Import-export expected to drive credit growth
|Import and export were expected to be the major driver for credit growth in the remaining months of this year. — Photo tapchicongthuong.vn|
Credit growth for the remainder of the year will be driven by imports and exports, according to a recent survey by the State Bank of Viet Nam.
The bank’s Monetary Forecasting and Statistic Department say almost half (49 per cent) of credit institutions that took part in the survey believe this will be the major impetus to boost credit.
Wholesale and retail (47 per cent), garment and textile (41 per cent) and construction (40 per cent), were the next best industries according to the findings.
These four sectors were also expected to push credit growth in 2021 with import and export predicted to be the major driving force.
Credit institutions expected a significant increase in credit demand in the second half of this year, based on economic recovery forecasts and demand for business expansion.
Credit risk level of loans in the second half of this year was lower than the first but for the whole year, the risk level would be higher than 2019, the survey found.
Credit institutions said they had cut marginal interest rates and costs in the first six months of 2020 to increase credit accessibility for customers. Lending terms would also be more relaxed.
However, institutions tightened requirements on mortgaged assets and credit rating, especially loans for real estate business, securities and consumer loans, to ensure credit quality and limit risks.
The central bank’s statistics showed credit expanded at less than four per cent in the first seven months of this year, equivalent to only half of the same period last year.
Tran Du Lich, member of the Prime Minister Nguyen Xuan Phuc Economic Advisory Council, said the credit growth would hardly reach the target of 10 per cent this year, given the low credit absorbability of the economy in the COVID-19 pandemic.
Vietnam represents an ideal economic partner for Australia: Expert
Vietnam is considered one of the success stories in the fight against the COVID-19 pandemic, and represents an ideal economic partner for Australia, said Dr Jeffrey Wilson, Research Director at the Perth USAsia Centre.
In his article published by the Australian Institute of International Affairs on August 25, Wilson said Vietnam has complementary economic needs, a stable business environment, and a high-growing economy driven by youthful demographics and rapid urbanisation and industrialisation.
However, Vietnam presently accounts for only 1.7 percent of Australia’s two-way trade, indicating there is considerable room for growth.
According to Wilson, Indonesia, Vietnam, and India present themselves as attractive partners for Australia to diversify its economic relationships.
The Australian economy now faces the most adverse external economic environment in over a generation. Trade and investment flows – two of the key drivers of Australia’s economic performance– will fall dramatically in 2020 and 2021. However, the effects of these external shocks are amplified by the lack of diversity in Australia’s trade and investment ties.
Fortunately, the Australian government has many policies in place to develop new trade and investment relationships. The recent trade agreement with Indonesia, and economic engagement strategies aimed at India, Vietnam, and ASEAN, are leading examples. As COVID-19 has brought into sharp relief the risks associated with a lack of diversity, they should now be accorded as much higher priority than in previous times.
As Australia begins thinking about its economic recovery, it also needs to think about what kind of connections it wants with international partners. Despite its many challenges, the crisis offers a historic opportunity to build more diversity and resilience into Australia’s economic relationships as it build a post-COVID-19 future, he said.
Singapore aims to preserve jobs amid COVID-19 crisis
The need to sustain jobs will remain a top priority for Singapore over the next few years, Singaporean President Halimah Yacob said at the opening of the 14th Parliament on August 24.
According to the President, the COVID-19 endemic amplifies the financial pressures faced by Singaporean workers.
To create more jobs, the country urgently needs to transform its economy and seek new ways to ensure livelihoods for its people.
Yacob stressed that the Singapore Government should consider how to strengthen social safety network so that people can better cope with risks in their lives.
During its economic transition, Singapore needs to gradually resume the aviation industry, strengthen the region’s digital connectivity, and further reinforce resilience in key sectors such as food, healthcare and supply chain management to create momentum for new sources of growth.
Previously, Deputy Prime Minister and Finance Minister Heng Swee Keat said the Singaporean Government will spend 8 billion SGD (5.8 billion USD) to support companies to maintain and create jobs for labourers, and fully tap opportunities for economic growth.
As Singapore’s economy in the second quarter of 2020 witnessed its worst growth in history and the COVID-19 pandemic remains complicated, Singapore will promote economic recovery strategies, focusing on creating new jobs, supporting industries that most affected by the health crisis, and utilizing growth opportunities./.
New decree on administrative fines in border management
Individuals who commit administrative violations in national border management and protection will face a maximum fine of 50 million VND (2,160 USD) under a newly-issued decree.
