Imports and exports are expected to become a bright spot and an economic driver despite anticipated challenges and hardships next year.
Economists expected the global market to regain momentum in 2023 after a year of tight spending. That, coupled with an impressive import-export turnover of around US$780 billion this year, would boost import-export growth next year.
According to the Vietnam Textile and Apparel Association, Vietnam’s textile and apparel products entered 66 countries and territories in 2022, bringing in US$42 billion. However, it forecast that the industry would do better next year thanks to tax deductions when shipping to the European Union market under the EU-Vietnam Free Trade Agreement.
Tet gift hamper market offer more affordable choices
As people are forced to tighten their purse strings due to the impact of the COVID-19 pandemic, Tet (Lunar New Year) gift hampers have become more affordable, Tin Tuc (News) newspaper reported.
Supermarkets and grocery shops in Ho Chi Minh City are offering many types of Tet gift hampers with prices ranging from 100,000 VND (4 USD) to several million Vietnamese dong.
Nguyen Ngoc Minh, owner of a shop on Do Xuan Hop street in Thu Duc city, said thanks to eye-catching gift hampers and affordable prices, the number of orders for Tet gift at her shop has increased remarkably since the beginning of December.
The shop is offering various types of gifts to meet a wide range of customers’ needs, she said, adding that the demand has increased by 40% compared with the same period last year.
Le Thao, owner of the Mai Thao store at Ba Chieu market in Binh Thanh district said most customers choose gift baskets priced between 150,000-250,000 VND.
Nguyen Tran Huu Thang, CEO of BSA Food Joint Stock Company, said that the company has put on the market 500,000 Tet gift hampers with prices ranging from 85,000 VND to 150,000 VND per piece. It has received a lot of orders from businesses, he said, adding that the sales are expected to increase at the end of December and the beginning of January next year.
The prices of Tet gift hampers this year are about 20,000 – 50,000 VND cheaper compared with those of the previous year, but still ensure the quality and quantity of gifts. The hampers include items typically used during Tet such as confectionery, soft drinks, instant coffee, wine, and Tet jams.
According to representatives of supermarkets and manufacturing enterprises, the purchasing power of Tet gift baskets this year is forecast to increase by 20-30% over the same period last year. However, the price of Tet gift baskets remains stable. Some retailers are even offering promotions of up to 50% discount to stimulate year-end shopping.
Nguyen Ngoc Thang, managing director of Co.opmart supermarket chain said it is offering 40 types of Tet gift baskets with an average price of 194,000-369,000 VND.
To control the prices of Tet gift baskets, HCM City’s Department of Industry and Trade of Ho Chi Minh City has asked the people’s committees of Thu Duc city and 21 districts to direct relevant agencies to monitor the market situation and quickly report any unexpected price increase.
The department also conducts regular inspections to check the observance of State regulations on commodity prices at markets, supermarkets, and convenience stores in the locality.
Petrol prices continue falling
The retail prices of petrol were reduced further in the latest adjustment on December 21 by the Ministry of Industry and Trade and the Ministry of Finance.
The price of RON 95-III petrol went down 500 VND per litre to 20,700 VND ( 0.87USD) per litre from 3pm on December 21.
Meanwhile, the retail price of E5 RON 92 decreased by 370 VND to 19,970 VND per litre. With the price adjustments made on December 21, petrol prices in Vietnam are now the same with those in June last.
The prices of oils also went down, with those of diesel oil and kerosene cut by 70 VND to 21,600 VND per litre and 21,830 VND per litre respectively. Mazut oil was priced at 12,680 VND per kg, a decline of 150 VND compared to the price adjusted on December 11.
Struggling enterprises in HCM City ensure payment of Tết bonus
Enterprises have managed to give Tết (Lunar New Year) bonuses equal to at least one month salary to employees amid a sharp drop in orders for exports and suspension of production, the HCM City Labour Federation said.
Việt Thắng Jean Co. Ltd. in HCM City’s District 9 announced that it would offer one month salary as Tết bonus to its employees.
This year’s average bonus at the company is not higher than VNĐ10 million (US$422) a person, said Phạm Văn Việt, the company’s general director.
The company saw its orders for exports to the EU and the US drop by half from the third quarter onwards, Việt said.
