VIETNAM BUSINESS NEWS FEBRUARY 24

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VN rubber industry experiences strong profit growth in 2021

Rubber is one of the industries posting good performance despite many sectors struggling due to the COVID-19 pandemic.

In its fourth-quarter financial statement, Vietnam Rubber Group (GVR), one of the leading rubber companies in Viet Nam, said that its net revenue rose 6,6 per cent year-on-year to VND9.6 trillion (US$4.2 million). Of which, revenue from producing and trading latex still plays a key role, with a gain of nearly 19 per cent to VND7.46 trillion.

Vietnam Rubber Group said that the country’s rubber industry will benefit from both export volume and value due to tight global supplies, especially in Southeast Asia as the region is severely affected by the weather, leading to a decrease in the production of natural latex.

Therefore, the price of latex is expected to continue to rise sharply.

Structure of Vietnam's exports to Singapore stable hinh anh 1

Structure of Vietnam’s exports to Singapore stable

The two-way trade turnover between Vietnam and Singapore is estimated at 1.3 billion USD in the first two months of 2022, up 6.3 percent year-on-year.

According to the Ministry of Industry and Trade, over the past time, the structure of Vietnam’s exports to the Singaporean market is relatively stable with numerous items earning high turnover such as computers, electronic products and components, means of transport and spare parts, phones and accessories, and glass and glass products.

In addition, agricultural and aquatic products are potential commodities that Vietnam has strengths to promote its export to Singapore.

Vietnam is currently Singapore’s fourth biggest exporter of aquatic products, accounting for 12 percent of the country’s total import of this group of commodity.

Meanwhile, Vietnam mainly imports machinery, equipment, tools, spare parts, computers, electronic products, chemicals, and cosmetics from Singapore. In January-February, the import value is estimated at 643 million USD, down 2.3 percent year-on-year.

Programme to help Vietnamese, RoK firms beef up trade cooperation

A trade promotion programme between representatives of 58 enterprises from Incheon, Jeonju, Daegu, Gyeongbuk of the Republic of Korea (RoK) and Vietnamese potential firms will be held virtually on March 21-25 by the Korea Trade-Investment Promotion Agency (KOTRA) in Hanoi.

During the five-day event, Korean businesses will introduce their high-quality products, including cosmetics and beauty equipment, supplementary foods, foods and beverage, consumer goods, household items, and mother and child products, KOTRA Hanoi said.

The event will offer a good chance for Vietnamese enterprises to expand partnership with RoK suppliers, watch directly sample products sent from the RoK. Businesses of the two countries will also receive consultancy from the KOTRA Hanoi.

As many as 17 firms from Incheon will attend the programme, while Jeonju – a culinary city of the RoK, will send 10 typical businesses to the event.

Following successful trade promotion activities over the last two years, KOTRA Hanoi plans to host about 70-80 similar events in both face-to-face and online forms in 2022, which are expected to contribute to speeding up economic recovery for the two countries’ business communities.

Pangasius exports exceed expectations

Exports rose quite sharply thanks to a surge in shipments to markets such as Brazil (48.6 percent increase), Colombia (68.5 percent) and Russia (72.8 percent).

The association said exports were up also thanks to the US increasing buying amid an increasing Covid-19 vaccination rate and reopening of restaurants.

Exports to the US in fact doubled from 2020 to 370.6 million USD.

Meanwhile, exports to China were down 12.6 percent to 450 million USD, or 27.8 percent of total exports. Exports to the EU declined for a fourth straight year, falling 17 percent to 106.2 million USD.

VASEP said the pandemic had a major impact on pangasius trade with many countries including France, Italy and Germany.

It forecast exports of the fish reach 1.7 billion USD this year.

Businesses struggling due to high gasoline prices

As gasoline prices rose to the highest level in eight years in February, the logistics industry is under increasing pressure, forcing businesses to bump up service prices.

Manufacturing enterprises are also expected to face many difficulties as costs soar.

