Slow-paced disbursement of official development assistance capital for a series of projects has prompted the government to further urge for the removal of policy obstacles in order to speed up progress.

At the regular government meeting and online conference with cities and provinces last week, Prime Minister Pham Minh Chinh emphasised the importance of speeding up projects that involve official development assistance (ODA) to raise performance of public investment disbursement and contribute to socioeconomic development.

“Ministries must revise and supplement regulations on management and use of ODA and concessional loans provided by foreign donors to simplify procedures and accelerate disbursement,” the PM said.

Minister of Finance Ho Duc Phoc noted that some ODA disbursement had been an unsolvable issue over recent years. “Donors claim a lot of disbursement is impossible because of the Law on Public Investment. All relevant authorities are frustrated with rules regarding ODA. They often ask to return this capital because it is too complex to spend it,” he said.

According to the Ministry of Planning and Investment (MPI), the total ODA and concessional loans that Vietnam signed for the 2021-2023 period was about $3.35 billion.

In recent years, ODA disbursement has reported a feeble performance. In 2024, the foreign capital target is around $833 million, but the disbursement rate as of February 29 was estimated at just 1.42 per cent.

For the 2023 plan of $1.2 billion, the disbursement rate reached just over half. In 2022, the rate was even lower, at about 26 per cent.

In the Mekong Delta city of Can Tho, three ODA projects have proved too challenging to implement. For the Can Tho City Oncology Hospital project, started in 2017, it is estimated that just over 20 per cent of the contract has been fulfilled. The reason for the slow progress of relates to issues in the commercial contract signed between the Hungarian contractor and the project owner, Can Tho City Department of Health.

Meanwhile, the Can Tho river embankment project boasted a loan from the French Development Agency worth almost $20 million. All four bidding packages kicked off, but the completion volume ended up at just 72.8 per cent. Project progress has not met requirements due to insufficient site handover for construction implementation, and the ODA funding deadline became overdue.

For the Tran Hoang Na bridge project, which started construction in 2020, about 80 per cent has been completed. However, there remain problems with disbursement of the main contractor to subcontractors, who have not promptly met the cash flow to speed up progress.

Ho Chi Minh City is implementing six ODA-related projects with investment of about $4.9 billion, with the majority coming from ODA itself. These projects have also encountered difficulties. Slow disbursement of metro line 1 relates to price adjustment of project contracts, and has not been resolved because the Ministry of Construction has not yet issued a price index for metro projects.

Similarly, in one Ho Chi Minh City water environment project, disbursement of phase 2 of the canal was delayed due to rising costs of machines, equipment, and personnel due to unforeseen obstacles.

The MPI pointed out various reasons why ODA disbursement has been slow going, which included problems in negotiating and signing loan agreements; differences in policies, processes, and procedures between Vietnam and donors; quality and deadlines; and obstacles in delivering plans in bidding, site clearance, and arrangement of counterpart funds.

In particular, the differences in processes between Vietnam and donors has been raised many times, but it has not been resolved although the MPI has made great efforts to discuss the issues with development partners, especially the six banks providing the largest amount of ODA capital to Vietnam.

“Slow disbursement of such capital not only affects progress, but also wastes an important resource, while we still have to pay loan interest, leading to poor efficiency of capital. It even leads to funds being withdrawn by donors, project funds increasing, or ventures eventually being cancelled,” Minister of Planning and Investment Nguyen Chi Dung said.

After the economy grew 5.66 per cent in the first quarter of 2024, the MPI has proposed two updated growth scenarios for the year. Under which, economic growth will be 6 per cent in the first scenario and 6.5 per cent in the second.

“If the global and national situation does not get worse, and we can issue some more supporting policies on fiscal and monetary areas, as well as amend legal documents to unlock resources for development, including ODA, we can reach the higher growth scenario,” Minister Dung said.

Hanoi working to raise localisation in support industries

Hanoi’s support industries have significantly contributed to the national economy and actively engaged in the global supply chain, yet their localisation remains low, resulting in the compulsory import of components worth tens of billions of US dollar each year.

The municipal Department of Industry and Trade reported that among the more than 900 support enterprises in the city, over 320 have production systems and products of international standards and which are able to serve the production by multi-national groups in Vietnam, the region, and the world at large.

The firms have continuously grown over the past years in terms of quantity, quality, and scale, mainly in the three areas of components and spare parts, products serving the textile - garment - footwear sector, and others for the high-tech industry, said Nguyen Van, Vice Chairman of the Hanoi Supporting Industries Business Association (HANSIBA).

Pointing to the modest localisation, Van said imported components in the electronics and automobile industries are worth about 35 - 50 billion USD.

