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Vietnam’s economy sailing through COVID-19 storm



Vietnam has fulfilled a number of economic targets this year despite impacts of the COVID-19 pandemic, becoming one of the top 20 economies in the world in terms of international trade.

Vietnam’s economy sailing through COVID-19 storm hinh anh 1

A view of Ho Chi Minh City. 

The country’s GDP grew 2 percent, while its foreign trade value surpassed 660 billion USD, up 21 percent, with a trade surplus of about 2.1 billion USD. Notably, foreign direct investment (FDI) poured into the country hit over 29 billion USD, up nearly 500 million USD from last year.

These achievements are attributable to efforts by the entire political system, the business community and people, along with the Government’s flexible decisions and policies.

Vietnam has shifted its strategy from “zero COVID-19” to safely and flexibly adapting to and effectively controlling the pandemic, helping to maintain economic activities.

Such policies and strategies have consolidated public confidence in the Government, and encouraged them to join hands in pandemic containment and economic development.

The fourth wave of pandemic outbreaks, which began late April, has prompted prolonged social distancing in a number of cities and provinces which are industrial hubs and top contributors to the State budget like Ho Chi Minh City, Hanoi, Da Nang, Can Tho, Bac Ninh, Bac Giang, Binh Duong and Dong Nai, resulting in sluggish production, disrupted supply chains and a decrease in the purchasing power.

Up to 1.8 million labourers lost their jobs or part of their incomes in the third quarter of this year, up 700,000 from the previous quarter, and the country’s economy contracted 6.17 percent – the sharpest drop since Vietnam began calculating and announcing its quarterly GDP. As a result, in the first nine months of this year, the national GDP was up only 1.42 percent.

However, the country’s socio-economic development has bounced back since October, as informed by Prime Minister Pham Minh Chinh at the Country Strategy Dialogue on Vietnam 2021 held at the end of the month.

During the January-October period, newly-registered FDI into Vietnam rose 11.6 percent and export went up 16.6 percent year-on-year. The country’s consumer price index (CPI) in the 10 months inched up only 1.81 percent.

PM Chinh said difficulties facing Vietnam are temporary, stressing the country’s potential, advantages and new driving forces for long-term development and macro foundation, with stable, solid major economic balances.

For a firm macro foundation, the country has issued unprecedented incentives for people and businesses affected by COVID-19, and made timely adjustments to policies.

Each locality has also adopted their own ways in implementing policies and guidelines of the Government to achieve the dual goals of pandemic combat and economic development.

The northern province of Quang Ninh is an example, which has fought the pandemic early and from afar in line with resolutions of the National Assembly, and instructions of the Government.

As a result, Quang Ninh is among very few localities that have posted the highest growth rate nationwide, reaching double-digit growth.

With the timely, flexible policies, Vietnam is expected to see a GDP growth of over 2 percent this year, and the agricultural sector would expand 2.8 percent, continuing to be a pillar of the national economy.

Given the emergence of the Omicron variant that would greatly threaten the economy of Vietnam and the world, experts suggested that Vietnam should kick off its economic recovery programme early, and deal with limitations of the previous support packages in order to reach the economic growth target of 6-6.5 percent in 2022 as set by the legislature.

The NA is scheduled to convene an extraordinary meeting late December to discuss major matters, including those regarding fiscal and monetary policies mentioned in the economic recovery and development submitted by the Government.

ADB Country Director in Vietnam Andrew Jeffries said the recovery of Vietnam’s major partners, plus increased vaccination in the country would help to boost trade and facilitate economic reopening of the country.

Deputy Minister of Planning and Investment Tran Quoc Phuong pointed out the five groups of solutions in the economic recovery and development programme for the 2022-2023 period, covering the COVID-19 combat and medical work, social welfare, business support, public investment promotion and management, ensuring macro balances, and controlling inflation and risks.

Many experts shared the view that if the programme is rolled out well, the economy would expand by 1 – 1.5 percentage points.

Vietnam’s economy sailing through COVID-19 storm hinh anh 3

Source: VNA



Vietnam remains attractive destination to international investors: HSBC survey



Vietnam keeps being an attractive investment environment for global investors, with many Indian and Chinese enterprises saying they plan to expand their business in the Southeast Asian country in the next two years, according to an HSBC survey. 

The UK-based HSBC Holdings plc (HSBC), one of the largest banking and financial services institutions in the world, has recently released the results of a large survey of nearly 1,600 companies from six of the world’s largest economies all of which have operations in Southeast Asia.

The survey, ‘HSBC Navigator: Southeast Asia (SEA) in Focus,’ covered 1,596 companies from the U.S., the UK, China, France, Germany, and India.

Survey respondents were key decision-makers from companies already doing business in SEA or those considering doing so.

These international businesses have strong expectations for continued growth in SEA, including Vietnam, which “has been striding forward in recognition and application of the sustainability agenda.”

About 21 percent and 26 percent of Indian and Chinese firms operating or intending to operate in SEA, respectively, said they plan to expand their business in Vietnam in the next two years.

In respect of Vietnam’s advantages, three out of ten businesses pointed to a skilled workforce, while 27 percent cited competitive wages and proven economic resilience in response to the COVID-19 pandemic.

Forty-nine percent of the Indian companies surveyed said they were enthusiastic about Vietnam’s supportive government and regulatory environment, while the corresponding rates of the American and Chinese firms are 33 percent and 30 percent.

Encouraged by Vietnam’s regulatory environment, 36 percent of the American companies in the poll said that they were keen on opportunities to develop and test new products and solutions in the market.

Meanwhile, 39 percent of the Indian companies stated they were attracted by Vietnam’s infrastructure.

Notably, 49 percent of the firms polled, mostly from China, India, and the U.S., expressed their hope to make use of the EU – Vietnam Free Trade Agreement (EVFTA) to further promote their trade operations in the region.

Being attracted by the supply chain ease and social and political stability of Vietnam, a quarter of the German respondents selected both as positive features of the Vietnamese market.

“Vietnam has been striding forward in recognition and application of the sustainability agenda to become a regional leader in its progress toward achieving the 17 United Nations Sustainable Development Goals (SDG),” HSBC said in the survey.

Ranked 51st out of 162 countries by the SDG Index, Vietnam is thus rated as having greater success than all other Southeast Asian countries barring Thailand, according to the poll.

However, some 31 percent of the respondent enterprises operating in Vietnam worried that new regulations and rules on carbon reduction could impact them, while 36 percent flagged the difficulty in hiring employees who possessed the correct sustainability credentials and knowledge.

Vietnam’s GDP growth is expected to make an impressive recovery over the course of 2022, likely reaching a 6.2 percent progression following a 2021 low of 2.6 percent, HSBC forecast.

The country is rising as a global production hub thanks to the incentives given by the government, especially in the signing of free trade agreements, HSBC Vietnam CEO Tims Evans said.

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Intel plans to expand investment in Vietnam



American technology company Intel has plans to broaden business and investment activities in Vietnam following the country’s good management of the COVID-19 pandemic, the Vietnam Government Portal (VGP) quoted Intel CEO Patrick Gelsinger.

The Intel executive made the statement at a meeting with Vietnamese Prime Minister Pham Minh Chinh in Hanoi on Friday.

Vietnam is an attractive destination for foreign investors as it is a vibrant economy and a promising market, CEO Gelsinger said.

He highlighted that Vietnam remains a charming investment destination in the eyes of foreign investors thanks to its dynamic economy, potential market, and industrious population.

He appreciated the Vietnamese government’s efforts in creating favorable conditions for foreign investors, particularly its support for Intel to maintain production amid the pandemic time.

Chinh, who visited Intel’s headquarters in California earlier this month, praised semiconductor chip manufacturer’s investment activities in Vietnam over the past 15 years.

Intel’s assembly and test factory, located in Saigon Hi-Tech Park in Ho Chi Minh City, became the U.S.’s biggest high tech project in Vietnam.

Since it came into operation in 2010, the factory has generated hundreds of jobs and consolidated Vietnam’s status in the global semiconductor supply chains.  

Chinh recommended that Intel build a research center in Vietnam and assist the Southeast Asian nation in building up a startup and innovation ecosystem and high-quality workforce.

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E-bike buyers face serious sticker shock amid rising gasoline prices



Increased fuel prices are wreaking havoc across the transportation industry in Vietnam as costs of once wallet-friendly alternatives, such as e-bikes, ride-hailing services, and budget airlines all steadily rise as a result.

To combat the problem, the government is considering proposals to cut taxes on gasoline and oil, according to the National Assembly (NA).

Ripple effect

Nguyen Tri, sales manager for electric bike brand PG, explained that the increased price of e-bikes and e-scooters is due to the rising costs associated with transporting the bikes to sales outlets and distributors.

According to Tri, PG had resisted raising rates at the beginning of the year despite spare part shortages and rising transport costs, but once fuel in Vietnam surpassed VND30,000 (US$1.28) per liter and transport operators hiked fees by 10 percent in March, the firm was left with no choice.

“The increased prices of input materials, such as aluminum, steel, and electric wires have forced the prices of spare parts up by 10 to 20 percent,” Tri explained, adding that the hike in fuel prices has left an enormous impact on the firm’s post-pandemic recovery.

The freight industry has faced the same fate.

Nguyen Kim Thanh, director of Kim Phat Transportation Company in District 12, Ho Chi Minh City, said that record-high fuel costs are creating serious struggles for her firm as it attempts to renegotiate with customers. 

The on-demand delivery sector is also confronting woes as a result of the rising cost of fuel, coupled with a decrease in demand, with Grab, GoJek, and Be drivers all struggling to earn a living.

Many are now considering looking for new jobs, including Nguyen Phuc Bao Chau, a student from Bach Viet College in Ho Chi Minh City, who is a part-time delivery worker.

“I am thinking about quitting my current job and seeking a new one because of soaring gasoline prices and sluggish demand,” Chau said.

More expensive fuel has also placed an undue burden on local airlines, including Vietnam Airlines, Vietjet Air, Bamboo Airways, and Vietravel Airlines.

A commercial deputy director of a local air carrier told Tuoi Tre (Youth) newspaper that airlines’ business operations remain slow although the aviation sector is showing positive signs of recovery.

Some nations are still limiting the number of air passengers aboard inbound flights, in some cases lowering flight capacities by up to 50 percent.

This, along with rising gas prices, is putting serious pressure on airlines.

If jet fuel continues being traded at $130 per barrel in 2022, the cost will add VND5.7 trillion ($245 million) over the course of the year, according to local airlines.

That number will jump to VND9.12 trillion ($392 million) if jet fuel hit $160 per barrel.

The way forward

Speaking about inflation, NA deputy Nguyen Manh Hung from Can Tho City, a permanent member of the NA Economic Committee, told Tuoi Tre that the spike in petrol and oil prices has become a hot topic as it stokes fears of high inflation.

To keep inflation under control, it is vital to reduce excise taxes on gasoline and oil.

In addition, it is urgent to refill the country’s petrol and oil reserves, while obstacles facing the Nghi Son refinery, which accounts for as much as 40 percent of the country’s fuel supply, should be removed soon, said Hung.

Fuel inventories at enterprises should also be addressed.

The prices of fuel will only stabilize when there is an abundant supply of gasoline and oil.

Furthermore, accelerating fuel rates have make food and foodstuffs more expensive. The prices of food are forecast to jump to over 20 percent in the near future.

The NA Economic Committee shared its support for the government’s plan to keep inflation below four percent and requested a clearer scenario for it amid economic growth.

The country’s economic growth target of 6-6.5 percent, plus relief packages for post-pandemic recovery, is expected to drive up inflation.

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