Vietnam to see export growth as global demand recovers
Global demand for goods is recovering and this is an opportunity for Vietnam to boost its exports of consumer and industrial products, according to the Ministry of Industry and Trade (MoIT).
The ministry forecasts that Vietnam’s import and export activities will continue to increase in the coming months as free trade agreements (FTAs) are gradually being implemented in a more comprehensive and effective manner.
Those agreements will continue to create conditions for Vietnamese goods to enter to partner markets with preferential tariffs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU-Vietnam Free Trade Agreement (EVFTA) and the UK-Vietnam Free Trade Agreement (UKVFTA).
Besides that, export prices for many kinds of goods are also tending to increase, especially Vietnam’s key export commodities, according to the ministry.
However, Deputy Minister of Industry and Trade Do Thang Hai said import and export activities may be negatively affected by the COVID-19 outbreak in many localities, especially localities in the northern region with the largest trade value such as Bac Giang, Bac Ninh and Hanoi.
Meanwhile, Asia continues to be a hot spot with a rapidly increasing number of new COVID-19 cases, causing a series of countries and territories such as India, Japan, Taiwan, Indonesia and Thailand to promote measures to control the pandemic.
“In this situation, domestic enterprises must improve competitiveness and adaptability to overcome difficulties and seize opportunities,” Hai told chinhphu.vn.
The ministry has requested its agencies and departments, and Vietnam’s Trade Offices abroad, to provide updates on the COVID-19 pandemic which may affect trade and economic cooperation between Vietnam and other countries.
It has also proposed measures on maintaining and developing export markets and supporting local businesses to find and import raw materials and components for stable production of export products in the future.
For the exports of farming, forestry and seafood products, the industry and trade departments of Hanoi, Hai Duong, Lang Son, Quang Ninh and Lao Cai should consider arranging more working hours, including working on Saturdays, Sundays and holidays, based on the issuing of the certification of origin (C/O) for those export products, especially agricultural products in localities affected by the pandemic such as lychees in Bac Giang and Hai Duong provinces.
Meanwhile, the import-export departments in the northern border areas are asked to closely monitor the customs clearance of goods at the border gates and report signs of goods stuck at the border gates to the ministry.
According to the ministry, the total trade value of goods in the first five months of 2021 increased by 33.5 percent year on year to 262.25 billion USD, although trade activities and production of export goods in May were affected by the fourth outbreak of the COVID-19 pandemic.
Specifically, in the first five months of 2021, the export value of goods was at 130.94 billion USD, up 30.7 percent over the same period last year.
Especially, the group of 22 items with export value of over 1 billion USD continued to hold stable exports, accounting for 87.3 percent of total export value. Of which, six items achieved export turnover of over 5 billion USD.
The group of phones and components had the largest export value of 21.9 billion USD, up 19.6 percent over the same period last year, accounting for 16.7 percent of total export value.
Following were electronics, computers and components (19.5 billion USD, up 26 percent); machinery, equipment, tools and spare parts (4.9 billion USD, up 74.8 percent); textiles and garments (12.2 billion USD, up 15 percent); footwear (8.5 billion USD, up 26.4 percent); and timber and wood products (6.6 billion USD, up 61.3 percent).
The United States continued to be Vietnam’s largest export market with a turnover of 37.6 billion USD, up 49.8 percent over the same period last year; followed by China with 20.1 billion USD, up 26 percent.
Other large export markets of Vietnam included the EU (16.1 billion USD, up 20.8 percent); ASEAN (11.5 billion USD, up 23.6 percent); the Republic of Korea (8.9 billion USD, up 17.1 percent); and Japan (8.4 billion USD, up 7.7 percent).
The ministry also reported that import activities increased strongly in the first five months thanks to the production expansion of the manufacturing sector. That was a good sign showing the recovery of domestic consumer demand.
In the first five months of 2021, Vietnam’s import turnover of products was estimated at 131.31 billion USD, up 36.4 percent over the same period last year./.
Top 50 public companies in 2021 announced
Vinhomes JSC, Hoa Phat Group JSC, Mobile World Investment Corporation and Vietcombank are among the top 50 public companies in 2021 announced by Vietnam Report.
Many other businesses operating in real estate, food production and processing, construction materials, and telecom electronics have also been named in the list that was made on the basis of turnover, profits, assets and market capitalisation of the enterprises.
Vietnam Report has also assessed the prestige and operational efficiency of the firms through investors, experts and market, as well as their communications prestige.
Vietnam Report Director Vu Dang Vinh said the public firms played a central role in the stock market that is developing strongly.
According to a study by the company, up to 72.73 percent of experts and public companies said the market will continue to grow in the time ahead, and 52.38 percent believed that the VN-Index will expand 20-30 percent./.
ODA disbursement in agricultural projects hits 31.33 mln USD in five months
The disbursement of official development assistance (ODA) at the Ministry of Agriculture and Rural Development (MARD) this year was estimated at 718.3 billion VND (31.33 million USD) as of May 31, or 25.2 percent of the target.