On February 21, a litre of RON95 gasoline was VND26,287(US$1.14); a litre of E5RON92 gasoline cost VND25,532.

With added pressure on freight rates, the price of many consumer goods increased, especially as businesses attempt to recover after months of inactivity.

The increase in gasoline prices has also had an impact on consumer goods. At some markets in HCM City many small traders said that prices increased sharply compared to early this year.

In the bigger picture, the increase in gasoline and oil prices will lead to an increase in transportation charges, and an increase in the price of consumer goods will most likely affect CPI and inflation.

Shortage of spare parts puts pressure on automobile makers

The shortage of spare parts, especially semiconductors, is seriously affecting the production and assembly of domestic automobile makers.

Reports of the General Department of Customs showed in January 2022, automobile manufacturers and assemblers in Viet Nam spent US$395 million importing auto spare parts, down 7.8 per cent compared to the previous month.

Currently, most spare parts for auto companies are imported, so the global shortage greatly affects the domestic auto industry.

Though the domestic supporting industry has also seen certain growth, the developments are still not as expected. The country has so far had 21 enterprises that obtained certificates to participate in the production of components for the auto industry against five in 2017, but they have met only a very small part of the local demand.

Truong Thi Chi Binh, vice president and general secretary of the Vietnam Supporting Industries Association, said there are only 20-30 enterprises in the country qualified to produce auto components and the components cost 10-20 per cent higher than that of other countries in the region due to low output.

Automotive expert Nguyen Minh Dong said in order to encourage foreign enterprises to invest in the production of auto components, the Government needs to impose high taxes on components that are simple and easy to produce with small investment capital. As for complicated components, they should be exempt from tax to help auto manufacturers create products with reasonable prices.

Gold prices set new peak of VND64.6 million per tael

Local gold prices passed historical highs set a few days ago to reach more than VND64 million per tael on February 24.

At 10 a.m. the buying and selling prices for gold bars quoted by Saigon Jewelry Company Limited (SJC) stood at VND63.9 million and VND64.6 million per tael, respectively, representing rises of VND600,000 and VND700,000 per tael compared to the prices recorded the previous day.

Simultaneously, DOJI Gold and Gems Group were trading gold at VND63.6 million for buying and 64.4 million for selling per tael, marking increases of VND400,000 and VND600,000 per tael from the day before.

The world’s gold prices are equivalent to VND52.85 million per tael when converted in the domestic exchange rate, VND11.4 million per tael lower than SJC gold prices in the Vietnamese market at the same time.

Vietnam car imports down sharply in January

The volume of imported completely built-up (CBU) automobiles fell more than 70 per cent to 4,524 units valued at US$127 million in January compared to December 2021 with imports from Indonesia down sharply, reports the General Department of Vietnam Customs.

Imported CBU automobiles reached 15,196 units with a value of $433 million in December.

It is reported that the majority of imported CBU vehicles in Viet Nam came from Thailand, Indonesia, China and Japan. The volume of cars imported from these markets reached 3,653 units, accounting for 87 per cent of the total number of imported vehicles into the country in January. Of this figure, Thailand accounted for 2,595 units, followed by China with 584 units, Indonesia with 474 units and Japan with 284.

Vehicles with less than nine-seat and buses, trucks, and specialised vehicles were imported into Viet Nam and were down by 53 per cent to 4,528 units. Of this figure, buses, trucks, and specialised vehicles reached 4,008 units for $99 million.

The less than nine-seater cars were registered for import in January, mainly came from Thailand with 2,488 units or down 54 per cent, and Indonesia with 472 units, a decline of 76 per cent compared to December.

In January, only 12 vehicles with more than nine-seat were imported into the country, mostly coming from Russia. Meanwhile, 260 trucks were imported worth $11.7 million with a 93.5 per cent decrease in volume and 90.5 in value compared to December. And some 244 specialised vehicles were imported, worth $16 million with a decline of 90.6 per cent in volume and 86.3 per cent in value.