It has been seeking new markets for exports and exploring the domestic market to avoid job cuts, he said.
Nissei Electric Việt Nam Company in Linh Trung I Export Processing Zone has suffered a decline of 20-30 per cent in orders for exports this year.
The company managed to keep its payroll unchanged and maintain Tết bonuses equal to more than VNĐ13 million ($548) per employee.
The company’s trade union will also present Tết gifts to employees.
Freetrend Việt Nam Co. Ltd. at Linh Trung I Export Processing Zone, which has more than 20,000 employees, planned to increase Tết bonuses by 20 per cent compared to last year.
Liêu Quang Vinh, chairman of the company’s trade union, said orders for exports began to drop in the fourth quarter and the decrease in orders is forecast to continue next year.
With the increase in Tết bonus payments, the company hoped that all employees would enjoy the Tết holiday and would return to work after Tết, Vinh said.
Phan Thị Thanh Xuân, deputy president of Việt Nam Leather, Footwear and Handbag Association, said enterprises have pledged to ensure the rights and interests of employees, particularly the payment of Tết bonuses.
Labour-intensive industries, which account for the lion’s share of the country’s total export turnover, offered Tết bonus higher than last year’s level, she added.
Phạm Chí Tâm, deputy chairman of the HCM City Labour Federation, said many enterprises employing a large number of employees have increased Tết bonuses by 10-20 per cent compared to last year’s figures.
However, many enterprises have yet to announce their plans on Tết bonus payments, meaning many employees might spend the Tết holiday without any bonus, Tâm said.
At least 155 enterprises have suffered a drop in orders and more than 50,100 workers had to reduce their working hours and pay as a result, according to the city’s Labour Federation.
The Ministry of Labour, Invalids and Social Affairs asked localities nationwide to report to the ministry by December 25 plans for employees regarding Tết bonuses.
Vietnamese products face greater scrutiny in international markets
More Vietnamese products have been targeted by trade defence mechanisms and barriers as the country enters numerous free trade agreements and integrates further into the global economy, said policymakers and industry experts during an online conference yesterday in Ha Noi.
Chu Thang Trung, deputy head of the trade defence department under the Ministry of Industry and Trade (MoIT), said Vietnamese products are to face greater scrutiny and barriers in the future.
He said the number of cases faced by Vietnamese firms has increased significantly in recent years, going from 25 cases in 2012 to 109 in 2022. On top of traditional anti-dumping and anti-subsidy cases, Vietnamese goods have been facing deeper investigations aimed at firms that attempted to circumvent trade defence measures and product origin rules.
In addition, more markets have turned their attention to Vietnamese products including Mexico, Indonesia, Malaysia and the Philippines.
On the other hand, Trung said it has been a reflection of Vietnamese products’ popularity and a positive sign of their increased market share in international markets.
Dr Luong Duc Long, vice president and secretary-general of the Vietnam Cement Association, said it’s only natural for Vietnamese products to become targets of trade investigations as the country increases its exports.
Long said in recent years, the Vietnamese concrete industry has found ways to enter various markets to become one of the world’s largest exporters, only behind China and India in volume. Viet Nam alone accounted for 92 per cent of all concrete imports to the Philippines. As a result, Vietnamese concrete makers have been sued by local firms.
Regarding the numerous free trade agreements the country has signed, Trung said trade barriers and defence mechanisms are here to stay even after import tariffs were removed as countries continued to protect domestic industries.
He urged Vietnamese firms to take the initiative in participating and preparing for potential trade conflicts and to fully comply with local trade regulations.
In order to minimise potential damage from trade defence mechanisms and barriers MoIT advised Vietnamese firms stay up-to-date with market developments and set up early warning systems.
Social impact businesses in dire need of support
Lack of capital, information, business management capacity and a sustainable market for their products were among the major challenges facing social impact businesses (SIBs) in Viet Nam, said policymakers and international experts.
According to the United Nations Development Programme (UNDP), about 4 per cent of all businesses, or more than 22,000, in the country qualified under the SIB category. The UN defined SIBs as organisations that prioritise doing work that consciously, systemically and sustainably serves or attempts to solve a local or global community need.
The vast majority of SIBs in Viet Nam was run and owned by some of the most vulnerable groups including women, ethnic minorities, people with disabilities and gender-diverse individuals, according to a UNDP report.