The ministry has attempted to remove bottlenecks in each project and speed up the process.
Some projects have seen adjustments to policies and loan agreements resulting in implementation and capital disbursement, in particular Sustainable Agricultural Transformation (VnSAT) and the Forest Sector Modernisation and Coastal Resilience Enhancement Project (FMCR).
The ravages of COVID-19 have also been an obstacle to the importation of machinery and equipment and the hiring of foreign consultants and contractors.
Most forestry projects require large amounts of time for training stakeholders, according to acting head of the Management Board for Forestry Projects Do Quang Tung.
Forestation is also hampered by COVID-19, he noted.
To speed up disbursement in ODA projects, MARD has asked relevant agencies to report to the Prime Minister on reciprocal capital replacing foreign capital for value-added tax payments.
Close to 2.85 trillion VND in foreign capital has been allocated to MARD in 2021, which has been distributed to 16 of its projects since the end of last year./.
Vietnamese goods able to expand presence in UK under trade deal
The UK-Vietnam Free Trade Agreement (UKVFTA), which officially took effect on May 1, is believed to herald a new era for Vietnamese goods to gain a foothold in a market with strong purchasing power, according to the Dau tu (Vietnam Investment Review) newspaper.
Vietnam’s exports to the UK rose nearly 27.4 percent year-on-year in the opening four months of 2021, to 1.94 billion USD, data from the General Department of Vietnam Customs shows, which is considered an impressive result amid COVID-19’s impact on global trade.
The UKVFTA, which temporarily came into force on January 1 this year, is hoped to create more favourable conditions for exports to the UK now it is officially in effect.
During the first five months of this year, exports to the UK grew more than 20 percent year-on-year to about 2.4 billion USD.
The UK is currently Vietnam’s third-largest trade partner in Europe.
Data from Vietnam Customs also shows that bilateral trade reached 6.6 billion USD in 2019, including 5.76 billion USD worth of exports from Vietnam, placing the UK ninth among the country’s main export destinations.
Trade revenue fell slightly last year to 5.642 billion USD, due to COVID-19.
Vietnamese goods currently make up no more than 1 percent of the UK’s total annual imports of over 700 billion USD, the newspaper pointed out.
For example, although Vietnam supplies the largest volume of coffee to the UK, the value accounts for just 10.9 percent of the UK’s total imports, ranking Vietnam fourth after France, Germany, and Brazil.
Dau tu cited Nguyen Canh Cuong, Trade Counsellor of Vietnam to the UK, as recommending that businesses further tap into the market since Vietnamese coffee will become more competitive thanks to the UKVFTA, under which most coffee products from the country will benefit from an import tariff of zero percent.
Meanwhile, the UK imported over 1.6 billion USD worth of fruit and vegetables in 2019, with only some 10 million USD coming from Vietnam.
Under the new trade pact, fruit and vegetables from Vietnam will receive a considerable advantage, as 94 percent of the 547 tariff lines on fruit, vegetables, and related products will be slashed to zero percent.
Cuong said that to expand their market share, fruit and vegetable exporters should sustainably meet the UK’s legal regulations on food safety, plant quarantine, and origin traceability.
Anh Dao Carrick, a trade specialist in the UK, suggested Vietnamese enterprises join hands with British distributors to develop their own brands and access the market, work to meet importers’ strict technical and quality requirements, and pay due regard to labelling issues./.
Legal documents for UKVFTA implementation to be released
The Ministry of Industry and Trade (MoIT) will finalise and issue a number of legal documents needed for the implementation of the UK-Vietnam Free Trade Agreement (UKVFTA) in 2021.
Under a plan approved recently by Minister Nguyen Hong Dien, the minisry will build particular market development programmes for Vietnamese products with strength and potential for export to the UK, while providing guidelines and support to enterprises so they clearly understand the methods of approach and make the best use of advantages brought about by the deal.
The ministry will continue increasing online trade promotions, which have been applied effectively for the realisation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), thus presenting more opportunities for Vietnamese firms to engage deeply in production and value chains involving UK businesses and expanding their links regionally and globally.
It will also speed up the building, amendment, and issuance of legal documents relating to the implementation of commitments within the UKVFTA with a suitable roadmap.
Training courses will be organised and publications released introducing and analysing the deal, while help will be given to businesses and organisations to participate in large-scale trade promotions in the UK and such promotions will be increased through e-commerce platforms. The origin tracing app will be maintained to serve exporters.
At the same time, the MoIT will deal with all matters arising during the implementation of the deal, according to the plan./.
Industrial developers winning big from rising rentals
Industrial properties continue to be a “bright spot” in Vietnam’s real estate sector, with mounting rental enquiries and increased capital market activity.
2021 is forecast to be another bumper year for the sub-sector, with Vietnam continuing to scoop up global manufacturing relocations, and industrial developers with large land banks are looking forward to an even brighter future, according to the latest report from real estate consultants Savills Vietnam.
