Wood exports look to seize chances brought by FTAs
According to the General Department of Vietnam Customs, timber and wooden exports were estimated to fetch 2.6 billion USD in the two months, surging 15.5 percent year on year. Of the amount, shipments of wooden products hit 2 billion USD, up 11.8 percent from the same period last year.
Firms are focusing on product lines which can rake in high added value, and target markets of the US and Europe, with a hope that they may increase orders this year thanks to consumption recovery.
Products from Vietnam hold huge competitive advantages as the country is a signatory to numerous free trade agreements (FTAs). Of note, the full reopening of international flights from mid-February has facilitated trade and is expected to bolster growth of many sectors, particularly wood processing.
Firms are advised to apply technologies in production as well as pay heed to trends and customers’ demand in a bid to seize opportunities and boost export.
In addition, businesses need to take measures to prevent origin frauds because major export markets of Vietnam set stringent rules in regards to trade frauds and tax evasion.
Online travel fair hoped to draw visitors to Da Nang, central region
Danang FantastiCity 2022, an online travel fair, will take place from March 17 to 25 to help attract more visitors to Da Nang city and the central region as a whole as Vietnam will completely reopen to international tourists from March 15.
The event, at danangfantasticity.com or travelbook.vn/danang, is held by the municipal Department of Tourism and the Viettel Business Solutions Corporation.
It will feature 150 booths of companies working in the travel industry and over 60 partners from Japan, the Republic of Korea, China, India, and Southeast Asian countries.
The fair will enable participating businesses to meet potential Vietnamese and international partners to share information, connect with one another, and expand ties. Meanwhile, visitors will have a chance to join the promotional programme Fantastic Hour on March 19 and 20.
Many factors support industrial real estate market’s growth
The industrial real estate market is expected to boom thanks to good signs in foreign direct investment (FDI) and the resumption of international flights, predicted experts from Savills Vietnam.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, in the first two months of 2022, Vietnam drew 5 billion USD in FDI, equal to 91.5 percent of the same period last year, but the figure is still encouraging given the spreading pandemic. Meanwhile, 2.68 billion USD worth of FDI was disbursed in the period, up 7.2 percent year on year.
The real estate sector came second in FDI attraction in the period with 1.52 billion USD, the agency reported.
The industrial real estate market has seen the emergence of many data centre and logistics projects with high-quality investment, contributing to the promotion of Vietnam’s reputation in the international arena. The resumption of international routes will make it easier for foreign-invested enterprises to access industrial park projects in Vietnam, which will greatly support the growth of this segment in 2022, they added.
Fitch affirms ‘BB’ rating, positive outlook for Northern Power Corporation
Vietnam Electricity (EVN)’s Northern Power Corporation (EVNNPC) has retained its long-term foreign-currency issuer default rating at “BB” with a positive outlook as issued by Fitch Ratings.
This rating is at the same level as that of its State-owned parent group, EVN, and Vietnam as a whole, creating a solid basis for EVNNPC to enhance its capacity of raising capital through more diverse sources, including the international capital market and long-term bond issuance, the corporation said.
According to Fitch Ratings, the standalone credit profile of EVNNPC is supported by its dominant market position in electricity distribution in northern Vietnam and its stable and diversified customer base of over 10 million, which is largest of EVN’s five distribution companies.
That also reflects stable operations by EVNNPC, which is the only distribution company in northern Vietnam, except for Hanoi.
Its commercial electricity output is expected to grow by 8 – 9 percent in the next three years as power demand will increase in the north’s agriculture, population, and industry, making up for the pandemic-triggered decline in trading.
PV Power, Samsung, LILAMA sign EPC Contract for Nhon Trach project
PetroVietnam Power Corporation (PV Power) and the consortium of Samsung C&T Corporation, LILAMA Corporation have signed an Engineering – Procurement – Construction (EPC) Contract for Nhon Trach 3 and Nhon Trach 4 Power Plant Project (Nhon Trach 3&4 Project), and other relevant agreements.
Those in attendance at the signing ceremony held on March 14 in Hanoi, included leaders of the Government, ministries and departments, and representatives from embassies of the US, Japan, and the Republic of Korea in Vietnam, among others.
During the ceremony, PV Power also inked an Extension of Letter of Authorization for a consortium of Citibank (USA) & ING (Netherlands) to coordinate the arrangement of an ECA loan for Nhon Trach 3 & 4 Project.
At the same time, PV Power and SMBC Bank (Japan) signed a mandate letter for a US$ 200 million loan to finance PV Power’s investment projects.
Accordingly, Citibank & ING will continue to support PV Power to work with ECA organizations to arrange long-term loans for Nhon Trach 3 & 4 project. In addition, SMBC will become a lender for a ECA loan with no origin binding, no collateral, no domestic 3rd party guarantee required for the purpose of financing PV Power’s projects, including Nhon Trach 3 & 4 Project.
Germany increases natural rubber imports from Vietnam
Vietnam represents the fourth largest natural rubber supplier to Germany, shipping 40,580 tonnes worth US$84.25 million to the market last year, increasing 29.4% in volume and 77.8% in value year on year.
Statistics from the Ministry of Industry and Trade indicated that the market share of Vietnamese natural rubber in Germany rose to 14.5% last year compared to 13.8% in 2020.
In total, Germany imported 279,270 tonnes of natural rubber last year, worth US$554.14 million, up 22.9% in volume and 58.3% in value compared to 2020.
Furthermore, the Vietnamese market was the 10th largest rubber supplier to Germany, exporting 40,580 tonnes worth US$84.37 million last year, up 29.4% in volume and 77.7% in value.
The market share of Vietnamese rubber in Germany therefore enjoyed a slight increase of 4.2% last year from 3.7% in 2020.
According to statistics from the International Trade Centre (ITC), Vietnam didn’t supply synthetic rubber to Germany in 2021.
Local firms seek to cushion Russia-Ukraine conflict impact
The ongoing Russia-Ukraine conflict has led to a significant rise in oil prices, fueling production costs which have affected many industries and reduced the competitive advantages of Vietnamese enterprises, according to industry insiders.
An increase in oil prices on the world market will certainly cause fuel prices in the domestic market to increase, driving up business production and distribution costs and giving consumers a hard time. Tran Quoc Hung, who used to work at the International Monetary Fund (IMF), analysed that the rise of fuel prices by 10% on average would make GDP fall by 0.5% and inflation edge up 0.4%.
According to the recent report detailing the impact of the Russia-Ukraine war on the Vietnamese wood industry by Forest Trends Associations and other local associations, the global supply source of wood materials will be seriously hit in the event that supply sources from Russia shrink in the future.
Experts pointed out that Vietnamese enterprises are anticipated to fiercely compete with businesses from other countries in terms of the supply sources of imported wood materials, especially from key suppliers such as the EU and the US, as Vietnam heavily relies on material imports.
Despite numerous difficulties caused by the Russia-Ukraine conflict, experts said there remains plenty of room for Vietnamese agricultural products to make inroads into the EU market which imports food worth approximately US$160 billion each year.
VinaCapital lowers Vietnam’s estimated GDP rate to 6.5% this year
VinaCapital, one of Vietnam’s most experienced asset management companies, has forecast that the country’s GDP growth rate this year is likely to expand by 6.5%, or 1% lower than its previous forecast.
Michael Kokalan, chief economist of VinaCapital, stated in a recently-issued report that the ongoing armed conflict between Russia and Ukraine has created shock waves in international financial markets, putting pressure on commodity prices. However, the conflict has had a negligible impact on the Vietnamese economy.
In his opinion, direct economic relations between Vietnam and Russia remain relatively small, with two-way trade between both countries reaching approximately US$3.2 billion last year, accounting for under 1% of total Vietnamese import and export turnover. Less than 4% of Russian tourists came to Vietnam during the pre-COVID-19 period.
Though Vietnam produces significant amounts of oil, natural gas, and coal, it remains a net importer. Given high energy prices, people’s spending will also shift from consumer goods to petroleum, a move that will consequently slow down the country’s GDP growth this year, emphasised the chief economist.
Gov’t to halve environmental protection tax to stabilize petrol market
The Government has agreed with the Finance Ministry’s proposal to cut the environmental protection tax on petrol by half in an attempt to stabilize the petrol market and rein in inflation.
Under the Ministry of Finance’s proposal, such tax would be axed by VND2,000/l on petrol, VND1,000/l on diesel, VND700/l on kerosene.
The policy, if approved, would come into force from April 1 till December 31, 2022.
The much awaited policy will certainly case a loss to the State budget, but it will help ease pressure on consumers, businesses and the economy which is getting back on post pandemic recovery track. It is also expected to help reduce amounting inflationary pressure on the economy.
The Government has submitted its policy to the ongoing session of the National Assembly Standing Committee for consideration and approval.
Pilot resolution on bad debt settlement proposed to be extended until 2025
The State Bank of Vietnam (SBV) has proposed to continually handle bad debts of credit institutions based on the provisions of pilot Resolution 42/2017/QH14 until 2025 instead of this year.
The National Assembly (NA) approved Resolution 42 on piloting the bad debt settlement of credit institutions in 2017, however, the policy will expire on August 15 this year.
Under a resolution draft made public this week for comments, the SBV has proposed extending the application of the pilot resolution until August 15, 2025. During the extension, the Government will be responsible for studying and proposing to develop a new law on bad debt settlement of credit institutions.
To meet the current legal regulations related to procedures and deadlines, the Government will propose the NA allow the application of the shortened procedures to pass the extended resolution at the NA’s meeting in May 2022, according to the draft.
Experts have so far also suggested streamlining Resolution 42 to better deal with bad debts.
Attractive railway discounts offered
Hanoi Railway Transportation JS Company (Haraco) has offered attractive discounts for passenger groups on different routes.
According to the company, groups of 5-10 passengers can enjoy a 2 percent discount when buying tickets on services SE5/6 and SE11/12 between 1 and 4 days before departure. The promotion will be 4 percent when the tickets are booked between 5-19 days and 6 percent more than 20 days before the departure time respectively.
Groups of 11-42 people will receive a 4 percent discount when buying tickets 1-4 days before the SE5/6 and SE11/12 service departure time. The discounts depend on the number of passengers and when the tickets are bought.
For Hanoi-Haiphong trains, the discount will be 9 percent for groups of 11-42 members and the rate will be up to 15 percent for groups of more than 101 people. However, tickets must be bought 24 hours before the departure time.
Re-operating businesses surge over two months
The latest report of General Statistics Office has shown that 22,300 enterprises returned to operation in the first two months of this year, up 102.5 per cent over the same period in 2021.
The total number of newly-established and re-operating enterprises during the first two months reached 42,600, an increase of 46.2 per year.
Of which, Viet Nam had nearly 20,300 newly registered enterprises with a total registered capital of VND277.6 trillion, up 11.9 per cent in several enterprises but down by 17.1 per cent in the registered capital on year.
The average registered capital of a newly established enterprise also decreased by 25.9 per cent compared to the same period in 2021.
Two-thirds of SMEs in ASEAN unable to secure funding
In Southeast Asia, nearly half (48 per cent) of small-and-medium-sized enterprises (SME) had to rely on friends and family for loans, according to a new report from the cloud banking platform Mambu.
The ‘Small business, big growth’ report surveyed over 1,000 SME owners globally, who set up their company and applied for a business loan in the last five years. It reveals that reliance on personal networks has increased 11 per cent globally during the pandemic, with shrinking access to external capital for SMEs.
In Viet Nam, according to statistics of the Ministry of Planning and Investment, by the end of 2020, the country had about 800,000 operating enterprises, of which 98 per cent are SMEs, attracting more than 5.6 million workers. The role of SMEs is very important to the national economy, but the SME sector is still facing many difficulties and obstacles in accessing funding.
Pham Quang Minh, General Manager of Mambu Vietnam, said: “There have been tens of thousands of SMEs that had to suspend or dissolve recently. This number has increased 10 per cent year-on-year in 2020. The latest statistics show that 32,700 SMEs have suspended or dissolved in the first two months of the year, an increase of 51.3 per cent year-on-year. The main reason is that SMEs could not secure funding to continue the business. While financial accessibility through traditional banks is still difficult because SMEs could not fully meet the lending application requirements. SMEs need a new way of funding to fill this financial gap”.
Gojek shakes hands with MoMo
Gojek and MoMo have announced a strategic partnership, integrating the latter’s wallet on the Gojek app in Vietnam.
Gojek and MoMo will combine the technological strengths and wide-reaching ecosystems of the two platforms, aiming to accelerate the use of cashless payments and provide a safe, fast, and convenient payments experience for consumers.
Through this partnership, MoMo will support the millions of Gojek users across two and four-wheel ride-hailing services (GoRide and GoCar), online food delivery (GoFood), and logistics (GoSend), providing the option of using the MoMo e-wallet to pay for Gojek services, in addition to the existing payment methods of bank cards and cash. As Gojek continues to expand its suite of products and services, MoMo will also gain access to a growing pool of customers.
The introduction of MoMo’s e-wallet is part of Gojek’s strategy to offer users more payment options on its app, following the launch of its card payment feature last year. The partnership will enable Gojek to tap into MoMo’s ecosystem of over 31 million users, while meeting the needs of Gojek users who wish to have more payment options, especially with the rising shift to contactless payments.
Vietnamese businesses urge concrete policies for welcoming int’l visitors
Ensuring uniform compliance with regulations on pandemic prevention and control is the top priority for localities and tourism businesses once the country fully reopens to tourism.
Both Vietnam’s tourism officials and businesses said that specific regulations guiding the safety in the Covid-19 pandemic would be necessary once the country fully opens to tourism from March 15.
The Ministry of Health’s requirements to ensure medical safety for arrivals on entry are still hindrances for inbound tourism.
Nguyen Trung Khanh, General Director of the Vietnam National Administration of Tourism (VNAT) said it requires localities and tourism businesses to prioritize uniform compliance with regulations on pandemic prevention and control.
He stressed the need of having consistent policies for the fact that inconsistencies in procedures and regulations on safety and isolation remain rampant among localities.
In the latest move, the Ministry of Culture, Sports and Tourism has completed the plan to resume tourism activities from March 15, via air, road, sea, and railway at all border gates.
Vietnam Int’l Travel Mart 2022 scheduled to open in late March
The event seems like a milestone to mark Vietnam’s reopening journey in the new normal.
The annual Vietnam International Travel Mart (VITM) 2022, the big event of the tourism industry, will be held in Hanoi from March 31 to April 3 to announce the reopening of both inbound and outbound travel with specific routes.
The highlight of the mart will be a forum titled “Tourism Recovery: New Orientation- New Action”, affirming the determination of tourism leaders in bringing the industry back to the “new normal”.
The event is expected to gather around 450 exhibitors from Vietnam and four regional countries and territories including Thailand, South Korea, Japan, and Taiwan to set up some 350 booths at the week-long mart.
Vietnam Airlines, Thua Thien-Hue to boost tourism cooperation
The central province of Thua Thien-Hue and national flag carrier Vietnam Airlines have agreed on a comprehensive cooperation deal for 2022-26 to promote destinations, tourism, and local investment.
The two sides will foster a series of programmes, including communications and promotions in tourism, investment, trade, air service in the post-COVID-19 recovery plan in 2022 and the following years.
The province and Vietnam Airlines will jointly host international and regional education, culture, tourism, and promotion programmes abroad.
Vietnam Airlines will help boost the destinations, trade and investment and cultural programmes of Thua Thien- Hue through its air service worldwide, calling for investment in the tourism hub.
Following the cooperation, the national airlines officially became the carrier of the Hue Festival 2022.
Industrial production index up 8.5 percent in February
Vietnam’s index of industrial production (IIP) in February rose by 8.5 percent year-on-year, marking the fourth consecutive monthly increase, according to the Ministry of Industry and Trade (MoIT).
The processing and manufacturing industry, which accounted for over 70 percent of total industrial output, still played a main driver of the growth.
The ministry said the resumption of supply chains in key industries in the first quarter has helped remove bottlenecks in the manufacturing supply chain.
The MoIT said it is necessary to ensure the sufficient supply of raw materials and energy to create momentum for, and meet the needs of production and business recovery and socio-economic development in next months.
Attention should be also paid to resolving difficulties facing key industrial projects, and factories to help them maintain and recover gradually their production activities, it added.
Gov’t approves draft resolution on environmental protection tax on petrol