The Airports Corporation of Vietnam (ACV) has expressed concerns over potential delays facing the first phase of the Long Thanh International Airport project as numerous sites have not yet been cleared for handover to contractors.

ACV has formally requested Dong Nai authorities to expedite the handover of remaining sites necessary for the first phase of the airport project.

According to ACV, despite 99% of cleared land being delivered for the construction of the road system connecting to road T1, challenges persist in site clearance at the interchange between T1 road and the Bien Hoa-Vung Tau expressway project, as well as a section at Bung Mon Bridge.

Moreover, although over 89% of cleared land has been handed over to road T2, 9% of the land is not yet ready for construction commencement.

Obstacles remain at the interchange between road T2 and the HCMC-Long Thanh-Dau Giay Expressway, impeding the construction progress of the overpass on the expressway. Additionally, unresolved electricity works pose safety risks and disrupt project schedules.

ACV also said that the construction of drainage systems essential for water diversion from reservoirs 2 and 3 to areas outside the airport, as well as the fencing system encompassing 5,000 hectares of land, cannot start until cleared land is provided.

The Long Thanh International Airport project, slated for three phases of development with a total investment of VND336.63 trillion, necessitates swift resolution of site clearance issues to ensure timely project execution.

Binh Duong, UK cooperate in promoting green energy

The People’s Committee of the southern province of Binh Duong, in collaboration with the British Consulate General in Ho Chi Minh City, organised a conference on green energy on April 9, aiming to optimise the use of renewable energy and facilitate knowledge exchange between the locality and experts on sustainable energy development.

On this occasion, the Eastern International University, Becamex IDC, the UK’s Q-Energy and the British Chamber of Commerce Vietnam, announced a cooperation project on energy solutions. 

Entitled Vietnam Intelligent Energy Trading Platform for Upscaling Local Energy Storage and EV (VIET PULSE), the project is intended to solve basic problems in using renewable energy in Vietnam such as instability in energy supply to customers.  

Under the project, necessary infrastructure for solar battery systems, electric vehicle charging stations and energy storage battery systems will be installed, along with expanding research and implementation of energy management systems to optimise electricity consumption and install renewable energy systems as well as applying Big Data and AI technologies to coordinate resources used in the same basic infrastructure complex and build an energy sharing model between units.

Addressing the event, British Consul General in HCM City Emily Hamblin said that the UK Government highly evaluated its partnership with Vietnam to prioritise supporting green transition. 

She said that staff at the Consulate General in HCM City and the UK Embassy in Hanoi are working closely with the Government of Vietnam and relevant parties to increase support for the country in implementing its net-zero emission commitment.

Vice Chairman of the Binh Duong provincial People's Committee Mai Hung Dung said the province highly appreciated the cooperation programme between Q-Energy of the UK and the Eastern International University on the project that promotes joint efforts to minimise negative impacts on the environment and create a more sustainable future.

It reflects the strong commitment of the provincial People's Committee and partners in promoting sustainable development and green energy transition, he said, adding that this cooperation not only creates opportunities for the application of advanced technology but also marks an important step in building a business environment towards sustainability and high efficiency./.

Top legislator attends Vietnam - China seminar on SoE reform, state capital management

National Assembly Chairman Vuong Dinh Hue attended a Vietnam - China seminar on State-owned enterprises (SoE) reform and management of state capital at enterprises in Beijing on April 9.

The event, part of the top legislator’s official visit to China, saw the presence of Vietnamese and Chinese officials and 250 delegates representing over 100 businesses of the two countries.

In his opening remarks, Vietnamese Deputy Prime Minister Tran Luu Quang emphasised the significance and progress of bilateral economic, trade, and investment cooperation, including partnerships between the two business circles, which, he said, is generating tangible and long-term benefits for both sides.

He also highlighted similarities between the socio-economic development viewpoints of Vietnam and China, including prioritising sustainable development that centres on people and bases on science, technology, and innovation.

Nguyen Hoang Anh, Chairman of the Vietnamese Commission for Management of State Capital at Enterprises, noted the special importance of SoEs which contribute to almost 30% of Vietnam’s GDP, employ about 700,000 workers (accounting for 7.3% of all businesses’ workers), hold a leading role in some sectors, and generate a considerable source of revenue for the state budget.

However, SoEs in Vietnam still face certain shortcomings, he pointed out, elaborating that some still show limited efficiency, competitiveness has yet to match the resources they possess, and their outstanding role in boosting the development of other economic elements hasn’t been shown clearly.

Zhang Yuzhuo, Chairman of the State-owned Assets Supervision and Administration Commission of the State Council of China, stressed the necessity to promote the role and professionalism of state-owned capital supervision and management agencies, as well as fostering SoEs’ operations in the market and integration.