Even before the pandemic, Vietnamese SIBs had been systematically marginalised and suffered from a lack of governmental support, unable to connect and integrate into the economic ecosystem.
Ramla Khalidi, UNDP Resident Representative in Viet Nam, said it’s high time the country stepped up its support in order to create a more capable and sustainable SIB community, especially in post-pandemic economic recovery.
She said many SIBs have proven they were capable of sustaining and adapting to changes but governmental support may still play a crucial part in helping them grow in the future.
During the pandemic years, the Ministry of Planning and Investment, in collaboration with UNDP and Global Affairs Canada, implemented the COVID-19 Adaptation Programme for Social Impact Businesses to aid the most vulnerable SIBs, especially those owned and operated by women and young females.
The programme has since continued to provide SIBs with capital, and training to improve business management skills, bolster links among SIBs and enhance government officials’ ability to provide support to SIBs.
Shawn Steil, Canadian Ambassador to Viet Nam, said a key objective of the Canadian government was to encourage private funds to participate in sustainable and inclusive economic development, in particular, to support poverty eradication and small-to-medium-sized businesses.
Vietnamese SIBs were to play a key part in realising such objectives, as well as numerous other benefits to the local communities including job creation, improvements to gender equality, living standard and protection of vulnerable social groups.
The programme, part of a larger effort to help leverage Viet Nam SIBs ecosystem in response to COVID-19 (ISEE-COVID) will continue to run through 2023 and 2024.
Viettel solution wins IoT in Action award
Technological solution Innoway developed by Viettel High Tech, a member enterprise of Viettel Group, has won the IoT in Action award at the Asia Communication Awards 2022.
Innoway is a multifunctional platform capable of collecting real-time data from billions of hardware components. It offers data analysis and data management for apartment buildings, airports, industrial parks, and many other clients.
The platform is technologically on the front foot in Viet Nam as its telecommunication systems enable users to efficiently manage their wireless connection and optimise their costs.
Additionally, its team of specialists will assist clients in developing their own IoT applications on the platform with low costs. The platform is expected to be connected to Viettel Cloud by late 2022.
Auto dealers bemoan slower festive period
Economic uncertainties and tightening credit for loans have left the domestic car market in the lurch, regardless of a plunge in prices.
The car market before Lunar New Year in previous years often becomes more vibrant than the rest of the year. However, it has been relatively quiet in the lead up to the festive season this time around, despite selling prices dropping in remarkable fashion.
While in October and early November the price of some car models raised slightly due to the increase in input costs, logistics, and exchange rates, cuts of 5-10 per cent have been seen in recent weeks. In addition, companies have been issuing promotional campaigns involving zero registration fee, free accessories, or direct discounts on selling prices.
Despite the efforts of showrooms and dealers, the market remains hushed. Vu Manh Hung, who visitied one showroom in Hai Ba Trung district in Hanoi, explained why he chose not to purchase. If he decided to purchase the vehicle he was interested in, he would have to borrow about $17,400 from a bank over five years. While the current interest rate is 13 per cent in the first year, the following years will float according to the base interest rate.
Truong Van Nam, owner of the showroom, said that situation is not uncommon and that, since the third quarter, it has been very difficult for customers to access credit.
Besides the challenges of interest rates, banks also tighten loans for buying cars because the room is small. Even after banks were allowed to relax their credit room, the situation has not yet improved. To get a loan, a customer must have a high profile.
He said that compared to the beginning of the year, sales in his showroom have dipped by about 40 per cent. “We set a target of selling 200 cars in December, but at the current status, it is unlikely to be achieved,” Nam said.
Struggling with such difficulties, dealers have suspended orders with car manufacturers. Nam said that dealers usually order about 3-4 months before receiving cars.
In the used car market, the situation is also gloomy. La Trung Tinh, manager of a used car showroom in Ho Chi Minh City’s District 7, said that the revenues of the last two months are at 20-30 per cent the size of the previous month.
Auto dealers said that in addition to difficulties in bank loans, the hibernation of the car market in general is being caused by the general economic downturn as well as negative fluctuations in the real estate market, stock market, and corporate bonds.
According to the Vietnam Automobile Manufacturers Association, the sales of its members in November reduced by 0.5 per cent on-month, to around 36,370 cars.