Experts forecast that businesses in general and those in support industries in particular will face a host of challenges this year regarding labour, finance, and the disruption in supply chain amid global economic uncertainties.

Against the background, businesses should cooperate to engage in production chains, and gain foothold in both domestic and foreign markets, they said.  

Hanoi has taken developing support industries as a solution to lure more foreign direct investments, step up technology transfer, and boost small- and medium-sized enterprises, said Tran Thi Phuong Lan, Acting Director of the Department of Industry and Trade, noting the city will work harder to help the enterprises improve their competitiveness.

Hanoi will organise relevant fairs, increase promotion activities, assist the businesses in technology transfer, and attract more foreign investments this year, she elaborated./.

Over 170,000 DWT container ship docks at Ba Ria – Vung Tau’s deep-water port

The container ship MSC Giusy, with a gross tonnage exceeding 170,000 DWT, on April 11 docked at the deep-water port SSIT in the Cai Mep-Thi Vai complex, the southern province of Ba Ria-Vung Tau.

Flying the Liberian flag, the vessel has a length of 366 metres, a width of 51 metres, and a draught of 16 metres.

Phan Hoang Vu, Deputy General Director of the SP-SSA International Container Services Joint Venture Company – the investor of SSIT, revealed that the Ministry of Transport recently granted the port permission to accommodate vessels of up to 199,273 DWT.

This event sets a precedent for similar ships to dock at the SSIT and, by extension, the entire Cai Mep port cluster, aiming to leverage the investment effectiveness of the ministry with the new depth of this navigation channel, he noted.

The MSC company highlighted the necessity and urgency of this ship's arrival at SSIT port to facilitate rice export from Vietnam to Africa.

The ship is expected to depart on April 12 morning, continuing its journey on the international cargo transport route./.

Vietnam advised to utilise opportunities to overcome difficulties

Vietnam needs to take advantage of opportunities to overcome difficulties and keep up with global trends; and create good, better quality foundations in terms of institutions, infrastructure and human resources for breakthrough development, according to an economist.

Addressing a symposium on recovery efforts of Vietnam’s economy in 2024 amidst numerous uncertainties held in Hanoi on April 11, Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, noted that although the 5.1% growth rate in 2023 brought Vietnam to the list of the world’s fastest growing economies, the figure was lower than the 6.5% target set by the National Assembly.

To improve this growth rate, Thanh proposed the Government maintain macro-economic stability, implement prudent monetary and fiscal policies, stimulate consumption, invest in infrastructure development, and attract quality foreign direct investment (FDI) by taking advantage of the upgrade of partnerships with major countries such as the US, Japan, Australia, and the Republic of Korea.

It is also necessary to continue to have specific policies to support businesses, he stated, adding that institutional reform and legal framework amendments also need to be implemented to create sustainable development and a firm foundation for new fields such as digital economy and green economy.

These will be important measures in shaping the development direction of Vietnam's economy in 2024, stressed the economist.

Dau Anh Tuan, Deputy General Secretary and head of the Legislation Department of the Vietnam Chamber of Commerce and Industry (VCCI), said that the Government needs to promote the disbursement of public investment, focus on attracting investment sources, and encourage investment projects in the form of public-private partnerships (PPP).

Attention should be paid to economic restructuring associated with growth model reform, and the improvement of productivity, quality and competitiveness, said Tuan.

At the symposium, participating experts, scientists and managers also discussed issues related to the country’s real estate market, the making and implementation of the Government's policies to respond to instability and boost the economic recovery, and ways to speed up the reform of the business environment to revive and develop Vietnamese enterprises./.

Training support for chip sector sped up

The United States is placing a special focus on supporting Vietnam in semiconductor development with a new cooperation framework, with growing interest from American investors.

Vietnamese Deputy Prime Minister Le Minh Khai last week met in Boston with US Trade Representative Katherine Tai, with both sides reaffirming to cement cooperation in sectors including science and technology, innovation, and education and training, which embraces supporting Vietnam in semiconductor workforce training via several specific projects.

During a dialogue between Minister of Foreign Affairs Bui Thanh Son and the US Secretary of State Antony Blinken last month, both sides also emphasised new focus on the energy transition, sci-tech, tech transfer, and workforce training.

The US will support Vietnam in workforce development initiatives for the semiconductor industry, which is considered a major breakthrough in the comprehensive strategic partnership forged last September. Vietnam is now quickening the implementation of a programme on training 50,000-100,000 high-quality engineers for the industry.

