FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
In recent years, e-commerce has cemented its position as one of the most popular forms of purchasing for the Vietnamese public while the digital industry continues to play a significant role in Vietnam’s economy. With such impressive potential, Vietnam e-commerce has risen to become an attractive market in Southeast Asia. Vietnam’s potential to foster e-commerce was strongly demonstrated through the tremendous growth despite the unprecedented pandemic, the reasons behind that growth and the predicted trends for the year 2022 are also worth considering to further its development.
The Potential – How did Vietnam e-commerce unanticipatedly thrive despite the Covid-19 pandemic?
When thousands of people across Vietnam entered a lockdown in 2020, a ripple effect throughout the economy was inevitable. Despite those difficulties, the e-commerce sector in Vietnam seems to be in a pretty good place amid the pandemic.
According to the Vietnam E-commerce White Paper 2021 issued by the Ministry of Industry and Trade, the Vietnamese e-commerce market has seen a steady growth over the past 5 years, the value of this market started at 5 billion USD in 2016 then significantly doubled to reach over 10 billion USD by 2019. This upward trend continued in 2020, with 11.8 billion dollars, a rise of 18% over 2019. In the light of the Covid-19 pandemic, there has been a significant growth in the digital economy in general and e-commerce in particular. According to a report by Google, Temasek and Bain & Company, the total merchandise value (GMV) of the e-commerce industry in Vietnam grew dramatically from 8 billion USD in 2020 to 13 billion USD in 2021.
Figure 1: GMV of Vietnam ecommerce (Source: Google, Temasek and Bain & Company)
Figure 2: Esimation of GMV of Vietnam 2030 (Source: Google, Temasek and Bain & Company)
These figures clearly prove that Vietnam's e-commerce sector has surmounted the challenges posed by the Covid-19 and is predicted to prosper in the "new normal". This growth is even more astonishing than the period before the pandemic, placing Vietnam second in Southeast Asia in terms of e-commerce market growth and third in size, behind Thailand and Indonesia. This makes Vietnam’s e-commerce a great investment opportunity.
The reasons behind – Why is e-commerce in Vietnam thriving?
The pandemic has impressively opened previously untapped customer desires for online purchases of food, necessities, and even entertainment. Lockdown restrictions boostled demand for industries that help people stay busy while social distancing and caused them to spend online more than ever before. According to Adsota and SOL Premier's study, e-commerce platforms in Vietnam have seen a 41% increase in new users since the outbreak of the pandemic.
Even if the pandemic comes to an end and shoppers are returning to physical stores, there is no sign of a decline in online shopping thanks to the tremendous effort in marketing activities of such e-commerce platforms as Shopee or Lazada, and it is considered to continue to thrive further as online shopping has become a habit of consumers.
Besides, the significant growth of e-commerce also stems from the staggering rate of foreign investment and international partnership. The success of national platforms such as Tiki and Thegioididong demonstrates Vietnam’s potential to foster e-commerce. These platforms have grown into big e-commerce powerhouses thanks to investments from foreign countries like Japan, Germany, the United States, South Korea and China.
The adoption of digital payments is another contributor to the growth of e-commerce while it has replaced the conventional cash-on-delivery method. With just a few clicks on an e-wallet platform installed in ones’ mobile phone, customers now can easily pay for their lunch or even electricity and water bills. Consumers' preference for using digital transactions has risen as a result of the prolonged lockdowns that kept them at home for months.
According to a survey of 15,000 retailers, cashless payments in 2021 made up 72.8% of total transactions, up 9% year-on-year. The government has also put significant effort in promoting the usage of digital payments when signing a decision to approve a project on developing Vietnam’s non-cash payment for the 2021-25 period which aims to accelerate the growth of cashless payments in Vietnam and make cashless payment methods more popular to people in both urban and rural areas.
The trends in 2022 – What will shape the growth of e-commerce in Vietnam in 2022?
The B2C market in Vietnam is fairly huge and has a lot of potential. E-commerce websites, e-commerce trading floors, online promotion websites, and online auction websites are the most common forms of B2C in Vietnam. Thanks to the rise of social media, social commerce as a sub-sector of e-commerce in Vietnam is likely to continue growing, contributing to further growth in the e-commerce industry. Even though social commerce has grown significantly, not enough effort has been put into growing supply chain and other operation support for this sector, which is an opportunity for investors to get involved at an early stage.
In recent years, the B2B e-commerce marketplace in Vietnam has gained momentum. Reaching 13.2 billion in 2020, the growth rate of Vietnam’s B2B e-commerce market is the highest in Southeast Asia. It is expected to grow at a CAGR of 43% by 2025. Various B2B organizations opt to expand their network and collaboration with dealers, VARs, wholesalers, e-commerce platforms, etc. to offer products and services. This demonstrates their ultimate goal of maximizing business potential and achieving extensible development. The COVID-19 pandemic has accelerated this trend, making digital commerce the number one priority for manufacturers, distributors, and brands that hope to thrive.
Several successful B2B e-commerce businesses predict strong growth for the B2B e-commerce market in the coming years. EI Industrial is Vietnam's first industrial-focused B2B marketplace, with the goal of accelerating the country's digital procurement. They created the platform eiindustrial.com where purchasers can easily source from multiple suppliers and identify the best deals available.
The Vietnam-EU e-commerce platform (VEFTA) was launched with the view to helping Vietnamese businesses access the European market more conveniently and boosting Vietnam’s exports to Europe. Telio, with the mission of connecting businesses with retailers, has received funding of 22.5 million USD from Vietnamese tech unicorn VNG, raising its total investment to 51 million USD.
Niche e-commerce market is another leading trend of 2022 and the coming years ahead. Because the market has been full of big players, it is hard for young businesses to seek a landscape to flourish. Therefore, targeting niche markets is a wise strategy which allows them to avoid confronting big players who have powerful financial capability.
Vietnam’s thriving e-commerce sector creates a diverse ecosystem which covers various areas such as mobile payment, virtual assistants, operation management, logistics, selling trending products and services,… These are areas that big players pay little attention to. Taking advantage of it, young enterprises are developing strategies to build businesses that have a good chance of succeeding – without going up against the big companies.
According to IPrice Insights' ranking of the top 50 largest e-commerce sites in Vietnam, up to 80% of these are specialized on a certain type of product or service such as luxury goods, imported cosmetics... In addition, by going deep into a particular niche, they are able to offer a variety of related services to both individual and corporate customers. This results in a relatively large revenue.
Nguyen Tuan, Deputy Director of the Investment and Trade Promotion, said that targeting niche markets was appropriate for small businesses in the fiercely competitive situation now. It could help businesses reduce costs for product promotion, lessen competition and even stand out in the market. By learning deeply about the culture and consumption habits of the Vietnamese to identify a niche, small businesses could gain great benefits for future development, he added.
Another trend which can be easily seen is the growing adoption of digital payments, which also refers to the growing collaboration between e-commerce and fintech sectors. According to the Vietnam Investment Report, fintech and e-commerce together accounted for 70% of total venture capital of Vietnam in 2021, and this trend is predicted to continue in 2022.
The figure demonstrates that the pandemic has tremendously triggered major changes in customers’ behavior that leads to the shift of online shopping and digital payments. Offering such same benefits as accessibility and minimized contact for customers, these two sectors will be not only complementary but also intersecting. Therefore, it is advisory for investors to pay attention to the chance of overlapping between these sectors to further business opportunities.
According to the Statista Report, revenue in the e-commerce market of Vietnam is projected to reach US$14.81bn with the user penetration reaching 58.2% in 2022. With thorough research and applicable innovations regarding these trends, Vietnam’s e-commerce is likely to grow tremendously, exceeding these above figures. Though the market is fiercely competitive with multiple big players, the growing demands of Vietnamese create more and more potential niche markets that can provide golden investment opportunities.
Earlier this year, the Regional Comprehensive Economic Partnership (RCEP) between 15 Asia-Pacific nations came into effect. This agreement is a big deal with global influence, covering about 30% of the world’s gross domestic product, trade, and population. For instance, in 2019, the total GDP of RCEP member countries reached $25.84 million, higher than that of the United States-Mexico-Canada Agreement or the European Economic Area.
RCEP is a free-trade agreement (FTA) involving 10 ASEAN members and 5 other countries in the Asia continent. Within RCEP members, tariffs on 91% of goods will be eliminated, boosting their economies. While in a closed economy, goods, services, technology, and knowledge are limited. However, with an open economy, consumers have access to a variety of goods.
From there, there will be an increase in aggregate consumption, leading to a growth in manufacturing. To achieve that, FTAs like the RCEP were formed to reduce taxes and stimulate trade, creating mutual benefits for member countries. RCEP includes commitments on market opening in the fields of goods, services, and investment. Additionally, the harmonization of rules of origin instead of applying the 5 sets of rules like the present was also discussed. Another matter of concern is the establishment of trade facilitation measures.
Vietnam - an active member of the RCEP
As one of the most open economies among the developing countries in terms of trade, Vietnam is an active member of many FTAs, including the RCEP. While being the ASEAN Chair in 2020, Vietnam has successfully completed its mission, contributing to the agreement of ASEAN nations on the RCEP. The signing of the RCEP agreement can be considered one of the most desirable outcomes of the ASEAN Summit 2020.
How Vietnam benefits from the RCEP
The RCEP, the world's largest trade bloc, is predicted to facilitate increased development and trade through integrated markets for Vietnam. This country has already been well integrated into the region; therefore the greatest benefits are not likely to come from tariff reductions alone, but from measures that facilitate trade such as unified rules of origin. It is believed that in the most optimistic scenario, where all benefits are applied, Vietnam will have the highest gains of all RCEP member countries.