Timber and wood products cross US$1.5 billion in January

Timber and wood products in January surged by 8.3% to reach US$1.55 billion compared to December, 2021, and were up 14.3% from the same period last year, according to the General Department of Vietnam Customs.

This also marks the third time that the export of timber and wood products has exceeded the threshold of US$1.5 billion per month.

The export value of timber and wood products to the majority of major markets increased in January, of which the United States took the lead with US$928.2 million, up 12.8% on-year. This was followed by Japan with US$153 million and China with US$134.4 million.

With an export turnover of over US$1.5 billion, timber and wood products are among seven groups of export commodities which saw a turnover of more than US$1 billion in January.

These products are also among the top three commodity groups that have witnessed double-digit growth, behind only garments and textiles.

Digitalisation fuels Vietnam’s economic growth

Vietnam’s fast-growing digital economy is likely to help the country become a high-income economy by 2045, according to an article recently published on eastspring.com.

Namely ‘Vietnam’s digital boom to lift the economy’, the article noted while there will be challenges to overcome, such development will also present many opportunities for investments across sectors.

According to the author, Vietnam is popular for its golden demographic population, with nearly 56 percent of its people are under 35, the highest among countries in the region with similar income levels.

The article also wrote Vietnam’s middle-income class earning above 700 USD a month is estimated at one third of the population and expected to double its size by 2030. Such growth will underpin domestic consumption for services and higher value-added products.

Vietnam to get highest trade, income gains among RCEP members: WB

Vietnam is expected to register the highest trade and income gains among Regional Comprehensive Economic (RCEP) members, according to a World Bank (WB)’s working paper.

To estimate the economic and distributional impacts of RCEP in Vietnam, WB constructed a baseline and four alternative scenarios. The baseline reflects the business-as-usual conditions, where the tariff schedules of previous agreements, including the most recent CPTPP, have been implemented, in parallel with the US-China trade war.

In the baseline, between 2020 and 2035, the average trade weighted tariff imposed by Vietnam declines from 0.8 percent to 0.2 percent, while the tariffs faced by Vietnam are reduced from 0.6 percent to 0.1 percent. To measure the effects of RCEP, the policy scenario will be compared against this baseline.

The four policy scenarios will measure the RCEP implementation incrementally. The first scenario, the Tariffs scenario, is exclusively the implementation of tariffs according to the RCEP tariffs’ reduction schedules.

In the second scenario, the RCEP scenario, WB implemented reductions of tariffs and of non-tariff measures, including the tariff reduction of 35 percent on agricultural goods; 25 percent on manufacturing goods; and 25 percent on services.

Reference exchange rate up 1 VND

The State Bank of Vietnam set the daily reference exchange rate for the US dollar at 23,131 VND/USD on February 24, up 1 VND from the previous day.

With the current trading band of +/-3 percent, the ceiling rate applicable to commercial banks during the day is 23,825 VND/USD and the floor rate 22,437 VND/USD.

The opening hour rates at commercial banks stayed stable.

At 8:30am, Vietcombank listed the buying rate at 22,650 VND/USD and the selling rate 22,960 VND/USD, unchanged from February 23.

Visa, VNPAY join hands to speed up digital payments in Vietnam

Visa, the world’s leader in digital payments, and VNPAY, Vietnam’s prominent fintech company, inked a strategic partnership to enhance the digital payments experience in Vietnam during a ceremony held in Hanoi on February 23.

The two companies will make cashless payment more accessible in Vietnam through expanding and strengthening the fintech company’s affiliate network of accepting merchants, as well as rolling out new services including Visa’s Tap to Phone acceptance solution, virtual Visa prepaid cards, fund transfers powered by Visa Direct service, and the Visa Instalment Solution (VIS), among others.

According to Visa’s Consumer Payment Attitudes study 2021, 80 percent of consumers in Vietnam are interested in using mobile contactless payments like tap to phone, said Dang Tuyet Dung, Country Manager of Visa Vietnam and Laos.

VNPAY operates a network of nearly 200,000 locations nationwide, which accepts payment through the VNPAY-POS, VNPAY-QR and VNPAY-QR payment gateway.

