Tax authorities of Dong Nai Province have reported that 101 enterprises are in arrears, collectively owing more than VND626 billion in taxes and other obligations.

This disclosure came through an official announcement by the Dong Nai Tax Department, accessible on the province’s website at dongnai.gov.vn.

The outstanding tax liabilities stem from various challenges faced by businesses, particularly in production and trading activities. Notably, a significant portion of overdue taxes is linked to entities operating in the real estate and mineral extraction sectors.

Among the notable debtors are Tung Lam Alcohol Production Factory Company, with arrears exceeding VND110 billion, and Phu Hoi City Company, owing more than VND81 billion. DONA Transportation Construction JSC is also listed with over VND40 billion in tax arrears.

To address these issues, tax authorities have vowed to implement stringent measures to recover the outstanding taxes, in accordance with tax management laws. These measures encompass debt recovery and enforcement actions, alongside intensified efforts to combat tax revenue losses through audits and inspections.

This year, Dong Nai Province has been tasked with collecting state budget revenues totaling VND56.1 trillion. The Dong Nai Tax Department shoulders a substantial portion of this responsibility, mandated to collect over VND37.3 trillion in domestic taxes.

Despite facing challenges, the tax department has shown progress in revenue collection, with nearly VND11.6 trillion collected in the first quarter of 2024, achieving 31% of the annual target.

New system improving management of Việt Nam's rice production chain

Developed and refined since 2018, the Rice Production Monitoring and Reporting System (RiceMoRe) has yielded positive results, enabling provinces to automatically synthesise data across various management levels, significantly improving rice production reporting and statistics processes. It stores and processes production data, helping calculate greenhouse gas emissions from rice cultivation at the field, farm, cooperative, regional and national levels.

Nguyễn Như Cường, Director of the Department of Cultivation at the Ministry of Agriculture and Rural Development, unveiled the initial successes of the system during the online consultation workshop titled "Assessment and Building of Digital Data Ecosystem to Serve Effective Rice Production Management," held by the Ministry of Agriculture in Hà Nội on Monday.

Following refinement, the system has been rolled out and implemented in nine localities in the Mekong Delta region and one locality in the Red River Delta. RiceMoRe encompasses data storage and processing components, facilitating the computation of greenhouse gas emissions from rice cultivation at various levels.

Consequently, the system holds promise for contributing to greenhouse gas inventory efforts in the rice sector and related national initiatives geared towards green growth and emissions reduction. This includes the Ministry of Agriculture and Rural Development's project on high-quality rice production and low emissions. Cường highlighted RiceMoRe as a precursor to establishing a digital ecosystem for both rice production and agriculture.

Drawing from practical implementation, Trần Ngọc Hiếu from the Plant Protection Station of Cờ Đỏ District of the Cần Thơ City Plant Cultivation, and Plant Protection Branch, shared insights into the system's functionality. He highlighted that the system enables data collection starting from the commune level, relieving district-level officials from manual data entry duties, as they only need to integrate data with the provincial-level database. This application not only saves time but also provides practical and visually accessible data. With updated data readily available in various formats, the system meets the current digitalisation needs of the local agriculture sector, offering quicker access to information.

Nguyễn Quốc Toàn, Director of the Centre for Digital Transformation and Agricultural Statistics, underscored the importance of establishing large-scale data systems and implementing digital applications in production management. He stressed the significance of enhancing digital awareness and skills among farmers, as well as improving the quality of human resources. Toàn mentioned the Ministry of Agriculture and Rural Development's active promotion of digital transformation, particularly in developing a high-quality, high-value open data platform across various agricultural domains.

During discussions, delegates explored the potential of upgrading and applying the RiceMoRe system to monitor greenhouse gas emission reduction indicators in the "Sustainable Development of One Million Hectares of High-Quality and Low-Emission Rice Cultivation, Linked to Green Growth in the Mekong Delta by 2030" project. They also considered integrating it with other systems, tools, and databases to establish a unified, efficient, flexible, and transparent digital data ecosystem for the agriculture sector. Delegates believe that the potential applications of the RiceMoRe system extend beyond its current scope.

Lê Thanh Tùng, Deputy Director of the Department of Cultivation, asserted that this initiative could serve as the cornerstone for establishing a digital data ecosystem in rice production, benefiting rice production and the broader agricultural sector. This effort aligns with the Ministry of Agriculture and Rural Development's key objectives of enhancing production value while ensuring green growth, livelihoods and public health.

Tùng emphasised the significance of having forecast data on seasons and agricultural weather information, stating that a cycle for a RiceMoRe production would serve as the most accurate measurement and calculation tool for various factors that may arise during that cycle. This, in turn, would greatly aid officials at commune, district and provincial levels in providing specific advice and making informed decisions.

The Mekong Delta region is a crucial source of rice production for Việt Nam, accounting for 90 per cent of rice exports. Despite achieving notable milestones in rice production, the majority of farmers in the region still face low incomes, while rice production encounters increasingly adverse conditions due to climate change, rising input costs and heightened consumer demands for product quality. Hence, the establishment of a dataset for rice production in the region is imperative to continually update and provide necessary information for farmers and management agencies. This would enable appropriate guidance, management, and adjustments in production to meet evolving development requirements. 

Industrial symbiosis - solutions to realize a circular economy

Industrial symbiosis is considered one of the solutions to realize a circular economy and achieve green growth; therefore, industrial symbiosis is receiving more and more attention in Vietnam, initially bringing efficiency.

Specifically, the initial effectiveness of industrial symbiosis - industrial activities where a waste or by-product of one actor becomes a resource for another actor - is seen at At Khanh Phu Industrial Park in the Northern Province of Ninh Binh, Ninh Binh Gas Company has implemented a project to produce liquefied CO2 using input materials from the exhaust gas source of Ninh Fertilizer Plant.

The project has been in operation for 3 years, with a capacity of 6,000m3 CO2 per hour, helping to reduce over 74,000 tons of emissions into the environment each year and it is expected that the capacity will be increased to 12,000m3 CO2 per hour in August 2024. This is one of the typical examples of industrial symbiosis in Vietnam today.

The Decree 35/2022 stipulates that industrial symbiosis is a cooperative activity between businesses in an industrial park or in different industrial parks to optimize the use or reuse of input and output factors such as raw materials, water, energy, waste, scrap and other factors in the production and business process.

Technical Manager Nguyen Tram Anh of the National Eco-Industrial Park Project Management Board in Vietnam said that according to the approach from the global eco-industrial park program, industrial symbiosis is an innovative form to increase the productivity of resource use and is one of the approaches to realizing a circular economy and achieve green growth.

Ms. Tram Anh gave an example of Industrial symbiosis. A green energy company hired the roof of Bridgestone Vietnam Company to install a solar battery system at Deep C Industrial Park in Hai Phong.

With 80 percent installation of the factory roof area, the company achieves an output of 14,321 MWh a year, basically meeting the company's needs and also supplying a number of other companies in the industrial park. Biogas emitted by a beer company in Hoa Khanh Industrial Park in the Central City of Da Nang becomes fuel for the boiler of an energy service company. Three companies in Tra Noc 1&2 Industrial Park in the Mekong Delta City of Can Tho are sharing boilers.

Some investors at Nam Cau Kien Industrial Park in Hai Phong City said that in recent years, a symbiotic chain of green energy and resource saving has been formed and developed. At the park, scrap from the steel industry is steel slag which is processed into standard leveling material while plastic is recycled into plastic pellets and finished plastic products such as household appliances, laces, and packaging. Scrap is produced into auxiliary products and components for the electrical industry.

Similarly, in Hiep Phuoc Industrial Park (HCMC) many industrial symbiosis models bring high efficiency.

Mr. Christian Susan from the United Nations Industrial Development Organization (UNIDO) said that industrial parks with many concentrated businesses facilitate the promotion of industrial symbiosis. Businesses join forces to help reduce the need for resources and promote economic circularity. Mr. Christian Susan cited many examples of good international industrial symbiosis practices such as turning slaughterhouse waste into animal feed in Peru or using artificial intelligence (AI) to turn CO2 emissions from the food industry into baking soda in South Africa.

According to Mr. Christian Susan, Vietnam also has great potential for the implementation of similar models. Chemical and environmental expert Nguyen Thi Kim Lien also assessed that the potential for industrial symbiosis in Vietnam's industrial parks is huge.