The report stated that average occupancy rates have increased significantly since 2018. In the north, average occupancies last year were up to 90 percent in Hanoi, 95 percent in Bac Ninh, 89 percent in Hung Yen, and 73 percent in Hai Phong. The rate in Ho Chi Minh City was 88 percent, Binh Duong 99 percent, Dong Nai 94 percent, Long An 84 percent, and Ba Ria-Vung Tau 79 percent.
Vietnam now has about 260 operational IPs and 75 others under construction. The national occupancy rate averages over 70 percent.
The sudden increase in rental enquires for land, ready-built factories, and warehousing has been accompanied by price escalations in IPs near major cities. In the north, prices in Hanoi of 129 USD per sq m were up 13.1 percent year-on-year, of 95 USD in Bac Ninh were up 9.2 percent, of 83 USD in Hung Yen were up 6.4 percent, and of 96 USD in Hai Phong were up 3.2 percent.
In 2020, HCM City saw rental prices of 147 USD per sq m, while in other southern industrial areas, the price in Binh Duong of 107 USD per sq m was up 4.9 percent year-on-year, of 98 USD in Dong Nai was up 6.5 percent, and of 65 USD in Ba Ria-Vung Tau was up 18.1 percent.
Rising demand for industrial properties gave a major push to overall performance by developers. The Kinh Bac City Development Holding Corp (KBC) reported revenue in excess of 2 trillion VND (87 million USD) in the first quarter of 2021, almost quadrupling the figure in the same period last year. Of this, over 1.9 trillion VND came from land rentals and property transfers, a three-fold increase year-on-year.
The Sonadezi Corporation’s revenue rose 14 percent from January-March to over 1.26 trillion VND, with more than 365 billion VND from industrial real estate, Savills said, adding that other developers such as the Tan Tao Group (ITA), the Becamex Infrastructure Development JSC (IJC), and the Nam Tan Uyen JSC (NTC) also saw high growth in profit during the period.
Vietnam has been drawing up plans since last year for the heavy investment being channelled into developing infrastructure and industrial parks to attract more companies in supply chains. Various incentives, including corporate tax exemptions, have been adopted to acquire a competitive advantage over rivals in the region./.
Ben Tre to outlay nearly 28.5 trillion VND on transport infrastructure, logistics
The Mekong Delta province of Ben Tre has earmarked over 28.46 trillion VND (1.24 billion USD) for the development of local infrastructure and logistics services in the 2021-2025 period.
The sum will be poured into 89 projects, including upgrades to National Highways 57 and 57B and the North-South Expressway sections serving the local Phu Thuan Industrial Park and Phong Nam industrial cluster.
In the subsequent period of 2026-2030, more than 29.91 trillion VND will be invested in 41 transport and logistics projects in the province, including those involving the completion of a coastal road and the HCM City-Tien Giang-Ben Tre-Tra Vinh Expressway.
Local authorities are also calling for more than 1.47 trillion VND in business investment to develop ports at local industrial parks and clusters.
In 2026-2030, it will channel money into in a new deep-water port in Binh Dai district and continue upgrading and expanding existing ports.
According to the Chairman of the provincial People’s Committee Tran Ngoc Tam to realise these goals, Ben Tre will deploy a raft of solutions on institutions, capital, land, human resources, and communications.
The province’s funding for such development in the 2016-2020 period totalled 82.9 trillion VND./.
Infrastructure boosts development of Hai Phong
Improved transport and tourism infrastructure has boosted the socio-economic development of Hai Phong city over the past five years.
According to Chairman of the municipal People’s Committee Nguyen Van Tung, in 2021-2030, the city plans to build more than 100 bridges with a total investment of some 83 trillion VND (3.6 billion USD).
In 2015-2020, Hai Phong built 45 bridges, including the Tan Vu-Lach Huyen bridge – one of the longest sea bridges in Southeast Asia with a length of about 16km.
The bridge not only shortens the travel time from Hai Phong to Cat Ba island but also serves as a trade connection between the city and other countries through Lach Huyen port.
Another bridge that has connected traffic between Hai Phong’s inner city and Thuy Nguyen district, as well as a tourist highlight of the port city, is Hoang Van Thu bridge belonging to the technical infrastructure project in the new urban area of northern Cam river.
This bridge is known as the most beautiful bridge in Hai Phong.
The Hoang Van Thu bridge’s operation is one of the steps contributing to the completion of the new city centre planning.
In addition to the outstanding development of its road transport system, Hai Phong has also strengths in terms of its seaports.
Lach Huyen deep-water seaport was put into operation in 2019 and became the first port in the northern region to receive large tonnage ships of 12,000TEU and 132,000 DTW transporting goods directly to Europe and the Americas instead of transiting via foreign ports as before.
Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said: “With the advantage of being the main gateway to the sea of the whole northern region, Hai Phong has a strategic location playing a vital role in the development of the northern key economic regions.”
“In particular, Hai Phong holds a key position in the ‘Two Corridors – One Economic Belt’ Co-operation between Vietnam and China as well as is an area with strategic relationships with major growth poles in East Asia and Southeast Asia,” Loc added.
The city’s economic indicators last year and the first four months this year, increased by 1.5 to 2 times compared to other localities nationwide despite the complex developments of the COVID-19 pandemic.
Minister of Industry and Commerce Nguyen Hong Dien said: “Hai Phong is currently a ‘fertile land’ for both domestic and foreign investors”.
A representative of the Hai Phong Economic Zone Management Board said that as of April this year, the city has 770 projects with a total investment capital of more than 20.669 billion USD.
From the beginning of this year, the city saw 12 new projects registered with a total investment capital of 87.81 million USD and 20 projects which increased their capital by a total of 914.55 million USD.
The projects are mainly in the processing and manufacturing industries.
In 2021-2025, the city plans to establish 15 new industrial parks with an area of more than 6,400 hectares.
In addition to attracting investment, the development of transport infrastructure has helped make tourism a key economic sector of the port city.
According to Vice Chairman of the city People’s Committee Le Khac Nam, before 2012, Hai Phong’s tourism industry always failed to meet its targets but from 2013, the number of tourists coming to the city has increased year by year, especially in 2016-2021, when the number of tourists increased by an average of 20 percent per year.
“In 2021-2025, Hai Phong identified tourism as one of the three pillars of the city’s economic development,” said Nam.
“To develop the industry, the city focused on infrastructure to attract big investors in this field,” he said.
By the year 2025, there will be six more 5-star hotels put into operation, raising the number of 5-star hotels to 10.
Cat Ba island, coastal Do Son district and Vu Yen island are three key tourist destinations of the city, he added./.
Ben Tre’s shrimp sector targets production value of 1 billion USD by 2025
The production value of the shrimp industry in the Mekong Delta province of Ben Tre is to surge by an average of 41.1 percent each year to 2025 and reach 1 billion USD.
According to a plan to develop the sector, issued recently by the provincial People’s Committee, the locality will develop 4,000 ha of brackish water shrimp aquaculture area applying high technology by 2025, to promote the sustainable development of the fisheries economy in particular and the coastal province’s socio-economic development in general.
Chairman of the provincial People’s Committee Tran Ngoc Tam said Ben Tre aims to modernise its industrialisation-oriented marine shrimp farming sector and turn it into a large commodity production sector with high levels of competitiveness, productivity, and quality, thus creating breakthroughs in the stable and sustainable development of the fisheries economy and, most importantly, contributing to the province’s GDP growth.
To that end, local authorities have implemented solutions such as re-organising production, improving the quality of young marine shrimp, prompting the research and application of science and technology in production, developing infrastructure, managing the environment, and developing shrimp processing activities.
Attention will be paid to developing concentrated and large raw material production areas and expanding effective aquaculture models to help local farmers improve their earnings.
According to the Deputy Director of the provincial Department of Agriculture and Rural Development Nguyen Van Buoi, Ben Tre currently has nearly 1,700 ha of brackish water aquaculture areas applying high technology, with an annual average yield of 36 tonnes per ha and profit of 2.1-2.4 billion VND (91,400-104,560 USD) per ha per year.
Brackish water shrimp farming has been developing strongly in Ben Tre, especially intensive and semi-intensive shrimp cultivation.
According to the department, as of 2020, the locality had exploited 45,747 ha of aquaculture area out of 50,000 ha of potential aquaculture area, including 36,000 ha of intensive and semi-intensive marine shrimp farming areas, with total production reaching some 70,000 tonnes.
Infrastructure in the province’s aquaculture areas has been gradually improved, especially road and irrigation networks, basically meeting current demand./.
Hanoi to prepare housing development programme for 2021-2030
The Hanoi People’s Committee has issued a decision approving the outline for a task of devising the capital’s housing development programme for 2021-2030, with vision towards 2040.
The programme aims at realising the Resolution of the Hanoi Party Organisation’s 17th Congress for the 2020-2025 tenure and identifying new criteria for the work in line with the local master plan for socio-economic growth to 2030 approved by the Prime Minister.
Accordingly, the city will conduct surveys and assessments regarding the current situation of commercial housing, social housing, resettlement housing, official residence and private housing in urban and rural areas. It will set goals for housing development and make forecasts on demand for housing among social welfare beneficiaries.
The programme will identify local demand for houses and land areas to build different types of housing in the city and links between housing and urban development, among other things.
Hanoi hopes to build a system of suitable solutions to ensure sustainable, modern, and climate change-adaptive housing development, as a basis for the management and implementation of related projects, investment attraction, and the healthy growth of the real estate sector./.
HCM City seeks cashless payment for company transactions
Businesses would be required to use non-cash payments for trading transactions of any value under a proposal submitted to the Government by the Ho Chi Minh City Tax Department.
