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Inflation 2022: internal and external pressures



Purchasing power is at a very low level, but the potential pressure on prices combined with external factors may make it increasingly difficult for Vietnamese businesses and people in 2022.

Inflation 2022: internal and external pressures

Eurostat has released preliminary data showing that inflation in the Eurozone rose to a record high of 5% in December 2021. This is the highest inflation rate in the past 25 years, since the data was collected.

According to Eurostat, energy prices rose by 26% in 2021 and food prices increased rapidly. The figures show that inflation has become a concern and puts policymakers in a difficult position when European economies are still battered by the Covid-19 pandemic.

There has been a controversy about whether the European Central Bank (ECB) needs to act urgently to prevent inflation or not. This agency is still maintaining interest rates at very low levels to stimulate the economy.

The appearance of the Omicron variant further complicates the situation. With new developments, it is forecasted that the ECB will not raise interest rates until 2023. Inflation becomes a burning issue than ever.

US President Joe Biden also faces price escalation. Consumer prices in the world’s largest economy rose at the fastest rate in nearly 40 years.

Inflation is on the rise in the world. The prices for many types of goods, including inputs such as energy, iron and steel, plastic have increased sharply while Vietnam needs to recover its economy with a large-scale stimulus package.

Production activities in the world and Vietnam have recovered but are still weak due to the impact of the Covid outbreak again along with new strains of viruses such as Omicron. Total supply has not recovered yet, but demand is likely to increase at a faster rate.

After Resolution 128 was issued, Vietnam’s economy prospered. The country’s GDP in the fourth quarter of 2021 regained momentum with an increase of 5.22% after a decline of 6.02% in the third quarter. For the whole year, GDP increased by 2.58%.

With an impressive increase in the fourth quarter, a V-shaped recovery pattern took shape. Like many countries in the world, the resilience of the Vietnamese economy is quite good.

The outlook for the economy is also bright as Vietnam recorded the highest vaccine coverage rate in the world, with up to 99% of the population vaccinated with the first dose and over 92% with the second dose. Along with the new policy of living together in a safe way with the epidemic, Vietnam’s economy is expected to recover quickly.

Resolution 01, which has recently been issued by the Government, sets a growth target of 6-6.5% in 2022 with a focus on speeding up the disbursement of public investment capital and mobilizing all resources to develop the infrastructure system. Optimism is higher after the Government submitted to the National Assembly an economic stimulus package of about VND 350,000 billion.

However, opportunity comes with risk. If supply does not increase in time while demand increases strongly, then high inflation is inevitable.

Vietnam: long-term risk

Inflation 2022: internal and external pressures

Compared to other countries, inflation in 2021, was low, only 1.84%. However, a very strong decline in economic growth may put Vietnam in a difficult position and the country may have to pump more money to revive the economy. Inflation risks are clear.

During the recent extraordinary session of the National Assembly, the deputies emphasized the necessity of the support package of the economic recovery program. However, they also warned about inflation risks.

According to the Government’s calculations, the estimated actual value of this fiscal and monetary policy package for socio-economic recovery and development is nearly VND 347,000 billion, about 4.28% of GDP, and the Government has also identified and prepared solutions to control possible risks, especially about increasing inflationary pressure in 2022 and 2023.

However, when the economy gradually recovers, and the pandemic is no longer a big threat, the demand for shopping and consumption will increase again, thereby pushing up aggregate demand. Accordingly, prices will also be pushed up if total supply does not recover in time, especially when the supply chain crisis shows signs of prolonging in 2022.

In Vietnam, in the past two years, fiscal and monetary policies have been strongly mobilized to support the economy. There is not much room to expand support, especially in the banking industry. Meanwhile, bad debt is sharply increasing.

The State Bank of Vietnam recently said that the ratio of bad debt, unresolved debt sold to VAMC, and potential debt that can become bad debt rose to 3.79%. If counting customers’ debt balances restructured according to Circular 01, the ratio of bad debt and debt at risk of turning into bad debt may reach up to 8.2%.

While many countries have had to tighten monetary policy, many central banks have reduced bond purchases and even raised interest rates to prevent a sharp increase in inflation. But Vietnam has entered the phase of “pumping” money into the economy.

Recently, many international organizations have warned Vietnam to avoid further easing monetary policy. Giving support to businesses and employees at a difficult time is necessary, but it needs to be timely and to the right subjects.

The economic stimulus package in 2009 helped the economy overcome the crisis, but it also left consequences. In 2010 Vietnam’s inflation reached 9.2% and in 2011 it was 18.6%.

Experts believe that in 2022, inflation will continue to remain low because production is still below potential. The average economic growth rate of the 2020-2022 period is between 4-5%, much lower than the 6% rate of the 2011-2020 period.

Ha Dung



US-based SSA Marine partners with Gemadept to build $6.7-billion logistics centre

The US-based SSA Marine and Vietnam’s Gemadept are collaborating to build the Cai Mep Ha Logistics Center in Vietnam, which is expected to be worth $6.7 billion.



According to local media on September 12, the agreement focuses on the southern Vietnamese port region, particularly the construction of the Cai Mep Ha logistics center.

“The establishment of the Cai Mep Ha logistics center represents not only a leap for Vietnam but for global logistics,” an SSA Marine source stated. “The vision is grand, and the potential is limitless.”

