Vietnam’s growth to rise by 6.5% in 2022: ICAEW
The economic recovery across the South-East Asian region has been uneven and must now contend with rising external headwinds from outside the region. Vietnam is predicted with a high growth prospect in the region, at more than 6.5% in 2022, 0.7% higher than the average growth of 5.8% for the whole region.
This was a key finding from the Economic Forecast presented by the experts at the Institute of Chartered Accountants in England and Wales (ICAEW) Economic Insight Forum Q2.
Vietnam was able to bounce back relatively quickly in 2021 compared to the rest of the region. With the easing of restrictions from last year’s Q4 that carried over to this year’s Q1, there has been a significant recovery in its services sector driven by domestic tourism.
The ICAEW report said that even though recovery across the Southeast Asian region had been uneven with the Delta COVID variant, GDP for Singapore, Indonesia, Malaysia, the Philippines, and Vietnam has risen back to pre-pandemic levels – except for Thailand, which is still at 2% below pre-pandemic levels as its tourism industry struggled with travel and mobility restrictions.
It was noted that Vietnam was not particularly affected by the Delta variant wave and hence did not experience large lockdowns that impacted its economy as much as Malaysia and the Philippines did.
Dong Nai enjoys trade surplus of nearly $3.5 billion in H1
The export turnover of southern Dong Nai province hit 13.3 billion USD during the first six months of this year, surging 13 percent over the same period last year, according to the provincial Department of Industry and Trade.
Meanwhile, its import turnover was 9.8 billion USD, resulting in a trade surplus of nearly 3.5 billion USD.
Commodity groups recording high growth in export turnover compared to the same period last year included footwear with nearly 2.6 billion USD, up about 10 percent; iron and steel products (more than 535 million USD, up over 42 percent); textile and garments (nearly 950 million USD, up 11 percent) and machinery, equipment, tools and spare parts (1.3 billion USD, up 17 percent).
The main export markets of Dong Nai are the United States, Japan, China, the Republic of Korea and some European countries.
A representative of the provincial Department of Industry and Trade said that from the middle of 2020 and 2021, enterprises in Dong Nai were severely affected by the COVID-19 pandemic, and a series of companies had to suspend production and export turnover suffered a sharp decline.
Vinh Phuc seeks stronger links with Japanese localities, investors
A conference was held in Vinh Phuc on June 23 with a view to reinforcing the northern province’s cooperation with Japanese localities and investors.
By the end of May, the province had housed 435 FDI projects with combined capital of 7.33 billion USD from 20 countries and territories. With 59 projects worth 1.62 billion USD, Japan ranks third in terms of project number and value but has always been the best performer when it comes to capital disbursement, project effectiveness, and contributions to the local budget.
Vietnamese Minister of Foreign Affairs Bui Thanh Son said the Ministry of Foreign Affairs will further help provinces and cities across the country, including Vinh Phuc, to boost connections in economy, trade, investment, science and technology with international partners, including Japan.
Japanese Ambassador to Vietnam Yamada Takio called on Japanese enterprises to continue promoting images of Vinh Phuc so that more companies from his country will invest in the province, adding that the embassy will do its utmost to boost Japan - Vietnam relations, including between Japanese localities and businesses in Vinh Phuc.
At the event, the Vinh Phuc People’s Committee and the Japan External Trade Organisation (JETRO) signed a memorandum of understanding on cooperation in investment promotions.
Made-in-Vietnam goods filling Vietnamese consumers’ shopping basket
Vietnamese commodities have made up 90% of goods sold in retail outlets owned by domestic enterprises and 60-96% of foreign supermarkets in Vietnam, according to the Ministry of Industry and Trade (MoIT), showing that more Vietnamese consumers are choosing Vietnamese goods.
In traditional retail channels, the ratio of Vietnamese goods in markets and groceries is at least 60%. Particularly, since COVID-19 broke out, 76% of Vietnamese consumers tend to prioritise domestic products, especially those with guaranteed quality and health benefits.
According to the MoIT, 90-95% of goods on the shelves of major supermarkets in Hanoi such as Co.opmart, Vinmart and Hapro are made in Vietnam. Meanwhile, the ratios range from 60-96% in foreign-owned markets such as AEON, Mega Market and Big C.
In order to further spread the programme of “Vietnamese prioritise Vietnamese goods” in an effective manner, in the time to come, the MoIT plans to organise more trade promotion activities and encourage the application of e-commerce in shopping activities.
At the same time, the ministry will implement an annual programme to identify Vietnamese goods on a national scale with the name "Pride of Vietnamese goods" and "Quintessence of Vietnamese goods" in 2022, with an aim to further enhance the position and competitiveness of Vietnamese goods amid the country’s deep regional and international integration.
Hanoi aims to boost night-time economic development
Hanoi is working to expand its night-time economic activities to form a typical economic sector that contributes to the capital city’s socio-economic development.
Hanoi’s major night-time hubs include streets in the Old Quarter, where tourists often gather for shopping, and culinary and entertainment activities. The streets become busier at weekends.
Night tours in Hanoi, including the “Decoding the Imperial Citadel of Thang Long” at the Thang Long Imperial Citadel and “Sacred Night - Glorious Vietnamese Spirit” tour in Hoa Lo Prison have also made the city more attractive at night.
As part of efforts to promote cultural values of the city, boost its tourism development, and increase staying time and spending of tourists, Hanoi is designing a plan to pilot the development of the night-time economy in Hoan Kiem district, focusing on cultural, culinary, entertainment and shopping services.
Earlier, the Prime Minister approved a project to develop the night-time economy in Vietnam to allow some activities to run overnight until 6am of the next day in some major tourism cities and zones.
The project aims to exploit the potential of the night-time economy in Vietnam to promote overall economic growth, improving incomes for residents while limiting risks and negative impacts on political security, social order and safety.
Laos boosts electricity exports to Vietnam, Cambodia
The Lao government is focusing on implementing an array of hydropower projects nationwide to increase its electricity exports to regional countries, including Vietnam and Cambodia.
Laos has signed contracts with Vietnam Electricity (EVN) covering 25 projects with a combined capacity of 2,180 MW, of which Sekaman 1, Sekamansanse and Sekaman 3 already have a total capacity of 572 MW.
With an accumulative capacity of 1,608 MW, the remainders are scheduled to be put into operation and supply electricity for Vietnam from 2022-2025.
The two countries have also reached memoranda of understanding on other projects, helping to push total electricity output expected to be exported from Laos to Vietnam to 8,148 MW by 2030.
Apart from Vietnam, Laos has also exported electricity to Cambodia, with a volume of 445 MW, which is scheduled to reach 6,000 MW by 2030.
VN-Australia to further boost trade and investment ties More than a hundred businesses from Viet Nam and Australia gathered for a trade and investment promotion event organised by the Australia Vietnam Business Council (AVBC) in Sydney, Australia.
Speaking at the event, AVBC President Kiem Dinh said the Australia-Vietnam Enhanced Economic Engagement Strategy, signed in December last year, reaffirmed the two countries' commitment to strengthening ties and sustainable economic development.
Viet Nam's consulate-general in Australia Nguyen Dang Thang said Viet Nam-Australia relations have been built on a foundation of mutual respect and understanding, common interests and similar views on international events.
The two countries have been and will stay committed to an open trading system and have ratified a number of regional and international trade agreements including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
As the two countries' premiers met on the side of the 2021 United Nations Climate Change Conference (COP26), they reiterated a bilateral goal to strengthen trade and investment, especially in the fields of energy, agriculture, forestry, seafood, manufacturing, tourism, digital economy and science and technology.
In the first five months of the year, export-import turnover between the two countries reached a record high of AUD$9 billion (US$6.22 billion), a 32.18 per cent increase from the same period last year despite severe disruptions in global commerce because of the pandemic.
Two-way investment reached AUD$3.5 billion ($2.45 billion) with more than 75 per cent coming from Australian businesses, placing the Oceania economy among Viet Nam's top 20 international investors.
More than 150 products on display for OCOP Week The Department of Industry and Trade of Can Tho City and Central Retail Group Vietnam officially opened OCOP (One Commune-One Product) Week and Vietnamese quintessential products 2022 at the GO Trade Centre on Wednesday in Cai Rang District, Can Tho Province.
Accordingly, more than 150 kinds of traditional and typical products will be exhibited in 19 booths from June 22 to 26.
The event aims to exchange and assist businesses, co-operatives, craft villages and producers in 13 cities and provinces in the Mekong Delta region to introduce their products and connect with supermarkets and traders nationwide.
OCOP is a programme in which each locality organises the production and trading of its local specialities to enhance the consumption of Vietnamese farm produce.
Developing a local shipping fleet to serve international routes could widen business prospects for carriers and relieve logistics burdens for exporters.
The Vietnam Maritime Administration (VMA) has asked the Ministry of Transport (MoT) to implement procedures to approve the development of Vietnam’s international shipping fleet over the next few years. Currently, Vietnamese ships transport freight within the country’s waters only, without a strong capacity for international routes.
The VMA has proposed policies to develop Vietnam’s international shipping fleet and increase its market share in the next five years, involving combined incentives related to VAT, import tax, personal income tax (PIT), and concessional loans.
To reduce the financial burden for shipping owners, it is necessary to remove the application of 10 per cent VAT according to current regulations for imported freight ships until the end of 2026, the VMA suggested in a document sent to the MoT. Its figures show that VAT on imported ships was VND234 billion ($10.1 million) in 2020 and VND109 billion ($4.74 million) in 2021.
Ship owners are expected to be exempt from the import tax and see a decrease in tonnage fee by 50 per cent when they operate container ships of 1,500TEUs or more, or own ships using cleaner fuel such as liquefied natural gas.
The administration has asked the State Bank of Vietnam to allow Vietnamese ship owners that are operating on international routes to borrow foreign currency to purchase new ships. Besides this, a 50 per cent reduction of PIT for Vietnamese crew members on cargo ships on domestic routes and seniority of five years would be suitable.
The VMA’s proposal targets that by 2030, Vietnamese container carriers have the capacity to reach international markets such as Japan, South Korea, and India, and then target possibly Europe or North America in a longer-term strategy.
Vu Anh Tuan, director of Project Shipping Transport Co., Ltd., said, “Most shipping carriers have a small scale and lack capital and human resources as well as international experience. Besides this, there is a lack of links in the supply chain between logistics service providers and other businesses.”
Offering incentive policies to develop an international fleet is an urgent requirement as foreign container carriers are dominating the market, according to Tuan.
The VMA’s statistics show that about 90 per cent of Vietnam’s trade volume is transported by sea, reaching 24 million, up 7 per cent in 2021. However, the country’s current fleet has only a 7 per cent market share, as the rest is handled by foreign shipping lines.
While Vietnam’s container shipping companies have a total capacity of 39,500TEU, 13 of the vessels are over 25 years old and 15 of the vessels have a capacity of 300-600TEU suited only for domestic operations. Only 14 of the ships have a capacity of 1,000-1,800TEU and can run routes in Asia.
The MoT will continue to gather suggestions and opinions from businesses and associations to improve Vietnam’s international shipping fleet.
Logistics chances get off ground in Danang
Alluring new development thanks to its sustainable investment attraction, Danang is cementing its position as a large logistics centre for the central coast and Central Highlands.
As a business that provides services connected to warehousing, land, and transportation with more than 200 trucks serving the inner city network and outside major cities, MTV ITL Logistics Danang held a groundbreaking ceremony in March for the building of the ITL Logistics Danang Centre.
This project, located at Hoa Khanh Industrial Zone (IZ), is being built over 31,000 square metres with the total investment of $8.6 million. It will feature a standard factory system for lease; a warehouse system and shared infrastructure; a packing area for storing goods; and Grade-A standards for service quality with seven storeys of storage shelves.
The centre will be a green distribution hub for Vietnam that utilises solar energy for industrial manufacturing. According to Danang Hi-Tech Park and Industrial Zones Management Authority, the centre aims to establish a logistics supply chain for the central region.
In updated planning for the development of logistics infrastructure with a vision to 2045, approved by Danang People’s Committee, there will be five main logistics centres located at traffic hubs, IZs, and industrial clusters.
The first hub is Lien Chieu Port, which serves as a seaport logistics centre and will be 30ha in size by 2030 and nearly 70ha by 2045.
In addition to seaport logistics, the province intends to construct the Hoa Nhon logistics centre of 27ha by 2030. The hub, which will be located near the intersection of Danang-Quang Ngai Expressway, will provide technical services for road transport and logistical services for north and south as well as surrounding provinces transiting through the city.
Danang high-tech parks achieving wider attention
High-tech parks are becoming a stronger lever to drive Danang’s economic growth.
On June 17, Danang Hi-Tech Park and Industrial Zones Management Authority (DHPIZA) approved the planning for the $60 million Micro-Electro-Mechanical Systems (MEMS) factory, to be funded by Vector Fabrication Inc. from the United States. Covering an area of 40,000 square metres, the factory will produce printed circuit boards while simultaneously studying and producing MEMS. Construction is expected to start this year and the factory’s first phase will come into operation in early 2025.
DHPIZA director Pham Truong Son said that since borders reopened in March, many foreign-invested enterprises (FIEs) have begun to look for investment opportunities in the city’s hi-tech park and industrial zones (IZs). “Thanks to outstanding advantages, our IZs are considered a trusting destination by investors. Since early this year, Danang has granted investment registration certificates for 10 projects worth over $53 million, two of which are foreign-funded and which take up $5.04 million of the total,” Son said.
To date, the city has attracted over 378 domestic ventures worth $1.22 billion and 129 foreign-invested projects worth $1.8 billion. The DHPIZA in particular has lured in 22 projects – 12 domestic ones worth over $273 million and 10 foreign-led schemes worth $400 million.
Major investors from such countries as Germany, the Netherlands, and Japan are creating the most activity and interest in Danang.
Developers expect smoother LNG policy planning
The government has asked the Ministry of Industry and Trade to clarify the planning data and feasibility of liquefied natural gas power development towards 2030, which has set a target of almost 24,000MW, accounting for 16.4 per cent of the total power source in the nation’s draft master power plan.
The input price of imported liquefied natural gas (LNG) fluctuates between 15-20 cents/kW while the saleable electricity price is currently 6-7 cents/kW only. This will be an obstacle in the future because Electricity of Vietnam (EVN) will have to buy high and sell low.
Despite the mandatory use of the standard form wholesale market power purchase agreement (PPA), complete with untenable fuel cost pass-through clauses being imposed on would-be LNG project sponsors, the market will never accept the proposition.
Prime Minister Pham Minh Chinh questioned why the latest draft of the Power Development Plan VIII (PDP8) seeks to effectively block any new solar power projects until 2030, since “solar power costs are getting cheaper and cheaper, and energy storage battery technology is becoming more advanced at more acceptable pricing”.
According to calculations by the Ministry of Industry and Trade, the import demand for LNG in PDP8 is about 14-18 billion cu.m in 2030 and about 13-16 billion cu.m in 2045. This number is higher than the specific target in the Politburo’s Resolution No.55-NQ/TW released in February 2020 on the orientation of the National Energy Development Strategy of Vietnam to 2030. On the other hand, the input price of imported LNG is fluctuating due to events such as the Ukraine conflict.
A 3.2GW LNG-to-power plant in the Mekong Delta province of Bac Lieu, proposed to be built by Delta Offshore Energy (DOE), is much anticipated. Pham Thanh Hien, deputy director of Bac Lieu Department of Planning and Investment, said, “This would be a major event for Bac Lieu, but the plant has not been able to start construction yet. Currently, the project has not made any progress and is still waiting for consideration and decision.”
Hien explained that investors are still negotiating a PPA with EVN. The project is facing a number of obstacles due to the harsh global restrictions of the last two years.
According to the plans of clean energy developer DOE, the first phase of the project with a capacity of 800MW is expected to start operation in 2024 and construction of the entire project is expected to be completed by the end of 2027. The complex of LNG port and warehouse will be located in the coastal area of Bac Lieu, 35km from the power plant.
Companies including Korean Gas Corporation (KOGAS) are also interested in LNG power generation projects. KOGAS, South Power, and Hanwha Energy are participating in the Hai Lang project phase 1 in the central province of Quang Tri, which was expected to start commercial exploitation in the 2026-2027 period.
However, progress that was approved in PDP7 has now been converted to the draft PDP8, which states that it will be carried out after 2040. Therefore, investors, as well as provincial authorities, are facing quite serious problems.
Previously, at the Vietnam Business Forum held in February, Kim Han-Yong, chairman of the Korea Chamber of Commerce in Vietnam, said that if some PDP8 plans are rolled back beyond 2030, such as it seems with the Hai Lang venture, project development may become practically impossible.
In Vietnam, about 20 LNG-fired power projects are in the pipeline. Some of these programmes, however, have yet to identify a fuel source.
PetroVietnam Gas claims to have completed eight master sale and purchase agreements last year with LNG providers from the Americas, Europe, Australia, the Middle East, and Asia-Pacific, and that it is still negotiating, unifying, and signing deals with other LNG suppliers worldwide.
Investors clamour for wind incentives
Developers and investors are asking for incentives for the first step instead of a bidding mechanism to develop offshore wind power projects in Vietnam, in order to reach the target of 7GW of offshore wind power by 2030.
Mark Hutchinson, chair of the Southeast Asia Task Force at the Global Wind Energy Council (GWEC) said the investment rate of offshore wind power projects is very large. Therefore, Vietnam needs to have a clear process and an appropriate price to attract investors. At the same time, it is also necessary to consider the supply chain and develop seaport infrastructure.
Commenting on the target of 7GW by 2030 as set out in the draft Power Development Plan VIII (PDP8), Hutchinson said it is necessary to have a conversion mechanism for the first 4GW, then implement a bidding mechanism for the remaining 3GW.
Nguyen Thi Thanh Binh, deputy general director of multi-sectoral T&T Group, said that it should consider and implement the transition period before implementing the bidding and auction policy. The transition phase is to follow the fixed electricity tariff suitable to Vietnam’s conditions and would be applied to the first 7GW in the period up to 2030.
Binh pointed out that the lengthy process of project approval and investor selection will affect the development target of offshore wind power development until 2030 as, currently, the draft PDP8 has only allocated offshore wind capacity by region and not by locality.
Stuart Livesey, senior director and head of Copenhagen Offshore Partners in Vietnam, shared Taiwan’s experience as the government has developed a project roadmap to create confidence for domestic investors and suppliers in finance, technology, and equipment.
He suggested that Vietnam needs to ensure a flexible policy to allow projects to choose the latest technology because the tech is constantly changing. “Investors must also have the foresight to forecast technology,” he added.
The GWEC estimates that a simplified transition mechanism can be established within next year, and local authorities can then complete a selection process for a large tranche of 4GW of projects by the end of 2023. Financial closure and other project work can be finalised by mid-2026. The project construction work can then ensure that 4GW can reach commercial operations by the end of 2030.
This gives more time for potential delays in the supply chain, port development, and grid infrastructure, and enables projects to be developed in tranches rather than 7GW altogether, in a short timeframe. An auction scheme can be developed and run in parallel by the end of 2026 covering the remaining 2-3GW of volume targeted in the draft PDP8.
The GWEC also suggested improved PPA bankability to attract international finance, which will be required to bring in the large investment volumes required for offshore wind.
It explained two weeks ago at the conference, “Offshore wind investment is significantly larger when compared to onshore wind. There are a variety of ways that onshore wind projects are financed in Vietnam, including vendor finance, corporate balance sheets, and local bank guarantees, and these are mainly led by domestic investors. For comparison, the investment needs for a typical 500MW offshore wind project are approximately $1.5 billion (or $3 billion/GW), while an onshore project would typically be less than $100 million ($1.5 million/MW with project sizes typically less than 70MW). As such, the involvement of international banks in offshore wind is likely to be necessary.”
Over VND17 trillion proposed for two North-South expy sections
The Bai Vot-Ham Nghi and Ham Nghi-Vung Ang expressways, which are part of the big-ticket North-South expressway project, are estimated to cost over VND17 trillion, according to the Thang Long Project Management Board.
The project management board has sent the pre-feasibility study of the two subprojects to the Ministry of Transport for consideration and approval, Lao Dong newspaper reported.
The Bai Vot-Ham Nghi section will run across Duc Tho, Can Loc, and Thach Ha districts in the north-central province of Ha Tinh, with a total length of some 35.3 kilometers. This section will link to the Dien Chau-Bai Vot subproject in Duc Tho and the Ham Nghi-Vung Ang subproject in Ha Tinh City. Besides, it will require over VND7.6 trillion, including over VND5.3 trillion for road construction and over VND1.5 trillion for compensation and resettlement.
The 54.2-kilometer Ham Nghi-Vung Ang section will pass through Thach Ha, Cam Xuyen, and Ky Anh districts in Ha Tinh Province. It will connect with the Bai Vot-Ham Nghi section in Thach Ha and the Vung Ang-Bung section in Ky Anh, with an investment of over VND9.7 trillion, including VND6.9 trillion for road construction.
The two sections will be developed in phases and have four lanes each. Once completed, each will be expanded to six lanes, allowing vehicles to travel at a maximum speed of 120 kilometers per hour.
To ensure traffic safety, the two sections will have emergency lanes, with the Bai Vot-Ham Nghi having 15 emergency stops and the Ham Nghi-Vung Ang section having 23.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes