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Support packages should be spent on health and business recovery: experts



Vietnam’s fiscal support package needs to contain the pandemic and minimise health and economic impacts, so it will be necessary to give priority to spending on health, social security and support for the business sector.     

Support packages should be spent on health and business recovery: experts
Residents register for the $2.6 billion financial support package from the Government to support workers affected by the COVID-19 pandemic. — Photo

Chairman of the National Assembly Vuong Dinh Hue yesterday chaired the Vietnam Economic Forum 2021 in Hanoi, where economic experts discussed and suggested fiscal and monetary policies to support socio-economic recovery and development after the COVID-19 pandemic.

The forum themed “Recovery and sustainable development” was co-organised by the National Assembly Economic Committee, the Central Economic Commission and the Vietnam Academy of Social Sciences, connecting 57 locations in the country and three international ones, gathering opinions from a large number of scientists and experts in various fields.

Hue said Vietnam has used financial and monetary policies and other macroeconomic policies to deal with the pandemic over the last two years, adding the total size of the country’s fiscal and monetary support packages was estimated at about 4 per cent of GDP, lower than the average level of other countries in the world. 

Hue told the forum: “The development is not at all costs, but must be sustainable. We have to pay attention to immediate and urgent solutions to maintain the growth drivers to control the pandemic, support recovery and economic growth.”

But, he said: “Short-term and medium-term solutions must always stick to the long-term goal of restructuring the economy, ensuring the economy’s rapid but sustainable development, not only economic problems, but also the social and environmental issues, ensuring macroeconomic stability, and controlling inflation.”

“Important solutions must be how to mobilise resources, especially in the context that Vietnam’s medium and long-term capital market is still limited,” adding: “We will allocate resources to specific targets on the basis of international experience and the practical situation of Vietnam,” Hue said.

He said the financial and monetary policy solutions and proposals made at the forum were not included in the one decided by the NA, but will be for additional financial and monetary frameworks.

In response, delegates of the forum said the pandemic was not just an economic-financial crisis and solutions in healthcare were crucial.

They said the objective of the fiscal support package was to contain the pandemic and minimise health and economic impacts.

Economist Can Van Luc forecast the local economy would face many difficulties in 2022, adding: “Without special programmes, Vietnam may miss opportunities and fall behind.”

Luc said policy formulation must be feasible and implemented quickly and effectively and there must be good coordination between policies. 

Regarding monetary policy, the economist said: “Vietnam should continue reducing loan interest rates from 0.5 to 1 per cent. For example, if the housing loan proposal proposed by the Ministry of Construction is VND65 trillion (US$2.82 billion), the Government will need to spend about VND6.1 trillion on interest.”

Luc said: “It is necessary to have a loan guarantee policy for small and medium enterprises through funds in the localities.”

Together with the Ministry of Finance’s loan support package of VND20 trillion – VND30 trillion, an additional investment of about VND150 trillion for key infrastructure projects and work, as well as other packages for healthcare and social security, Luc estimated the fiscal support packages at VND278 trillion or 3.41 per cent of GDP in 2021.

In the long term, fiscal measures should gradually shift from direct support to indirect support, from financial support to mechanism support, in a way that promotes innovation, digital transformation and green and sustainable growth, said Luc.

Nguyen Minh Cuong, Chief Economist of the Asian Development Bank in Vietnam, told the forum as the pandemic continues to affect the world and the appearance of new strains were potential risks to the global economy, adding: “The gradual narrowing of the fiscal and monetary policies of countries in 2022 will also gradually narrow the time for Vietnam if the country does not quickly implement support policies, especially in the short term.”

Francois Painchaud, a representative of the International Monetary Fund (IMF) in Vietnam, said it was necessary to focus on spending instead of tax reduction or postponement measures.

He said: “Increasing public investment, as well as supporting private investment to encourage businesses to invest, is needed to meet the challenges of the fourth industrial revolution.” 