HCMC to break ground on Tan Son Nhat terminal T3 this weekend
The passenger terminal T3 project at the Tan Son Nhat International Airport in HCMC will get off the ground on December 25.
The city has almost completed site clearance and compensation work and handed over some 14.7 hectares of cleared land to the Airports Corporation of Vietnam (ACV), the project’s investor, to start building the terminal.
The project investor has invited tenders for the project and conducted the bidding process for around two months.
As required by the prime minister, ACV will have to complete the construction in 24 months and put passenger terminal T3 into service in 2024. This terminal would be able to handle 20 million passengers a year.
Experts warn of real estate risk in 2023
Experts of the Central Institute for Economic Management (CIEM) have forecast that the gloomy global economic picture will continue to affect the Vietnamese economy next year, especially the real estate market.
Inflation, high interest rates, volatile foreign exchange rates, restrictions on real estate loans, falling foreign investment and slow public investment disbursement would dampen the property market.
Chairman of the HCMC Real Estate Association Le Hoang Chau told the Vietnam News Agency that if there were no incentives for real estate firms, the local property market next year could melt down. Many firms are in financial distress, with some having seen their assets frozen due to corporate bond issues. As a result, flows into the real estate sector might decrease sharply.
Under pressure from international supply chain disruptions and global inflation, the local property market could plunge into depression as it is not until late 2023 that many regulations and laws on land, housing and real estate trading come into force.
However, CIEM experts said that if these laws are approved at the National Assembly Standing Committee’s extraordinary meeting and take effect from the first quarter of 2023, the property market would see many positive signs.
Realizing the challenges facing the economy, a few days ago, the prime minister asked relevant agencies and ministries to promptly remove obstacles over loans and real estate bonds and lift hurdles on the real estate market by developing housing projects pending the completion and expediting the launch of the revised Laws on Land, Housing and Real Estate Trading.
To relieve the financial burden on the real estate industry, the Prime Minister urged the central bank’s governor to work with commercial banks and relevant agencies to offer preferential loans to property firms and homebuyers.
This year, the local real estate market has been facing many difficulties, including an undersupply of social homes, an oversupply of luxury homes, falling capital flows into the sector and soaring prices of homes.
Incentives proposed for transport firms
The Vietnam Automobile Transportation Association has written to the prime minister proposing measures to ease the difficulties faced by transport businesses.
The association said auto transport is one of the industries hit hardest by the pandemic, causing a plunge in revenues of companies in this field.
They could now see the light at the end of the tunnel as the demand for travel and goods transport has regained its strength, said Nguyen Van Quyen, chairman of the association.
However, global geopolitical tensions have made oil prices volatile, coupled with a rise in the operation of unregistered passenger coaches at unregistered bus stations, placing a further strain on transport companies and hindering their recovery, he added.
Given back-to-back woes, the association proposed the State Bank of Vietnam devise a policy enabling the restructuring of loans and the extension of payback periods for cash-strapped firms affected by Covid-19 without downgrading debt.
The central bank was also asked to urge commercial banks to offer new loans to debt-ridden businesses for reinvestment and business expansion purposes, even if they have yet to settle their existing debt.
It suggested that the Ministry of Finance and the General Department of Taxation defer taxes in 2023, keep the value-added tax at 8% and reduce the registration tax by 2% for transport companies.
Besides, it proposed the Ministry of Labor, Invalids and Social Affairs and the Vietnam Social Security extend social insurance debt of transport firms until June 30, 2023, without extra charges for delays.
In addition, the association asked Vietnam Social Security to write off the late payment interest from March 2020 to December 31, 2022, for transportation companies.
Vietnam imports over 163,000 CBU cars this year
Vietnam had spent US$3.62 billion importing 163,333 completely-built-up (CBU) cars in the year to December 15, surpassing 2021’s full-year figure of nearly 160,000 units, according to statistics released by the General Department of Vietnam Customs.
Last month, the number of CBU cars shipped to the country reached an all-time high of over 22,700, surging nearly 59% month-on-month. The first half of December saw 11,769 CBU units imported to the country, with a total value of over US$219 million.
Between January and November, Indonesia, Thailand and China were the top three suppliers of CBU cars for the Vietnamese market. Of them, Indonesia surpassed Thailand to become Vietnam’s largest CBU supplier, exporting close to 64,000 CBU units worth roughly US$934 million to Vietnam during the 11-month period.
Thailand exported more than 61,100 CBU cars, worth US$1.2 billion, to Vietnam during the given period, followed by China with 16,240 units valued at US$670 million.
HCMC approves bidding plan for Can Gio bridge project
The HCMC Transport Department has approved the bidding plan and cost estimate for the Can Gio bridge project.
As part of the plan, the cable-stayed bridge will be developed under the build-operate-transfer format.
According to the department, the project will need nearly VND10 billion, of which the HCMC government will spend VND4,000 billion on site clearance compensation, and investors will cover the balance for construction.
The tender to select investors is updated on the National Bidding Network System.
As part of the project, the six-lane bridge is set to link HCMC’s two outlying districts, Can Gio and Nha Be, with a total length of over 3.6 kilometers.
The city is expected to break ground on the project in 2024 and complete it in 2028.
Real estate transfer tax revenue double in 2022
Vietnam has seen a surge in revenue from real estate transfer taxes this year even though the market has almost ground to a halt due to liquidity problems.
In its report on the budget collection of the tax sector, the General Department of Taxation said revenue generated by taxes on transfers, inheritances and gifts of real estate this year is estimated to double the 2021 figure, at VND41 trillion.
The authority attributed the strong revenue growth to a vibrant housing market in the year’s first half.
This year, the property value declared in transfer pricing documents has soared 72%, averagely tripling the price set by the provincial and municipal governments.
A real estate transfer in the southern province of Ba Ria-Vung Tau is a case in point, with its declared price 77 times higher than the price determined by the local government, at VND81 billion.
Meanwhile, HCMC has seen a property selling 27 times higher than the city’s land price table and a house in its neighboring province of Long An at over VND11 billion, while the local government calculated the home value at around VND400 million.
According to the Ministry of Finance, the current regulations on real estate transfer taxes still have some loopholes as they have yet to align with land and real estate business laws. Besides, there is a need for closer cooperation among competent state agencies.
Veggie, fruit imports top US$1.8 billion
Vietnam had spent US$1.87 billion importing vegetables and fruits in the year through November, soaring 39% year-on-year, and is expected to buy more to meet the surge in demand during the Lunar New Year, according to the General Department of Vietnam Customs.
Of the amount, apples had come first by import spending in January-October, with US$214 million, up 46% over the same period last year.
Grapes came second with US$160 million in the 10-month period, shooting up 77.5% versus the same period in 2021, with New Zealand, China and the U.S. remaining the biggest sellers.
The country also bought garlic, mung beans, onions, potatoes, Shimeji mushrooms, cabbages, and Flammulina filiformis, along with processed fruit and vegetables such as fried potatoes, seaweed and chili powder.
Digital Content Creation Alliance formally introduced
Vietnam Digital Communication Association (VDCA) yesterday officially announced the operation of its Digital Content Creation Alliance (DCCA) and the hotline 1900.2685 to receive reports on copyright infringement.
DCCA is born with the mission of ‘Connection for Global Values’, aiming at linking Vietnamese businesses and individuals in the fields of digital content, IT, and communications for mutual development. DCCA is expected to boost the creation of valuable ‘Make in Vietnam’ content to serve national and international communities.
In the opening ceremony, the hotline 1900.2685 was formally introduced to receive reports on copyright infringement. These reports will be transferred to competent agencies for proper handling and punishment (if any). Results of the investigation and possible handling will be delivered to the reporters.
The hotline receives reports in the fields of social network, the press, television, music, books, publications, advertisements, and other content creation areas.
Vietnam banks’ ratings on positive trajectory: Fitch
The favorable economic backdrop has enabled banks to take advantage of ample asset origination opportunities to expand while rising household incomes and improved business cash flow keep credit risks in check.
This led to Fitch’s upgrade of most domestic banks’ Long-Term Issuer Default Ratings (IDRs) in November 2022.
Positive macroeconomic momentum, if sustained into 2023, also makes it likely that standalone credit ratings may be upgraded in the next 12 months, noted Fitch.
Fitch added the State Bank of Vietnam (SBV)’s record of prudential supervision over the past decade, and its policy response to a run on deposits at a mid-sized commercial bank in October 2022 have reinforced its view that the state has a strong propensity to support the banking system during times of stress to avert bank defaults.
The IDRs of state-owned banks with high systemic importance are now equalized with the sovereign rating as a result.
The operating environment for the banking system remains broadly supportive, with revenue prospects riding on Vietnam’s strong economic performance, while asset quality, profitability, and capitalization continue to make steady progress.
In this regard, Fitch said it revised the outlook on the operating environment to positive because of Vietnam’s strong economic momentum and healthy sector performance.
Vietnam’s economy grew by 8.8% in the first nine months of 2022, a significant improvement from 2.6% in 2021. Fitch forecasts the country’s GDP growth to be sustained above 6% in 2023 and 2024.
The favorable economic backdrop has enabled banks to take advantage of ample asset origination opportunities to expand while rising household incomes and improved business cash flow keep credit risks in check.
Key performance indicators in the banking system have continued to improve. Loan growth in the first nine months of 2022 accelerated to 17%, higher than the 14% recorded in the same period last year, and the SBV announced in December that the 14% system credit growth limit for 2022 may be increased by 1.5pp-2.0pp.
The system’s reported non-performing loan (NPL) ratio was steady at 1.5% as of the first half of 2022, unchanged from the same period last year, pushing credit costs lower year on year and raising the return on equity in the system to nearly 20% on an annualized basis.
Hanoi to mobilize US$520 million for social housing development in 2021-2025
Hanoi plans to mobilize VND12.35 trillion (US$521 million) from private and State budgets for social housing development programs in the 2021-2025 period.
The figure was part of the city’s recently-released five-year plan, which will serve as a basis for Hanoi to ensure the effective development of social housing projects in the city, meeting public demand for housing and contributing to the city’s development towards ecology, civilization, and modernity.
Under the plan, Hanoi would need 6.8 million square meters (sq.m) of floor area for social housing projects in the post-2020 period, including 1.25 million sq.m until 2025.
Since 2021, Hanoi has completed four social housing projects with a combined floor area of 0.33 million sq.m, while 46 others for an area of 2.9 million sq.m are under construction, and five are under feasibility study.
In the 2021-2025 period, Hanoi expects to speed up the construction of 22 projects and complete the preparation for others with a combined floor area of 1.21 million sq.m.
Based on the number of projects set for construction, Hanoi expects to add 257,000 sq.m of floor area in 2022; 32,900 sq.m in 2023; 361,700 sq.m by 2024; and 475,200 sq.m by 2025.
JICA finances onshore wind power project in Ninh Thuan
The Japan International Cooperation Agency (JICA) has recently signed a credit contract to provide up to US$25 million for an onshore wind power generation project with a total capacity of 88 MW in the central province of Ninh Thuan.
The project, which is co-financed by the JICA, the Asian Development Bank (ADB) and other financial organizations, is expected to reduce 215,000 tons of CO2 every year.
This project is JICA’s second finance for a wind power generation project in Viet Nam.
Last year, the JICA financed US$25 million for the other onshore wind power generation project in Quang Tri Province, which is regarded as a model for the private sector to pour more investment in renewable energy projects in the future.
Vietjet resumes two routes to Republic of Korea
Vietjet has resumed the non-stop services from Vietnam’s two tourism destinations of Da Lat and Can Tho to the capital city of the Republic of Korea – Seoul, just in time for the Christmas holidays.
The resumption of the two routes raises Vietjet’s total services between Vietnam and the RoK to 12, further strengthening its leading position in the Vietnam-RoK flight network.
The Da Lat – Seoul (Incheon) route will have four weekly return flights every Tuesday, Wednesday, Saturday and Sunday. The flight departs from Da Lat at 17:10 and lands in Incheon at 23:55. The return flight takes off from Incheon at 2:30 and arrives in Da Lat at 5:50 (all in local times).
Meanwhile, passengers can take the three weekly return flights from Can Tho to Seoul (Incheon) every Monday, Thursday and Friday. The flight departs from Can Tho at 16:50 and lands in Incheon at 23:55. The return flight takes off from Incheon at 2:30 and arrives in Can Tho at 6:20 (all in local times).
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes
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