Ample room remains for Vietnam-Singapore trade growth

Vietnam is anticipating a great chance to further promote its trade with Singapore, which has yet to be on par with the potential of both nations, as President Nguyen Xuan Phuc is scheduled to pay a State visit to the city-state from February 24-26.

Despite adverse impacts from the COVID-19 pandemic, bilateral trade hit 8.3 billion USD in 2021, up 23.3 percent from the previous year. In January 2022, the figure reached 783.9 million USD, an increase of 6.8 percent year on year.

As of February this year, Singapore had 2,860 valid projects worth 66 billion USD, ranking second among 140 nations and territories worldwide pouring capital into Vietnam. Notably, in 2021, Singapore took the lead among all foreign investors with combined registered investment of over 10.7 billion USD, accounting for 34.4 percent of the total capital attracted by Vietnam.

Guidelines on supervision, assessment of foreign investment issued

The Minister of Planning and Investment has issued a circular giving guidelines on the supervision and assessment of foreign investment activities in Vietnam.

Accordingly, Circular 02/2022/TT-BKHDT is applicable to state management agencies related to foreign investment activities, including ministries, ministerial-level agencies, provincial-level People’s Committees, investment registration agencies, agencies tasked with state management of investment in accordance with legal regulations on investment, foreign-invested economic organisations and projects operating in Vietnam.

The circular stipulates the principles for foreign investment management, one of which is not to hinder or affect the normal operations of foreign-invested organisations and projects during the process of supervision and evaluation.

The circular will take effect on April 1 this year, replacing Circular 09/2016/TT-BKHDT dated June 30, 2016.

Capital market development helps raise confidence in investor protection

The capital market will continue to play a vital role in national development moving forward, according to international investors at the recent Vietnam Business Forum (VBF).

Despite this optimism, a number of solutions have also been proposed by various experts to accelerate the development of the Vietnamese capital market. In particular, it remains necessary to focus on solutions aimed at strengthening investor protection, thereby increasing confidence in the market, as well as its overall attractiveness for foreign financiers.

According to an assessment conducted by the Capital Market Working Group of the VBF, it can be viewed as essential to continue to improve the hardware and software infrastructure of the market.

The country boasts a solid legal system, although it still requires improvements to be made to ensure the consistency of legal provisions applicable to the debt and securities markets.

Outbound tours set to rise in March and April

The demand for outbound tours is projected to grow once the nation fully reopens its borders to international tourism on March 15, according to tour operators.

Some of the destinations that Vietnamese tourists can consider include Thailand, Cambodia, Dubai in the United Arab Emirates (UAE), India, and the United States.

Many outbound tours in March and April have already been fully booked with travel firms urgently preparing to launch European tours or Australian tours.

In the near future, Dat Viet Tour Company is set to organise a group of tourists to Cambodia in support of the Vietnam U23 national team, along with a group of tourist heading to Dubai in April.

Furthermore, Hanotours company will kick off eight delegations to Dubai in March and April, while tours to the Western Europe will begin in March.

Nguyen Nguyet Van Khanh, deputy director of the Marketing Department at Vietravel Company, said the firm is gradually restoring foreign markets, adding that outbound tourism will flourish in the summer season this year.

Vu Giang Bien, director of PATTOURS, predicts that the international destinations, which will attract Vietnamese tourists will be Asia, along with the European, Russian, and African markets.

Promising start to the year for wood exports

After a trade surplus of $11.8 billion in 2021, the wood industry brought in export revenue of approximately $1.6 billion in the first month of 2022, heightening expectations for the remainder of the year.

According to the latest data from the General Department of Customs, in January the total export value of wood and wooden products stood at just over $1.5 billion, a 14.3 per cent jump on-year.

Along with March and June last year, this is the third time the sector’s monthly export turnover has exceeded the $1.5 billion mark.

As a result, wood and wood products have made it into a shortlist of export items with a turnover surpassing $1 billion in the first month of the year and are in the top three of goods with double-digit growth, ranking second after textiles and garments.

Air passengers rebound in early 2022

The number of air passengers in February reached over six million, up 57.8 per cent on-year, according to the Civil Aviation Authority of Vietnam (CAAV).

The number included 105,000 international arrivals, up 350 per cent from the same period last year, while the rest was domestic tourist travellers, up 56.1 per cent on-year.

During the month, cargo transport by air rose 27.6 per cent on-year.

The recent positive signals stir hope that the sector is likely to strongly rebound this year after suffering a bad 2021 due to the pandemic.

Hoa Phat ramps up medical oxygen supply

Due to the rising demand for medical oxygen for Covid treatment, Hoa Phat Group has announced that it is reducing the oxygen volume for steel production to ramp up its supply of medical oxygen from January to March.

This plan is aimed at sharing the difficulties of the health sector and following the Industry and Trade Ministry’s call to enhance medical oxygen production and supply for Covid treatment.

During the period of reducing oxygen for steel production, the group will be increasing the consumption of pulverized coal and foundry coke to not affect its steel production target.

Due to its change, the group’s production cost is expected to increase some VND40 billion in the first quarter of 2022.

Khanh Hoa eyes VND4t in tourism revenue in 2022

The tourism sector in the south-central province of Khanh Hoa is looking to earn VND4 trillion in revenue this year, up 80% year-on-year, according to a local tourism official.

The coastal province is expected to welcome over 1.2 million tourists this year, up 100% year-on-year, with 1.16 million domestic visitors and 40,000 international ones, Nguyen Thi Le Thanh, director of the provincial Tourism Department, told a tourism conference held in the province on February 22.

Domestic tourism would also be developed into a spearhead economic sector under the province’s tourism recovery program. Therefore, the province will ramp up efforts to promote local tourism and attract tourists throughout 2022, the official said.

The provincial tourism sector had earlier made the most of opportunities to overcome challenges posed by the Covid-19 pandemic and made preparations to recover in the new normal. As a result, in the last three months of 2021, the province served nearly 122,000 visitors, with some 4,600 of them being international travelers, and achieved over VND450 billion in revenue.

Hanoi ready to assist businesses in developing supporting industries

With the advantage of technology and manpower, Hanoi is poised to be a pioneer in helping local businesses develop supporting industries, becoming an example for other localities nationwide, Dam Tien Thang, Deputy Director of Hanoi Department of Industry and Trade said.

At a recent meeting with the Ministry of Industry and Trade on mechanisms and policies for the development ofsupporting industries, Thang said, the city’s authorities have approved the supporting industry development program for the 2020-2025 period with the goal of increasing investment attraction and improving the capacity of supporting industries in Hanoi.

Under the program, the city will form a supporting industry network, which will promote linkage among multinational corporations, manufacturing and assembly enterprises in Hanoi and nationwide, especially in the fields of automobile and motorbikes, mechanical engineering, and mobile phones.

The city will enhance the investment of local enterprises in the Hanoi Southern Supporting Industrial Park, other industrial and high-tech zones, and industrial clusters in the area. Especially, the city will speed up the investment progress and complete the technical infrastructure of Hanoi Information Technology Park and industrial zones in Soc Son and Dong Anh districts.

Ministries urged to mull over new environmental tax on fuel

Prime Minister Pham Minh Chinh has requested the Ministry of Finance to coordinate with the Ministry of Trade and Industry in mulling over reduction of environmental tax on fuel and report to the Prime Minister prior to February 28.

The Government chief made the request as fuel prices are now at historic high.

The new policy on environmental tax shall be decided by the Standing Committee of the National Assembly at the proposal of the Government.

Under current regulations, the environmental tax on RON 95 gasoline is VND4,000 per liter.

In addition to the environmental tax, gasoline is also subject to special consumption tax (8-10 percent), import tax (8 percent), and value-added tax (10 percent).

Source: VNA/SGT/VIR/VOV/VNS/Hanoitimes

Vietnam records 3.91 billion USD trade deficit in first half of February

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