Positive impacts on trade
According to a recent study by the World Bank, Vietnam is projected to have the highest trade and income gains among all members of the RCEP. In regards to trade encouragement, Vietnam offers partner countries a tariff liberalization rate equal to or lower than the current level of the ASEAN Plus free trade area agreements.
Countries in return also apply tariff liberalization rate for Vietnam: Australia eliminates 92% of tariffs for Vietnam, New Zealand lowers by 91.4%, Japan by 90.4%, Korea and China by 90.7%. In addition, some types of goods were free from tariffs as soon as the agreement was enforced: mechanical equipment, tools, accessories, computer components, chemical products, cotton, and some agricultural products, among many others.
Beside tariff removal, the simplification of the rules of origin was implemented due to the RCEP. Regulations on harmonization and transparency of customs procedures to match international standards were discussed as well. With consistent customs laws and regulations between involved countries, businesses operating in the bloc can benefit from quick procedures and favorable conditions.
Agreements on trade-related issues open great export opportunities for Vietnamese enterprises, enabling them to export to 14 other markets of member countries with preferential tax rates and relaxed customs procedures and product requirements. As a consequence, the RCEP will help establish long-term stable export markets despite the volatile world situation causing disturbances in the supply chain.
What's more, by encouraging other countries to export products and services to Vietnam, the RCEP allows Vietnamese companies to access modern production chains, technology, and equipment from developed countries in the bloc. Moreover, it would be easier for Vietnam to import input materials for manufacturing at lower prices due to the cut in tariffs.
Vietnam as an investment destination
It is settled that the opening level of the Vietnamese market does not exceed the level decided in the CPTPP and EVFTA Agreements. RCEP also adds some TRIMs+ obligations compared to commitments to join the WTO. Furthermore, the investment chapter of the Agreement added a mechanism to assist investors with solving problems in the investment process. However, the mechanism of dispute and settlement between the state and investors will not be applied to tariff-related expropriation. Also, Vietnam reserves the right not to exercise automatic MFN clauses in the investment field.
Another point is that RCEP is built on the appropriateness of the economic development level of participating countries. Therefore, while some ASEAN countries are still in underdeveloped economic status, the dissimilar economic structure will create conditions for countries to support each other through the supply chains of goods. Consequently, businesses in Vietnam as well as in other less developed economies can compete in the market. Due to the RCEP, Vietnam and some ASEAN countries have become more attractive as investment destinations.
RCEP brings about an increase in GDP
Assuming reductions in tariff and non-tariff measures, real income in RCEP countries is expected to increase by 0.21 percent and real GDP by 0.17 percent in 2035. Particularly, in Vietnam, considering the full scenario, the income level grows by almost 5 percent, higher than that of other countries, whose average is 2.5 percent. The baseline, which incorporates long-term trends and takes into account all of the current tariff liberalization commitments within the region (except for the Regional Comprehensive Economic Partnership), predicts real income in Vietnam will grow more than 112 percent between 2020 and 2035.
Challenges and solutions
Generally, the RCEP agreement opens many opportunities for member states, especially underdeveloped countries like Vietnam. However, beside creating an environment with highly diverse economies, the new FTA can also pose challenges for Vietnamese enterprises. For example, a higher level of competition will be inevitable, not only in manufacturing but also in services. Furthermore, since RCEP has come into effect, legal matters will occur more frequently, including ownership rights, intellectual property, and e-commerce.
Hence, while this is an opportune time to consider entering the Vietnamese market, investors should be mindful of the procedures and problems. The research process can be exhausting and overwhelming without the help of a faithful partner. Therefore, Viettonkin is here to support you and tackle all your problems with experienced specialists and high-quality service. Contact us now via our website to spare yourself the hard work.
The professional service industry in Singapore is one of the most developed industries, becoming the service center in not only Asia, but also the world. As it stands, Singapore professional services industry made up 6.5% of the nation’s GDP at 25 billion USD value-added worth in 2016. The industry created jobs for over 230,000 people, constituting 6.4% of its total workforce.
The industry amid destructive Covid-19 pandemic
Since 2018, the Singaporean government has revealed a national roadmap for further developing the professional services industry in the city-state. Thus, the roadmap aims to generate an additional 5,500 occupations annually, pushing the industry’s value-add out to 31 billion USD in 2020 at a 4.6% average growth rate.
Prior to Covid-19 pandemic, the professional services sector and the administrative & support services sector outperformed the Singapore economy. The real value-added of the professional services sector grew by a CAGR of 4.4%, outstanding real GDP growth of 3.1%. This figure shown Singapore’s continued development as a global professional service hub. Among the various segments of the sector, the highest CAGRs were seen for the (i) head offices & business representative offices; (ii) business & management consultancy; and (iii) other professional, scientific & technical services segments.
Figure 1: Real VA Growth of the Segments of the Professional Services Sector (Source: MTI, 2021)
Regarding the administrative & support services sector, its real value-added expanded at a CAGR of 5.6%. Both segments of the sector experienced at a faster growth pace than the overall economy during this period. However, when compared to the decade as a whole, their growth during the more recent period was not really strong.
Figure 2: Real VA Growth of the Segments of the Administrative & Support Services Sector (Source: MTI, 2021)
Yet, the Covid - 19 pandemic has unprecedentedly had a widespread devastating effect on the whole global economy. As a result, Singapore experienced a sharp plunge in the construction works and contracts in 2020, while also saw a decline in demand for advertising and market research activities. Businesses cut back their expenses on professional services during the downturn period. This has negatively impacted the professional services sector. An overall contraction of 9.7% was recorded due to contraction in the architectural and engineering, technical testing and analysis (-16%), and the other professional, scientific and technical services segments (-14%) in the same year.
Meanwhile, the sinking in the real value-added of the rental and leasing segment weighed down the administrative and support services sector. The reason behind this decline lies in the global travel restrictions, the slower work progress at construction sites and weaker domestic economic conditions. In short, the real value-add of these sectors has still remained below pre-Covid-19 levels (Ministry of Trade and Industry, 2021)
Singaporean government give boost to professional services industry
Even before Covid-19, the Singaporean government has made a nation-wide effort to take Professional Services to the next level. Mrs Indranee Rajah, Singapore’s Second Minister for Finance, articulated that “The Professional Services sector is a growing industry with tremendous potential for job creation”. This period signals the right conditions for Singapore professional service companies to innovate world-class business solutions and forge cross-disciplinary partnerships. Thus, the government launched an industry transformation map (ITM) that will enable firms in the industry to scale, innovate and increase their productivity. Along with that, the plan prepares Singaporeans to take on exciting new jobs such as digital product developers, data modelers and risk advisory professionals.
The Singaporean government also planned several initiatives to reskill and upskill professionals, managers, executives and technicians (PMETs), developing new competencies. Thus, the government launched further Professional Conversion Programmes (PCPs) under the Adapt & Grow project with additional programmes relevant to the professional services industry.
Additionally, the government has fostered the collaboration between higher learning institutes and firms within the professional service industry. This initiative aims to ensure relevant training and education as well as facilitate coordinations between corporations, start-ups and research institutes to strengthen and drive innovation.
Furthermore, Mrs Indranee Rajah emphasized the professional service sectors in Singapore take steps to seize the growth opportunities. She also urged firms in the professional services industry to seriously pay attention to job redesign and the well-being of employees. Under the context of Covid-19, the digital transformation has experienced a rapid acceleration. Therefore, redesigning jobs and ensuring updated skills among employees are of importance to develop the professional service industry.
Viettonkin as one of the leading local professional service firm in Singapore
Credited by multinational corporations (MNCs), Fortune Global 500 companies, as well as international non-governmental organizations (INGOs), Viettonkin has been positioned among the prestiged local professional service companies in Singapore. In alignment with the initiatives of the Singaporean government, Viettonkin has always upgraded the skills of its staff, ensuring the high quality of the provided services.
Understanding the difficulties foreign investors have gone through and will experience in entering the Singapore market, Viettonkin is on its mission to help and support investors along their business journey. We provide a wide range of professional services, guiding you with the accuracy, professionalism and detailed insights in the Singapore market and legal system. Unfamiliar with the new environment, you can make undesirable mistakes. Yet, our team of top-notch experts in the industry can stand by your sides, ensuring the best support you can receive. With our assistance, you can focus on what really matters - doing business in Singapore! Let us be your reliable companion!
Due to the growing concerns about environmental awareness, many countries in the world have paid more attention to incentivising electric vehicles (EVs) adoption. EVs will play a key role in achieving the goal of zero emissions by 2050. The EV market is growing tremendously over the last few years. As a result of the booming demand for new energy vehicles (NEVs), multiple players are joining the market, making the EV industry fiercely competitive than ever before.
Electric vehicles industry overview in the global market
What is the current situation?
The worldwide electric vehicle industry has grown significantly in response to rising fuel prices, increased demand for fuel-efficient, low-emission, and high-performance automobiles, and stricter regulatory regulations on vehicle emissions.
The growth of EVs has been impressive over the last three years, despite the supply chain bottlenecks caused by the global pandemic. According to the International Energy agency, in 2019, 2.2 million electric automobiles were sold worldwide, accounting for only 2.5 percent of total vehicle sales. Then, the global cars market shrank in 2020. However, electric car sales bucked the trend, reaching 3 million units and accounting for 4.1 percent of total vehicle sales. Electric vehicle sales rose to 6.6 million in 2021, accounting for over 9% of the global auto industry and more than tripling their market share from only two years before. Noticeably, in 2021, all the net growth in global car sales came from electric cars.
Figure 1: Global electric vehicles in 2021 (Source: Statista)
According to Allied Market Research, the global electric vehicle market was valued at $163.01 billion in 2020. The figure rose to roughly USD 185 billion in 2021 and is expected to surpass USD 980 billion by 2028. Electric car sales powered through 2021 and have remained strong so far in 2022.
Established firms such as Tesla (US), Volkswagen AG (Germany), SAIC Motors (China), BYD (China), and Stellantis (Netherlands) dominate the electric vehicle industry. These companies have extensive global distribution networks and invest greatly in R&D to develop new products.
Figure 2: Electric vehicles sales of key players in the world
What are the dominant markets?
These days, China, Europe and the U.S are the 3 biggest EV markets in the world. Europe and China are leading the way with 16% and 14% EV market share respectively, while the US is at 4.5%.
2021 was a breakthrough year for China’s EV sector. According to the China Passenger Car Association, with about 3.2 million electric vehicles sold, China saw the most rapid growth in the EV market. This was an increase of 2 million EV units compared to 2020, more than the combined increase of all other regions taken together. Thus, electric vehicles accounted for over 16% of the automotive market in China in 2021, and 53% of the global market share. This made China regain its dominance in the global EV market - the biggest market for electric vehicles in the world.
Figure 3: electric vehicles sales by major market in 2021 (Source: Canalys)
China continues its great performance in 2022. In March 2022, plugin vehicles hit 26% China’s market share while full electrics (BEVs) alone accounted for 21% of the country’s auto sales. China is forecast to be the world leader in terms of electric vehicle production over the next few years.
Consumer behavior is a great contributor to the development of China’s EV market. Because many Chinese have no previous car ownership experience, they can easily adapt to EVs. Besides, many Gen Z and millennial buyers would love to take their new purchase to the next level by customizing their electric vehicles as a form of self-expression. Therefore, many EV start-ups are putting great effort in innovating their products with the view to driving a transformational change towards electrification.
In the US market, there is also a growing demand in vehicles which are carbon-neutral, high performance, economical and practical. The US’ EV market broke records in 2021, estimated at approximately 607,000 sales. This was an 83% increase compared to 2018 – the year marking the beginning of a strong demand for a popular EV product Tesla’s Model 3. The US’s electric vehicle market is projected to grow from $28.24 billion in 2021 to $137.43 billion in 2028 at a CAGR of 25.4%.
Figure 4: Tesla electric vehicles dominates US EV market (Source: Forbes, Statista)
In the European market, people widely accept electric vehicles. As charging infrastructure improves, production costs decrease, and governments take action to reduce carbon emissions, electric cars have seen an increasing trend of acceptance throughout Europe. According to the Guardian in 2020, car manufacturers sold over 500,000 electric cars in Europe. The sales of EV in Europe have increased steadily since 2010, with annual growth of roughly 50% over the last 5 years. According to the International Council’s report on Clean Transportation, Europe is currently the world's second-largest electric car market by volume, after China but ahead of the United States. This tremendous growth in demand for electric vehicles is expected to bring further development to Europe's EV market.
China and the US’s policies to incentivise EVs adoption
Boosting demands
When it comes to boosting demands. According to the China Association of Automobile Manufacturers, in 2009, the Chinese government started granting incentives of around US$ 15 billion. The funds were used to strengthen its commitment to stimulate EV development, generate employment, and reduce urban pollution and dependence on oil imports.
The very first action was launching the pilot program called The Thousands of Vehicles, Tens of Cities to subsidize Chinese cities to implement EVs. Initially, the program concentrated on public procurement, but they were eventually expanded to include private procurement.
Nowadays, almost all major cities in China are enacting stricter regulations. Beijing, for example, only provides 10,000 registration licenses for combustion-engine vehicles every month in order to encourage residents to switch to electric vehicles. EVs have been exempted from traffic and vehicle ownership control in several large cities. Some cities even allocate dedicated parking space for EVs.
Moreover, the Chinese government has actively promoted the electrification of public transportation vehicles. Many Chinese cities have set specific objectives for fully electrifying taxis and online hailing cars. For example, China's Ministry of Transport set a goal in 2018 to replace all buses in large cities with electric vehicles by the end of 2020.
Meanwhile, the United States was said to take a less supportive approach to EVs than China. However, the US Government has put more effort into promoting EVs recently. At least 47 states and the District of Columbia offer incentives to encourage the deployment of EVs. The incentives include measures that provide high-occupancy vehicle lane exemptions for EVs, financial incentives for purchasing EVs, vehicle inspection or emissions test exemptions, parking incentives and utility rate reduction.
Utilities also offer incentives, rebates, and grants for transportation electrification. Price reductions for charging electric vehicles during off-peak hours are one of the most prevalent incentives. Several electric utilities provide cheaper off-peak prices per kilowatt-hour. Other utilities provide subsidies to encourage people to buy electric vehicles and equipment.
The US Government also offers tax credits for anyone who purchases EVs from certain manufacturers. However, this system is not permanent and is dependent on sales by the model of cars.
Facilitating manufacturers
The Chinese government has provided a variety of policy support for the development of EV-related infrastructure. They include financial assistance for the construction and operation of charging stations and regulatory provisions to streamline charging infrastructure planning processes. By 2020, such policy assistance will boost the number of charging and battery exchange stations to 12,000, as well as the number of charging heaps to 4.8 million.
Monetary consumer subsidies help the China government cultivate the EV industry. This results in a gradually decreasing amount of cost as the supply chain and manufacturing matures while scale is gained. In addition, the government also provides tax reliefs and monetary subsidies for research and development expenditure for companies throughout the EV manufacturing supply chain.
The main reason why EVs are costly is that their batteries are expensive. China’s solution was to invest greatly in battery production. Five Chinese EV battery suppliers entered the global top ten ranking of battery suppliers in 2015. The significant investment in battery production made China become dominant in this stage of the supply chain. Recognizing the potential market of EV batteries, international battery suppliers are entering China's market.
In the meantime, US automobile manufacturers are pouring money into developing a net-zero carbon powertrain for future models that does not rely on third-party technology. The US Government has granted great subsidies to these corporations as part of a large energy investment incentive to help them begin their research and development for American markets.
When it comes to battery supply, recently, the US Department of Energy has announced to invest $3 billion into battery manufacturing and supply chain to promote the transition to EVs. The funds came from last year's massive infrastructure bill.
Encouraging customers to purchase
Both governments introduced subsidies to bolster sales of electric vehicles. The Chinese government has either exempted or reduced taxes on the purchase of electric vehicles. These programs have attracted a large number of purchasers to acquire electric vehicles in this country.
Meanwhile, in the US, consumer rebate programs are launched in multiple states. They can cover small costs associated with purchasing new electric or alternative fuel vehicles, such as immediate cash down rebate payment. These incentive programs might also be temporary, or may be allotted more funding in the future to provide higher incentives.
Electric vehicles are the key to a sustainable future and will gain more popularity in the future. Our experienced experts will help companies to receive in-depth knowledge about the present scenario of certain markets so that you can adopt the necessary strategies accordingly. We are confident to help you seize ample opportunities ahead. Let us be your trustworthy companion!
Despite the COVID-19 pandemic, Japanese FDI in Vietnam still grows sharply, reaching a total registered capital of $63.94 billion in Q4 2021. The average Japanese project size in Vietnam is $13 million per project, higher than the national average size of $11.7 million per project.
Currently, Japanese investment projects in Vietnam focus on 19 industries and fields, with the largest concentration on the processing and manufacturing industries. The section alone embraces 1,842 projects with a registered capital of $41.79 billion, accounting for 65.3% of total investment capital. Following is the electricity production and distribution sector with 19 projects and $7.4 billion of investment, accounting for 11.5% of total funds invested. In third place is the real estate industry, making up 10.9% of the total investment capital. According to statistics, Vietnam is evidently a strategic investment destination for Japanese investors.
Japanese FDI trends in Vietnam
Since its establishment in 1973, Vietnam and Japan have always been maintaining a friendly relationship. Whereby, the wave of Japanese investment in Vietnam has also been constantly increasing since, supporting Vietnam for the country’s development and innovation needs.
Mr. Shinji Hirai, Chief Representative of the Japan Trade Promotion Organization (JETRO) in Vietnam, recently shared notable points about the new investment trends of Japanese companies. Due to Hirai’s statement, Japanese investment flow in Vietnam will have a change in location as Japanese investors are looking for new possible areas besides big cities like Hanoi and Ho Chi Minh City.
Another point he made was about an expected increase in non-manufacturing sectors. The manufacturing sector in Vietnam has been the main attraction of investment for Japanese companies due to shipping and labor advantages. However, in the future, non-manufacturing sectors having great potentials like trading and services will start to receive more investment.
Finally, in concerns about the partnership between Japan and Vietnam, the Chief Representative of JETRO predicted gradual shifts in the priorities of Japanese companies. One of which is the promotion of partnerships with Vietnamese firms. To clarify, enterprises from Japan and in Vietnam will be building a strong collaboration with one another. While Vietnamese firms can help Japanese partners to understand the local market, Japanese companies can provide Vietnamese partners with technology and distribution channels.
Additionally, a noteworthy trend in Japanese FDI is the investment trend of Japanese small and medium enterprises (SMEs) in Vietnam. SMEs from Japan are high-tech firms with high-quality mechanics. They are important links between Vietnam and the global production chain and reliable partners helping Vietnam in technological transformation. Hence, the presence of Japanese SMEs in Vietnam is very critical. With their help, Vietnam can gradually upgrade its private sector and approach the higher global supply chain.