Specifically, through a package of $4 million in dedicated programmes, the US mission to Vietnam is enhancing technical skills training and workforce development at every level through expanded US-Vietnam institutional and public-private partnerships. This package includes expanded English language training for students in science, technology, engineering, and mathematics, and expanded exchange programmes focused on workforce development and expanded Fulbright scholarship opportunities for students.

The package also includes international tech security and innovation funding implemented by Arizona State University to develop workforce capacity building activities, including faculty workshops, curricula transfer, and resources to enhance assembly, testing, and packaging skills.

These programmes are based on the recommendations of an ecosystem review led by the Organisation for Economic Co-operation and Development (OECD). US industry has also launched new workforce development initiatives to expand online training and certification programmes, as well as collaborations with Vietnamese higher education institutions.

At a meeting between Minister Son and Jeffrey Goss, associate vice provost for Southeast Asia at Arizona State University, the university said it would “continue actively cooperating with Vietnam” in developing the country’s semiconductor industry.

The university is now deepening cooperation with Vietnam’s National Innovation Centre and other partners in semiconductor workforce training.

Keith Strier, vice president of US-backed Nvidia, the world leader in AI computing, told Son that the group would work with the Vietnamese side to turn Vietnam into “Nvidia’s second home” with specific projects, especially when it comes to high technology application and high-quality workforce training.

Last December, Nvidia president and CEO Jensen Huang came to Vietnam, where Nvidia has already invested $250 million, and said it wanted to establish a base in Vietnam to develop the country’s semiconductor industry.

At present, Vietnam is also working with the OECD to develop a report on the semiconductor ecosystem in Vietnam. The government has built up a national AI strategy and will soon enact a semiconductor development strategy for 2030 and beyond.

Last September, Vietnam and the US forged a new semiconductor partnership to support resilient semiconductor supply chains for US industry, consumers, and workers.

Under the International Technology Security and Innovation Fund, the US will partner with Vietnam to develop the semiconductor ecosystem, regulatory framework, and workforce and infrastructure needs.

“We will focus on boosting cooperation in sci-tech with the US, with a major focus laid on semiconductor cooperation. It’s necessary now for both nations to effectively and practically implement the memorandum, in which Vietnam must continue working with the US side about support in human resources, including the development of labs and capacity at upstream stages,” said Le Chi Dung, general director of the Department of American Affairs under Vietnam’s Ministry of Foreign Affairs.

In January, US Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez met with Vietnamese Prime Minister Pham Minh Chinh in Hanoi, reaffirming the US as an enduring partner and expressing support for the rapid development of Vietnam’s semiconductor ecosystem including human resources training and semiconductor trading. This effort includes cooperation to launch workforce development initiatives.

Fernandez revealed that 15 US companies operating in semiconductor and green technology have stated their interest in Vietnam’s chip and clean energy industries, with total capital amounting to about $8 billion.

According to German data provider Statista, revenue from Vietnam’s semiconductor market is forecast to hit $20.15 billion this year and post a compound annual growth rate of 11.62 per cent in 2023-2027, for a market volume of $31.28 billion by 2027. The largest market within the semiconductor industry is integrated circuits, with a projected market value of $16.44 billion this year.

The US is now Vietnam’s largest export market, while Vietnam is the US’s seventh-largest trade partner and the US’s largest trade partner in ASEAN.

Steel firms drop prices for the third time this year

Construction steel manufacturers are once again reducing prices, with an adjustment of around $4.17/tonne at the beginning of April.

The construction sector overall is facing difficulties due to limited financial capabilities and a restricted market, leading to a high withdrawal rate of businesses in the first three months of 2024.

Data from the General Statistics Office shows that in the first quarter, 3,208 new construction businesses were established; 2,918 construction businesses resumed operations, and an average of about 2,300 new businesses entered the market each month.

However, according to state-run VNSteel, during the same period, 7,064 construction businesses suspended business temporarily; 369 businesses completed dissolution procedures, and an average of nearly 2,478 businesses withdrew from the market each month.

At the AGM of Hoa Sen Group JSC (HSG) in March, chairman of the Board of Directors Le Phuoc Vu said, "Steel prices are likely to be lower this year than last, so the company has to reduce its profit forecast due to the adverse conditions."

The price of Vietnam America Steel's CB240 rolled steel D10 and CB300 ribbed steel are at $0.59 per kg. Meanwhile, Hoa Phat sees CB240 rolled steel down to $0.58/kg and D10 CB300 ribbed steel down to $0.60/kg.

This action reflects the changes in input material prices and the Vietnamese Steel Association believes that domestic factories are facing many difficulties due to high inventory prices, low selling prices, and increased financial costs.

Phan Ho Chau Nam, deputy general director of Nhan Luat Investment and Steel Trading Holding Corporation, told VIR, "Nhan Luat is intensifying market development efforts, ensuring quick access to customers and expanding the company's sales."