Currently, trading transactions worth more than 20 million VND (868 USD) have to be made by cashless payment in order to enjoy tax refunds and corporate income tax reductions as regulated by the law on value-added tax.
The proposal is aimed at improving tax governance and strengthening monitoring of expenditures and turnover of businesses and traders, according to an official at the tax department.
The official said that payments using non-cash methods have become increasingly popular in Vietnam, and the Government last year issued a resolution to boost cashless payments in the country.
The department also proposed that the Government create regulations for e-commerce or digital-based business activities conducted by foreign companies like Google, Facebook, YouTube, Agoda, Booking.com and Airbnb.
These companies would be required to provide tax agencies information on individuals and businesses in Vietnam involved in their business activities.
The department also proposed that the Government set regulations concerning investigation of tax fraud and related crimes.
Associate professor Dinh Trong Thinh of the Academy of Finance said it was vital to speed up cashless payments to reduce the risks involved in cash payments and to increase financial transparency.
However, limited payment infrastructure was one of the barriers hindering electronic payment adoption, he said.
Regulations on non-cash payments for all transactions should not be required, he said. There should be a detailed roadmap to implement regulations on non-cash transactions to make it feasible, especially for small enterprises, he added./.
Tra Vinh shrimp output up over 6,000 tonnes
Total salt and brackish water aquaculture output in the Mekong Delta province of Tra Vinh reached 28,000 tonnes in the first five months of 2021, with shrimp output of over 20,000 tonnes, an increase of 6,000 tonnes year-on-year.
According to General Director of the Tra Vinh Department of Aquaculture Nguyen Van Quoc, total output surged thanks to favourable weather conditions and expanded breeding areas, while shrimp farmers strictly complied with farming schedules, exerted better control over breeding stocks, and improved their techniques.
Shrimp prices increased 10,000 to 15,000 VND per kg in April, allowing farmers to post a handsome profit. However, as the pandemic has again broken out, the market for shrimp has contracted, causing prices to drop. In order to cope, farmers have decided to maintain production and wait for shrimp exports to pick up.
Tra Vinh is urging local aquaculture processing businesses to resume production and seek new markets for exports to ensure sales./.
Wood exports hit record high despite COVID-19 in five months
Exports of wood and timber products surged 42 percent year-on-year to reach a record high of over 6.42 billion USD in the first five months of 2021 despite global supply chain disruptions caused by the COVID-19 pandemic, according to customs data.
Of the figure, 4.96 billion USD came from wood furniture, up nearly 57 percent against the same period last year.
Domestic producers have adapted well to the “new normal” by stepping up digital trade meetings with foreign buyers in order to boost sales, said Deputy Minister of Agriculture and Rural Development Ha Cong Tuan.
There is plenty of room for the global wood and furniture market to grow, said Bui Chinh Nghia, vice director of the Vietnam Forestry Administration under the Ministry of Agriculture and Rural Development.
Vietnam now makes up 9 percent of the global market, he noted, stressing that with the current growth rate, Vietnam will soon rise to the fourth or even third places among the world’ largest exporters of wood products from the current fifth place.
According to several foreign importers, COVID-19-induced social distancing orders and travel restrictions have forced people in many countries to work from home, triggering increasing demand for home furniture. Vietnamese furniture has been more and more favoured by importers as producers have strictly complied with rules of origin.
Insiders, however, warned that rising orders may cause troubles for Vietnamese producers as disruptions in supply of material wood remain./.
Veggie, fruit exports reach 1.77 billion USD during Jan-May
Vietnam’s export turnover of fruits and vegetables hit 1.77 billion USD in the first five months of 2021, a year-on-year increase of 18 percent, according to the Ministry of Agriculture and Rural Development.
In May alone, fruit and vegetable exports raked in 400 million USD, a surge of 48.3 percent compared to the same period last year.
China currently remained the top importer of fruits and vegetables from Vietnam. These products are also witnessing positive signs in other major markets such as the US, Japan, Russia, and Australia.
To boost the export of fruits and vegetables, the ministry assigned the Director of the Plant Protection Department to negotiate to open 19 markets for 20 types of products, assist in handling, negotiating and removing technical difficulties arising in the export process, coordinate with localities to build codes for growing areas and export establishments to ensure traceability and meet requirements of major importers./.
Gov’t responds swiftly to COVID-19 economic impacts: ADB official
The Vietnamese Government has responded swiftly to the COVID-19 economic impacts, which was supported by strong fundamentals, thus ensuring the economy’s resilience, said Asian Development Bank (ADB) Country Director for Vietnam Andrew Jeffries.
Jeffries made that statement in a recent interview granted to the Vietnam Government Portal (VGP) regarding Vietnam’s macro-economic prospects amidst the COVID-19 pandemic outbreaks.
Jeffries highlighted that Vietnam’s economic growth is expected to growth by 6.7 percent in 2021 and 7.0 percent in 2022 – strong and steady growth made possible by Vietnam’s success in containing the COVID-19 pandemic.
Inflation will be under control, despite an expected rise to 3.8 percent this year and 4.0 percent in 2022 due to rising international oil prices on the global economic recovery and increased domestic consumption, he added.
The ADB Country Director referred to the drivers of this growth, including industry, driven by export-oriented manufacturing, increased investment (private and public investment) given accommodative fiscal and monetary measures, and expanding trade, thanks to the faster-than-expected recoveries in China, the US, and Vietnam’s participation in 15 major free trade agreements involving all advanced economies.
Regarding the Vietnamese Government’s support packages for enterprises and people affected by COVID-19, he asserted that the Government has responded swiftly to the COVID-19 economic impacts, which was supported by strong fundamentals, thus ensuring the economy’s resilience.
The accommodative monetary policy through key interest rate cuts together with the implementation of credit package and fiscal support measures have provided breathing space to affected businesses, including small- and medium-sized enterprises (SMEs).
However, the credit support has been mainly arranged and provided by commercial banks, said Jeffries, adding that the bulk of the increases of liabilities have been shouldered by the commercial banks, but they still have to apply required lending standards, especially when the balance sheets of affected firms are being deteriorated.
Without risk sharing by the Government, banks may have been reluctant to provide more loans to affected firms, he emphasised.
Mentioning Vietnam’s measures to support businesses and people to overcome negative impacts of COVID-19, Jeffries said that the State Bank of Vietnam has instructed the banks to extend the implementation of credit support measures to the end of 2021.
The Government also allowed extending the deferral of taxes and landing rental in 2021 to further reduce the shock’s impacts and support economic recovery, he said, stressing that the long-term economic recovery is being fleshed out by the Government.
However, he supposed that the support was mainly in the form of deferral of taxes and land rental, and size of the support remained modest, as compared with other countries with fiscal support of up to 15 percent – 20 percent of the GDP, like in France, the UK or Singapore.
Among others, the emerging long-term economic priorities after the COVID-19 are the imperatives to build an economy which is resilient to internal and external shocks which have become more frequent in recent decades; broad-based that can help reduce disruptive impacts from external crisis; and digitally able to strengthen economic competitiveness and efficiency, the ADB Country Director proposed.
An ADB study suggests that there is a huge impact of COVID-19 on income and poverty of Vietnamese households. For example, the impact of the pandemic will reduce household per-capita income on average by 9.8 percent, and the poorest income group will suffer a 10.2 percent income drop, while the poverty rate of households in the poorest income quintile will rise by 40 percent.
There will be an additional 1.7 million poor people due to the pandemic, and those living in rural, remote areas and ethnic minority people will be more severely affected.
Cash transfer in Resolution No. 42/NQ-CP dated April 09, 2020 assistance for people affected by the COVID-19 pandemic should be a short-term solution to over income shock, said Jeffries.
A more sustainable long-term strategy should be to help the poor and vulnerable to diversify their livelihoods through, for example, short-term vocational training and improved access to microfinance for establishing new businesses, he suggested.
In short-term, Jeffries indicated that the major downside risks are the pandemic re-emerging from new coronavirus variants and delays in the Government’s vaccination plan.
A faltering global COVID-19 vaccine rollout could have an immediate impact on Vietnam being able to return to its strong pre-pandemic growth path given the country’s reliance on external demand.
The fast revival of domestic private investment may also heighten the risk of asset bubbles if credit is not channeled to productive sectors.
Meanwhile, in the medium and long-term, main challenges facing Vietnam include climate change impact, unfinished reforms (financial sector reform and SOE reform), and low labor productivity, he underlined.
The ADB Country Director recommended Vietnam to reset the growth momentum to achieve green recovery in the medium-term and green growth in the long-term, given the daunting impact of climate change on Vietnam in the decades to come.
Strengthening institutional efficiency is the key to unlock the private sector’s potential to support growth, he said.
Accomplishing unfinished business reforms (financial sector reform, and SOE reform), improving the quality, transparency, and enforcement of laws and regulations, and simplifying businesses conditions are all critical to improve institutional efficiency for private sector development, Jeffries advised.
He stressed the significance of promoting digital transformation to improve productivity by investing on education, technology, and innovation./.
VNR faces difficulty due to drop in passengers
Vietnam Railway Corporation (VNR) announced that its revenue in the first five months of 2021 decreased strongly to only 51.4 percent of the figure of the same period last year, due to the impact of the COVID-19 pandemic.
The railway served about 1.147 million passengers, a reduction of 35.4 percent compared to the same period last year, bringing in over 400 billion VND (17.4 million USD) in revenue.
In May, which saw the peak of COVID-19 outbreaks in the latest resurgence wave, the number of passengers was only by 132,300, equal to 48.4 percent of the corresponding figure last year. As a result, revenue from passenger transport stood at 44.7 billion VND (1.9 USD), equivalent to 55.4 percent of the figure of the same period last year.
According to VNR, a decline in revenue and demand for transportation and travel is attributable to travel restrictions prompted by outbreaks of COVID-19 in many localities across the country.
The VNR curtailed most of its operations in May. It is currently operating only one train on the Hanoi-Ho Chi Minh City route.
Also due to the COVID-19 resurgency, more than 11,300 tickets were returned on the occasion of the Reunification Day (April 30) and May Day (May 1) holidays, worth about 4 billion VND (174,900 USD)./.
Ministry seeks to boost consumption of farm produce
Policymakers and experts recently gathered in a meeting to seek solutions to deal with difficulties in transporting farm produce and goods to border gates and between provinces amid the COVID-19 pandemic.
Container trucks go through Kim Thanh International Road Border Gate No.2 in Lao Cai Province.
At the meeting, Deputy Minister of Agriculture and Rural Development (MARD) Tran Thanh Nam said his ministry had worked with the Ministry of Industry and Trade and the Ministry of Health to create a mechanism where the latter would issues certificates for farm produce to be transported faster.
Ministries and agencies needed to conduct procedures in good time to help farmers and businesses know how and where they can get said certificates for their farm produce, he noted.
The deputy minister said businesses only needed the health sector to issue a certificate of eligibility for agro products circulation. Once traders show the certificates, traffic police would let them go to ensure farm produce is shipped quickly.
Nam also asked the Ministry of Foreign Affairs to work with Chinese partners to temporarily allow the use of “vaccine passports” for drivers specialised in driving agricultural products and goods between the two countries to reduce costs for businesses.
Hoang Anh Tuan, Deputy Director of the Domestic Market Department under the Ministry of Industry and Trade, requested traders to follow measures on pandemic prevention and control to ensure circulation of goods.
The Ministry of Industry and Trade has issued documents to instruct businesses to work together to ensure supply and demand with the use of modern trade channels and e-commerce to promote the consumption of farm produce.
Nguyen Quoc Toan, Director of the Agro Processing and Market Development Authority under the Ministry of Agriculture and Rural Development, said difficulties in transporting farm products between provinces were due to checkpoints for controlling the pandemic. Despite having a safety compliance certificate for COVID-19, all drivers and goods were inspected again, causing transport congestion and harming businesses.
Toan said he wanted ministries to review and conduct suitable measures on transport management to ensure pandemic prevention and business operations.
Vietnamese Ambassador to Spain join activities in Barcelona
Vietnamese Ambassador to Spain Hoang Xuan Hai led a delegation of the Embassy of Vietnam to join a host of activities in Barcelona city on June 5-8.
The ambassador attended a ceremony marking the 20th founding anniversary of Casa Asia, which was held under the chair of the Spanish Minister of Foreign Affairs and the Mayor of Barcelona.
Casa Asia, established in 2001, has hosted various exchange events between Spain and Asian nations, including Vietnam.
Hai and other ASEAN diplomats also joined a working session with leaders of the Barcelona Chamber of Commerce and Industry.
He informed the delegates of Vietnam’s socio-economic development in the recent past and affirmed the Government’s aspiration in improving business climate, in a bid to attract foreign investors.
The ambassador believed that the EU-Vietnam Free Trade Agreement (EVFTA), which took effect in August 2020, and the EU-Vietnam Investment Protection Agreement (EVIPA), will offer new chances for businesses of Spain and Vietnam.
He hoped for a close coordination and cooperation between the Vietnamese Embassy and the Spanish city’s Chamber of Commerce and Industry in organising events to promote Vietnam’s economy, trade, investment and tourism in Barcelona in the coming time.
The hosts spoke highly of Vietnam’s accomplishments, voicing a hope that the Vietnamese Government will further simplify administrative procedures and create a more optimal climate for investors.
Hai also attended a session with Vietnam’s Honorary Consul in Barcelona and overseas Vietnamese, during which he hoped that the Honorary Consul would serve as a bridge linking Vietnam and the Spanish city, and continue to support the Vietnamese community.
He also briefed the participants on the successful organisation of the 13th National Congress of the Communist Party of Vietnam, the elections of deputies to the 15th National Assembly and all-level People’s Councils for the 2021-2026 tenure; along with socio-economic development in the first five months and achievements and efforts made in COVID-19 prevention and control./.
Dong Nai to build more roads linked to Long Thanh Airport
The People’s Committee of Dong Nai province has approved investment plans for four local roads, most of which are directly connected to Long Thanh International Airport – a driving force for investment and economic development in the southern region.
Investment in those projects is expected to hit more than 7 trillion VND (304.3 million USD), excluding site clearance costs.
The provincial People’s Committee has assigned relevant units to prepare pre-feasibility studies, propose investment plans, review demand for land use and estimate compensation and clearance costs.
Capital for the road construction will be taken from the budget and the land funds along the two sides of the roads. The province has requested relevant districts coordinate with units involved to exploit the land funds and put potential land lots up for bidding.
Construction of the four roads will be conducted during 2021-2025.
Chairman of the provincial People’s Committee Cao Tien Dung said demand for transport connectivity in Dong Nai is a pressing matter as the airport is now under construction and is expected to be put into operation in 2025.
Roads directly or indirectly linked to Long Thanh will play an important role in the province’s development, as they can help bring into full play opportunities brought about by the airport.
The airport will be built in three phases over three decades, and is expected to become the country’s largest.
In the first phase, one runway with a length of 4,000 metres, taxiways, an apron, and a passenger terminal with other auxiliary works sprawling 373,000 sq.m will be built to serve 25 million passengers and handle 1.2 million tonnes of cargo each year.
The airport is designed to have four runways, four passenger terminals, and other auxiliary facilities to ensure a capacity of 100 million passengers and 5 million tonnes of cargo a year by 2040.
Covering a total area of more than 5,580ha, the airport will straddle six communes in Long Thanh district. It is expected to cost 336.63 trillion VND (14.5 billion USD), with the first phase requiring over 109 trillion VND./.
Agency banking model develops in rural, remote locations
The State Bank of Vietnam (SBV) is amending regulations related to the operation of agency banking to improve access to the banking system.
Agency banking is a type of branchless banking that allows traditional banks to extend their network of branches and services through authorised agents.
The model arrived in the country in recent years, especially since the Government issued the national comprehensive financial strategy in early 2020.
According to the SBV’s research, Brazil, Kenya, Mexico and India have all seen agency banking become an important tool to expand access to basic financial services and promote financial inclusion. Five years since Brazil launched the agents, the network has served 12.4 million new bank accounts.
The state bank said in Southeast Asia, Malaysia’s agency banking model uses the nationwide telecommunications network to expand the network of traditional banking services to customers in rural and remote areas at a low cost. The model also helps Malaysian banks save more than 80 percent of costs for setting up service points and 60 percent of transaction costs compared to the traditional bank branch network.
According to the latest Comprehensive Financial Report of World Bank released in 2018, 69 percent of adults in Vietnam were unbanked and relied on cash while the rate in the world was 31.5 percent at the same time.
Meanwhile, the national strategy of financial services sets the goal to have at least 50 percent of communes accessing financial service points and 80 percent of adults having transaction accounts at banks or other institutions by 2025.
Experts reckon the low rate of bank accessing in Vietnam is a big chance to develop banking agents across the country.
By the end of 2017, the SBV piloted agency banking in rural areas with three models.
MB Bank work with Viettel services, PGBank with Petrolimex sales points and Vietcombank with M_service Company, reaching 32,185 sales points.
More than 11 million transactions with a value of more than 81 trillion VND (3.49 billion USD) were recorded among some 6 million customers.
Outside of the SBV pilot, LienVietPostBank took advantage of post office locations to develop savings services, while Jens Lottner, CEO of Techcombank, shared the bank’s plan to work with Masan Group to take advantage of convenience stores to bring the bank’s financial products and services to a wider population.
Between 2020 and 2025, Agribank plans to set up a network of banking agencies and work with postal organisations, public administrations and microfinance projects to deploy low-cost, convenient, safe products for individual payment transactions.
Seeing the potential of the model, a SBV representative said there must be a legal corridor.
The SBV said completing the legal framework on agents was proposed in the national comprehensive financial strategy) to improve the level of access to financial services for people.
The central bank said it was amending other regulations related to the operation of the model, especially those on anti-money laundering/terrorist financing, regulations on electronic money and know-your-customer (KYC) processes.
CEO of TPBank Nguyen Hung said such regulations would need to go into detail to guide the establishment of agencies to provide banking services, such as regulations on approved and prohibited services, criteria to become authorised agencies and the form of operation.
Hung mentioned two main forms of authorisation used in Brazil known as full authorisation and credit authorisation, adding a fully authorised agent will provide a full range of services from receiving and forwarding application documents for opening a payment account, savings account, deposit/withdrawal transaction, transfer, payment as well as loan applications and opening credit cards. Meanwhile, a credit agency will only provide services on payment, borrowing and credit.
Taking another example of Bangladesh, Hung said authorised dealers can provide cash withdrawal/deposit services, support for small loan disbursement and debt collection/instalment, bill payment assistance, fund transfer assistance, balance queries, collect and forward applications for opening accounts, opening savings, loans and credit cards. However, they are not allowed to approve the decision to open card/loan accounts, conduct financial appraisals and conduct foreign currency transactions.
According to another financial expert, it is necessary to clarify the quality and capacity of organisations authorised to act as banking agents.
The agents must ensure that they meet all the standards of financial capacity, reputation, ability to meet commitments under adverse conditions, ability to provide financial services based on technology and capacity of internal control, security assurance and anti-money laundering./.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes