VIETNAM BUSINESS NEWS MAY 26 – VietNamNet

The Vietnamese economy recovered more slowly than the world economy last year, but the reverse is likely to be true this year.
BIDV Chief Economist Can Van Luc made the forecast at the conference “Vietnam financial market 2021 and outlook 2022” on May 25.
Luc had three possible scenarios for the Vietnamese economy in 2022. In the best-case scenario, the economy is expected to rebound strongly with an annual growth rate of 6-6.5 percent.
The figure is adjusted down to 5.5-6 percent in the base-case scenario, and to 4.5-5 percent if things do not turn out well. Meanwhile, inflation is believed to rise steadily due to global inflationary pressures.
“I’m quite sure that Vietnamese inflation will rise to around 3.8-4.2 percent this year. It’s inevitable amid rapid-rising global inflation,” he added.
Additionally, Luc was optimistic that the securities market is likely to become more sound and stable after several corrections. The VN-Index is forecast to rise slightly by 7.7 percent to reach 1,614 points in the best-case scenario.
Regarding the banking system, credit growth is expected to hit 14-15 percent while the non-performing loan ratio would be kept at around 2 percent. Pre-tax profits of credit institutions are estimated to grow by 20-25 percent against 2021. 
The insurance market is also expected to do well in 2022 profit-wise with a growth of 18-20 percent. However, profits from investment activities are likely to stay lower than in 2020 and 2021.
Economic expert Le Xuan Nghia believed that the corporate bond market is a capital-raising channel more important than medium- and long-term bank loans. It is the case because corporate bonds are more flexible than bank loans.
The expert feared that the currently-stagnated bond market would hold back ongoing bond-financed projects and stifle new projects, putting firms at risk of defaults.
He was also concerned that the stagnation would freeze the realty market and drive many banks to a critical situation. He called for transparency and accountability in the bond market to solve the problem.
Pham Xuan Hoe, Secretary-General of Vietnam Financial Leasing Association, estimated total financial assets in the economy at over 300 percent of GDP. The ratio was so high that it signalled a structurally-problematic real economy. 
The secretary-general also highlighted asset leasing as an effective financial channel for firms, notably small- and medium-sized businesses. However, legal frameworks for the channel have been outdated and need to be replaced to unlock its potential.
Pham Thi Hoang Anh, Director of Research Institute for Banking, Banking Academy of Vietnam, opined that the State Bank of Vietnam had managed central exchange rates with much success. Notably, foreign reserves reached 114 billion USD by late 2021.
The director also revealed that total credit to commercial real estate hit 783 trillion VND by late March 2022, higher than the same period in previous years but still in the safe zone.
Vu Nhu Thang, Vice Chairman of the National Financial Supervisory Commission, was concerned that risks in the realty market might spill over into the banking system and securities market, putting firms on the line.
He also underlined Circular 16 issued by the SBV in 2021 as a timely regulation that constrained banks’ privately-placed bond ownership, effectively curbing the spillover.
UK attaches importance to agriculture cooperation with Vietnam
Minister of State at the Department for Environment, Food and Rural Affairs (DEFRA) of the UK Victoria Prentis on May 25 highlighted the importance of the Vietnam-UK agriculture and rural development cooperation, especially now that the UK government considers Vietnam as a vital partner in the Indo-Pacific region.
During talks with visiting Deputy Minister of Agriculture and Rural Development of Vietnam Phung Duc Tien at the headquarters of DEFRA, Prentis affirmed her country’s commitment to strongly support the transformation of Vietnam’s agriculture towards green, low emission and sustainable development.
For his part, Tien proposed specific cooperation, including in the field of policy, to develop green and low-emission agriculture, promote the opening of agro-forestry-aquaculture markets, and strengthen cooperation in sustainable development, climate change adaptation and biodiversity.
He expressed his hope that the two sides will soon sign a Memorandum of Understanding (MoU) on cooperation in agriculture and rural development, thus promoting and realising priority cooperation programmes and activities in 2022-2025.
Regarding future orientations for cooperation, the Vietnamese official suggested the UK government to soon consider opening the market for fresh fruits such as mango, passion fruit, grapefruit, litchi, and longan; and processed pork and poultry products, poultry eggs, and milk and dairy products, from Vietnam.
To increase trade in livestock products between the two countries, Deputy Minister Tien proposed the UK side to provide veterinary hygiene and food safety requirements.
Prentis agreed on Tien’s assessment of the cooperation potential between the two ministries in the near future, and noted proposals of Vietnam to promote the opening of the market.
She suggested Vietnam consider to soon import some pork and chicken products of the UK, and affirmed her country’s commitment to strongly support the transformation of Vietnam’s agriculture towards green, low emission and sustainable development.
Forum promotes application of int’l financial reporting standards in Vietnam
A forum discussing the application of international financial reporting standards (IFRS) in Vietnam took place in Hanoi on May 25.
Jointly organised by the Japan International Cooperation Agency (JICA) and the Accounting and Auditing Supervisory Department (AASD) under the Ministry of Finance, the event gathered over 600 delegates from agencies, units, listed businesses, auditing companies and universities.
The second event of its kind is within the framework of the technical cooperation project between AASD and JICA  on “strengthening the capacity of the AASD to promote the application of financial reporting standards in Vietnam” funded by the Japanese government.
The forum is expected to help agencies of the Government, private sectors and training institutions in Vietnam understand the differences between Vietnamese accounting standards (VAS) and IFRS; as well as promote the exchange of views on the roadmap for applying IFRS.
Quang Ninh to host Vietnam Real Estate Brokerage Day 2022
The Vietnam Real Estate Brokerage Day 2022 will take place in Ha Long city in the northern province of Quang Ninh from June 24-25.
According to Nguyen Chi Thanh, vice chairman of the Vietnam Association of Realtors (VARS), Vietnamese real estate brokers have played an important role in the rapid, strong and sustainable development of the property market over the last two decades.
He underlined the impressive change to Vietnam’s property market with thousands of new and modern urban areas, adding that tens of thousands of people have been able to buy new houses every year.
Thanh attributed the results to the significant contribution of real estate brokers in Vietnam, noting they have helped stimulate demand and create motivation for property developers to promote investments.
The event is hoped to attract about 1,000 participants from the real estate investment and business community and brokers across the country.
It will offer a venue for brokers and businesses to share experience and set up partnerships.
The event will also see the participation of representatives from the Government, local authorities, and from ASEAN, Asia and the US, among others.
Vietnam Electricity gearing up to keep lights on for dry season
Vietnam Electricity (EVN) said it will make adjustments to the power grid to ensure power supply for daily public energy use in the second quarter – the peak of the dry season, when power generation becomes a serious issue.
Daily consumption in April was estimated at 779 million kWh while load power stood at about 42,124 MW, rising 5.3 percent year on year.
Difficulties are likely to linger on this season in terms of coal supply for thermal power plants.
The State-owned group said coal shortages were recorded in Q1, at 1.36 million tonnes lower than the contracted volume, forcing thermal power plants to cut turbines, reducing output by 1.365 billion kWh.
Facing that reality, the firm worked with coal suppliers to find solutions and reported the problem to authorities.
EVN flexed its fleet of hydropower plants so as to guarantee both power generation and water for downstream agriculture.
Vietrade consultation to spur exports to Kuwait
A consultation will be held by the Ministry of Industry and Trade’s Department of Trade Promotion (Vietrade) on June 1 to boost export to Kuwait where demand for agricultural, industrial and consumer products are on a rise.
Economic relations between Vietnam and Kuwait have grown constantly over the years, with the bilateral trade exceeding 4.78 billion USD in 2021, up 49 percent from the previous year.
However, Vietnam has registered a significant trade deficit with Kuwait as it only generated over 60 million USD from the export of mainly mobile phones, electronics, aquatic products, wood and timber products and farm produce to the Middle Eastern country last year.
Its import from Kuwait totaled more than 4.7 billion USD in 2021, a year-on-year increase of 49 percent, a majority of which was crude oil to be used as input for Nghi Son Oil Refinery.
