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Vietnam forecast to stay in top 10 remittance recipients in 2020

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In the East Asian and Pacific region, Vietnam ranked third after China and the Philippines.

Vietnam is forecast to remain the ninth largest remittance recipient globally with an inflow of US$15.6 billion in 2020, slightly declining from US$17 billion received in 2019 and accounting for 5.8% of its GDP, according to the World Bank’s latest data.

This was a fourth consecutive year that Vietnam remains in the top 10 ranking in terms of inbound remittance, with the figure being US$13.8 billion in 2017 and US$15.9 billion in 2018.

 Top Remittance Recipients in 2020. Source: World Bank. 

India claimed the top spot in the top 10 with an estimated of US$76 billion, followed by China with US$60 billion and Mexico with US$41 billion.

In the East Asian and Pacific region, in 2020, Vietnam is set to rank third after China and the Philippines (US$33.3 billion) – the world’s fourth largest recipient.

 Top remittance recipients in the East Asian and Pacific region, 2020.

According to the World Bank, remittance flows to low and middle-income countries (LMICs) are projected to fall by 7%, to US$508 billion in 2020, followed by a further decline of 7.5%, to US$470 billion in 2021.

As the Covid-19 pandemic and economic crisis continues to spread, the amount of money migrant workers send home is projected to decline 14% by 2021 compared to the pre Covid-19 levels in 2019.

The foremost factors driving the decline in remittances include weak economic growth and employment levels in migrant-hosting countries, weak oil prices; and depreciation of the currencies of remittance-source countries against the US dollar.

“The impact of Covid-19 is pervasive when viewed through a migration lens as it affects migrants and their families who rely on remittances,” said Mamta Murthi, Vice President for Human Development and Chair of the Migration Steering Group of the World Bank. “The World Bank will continue working with partners and countries to keep the remittance lifeline flowing, and to help sustain human capital development.”

The declines in 2020 and 2021 will affect all regions, with the steepest drop expected in Europe and Central Asia (by 16% and 8%, respectively), followed by East Asia and the Pacific (11% and 4%), the Middle East and North Africa (8% and 8%), Sub-Saharan Africa (9% and 6%), South Asia (4%and 11%), and Latin America and the Caribbean (0.2% and 8%).

 Projected Growth of Remittances by Region, 2020.

Importance of remittances to amplify in 2020

The importance of remittances as a source of external financing for LMICs is expected to amplify in 2020, even with the expected decline. Remittance flows to LMICs touched a record high of US$548 billion in 2019, larger than foreign direct investment flows (US$534 billion) and overseas development assistance (about US$166 billion). The gap between remittance flows and FDI is expected to widen further as FDI is expected to decline more sharply.

Migrants are suffering greater health risks and unemployment during this crisis,” said Dilip Ratha, lead author of the Brief and head of KNOMAD. “The underlying fundamentals driving remittances are weak and this is not the time to take our eyes off the downside risks to the remittance lifelines.”

This year, for the first time in recent history, the stock of international migrants is likely to decline as new migration has slowed and return migration has increased. Return migration has been reported in all parts of the world following the lifting of national lockdowns which left many migrant workers stranded in host countries. Rising unemployment in the face of tighter visa restrictions on migrants and refugees is likely to result in a further increase in return migration.

“Beyond humanitarian considerations, there is a strong case to support migrants who work with host communities on the frontline in hospitals, labs, farms, and factories,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

According to the World Bank’s Remittance Prices Worldwide Database, the global average cost of sending US$200 was 6.8% in the third quarter of 2020, largely unchanged since the first quarter of 2019. This is more than double the Sustainable Development Goal target of 3% by 2030. 

Despite being the cheapest, money transfer and mobile operators face increasing hurdles as banks close their accounts to reduce risk of non-compliance with anti-money laundering (AML) and combating terrorism financing (CFT) standards, stated the World Bank.

