings (BVH) and PVI Holdings (PVI), have long been considered by many investors as insurance stocks, but are actually financial investment stocks in the financial – insurance sector. BVH is holding 100 per cent of capital in Bảo Việt Insurance Corporation, while PVI holds 100 per cent of capital in PVI Insurance Corporation and 73 per cent of capital in PRE.

PVI shares, which were trading at VNĐ48,100 per share on Thursday morning, rose about 50 per cent this year. Meanwhile, BVH shares fell slightly, despite its profit climbing 41.2 per cent year-on-year in the first half of 2021. 

The negative and complicated developments of the COVID-19 pandemic are creating short-term risks for insurance companies due to a decrease in customer income, the risk of inflation and an increase in premiums, but insurance stocks are expected to inch higher.

The bullish trend of insurance stocks is believed to be driven by the divestment of state capital and extraordinary business results of some enterprises. 

According to the plan to divest state capital of the Department of Corporate Finance, the Ministry of Finance, BMI and VNR are two insurance companies managed by the State Capital and Investment Corporation (SCIC) expecting to divest in the first quarter of 2022. The value of State capital at par value at BMI is VNĐ463.1 billion (US$20.3 million), while at VNR is VNĐ529 billion.

However, VNR has not received any documents from the authorities on the divestment of State capital, Nguyễn Thị Minh Châu, who is in charge of information disclosure of VNR, told tinnhanhchungkhoan.vn

Finance-insurance expert Trần Nguyên Đán said that it is understandable that investors’ cash flow is poured into insurance stocks, especially those on the list of State divestment. But investors need to assess the business performance and growth potential.

Accordingly, if an enterprise subject to divestment has an almost exclusive segment, it is an investment opportunity, while if that field has been opened and liberalised, it is not attractive.

“For example, previously, a month after the successful State divestment, Sabeco (SAB) share price declined from VNĐ340,000 per share to VNĐ230,000/share. The shares’ fluctuation, then, created a lot of emotions in the market, but SAB shares currently are just traded over VNĐ160,000 per share,” Đán added. 

Preliminary data from the Insurance Association of Việt Nam showed that in the first eight months of 2021, the revenue of the non-life insurance market is estimated at nearly VNĐ37.3 trillion, up 3.61 per cent over last year, the lowest growth rate in the last decade. 

The slowdown was due to declines in both major retail businesses, with negative growth in vehicle insurance, while health insurance’s growth was lower.

Of which, vehicle insurance’s revenue reached nearly VNĐ10.3 trillion, down 7.7 per cent, while revenue of health insurance rose 3.39 per cent year-on-year to more than VNĐ11 trillion. —

Source: https://vietnamnews.vn/economy/1063200/insurance-stocks-get-boost-thanks-to-state-divestment.html

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Upcoming incentives create space for tech-led projects

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New regulations on special investment incentives have been unveiled to facilitate more high-tech funding in Vietnam, giving the country a new tool to lure quality foreign investment and retain investors for the long term.

Upcoming incentives create space for tech-led projects
Vietnamese high-tech groups are welcoming added investment from Asia and beyond. VIR Photo: Le Toan

On October 6, the prime minister issued Decision No.29/2021/QD-TTg, in which new and expanded investment projects will be entitled to special incentives. The decision provides the levels, duration, and conditions for application of incentives on areas such as corporate income tax and land rent.

According to Seck Yee Chung, vice president of the Singapore Business Group (SBG), with the aim to boost the growth of startups, tech companies, and other innovative sectors, the Law on Investment 2020 supplemented the sectors that will be entitled to such funding incentives. The sectors include, among others, high-tech and sci-tech enterprises, innovative small- and medium-sized enterprises (SMEs), research and development centres, and investment in technical facilities for SMEs.

“Decision 29 has provided further guidance on the requirements and specific incentives applicable to these projects and, in general, I believe this new regulation will help promote investment in Vietnam,” he added.

Sophie Mermaz, head of the French Chamber of Commerce and Industry in Vietnam (CCIFV) in Hanoi, said, “Considering that French companies are at the cutting edge of technological progress and innovation in sectors such as digital, energy, and pharmaceuticals, a push for technology and know-how transfer to access a market as vibrant as Vietnam is more than welcome.”

The CCIFV, as one of the largest foreign business associations in Vietnam, is promoting and supporting investors wishing to do business in Vietnam and it greatly welcomes the positive announcement, Mermaz said. “We strongly believe that Vietnam is rapidly emerging as one of the world’s new manufacturing hubs. Through our business centres and associated consultancy services in Ho Chi Minh City and Hanoi, we strive to entice tech and innovative companies to set up in the new ASEAN hub that is Vietnam,” she added.

The new regulations on special investment incentives may also facilitate Vietnam to fulfil its commitments under a wide range of free trade agreements (FTA) it has signed. In particular, the EU-Vietnam FTA is expected to strengthen Vietnam’s competencies by fostering further European high-tech and innovation investments, which are important to accelerate the development of the local industrial and digital economy in line with the country’s development strategy.

Benefiting from maturity 

According to Guru Mallikarjuna, managing director of Bosch Vietnam, Vietnam has a favourable economic outlook for German investors, especially with ample advantages for further industrial and high-tech development, such as availability of a competitive labour force, preferable age brackets, and increasing focus on capacity training and development trajectory. In addition, direct effects from FTAs promote Vietnam’s standing even stronger with fewer trade barriers with countries in the EU and Asia, representing a huge purchasing power of billions of potential customers.

“The pandemic has also accelerated digitalisation, leading to higher productivity and promoting leaner production footprints that are closer to end markets,” Mallikarjuna said. “In response to this shift Vietnam, with the right pandemic management strategy, can present itself as a prime candidate for global and German investors.”

He did add, however, that it remains a valid argument that Vietnam’s supply chain could benefit from further maturity and expert availability – but the country is well on its way to addressing this matter to sharpen its competitive edge.

Specifically, for German investors and manufacturers, this is thought to be an opportunity rather than a challenge, providing that they act boldly and imaginatively to leverage the forefront capabilities that German industries are known for, in Industry 4.0 technologies and system quality. Through embracing next-generation digital technologies such as automation, advanced robotics, and more, not only will it enable German firms to significantly improve speed and productivity, but will also promote a much leaner and more flexible supply chain that is located in close proximity with end users of ASEAN’s growing markets, according to Mallikarjuna.

The new regulations on special investment incentives are being offered in the hope of aligning Vietnam’s efforts to attract high-quality investment in the Industry 4.0 era. However, there are still some concerns as to whether certain conditions under the decision would be workable. Chung from the SBG pointed out that in order to enjoy the incentive corporate income tax rate of 9 per cent for 30 years, the project must be in business lines eligible for exceptional incentives, and with a total investment capital of at least VND30 trillion ($1.3 billion), with at least VND10 trillion ($434 million) being disbursed within three years.

Given the significant size of investment capital to be disbursed within a short period of time, the number of projects that can meet the conditions for entitlement to this particular incentive is likely limited. It remains to be seen, in practice, as to how meaningfully this regulation will be interpreted and applied.

Chung also noted that the regulation on investment incentives is a significant effort from the government to facilitate foreign investment, especially in tech sectors, into the country. However, in addition to regulations on investment incentives, tech transfer and investment into a particular market, including Vietnam, depend on the various policies and circumstances.

“These can include support from the government, whether on a business-friendly environment, legal framework on protection of intellectual property rights, cybersecurity, and also taxation. In addition, the country’s ability to manage future crises can be a factor that the investor will consider before making a decision,” Chung stated.

Taking advantage 

As Vietnam is reopening its economy, the new investment incentives also give confidence for foreign financiers to retain investment in Vietnam after the implementation of tough coronavirus prevention measures.

Mermaz from the CCIFV said that Vietnam does have advantages in the fast-evolving international supply chain. The country remains in a good position as it has been open for foreign direct investment (FDI), and related regulations have been favourable. The economy is likely to bounce back strongly in 2022, attracting strong demand for relocation.

Despite the complexities of the pandemic, FDI keeps growing in terms of capital investment. Vietnam’s favourable conditions for doing business has cemented its position as a safe and stable destination for investment. “We aim at helping companies make informed decisions when beginning their operations in Vietnam and will continue to do so when the 2022 economic rebound takes place,” Mermaz added.

In the same vein, Chung said that the safety measures introduced to manage the pandemic outbreaks have seriously affected the business of many companies and investments in Vietnam. However, he believed that Vietnam is still an attractive destination for foreign investment. In 2020, Vietnam was one of the few Asian countries to continue to grow and attract new foreign investment despite the impact on the global economy.

“The country’s position in the global supply chain remains important, as investors look at other Asian countries outside of China for production activities. That being said, in order to compete with other countries to attract foreign investment, the government should continue to support companies in Vietnam, whether by way of incentives or ensuring a fair and transparent environment to do business in,” he said.

Source: VIR

Source: https://vietnamnet.vn/en/business/upcoming-incentives-create-space-for-tech-led-projects-784871.html

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IT giant FPT reports high profits over first nine months of 2021

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FPT’s new headquarters on Phạm Văn Bạch Street in Hà Nội. — FPT.com.vn

HÀ NỘI – Information technology giant FPT has recorded VNĐ24.95 trillion (over US$1 billion) in sales and VNĐ4.57 trillion ($198 million) in pre-tax profits over the first nine months of 2021, up by 17.9 per cent and 20 per cent respectively.

Both revenue and profit enjoyed positive growth, with the technology and telecommunications sectors providing the primary impetus.

FPT’s technology sector accounted for 22.1 per cent of its revenue and 30.4 per cent of its pre-tax profit.

Overseas, sales increased in all of the major markets, especially in the US and Europe, due to high COVID-19 vaccination rates and steady economic recovery. FPT has consistently received substantial orders.

Revenue from digital transformation reached VNĐ3.94 trillion over the nine months, up by 59.6 per cent, thanks to growth in key technologies such as cloud computing (Cloud), Artificial Intelligence (AI), and low-code.

FPT secured 16 projects totalling more than $5 million by the end of the third quarter this year.

After three quarters of 2021, the group has achieved 72 per cent of its revenue target and 74 per cent of its profit target for this year, indicating that it is on track to meet its full-year targets.

FPT’s telecommunications sector has generated revenue of VNĐ9.23 trillion, an increase of 11 per cent with a pre-tax profit of VNĐ1.78 trillion, a 21.9 per cent increase over the same period last year.

Due to increased profits from PayTV, combined with the postponement of infrastructure investment due to the pandemic, the pre-tax profit margin of telecommunications services, including broadband and other services, continued to improve in the first nine months of 2021, reaching 20.8 per cent and 14 per cent, respectively. —

Source: https://vietnamnews.vn/economy/1063618/it-giant-fpt-reports-high-profits-over-first-nine-months-of-2021.html

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