When completed, the complex would span over 2,200 hectares and serve as Vietnam’s top logistics hub. The venture, located in the gorgeous surroundings of Phuoc Hoa district in Phu My town, has a dual-focused blueprint: a cutting-edge logistics center paired with the strategically positioned Cai Mep Ha downstream port.

SSA Marine, the largest US-owned and privately held container terminal operator and cargo handling company in the world, handles 35 million container TEUs per year at its marine and rail terminals and also operates cruise, auto- and Ro/Ro logistics, and IT Solutions.

With 73 years of existence, the firm operates over 250 ports throughout the US, Canada, Panama, Mexico, Chile, Costa Rica, Colombia, Asia, and New Zealand.

This modified plan, according to the province’s Department of Transport and consultants, increases the total area from 1,763ha to nearly 2,204ha. The core project space is approximately 1,687ha, including both the logistics center and the downstream port of Cai Mep Ha.

Moreover, the water surface area has been reduced to about 202ha. In addition, land initially reserved for clean energy storage will be repurposed for logistics and port functions.

The strategic planning adjustment aims to extend the port to handle 250,000-ton ships. Logistics and port operations will be redefined on the 198 ha of land, together with possible water surface areas.

Gemadept and SSA Marine are the leading investors, although seven others are interested. Geleximco, ITC, and Besix-Boskalis-Hateco, a Vietnam-EU collaboration, are said to be involved.

Upon completion, this hub will optimize import and export transportation costs across road, sea, rail, and air transit nodes. It aims to receive, store, process raw materials, package, label, and distribute commodities for adjacent industrial zones, notably the CM-TV port cluster, Vung Tau Port, and the southeast coastal port region.

Source: VIR


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Vietnam’s Hai Phong City attracts extra $1.4 billion in foreign investment



Several enterprises from South Korea and Japan were granted investment certificates on Friday to develop FDI projects at industrial parks in the northern port city of Hai Phong, with a total pledged capital reaching nearly US$1.4 billion.

The investment certificate handover ceremony was attended by Le Tien Chau, secretary of the municipal Party Committee.

The Hai Phong Economic Zone Management Board presented an investment certificate to Ecovane, a subsidiary of the South Korean chemicals maker SKC, to develop a hi-tech biodegradable material factory project worth $500 million.

Other key projects receiving the certificates at the event included a BW ready-built factory worth $60 million and a $40-million auto parts manufacturing plant by China’s CCTY Bearing Company.

Besides, Japan’s Kyocera Document Solutions Inc was approved to pour an additional $237.5 million into its machine and equipment manufacturing plant project, raising the project’s total investment to $425 million.

The municipal Economic Zone Management Board also finished the selection of investors for two social housing projects worth a combined $400 million, whose work is expected to begin this year.

Once completed, the social housing projects will offer more than 8,000 apartments to around 22,000 people, contributing to the city’s efforts to ensure social security and stable accommodations for low-income employees.

Hai Phong City in northern Vietnam attracted an additional US$1.4 billion of foreign capital in September 2023. Photo: Tien Thang / Tuoi Tre
Hai Phong City in northern Vietnam attracted an additional US$1.4 billion of foreign capital in September 2023. Photo: Tien Thang / Tuoi Tre

In the year to September 20, industrial parks and economic zones in Hai Phong had attracted roughly $3.1 billion of investment, reaching 120 percent of its 2023 target, said Le Trung Kien, head of the city’s Economic Zone Management Board.

Up to now, over 1,000 FDI projects worth a combined $28 billion have been developed in this northern port city, which granted investment certificates to 45 FDI projects with a total pledged capital of nearly $2.1 billion and 11 DDI (domestic direct investment) projects with a total cost of some $600 million last month.

The city’s Economic Zone Management Board previously had a working session with South Korea’s Chungbuk Free Economic Zone, which sought to cooperate with businesses active in Hai Phong as well as support them in technology transfers and human resources training.

The investment in semiconductor technology in Hai Phong is expected to advance further as SKC, the chemical unit of South Korea’s SK Group, inked a memorandum of understanding with Hai Phong to study the investment environment for advanced semiconductor materials, secondary batteries, and some other eco-friendly materials.

SK Group is the second-largest conglomerate in South Korea, just after Samsung, focusing on four main areas including energy and chemicals; telecommunications; semiconductors and other advanced materials; pharmaceuticals and logistics services, according to the Hai Phong Economic Zone Management Board.

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VinFast’s 5th electric vehicle costs under $30,000



VinFast’s 5th electric vehicle costs under $30,000

VinFast VF 6 is introduced in an even in Ho Chi Minh City on Sep. 29, 2023. Photo by VnExpress/Thanh Nhan

Vietnamese automaker VinFast has launched its fifth electric car, the VF 6 crossover in the small-car segment, with base prices starting at VND675 million ($27,800).

The Plus version, which offers a range of 399 kilometers compared to the base’s 381 kilometers, costs VND765 million.

The battery costs VND90 million for each version.

Any customer who does not buy the battery can lease it for VND1.8 million a month, with a maximum monthly distance of 1,500 kilometers.

Sales begin October 20 and deliveries will be scheduled for the end of this year.

The VF 6 is in the same price range as the Hyundai Creta (starting at VND640 million) and the Kia Seltos (from VND599 million).

The B-segment (European classification’s smallest-car category) is rife with competition in Vietnam thanks to offerings by Japanese, South Korean, German and Chinese brands all seeking a bigger share.


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