Nguyen Duc Khuong, deputy director in charge of research at IPAG Business School, Paris, said the innovation ecosystem will be a space for creating a new generation of employees and operating processes and boosting productivity.

He said: “Support from the State and the Government needs to focus on human resource training, capital support, risk sharing with businesses, through helping businesses take strategic actions to respond to the challenges of changing business models, investing in technology and big data to understand and reach consumers better.”

He added: “The challenge of digital transformation, digital services and shared platforms is all related to human resources.”

Bui Quang Tuan, director of the Vietnam Economic Institute, said Vietnam’s competitiveness towards ASEAN countries was low while the investment in technology from the State budget was decreasing, while it was increasing in other countries.

Tuan said it was a golden opportunity for Vietnam’s digital economy at present, saying: “It is necessary to increase investment, invest in materials, invest in resources and improve and perfect institutions.”

Tuan said only with such investment would Vietnam adapt to the changes that are happening very quickly.

In other sessions of the forum, delegates discussed practical solutions to help Vietnam overcome difficulties and quickly recover after the pandemic.

Chairman of the National Assembly Vuong Dinh Hue said: “If policies, especially macro policies, do not match reality, the policy itself will be misleading.”

Source: Vietnam News



Upgrading the market for the sake of all participants




An employee passes electronic boards showing share prices inside Hồ Chí Minh Stock Exchange in HCM City. — VNA/ Photo Hữu Khoa

HÀ NỘI — An upgrade to emerging status will not only help the stock market develop quickly, transparently and sustainably, but also attract huge foreign capital inflows, said experts. 

Recently, the Government has directed to purge the market and improve the trading system’s capacity, showing its determination to enhance the quality of the stock market.

The refinement is to protect investors and open a door for the Vietnamese stock market to be upgraded from a frontier to an emerging market.

Prime Minister Phạm Minh Chính has taken an interest in the development of the capital market and the stock market, including the matter of upgrading the market. 

During a trip to attend the ASEAN-US Special Summit, on May 16, the PM visited the New York Stock Exchange (NYSE) – the largest stock exchange in the world – hoping it supports and shares experience to develop an effective and sustainable stock market in Việt Nam, and successfully build a regional financial centre. 

PM Chính also expected the NYSE and its Vietnamese partners to foster a sustainable, mutually beneficial partnership, contributing to making the Việt Nam-US comprehensive partnership more substantive and effective.

On the occasion, PM Chính witnessed the awarding ceremony of two cooperation documents in the fields of finance, banking and investment funds between Vietnamese and US partners, including a cooperation document between the Vietnamese State Securities Commission (SSC) and the NYSE regarding support to upgrade the country’s stock market and build a mechanism for investors to participate in both stock markets.

Previously, the PM chaired a conference on developing a safe, transparent, efficient and sustainable capital market to stabilise the macro-economy and ensure major balances of the economy.

At the conference, PM Chính also asked the Ministry of Finance to immediately solve the order congestion situation and invest in technological innovation and digital technology application, while urgently implementing measures to upgrade the market from frontier to emerging status to attract investment capital, especially foreign investment.

Dominic Scriven, head of the Việt Nam Business Forum’s (VBF) Capital Markets Working Group, said that the move to purify the market is a great effort and determination from the Government.

As the goal is to build and develop a safe, transparent and sustainable securities market, cleansing the market will ensure the interests of businesses and genuine investors, increase the stock market’s appeal, and attract more investment capital flows both at home and abroad.

Meanwhile, Phạm Lưu Hưng, chief economist of SSI Securities Company (SSI), said that the move to purge the market in recent years raised expectations that the upgrade process will be easier. Hưng hoped that in the next assessment, the Market Rating Organization (MSCI) will note some positive comments about what Việt Nam has done.

According to Minister of Finance Hồ Đức Phớc, the ministry is currently working with international organisations to deploy solutions to upgrade the stock market by 2025 as per the set roadmap.