For organisations committing the same violations, the fine would be doubled, according to the Government’s Decree No. 96/2020/ND-CP on administrative fines for violations in the field of national border management and protection.
Any acts that damage border markers, poles, signs and objects, flag poles, basepoints, and sovereignty steles on islands; change water flows of border rivers and streams, or affect national border; build permanent facilities within 30m from the land border with China or 100m from the land borders with Lao and Cambodia; and illegally construct facilities on border rivers and streams, will be subject to fines of 40-50 million VND.
Meanwhile, fines of 20-30 million VND will be imposed on geological exploration, natural resources exploitation and mining activities that are licensed but damage border signs, markers, poles and objects, flag poles and sovereignty steles on islands, and basepoints; maritime defence and border facilities; and the dumping of dirt and gravel in border rivers and streams.
Notably, the launch and operation of flying objects within the border area or across the border will face fines of 40-50 million VND, and the use of gun for hunting within 1,000m from the land border will be subject to fines of 30-40 million VND.
Warnings or 300,000-500,000 VND penalties will be imposed on Vietnamese citizens who enter land border areas and border belts without bringing identity cards or passports; and those who do not report and register, or hide and facilitate the illegal travelling and stay of others in land border areas.
Fines worth 500,000-1,000,000 will be rolled out for border residents using expired border passes to travel through the border, border residents who travel beyond the allowed areas, foreigners entering border belts without reporting to border guards; and border residents grazing cattle and poultry across the border.
According to the decree, border residents who allow others to use their valid border passes to travel through the border; and anyone who travels and conducts activities breaching regulations in prohibited areas, will have to pay 1-2 million VND in fines.
Deputy Prime Minister urges aviation security
Deputy Prime Minister Trương Hòa Bình has ordered domestic airlines to take action to avoid further incidents that threaten aviation security.
Chairing a meeting on Tuesday which aimed to review civil aviation security and safety in the first seven months, Bình, who is chairman of the National Civil Aviation Security Committee, pointed out several shortcomings that lead to aviation insecurity.
These include thefts, passengers carrying weapons and dangerous items, public disorder and assaults on aviation personnel.
Most of those incidents were caused by human mistakes, he said, asking the Civil Aviation Administration of Việt Nam (CAAV) to inspect direct, indirect causes and effects to seek preventive solutions, especially to supervise the problem-solving process.
Director general of national flag carrier Vietnam Airlines Dương Trí Thành said some people even accessed the booking reservation systems to steal personal information of passengers. Vietnam Airlines staff have discovered many thefts at check-in counters or on flights.
Vũ Thế Phiệt, director-general of the Airports Corporation of Vietnam (ACV), said unlicensed taxi services resumed operation in June and July, posing risks to airports’ security.
Deputy Prime Minister Bình ordered the Ministry of Transport to work with the ministries of public security, defence, information and communications to improve quality of information network security and safety. They have been assigned to organise response drills for cybersecurity incidents.
Relevant ministries were urged to step up the progress of establishing police stations at key airports and building air security forces.
The Ministry of Transport must closely monitor contractors and relevant units conducting runway upgrade projects at Nội Bài and Tân Sơn Nhất airports to ensure their progress as well as security and safety, he said.
According to Đinh Việt Thắng, CAAV director and chief of the secretariat of the National Civil Aviation Security Committee, 80 per cent of aircraft managed by domestic airlines are not operating.
In the first seven months of this year, airports nationwide received about 43 million passengers, a year-on-year decrease of 37.5 per cent.
Among 43 million passengers, there were only 7 million people from overseas, down by 71.1 per cent compared to the same period last year.
Vũ Thế Phiệt, director-general of ACV, said the business would face revenue losses of nearly VNĐ600 billion this year.
“In spite of the losses, we still consider security and safety to be the core of the corporation. We focus our investment in upgrading security infrastructure to be prepared for coming scenarios. The corporation has promoted training for security forces,” he said.
VN needs to improve post-harvest technologies for farm exports to be competitive: experts
Viet Nam needs to invest more in post-harvesting technologies to improve the competitiveness of its farm produce, including fruits and vegetables, in the global market, experts have said.
Poor harvesting and preservation technologies result in a decline in their value, and with the growing competition, the country needs to invest heavily in processing of fruits and other farm produce to hold its own in export markets.
According to Ho Thi Thu Hoa, head of the Viet Nam Logistics Research and Development Institute, only 0.3 per cent of agricultural products in Viet Nam benefit from the use of cold chain logistics technologies compared to 3 per cent in Germany, 2.6 per cent in England and 1 per cent in the US.
Post-harvest losses in Viet Nam are significant at around 25 per cent farm since the country has little in the way of post-harvest technologies and machinery.
According to the Food and Agriculture Organisation of the United Nations, Viet Nam loses 10 per cent of its rice output, 10-20 per cent of root and tuber crops and 10-30 per cent of fruits and vegetables.
In the Mekong Delta, a major rice bowl, post-harvest rice losses are worth more than VND3 trillion (US$132 million) a year, or 10-12 per cent of total output.
“Packaging farm products plays a very important role in preserving them after harvest, but Vietnamese businesses are not paying attention to that,” Hoa said.
Some 70 per cent of fruit and vegetable exports have been to China, mostly in fresh and unprocessed form.
Little went to South Korea, Japan, the US, or the EU because of Viet Nam’s limitations with regard to storage and post-harvest processing, experts said.
The country’s seafood faces similar issues, particularly with ocean tuna. Japan is a big market for this fish and willing to pay high prices for it. A number of Japanese experts have attempted to assist Vietnamese fishermen in post-harvest processing, but there has been little progress so far.
Le Duy Hiep, chairman of the Viet Nam Logistics Business Association (VLA), said to reduce post-harvest losses it was necessary to make further investments in agriculture, the Government needed to offer incentives to encourage farmers apply high-technology to reduce losses after harvest.
Nguyen Thi Thanh Thuc, chairwoman and director of Bagico Company, said to preserve produce, factors that affect quality must be tackled directly such as vegetables being desiccated before packing.
The country exports its agricultural products to 120 countries and territories, with key products being rice, coffee, pepper, and seafood.
However, in large and fastidious markets like the EU, the US, Japan, and Australia, many of its exports have been refused entry due to microbial infections and residues of veterinary drugs and heavy metals.
Two major shareholders leave Vinaconex
Cuong Vu Real Estate and Star Invest are no longer major shareholders at the Vietnam Construction and Import-Export Joint Stock Corporation (Vinaconex), according to the Ha Noi Stock Exchange.
The northern market regulator said on Tuesday that the two limited liability companies had sold their stakes in Vinaconex on August 14.
Cuong Vu Real Estate Co Ltd sold 94 million shares, or a 21.28 per cent stake, it had owned in Vinaconex. Star Invest Co Ltd offloaded all 33.44 million shares, equal to a 7.57 per cent stake.
The shares were transferred via put-through transactions on August 13-14, worth nearly VND3 trillion (US$129.4 million).
The identity of the buyers remains confidential.
Vinaconex shares soared total 20.8 per cent in the two days. Its shares rose 1.2 per cent to end Tuesday at VND32,400 ($1.40) apiece.
Cuong Vu Real Estate and Star Invest became major shareholders at Vinaconex in late 2018 when the latter was equitised.
The State Capital Investment Corporation (SCIC), representing the Government to control the State capital in State-owned enterprises, decided to sell 254.9 million Vinaconex shares or 57.71 per cent of the company’s charter capital in November 2018.
The shares were purchased by the An Quy Hung-led consortium at VND28,900 per share.
After the IPO, the military telecommunications group Viettel offered 94 million Vinaconex shares for sale and the investment fund Pyn Elite also wanted to offload 33.44 million shares.
Then the shares were absorbed by Cuong Vu Real Estate and Star Invest, becoming the major shareholders with total 28.8 per cent stakes.
In the second quarter of 2020, Vinaconex posted a 30 per cent annual decrease in revenue, which dropped to VND1.59 trillion.
However, the collection of VND287 billion worth of doubtful debts helped boost the firm’s post-tax profit by 51.3 per cent on-year to VND321.6 billion in the second quarter.
In the first six months of the year, Vinaconex reported a total revenue of VND2.59 trillion, down 34.3 per cent year on year, and a post-tax profit of VND385 billion, up 23.4 per cent year on year.
Vinaconex blamed the downturn of the real estate market and construction sector for lower revenue in the first half of the year.
The construction and real estate firm targets VND9.53 trillion worth of total revenue in 2020, down 4 per cent year on year and VND820 billion worth of total post-tax profit, up 4 per cent on-year.
On June 30, Vinaconex had VND18.64 trillion worth of total asset, including VND11.47 trillion worth of short-term assets.
Nearly 64 per cent of the short-term assets was doubtful short-term debts, worth VND7.31 trillion. Vinaconex has made a provision worth VND551 billion for those debts.
Aquatic exports set to reach US$8.3 billion amid signs of recovery
According to figures released by the General Department of Customs, July witnessed the country’s seafood export turnover reach a figure of US$796.3 million, up 0.8% compared to the previous July. As a result, seafood exports in July continued to undergo a recovery after recording a 0.3% rise in June.
Over the course of the opening seven months of the year, aquatic export turnover reached a figure of US$4.4 billion, representing an annual drop of 6%.
Throughout the reviewed period, aquatic exports to the United States continued to enjoy positive growth with an increase of 20.8% on-year to US$184.35 million, bringing seafood exports during the seven-month period to US$838.44 million, up 4.5% from the corresponding period the previous year.
Furthermore, seafood exports to the EU market also witnessed an improvement, with a drop of a mere 2.3% from last July, while the decrease in previous months stood at over 18%. Elsewhere, aquatic exports to Japan are still facing several difficulties, whilst exports to China have fallen once again.
The VASEP believes that with the novel coronavirus pandemic yet to be brought under control globally, it will continue to affect Vietnamese seafood exports to foreign markets during the second quarter of the year. After enduring a decline of 16% in May to US$639 million, seafood exports in June suffered a further decline of 10% to US$626 million.
Despite these falls to various markets, the VASEP anticipates that seafood exports will gradually witness a recovery during the third and fourth quarters, with the entire year’s export turnover predicted to hit US$8.26 to US$8.3 billion, a drop of 3.8% from last year.
Moreover, there remains plenty of optimistic signs for exports as retail sales in the global market remain stable, with increased demand for frozen, canned, chilled, and smoked seafood with a longer shelf life.
At present, global seafood trade is stagnant due to interrupted shipping, although the trend of electronic transactions and online retail will partly offset plummeting market demand.
The VASEP also states that the EU-Vietnam Free Trade Agreement (EVFTA), which came into effect from 1 August, could serve as a “boost” for the nation’s seafood exports during the remaining months of the year. This could particularly apply to items which are entitled to enjoy a tax rate of 0% as soon as the agreement comes into effect, such as tiger shrimp, frozen white shrimp, and processed octopus and squid.
“The EVFTA will serve as a catalyst for the fisheries sector to increase its competitive advantage over countries which have FTAs with the EU, such as Ecuador, India, and Thailand. According to many studies, after the trade deal enters into force, seafood exports to Europe may increase 20% compared to before as a result of the competitive advantage over other nations. For example, European partners will increase their buying of Vietnamese tuna which will enjoy a tax rate of 0%, instead of buying from other markets with higher tax rates,” VASEP Secretary General Truong Dinh Hoe analyses.
Experts believe CPI in 2020 will be kept under control
The prediction has been made by the General Statistics Office (GSO) that believes that curbing the consumer price index (CPI) below 4% for the year is feasible.
Statistics show the country’s CPI growth has slowed down despite enjoying a slight increase in recent months due to rising petrol prices, prompting the seven-month CPI to increase by 4.07% on-year.
Insiders believe that drastic measures are needed to rein in inflation at below 4% as planned in an effort to ensure social security and stabilise people’s lives amid the negative impact of the COVID-19 pandemic.
Most notably, prices of major products such as food, fruit and vegetables, especially pork, have been among the key factors that have seen the CPI increase since July, all of which have experienced a downward trend due to rising supply sources.
However, petrol prices remain unpredictable as they are largely dependent on the global market. In addition, an increasing demand for learning materials ahead of the new academic year in September and consumer goods in the remaining months of the year shoulder the burden on the economy.
Still, the accelerated disbursement of public investment capital will certainly affect market prices in the second half of the year.
Nguyen Duc Do, deputy director of the Institute of Economics and Finance under the Ministry of Finance, predicts that demand for fuel is expected not to witness any sharp increases in the future, even in countries where the COVID-19 pandemic has been brought under control.
The price of crude oil is anticipated to hover around the US$40 per barrel mark and is unlikely to push up the CPI suddenly, Do analyses.
Nguyen Bich Lam, former GSO general director, points out this year’s CPI will remain under control as pork prices are anticipated not to rise further thanks to a sufficient supply, while petrol prices have already been affected by the impact of COVID-19.
Economist Ngo Tri Long proposes a number of synchronous and flexible solutions aimed at dealing with unpredictable and complicated developments in the global market, including the effective use of the petrol price stabilisation fund.
Incumbent GSO director Nguyen Thi Huong notes that a slowdown in the CPI is a positive signal that supports the government’s inflation controlling efforts, given the fact nearly 31 million employees have fallen victim to the COVID-19 pandemic.
“It is difficult for the economy to suffer a deep CPI shock as the demand of the society is not so high, the exchange rate between VND and foreign currencies is quite stable, and the income of the majority of employees is still limited,” says Huong.
The government has requested the Ministry of Finance and the State Bank of Vietnam to deploy a flexible fiscal and monetary policy in a bid to ensure macro stability, with a specific priority being given to curbing inflation and removing business hurdles, speeding up the disbursement of public investment capital, and accelerating future economic growth.
The government has also assigned the Ministry of Planning and Investment to draft the second relief package to iron out business snags and ensure social security.
Enterprises reach out for assistance
Facing massive difficulties, many enterprises suffering from stalled production are waiting for government-led policies to go further into the business community, making it more favourable to boost economic growth.
“However, the sum has been slashed by half now as we cannot sell goods. The pandemic is making the public tighten their belt,” Tac told VIR. “We have had to self-process the fruit into small packs and are finding new outlets.”
Dong Ket has over 3,000 hectares of longan. However, thousands of tonnes of the fruit have not been consumed, while farmer households have invested a huge sum of money and great labour into the farms. Many households and small-scale companies like The Tac Agri Trade have faced bankruptcy as many of them have big loans from banks.
“We have met with banks to ask for extension of loan payments, but it has been quite a hard job. Banks also need money to keep operations,” Tac said. “We even want to seek loans from the Vietnam Bank for Social Policies (VBSP), but it is impossible.”
VBSP, established in 2002 to deploy preferential credit policies for the poor and other policy beneficiaries, has been offering a VND16 trillion ($695.65 million) credit package to businesses seeking preferential loans at a zero per cent lending rate in order to pay salaries for their employees.
However, the loans, featuring the government’s efforts to support enterprises during COVID-19, may be never reached by borrowers as the loaning conditions are a tough nut to crack.
To obtain such a loan, a business has to have 20 per cent or at least 30 employees with social insurance who were forced to halt employment between April 1 and June 30. The time of layoff must have been at least one continuous month, and the employer has paid in advance at least 50 per cent of salaries.
Also, the employer must be facing financial difficulties and cannot pay salaries, and must have had no bad debt at credit institutions and foreign banks by December 31, 2019.
If the borrower can meet all of these conditions, he must submit a loan proposal to the district-level people’s committee where the enterprise and the bank’s branch are located. Within three working days, the committee must appraise the proposal and then submit it to the chairperson of the provincial-level people’s committee. Within two working days, the chairperson must issue a decision on adopting the proposal, and send it to the VBSP branch which will process final procedures to provide the loan for the enterprise.
“The procedures and conditions are quite hard, and we will never be able to reach such a loan,” Tac said.
Over the past few months, the government has been deploying some sturdy measures to support enterprises. Specifically, the State Bank of Vietnam has been implementing a package worth over VND300 trillion ($13 billion) for enterprises and households, in the form of debt payment deferral and preferential loans.
The Ministry of Finance has also been deploying a VND180 trillion ($7.82 billion) package to support these people and enterprises. The government has also been carrying out a VND62 trillion ($2.7 billion) package to support 20 million poor and unemployed people.
A recent survey by the General Statistics Office showed that COVID-19 has had negative impacts on 85.7 per cent of enterprises and nearly 20 per cent of them have had to halt operations. There will be over 160,000 enterprises halting operations if COVID-19 lasts throughout the third quarter of the year, and the figure will be 205,000 if the pandemic lasts into the fourth quarter.
The United Nations Development Programme (UNDP) has just released results of a May telephone survey over 930 vulnerable households, and 935 vulnerable household businesses (HBs), and micro-, small-, and medium-sized enterprises (MSMEs) in 58 cities and provinces across Vietnam.
The surveyed HBs and MSMEs suffered from a sharp reduction of revenues as COVID-19 caused a scaling-down of business activities. On average, as compared to the December 2019 level, MSMEs suffered a 78 per cent reduction in revenue in April, while HBs faced a deeper decrease by 83 per cent. Notably, firms surveyed said they have faced difficulties in accessing government support.
“The government should provide concrete guidelines of the beneficiary definition and requirements and allow digital technology to be used for applications. In this way, the affected firms can identify whether they fit in the beneficiary list and register for support,” said the UNDP report.
National Assembly deputy Nguyen Sy Cuong, representing the south-central province of Ninh Thuan, proposed that the government “pay special attention to how its policies to assist enterprises are being materialised.”
“For example, the VND62 trillion ($2.7 billion) package is facing difficulties in disbursement, while the VND16 trillion ($695.65 million) from VBSP have yet to be disbursed. The bank reported that it has yet to receive any loan proposal from any enterprise,” Cuong said.
Quang Ninh IZs and EZs attractive to domestic and foreign investors
By virtue of improved inter-regional transport infrastructure and the establishment of the Quang Yen coastal economic zone with lucrative investment incentives, more foreign investors are considering the north-eastern province of Quang Ninh an ideal destination.
The Quang Yen coastal economic zone (EZ) covers about 13,300 hectares built on two zones – an urban high-tech industrial complex in Quang Yen town and Uong Bi city covering 6,400ha; the Dam Nha Mac seaport and associated services, plus an industrial zone (IZ) on an area of 6,000ha. To step-by-step meet the requirements of a coastal EZ and diversify investment resources, Quang Ninh has spent more than VND1 trillion ($43.47 million) on transport infrastructure connecting IZs with each other and between the IZs and Halong-Haiphong Expressway.
Quang Ninh is also investing in a riverside route linking Quang Yen with Dong Trieu towns.
In a recent talk with VIR, Koen Soenens, general sales and marketing director at DEEP C Industrial Zones, hailed Quang Ninh’s unique factors to become its next investment destination in the country. Along with this, DEEP C invested in two IZs in Quang Yen town – Bac Tien Phong and Nam Tien Phong IZs, also known as DEEP C Quang Ninh – on a total area of 1,680ha. In DEEP C’s investment plan, a 150,000-square-metre ready-built factory space at DEEP C Quang Ninh is scheduled to be built and put into operation next year. DEEP C leaders are expected to sign its first leasing contract in Quang Ninh by the end of the year, with the project to be implemented early in 2021.
“Adjacent to an expressways heading to the border with China, near international airports and Lach Huyen International Gateway Port, DEEP C Quang Ninh, like DEEP C Haiphong, is well-positioned for us to build a seamless IZ ecosystem connected to a seaport,” said Soenens.
Moreover, Quang Ninh has on offer all the factors that are of prime concern to investors in making funding decisions: political stability, policy, tax incentives, and a favourable geographic location.
Accordingly, as the prime minister has approved to add Quang Yen to Vietnam’s coastal EZ development planning, the zone will offer investors tax incentives on the same level as the Dinh Vu-Cat Hai coastal EZ in Haiphong.
Along with DEEP C, Quang Yen town is luring the attention of diverse investors such as Amata, Viglacera, NOSCO-VINALINES Ship Repair JSC, Xuan Truong Hai Transportation and Trading JSC, Haiphong Auto Repair Co., Ltd., and more.
For the 2020-2025 period, the province is looking to further develop existing IZs and EZs, improving their advantages and competitiveness to attract qualified investors such as DEEP C to build IZ infrastructure, as well as to entice qualified secondary investors with high-tech capabilities.
In recent times, Quang Ninh has attracted a number of sizable and experienced investors in several fields, including Rent-A-Port, TCL, Foxconn, Texhong, Amata, and Thanh Cong, among others.
These projects all use international consulting, modern equipment and production technology, and advanced management models for the production of eco-friendly products and services, minimising environmental impact.
Recently Vietnam’s conglomerate Vingroup also announced a plan to invest in an industrial production complex south of the Luc Lam River at the Mong Cai border gate EZ, with a capital scale of more than VND3.4 trillion ($147.8 million) in order to manufacture spare parts and accessories for cars and other motor vehicles. According to Quang Ninh Economic Zones Management Authority’s analytics, the province is currently home to 11 IZs which were included in the development plan to 2020, at a total area of over 11,740ha. The majority of those IZs have attracted secondary investors, with occupancy rate at over 60 per cent. Furthermore, Quang Ninh also accommodates four established EZs (Van Don with 217,000ha and three border gate EZs at Mong Cai, Hoanh Mo-Dong Van, and Bac Phong Sinh) as well as Quang Yen, which is processing establishment procedures. So far, Quang Ninh’s IZs and EZs have drawn in 250 non-state investment projects, 178 domestic ventures, and 72 foreign-invested ones.
The efforts to tackle traffic infrastructure bottlenecks through many key projects like the expressway connecting Haiphong, Halong, Van Don, Tien Yen, and Mong Cai, or Van Don international airport, have made trade activities more convenient than ever. This has entailed more capital flow of domestic and overseas investors to Quang Ninh, and IZ infrastructure developers like DEEP C are eager and striving to become well-prepared to avail of this great opportunity.
An investment promotion seminar held by Quang Ninh People’s Committee with the theme “Quang Ninh – the next investment location” will take place on August 28-29 in Halong city. The seminar seeks to promote investment links between Quang Ninh and South Korean investors, showcasing an overview to the province as well as open up opportunities for partnerships.
New bailout put forth to aid recovery
Following an initial bailout currently under implementation, the Ministry of Planning and Investment and relevant governmental agencies are mulling over another support package to help businesses stay afloat and spur on economic growth amid the ongoing pandemic.
At first, Minister Dung proposed to extend the policy effects in the previous bailout to 2021 if the pandemic continues unabated. Such policies as delaying the payment timelines of VAT, corporate and personal income tax, and land rental fees, and all policies in Decree No.41/2020/ND-CP released in April on tax and land rent deferrals will be extended to the end of the year.
Circular No.01/2020/TT-NHNN, enacted in March on debt rescheduling exemption or reduction of interest and fees, is also being considered for extension of implementation to support corporate clients affected by COVID-19. It could even be amended for businesses to more easily enjoy the policies.
“It is necessary to provide better financial policies to strengthen production and consumption, as well as deliver vouchers, or government supply of goods to people who suffer difficulties caused by social distancing, in order to guarantee essential needs and promote local consumption,” Minister Dung proposed.
He emphasised the importance of the new bailout, which should not only strengthen development of various industries and attract foreign direct investment and innovation, but also should be robust enough to strengthen the economy as well as cover a variety of beneficiaries.
According to the Ministry of Planning and Investment (MPI), the pandemic has hurt most socioeconomic sectors, especially aviation, tourism, and catering. Many have already gone bankrupt or been dissolved, or had operations suspended or scaled down.
Meanwhile, employee incomes have also been affected significantly, as unemployment rises. The incomes of around 17.6 million people have dropped during the pandemic, leading to a fall in local consumption. The number of enterprises suspending their operations in the first seven months of the year jumped by 41.5 per cent on-year to 32,700. The performance of the first bailout, valued at tens of billions of US dollars including a VND62 trillion ($2.7 billion) package to support the poor and unemployed, has not been as successful as intended. As of mid-July, around VND11 trillion ($478.2 million) was delivered to 11 million people as well as 9,400 business households.
After the issuance of Decree 41, the Ministry of Finance estimated that the number of firmss that could enjoy the support was about 700,000, or 93 per cent of the total across the country, while the amount of tax and land rental fees with extended timelines was estimated at VND182 trillion ($7.9 billion). However, in fact, only 179,000 documents were sent to tax agencies and localities as of the end of July to delay the payment of tax and land rental fees, with the amount over VND53.6 trillion ($2.3 billion), equivalent to 29 per cent of expectations.
Nguyen Duc Huy, deputy chief of office at the General Department of Taxation, explained that COVID-19 pulled most enterprise revenues and profits to zero or even a loss, and so they do not require extension of payment timelines. “Also, some of those with good business do not need to delay the tax or land rental payment timeline,” said Huy.
PM assigns Ministry of Finance to expand environmental protection taxpayer base
The environmental tax on nylon packages has been raised again as the government is looking to expand taxpayer base.
The PM assigned the Ministry of Finance to research and outline amendments to the Environmental Protection Tax Law to extend the taxpayer base and also increase the tax rate on nylon packaging and other plastic items. Moreover, the ministry was tasked with levying taxes on plastic raw materials, as well as inspect and prevent environmental tax evasion.
The ministry collaborates with the Ministry of Natural Resources and Environment to research and propose financial policies to stimulate plastic waste recycling activities, as well as provide incentives on eco-friendly packaging and materials. Additionally, the ministry will also outline priority standards or norms for public the procurement of reused and eco-friendly products.
The Ministry of Industry and Trade was put in charge of achieving the target of “no single-use plastic items in stores, markets, supermarkets in urban areas in 2021, and the whole country in 2025.”
The relevant ministries must issue regulations stipulating standards for quality and design of plastic products to promote recycling and reuse, and set a minimum reused plastic content for plastic products. Moreover, they have to issue directions about manufacturing and consuming sustainable plastic items.
The Ministry of Health will have to classify and lessen the amount of plastic waste generated at hospitals and medical establishments and add plastic waste reduction as a category to the assessment of eco-friendly medical establishments.
Savills Vietnam remains positive property prospects despite pandemic
Even with the entire economy of Vietnam affected by the coronavirus pandemic, the property market’s prospects remain positive as it promises to show the first signs economic recovery.
Even though COVID-19 might last into early 2021, Savills anticipates a strong recovery from 2021 to 2022 and beyond. Moreover, effective and timely government support, as shown through its effective pandemic response and recent stimulus policies, will provide further powerful leverage for real estate businesses and the national economy.
Since the mid-90s, the domestic property market has had a pattern of impressive growth, brief downturn, and recovery. However, the COVID-19 pandemic in the first half of 2020 negatively affected the market in an unprecedented manner.
1995 to 1998: Stabilising relations with the United States and officially joining ASEAN in 1995 marked successful milestones.
The transition from centrally planned to a market driven economy was establishing a robust platform for lasting change and growth.
The General Statistics Office (GSO) shows growth in 1995 was 9.54 per cent, and 9.34 per cent in 1996, correlating with per capita GDP increasing from $277 in 1995 to $324 in 1996.
Inflation was reined in from 12.7 per cent in 1995 to 4.5 per cent in 1996 and 3.6 per cent in 1997.
At the same time, GDP growth and increased consumer confidence resulted in rising land prices, as the property market started to show signs of promise.
The domestic market then entered a prolonged slowdown with the onset of the Asian Financial Crisis in 1998 impacting the nascent market economy.
GSO data shows 5.76 per cent economic growth in 1998 while inflation reached 9.2 per cent. However, the limited market opening resulted in a proactive government response which helped successfully manage the crisis and enable a strong foundation for future growth.
1998 to 2008: The early years of the 21st century were characterised by further economic integration.
In 2001, the Vietnam-US Bilateral Trade Agreement (BTA) was ratified followed by Vietnam becoming a member of the World Trade Organisation (WTO) in 2006.
Back in 2000, Vietnam was considered the next “Asian Tiger” economy with per capita GDP growing to $396, compared to $328 in Laos and $283 in Cambodia. New national economic and macroeconomic policies saw 6.79 per cent GDP growth in 2000, up to 6.89 per cent in 2001, followed by robust GDP growth averaging 8.23 per cent per annual from 2004 to 2007.
Property market fluctuations inevitably followed. National economic indicators reflected a strong global economy, increased confidence in local economic recovery and steady increases of foreign direct investment (FDI).
Furthermore, effective government policies contributing to market performance saw land prices ramping up.
Significant price growth driven by increasing transactions led to the property market becoming everyone’s favourite investment channel.
However, land prices increasing significantly over the two most frantic periods of 2001 to 2003, and 2007 through 2008, started to exclude lower-income investor participation from Ho Chi Minh City and Hanoi.
2008 to 2018: Growth punctuated by slowdown continued. In mid-2008, effects from the Global Financial Crisis led to a downward cycle in the domestic property market and land prices dropped by up to 40 per cent.
Property inventory in 2012 was over VND100 trillion ($4.35 billion), while property enterprises under bad debt increased. Rapidly rising inflation forced the State Bank to tighten monetary policies.
The government, by revising policies and releasing economic stimulus packages to attract investment, helped successfully navigate the crisis.
Social-housing-focused companies helped responsibly modify social housing policies and pricing. Together with government-supported VND30 trillion ($1.3 billion) credit packages, a real estate recovery started but inventory remained high. The market started to demonstrate sustained growth. Property segments bursting into life such as hotels and second homes ushered in new economic potential for provinces gifted with favourable geography and natural appeals such as Ba Ria -Vung Tau, Phu Quoc Island, Nha Trang, Halong, and in particular Danang.
2018 to 2020: The latest World Bank report finds Vietnamese economic growth over the last two years has been mainly driven by high consumer demand and manufacturing-based export growth.
Economic data indicating 7 per cent real GDP growth in 2019, reflected one of the fastest-growing economies in the region.
While globalisation has positively affected Vietnam, the COVID-19 pandemic has caused extensive damage to global and local economies.
Fortunately, early and decisive measures from the government meant Vietnam was far less affected than other countries in the region. While fiscal policies were stable with GDP growth reaching 3.8 per cent in the first quarter of 2020, the pandemic, as it expanded, became more unpredictable.
The ASEAN Development Bank (ADB) estimates that Vietnam’s GDP growth will reach 4.1 per cent in 2020. Although this is 0.7 per cent lower than their forecast in April, it remains the highest forecast growth in Southeast Asia. The World Bank anticipates 3 per cent GDP growth in 2020, and its 6.8 per cent growth forecast for 2021 shows confidence remains high in the local economy.
The Vietnamese economy is primed for recovery and the real estate sector is set to be one of the key beneficiaries in 2021 and beyond.
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