Although the construction market is facing many difficulties and construction steel prices are still trending downward, market sentiment has gradually improved as the downward trend has begun to slow in the recent adjustments. Additionally, the early implementation of the Land Law 2024 in July is expected to stimulate the real estate market.

Cost juggling continues for retailers

Retailers in Vietnam are still determined to expand their operations, at a time when prominent groups reorganise their operations to cut costs.

Last week, AEON Vietnam inaugurated AEON Nguyen Van Linh, located in the Crescent Mall shopping centre in Ho Chi Minh City. This is the third so-called ‘super supermarket’ model from the Japanese retailer, following others launched in Hanoi in 2022 and in the southern province of Binh Duong in 2023.

According to AEON Vietnam CEO Furusawa Yasuyuki, alongside the opening of large shopping centres, AEON will continue to enhance its strategy of diversifying models and adapting them flexibly to suit the needs of the local community and the practical conditions of each region.

“We currently have six shopping centres, general merchandise stores, and supermarkets. In 2024, we will open three new general stores and supermarkets, as well as one streamlined general merchandise store and supermarket,” said Yasuyuki.

The Japanese retailer has set a plan to expand and develop additional shopping locations, not only within AEON malls but also at the commercial centres of other partners. Yasuyuki also mentioned that not only AEON Vietnam but all other remaining subsidiaries within AEON Group in Vietnam will accelerate the development of new business locations and enhance systems this year.

Masan Group, which currently owns over 130 Winmart supermarkets and 3,500 WinMart+ convenience stores, will complete the receipt of a $250 million investment from Bain Capital this month.

Notably, Masan’s consumer businesses demonstrated exceptional performance in 2023, growing its operating profit by 40 per cent on-year.

Meanwhile, FPT Retail also aims to open an additional 400 Long Chau pharmacy chains by the end of this year, bringing the total number of stores to nearly 1,900. FPT Retail currently operates in tech products and consumer electronics with its FPT Shop chain, as well as pharmaceuticals with its Long Chau chain.

Despite the market outlook for 2024 being accompanied by various risks and requiring time for recovery due to macroeconomic uncertainties, FPT Retail expects the revenue of the FPT Shop chain to maintain its stability, similar to 2023. Meanwhile, Long Chau is expected to achieve double-digit growth.

While many retailers remain optimistic about the long-term positive growth of the market, some others are making decisions that will have a significant impact on their business performance by withdrawing or narrowing their operating areas.

Vingroup last month announced its divestment from Vincom Retail, in a process that will last until the end of the third quarter. Once the transaction is completed, Vincom Retail will no longer be a member of the Vingroup ecosystem, although the conglomerate still holds an 18.8 per cent stake.

Vincom Retail currently manages over 80 Vincom shopping centres nationwide, and its contribution to the conglomerate’s business activities ranks third only to real estate and vehicle manufacturing.

Four years ago, Vingroup transferred its VinMart and VinMart+ supermarket chains as well as VinEco farms to Masan Group. Nguyen Viet Quang, vice chairman and CEO of Vingroup, explained that this is a time when the conglomerate needs to focus all its resources on developing key brands that have higher growth potential. “We will allocate all our efforts, especially financial resources, to generate breakthrough development in the upcoming pivotal phase,” said Quang.

Also last month, Unilever made a decision to spin off its ice cream business. The move comes amid the corporation facing various challenges as its growth slows down due to inflation. The company is moving towards streamlining its product portfolio and cutting costs to save nearly $870 million over the next three years. Around 7,500 employees of Unilever worldwide will face job cuts, and according to sources from Unilever Vietnam, employees working in this country will not be exempt from the impact.

“The separation of ice cream will assist management to accelerate the implementation of its growth action plan, announced in October 2023, which is focused on carrying out fewer things better, with greater impact to drive consistent and stronger topline growth,” the company said.

In 2023, the ice cream business segment generated $8.6 billion for Unilever, accounting for 13 per cent of the total company’s revenue.

According to Nguyen Anh Duc, chairman of the Vietnam Retailers Association, the long-term outlook for the retail market is promising. “Vietnam remains a prosperous land for retailers as the average incomes continue to rise, the middle class has grown by 70 per cent in the past five years, and the consumption-to-GDP ratio is over 70 per cent, which is high compared to other countries in the region,” he stated.

However, Duc also noted that retail will experience a somewhat slow recovery this year due to the decline in employment opportunities and reduced income of workers, which directly impacts this market.