Huge foreign capital inflows

Analysts believe that the upgrade from frontier to emerging status will be an important driving force for the market.

Zafer Mustafaoglu, World Bank (WB) Practice Manager for Finance, Competitiveness and Innovation (FCI) for East Asia and Pacific, said that the capital market development is a long-term effort, and there is still much work to be done in Việt Nam.

Upgrading to emerging market status is not only an improvement in position, but also signals strong enhancement in quality with a solid market foundation.

Upgrading to an emerging market also attracts the attention of high-ranking international investors to Việt Nam. In the stock market, upgrading to an emerging market could result in an additional US$10 billion in new investment for the country. The first year alone can receive an additional $2-5 billion.

According to Nguyễn Minh Tuần, General Director of AFA Capital Investment JSC, the criteria for upgrading from frontier to emerging status focus on two main factors – size and liquidity of the market (quantitative) and market access (qualitative).

In terms of size and liquidity, there are four criteria which are the number of companies included in the Standard Index, total market capitalisation, floating capitalisation and market liquidity. Việt Nam has almost met three standards, he said. 

The main issue is qualitative standards. In the latest ranking in June 2021, there are nine criteria that the country has not yet met, including the ownership rate, ownership restrictions and equal rights of foreign investors.


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EVN accelerating projects to gear up for hot season




EVN workers checks electricity equipment. — VNA/  Photo

HÀ NỘI — Vietnam Electricity (EVN) said it is accelerating power generation and grid projects, especially urgent infrastructure, to ensure supplies in the hot season.

The State-owned group said in the first four months of 2022, the firm and its subsidiaries had started work on 30 projects and put into use 31 grid facilities between 110kV – 500kV.

It cited meteorological forecasting centres as saying that heatwaves this year are likely to appear in the northern and central regions later than usual, but won’t be too severe.

Power demand in the north is unlikely to rise sharply in May, and daily consumption will be around 805 million kWh.

EVN noted that this month, it is working to guarantee supply for production and business activities as well as daily life, especially the 31st Southeast Asian Games (SEA Games 31) and the 15th National Assembly’s third session.

It is maintaining high water levels at multi-purpose hydropower plants in the north, operating thermal power plants in the region, and importing about 540MW of electricity in May.

Its subsidiaries were also requested to ensure power supply in the dry season, ready manpower and equipment for any possible incidents due to natural disasters, and recommend people, agencies and factories use electricity in a safe and economical manner.

In April, the entire EVN system produced 22.62 billion kWh of electricity, up 1.9 per cent year-on-year. That added up to a four-month figure of 85.65 billion kWh, increasing 6.2 per cent. —


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Deputy Finance Minister Nguyễn Đức Chi takes charge of the State Securities Commission



Deputy Finance Minister Nguyễn Đức Chi. — Photo

HÀ NỘI — Minister of Finance Hồ Đức Phớc had assigned Deputy Finance Minister Nguyễn Đức Chi to take charge of the State Securities Commission (SSC) from May 19.

In a dispatch to the SSC, Minister Phớc stated that Deputy Minister Chi will manage the commission during the consideration and completion of personnel for the commission.

Earlier on May 18, the Party Central Committee’s Inspection Commission announced the inspection conclusions and Party disciplinary measures on the SSC Party Committee in the 2015-20 tenure and relevant individuals. Right after that, the Ministry of Finance directed the SSC, stock exchanges, the Việt Nam Securities Depository and relevant agencies to review and implement measures to remedy the violations and shortcomings.

Specifically, the ministry dismissed Trần Văn Dũng from the position of the Chairman of the SSC, while giving a warning to Vũ Bằng, former secretary of the SSC Party Committee in the 2015-20 tenure and former SSC Chairman.

Warnings were given to Nguyễn Thành Long, secretary of the Hà Nội Stock Exchange Party Committee; and Nguyễn Sơn, chairman of the management board of the Việt Nam Securities Depository for their wrongdoings during their tenures. —


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