Vietnam Dairy 2022 to be held in Hanoi
The third Vietnam International Milk and Dairy Products Exhibition (Vietnam Dairy 2022) will take place at Hanoi International Exhibition Centre from May 31 to June 4, the event’s organisers have announced.  
Co-organised by the Vietnam Dairy Association (VDA) and Vietnam Advertisement and Fair Exhibition JSC (VIETFAIR), the upcoming exhibition will have 200 booths from 150 domestic and foreign exhibitors. Among them will be Vinamilk, Friesland Campina, Nestle, Nutifood, Abbott and Vinasoy. 
Participated firms will showcase milk and dairy products, ingredients and technology in the dairy industry, processing and packaging lines in the industry, animal feed and veterinary machines, dairy cattle breeds, environment treatment technology, food safety standard management system and other services in the dairy sector. 
Despite the prolonged pandemic, the domestic dairy industry still produced over 1.76 billion litres of fresh milk in 2021, up 3.5 percent year-on-year. Powdered milk production volume also saw positive growth of 14.5 percent year-on-year to 150,000 tonnes, congthuong.vn reported. 
In 2021, the sector had a turnover of nearly 300 million USD. Among its export outlets last year, Iraq was the largest one, accounting for over 50 percent of the sector’s total export value.
Shrimp exports reach peak, higher value expected in Q2
Vietnamese shrimp exports hit a record high of US$1.4 billion in the opening four months of the year, rising by 45% against the same period from last year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
The top five consumers of local shrimp include the United States, Japan, the EU, China, and the Republic of Korea, with their growth rates ranging between 15% and 91%.
The steady growth in shrimp exports can largely be attributed to high market demand and strong export prices, according to local export enterprises.
Most notably, Vietnamese shrimp products received due attention at a number of international aquatic trade fairs, such as the Seafood Expo North America and the Seafood Expo Global held in March and late April.
According to details given by the VASEP, shrimp exports during the second quarter of the year are projected to see an upward trajectory of approximately 12% to US$1.2 billion.
However, experts have outlined that a number of factors, such as unusual weather, as well as high input costs of gasoline and production materials, are likely to impact the supply source of raw shrimp, thereby eroding any profits made by enterprises.
Vietnamese firms show off food, beverage products at Thai fair
     
Eighteen food and beverage enterprises led by the High Quality Vietnamese Product Business Association are displaying their products in Bangkok at THAIFEX-Anuga Asia, the region’s largest food and beverage trade fair.
They are showcasing some unique and healthy products that meet consumers’ evolving post- COVID-19 pandemic such as lotus seed milk, lotus tea, dried lotus seeds, fruit jam pie, organic mango, coconut candy, bottled fresh coconut water with strawberry and salted lemon flavours, coconut butter, green skin pomelo, Habanero chilli sauce, fresh freeze-dried celery juice, eggplant products, pennywort powder, and others.
According to the association, the Vietnamese products exhibited at the event meet international standards and are especially good for health.
Besides taking part in the fair, the Vietnamese businesses will also take part in a study tour, visiting large factories, wholesale market and farms, and meet Vietnamese businesses in Thailand and local ones.
They will also call on the Vietnamese ambassador and trade office in Thailand and interact with the Thai Food Processing Association to learn about consumer trends, innovations in food processing and trading, difficulties faced by Vietnamese agricultural products in penetrating the Thai market and long-term solutions to enable them to get a firm foothold there.
Ample room for Vietnamese plastic exports to Australia
     
Room for growth is ample for Vietnamese plastic exports, as Australian demand has risen steadily in recent years.
The Vietnamese Trade Office in Australia (VTOA) reported that Vietnamese plastic exports to the country grew by over 11 per cent between 2017 and 2021. In 2021, Viet Nam took revenue of nearly US$87 million in plastic trade with Australia, up 28.5 per cent year-on-year.
Since the changing consumption habits in Australia are associated with a greater preference for convenience and ready-to-eat foods, the demand for plastic bags used in the food industry is expected to hold steady, creating more room for Vietnamese plastic.
Additionally, Australian agricultural and food exports are forecast to continue to climb in the short term thanks to free trade agreements, raising the demand for plastic bags in packaging. Vietnamese plastic is believed to benefit significantly from this upward trend.
The VTOA underlined trade fairs as an effective channel allowing Vietnamese firms to reach out to Australian partners. The organisation said it would help firms stay well-informed about Australia’s trade fairs and trade opportunities.
It also said that it promoted Vietnamese firms to Australian partners and developed plans to help these firms look for exclusive distributors in the market.
HCM City annual agriculture fair opens
     
Agricultural and other products under the ‘One Commune – One Product’ Programme from HCM City and the Cuu Long (Mekong) Delta are on show at the HCM City Agriculture Fair that opened on Tuesday in Thu Duc City.
The products on the display at 160 booths include orchids, bonsai plants, vegetables, mushrooms, seeds, fertilisers, garden accessories, and packaged foods.
The fair is aimed at promoting agricultural products and creating a platform for the promotion of agriculture and rural development.
It seeks to connect farmers and agricultural businesses with consumers in the city.
The event at the Thu Duc City Children’s House will run until Sunday. 
False declaration of prices in transferring real estate cause losses
     
Organisations and individuals buying, selling and transferring real estate under two separate prices, meaning that the actual purchase price is lower than that on the notarised contract, is increasingly common and has caused great losses of revenue to the State budget.
The tax industry has implemented many solutions, recommending that taxpayers need to be honest in declaring actual prices to protect their own interests.
In real estate transfer activities, there are still cases in which the house prices declared on real estate transfer contracts with notarised certification, are much lower than the actual prices.
There are also contracts of purchase and sale of houses and construction works which are formed in the future. The value of the future house is somehow equal to the purchase price of the initial investor. In other case, after receiving the certificate of land use right, when the ownership of house and other land-attached assets has been granted, the taxpayer is willing to declare lower selling price. This does not reflect the true value of real estate transactions, and causes a loss of revenue for the State budget.
To promote the management of real estate transfer activities, the Ministry of Finance has sent an official dispatch to the People’s Committees of the provinces and centrally-run cities, police and Ministry of Justice to co-ordinate and implement solutions to prevent losses.
The Ministry of Finance and tax authorities at all levels have guided people and businesses to properly declare the transfer price as a basis for tax calculation in accordance with the law. The Ministry of Finance has also directed the General Department of Taxation to request tax authorities strengthen co-ordination with local agencies and departments in the management of real estate transfer activities, especially strengthening criminal handling for acts of tax evasion related to business activities and real estate transfer.
The General Department of Taxation has taken a number of measures to collect evidence to verify the transfer price such as verifying with the Notary Offices about the deposit contract, the contract appendix with the adjusted price, verifying through the banks about transactions related to real estate transfer and loans to buy real estate.
US institutions here to help local leverage
A number of US-headquartered investment funds and financial institutions are displaying a growing appetite for Vietnam’s market, but regulatory bottlenecks must be expeditiously addressed to realise their ambition.
Following the visit by Vietnam’s Prime Minister Pham Minh Chinh to the United States last week, a number of American business leaders have expressed their confidence in Vietnam as a compelling story for them to generate alpha.
Charles R. Kaye, CEO of private equity firm Warburg Pincus, highlighted interest in Vietnam’s policy of restricting foreign ownership limits (FOL) in banking, set at 30 per cent for private commercial banks and 20 per cent for state-owned banks. The FOL barrier, consequently, could hamper international financing sources flowing to Vietnamese banks.
With a diverse portfolio, Warburg Pincus is now a prominent US backer, spending over $2 billion on a range of companies and joint ventures such as Techcombank, MoMo, Vincom Retail, BW Industrial, Lodgis, and The Grand Ho Tram Strip, among others.
He also suggested that Vietnam’s stable macroeconomic and business environment is a huge impetus for foreign investors, and some challenges still need to be further improved, such as FOLs in the banking sector and infrastructure. Similarly, a Goldman Sachs representative also raised his concern FOLs as well as accessibility to foreign currencies.
Nevertheless, Asian investors, especially from Japan and South Korea, are continuing their buying spree in Vietnam’s banking landscape, with a handful of notable deals, which bodes well for the resurgence of cross-border merger and acquisition activity. US financiers, notwithstanding, have not been active in deploying their capital into the Vietnamese banking M&A market.
The International Finance Corporation (IFC) under the World Bank Group has partnered with HDBank to boost access for Vietnamese small- and medium-sized enterprises to innovative funding, enabling them to take part in global supply chains and expand into new markets. The collaboration is expected to help HDBank build a supply chain financing portfolio of $1 billion by 2025.
Besides this, IFC will also support the State Bank of Vietnam in developing the legal framework for environmental, social, and corporate governance standards in the investment activities of Vietnamese credit institutions.
Joseph Y. Bae, co-CEO of Kohlberg Kravis Roberts (KKR), another prominent PE fund from the States, also emphasised the fund’s interest in enhancing its footprint in Vietnam.
Vietnam’s State Securities Commission and the New York Stock Exchange have also inked an agreement to facilitate Vietnam’s forthcoming market status upgrade, from frontier to emerging, and provide a mechanism for investors to engage in both markets. Standard & Poor’s has also signalled its readiness to assist Vietnam to be classified as an emerging market.
JPMorgan Chase, N.A. Ho Chi Minh City Branch announces capital injection into Vietnam
JPMorgan Chase, N.A. Ho Chi Minh City Branch announced a capital injection of $123 million into its branch entity on May 26.
The investment brings the firm’s total capital investment into the Vietnamese market from $77 million to $200 million.
The capital will be used over the next few years to fund the expansion of the bank’s onshore services and capabilities, support its fast-growing suite of product offerings, and increase the hiring of local talent.
Vietnam accelerates post-pandemic economic recovery
The first year of the post-pandemic economic recovery journey has seen many positive signals, with a boom in investment, manufacturing and business, since COVID-19 was effectively put under control.
In a document sent to National Assembly deputies, the Government emphasised that the epidemic has been put under control, the macroeconomy remains stable, major balances of the economy have been ensured, key sectors are all recording higher growth, and many large-scale infrastructure projects are being implemented with strong determination.
However, the economic recovery path remains bumpy amid the uncertainties in the global political situation and internal weaknesses of the economy. Controlling inflation is a challenge amid rising fuel prices while public investment disbursement remains slow. In such a situation, the goals of achieving 6-6.5% economic growth and keeping inflation under 4% have become enormous challenges.
The National Assembly adopted Resolution 43/2022/QH15 on fiscal and monetary policies with the aim to support the socio-economic recovery and development programme, with total funding of 347 billion VND (15 billion USD). The programme has been promptly implemented by the Government by providing interest rate support, reducing value added tax for enterprises, supporting house rent for workers and constructing key transport projects.
The implementation of the programme is expected to raise GDP by 2.9% in 2022 and 0.2% in 2023, thus helping Vietnam to realise the growth target of 6.5-7% during the 2021-2025 period, while ensuring stable jobs and income for workers and keeping the unemployment rate at 2-3%.
Recently domestic and international research organisations have made optimistic forecasts about Vietnam’s economic recovery prospects. The World Bank predicts that Vietnam’s growth in 2022 will reach 5.3% and then stabilise at around 6.5%. The International Monetary Fund sees Vietnam’s growth at 6% and 7.2% in 2022 and 2023 respectively, while the Asian Development Bank expects Vietnam’s economy to recover to 6.5% in 2022 and 6.7% in 2023. Domestic agencies also forecast that the economy will expand by 6-6.5% this year under an optimistic scenario.
In order to accelerate economic recovery and fulfil the set targets, the Government has identified 12 key tasks, with a focus on expediting the implementation of support packages and public investment. The Government is also seeking new growth drivers in science and technology, digital transformation, innovation, and clean and renewable energy. On top of macroeconomic stability, such measures are expected to help the Vietnamese economy speed up on the recovery path and soon return to the growth orbit.
Techmart introduces promising produce processing, preserving technologies
More than 200 technological products of 87 businesses have taken part in the recent Techmart with the theme Agriculture and Post-Harvest Technology, held by the Ho Chi Minh City Department of Science and Technology.
At this Techmart event, certain products and solutions for post-harvest produce processing and preserving like innovative produce dryers have attracted much attention of visitors since they can help to reduce processing time while increasing product quality and preservation time compared to traditional drying methods.
Vietnam’s agriculture lately has achieved many impressive results, and its export turnover continuously increases year by year. However, during the harvest season, farmers still encounter trouble processing and preserving their crops owing to a lack of advanced technologies. The products and solutions exhibited in this Techmart are, therefore, expected to become a great aid to farmers and produce processing factories.
HCMC announces 6 key scientific-technological programs
The Ho Chi Minh City Department of Science and Technology has just held a conference to announce ‘Innovative, Scientific-Technological Research Programs and Directions from 2021-2025’, and the project ‘Introducing the Task of Managing, Using, and Handling Assets from Implementing Scientific-Technological Missions with State Capital’. 
Accordingly, HCMC is going to launch the 6 key scientific-technological programs:
_Research and development of technologies for smart urban area and digital transformation;
_Research and development of industrial technologies;
_Research and development of healthcare technologies
_Research and development of hi-tech agriculture;
_Research and development of applications for urban management and growth;
_Youth Science and Technology Incubator.
HCMC to develop urban area around Tan Son Nhat Airport
Chairman of the HCMC People’s Committee Phan Van Mai has directed the planning and development of an urban area around Tan Son Nhat Airport, according to the Office of the municipal People’s Committee on May 25.
Under the direction, the Department of Planning and Architecture will cooperate with the People’s Committee of Tan Binh District to study the airport-based urban area planning and assess the adjustment of the HCMC Master Plan by 2040, with a vision to 2060.
The People’s Committees of Tan Binh, Go Vap and Tan Phu districts have been required to consider solutions for the planning and development of an urban area around Tan Son Nhat Airport to make zoning plans and propose appropriate models of business and service development.
Transport Ministry announces projects with slow disbursement
The Ministry of Transport announced that at the end of May, there are nine projects with slow disbursement.
The projects invested by the ministry include the transport project connecting mountainous Northern provinces, the Tan Van – Nhon Trach section of Ho Chi Minh City’s Ring Road No. 3 project, the construction of Dien Chau-Bai Vot section of the North-South expressway, My Thuan – Can Tho Expressway, construction of the Interconnecting Road to National. Highway No 91 and Long Xuyen City bypass, the subproject on upgrading and renovating National Highway 279B, construction of the National Roads of 21B and 15, and the project to upgrade the runways at Tan Son Nhat International Airport.
Hanoi accelerates construction of smart urban projects
 
The completion of these projects would help ensure Hanoi’s rapid and sustainable development towards green, smart, and modernization while maintaining the harmonization between rural and urban areas.
To date, the progress has been encouraging as contractors are speeding up the completion of the site clearance process.
According to a recent report, site clearance for the construction of the new residential project Tay Mo – Dai Mo – Vinhomes Park in Nam Tu Liem District has almost concluded, with the  70% of the work volume completed.
Around 80% of the land for the projects in the communes of Xuan Canh, Dong Hoi, and Mai Lam (Dong Anh District) have been cleared, and the authorities are handing over clear sites to contractors.
The local authorities are also working on investment procedures for the construction of the smart city project in Dong Anh District, with an investment capital of US$4.2 billion from the joint venture of Sumitomo Corporation and BRG Group.
Secretary of the Hanoi Party Committee Dinh Tien Dung in a recent meeting with Japan’s Ambassador to Vietnam Yamada Takio pledged to complete the site clearance on time for the construction to start in June 2022.
Under the municipal Party Committee’s program No.03 on urban renovation and development of urban economy in Hanoi in the 2021-2025 period, the city is tasked with building 2 to 3 new smart urban areas.
This would help ensure the city’s rapid and sustainable development towards green, smart, and modernization while maintaining the harmonization between rural and urban areas.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes
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