Currently, there are 412 established industrial parks in the country, of which 293 have been put into operation. Through the survey, it can be seen that the level of readiness to implement Industrial symbiosis and circular economy of all parties is gradually improving. However, experts recognize that legal and policy are major barriers to the development of industrial symbiosis. According to expert Nguyen Thi Kim Lien, in general, current policies lack financial and economic incentives for businesses to implement industrial symbiosis of renewable energy while investment procedures for renewable energy projects are still complicated and there is a lack of supportive policies.

In particular, policies in the field of reuse and recycling of waste are not strong enough to develop the market for recycled products. Talking about this, some businesses said that they had difficulty sending waste outside the company to supply to other units, because the regulation states that waste must be treated before being sent out. In addition, if you want to reuse treated wastewater, there are currently no instructions and technical regulations to use this water for watering plants and as input water for businesses.

Experts say that industrial symbiosis is a requirement for ecological industrial parks and an inseparable part of circular economic models. Therefore, it is necessary to perfect policies to promote industrial symbiosis in the coming time.

As one of the leading localities in the development of industrial parks - export processing zones (IZs - EPZs), Ho Chi Minh City has soon realized that green transformation is an inevitable trend. The city has studied and found that the industrial parks and export processing zones in the area have entered the post-industrial stage and are initially transitioning to a higher stage of development - the innovation stage which is an incredibly challenging time for businesses in Ho Chi Minh City's Industrial and Export Processing Zones.

Without technological innovation and investment in sustainable development factors, transformation will be very slow, economic efficiency will be poor and industrial development will stagnate in the next 10-20 years. From there, Ho Chi Minh City has initiated a suitable long-term and sustainable model for the post-industrial period of industrial parks and export processing zones, which is the ecological industrial park model. All existing industrial parks and export processing zones in Ho Chi Minh City, if they want to continue to exist and maintain, must have a roadmap to gradually approach eco-industrial parks.

According to Deputy Head Tran Viet Ha of the Ho Chi Minh City Export Processing Zone and Industrial Park Authority (Hepza), the shift in industrial parks and export processing zones in Ho Chi Minh City towards green, digital, and circular has taken place early.

Since 2004, the Industrial Parks and Export Processing Zones have focused on attracting four key industries, which have given more consideration to green factors. Initially, it was resource- and labor-intensive industries such as textiles, footwear, mechanics, and plastics, but later it focused on high-tech industries such as chips and solar battery production, software and information technology industries.

Typically, Tan Thuan Export Processing Park in District 7 currently has three businesses specializing in chip design, gathering many information technology businesses such as VNG, VNPT, and FPT with many data centers. Moreover, in 2020, Hiep Phuoc Industrial Park in Nha Be District participated in the project to deploy ecological industrial parks in Vietnam jointly implemented by UNIDO and the Ministry of Planning and Investment. At that time, this industrial park only met 44 percent of the criteria for ecological industrial parks according to international standards.

Although the management level of Hiep Phuoc Industrial Park at that time was quite high, the economic efficiency was only average, and environmental management and social efficiency were still limited. To date, according to UNIDO's assessment, this industrial park has met 76 percent of the criteria.

However, the green moves in industrial parks in Ho Chi Minh City are still not as fast as expected. With the orientation toward a faster green transition, the city formulated a project for the development of Industrial Parks and Export Processing Zones in Ho Chi Minh City in the period of 2023-2030 and a vision to 2045. The project offers solutions to restructure existing Industrial Parks and Export Processing Zones.

At the same time, the city orients toward new industrial parks such as pharmacy, information technology, electricity, electronics, mechanical engineering, food and beverage associated with green and digital elements, approaching industrial park criteria. Ecological. The Ho Chi Minh City People's Committee has assigned Hepza and the city Institute for Development Studies to build a detailed project to convert five industrial parks and export processing zones in the inner city area including the Tan Thuan Export Processing Zone and industrial parks of Tan Binh, Cat Lai, Hiep Phuoc, and Binh Chieu is the basis for converting the next industrial parks from now until 2025.

Solutions being implemented to ensure power supply for coming dry season

A number of solutions are being implemented to basically ensure sufficient power supply for the coming dry season, although the pressure from rising electricity usage demand is significant.

According to Nguyễn Quốc Trung, deputy director of the National Load Dispatch Centre, 2024 is forecast to see strong growth in electricity demand across the country, especially the North.

It is estimated that the electricity demand will increase by 9.6 per cent this year, the highest since 2018.

In the first months of this year, although the hot season has not yet come, electricity demand has already increased by around 11 per cent.

The National Centre for Hydro-Meteorological Forecasting predicts that heat will come earlier this year which might weigh on the electricity supply system, especially of the northern region, as overall demand for electricity is rising.

The National Load Dispatch Centre’s latest report showed that the demand for electricity in the North for the peak dry season from April to July might reach 27,481MW, a rise of 17 per cent compared to the same period in 2023.

Meanwhile, the total electricity output, both produced and imported, of the northern power system is estimated to increase by around 10 per cent to 52.3 billion kWh.

With an increasing rate of 10 per cent per year in the electricity demand, the northern region might need a new hydroelectricity plant with an annual capacity of estimated 2,500MW put into operation every year. “This is to say that the electricity supply is under significant pressure,” Trung said.

According to the Ministry of Industry and Trade, in the context of unfavourable hydrological conditions in the first three months of this year, thermal power sources have been raised to meet the load demand.

Power transmission from the southern and central regions to the North has also increased.

The electricity supply for 2024 will basically be guaranteed, the ministry said. However, with hydropower accounting for more than 34 per cent, the northern region might face imbalances in electricity supply and demand, especially if the hydrological situation is affected by climate change or incidents in coal-fired power plants occur.

It is vital to add new power supply sources for the North, according to the ministry.

For the coming dry season, the National Load Dispatch Centre has stored water in reservoirs which will be used at times of need, especially at the hottest time in May, June and July.

To date, water storage at reservoirs is estimated to be enough to produce 11 billion kWh, around four billion kWh higher than the same period in 2023.

Of note, the centre has developed scenarios for power generation from diesel oil and fuel oil.

Việt Nam Electricity is also hastening the effort to put LNG-fired power plants into operation.

Checks are being carried out to minimise the risks of incidents in electricity production, transmission and distribution.

Nguyễn Thế Hữu, deputy director of the Electricity Regulatory Authority of Việt Nam, said that balancing electricity supply and demand in peak months of this year’s dry season will be challenging as demand might rise higher than expected.

Electricity companies are actively developing solutions to ensure adequate electricity supply for the coming dry season and the entire year.

The electricity supply will be basically guaranteed if there are no unusual developments, Hữu said.

He stressed that it is also necessary to increase energy savings and adjust the load to reduce the pressure during peak hours.

At a working session on April 20, Prime Minister Phạm Minh Chính asked for efforts to ensure sufficient power supply for production and daily activities under any circumstances.

Chính said that to ensure adequate electricity supply, focus must be placed on every stage from production, loading, distribution, usage and price.

Accordingly, it is necessary to effectively operate all power plants, diversify generation sources and speed up the implementation of major power projects, including the 500kV Quảng Trạch-Phố Nội Project to bring electricity from the central and southern regions to the North.

The 500kW Quảng Trạch – Phố Nối transmission project is expected to be completed this June.

He also asked relevant businesses to ensure adequate supply of gas, oil and coal for electricity generation.

Deputy Minister of Industry and Trade Nguyễn Sinh Nhật Tân said at the ministry’s quarterly conference that with a combination of solutions, power shortages are not expected to occur in 2024 and the following years.

The northern region faced serious electricity shortage in late May and early June 2023, resulting in rotating power outage which significantly affected production and daily activities. An estimation by the World Bank showed that the electricity shortage last year caused damage of around $1.4 billion, equivalent to 0.3 per cent of the country’s gross domestic product. 

Outlook positive for Vietnam's wind power

Vietnam witnessed some positive developments for wind power projects, reflecting the country's commitment to transition to net-zero by 2050.

According to Global Wind Report 2024 by the Global Wind Energy Council (GWEC), following a difficult year for wind in 2022 in Vietnam, 2023 showed some positive developments.

Early in 2023, Vietnam issued a new price ceiling for “transitional projects” (projects which have a power purchase agreement but missed the October 2021 feed-in tariff deadline), which resulted in 822MW of onshore and intertidal projects being commissioned by year-end.

The government also issued the long-awaited Power Development Plan VIII (PDP8) last May. The PDP8 sets the energy strategy for the country for 2021-2030. It includes a target for onshore wind of 21.8GW by 2030, up from the roughly 5GW of installed capacity by end of 2023. The target for offshore wind is 6GW by 2030 (with no installations currently), rapidly increasing thereafter to 91GW by 2050.

These ambitious targets for wind energy reflect the commitment of Vietnam to transition to net-zero by 2050, a pledge made by the prime minister at COP26 in 2021. The next step is to have a PDP8 Implementation Plan and detailed regulatory framework to turn the targets into reality.

In addition to the roughly 5GW of onshore and intertidal projects installed by end of 2023, there is another 3GW of transitional projects in the process of power purchase agreements (PPA) negotiation with Vietnam Electricity (EVN).

The Ministry of Industry and Trade (MoIT) issued the price ceiling for these projects (about 20-25 per cent lower than the previous FIT prices) and each project must renegotiate a new PPA with EVN.

The terms of the new PPA are viewed as less favourable for developers.

For example, the MoIT only allows projects that have all necessary permits to dispatch during the negotiation process, and they will enjoy a tariff of only 50 per cent of the ceiling price in this period. The difference between the 50 per cent tariff and the final tariff will be paid once the negotiations are finished.

According to the GWEC, the government needs to issue new policy and legal frameworks before any new onshore and intertidal wind projects can be constructed. New wind projects must also enter into a PPA negotiation process with EVN to determine the price – a process which will remain until MoIT issues a new auction for wind projects in the coming years.

The council also pointed out that Vietnam does not have any real offshore wind projects, only intertidal projects located near to the shore.

The 2030 target for offshore wind in PDP8 is very ambitious, and divided by region: 2,500MW in the North, 500MW in the central region, 2,500MW in the south central region and 1,000MW in the south.

In addition, the PDP8 also has a target for offshore wind projects for export. While there isn’t a specific volume designated for offshore wind, the total electricity export capacity for renewable energy is estimated to range between 5-10GW by 2030.

One project has already been identified and received a site survey licence: PTSC & Sembcorp, linked to the governments of Vietnam and Singapore, respectively, was approved as a special case by the prime minister.

The regulatory framework for offshore wind in Vietnam is underdeveloped. Coupled with the typical development and construction timeline of six to eight years for offshore wind projects, achieving the connection of the first generation of offshore wind by 2030 will be challenging.

The development of the new legal and regulatory frameworks is time-consuming, and potentially new law(s) are needed, which in Vietnam typically takes two to three years.

Many of the new regulations also cross multiple ministries and government departments. Recognising these hurdles, the GWEC has been advocating for the establishment of an inter-ministerial task group to accelerate the process – a measure which the government initiated in late 2023.

The GWEC has proposed a type of fast-track or pilot mechanism to be applied for the first offshore wind projects. The government has signalled that it is open to a pilot scheme, but what shape this will take is still unclear.

Crucial small business arena to receive reduced CIT boost

A reduction in corporate income tax is expected to materialise for smaller enterprises in Vietnam, helping them improve competitiveness.

The National Assembly (NA) Standing Committee last week agreed to supplement previous discussions of the draft amendments to the Law on Corporate Income Tax (CIT) and to the Law on Special Consumption Tax, in a bid to help remove difficulties in business performance and ensure stability of state budget revenues.

One of the biggest highlights in the draft amendments to the CIT is that the NA Committee for Finance and Budgets showed consensus to some new specific policies, such as the supplementation of regulations for the application of lower CIT for small- and micro-sized enterprises, at 17 and 15 per cent, respectively.

It is expected that this policy will be adopted at the 15th NA’s ninth session, which will be held in Hanoi during May and June 2025.

In Vietnam under the Law on Support for Small- and Medium-sized Enterprises, small enterprises refer to those with 10-49 people employed, and total annual revenue and total capital of VND50 billion ($2.08 million) and VND20 billion (more than $833,300), respectively. Micro-enterprises refer to those with from one to nine employees, and total annual revenue and total capital of VND3 billion ($125,000).

At present in Vietnam, all taxes are imposed at the national level and the standard CIT rate is 20 per cent. Enterprises operating in the oil and gas industry are subject to rates ranging from 25 per cent to 50 per cent, depending on each contract.

Enterprises engaging in prospecting, exploration, and exploitation of certain mineral resources are subject to rates ranging from 32 to 50 per cent, depending on each project. Preferential rates of 10, 15, and 17 per cent are available where certain criteria are met.

Vietnam is now home to about 800,000 enterprises, of which more than 98 per cent are medium-sized or smaller and are often cash-strapped and lack output markets, with weak competitiveness.

Figures from the General Statistics Office showed that in 2023, just over 89,000 businesses halted operations, up 20.7 per cent as compared to the previous year. Around 65,500 enterprises stopped operations and waited for dissolution procedures, up 28.9 per cent, and 18,000 enterprises completed such procedures. On average, 14,400 enterprises left the market every month.

The first quarter of 2024 saw 53,400 businesses with suspended operations, up 24.5 per cent on-year; 15,500 businesses stopped operations waiting for dissolution procedures, up 21.7 per cent; and 5,100 enterprises completed such procedures.

Nguyen Cong Bang, director of Cong Bang Foodstuff Co., Ltd. based in the outskirts of Hanoi, told VIR that currently like thousands of other businesses, his company is faced with massive difficulties.

“Prices of input materials like sugar, gas, beans, and cooking oil have increased by an average 15 per cent since late October, while we still have to pay many types of taxes including a CIT rate of 20 per cent costing about VND24 million ($1,000) per month,” said Bang, whose company employs 30 people.

“If the tax is reduced to 17 per cent, we can save about $30 a month and $360 a year. The sum is not so big, but it demonstrates the state’s support to small-sized enterprises like us,” Bang said.

However, according to Dang Dinh Quyet, vice director of Hoang Ngoc Trading JSC in Hanoi, specialised in trading rice and agricultural products, there is an urgent need to reduce assorted taxes including CIT for micro and small enterprises that are often vulnerable to shocks in the market.

“For example, a reduction can be offered to those with total revenue of below VND10 billion ($416,000) a year and this should be divided into different levels for application. For instance, a CIT rate of 15 per cent is offered to a revenue of more than VND5 billion ($208,000) and a rate of 10 per cent is offered to a revenue of below that figure,” Quyet said.

According to the Ministry of Finance which compiles the draft amendments to the CIT law, the government has also proposed to amend and supplement a number of regulations on determining payment in the direction of allowing enterprises with losses from conducting production and business activities (currently receiving CIT incentives) to be offset by profits earned from real estate transfer, project transfer, and transfer of rights to participate in ventures.

The Ministry of Finance last month submitted a proposal to amend the CIT law to the government. The proposal aims to meet practical requirements and new development demands, contribute to restructuring the state budget, create a fair business environment, ensure consistency of the legal system, and enhance international cooperation.

The government has agreed on seven policies in the proposal to amend the law. These are improving regulations related to taxpayers and taxable income; exempted income; determination of taxable income and tax calculation methods; determination of deductible and non-deductible expenses; CIT incentives; adjusting tax rates for certain groups to align with new requirements; and applying supplementary tax to prevent global tax erosion.

Veterinary drugmakers seek time and cost-saving policies

Veterinary drug producers in Vietnam are awaiting simplified procedures for drug conformity to get the go ahead, in order to save millions of US dollars each year.

The drug producers await a National Assembly (NA) decision on passing the law amending and supplementing some articles of the Law on Standards and Technical Regulations. When the amended law is approved, there will be shortened orders and procedures on clarifying veterinary drug conformity, which is likely to save producers a great deal of money a year.

In late March, the Ministry of Agriculture and Rural Development (MARD) reported to the government about inadequacies in declaring veterinary drug conformity. The MARD proposed to the government to allow the ministry to amend rules regulating the management of veterinary drugs according to the compacted procedures.

The MARD also asked the government to issue a document which requires temporarily suspending or not sanctioning administrative violations for the production, import, and circulation of veterinary drugs that have been granted a certificate of circulation in Vietnam but have not declared conformity since February 14. These temporary suspensions may be slated until the NA passes the law in question, and it takes effect.

In the last two weeks, livestock industry groups such as the Vietnam Livestock Association, the Vietnam Large Cattle Breeding Association, the Vietnam Poultry Farming Association, and the Vietnam Animal Feed Association submitted a petition to the prime minister and the chairman of the NA to address issues in the industry.

The associations said that the production of veterinary medicine is a conditional business, and so production and trading establishments of these items must meet the conditions assessed and appraised by state agencies for issuance of certificates before production, and annually take the agency’s maintenance supervision assessment.

In addition, there are periodic and irregular inspections, as well as inspections by other authorities of the ministry or locality. Thus, the assessment and declaration of conformity by various bodies are duplicated and overlapping.

While waiting for the law to be amended, the associations expect the temporary suspension of the declaration of conformity for veterinary medicine products, or otherwise must shoulder a huge financial burden.

Softening demand to limit 2024 trade

A slowdown in Vietnam’s trade is expected to undermine the nation’s current account, which is projected to remain positive this year on account of waning global demand and domestic production difficulties.

The Asian Development Bank (ADB) last week said that Vietnam’s trade declining due to continued global woes will affect the country’s current account in 2024.

“Softening global demand will limit the trade recovery in the rest of 2024,” the ADB said in its update on Vietnamese economic performance. “Global growth is expected to bounce back slower than expected, which could slow Vietnam’s export recovery.”

Vietnam’s exports in the first quarter of 2024 are estimated to have grown by 17 per cent on-year to reach $93.06 billion, while imports were estimated to have increased by 13.9 per cent on-year to hit $85 billion. This led to a trade surplus of $8.06 billion, according to Vietnam’s General Statistics Office.

However, according to the ADB’s projections, Vietnam’s imports and exports will climb modestly by 4-4.5 per cent this year and next as external demand gradually recovers.

This would be lower than the government’s expectation of an on-year rise in export and import turnover of 6.4 and 10.2 per cent, respectively.

“Renewed manufacturing activity would push up imports of production inputs. As a result, the current account surplus is projected to be 1.5 per cent of GDP in 2024,” the ADB stated.

Meanwhile, the International Monetary Fund has also projected that Vietnam’s current account balance this year would be 0.7 per cent of GDP.

Last year, Vietnam’s GDP hit $430 billion, and the growth rate for this year is expected to be 6.5 per cent, meaning about $457.95 billion. Thus, if the forecasts materialise, Vietnam’s current account surplus in 2024 will be $6.87 billion and $3.2 billion, respectively.

In 2023, the trade surplus sat at a record $28 billion as imports declined faster than exports. Exports receipts totalled $355.5 billion (83 per cent of GDP), down 4.4 per cent from 2022, while imports fell to $327.5 billion (76 per cent of GDP), an on-year drop of 8.9 per cent.

Shipments of mobile phones, computers, and electronic products, which accounted for 30 per cent of total exports, decreased by 3.6 per cent on-year. Meanwhile, machinery and equipment, which was responsible for 12 per cent of total exports, fell by 5 per cent on-year.

“The sizable trade balance supported the current account surplus estimated at 5.9 per cent of GDP from a modest surplus of 0.3 per cent a year ago,” the ADB commented. “Higher remittances also supported the current account balance. The wide differentials with global interest rates led to a capital and financial account deficit estimated at 0.7 per cent of GDP in 2023.”

However, the ADB underlined that the substantial current account surplus last year “turned Vietnam’s overall balance of payments to an estimated surplus of 1.3 per cent of GDP in 2023 from a deficit of 5.6 per cent of GDP in 2022 (see Figure). By the end of 2023, foreign reserves had improved to 3.3 months of imports from 2.8 months at the end of 2022.”

The government has set a target that in 2024, the total export and import turnover will reach $380 billion and $365 billion, respectively. The total trade surplus will be $15 billion.

In order to realise this target, 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 this year, these rates climbed 26, 12.9, 9.5, 16.3, and 6.4 per cent, respectively.

“Risks are titled towards the downside. Softened global demand and continued geopolitical tensions would slow the full recovery of Vietnam’s export-led growth,” the ADB warned.

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-subsidies (23 cases).

Moreover, 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 textiles and garments, footwear, and electronics. Only 10 per cent of products produced in Vietnam are consumed domestically, and the remaining 90 per cent are for export.

In the first three months of this year, 24,700 enterprises left the market monthly.

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