“Some government policies, such as the 2 per cent VAT reduction, have only provided support to consumers and have not directly impacted or supported manufacturers and distributors. Vietnam could consider implementing direct rental price reductions to create vibrancy in the market,” Duc added.

A Kantar Worldpanel Vietnam report released in March reveals that the retail industry in Vietnam is facing volatility. More than half of brands are having trouble keeping up with competitors, and about one-third have begun to slow in growth. “Retail types in Vietnam are gradually becoming more modern and promoting convenience, but not all retail channels are achieving good growth. Hypermarkets are gradually losing market share, giving way to the strong rise of convenience channels, small supermarkets, and specialised sales chains,” the report stated.

According to the Ministry of Industry and Trade, the retail market size in Vietnam hit $142 billion in 2023 and is forecast to rise to $350 billion by 2025. It continues to be a promising sector, attracting investments from both domestic and foreign enterprises.

Banks eye charter increase

Vietnam’s banks are to set out ambitious plans to raise charter capital this year.

With AGM season up ahead, Vietcombank plans to issue 6.5 per cent of its charter capital to strategic shareholders, with a projected scale of $1 billion, equivalent to $4 per share. Additionally, it will propose a plan to increase its charter capital by 38.8 per cent through stock dividends.

LPBank anticipates increasing charter capital by over 31 per cent at its 2024 AGM. MSB will seek approval to raise its charter capital by 30 per cent, while Techcombank plans a significant boost in its charter capital by almost half.

Likewise, ACB, VIB, and Nam A Bank have approved plans to increase charter capital. BIDV has meanwhile postponed its equity increase plan, while MBB has completed private placements for both Viettel and State Capital and Investment Corporation.

The segment comprising financial companies, financial leasing firms, and cooperative banks maintained their charter capital at the same level as the end of 2023. Additionally, The People’s Credit Fund witnessed an increase in charter capital, reflecting a 0.98 per cent growth compared to the end of 2023.

Dr. Nguyen Tri Hieu, an economic expert, said that while Vietnamese banks have shown improvement in capital adequacy ratio, they still lag international standards. The average ratio in Vietnam is notably lower compared to regional counterparts, such as Indonesia at 22.6 per cent, the Philippines at 17.2 per cent, Singapore at 17.1 per cent, and Thailand at 19.6 per cent.

“Many banks in Vietnam have yet to fully implement the pillars of Basel II standards, emphasising the necessity of increasing charter capital to enhance financial capacity,” he said.

Banks’ financial reports indicate that the industry-wide bad debt ratio has significantly improved in the fourth quarter of 2023 compared to the previous quarter, although it still low compared to 2020-2022.

Bad debt of 27 listed banks reached 1.9 per cent at the end of 2023, while the total bad debt balance of the entire industry at the end of 2023 increased by 57.6 per cent over the same period and decreased by 7.4 per cent compared to the previous quarter.

Experts largely attribute this decrease in the bad debt ratio to robust credit growth in the final quarter of the year. Specifically, credit growth of the 27 listed banks in Q4/2023 reached 17 per cent over the same period and 7.6 per cent compared to Q3/2023,

While the loan loss reserve (LLR) showed signs of bottoming out in the third quarter of 2023 (reaching 93.8 per cent), it saw a slight increase to 95 per cent by the end of the fourth quarter of 2023. However, this level remains significantly lower than the period from the end of 2020 to the first quarter of 2023 when it was above 100 per cent.

“Although asset quality has shown signs of bottoming out in the third quarter of 2023, the recovery in Q4 will have a major contribution from high credit growth. Therefore, we forecast that bad debt at the end of the first quarter of 2024 may increase slightly in most banks,” said Tran Thi Khanh Hien, research director at MB Securities Company.

Hien predicted that attracting credit through lending rate reductions, amid the current low credit demand, will push commercial banks into a precarious position, lacking sufficient provision buffers for potential bad debts. This scenario is expected to impact joint-stock commercial banks more significantly than state-owned ones.

The discrepancy arises primarily from the lending structures of these two banking groups. State-owned commercial banks heavily cater to large corporate clients and state-owned enterprises, characterised by stronger debt repayment cash flows and credit ratings compared to small enterprises or individual customers.

Furthermore, at the end of 2023, LLR for state-owned and joint-stock commercial banks stood at 188.9 and 61.1 per cent, respectively, indicating a substantial difference.

Additionally, bad debts for these groups are projected to have reached 1.1 and 2.5 per cent, respectively, by the end of 2023. The discrepancy suggests that joint-stock commercial banks will have limited room for absorbing bad debts.

Consequently, Hien forecasted a slight increase in industry-wide bad debts by 10-20 basis points in the first half of 2024 due to low credit growth. However, for the whole of 2024, banks are anticipated to ramp up provisioning and bad debt management efforts.

