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VN aviation industry’s slowdown to affect public debt



The debts incurred by enterprises in the aviation industry, due in 2020, if not payable, will have a big impact on public debt.

Minister of Finance Dinh Tien Dung, in his report to the National Assembly, mentioned the safety of public debt.

VN aviation industry's slowdown to affect public debt

It is expected that public debt will be at 52.3 percent of GDP, within the safety line. However, the Covid-19 epidemic is believed to have impact on all business fields, thus bringing risks to the macroeconomy and finance. The epidemic has increased pressure on budget deficit targets and public debt.

For the last 1.5 years, the government has stopped acting as a guarantor for enterprises in business fields. However, much of the debt guaranteed by the government in the past was due to be paid in 2020. Because of the epidemic, many enterprises cannot pay debts.

The debts of Vietnam Airlines, where the state holds 86.19 percent of shares, are among these. It announced that debt repayment would be on time at the annual shareholders’ meeting, but then the Covid-19 epidemic broke out.

Vietnam Airlines’ Q1 business plan showed that its post-tax profit was minus VND2.589 trillion and the revenue was 43.9 percent lower than planned.

Vietnam Airlines’ Q1 business plan showed that its post-tax profit was minus VND2.589 trillion and the revenue was 43.9 percent lower than planned.

If the epidemic lasts until the end of June, total revenue would decrease by VND50 trillion and there would be a loss of VND15-16 trillion this year.

The business loss because of the epidemic has caused the airline to suffer from serious cash flow imbalance. The short-term debt rescheduling and payment extension would only be helpful in the short term. If the market continues to bear adverse impacts from the epidemic and international flights still cannot be reopened, Vietnam Airlines would not have money to operate, pay bank debts and make payment to partners.

Vietjet is facing the same problems. The private airline took a loss of VND989 billion in Q1 and the cash flow from business activities was minus VND2.027 trillion.

Bamboo Airways, which has just joined the aviation market with modest market share, is also meeting financial problems because of high fixed costs in the first phase of operation.

According to Thoi Bao Kinh Te Sai Gon, because of the cash flow imbalance caused by the epidemic, many loans in the past, due in 2020, to upgrade the fleets, may become unpayable for Vietnam Airlines.

The airline will have to pay $800 million worth of debts to Vietnamese and foreign banks in mid-May. The amount of money was borrowed to buy aircraft in 2009-2015 under the government’s guarantee. Only if the government applies urgent measures to save airlines, including Vietnam Airlines, will creditors consider extending payments for the big loans.

Mai Lan 



Singapore’s CapitaLand in talks to buy Vietnam property assets from Vinhomes

Asian real estate giant CapitaLand Group is in talks to acquire assets worth roughly $1.5 billion from Vietnam’s biggest listed property firm Vinhomes JSC, two sources familiar with the matter told Reuters.



A deal of that size would mark one of the largest real estate transactions in Southeast Asia in the last few years.

The talks come as Vietnam’s property sector is struggling with a cash crunch following an anti-graft campaign launched by the government last year.

Discussions between CapitaLand, majority owned by Singapore state investor Temasek Holdings, and Vinhomes, which has a market value of $8 billion – have taken place for some projects owned by Vinhomes, four sources told Reuters.

Vinhomes, Vietnam’s biggest real estate developer by market capitalization, is part of Vingroup, the country’s largest conglomerate.

One of the sources said CapitaLand is considering buying part of Vinhomes’ Ocean Park 3 project, a 294-hectare resort city style development near the Vietnamese capital city of Hanoi, or another project in the northern city of Haiphong.

The value of the deal was still being negotiated, the person said, adding the talks reached advanced stage.

The sources declined to be identified due to the sensitivity of the matter.

When contacted by Reuters, CapitaLand Development did not directly comment on any potential deal with Vinhomes but said: “Vietnam is one of CapitaLand Development’s core markets. We constantly evaluate investment opportunities to grow our presence in the country.”

CapitaLand Development, part of CapitaLand Group – which has a presence in 40 countries – develops retail, office, residential, business parks and data centres among other businesses. It already has a portfolio of residential projects, including luxury condominiums, in four cities in Vietnam.

Vingroup declined to comment on any discussions with CapitaLand, but said that as a listed company it would disclose information if any transactions happen.

Vingroup, which is involved in real estate, automobiles and retail, is investing billions of dollars to develop VinFast, its fledgling electric vehicle car maker.