He said the seminar was an occasion for the two sides to discuss and work out solutions to challenges. As SoEs form a crucial force for national modernisation in each country, it is necessary to develop leading and open businesses with rich vitality that serve as pillars of the national economies, help with social stability, and are able to cope with crises.

At the event, participants discussed results and lessons of state-owned capital and asset management in China, SoE reform experiences and issues in Vietnam, along with other major matters. They also looked into ways to further improve SoEs’ role in each economy and the two countries’ economic cooperation./.

Tax sector’s budget revenue increases by nearly 11% in first quarter

The tax sector’s total state budget revenue in the first quarter of 2024 was estimated at 490.2 trillion VND (19.64 billion USD), equal to 33% of the estimate for the year, and 10.9% higher than the figure of the same period last year, the General Department of Taxation announced on April 9.

Of the total revenue, domestic revenue was estimated at 474.46 trillion VND, equal to 32.9% of the estimate for 2024, an increase of 11.5% over the same period in 2023.

Regarding the implementation of tax policies to support people and businesses to recover and develop production and business after the COVID-19 pandemic, the total amount of tax and land rent exempted and reduced in the first three months of 2024 was estimated at 18 trillion VND.

Regarding the implementation of the e-invoice policy, by the end of the first quarter, tax agencies received and processed 7.12 billion e-invoices, including 2 billion invoices with the tax authority's verification codes and more than 5.12 billion invoices without the codes.

By the end of the first quarter of 2024, 50,303 businesses had registered to use e-invoices generated from cash registers. More than 252.8 million invoices were generated from cash registers.

As of March 31, 15,931 petrol stations nationwide had issued electronic invoices for each sale or 99.97% of the total number of petrol stations across the country./.

Measures sought for coffee firms to adapt to EU Deforestation Regulations

Experts gathered in the Central Highlands province of Gia Lai on April 9 to seek measures to help local coffee businesses to adapt to the EU Deforestation Regulations (EUDR) and promote exports to the EU market in particular and the world in general.

Under the EUDR, the European Commission (EC) will ban the import of agricultural products whose production process originates on land that resulted from deforestation after December 31, 2020, including livestock farming, cocoa, coffee, rubber and wood products.

The deadline to implement the EUDR for large-scale firms is December 2024, and for small and medium-sized enterprises is June 2025.

According to experts, the application of EUDR will pose many challenges to small and medium-sized enterprises in Gia Lai where export value from coffee accounted for nearly 71% of the total export revenue in 2023.

Currently, Gia Lai has about 37,538 hectares of coffee meeting VietGAP, 4C, Rainforest Alliance and Organic standards. Local coffee products are sold in many choosy markets such as the US, the EU and Japan.

According to Vice Director of the provincial Department of Agriculture and Rural Development Doan Ngoc Co said that Gia Lai’s agricultural products will face many challenges in satisfying EUDR standards, especially in proving that the “relevant goods” or “relevant products” do not cause deforestation according to EUDR requirements.

When "relevant goods" or "relevant products" cannot be imported into the EU market, agricultural products of Vietnam in general and Gia Lai province in particular are likely to have their prices squeezed when they are exported to other markets with fewer compliance requirements, he explained.

According to the official, the majority of local residents in Gia Lai reside in far-flung areas and live in the forests with nomadic farming habits, which makes it difficult for the province in management activities and poses difficulties for the local coffee industry.

Dr. Nguyen Trong Cuong from the Department of Forestry under the Ministry of Agriculture and Rural Development proposed some solutions for the coffee industry of the country and Gia Lai to adapt to the EUDR, including establishing forest database for the EU's use, and forming forest boundaries and forest developments to serve as a basis for industries to prove that products meet the requirements in anti-deforestation and product traceability.

At the same time, it is necessary to develop forest maps and data, production area maps according to the timeline prescribed by the EUDR, he said, advising the coffee industry to set up a product traceability system from farms to local agents./.

Dated policies on gold necessitate modernisation

Experts have called for regulatory changes to align Vietnam’s gold prices with global rates, suggesting authorised imports by businesses to reduce smuggling, stabilise the market, and increase foreign reserves.

Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said at last week’s meeting of the council headed by Deputy Prime Minister Le Minh Khai in Hanoi that Decree No.24/2012/ND-CP from 2012, which aimed at curtailing the “goldisation” of the economy, has essentially fulfilled its mission. The term can refer to holding gold reserves to act as a hedge against inflation.

“Given the current context, the regulations set by Decree 24 are no longer necessary and may adversely affect other macroeconomic factors. The high gold prices and significant discrepancies with global rates could spur unorthodox gold import activities, thereby straining the exchange rate locally,” Luc said.

“SJC gold bars, in reality, are no different from other gold brands, yet the price differential has reached $400-500 per tael recently. This has created an artificial value for businesses and the economy, leading to smuggling due to the price discrepancies in gold.”