Moreover, the State Bank of Vietnam may consider extending Circular No.02/2023/TT-NHNN until the end of the year, providing banks with time to address outstanding debts.

Pro-business solutions to build on rising confidence

According to the General Statistics Office (GSO), manufacturers have been making efforts in seeking orders to fulfil their production and business plans for 2023 and to prepare goods for growing demands in 2024. In Q1, industrial production has continued its positive trend.

“One of the growth’s biggest drivers is local production surging, especially industrial production,” said GSO general director Nguyen Thi Huong.

In Q1, the industrial added value climbed 6.18 per cent on-year, far higher than the first-quarter reduction of 2.2 per cent in the same period of last year.

In an example, after more than two years of preparations, Tran Manh Dung has decided to expand his company’s operations in Hanoi to churn out furniture products, in addition to his existing production of metal products which has fetched him a quarterly 10-12 per cent growth rate since late 2022.

“These two types of products can add strength to each other. We hope to have a stable 14 per cent growth rate in each quarter this year,” said Dung, director of Manh Dung Mechanics JSC in the suburbs of the capital.

The optimistic performance of Dung’s firm mirrors the general confidence of Vietnam’s business community to the country’s brighter prospects this year.

“The Vietnamese government has carried out a suite of measures designed to attract investments. These include tax incentives, preferential tariffs, and streamlined bureaucratic processes,” said Marko Walde, chief representative of AHK in Vietnam, Myanmar, Cambodia and Laos. “What is more, transparent regulatory frameworks protect investors’ interests and provide a stable foundation for long-term collaboration.”

According to Walde, in the tapestry of global investment, Vietnam emerges as a shimmering thread, drawing the attention of German manufacturing giants seeking to weave their success story in its vibrant landscape. For years, Vietnam has been a magnet for German investors, offering a blend of opportunity, innovation, and growth potential that captivates the entrepreneurial spirit.

Cumulatively as of March 20, Vietnam was home to 469 valid projects from Germany, registered at $2.75 billion.

In its recent global research report on Vietnam’s GDP amid rising inflation, Standard Chartered Bank forecasts Vietnam’s Q1 GDP growth to moderate to a still-strong 6.1 per cent on-year from 6.7 per cent in Q4 2023. The bank remains 2024 GDP growth forecast at 6.7 per cent, and a growth rate accelerating from 6.2 per cent in H1 to 6.9 per cent in H2.

Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank, said, “Despite the likely Q1 slowdown, we think Vietnam’s recovery remains intact. However, we are cautious on the H1 growth outlook due to headwinds to global trade.”

The Vietnamese economy grew 5.66 per cent in Q1, higher than the on-year rise of 3.41 and 5.12 per cent in the same periods of 2023 and 2022, respectively. “The economic growth is gradually bouncing back thanks to gradual recovery of industrial production, retail, and consumption,” the GSO said.

In the first three months, as compared to the same period last year, the processing and manufacturing sector, which creates more than 80 per cent of industrial growth, ascended nearly 7 per cent. The mining sector declined 4.84 per cent; the electricity production and distribution sector expanded nearly 12 per cent; and the sector of water supply, wastewater, and waste treatment increased 5 per cent.

Figures from the Ministry of Planning and Investment showed that in March, nearly 14,100 enterprises were newly established, up 64.3 per cent on-year.

In the first three months, Vietnam saw over 36,200 enterprises of the type registered at $13.84 billion, using nearly 258,800 workers. This was up by 6.9 per cent in the number of enterprises, 7 per cent in registered capital, and 22 per cent in the number of employees – as compared to the same period last year.

If another $16.34 billion registered by 9,700 operational enterprises is included, the total capital supplemented into the economy in the period was $30.18 billion.

However, the GSO reported that the first three months of this year saw 53,400 businesses with halted operations – up 24.5 per cent as compared to the corresponding period last year; 15,500 enterprises stopped operations and waited for dissolution procedures – up 21.7 per cent; and 5,100 enterprises completed such procedures. On average, nearly 24,700 businesses left the market each month.

At a government meeting last week, Prime Minister Pham Minh Chinh stated, “We must make greater efforts to revive the economy. At present, enterprises and individuals are still in big difficulties,” PM Chinh said.

The government in 2024 has set out a mission in boosting administrative reform to “create new values, new impetuses, and new success”, with the public and enterprises being the biggest beneficiaries. Efforts are to be made to remove and decrease at least 10 per cent of compliance costs for administrative procedures and business regulations.

In 2024, the government will complete all decentralising of administrative procedures that are subject to the power of government and prime minister, ensuring that at least 70 per cent of public services will be provided online and the rate of people performs such services will be at least 40 per cent.

Ministries and sectors have been ordered to review all business conditions, and propose the removal of conditional business conditions in the sectors that can apply other more effective management solutions. This task has to be completed before June.

“They are also ordered to promptly review and propose the eradication of business conditions that are unnecessary, infeasible, unclear, difficult to determine, and unsuitable to the reality,” read a conclusion from the seventh meeting of the government’s Steering Committee on Administrative Reform in February. “Additionally, they have to annul all unnecessary certificates, and reduce certificates overlapped in content, and this task has to be completed in Q4 of 2024.”

The government expects that the economy will grow 6-6.5 per cent this year, meaning that more efforts are to be made in coming months.

Meanwhile, Tran Hai Van from Red Lotus Trading Company said she believes the economic situation will get better, meaning companies will be able to sell more goods and earn more money.

“We are expecting more sales to go this summer as this means a bigger income. Our income also depends on how the sales go,” Van said. “We are making plans to continue increasing the revenue in the following quarters thanks to more convenient conditions.”

Production amplification an answer for export goals

The General Statistics Office (GSO) last week reported that in the first three months of this year, the country’s total export turnover is estimated to hit $93.06 billion, up 17 per cent on-year. Vietnamese exporters earned $25.2 billion, up 26.2 per cent and accounting for 27.1 per cent of the economy’s total export value; and foreign exporters fetched $67.85 billion (including crude oil exports), up 13.9 per cent and responsible for 72.9 per cent.

However, the government has warned that though there have been good signals for Vietnam’s export landscape, global geopolitical uncertainties may continue undermining the country’s efforts to boost production and exports in 2024 and beyond.

“It is forecasted that the global economic growth will be undermined by a series of unfavourable factors, with an increase in risks, in addition to strategic and geopolitical competition among major countries becoming increasingly complicated and unpredictable, while there is a danger of global supply chain disrupted again,” said Prime Minister Pham Minh Chinh. “This will affect domestic production and exports.”

The on-year export turnover in 2023 is estimated to sit at $355.5 billion, down 4.4 per cent on-year. The government has set a goal that in 2024, the total export turnover will be $380 billion and total import turnover will be $365 billion. Total trade surplus will be $15 billion, according to the Ministry of Industry and Trade (MoIT).

With a view to materialising this goal, it is clear that bigger efforts must be made in amplifying production and expanding exports, but the task is not so easy given difficulties escalating in the global economic landscape.

In fact, declines in demand in Vietnam’s key markets reduced significantly last year, including the US (11.6 per cent), South Korea (3.4 per cent), ASEAN (4.1 per cent), the EU (5.9 per cent), and Japan (3.2 per cent). However, in Q1 2024, these rates climbed 26, 12.9, 9.5, 16.3, and 6.4per cent, respectively.

The government has required the MoIT in combination with relevant agencies and localities nationwide to urgently work with business associations and enterprises to soon remove difficulties for production and business, especially regarding key export items such as garments and textiles, machinery, electronics, and steel.

“There is an imperative need to continue diversifying export markets and products, as well as supply chains; and to strengthen and expand Vietnamese products’ market share,” the government stated in a resolution released last week.

“There must be synchronous and adaptive solutions and plans to respond to new regulations of importing markets, especially regulations about emission reduction, anti-deforestation, green growth, product origin tracing, and food safety.”

At present, there has been a rising trend in protection barriers in many foreign markets. For instance, as of November 2023, Vietnam’s exports faced 238 trade remedies probes from 24 markets. Among them, the leading cases are anti-dumping investigations (132 cases), followed by trade remedies (48 cases), anti-circumvention of trade remedies (35 cases) and anti-subsidy (23 cases).

In a specific case, in mid-March, the Trade Remedies Authority of Vietnam received notice from the World Trade Organization about the United States International Trade Commission initiating a global safeguard investigation with artificial staple fibre products from polyester.

The plaintiffs are US manufacturers of man-made polyester staple fibres, including Fiber Industries LLC, Nan Ya Plastics Corporation, and Sun Fiber LLC. The plaintiff alleges that the import of artificial staple fibres from polyester has increased sharply compared to domestic production and consumption, causing serious damage and affecting the domestic production industry.

“In addition to a large number of foreign anti-dumping investigations on Vietnamese export goods, some major export markets, including the US, have also increased probes on anti-circumvention of trade remedies,” said MoIT Deputy Minister Phan Thi Thang. “Among the investigation cases of evasion of trade remedies measures on Vietnamese export goods, there are a number of cases related to items with large export turnover, such as solar batteries and wooden cabinets.”

What is more, Vietnam’s domestic industrial production sectors are currently mainly export-oriented, highly contingent on the global market because domestic supply far exceeds the demand of the local market, especially for industries such as textile and garment, footwear, and electronics. Only 10 per cent of products produced in Vietnam are consumed domestically, and the remaining 90 per cent are for export.

Under a Q4 of 2023 survey conducted by the GSO involving 6,500 manufacturing and processing enterprises throughout the country, the surveyed firms stated that they are facing massive difficulties both at home and in export markets.

When it comes to industrial output, only 32.7 per cent of respondents said there had been a rise in such output in Q4 as compared to Q3. In Q1 2024, only 30.5 per cent of respondents reported an expected increase in production from Q4 2023.

As for orders, only 29.2 per cent of enterprises had orders bigger in Q4 2023 than in Q3 of the same year. In comparison, between Q1 2024 and Q3 last year, only 29.3 per cent of respondents expected a climb in orders.

Vietnam National Brand Week to be held in mid-April

The Vietnam National Brand Week 2024 will be held nationwide from April 15-21 to raise public awareness of Vietnam national brand and promote products recognised as national brands to domestic and international communities.

According to the Vietnam Trade Promotion Agency (VIETTRADE) under the Ministry of Industry and Trade (MoIT), communication campaigns on Vietnam Brand Day, April 20, will be launched on mass media during the event.

An opening ceremony and an international forum on Vietnam national brand will be held in Hanoi in the hybrid format, along with an exhibition spotlighting achievements of national brands, the agency said.

Established in 2003, the Vietnam National Brand Programme is expected to promote Vietnam as a producers of high-quality goods and services and enhancing competitiveness for Vietnamese businesses in domestic and international markets, it added.

According to brand evaluation consultancy Brand Finance, Vietnam brand value has increased to 431 billion USD to rank 33rd in 2022 from 319 billion USD in 2019. The country climbed one place to 32nd in 2023.

A report on the implementation of the Vietnam National Brand Programme 2023 by the MoIT showed that Vietnam continued to be a spotlight in the world’s brand development map, posting the fastest growth rate of 102% in the 2019-23 period.

The brand value of Vietnamese businesses also increased strongly along with the growth of the nation brands.

While brands of Vietnamese businesses were absent in the rankings of international organisations in early 2000s, the total value of the country’s top 50 brands increased by 36% to 36.6 billion USD in 2022, it said./.

Business forum talks green transition towards net-zero emissions by 2050

A business forum on green transition and finance towards net-zero emissions by 2050 was held in Hanoi on April 11, bringing together hundreds of representatives from ministries, agencies, organisations and businesses.

The event was jointly held by the Vietnam Business Council for Sustainable Development (VBCSD) under the Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Natural Resources and Environment, and the Japan International Cooperation Agency (JICA).

On this occasion, the sides also approved the “Support for Planning and Implementation of the Nationally Determined Contributions in Vietnam” (SPI-NDC) project.

The forum provided updates on Vietnam’s policies regarding greenhouse gas emission reduction, and specific opportunities that would support the country’s green transition.

The speeches presented at the forum highlighted the Vietnamese Government’s continuous efforts to create a more favourable policy environment as well as the business circle’s role in cutting greenhouse gas emissions.

Nguyen Tien Huy, Director of the VCCI’s Office for Business Sustainable Development, stressed the need for enterprises to embark on the sustainable business model to raise their competiveness and resilience, thus meeting requirements in international economic integration.

Naoki Ikenoya from JICA Vietnam affirmed that the agency will continue its close cooperation with the Vietnamese Government and the private sector to accelerate green transition in the country./.

Binh Dinh to have 160 million USD eco-tourism project

The central province of Binh Dinh will have a huge eco-tourism project on an area of 43 hectares with a total investment of more than 4 trillion VND (160 million USD).

The Binh Dinh Economic Zone Management Board on April 10 said that it has accepted the investment policy of the Tan Thanh Tourist Area Project located in Tan Thanh urban and tourist area, Nhon Hoi economic zone, the south central province of Binh Dinh.

This 50-year project will be a high-end tourist and commercial service area associated with the coastal landscape, including hotels, resort villas, entertainment areas, parks and spa.

Once the Tan Thanh Tourist Area project building an ecological resort is put into operation, it will contribute to local tourism development, thereby attracting tourists to Binh Dinh province, while creating jobs and income for local people, helping to promote the province's socio-economic development.

This project is located along Cat Hai beach, near Hon Dun in Cat Hai commune, Phu Cat district, which is considered one of the ideal swimming locations./.

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