To keep these channels open, especially for lower-income migrants, AML/CFT rules could be temporarily simplified for small remittances. Further, strengthening mobile money regulations and identity systems will improve transparency of transactions. Facilitating digital remittances would require improving access to bank accounts for mobile remittance service providers as well as senders and recipients of remittances. Hanoitimes

Ngoc Thuy

Source: https://vietnamnet.vn/en/business/vietnam-forecast-to-stay-in-top-10-remittance-recipients-in-2020-685053.html

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ASEAN customs transit system launched

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The online ASEAN Customs Transit System (ACTS) was officially launched on November 30 to accelerate trade in goods by road within Southeast Asia.

ASEAN customs transit system launched hinh anh 1

The Asean Customs Transit System was officially launched at a virtual event on Nov 30, 2020. (Photo: ACTS)

In 2017, ASEAN economic ministers set the twin goals of reducing trade transaction costs by 10 percent by 2020 and doubling intra-bloctrade between 2017 and 2025. ACTS has been developed to realise this goal to allow businesses to lodge e-transit declarations directly to ASEAN customs authorities and track the movement of their goods from loading to delivery.

Being developed with the support of the European Union, ACTS is simplifying the movement of goods across the region, making it more efficient and cost-effective.

Following trials in Cambodia, Laos, Malaysia, Singapore, Thailand, and Vietnam, the system has now been formally launched.

The first successful ACTS transit movement occurred on October 23-24 when a truck travelled from Singapore via Malaysia to Thailand.

The system will soon be available in Myanmar, and, depending on business needs, may later be expanded to Brunei, Indonesia and the Philippines.

Now transporters can make a single customs transit declaration that covers the transport of goods across multiple countries, without the need to make repeated customs declarations or change vehicles at each border.

Special arrangements allow reliable traders to load their goods at their own premises in the country of departure, and to deliver the goods to their own premises at other places.

Faster customs clearance at borders helps accelerate transit and reduce the time and expenses needed for carrying out regional trade in goods.

Dato Lim Jock Hoi, Secretary-General of ASEAN, said: “The implementation of the ASEAN Customs Transit System plays a vital role in facilitating seamless movement of goods in the region. I believe the system will be an excellent tool in enhancing ASEAN’s trade and production networks as well as establishing a more unified market for its firms and consumers.

“ACTS could also support post-COVID recovery to accelerate the transit movement of medical supplies, vaccines and personal protective equipment within the member states.”

The system is managed by a permanent ACTS central management team based in the ASEAN Secretariat in Jakarta, Indonesia, with support from the EU-funded ARISE Plus programme.

“ACTS is a remarkable achievement that is testament to the strong, dynamic and long-standing partnership between ASEAN and the European Union,” Koen Doens, director general for international cooperation and development at the European Commission, said.

“The EU is proud to have joined ASEAN to make ACTS a reality, providing European technical expertise and 10 million euros since 2012.”
ARISE Plus has provided extensive ACTS training for stakeholders in the public and private sectors, including customs authorities, government transport agencies, freight forwarders, transporters, banks, and insurance companies./.VNA

Source: https://vietnamnet.vn/en/business/asean-customs-transit-system-launched-694172.html

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Freight and logistics stocks on the rise despite pandemic

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Quy Nhơn Port in south central province of Bình Định. — VNA Photo

HÀ NỘI — Freight and logistics stocks have seen major gains since the beginning of 2020 even as the COVID-19 pandemic has wreaked havoc on the economy. 

According to the General Statistics Office, the country’s exports topped US$254 billion during the first 11 months of the year, making for an increase of 5.3 per cent over the previous year, while imports were estimated at $234.5 billion. 

Increased trade activities coupled with a number of international trade deals which were recently signed or came into effects such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) have significantly boosted investors’ confidence in logistics stocks.

A number of stocks such as VSC, GMD, DVP, DXP, SFI and HAH have seen double-digit growth in recent months and some of them set all-time high records on the trading floor. 

Experts, however, pointed out the recent rise in stock value did not necessarily come from better business performance but rather investors’ optimism in the sector’s future. For example, despite the increased trading value, Gemadept has reported a 32 per cent drop in profit in the first three quarters, Tân Cảng Logistic (TCL) a 15 per cent drop and Hải An Logistics a 9 per cent drop. 

A container shortage, typically experienced by logistics firms during the end of the year when import/export activities are at the highest level, especially for an export-oriented economy such as Việt Nam, contributed to an increase in logistics costs.

A report from the Vietnam Logistics Business Association (VLA) showed more than 40 per cent of firms had difficulty finding containers for their cargo with up to 17 per cent unable to rent them. This has created a large backlog of cargo at port and storage facilities across the country, which generated additional revenue for logistics firms. 

Meanwhile, freight charges have skyrocketed in recent months. According to Freightos, a Hong Kong-based shipping company, the freight charges for a 40-feet container from China to the US west coast has almost tripled to near $4,000. 

Investors also seem to be betting on an increase in port charges as Việt Nam’s current prices were comparatively low in the region. A statement from the VLA said the sector has set an objective to bring charges to 60-70 per cent of the region’s price level by 2025, which they have planned to start bringing up at the beginning of next year. —

Source: https://vietnamnews.vn/economy/816951/freight-and-logistics-stocks-on-the-rise-despite-pandemic.html

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Nearly a third of local sugar plants shut down

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A farmer harvests sugarcane. Nearly a third of domestic sugar plants have shut down – PHOTO: THANH HOA

HANOI – Only 29 of 40 local sugar plants remained operational in the 2019-2020 season due to a high volume of sugar imports and the deployment of the ASEAN Trade in Goods Agreement (ATIGA) with lower tax rates for sugar imports from ASEAN markets, according to the Vietnam Sugarcane and Sugar Association (VSSA).

The 2020-2021 season is forecast to be a hard time for the sugar sector, especially since the Covid-19 pandemic remains a big challenge. Four more sugar mills—Son Duong, Nong Cong, Van Phat and Pho Phong—are likely to stop their operations due to a shortage of input materials, resulting in their poor performance.

The local sugar sector has been hit for many years due to the smuggling of sugar, mainly from Thailand.

Meanwhile, other ASEAN countries, such as Thailand, the Philippines and Indonesia, despite commitments to the ATIGA, have still employed measures to protect their sugar firms.

Vietnam has fulfilled its commitments to the agreement since January 1 by setting no limits on the volume of sugar imports from ASEAN countries and applying a tax rate of 5% for sugar imports from these markets.

According to statistics from the General Department of Vietnam Customs, nearly 884,300 tons of sugar was imported into the country in the January-October period of this year, higher than the locally-produced volume of sugar. Of the total, sugar from Thailand accounted for 87.67%.

Due to a high volume of low-cost sugar imports, the prices of local sugar products have plunged, leading to low sugarcane prices. As a result, many farmers have incurred debts and stopped growing sugarcane.

In reality, the Ministry of Industry and Trade launched an anti-dumping and anti-subsidy investigation into sugar products that originate from Thailand in September. The ministry had earlier imposed anti-dumping measures on high-fructose corn syrup products originating from China and South Korea.

According to VSSA, Thailand has banned sugar imports, while Indonesia and the Philippines have allowed the import of a volume of sugar equivalent to the deficiency in volume.

In these three countries, sugarcane farmers are supported through direct and indirect aid and the profit sharing system to ensure they earn a stable income.

Specifically, the Thai Government annually provides at least US$1.3 billion to the sugar sector.

Therefore, Nguyen Van Loc, acting general secretary of VSSA, proposed Vietnam should apply trade remedies in line with the international law and rules of the World Trade Organization.

Source: https://english.thesaigontimes.vn/79609/nearly-a-third-of-local-sugar-plants-shut-down.html

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