Therefore, he suggested that abolishing the gold monopoly is a necessary step to reduce domestic gold prices, thereby minimising gold smuggling, increasing foreign currency in the economy, possibly boosting foreign reserves, and stabilising the exchange rate.

Financial expert Le Xuan Nghia recalled that the economy a decade ago was “goldised” because commercial banks were allowed to accept deposits and provide loans in gold. “The monopoly on gold should be abolished, since the context that created it no longer exists. There will permanently be no more inflation-hedging of gold, as it is not accepted as a deposit in the banking system.”

On the other hand, Nghia noted that when the domestic gold price is significantly higher than the global price, it leads to gold smuggling for profit margins.

“When the price difference is low, the incentive for smuggling vanishes,” he said. “According to the World Gold Council, approximately 50 tonnes of gold is smuggled annually, equivalent to $3 billion. This is utterly unacceptable.”

He believed allowing businesses to independently import gold would necessitate purchasing USD through the banking system and opening letters of credit for official gold imports. This would eliminate the practice of buying USD on the free market for smuggling purposes, relieving pressure on the exchange rate. Businesses could also add value through the export of gold jewellery, thereby increasing foreign currency earnings, a practice Vietnam encourages.

He also emphasised that no country in the world now has a central bank monopolising gold bar business. Instead, central banks hold gold reserves as national reserves alongside USD to diversify risk. China, Russia, and India continue to buy gold for their reserves annually.

Meanwhile, Huynh Trung Khanh, vice chairman of the Vietnam Gold Business Association, revealed that the association has proposed to the regulatory authorities that three key businesses - PNJ, SJC, and DOJI - be granted permission to import 1.5 tonnes of gold annually, equating to each company importing 500kg per year.

“Our recommendation focuses on allowing the importation of raw gold, primarily for the crafting of jewellery. The three nominated companies represent the pinnacle of gold trading within the sector. We’re advocating for a pilot initiative tailored to these entities, rather than a broad application,” Khanh said.

He further explained that the importation process would not involve a single transaction of 1.5 tonnes, but would instead be staggered across multiple occasions, subject to the discretion of the State Bank of Vietnam. “It is not a large amount, considering the domestic demand for gold jewellery stands at approximately 20 tonnes,” Khanh added. “Translating into monetary value, we’re looking at just over $30 million for 500kg. The aggregate value of importing 1.5 tonnes of gold, encompassing import costs and taxes, amounts to around $100 million.”

Khanh also expressed confidence that importing gold would diversify the market. “This will undoubtedly lead to a decrease in domestic gold prices, effectively reducing the gap between international and domestic rates. The public stands to gain from this, and it promises a more stable gold market,” he said.

Elsewhere, financial expert Nghia proposed abolishing the monopoly on gold supply, allowing qualified businesses to import gold, returning the SJC brand to Saigon Jewellery Company, and removing gold management quotas in favour of tax management. The central bank could still maintain gold reserves and intervene when necessary.

“The state could encourage imports by reducing taxes and vice versa it can earns tax revenue and remains in control,” he said. “Abolishing the SJC gold bar monopoly is expected to increase supply, lower gold prices to closer align with the global market, and, by returning the SJC brand to Saigon Jewellery Company, reduce the domestic price of SJC gold bars to similar levels as standard 9999 gold or slightly higher due to branding.”

Vietnam poised to reap rewards of rebound in global demand: AMRO

Vietnam continues to shine as a manufacturing hub in the region, although it faced significant challenges last year amid a tough global economic landscape. Nevertheless, it is poised to reap the rewards of the rebound in global demand.

“Projections indicate that this year, the country's GDP is expected to expand by at least 6%, driven in large part by the resurgence in global economic activity, especially within the electronics sector,” said Chief Economist Hoe Ee Khor of the ASEAN+3 Macroeconomic Research Office (AMRO) during the launch of its annual flagship report the ASEAN+3 Regional Economic Outlook (AREO) 2024 today [April 8].

Another positive sign as Hoe mentioned, is the fact that Vietnam stands primed to attract substantial foreign direct investment (FDI), partly due to ongoing geopolitical tensions and the evolving dynamics of global trade and investment.

“It has emerged as a favored destination for the "China+1" strategy, alongside peers like Indonesia and Malaysia. Notably, Vietnam boasts a well-established manufacturing ecosystem that appeals to investors seeking stability and growth,” Hoe told The Hanoi Times.

Looking ahead, Hoe said Vietnam's extensive coastline exposes it to the growing threats of climate change and extreme weather events. Consequently, there is a pressing need for the country to invest in climate change adaptation measures, focusing on the development of weather-resilient infrastructure, he noted.

In parallel, Vietnam must also prioritize mitigation strategies. Given its continued allure for FDI and the burgeoning opportunities in renewable energy, the country is well positioned to attract green investments that can drive sustainable growth, Hoe said.

“The central challenge lies in striking a balance between the costs associated with climate change adaptation and the opportunities for long-term economic development. By effectively managing this balance, Vietnam can pave the way for resilient and sustainable growth in the years ahead,” he noted.

For the ASEAN+3 region (including China, Japan, and South Korea), AMRO forecasts growth of 4.5% this year, up from 4.3% in 2023, and next year, 4.2%.

The stronger growth for ASEAN+3 this year will be mainly driven by robust domestic demand, underpinned by increasing household incomes and recovering investment activity. The anticipated turnaround in exports, in part due to the global chips upcycle, and the continued recovery of tourism will provide additional tailwinds.

The ASEAN region is expected to benefit from a combination of these favorable factors, with growth in 2024 and 2025 forecast at 4.8 and 4.9%, respectively.

With global commodity prices continuing to stabilize, inflation in ASEAN+3—excluding Laos and Myanmar—is expected to moderate from 2.8% last year to 2.5% in 2024, before easing further to 2.3% in 2025.

Nevertheless, AMRO cautions against taking the region’s positive momentum for granted, given the potential for disruptions to the growth trajectory.

“A sudden spike in global commodity prices, weaker-than-expected growth in China, or escalating geopolitical tensions could turn the tide for the region,” said Hoe. “Now that the current outlook is quite positive, given robust growth and gradual disinflation, ASEAN+3 economies need to rebuild policy space as much as they can.”

Almost a year after the World Health Organization declared the end of the Covid-19 pandemic,  ASEAN+3 continues to grapple with pandemic scars. The global health crisis has taken a toll not only on economic activity but also on the labor force and capital formation, especially infrastructure. Trend growth for most regional economies has remained lower than the pre-pandemic levels, and the recovery in capital formation has been particularly weak.

“Revitalizing growth requires boosting investment and embracing technology to raise productivity and resilience, especially of smaller firms,” said Khor. “Stepping up regional collaboration can be instrumental in achieving this goal.”

AMRO also calls on the ASEAN+3 economies to work more closely together in response to three key secular trends: aging, global trade reconfiguration, and rapid technological change.

While these structural shifts pose various risks, they also create new sources of growth and productivity gains. Balancing the risks with the opportunities they offer will help ASEAN+3 secure sustainable, resilient, and inclusive growth over the long term.

“Aging presents a critical challenge for the ASEAN+3 region,” said Allen Ng, AMRO Group Head and one of the lead authors of the AREO report. "At the same time, it's important to recognize that the region is not just aging. We are also living longer and healthier lives. Adapting to this ‘longevity dividend’ and enabling our populations to age productively will be crucial for the region's future."

Similarly, while the ongoing trade reconfiguration is casting concerns about the region’s time-tested export strategies, it is also creating new opportunities. One example is the spike in FDI inflows to several ASEAN economies and the strong growth in ASEAN+3’s exports of “modern” services, especially those that can be delivered digitally.

However, there is growing about technology’s potential impact on the future of industries and jobs in ASEAN+3, especially with the rapid advances in artificial intelligence technologies such as Generative AI.

“Navigating these crosscurrents requires prioritizing robust policies to secure growth under various possible futures. For ASEAN+3, this includes deepening infrastructure development as well as promoting innovation and social inclusion,” Ng said.

Coffee prices predicted to keep rising under impact of world prices

The Vietnam Coffee Cocoa Association (VICOFA) predicted that prices of coffee in the country will keep increasing because coffee prices in the world have constantly fluctuated.

However, VICOFA said that it is difficult to say how much the specific increase will be.

The Vietnam Coffee and Cocoa Association (VICOFA) said that the general trend is that domestic coffee prices are still increasing due to the direct impact of constantly fluctuating world coffee prices; yet, the association can’t forecast the specific increase level.

According to the Ministry of Agriculture and Rural Development, Vietnam is the second largest supplier of coffee output in the world after Brazil. According to estimates, prolonged drought and heat will reduce output by about 20 percent in the Southeast and Central Highlands regions.

Purchasers and processing coffee exporters said that if the prices of raw coffee continue to increase and are as difficult to forecast as they are currently, it will continue to affect production and business activities. As a consequence, many businesses dare not to sign stable export contracts with partners but only spot contracts - buying or selling coffee for immediate settlement (payment and delivery) on the spot date.

Economic experts also warn that rising coffee prices will be very beneficial for farmers.

However, increasing prices will show signs of virtual increases resulting in some instability in the domestic market because establishments holding large amounts of coffee stop selling or they are hoarding goods to wait for new prices, which can lead to a frozen market or slow transactions.