Vinhomes develops and owns residential and commercial real estate projects in Vietnam, a country which has a population of 100 million and was Asia’s fastest growing economy last year.

The economy expanded by 8% last year, the fastest pace in 25 years, backed by strong retail sales and exports, but is facing headwinds from a global slowdown.

A property crisis that started last year, sparked by problems at one of the country’s largest property groups No Va Land, has battered investor confidence as authorities arrested high-level individuals and overhauled the country’s bond sector.

Vinhomes was spun off and listed on the local stock exchange in 2018.

Vinhomes’ net profit dropped 26% to 29 trillion dong ($1.23 billion) in 2022 from a year earlier, while total revenue declined 27% to 62 trillion dong.

Shares of Vinhomes have lost 10% so far this year, after tumbling 40% in 2022 as the property crisis deepened.

Source: Reuters


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Prudential Vietnam records $327 mln operating profit in 2022

Prudential plc earned a pre-tax operating profit of $327 million from its Vietnam operations in 2022, up 3.15% year-on-year, according to the multinational insurer’s annual report.



Prudential Vietnam’s pre-tax operating profits increased gradually through the years, from $199 million in 2018 to $237 million in 2019, $270 million in 2020, and $317 million in 2021.

A company’s operating profit is its total earnings from its core business functions, excluding the deduction of interest and taxes.

Meanwhile, the annual premium equivalent of the life insurer moved up in tandem with the operating profit, rising from $195 million in 2018 to $217 million in 2019, $236 million in 2020, $242 million in 2021, and $298 million in 2022.

The report highlighted other optimistic results in the Southeast Asian country, including a market share of 15%, up two percentage points year-on-year, and 1.9 million customers.


The giant also noted that Vietnam has high potential for the insurance sector, given a huge population approaching 100 million, low insurance penetration rate of 1.6%, and average health and protection gap of $1,251. 

On a global scale, Prudential recorded an adjusted operating profit of $3.38 billion in 2022, up 4.39% year-on-year. It earned a post-tax profit of $1 billion, down from $2.21 billion a year earlier.

Insurance premiums in Vietnam increased 15.1% year-on-year to VND251.31 trillion ($10.6 billion) in 2022, the Insurance Association of Vietnam reported. The revenue included VND68.20 trillion ($2.88 billion) from non-life insurers, and VND183.11 trillion ($7.72 billion) from life insurers.

Source: The Investor


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Vietnam plans tighter limits on stakes in banks in blow to foreign investors

Vietnam’s central bank is seeking to reduce the maximum stake investors can hold in Vietnamese banks, according to a published draft document on a regulatory change.



Under the proposal, published by State Bank of Vietnam on its website, individual investors would be allowed to hold up to 3% of the shares of a credit institution, down from 5% currently.

The limit for institutional shareholders, like investment or pension funds, would be reduced to 10% from the current 15%, but the draft proposal did not specify how long investors would be given to reduce their holdings to comply with the lower cap.

Currently, the combined stake of foreign investors in a bank cannot exceed 30%, while the cap for stakes in companies in many other sectors is set at 49%.

The central bank’s move to change the ownership limits follows several cases of fraud, including one that led to a run on a bank that a prominent real estate tycoon controlled through nominees and his own small holding.

In February, police in Vietnam opened an investigation into transactions made by foreign investors concerning listed domestic lender Eximbank (EIB.HM) as it suspected the share value had been manipulated, according to documents seen by Reuters and sources. The outcome of that probe is unclear.

The central bank said its proposed changes would reduce risks of market manipulation.

A Bangkok-based fund manager who declined to be named as he was not authorised to talk to media, said the lower cap would impact foreign investors more as their holdings were more often closer to the current maximum.

Foreign investors have repeatedly called for the caps on ownership to be raised, and they are often cited as a reason why Vietnam is still classified by index managers as a risky frontier market, depriving it of billions of dollars of investment.

Despite being an open economy that relies on foreign direct investment in its industries and whose exports are as much as its gross domestic product, Vietnam has for years limited foreigners access to its equity market.

The central bank also proposed a reduction to the maximum that a bank can lend to a single borrower, lowering it to 10% of the bank’s equity from 15% currently.

Analysts said tighter caps on banks’ stake holders and borrowing could exacerbate liquidity challenges in Vietnam, at a time when the country’s property developers are under pressure.

Earlier this month authorities approved regulatory changes in order to help developers by extending bond maturities and allowing debtors to pay back in assets.

The central bank also cut interest rates this week to spur growth and reduce pressure on debtors.

Source: Reuters


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