Like Hirai, Vietnamese Prime Minister Pham Minh Chinh also expressed great interest in positive and timely modifications in the Japanese investment direction. The COVID-19 pandemic has affected the trend of investment in most countries. Thus, thanks to the Vietnamese government’s great efforts in containing and controlling the outbreak, the Japanese companies operating in Vietnam can continue to expand their business with assurance. According to JETRO's survey of the current situation, roughly 65% of Japanese enterprises doing business in Vietnam have plans to extend their market share. With all this evidence, in general, recent changes in Japanese investment trends have been in line with Vietnamese orientation to attract high-quality FDI.
Potential for future collaboration
A study by JETRO shows that among nations in the region, Vietnam contains the highest percentage of Japanese companies planning to continue expanding their business. The survey took place during strict social measures implementation with many negative factors affecting the Vietnamese business environment. Nevertheless, the results show that the Vietnamese economy still receives great attention from Japanese investors. Companies in Vietnam have high hopes for increased export revenue and raised revenue in the host country.
In the field of trade and production, in the first 10 months of 2021, Vietnamese Customs reported that bilateral trade increased by 6.4% on a year-on-year basis to $34.4 billion. This outcome is an achievement of the Regional Comprehensive Economic Partnership (RCEP), the world’s biggest trade deal among 10 members of ASEAN and 5 other partners in the Asia continent. As part of the agreement, tariffs will be eliminated on 91 percent of goods. In addition, common rules will be established on investment and intellectual property to encourage trade.
With this new deal, business exchange between Japan and Vietnam has been taken to a new level. Japanese brands, including Toyota and Mitsubishi, were the biggest sellers among imported cars in Q1 2022. Toyota sold 11,661 completely built units, while Mitsubishi imported 7,797. Following were Honda, Mazda, and Suzuki. Particularly, in the past year, Toyota’s sales reached more than 69,000, leading the Vietnamese passenger car market. Furthermore, components and accessories export also hit $70,8 million, increasing by 38% compared to the year 2020. Toyota Vietnam in the last year alone contributed more than $1 billion to the state budget.
Beside mentioned accomplishments, Vietnam's non-manufacturing industries such as retailing, education, healthcare, energy, finance, insurance, transport, and among others saw an increase in Japanese investments. While input costs and labor costs have risen in Vietnam over the past few years, they are still relatively low compared with those of Japan. As a result, many Japanese firms in the IT and retailing sectors, which generally post higher labor costs, are growing and intending to expand their business in Vietnam. Moreover, Vietnam's fast-growing population, strong economy, and improved standard of living make services, equipment, and consumer goods industries have great potential for growth.
As a response to the positive changes in economic cooperation between Vietnam and Japan, Vietnamese Prime Minister Pham Minh Chinh and Japanese Prime Minister Kishida Fumio agreed that the opportunities for collaboration between Vietnam and Japan are unlimited. The two economies are highly complementary and compatible in many aspects, especially in technology innovation, digital transformation, and supply chain diversification. Accordingly, in the near future, the Vietnamese government will continue to implement policies supporting and attracting Japanese enterprises to scale up investment in Vietnam.
Dynamic and fertile as the Vietnamese business environment is, Japanese SMEs entering Vietnam’s market sometimes face challenges due to the inability to access investment property or to predict future policy amendments. Understanding these challenges, Viettonkin Consulting was founded with the aim to navigate foreign enterprises through this inspecting and adapting process. If you are an investor looking for new opportunities in the Vietnamese global economy, contact us now to get help from a team of experts in the field.
In March 2021, the Government launched a pilot program to deploy mobile money service in the Vietnam market. They targeted the underprivileged population who live in the countryside, islands, and mountainous areas to aim for an inclusive digital society.
After six months of launching, there have been over 1.1 million mobile money users. This is still a low number given that there are 123 million phone subscriptions in the country. The total number of transactions via mobile money has surpassed 8.5 million, yet their value remains modest at about $16 million. Positive results have been seen; however, mobile money has not gained much popularity as major challenges still remain.
Little spare space for mobile money in the market full of “giant players”
Speaking at a banking conference, Nguyen Manh Hung, Minister of Information and Communication said that Vietnam once had the opportunity to become the leading country adopting mobile money in payment. However, Vietnam didn’t seize that opportunity. Mobile money is the most suitable for the period when digital financial services were still limited, 3G and 4G networks were not ubiquitous, and people only owned a basic phone. Vietnam has been behind the world for 20 years. The golden time for introducing and promoting mobile money has long passed.
These days, according to the State Bank of Vietnam, over 70% of adults in Vietnam have bank accounts. This is the major difficulty to make mobile money popular nationwide. The government opted for remote areas to launch a mobile money pilot. However, alternative financial technologies have also penetrated the rural markets.
QR codes, e-wallet and internet banking have already taken the majority of market share. The number of E-wallets in Vietnam has grown to more than 40 options, compared to only five E-wallets just six years ago. This makes E-wallets one of Vietnamese consumers’ most favorite payment methods for making online transactions. Digital wallet use is 42% among the banked and 17% among the unbanked. Therefore, it is hard to provide a lucrative landscape for mobile money to flourish.
Since the beginning of the pilot program, telecom providers have had major difficulties in identifying customer information. The information they had was collected a long time ago and they have not been able to access the national population database for identity verification purposes. As a result, according to Ms Pham Minh Tu, Deputy Director of Mobifone Digital Services Center, three leading telecom providers missed 50% of their target customers due to the misinformation of customers’ identification.
In order to collect the latest information, mobile money requires people to subscribe to a new version of state-issued ID cards. However, many citizens in remote areas still use the old ones. They also face the inconvenience of going in-store to update details because online updating is still unavailable.
Therefore, a great effort should be put into developing a customer identification database based on the national population statistics in order to mitigate the potential risks regarding information security.
Lack of strategic cooperations
The Vietnam Government is aiming for a national digital ecosystem which mobile money is a crucial member of. To achieve that goal, it is such a long journey to go. There has been no collaboration among telecom providers. This makes users unable to transfer money to another account of a different telecom provider from their own.
An obstacle to mobile money’s nationwide adoption is how it is not linked to a bank account just like e-wallets despite performing similar functions. This presents inconvenience to those who are used to making payments via bank accounts, then consequently leads to users’ dissatisfaction.
In fact, there has been little priority given to the collaboration among telecom providers particularly and between telecom providers and banks generally. Telecom providers consider mobile money as a value-added service, similar to creating a mobile internet site, and want it to seamlessly integrate with their existing operations. Meanwhile, banks assume it is simply another type of mobile banking service, intimately related to their core business and easily fit into their current infrastructure. As a result, they have made little progress to form a strategic cooperation, which can increase users’ convenience and satisfaction, and gain benefits for both businesses.
Low transaction limit
The monthly limit for transactions via mobile money account is 10 million VND (US$438) per user. VNPT Deputy Director Nguyen Son Hai stressed that this transaction limit “did not provide enough elbow room for bills and daily expenses.” Meanwhile, in 2019, instead of a daily transaction limit, Vietnam's central bank set up a monthly limit of 100 million VND (US$4284) for e-wallet users.
There are differences between expenses of urban and rural populations. However, as consumers’ demand is growing rapidly even in remote areas, the transaction limit of 10 million VND seems relatively unappealing to a large number of users.
Insufficient effort into educating target customers about mobile money
Though populations in remote areas are the most potential ones to adopt mobile money, they are still mainly cash-based communities. This makes it hard for the Government and telecom providers to change their belief and behavior, then nourish trust in them.
Lack of information is a real challenge facing the users of mobile money, especially the rural communities. Most of the rural populations lack the information that mobile phone money can be used as well to buy goods through the use of till numbers and payment of utility bills as long as there is a business number. This shows a clear indication that inadequate information posed a challenge to embracing the wide range of services their mobile phone money technology could offer to them.
A large number of target customers, especially the mountainous communities, are utterly unfamiliar with the concept of cashless payment let alone mobile money. Therefore, mobile money also requires significant marketing effort to educate its target customers on what mobile money is and how it can help them better than cash. Launching mobile money must be an expensive business.
The Government has discussed a strategic plan and taken immediate action to address these above challenges. Popularizing mobile money nationwide is not a “mission impossible” because they view challenges as opportunities for innovation and further development. There is a promising future for mobile money to compete in Vietnam's competitive market.
80 percent of real estate trading floors reopen
Up to 80 percent of real estate trading floors have resumed operations, along with the establishment of new ones, according to the Ministry of Construction (MoC).
The ministry’s report on the real estate market in 2021 and the first three months of this year, which has been submitted to the Prime Minister, showed that real estate trading floors have bounced back.
The report noted there were more than 1,600 real estate trading floors nationwide in 2020. However, due to the heavy impact of the pandemic, only 20 percent maintained operations.
At the end of last year, there was a revival, with 40 percent of property trading floors returning to work.
According to the MoC, the real estate market has gradually picked up and the number of transactions has been on the rise since the first quarter of this year after most provinces and cities returned to the “new normal”.
Notably, many floors have invested in facilities and training staff to professionalise the services. There has also been an exchange of information among the floors to enhance their effectiveness.
However, the ministry pointed out some real estate trading floors are perceived to collude with each other for price gouge.
Two foreign ETFs likely to add more stocks in Q2 restructuring
Two of the biggest foreign exchange-traded funds (ETFs) in Việt Nam, FTSE Vietnam Swap UCITS ETF (FTSE ETF) and VanEck Vectors Vietnam ETF (VNM ETF), will release their portfolios for the second quarter of this year.
According to SSI Research's forecast, shares of Sài Gòn – Hà Nội Commercial Joint Stock Bank (SHB), Nam Long Investment Corporation (NLG) and Vĩnh Hoàn Company (VHC) may be added to the FTSE Vietnam Index, while An Phát Holdings (APH) may be excluded in the second quarter structure.
ETFs are about to restructure their portfolios in the second quarter of 2022. The two index groups of FTSE and MV Index Solutions (MVIS) will need to complete their portfolio structure on June 17, while the MSCI indexes have an earlier restructuring schedule, on May 31.
Assuming the above changes, the index portfolio will include 31 stocks. Total assets of the FTSE ETF on May 23 reached US$275 million. SSI Research gives an estimate of the weight of the FTSE Vietnam Index portfolio and the trading of the FTSE ETF.
In the next restructuring period, this ETF can buy more than 7 million shares of SHB, nearly 1.7 million shares of NLG and more than 700,000 shares of VHC. Meanwhile, most of the stocks in the FTSE ETF's portfolio will be sold. APH is forecasted to sell 1.5 million shares.
The MVIS fund will announce the results of the second quarter portfolio structure of the MVIS Vietnam Index - the base index of the VanEck Vectors Vietnam ETF (VNM ETF) on June 10. For VNM ETF, the fund will trade during June 13 -17.
Based on updated data on May 23, SSI Research forecasted that no stocks will be added to the MVIS Vietnam Index portfolio in this restructuring period.
The MVIS Vietnam Index portfolio will have 56 stocks, of which there are 42 listed stocks in Vietnam and 14 related foreign stocks. The total asset value of the VanEck Vectors Vietnam ETF on May 23 reached $404 million.
The Yunta Securities Company also provided forecasts on the two funds. With the FTSE ETF, according to Yuanta's estimate, only SHB and NLG which are the two stocks that meet the criteria, will be bought 15.3 million shares and 4.7 million shares respectively.
With the VNM ETF, Yuanta forecasts that the fund will buy three new stocks, including SHB, FPT Securities Joint Stock Company (FTS) and Viglacera Corporation (VCG). This VNM ETF could buy 13.8 million SHB shares with a value of more than VNĐ200 billion. They could buy 4.5 million VCG shares and 1.8 million FTS shares.
Two foreign ETFs likely to add more stocks in Q2 restructuring
Two of the biggest foreign exchange-traded funds (ETFs) in Việt Nam, FTSE Vietnam Swap UCITS ETF (FTSE ETF) and VanEck Vectors Vietnam ETF (VNM ETF), will release their portfolios for the second quarter of this year.
According to SSI Research's forecast, shares of Sài Gòn – Hà Nội Commercial Joint Stock Bank (SHB), Nam Long Investment Corporation (NLG) and Vĩnh Hoàn Company (VHC) may be added to the FTSE Vietnam Index, while An Phát Holdings (APH) may be excluded in the second quarter structure.
ETFs are about to restructure their portfolios in the second quarter of 2022. The two index groups of FTSE and MV Index Solutions (MVIS) will need to complete their portfolio structure on June 17, while the MSCI indexes have an earlier restructuring schedule, on May 31.
Assuming the above changes, the index portfolio will include 31 stocks. Total assets of the FTSE ETF on May 23 reached US$275 million. SSI Research gives an estimate of the weight of the FTSE Vietnam Index portfolio and the trading of the FTSE ETF.
In the next restructuring period, this ETF can buy more than 7 million shares of SHB, nearly 1.7 million shares of NLG and more than 700,000 shares of VHC. Meanwhile, most of the stocks in the FTSE ETF's portfolio will be sold. APH is forecasted to sell 1.5 million shares.
The MVIS fund will announce the results of the second quarter portfolio structure of the MVIS Vietnam Index - the base index of the VanEck Vectors Vietnam ETF (VNM ETF) on June 10. For VNM ETF, the fund will trade during June 13 -17.
Based on updated data on May 23, SSI Research forecasted that no stocks will be added to the MVIS Vietnam Index portfolio in this restructuring period.
The MVIS Vietnam Index portfolio will have 56 stocks, of which there are 42 listed stocks in Vietnam and 14 related foreign stocks. The total asset value of the VanEck Vectors Vietnam ETF on May 23 reached $404 million.
The Yunta Securities Company also provided forecasts on the two funds. With the FTSE ETF, according to Yuanta's estimate, only SHB and NLG which are the two stocks that meet the criteria, will be bought 15.3 million shares and 4.7 million shares respectively.
With the VNM ETF, Yuanta forecasts that the fund will buy three new stocks, including SHB, FPT Securities Joint Stock Company (FTS) and Viglacera Corporation (VCG). This VNM ETF could buy 13.8 million SHB shares with a value of more than VNĐ200 billion. They could buy 4.5 million VCG shares and 1.8 million FTS shares.
Petrol companies to benefit from rising prices
Petrol producers and traders are expected to benefit from low-priced inventories as the price of petrol rises.
The two leading enterprises in the industry, Petrolimex and PV Oil, recorded that the value of their inventories at the end of the first quarter was nearly double the beginning of the year.
Petrol price has been adjusted up five consecutive times to reach VND31,250 per litre, a rise of 31.3 per cent compared to the beginning of the year.
According to a report by the Ministry of Industry and Trade, the world petrol market has undergone many great changes in recent years. Supply to the market, especially to the European region, continues to be affected by the embargo on products from Russia, while US crude oil inventories continue to remain low.
These factors have pushed up petrol prices. During the price management period from May 11 to May 23, the average world price of petrol products reached US$141.4 per barrel, up 64 per cent compared to the beginning of this year. Diesel oil reached $142 per barrel, up 67 per cent and kerosene touched $137.9 per tonne, up 64.6 per cent.
In the domestic market, as business activities recover again the demand for petrol has increased.
By May 23, the petrol price had increased for the fifth time in a row and set a new record. Specifically, the price of RON 95-V gasoline in region 1 reached VN D31,250 per litre, up 31.3 per cent compared to the beginning of this year and up 59 per cent over the same period last year. Diesel prices reached VND26,350 per litre, up 47 per cent compared to the beginning of the year and 74.3 per cent over the same period last year and kerosene prices reached VND24,400 per litre, up 48 per cent and 76.6 per cent, respectively.
In the context of increasing prices, the inventory value of many petrol businesses also increased sharply. Considering the five petrol production and trading units listed on the stock exchange, the value of inventory at the end of the first quarter reached VND49.3 trillion, up 47 per cent compared to the beginning of the year.
By the end of Q1, Petrolimex (PLX) had the largest inventory of VND24.25 trillion, up 84.2 per cent compared to the beginning of the year.
PV Oil (OIL) doubled its inventory value from VND2.58 trillion to VND5.16 trillion.
For petrol manufacturers such as Binh Son Refinery and Petrochemical (BSR), inventories at the end of the quarter reached VND11.94 trillion, an increase of 15.3 per cent compared to the beginning of the year.
Binh Son Refinery (BSR) reported a 65 per cent increase in revenue to VND34.78 trillion; profit after tax reached VND2.3 trillion, up 23.7 per cent. Gross profit margins decreased from 9.7 per cent to 7.5 per cent.
PV OIL (OIL)'s revenue doubled from the same period last year to VND23.29 trillion. Gross profit margins decreased from 6.6 per cent to 4.5 per cent and net profit increased only 54 per cent to VND219 billion.
Petrolimex reported that first-quarter revenue increased 75 per cent to VND67 trillion and profit after tax decreased by 65 per cent to VND208 billion.
Viet Nam Dairy 2022 to be held in Ha Noi
The third Viet Nam International Milk and Dairy Products Exhibition (Viet Nam Dairy 2022) will take place at the Ha Noi International Exhibition Centre from May 31 to June 4, the event's organisers have announced.
Co-organised by Vietnam Dairy Association (VDA) and Vietnam Advertisement and Fair Exhibition JSC (VIETFAIR), the upcoming exhibition will have 200 booths from 150 domestic and foreign exhibitors. Among them will be Vinamilk, Friesland Campina, Nestle, Nutifood, Abbott and Vinasoy.
Participated firms will showcase milk and dairy products, ingredients and technology in the dairy industry, processing and packaging lines in the industry, animal feed and veterinary machines, dairy cattle breeds, environment treatment technology, food safety standard management system and other services in the dairy sector.
Chairman of VDA Tran Quang Trung described the event as a major trade promotion event to connect domestic and foreign businesses.
Several conferences discussing the development of the local dairy industry in the new normal conditions; the use of high technology in dairy farming and Industry 4.0 and the role of milk, and dairy products in enhancing the people's health and in preventing the COVID-19 pandemic will be held on the sideline of the event, Trung said.
Despite the prolonged pandemic, the domestic dairy industry still produced over 1.76 billion litres of fresh milk in 2021, up 3.5 per cent year-on-year. Powdered milk production volume also saw positive growth of 14.5 per cent year-on-year to 150,000 tonnes, congthuong.vn reported.
In 2021, the sector had a turnover of nearly US$300 million. Among its export outlets last year, Iraq was the largest one, accounting for over 50 per cent of the sector's total export value.
Hau Giang's investment promotion conference slated for June
The Mekong Delta province of Hau Giang will advertise its potential and strengths, promote trade and tourism while introducing a list of projects calling for investment during an upcoming investment promotion conference in the locality.
The conference, slated to be held from June 15 to June 18, will create favourable conditions for domestic and foreign businesses to learn about the province's mechanisms and policies, its investment incentives besides its prioritised projects, director of the provincial Department of Planning and Investment Tran Ngoc Hung told a press conference in HCM City on Wednesday.
Five seminars discussing Hau Giang's potentials and opportunities in the fields of industry, agriculture, urban development, tourism and IT will be held on the sidelines of the conference.
Recently, the province approved the list of 35 projects seeking foreign direct investment between now and 2025.
These projects, worth a total US$876 million, are in a wide range of sectors including construction of industrial zones and clusters, industry, farming, trade and service, tourism, and healthcare.
VND5.1-trillion southern region bridge approved
The Ministry of Transport has approved a VND5.1-trillion (USD219.82 million) project to build the Rach Mieu 2 Bridge across the Tien River.
The information was given by chairman of Ben Tre Province People’s Committee Tran Ngoc Nam.
The project is aimed to ease traffic on National Highway 60 and shorten the travel time from HCM City to the Mekong Delta provinces of Ben Tre, Tra Vinh, Soc Trang, Bac Lieu and Ca Mau.
According to Nam, the ministry has also approved a project worth VND1.158 trillion to build roads to lead to Rach Mieu 2.
Work on the Rach Mieu 2 Bridge is scheduled to be kicked off on March 29. Project capital will be sourced from the state budget.
The bridge will be 17.6 kilometres long and has six lanes. It is slated for being put into operation in 2026 at the latest.
Around 48 hectares of land will be used for bridge construction, affecting some 800 households in Ben Tre. Roughly VND457 billion will be used for site clearance and compensation for the affected households.
Three tollgates in HCMC ordered to install ETC systems by July
The HCMC government on May 27 asked three investors of build-operate-transfer (BOT) projects to promptly install non-stop electronic toll collection (ETC) systems by July.
The An Suong-An Lac toll station developed by IDICO needs to install the ETC systems on four of its lanes, while the HCMC Infrastructure Investment JSC has been ordered to install the systems on eight lanes of the tollgate on the Hanoi Highway.
Vicem Ha Tien JSC is asked to install the non-stop ETC systems at the BOT tollgate on the road linking Nguyen Duy Trinh Street and the Phu Huu industrial park in Thu Duc City before putting it into service for toll collection.
The city assigned the HCMC Departments of Transport and Planning and Investment to oversee and evaluate the installation of ETC systems at these tollgates, the local media reported.
On the same day, the municipal government sent a report on the process of installing non-stop ETC systems at tollgates in the city to the prime minister. The city proposed not installing the systems on some lanes of the two toll stations as toll collection will be suspended there, including the Phu My bridge toll station on Vo Chi Cong Street in Thu Duc City and the tollgate on Nguyen Van Linh Street in District 7.
The two stations have only four or five years of toll collection to be completed and charge road users low rates, while the cost of installing the ETC systems is very high, according to the report.
Yeah1 chairman wants to make divestment
Nguyen Anh Nhuong Tong, chairman of Yeah1 Group Corporation (YEG), has announced to sell his four million-plus shares, or a 12.89% stake, at the corporation.
The transaction is expected to take place from June 1 to 10 under the put-through and order-matching methods. Tong said the share transfer is aimed at addressing his personal financial issues.
Tong made the move several days after YEG publicized documents for its annual shareholders’ meeting in 2022 which is planned to take place on June 15.
According to the documents, YEG will seek its shareholders’ approval for a plan to increase its charter capital by issuing more than 78.64 million shares at VND10,000 each to no more than 100 investors.
The share issue is expected to help YEG earn over VND786.4 billion. Of the total, YEG will use over VND572 billion to expand its investment in digital-tech media, technology, fintech and other relevant sectors to develop the firm’s ecosystem.
YEG will invest VND73 billion in the technology infrastructure and use some VND140 billion to pay debt.
Hanoi accelerates planning for industrial parks
Industrial parks in Hanoi are home to 707 operational projects with a combined investment capital of $7 billion, half of which came from foreign investors.
Hanoi would accelerate the planning for industrial parks in the city during the 2021-2030 period, with a short-term goal of putting into operation five new ones before 2025.
Deputy Secretary of the Hanoi Party Committee Nguyen Thi Tuyen gave the remarks at the signing ceremony of a cooperation agreement between the Hanoi Industrial and Export Processing Zones Authority (HIZA) and local districts on industrial parks management on May 26.
A report from HIZA revealed it has attracted US$20 million injected into four new projects and $61 million into existing projects during the first five months of 2022.
HIZA estimated total investment capital during the first half of 2022 would reach $100 million, or 25% of the plan for 2022.
To date, industrial parks in Hanoi are home to 707 operational projects with a combined investment capital of $7 billion, half of which came from foreign investors with a capital commitment of over $6.1 billion.
For the six months, the revenue of companies operating in industrial parks in Hanoi is estimated at $4.86 billion, and their export earnings were $3.12 billion.
HIZA is expected to attract an additional $400 million in investment capital in the last half of 2022, and launch the construction of one new industrial park this year.
HCM City to host ICT trade fair
Vietnam ICTComm 2022, an international IT, telecom and electronics trade show, will be held in HCM City from June 9 to 11 after a gap of two years.
The event will also feature international pavilions.
Taiwan Excellence will be organised by Taitra for firms to showcase software and hardware products and services and innovative and energy-saving products and solutions.
The Hong Kong pavilion hosted by the Hong Kong Software Industry Association will show off the latest AI, POS, finance/banking and e-commerce solutions, cloud computing and cyber-security services, online education platforms, and augmented and virtual reality technologies.
There will be B2B match-making, conferences and seminars hosted by experts to provide domestic and international firms with opportunities to exchange information, learn, share experiences, transfer technologies, and contribute to improve their competitiveness.
The exhibition, endorsed by the Ministries of Information and Communications and Industry and Trade, and organised by Adpex JSC, the Việt Nam Internet Association, the Việt Nam Association for Information Processing and the Việt Nam Digital Communication Association, will be held at the Saigon Exhibition and Convention Centre in District 7.
Hai Duong ships Thanh Ha lychees to Japan
The northern province of Hai Duong held a ceremony on May 29 to ship the first batch of lychees grown in Thanh Ha district to Japan.
The ceremony was part of a conference held on the same day by the Hai Duong provincial administration, in collaboration with the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development, to promote the trade in Thanh Ha lychees.
The conference was virtually connected to other localities in Vietnam and venues in 10 countries and territories worldwide, namely China, the United States, France, Germany, the United Kingdom, Australia, Belgium, Japan, the Republic of Korea and Hong Kong (China).
About 300 foreign importers worldwide took part in the conference in the online platform.
Vietnam enjoys trade surplus of US$520 million over five months
Vietnam produced an estimated export surplus of US$520 million in the past five months, an impressive figure that shows the country’s economy is gathering steam and its foreign trade is up and running from the impact of the COVID-19 pandemic.
It’s noteworthy that the economy endured an import surplus of up to US$1.2 billion between January and May 2021.
The General Statistics Office (GSO) reported on May 29 that Vietnam earned US$30.48 billion from export in May, a month-on-month fall of 8.5%. However, its five-month exports fetched US$152.81 billion, an increase of 16.3% year on year.
There are 26 export commodities that raked in more than US$1 billion each. Of them, five groups of commodities that attained an export value of more than US$5 billion each, are electronics, computers and components; machinery and equipment; phones and spare parts; garments; plastics; and iron-steel.
Also according to the GSO, the index of industrial production (IIP) in May 2022 increased by 4% over the previous month and by 10.4% over the same period last year. Overall, the past five months saw the IIP rise by 8.3% compared to the same period last year.
FDI disbursement up 7.8 % in five months
Up to US$7.71 billion worth of foreign direct investment (FDI) was disbursed in the first five months of this year, up 7.8 % from the same period in 2021, according to the Ministry of Planning and Investment.
As of May 20, total FDI in Vietnam, comprising new, adjusted capital and share purchases by foreign investors, dropped 16.3 % year-on-year to reach only US$11.71 billion.
There were 578 new projects worth nearly US$4.12 billion, down 53.4 % in value, and 395 others registering to increase their investment by more than US$5.61 billion, up 45.4 %. The accumulative value of share purchase by foreign investors also rose 51.6 % to US$1.98 billion.
Foreign capital has been poured into 18 out of 21 economic sectors, with processing and manufacturing making up the lion share, US$6.8 billion or 58.2 % of the total investment, followed by real estate, information-communications, and science-technology.
Among the 79 countries and territories investing in Vietnam in the reviewed period, Singapore took the lead with nearly US$3 billion, followed by the Republic of Korea (RoK), US$2.06 billion, and Denmark, some US$1.32 billion.
The southern province of Binh Duong, the northern province of Bac Ninh and Ho Chi Minh City attracted the most foreign investments, with more than US$2.52 billion, nearly US$1.65 billion and over US$1.3 billion, respectively.
Aquatic exports likely to reach 3 billion USD in Q2
The exports of aquatic products are expected to fetch 2.8-3 billion USD in the second quarter, a year-on-year increase of 36-38 percent, thanks to the strong growth of key products, according to Le Hang, deputy director of the Vietnam Association of Seafood Exporters and Producers (VASEP)’s Training and Trade Promotion Centre.
The aquatic export value in March exceeded 1 billion USD for the first time. In April, it continued to grow, obtaining 1.13 billion USD, raising the four-month value to more than 3.6 billion USD, a year-on-year increase of 46.8 percent.
Aquatic exports in the second quarter are forecast to continue enjoying impressive growth as a bright future is predicted for key products.
Vietnam exported 406 million USD worth of shrimp in April, up 35 percent compared to the same period last year, bringing the four-month export turnover to 1.36 billion USD, a year-on-year rise of 41.5 percent.
Strong growth was recorded in tra fish shipments to some markets in the period, such as China with 161 percent, the US 128 percent, and Canada 69 percent.
The increasing demand for Vietnam's key aquatic products post COVID-19 in large consumer markets including the US and China, rising prices and supply shortages due to the impact of the Russia-Ukraine conflict are offering an opportunity for export firms.
Vietnam’s media consumption grows strongly: YouGov
Media consumption in Vietnam has soared as people watched, listened, and surfed online more often in 2021, according to new research from YouGov, a market research and data analytics company headquartered in the United Kingdom.
The first-ever “Vietnam Media Landscape” report, based on interviews with 2,369 people across the country, also found that the growth in consumption continues to rise in 2022, with streaming and on-demand services shaking up the traditional media environment.
Over two-thirds of people used digital platforms such as social networks (69%) or websites and apps (66%) more often over the last 12 months. Meanwhile, around half streamed more music (49%) and read more newspapers or magazines either in print or online (47%).
Streaming services such as Netflix and Amazon Prime (41%) also became more popular over the last 12 months. However, traditional media channels such as live TV (36%) saw slower growth in 2021.
These trends are set to continue into 2022, with digitization driving growth in media consumption across platforms and channels. Catch-up TV and video-on-demand are set to be amongst the biggest winners, with a 10% rise compared to 2021.
However, there are significant differences between age groups when it comes to digital media consumption. Those born after 1997 – known as ‘Gen Z’ – are driving the growth in music streaming, with around half planning to stream more songs in 2022, around double the figure for “Boomers”, or those born before 1965. Meanwhile, people born between 1981 and 1996 – otherwise known as ‘Millennials’ – are behind the growth in video streaming.
The rise in digital media is also boosting the readership of print and online newspapers and magazines. Other than boomers, all age groups are predicting an increase in news media consumption in 2022.
However, in an ever-more crowded media marketplace, with a growing number of sites competing for consumers, traditional publishers face new challenges in attracting audiences and keeping them for the long term.
Dubai’s thriving creative economy drew Dh4.9 billion foreign direct investment in 2021 to rank first in the region and fourth globally in terms of creating jobs from FDI in the sector.
Dubai attracted 233 new projects in the creative economy in 2021. Surpassing other major cities such as New York, Singapore and Berlin, Dubai improved its rankings from fifth in the previous year, according to the Dubai FDI Monitor report, published by the Dubai Investment Development Agency (Dubai FDI), an agency of the Department of Economy and Tourism (DET).
The rise in FDI inflow and rankings reflect the enhanced attractiveness of the emirate’s creative economy. In terms of the number of new jobs in the creative economy, Dubai held on to its top rank regionally and fourth globally with 6,204 new jobs created from FDI, according to the report that was based on data from the ‘FDI Markets.’
Sheikha Latifa bint Mohammed bin Rashid Al Maktoum, Chairperson of the Dubai Culture and Arts Authority (Dubai Culture) and member of the Dubai Council, said the emirate consolidated its status as a global cultural hub and investment destination, ranking first in the Mena region and second in the world in attracting foreign direct investment (FDI) in the cultural and creative industries (CCI) in 2021.
“These results reflect the maturity and stability of the investment environment in the emirate’s creative economy. Dubai has created outstanding FDI opportunities in the sector by building a robust ecosystem and an advanced business-enabling infrastructure for creative entrepreneurs,” Sheikha Latifa said.
“By fostering an environment that promotes learning, development, and innovation, Dubai has developed a vibrant global creative community. Its unique social fabric that has evolved out of the emirate’s remarkable cultural diversity and its comprehensive human-centred development process has further supported the growth of Dubai’s creative economy,” she said.
Sheikha Latifa said Dubai has witnessed a remarkable rise in FDI capital flows in the creative economy during the past five years. In the 2017-21 five-year period, the emirate’s creative economy witnessed FDI capital inflows of Dh50.9 billion across 787 projects. “This increase follows the directives and initiatives of Dubai’s wise leadership to make the emirate a destination for creativity and talent through innovative infrastructure, laws and legislation. The results are now a tangible and sustainable reality in the development journey, as envisioned by the leadership.”
According to the Dubai FDI Monitor report, these projects created 32,542 new jobs during the five-year period. Dubai ranks fifth globally in terms of projects, eighth in terms of FDI capital flows into the creative economy, and fourth in terms of jobs created during the past five years.
“Dubai’s success in continuously enhancing the well-being of its citizens, residents, and visitors and elevating the quality of services provided to them has raised the global creative community’s confidence in the emirate and made it a preferred global business, lifestyle, and entertainment destination,” said Sheikha Latifa.
Hala Badri, director general of Dubai Culture, said the Authority continues to reinforce the foundations to open new horizons for the various components of the emirate’s creative economy and cement its position on the global scene as an ideal investment destination.
Helal Saeed Almarri, director general of the Department of Economy and Tourism in Dubai, stressed that Dubai’s regional and global pre-eminence in FDI attraction stems from the vision and guidance of the leadership to build a diversified economy based on knowledge and innovation. Fahad Al Gergawi, chief executive officer of Dubai FDI, stressed that Dubai’s cultural and creative industries sector has increased its attractiveness to all forms of FDI, including greenfield FDI projects, FDI Reinvestment projects, Mergers and Acquisitions, Joint-Ventures, and New Forms of Investments, in addition to Venture Capital Backed FDI.
According to ‘Dubai FDI Monitor’ data, Greenfield FDI accounted for 71 per cent of the total FDI projects in Dubai’s cultural and creative industries in 2021, followed by Mergers & Acquisitions projects (12per cent of the total), Reinvestment FDI projects (9.0 per cent), New Forms of Investments (5.0 per cent) and Joint Venture (2. per cent).
Though Vietnam is one of the attractive FDI destination regionally and globally, the amount of US and EU enterprises investing in Vietnam is quite humble.
Lack of information, it is difficult to monitor and support US and EU Enterprises
Up to this time, economic expert Le Huu Quang Huy is still concerned with the question: "Why is the quantity of projects with advanced and modern technology, European technology only accounts for about 5% of total FDI projects in Vietnam? European investors' capital percentage in total FDI in Vietnam currently accounts for only about 8.2%. The percentage of the investors’ capital from the Americas is lower, accounting for only about 4.5%.
“It is a very low figure, not only in the terms of percentage but also in the concerns of US and EU investors with Vietnam. Moreover, the percentage is not only very low against FDI capital from the US and EU in the world and the investment in ASEAN countries", said Mr. Huy.
Mr. Huy used to be the Economic Counselor of the Vietnamese Embassy in Japan, and the Head of the Foreign Investment Project Management Department (Ministry of Planning and Investment), Mr. Huy clearly understands that the requirement to attract more quality projects, the US and EU investors... have been prior for many years.
As Mr. Huy is a member of the 2021 Foreign Investment Report Compiling Council, released at the end of May 2022, he has opportunities to travel to many localities and try to find out the answers to the above difficult situation. “It must be frankly acknowledged that although there have been many positive changes, transparency and consistency in the implementation of the investment policies, in the selection of the investment projects in many localities is still a barrier for the big investors, especially the investors from the US and EU", analyzed Mr. Huy.
Citing the story of an American investor who had to change his mind when the local authorities whom he linked with made the requests and procedures other than the regulations, regretted Mr. Huy. The investor said that because the costs for extra-legal procedures and processes cannot be explained to the parent company. Even though the investors really want to implement the project, they ought to reconsider.
“This is a content in the 2021 Foreign Investment Report that we spent efforts researching, giving the conditions and specific recommendations,” said Mr. Huy.
The experts want to emphasize but not be insufficiently aware of the role and position of FDI in some local governments, affecting the specific actions. Said experts, some local governments take the reason for the industry and locality interest protection to issue the inappropriate regulations, processes, procedures, and documents; make the decisions to limit and discriminate against FDI, increase administrative costs, and increase operating costs after the business license is issued, thereby the investors are worried.
FDI attraction is considered as only attracting capital and high technology in some places, thus the perspective from domestic development needs is not harmonious with the needs of international investors, resulting in imposing, unobjective executive direction, etc.
The above report’s section on limitations in the quality and efficiency of FDI attraction and use is put at the top among the four groups of FDI’s limitations and weaknesses in Vietnam, with obvious consequences that are the risks, challenges of environmental pollution, energy consumption, resource depletion. FDI is mainly concentrated in a few industries with low technology level to take advantage of low labor costs and to get such incentives as outsourcing (textiles, footwear, wood processing), assembly (electronics, automobiles, motorcycles...) and some food processing industries.
The investment rate per hectare of land used in the processing and manufacturing field is not high (average USD 3.7 million/hectare). FDI project scale is mainly small: 58.1% of projects with a capital scale of less than USD 1 million (accounting for only 1.6% of registered capital); 46.2% of projects less than USD 500,000 (accounting for 0.7% of capital). By the end of 2021, there are only 30 FDI projects with a capital scale of 1 billion USD or more.
The current status of above FDI projects directly affects the spillover effects on productivity and quality between FDI sector and other areas where Vietnamese economy has the high expectation.
Questions for monitoring and post-inspection mechanisms
Dr. Ngo Cong Thanh, former Deputy Director of the Department of Planning and Management (Ministry of Planning and Investment) is also worried when he knew that the information system about FDI Enterprises has not been significantly changed for many years.
“We always want to know whether the updated information on active FDI projects and Enterprises when we participate in the field surveys to complete the 2021 Foreign Investment Report, but unfortunately the answer is not complete”, Dr. Thanh discussed with the reporter of Investment Newspaper.
The research team’s survey results in some localities show that the annual realized FDI capital has not been generally calculated by economic sectors, and the Enterprises ongoing have not been updated. In many industrial zones, the time to disburse capital and invest, and build the surveyed FDI Enterprises’ factories is no more than 2 years, but it is not in included in the updated reports.
“The partial cause is that the authorities at all levels attach great importance to the promotion and issuance of investment certificates, but it is clear that there is a laxity in the management of FDI projects after licensing, thus Enterprises’ violations, difficulties, and problems are delayed in handling, "said Mr. Thanh.
Meanwhile, the FDI monitoring system is still inconsistent. FDI investors’ capital contribution and capital utilization supervision are being regulated by many different legal systems, leading to the existence of many supervising subjects. Each subject supervises some contents of economic organizations with FDI capital but the absence of connection and coordination results in low supervision effectiveness and efficiency.
The national information system on FDI has been developed since 2019 in fact, but it is time for a change to ensure the new requirements of e-Government, said Mr. Thanh. “We agree with many proposals that more appropriate institutions in attracting, managing, and using FDI capital should be provided. In order that this proposal can, however, to be realized, an updated, complete, and smoothly operating national information system on FDI with the participation of both Enterprises and localities should be first provided. This is the urgent one required to do,” suggested Mr. Thanh.
Moreover, the lack of updated information from Enterprises greatly affects the effectiveness of proposals, formulation, and implementation of mechanisms and policies as well as efforts to improve the investment-business environment. As one of leading professional services firms in Vietnam, Viettonkin is well-informed with Vietnam market and legal environment. In this way, we are able to help FDI enterprises with their investment process in Vietnam. Under this uncertain situation, foreign investors still can harvest benefits from investment projects with the help from the well-recognized experts in the industries. Let us stand by your sides!
At the end of the two-day meeting in early May, the Federal Open Market Committee (FOMC) decided to raise the operating interest rates by 50 basis points to the new margin from 0.75% to 1.0%.
The decision to raise the operating interest rates by 0.50% marks the strongest increase realized in a single meeting since May 2000. The US Federal Reserve (Fed) officials also hinted that they will continue to raise the operating interest rates this year with the inflation restraining effort.
According to a survey by CME Group, Fed is said by the market to raise the operating interest rates by 175-200 basic points in the final months of 2022 to a new margin in the range of 2.5% to 3.0%.
Fed officials also decided to reduce the size of the Fed's balance sheet from June 2022, it starts with $47.5 billion a month ($30 billion in US Treasuries and $17.5 billion in mortgage-backed securities), which will increase to $95 billion a month after three months ($60 billion in U.S. Treasuries and $35 billion in mortgage-backed securities).
With this plan, Fed may shrink its balance sheet size by about $427.5 billion in half of 2022. This size is relatively small (only 5% of the Fed’s current balance sheet size), so the impact on global financial market liquidity is minimal.
5 main impacts on Vietnamese economy
According to the analyst’s assessment at VNDirect, the Fed's tightening of monetary policy causes 5 major impacts on the Vietnamese economy.
Firstly, the global financial situation tightening reduces the growth prospects of the world economy, leading to lower demand for Vietnamese exports.
Fed's tightening of monetary policy will increase lending interest rates (in USD) thereby reducing people's consumption demand as well as weakening the enterprises’ demand to expand investment.
Many research organizations around the world have recently lowered their growth forecasts for the global economy as well as the US economy, one of the main reasons is the increasingly tightening of the global financial conditions. Therefore, Vietnam's export performance is likely to slow down in the coming quarters as consumers in key export markets such as the US and Europe tighten their expenses.
Figure 1: Difference between credit growth and deposit growth (Source: SBV, VnDirect Research)
Secondly, deposit interest rates (in VND) are subject to increasing pressure in the last months of the year. As of April 26, 2022, deposit interest rates for 3-month and 12-month terms of state-owned banks are unchanged from the end of 2021 while 3-month deposit interest rates and 12-month deposit interest rates of private banks is increased by 14 basis points and 13 basic points respectively compared to the end of 2021.
Said VNDirect, deposit interest rates will continue to increase from now until the end of 2022 due to the increase in USD interest rates and high inflationary pressure in Vietnam in the coming quarters. However, the expected increase will not be high, about 30-50 basic points for the whole of 2022.
"We think that the 12-month deposit interest rates of commercial banks can increase to 5.9-6.1%/year at the end of 2022 (currently at 5.5-5.7%/year), still lower than the pre-pandemic deposit interest rates of 7.0%/year," said the report.
Figure 2: The slight increase in the deposit interest rate in April, 2022 (Source: SBV, VnDirect Research)
Thirdly, the increase in USD interest rates puts pressure on the foreign debt repayment obligations of Vietnamese Government and enterprises. Estimated by VNDirect, Vietnam's external debt will account for 39% of GDP by the end of 2021. The context of tighter liquidity in the international financial market makes Vietnamese government and enterprises hard to raise capital in the international market and will incur the higher interest rates.
Fourthly, for the financial market, foreign indirect investment (FII) inflows may continue to be net withdrawn in the coming months due to the influence of "taper tantrum". The foreign investors, however, continuously net selling on Vietnam's stock market in the past 2 years, so the impact of foreign investors’ net selling will be moderate because the market has prepared in advance.
Meanwhile, foreign direct investment (FDI) flows into Vietnam will be less affected because Vietnam is still an attractive investment destination in the trend of the global supply chain diversification. Thirdly, the increase in USD interest rates puts pressure on the foreign debt repayment obligations of the Vietnamese Government and enterprises. As estimated by VNDirect, Vietnam's external debt will account for 39% of GDP by the end of 2021. The context of tighter liquidity in the international financial market makes the Vietnamese government and enterprises hard to raise capital in the international market and will incur higher interest rates.
Fourthly, for the financial market, foreign indirect investment (FII) inflows may continue to be net withdrawn in the coming months due to the influence of the "taper tantrum". The foreign investors, however, continuously net selling on Vietnam's stock market in the past 2 years, so the impact of foreign investors’ net selling will be moderate because the market has been prepared in advance.
Meanwhile, foreign direct investment (FDI) flows into Vietnam will be less affected because Vietnam is still an attractive investment destination in the trend of global supply chain diversification.
Figure 3: VND outperforms other regional currencies as of April, 2022 (Blomberge, VnDirect Research)
Fifthly, a strong USD puts pressure on Vietnam's exchange rate. On April 31, 2022, the US dollar index (which measures the strength of the US dollar against a basket of currencies) gained 103 points, the highest rate in 20 years. The strong USD pulled USD/VND exchange rate up by about 0.6% in the first 4 months of 2022.
VND is still, however, one of the most stable currencies in the Asia-Pacific region. According to VNDirect, the basic factors to keep VND stable in recent years are still maintained, including a current account surplus and high foreign exchange reserves.
Experts expect that the current account surplus will rise up to 1.9% of GDP in 2022 from an expected deficit of 1.0% of GDP in 2021. Vietnam's foreign exchange reserves are expected to gain $122.5 billion by the end of 2022 (equivalent to 4.0 months of imports) from the current rate of $105 billion.
Said VNDirect, USD/VND exchange rate will be stable at 22,600-23,050 in 2022, and VND may fluctuate within a relatively narrow margin (+/-1%) against the USD.
Will Vietnam continue the easing policy?
Said VNDirect, the State Bank of Vietnam (SBV) will maintain an "appropriate" monetary policy with a priority on the economic recovery support, no later than the end of the second quarter of 2022.
Said the experts, although inflation pressure is expected to increase in the coming months, the average consumer price index in the first half of 2022 is forecast at 2.5% over the same period, which is still much lower than the Government's target of 4% to explain the above statement.
In addition, domestic demand is still weak and has not been fully recovered to the pre-pandemic rate and the SBV still prioritizes the goal of maintaining the low lending rates to support enterprises and the recovery of the economy.
"Any monetary tightening will only take place in the second half of 2022 (likely higher than the fourth quarter of 2022) and gains (if any) will be limited to around 0.25-0.5%, " commented VNDirect experts.
Figure 4: Credit growth plan of joint stock commercial banks (Source: Commercial banks, VnDirect)
Experts also expect that the State Bank will allow credit growth to remain at a high rate to support the economic recovery. Credit capital flows will be prioritized for the manufacturing and service sectors, especially such priority sectors as industry, import, and export, agriculture, forestry, and fishery.
In addition, the SBV will carefully control the credit capital flowing into such high-risk areas as real estate, securities, and BOT (Build-Operate-Transfer) projects. Accordingly, VNDirect forecasts credit growth to maintain a high rate of 14% in 2022.
For the lending interest rates, the State Bank is applying an interest rate compensation package with a scale of 3,000 billion Vietnamese dong. This package offers a loan interest rate of only 3-4%/year for enterprises strongly affected by the COVID-19 pandemic.
In addition, the Government plans to expand the interest rate compensation package size for enterprises to 40,000 billion Vietnamese dong, focusing on a number of priority subjects, including small and medium enterprises, enterprises participating in a number of national key projects, and trading in certain industries (tourism, aviation, transportation).
VNDirect expects that the interest rate compensation package can help reduce the average lending interest rate by 20-40 basic points in 2022. However, the actual impact of the interest rate compensation package for enterprises and the economy may be lower if commercial banks increase the lending interest rates on other conventional loans to offset the increase in deposit interest rates.
The increase in interest rates will affect the global investment, yet opportunities are still open with potential high rate of return. Under this context, investors can seize the chances and turn the table around to reap the benefits. With the effort of SBV and Vietnam government, Vietnam remains favorite investment destinations for global investors. Joining the effort, Viettonkin will also assit you through the investment journey. As a prestiged professional services firms domestically and globally, we are confident to own in-depth knowledge in Vietnam market and legal environment with a team of top-notch professionals in the industries. Let us be your trustworthy partner!
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Founded in 2009, Viettonkin Consulting is a multi-disciplinary group of consulting firms headquartered in Hanoi, Vietnam with offices in Ho Chi Minh City, Jakarta, Bangkok, Singapore, and Hong Kong and a strong presence through strategic alliances throughout Southeast Asia. Our firm’s guiding mission is aimed towards facilitating intra-ASEAN investments and connecting investors in Southeast Asia with the rest of the world, thus promoting international business relationships and strengthening inter-nation connections.