The Ministry of Agriculture and Rural Development further informed that this year's coffee crop will not be harvested until around October. To ensure stable productivity and the output of raw material, the Department of Crop Production under the Ministry of Agriculture and Rural Development has sent a document to localities requesting to assess the current production - consumption situation as well as the weather to continue to monitor developments and provide forecasts so that responsible agencies can give early guidance.

According to Director Nguyen Nhu Cuong of the Department of Crop Production’s preliminary assessment, this year's productivity and output of the coffee crop in the country only reduced due to drought. In the immediate future, the Department of Crop Production continues to ask localities to guide people in implementing preventative measures to cope with drought early and work to have enough water for irrigation.

Ministry of Industry, Trade warns 11 petroleum wholesalers

The Ministry of Industry and Trade has just issued an official letter to warn 11 petroleum wholesalers to strictly submit special audit reports on the Petroleum Price Stabilization Fund.

The mentioned enterprises were Thien Minh Phuc Group Joint Stock Company, Nam Song Hau Trading Investing Petroleum Joint Stock Company, Saigon Trading Corporation, Hong Duc Petroleum Company, Duong Dong Group Joint Stock Company, S.W.P Southwest Petroleum Limited Company, Tan Nhat Minh Petroleum Joint Stock Company, Trung Linh Phat Limited Company, Phuc Loc Ninh Joint Stock Company, Hung Hau Petroleum Limited Company and Appollo Oil Joint Stock Company.

According to the Ministry of Industry and Trade, the wholesale petroleum enterprises are recommended to submit reports on setting up, spending, using and managing the Petroleum Price Stabilization Fund periodically every six months.

However, the Ministry of Industry and Trade has not received any special audit report of the 11 enterprises mentioned above from July 1, 2023 to December 21, 2023.

Exchange rates hover near historical highs

According to an SSI Research study last week, domestically, the USD/VND exchange rate exhibited divergence across different markets. The interbank exchange rate rose by 0.1 per cent, closing on March 29 at 24,790 VND/USD - a 2.15 per cent increase since the end of 2023, and just 0.3 per cent below the historical peak. The exchange rates listed by Vietcombank and in the informal market are also oscillating near historical highs.

“Despite positive trade balance and foreign investment disbursement figures for March, the exchange rate trend has been less favourable due to strong international market pressures. The State Bank of Vietnam (SBV) may need to implement more vigorous measures to cool the demand for USD,” SSI highlighted.

Reflecting on 2023, SBV Deputy Governor Dao Minh Tu described the exchange rate dynamics as “highly volatile,” attributed to the challenges posed by global economic policy shifts directly impacting Vietnam, especially in the trade sector.

Entering 2024, exchange rate concerns have persisted. According to Tu, a significant factor contributing to this trend is the Fed’s ongoing ambiguity regarding monetary policy easing and interest rate cuts, which has recently bolstered the US dollar considerably. This surge has affected the valuation of global and regional currencies, including VND.

“Moreover, the SBV has observed an increased pressure on the exchange rate due to Vietnam’s reduced interest rates, further exacerbated by a negative interest rate differential between the USD and VND in the interbank market,” Tu said.

In the last 20 trading sessions on the Ho Chi Minh Stock Exchange up to April 3, foreign investors have net sold approximately VND14.3 trillion ($595.8 million), and one of the key reasons identified by experts is the significant pressure from the exchange rate.

“To prevent devaluation of their USD-denominated investments, they have opted to withdraw capital from the Vietnamese stock market to preserve investment value and await a more stable exchange rate,” an industry insider told VIR.

“The strategic retreat by foreign investors from Vietnam’s stock market is primarily a defensive move to shield their investments from exchange rate volatility. In light of the current financial climate, preserving capital has taken precedence, with a keen eye kept on the exchange rate for a potential re-entry point,” he added.

The expert also stated that Vietnamese companies engaged in export and import operations possess the advantage of minimising exchange rate risk, courtesy of their stable foreign currency cash flows, which facilitates the strategic retention of funds for debt servicing.

Tu of the SBV assured, “The SBV’s management ensures that the current exchange rate maintains stability and secures a healthy foreign exchange market.”

He also noted that the VND’s depreciation rate against the USD remains modest compared to other major currencies, with a 2.9 per cent decrease in 2023 and a current interbank rate increase of 2.6 per cent. This is relatively low when juxtaposed with the depreciation rates of other key economies against the USD, highlighting the global impact of USD exchange rate fluctuations on these economies.

“The SBV is fully prepared to intervene in the market using our foreign exchange reserves to ensure stability. It’s vital for both the public and businesses to understand that exchange rate management is central to our government’s policy, rigorously managed and controlled. We are dedicated to proactively using our monetary tools to maintain exchange rate stability in the future,” Tu emphasised.

Vietnam becomes biggest durian exporter to China

Vietnam has surpassed Thailand to become the biggest exporter of durian to China.

According to the former director of the Dong Thap Provincial Centre for Agriculture Promotion, Nguyen Phuoc Tuyen, statistics from the China Customs General Department showed that Vietnam was currently the top durian exporter to the country.

China imported 53,110 tonnes of fresh durian worth USD283.60 million in the first two months of this year. Vietnam exported 32,750 tonnes to the country during this period, earning USD161 million; while Thailand exported 19,016 tonnes valued at USD 120.30 million.

The figures showed that Vietnamese durian accounted for 57 percent of China’s imports, up from 32 percent of last year. Meanwhile, Thailand saw its exports plunge by over a half in volume and 45.20 percent in value compared to the same period last year.

However, despite recent price hikes, Vietnamese durian prices were almost 20 percent lower than Thailand’s.

In March the prices of the highest quality Monthong variety in the Mekong Delta region reached between VND218,000-230,000 per kilo.

Vietnam’s durian exports are expected to earn USD3.50 billion this year, up 66 percent from last year.

Forex market under significant pressure

Large fluctuations in the forex market in the early months of this year have been contributed to several internal factors. Economic experts believe that measures so far have been insufficient, and market-driven interest rates are forecasted to rise in the near future.

Market experts believe the main issue has been the increase in foreign currency demand due to Vietnam's growing import demand. According to the General Statistics Office, imports in the first two months of 2024 were valued at just under $55 billion, up 18 per cent on-year. In addition, domestic gold is more expensive than international gold, leading to increased demand. Credit also remains weak, with a decrease of 0.33 per cent as of March 18 compared to the end of 2023.

"By the end of last year, the USD exchange rate had increased by about 2.9 per cent compared to the beginning of the year, and it was about 1.2 per cent off the peak. Although VND has depreciated in line with global trends, it remained quite stable in 2023. Other currencies in the region have also depreciated against the dollar, for example, Malaysia's ringgit depreciated by 4.3 per cent, and the Chinese yuan depreciated by 2.9 per cent," said Tran Thi Khanh Hien, director of research at MB Securities.

Last year, the ringgit, yuan, and Thai baht were all weak, so Vietnam did not need to restrain the exchange rate too much while still maintaining the competitiveness of its currency. However, at present, only the VND is weak, so the level of exchange rate maintenance will be higher than last year.

One of the solutions implemented by the operator is to issue bonds after a 4-month hiatus to stabilise the exchange rate. On March 11, the State Bank of Vietnam (SBV) offered bonds, and by March 26, the pace of money withdrawal had decreased slightly, with only a little over $154 million being withdrawn from the system through bond instruments with a term of 28 days. Therefore, since the resumption of the bond channel, the SBV has attracted nearly $6.5 billion in liquidity and has not yet made any additional injections, and as of April 8, the first new bond lot has matured.

In mid-March, the SBV consulted on the draft circular amending and supplementing Circular 02/2021/TT-NHNN guiding foreign exchange transactions on the forex market of credit institutions permitted to operate in the foreign exchange market.

Determining the forward exchange rate in forward transactions, forward transactions in swaps between credit institutions with each other, and between credit institutions and customers will be based on the SBV's regulations instead of being limited to the forward exchange rate ceiling based on the interest rate differential basis.

According to economic experts, this will help the SBV have more flexibility in pre-emptive management of market fluctuations. However, the pressure on the international market remains high as positive economic indicators from the United States means the SBV may have to implement stronger measures.

According to analysts, at the beginning of the money withdrawal, the interbank interest rate increased from 0.7 per cent to 1.4 per cent in two days before falling back. Although the SBV withdrew nearly $8.33 billion, the interbank interest rate remained unchanged, so this measure may be futile.

Commitments on import duties from CPTPP members for Vietnam

CPTPP members eliminate import duties of 97-100 per cent tariff lines for goods originating from Vietnam. Most Vietnamese goods when imported into CPTPP members will be subject to import duties of zero immediately when the agreement enters into force. Some preferential import duty commitments of CPTPP members are as follows:

- Canada commits to eliminating import duties on 95 per cent of tariff lines, which is equivalent to 78 per cent of exports from Vietnam to Canada when the agreement enters into force.

- Japan promises to remove import duties on 86 per cent of tariff lines, which is equivalent to 93.6 per cent of exports from Vietnam to Japan when the agreement enters into force, and import duties on 90 per cent of tariff lines will be zero after five years.

- Peru commits to erasing import duties on 80.7 per cent of tariff lines, which is equivalent to 62.1 per cent of exports from Vietnam to Peru when the agreement takes effect, and import duties of 99.4 per cent of tariff lines will be zero after 17 years.

- Mexico pledges to eliminate import duties on 77.2 per cent of tariff lines, which is equivalent to 36.5 per cent of exports from Vietnam to Mexico when the agreement becomes valid, and import duties of 98 per cent on tariff lines will be zero after 10 years.

- Chile commits to phasing out import duties on 95.1 per cent of tariff lines, which is equivalent to 60.2 per cent of exports from Vietnam to Chile when the agreement enters into force, and import duties of 99.9 per cent of tariff lines will be zero after eight years.

- Australia promises to remove import duties on 93 per cent of tariff lines, which is equivalent to 95.8 per cent of exports from Vietnam to Australia (about $2.9 billion) when the agreement takes effect. Import duties on other tariff lines will be zero after a maximum of four years.

- New Zealand vows to eliminate import duties on 94.6 per cent of tariff lines, which is equivalent to 69 per cent of exports from Vietnam to Chile (about over $1 billion) when the agreement enters into force, and import duties on other tariff lines will be zero after seven years.

- Singapore commits to erasing import duties on all tariff lines when the agreement becomes valid.

- Malaysia pledges to eliminate import duties on 84.7 per cent of tariff lines when the agreement enters into force. After 11 years, 99.9 per cent of the tariff lines in Malaysia will be reduced or eliminated.

- Brunei vows to remove import duties on 92 per cent of tariff lines when the agreement takes effect. Import duties of 99.9 per cent tariff lines will be zero after seven years and all tariffs will be eliminated after 11 years. Source: Vietnam’s Ministry of Industry and Trade

Apartment hikes hint at speculation return

Apartments in Hanoi are reaching record-high selling prices due to supply and demand differences and low interest rates, which some experts say is distorting the market.

Nguyen Kim Dung, an executive at a foreign-invested company, was surprised to see the price of apartments going up recently. “I spent VND3 billion ($125,000) for an apartment in January, and someone has just asked VND3.4 billion ($141,600) for it. I can earn 10 per cent within only two months,” she said.

In addition to raising the prices of new projects, old ones are going up, too. Tran Hoang Hai, a teacher at a university in Long Bien district, looking for an apartment for her parents nearby, is shocked by the current prices.

“My apartment cost around VND1.3 billion ($54,000) five years ago, but now all the housing here and in surrounding buildings are more than VND2.2 billion ($92,000),” Hai said.

According to CBRE Vietnam, a commercial real estate brokerage, last year prices of most projects increased sharply by 10-45 per cent on-year. And in 2024, apartment prices will likely increase by 16-24 per cent on-year.

With price rises maintaining at double digits, the Hanoi apartment market has witnessed the strongest price hike over the past five years. Previously, the average price climb in Hanoi apartments was very low at 2–3 per cent annually.

A senior expert from CBRE Vietnam’s Professional Services, said that housing supply was scarce now, while demand continued increasing.

“Last year, about 11,000 new units were launched for sale on the market. This was a minimal number, equalling 20-25 per cent compared to previous years. 2023 was also the fifth consecutive year that the Hanoi property market reported a decrease in supply, and the total number of new supplies was the lowest level over the past decade,” the expert said.

Meanwhile, demand in the market is huge due to Hanoi’s population growth and urbanisation rate. “This is the time for a boom of strong demand,” she added.

However, according to experts the key reason has been the low interest rates, which have been maintained for more than a year. A large amount of money that was deposited in banks for 1-2 year terms to enjoy high interest rates has reached maturity. That’s why they have decided to withdraw their savings to put money into real estate, including the apartment segment.

In the past, apartments were not an attractive segment for investors because the profit from subleasing each year was only about 5 per cent. However, the recent situation has changed with apartments, and investors can earn annual profits of 16 per cent at least, in addition to the cash flow from rental. So the efficiency of investing in housing is excellent, much better than depositing money in the bank.

Nguyen Quoc Anh, deputy director at batdongsan.com.vn, said that the prices would surge going forward, especially for the commercial housing segment.

“For commercial housing projects, developers must be proactive in compensating for site clearance at market prices. This also increases project investment costs, causing the high selling prices,” Anh said. “If housing prices continue to surge for a long time, it will ‘distort’ the property market, hindering middle- and low-income people from buying a house or an apartment.”

However, Hanoi Land Registration Office has yet to see any big surge in recent months. Even the number of applications submitted after the Lunar New Year decreased by half compared to the end of last year. Specifically, the office received more than 22,000 applications last November, and the quantity exceeded 10,000 applications in February.

“The number of registration applications has increased in the past two months, but there is no sudden change compared to the end of 2023. In the early months of the year, people’s psychology is not likely to buy real estate, so the annual number of deals and registrations often dips,” said Pham Hoai Nam, director of the Registration Office for Gia Lam district.

At the end of 2023, there were about 27,500 apartments in inventory in Hanoi, mainly middle and high-end segments (accounting for 85 per cent), and primary apartments (9 per cent). Thus, there is no shortage of supply in Hanoi, but only a shortage of affordable housing.

“However, some investors and real estate companies have provided market forecasts that lack transparency and conviction, pushing prices up to an incorrect value. People with a crowd mentality think that land prices will continue rising, so they are looking for houses right now. Homeowners and landowners have followed the rumours and raised selling prices unreasonably,” real estate broker Tran Tuan Binh told VIR.

Korean firms in Vietnam face growing competition from China

Japan’s news service Nikkei Asia recently published an article to highlight that many leading companies from the Republic of Korea (RoK) operating in the Vietnamese market are facing fierce competition from Chinese peers.

From Samsung Electronics to LG, RoK companies have long led foreign direct investment in the nation, thereby making the country a critical manufacturing hub in global supply chains, according to a representative of the Korea Chamber of Commerce and Industry (KCCI) in the country.

"Looking at the cumulative amount of investment in Vietnam since 1988, the Republic of Korea (RoK) ranks first with US$85.8 billion, ahead of Singapore and Japan. However, in recent years, the Republic of Korea has been in a neck-to-neck competition with China," Kim Hyong-mo told Nikkei Asia in an interview.

Last year saw the RoK rank fourth in terms of foreign direct investment in the nation, lagging behind Hong Kong (China), China, and Singapore.

Among the RoK’s projects announced last year was LG Innotek's US$1 billion investment in Hai Phong to expand the production of camera modules.

However, companies from the RoK have been cautious about new investments due to the global economic slowdown, according to Kim. 

"Many Korean companies find it challenging to expand investments in Vietnam due to rising labor costs, especially as Chinese companies also increase their presence in the country," he said.

However, the open trade and investment environment locally, along with its geopolitical advantages and domestic political stability, will continue to position the country as an attractive investment destination, Kim noted. 

He referred to some challenges that have impacted investment momentum, including the rising minimum wage, which will increase by about 6% on average from July, as well as a general shortage of highly skilled workers.

Kim said the nation’s recent implementation of a global minimum corporate tax of 15%, in accordance with a global agreement, could undermine its attractiveness as an investment destination.

Due to the minimum tax rule, the nation’s tax revenue will reportedly increase by more than VND14.6 trillion, equal to roughly US$588 million, of which VND10 trillion will be borne by RoK companies in 2024.

Asked if the RoK’s companies will shift to other countries, such as India, Kim said, "Considering the background of many Korean companies moving from China to Vietnam in search of cheaper labor costs, it's inevitable that labor costs will also rise in Vietnam. However, while there is a need to explore alternative investment destinations to Vietnam, they won't be easily found."

He stressed that KCCI member companies he recently spoke to are not considering withdrawing from Vietnam or retreating on their investments despite a series of issues. "Korean companies have firmly established their position through trade, investment and continuing production activities in Vietnam,” he concluded.

Diverse events promotes Vietnam - Malaysia co-operation

The National Trade Promotion Agency of Malaysia (MATRADE) has unveiled that it plans to organise a series of events in multiple fields throughout the year in order to further promote economic ties between Vietnam and Malaysia.

One of the outstanding events includes the 24th Southeast Asian Healthcare and Pharma Show (SEACare) which is due to run from April 17 to April 19 and the SEMICON South East Asia 2024 expo scheduled for May 28- May 30 to promote technologies in the semiconductor components industry.

Another outstanding event will be the Malaysia International Halal Showcase (MIHAS 2024) which is slated to take place from September 16 to September 20, providing an ideal platform for businesses as they strive to enhance trade connectivity and share expertise on the latest trends and developments in the Halal industry.

Furthermore, there are also online events related to the fields of construction, building materials, professional services, green technology, ecological products and solutions, chemicals, and information technology, as well as transport and logistics.

Rosmizah Mat Jusoh, trade commissioner of MATRADE in Ho Chi Minh City, emphasized that the nation currently represents Malaysia's fourth largest trade partner in the ASEAN region, while Malaysia is also considered to be the third biggest Vietnamese trade partner in the bloc.

By the end of 2023, bilateral trade hit US$11.3 billion, with Malaysia’s top export items to the Vietnamese market including electrical and electronic products at 47.2%, petroleum products at 15.5%, chemical products at 8.9%, metals at 4.4%, and palm oil products at 3.8%.

Meanwhile, major Vietnamese export items to Malaysia are electrical and electronic products at 35.8%; chemical products at 13.2%; iron and steel products at 10.1%; garments, textiles, and footwear at 7.7%; and other agricultural products at 7.3%.

Through trade facilitation under the ASEAN Trade in Goods Agreement (ATIGA), both countries can complement each other and work to increase bilateral trade towards fulfilling the goal of US$18 billion over the coming years.

Promising fields for co-operation among both sides include the Halal industry (Food &Beverage, personal care, cosmetic products), renewable energy, information technology, chemicals, and professional services.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes