Top Story of the week: Vietnam's Economic Growth Accelerates
- U.S. Commercial Service Infrastructure Mission to Indonesia and Vietnam led by Undersecretary Sanchez, November 11-17, Hanoi, Ho Chi Minh City, and Jakarta. For additional information, please visit the mission website here: http://export.gov/trademissions/indoviet2012
- U.S.-ASEAN Smart Grid Workshop: Partnering for Regional Power Cooperation,November 13-14, 2012, Sheraton Hanoi Hotel, Hanoi, Vietnam. For more information, please visit the organizer’s website here: http://trademeetings.com/EventDetails.aspx?id=58
- For more information on the Council's Vietnam program, please contact Carr Slayton at firstname.lastname@example.org or 202 416-6712 and "Fon" Wanlapa Komkai at email@example.com or 202 416-6706.
Vietnam’s economy is likely to recover in the fourth quarter of 2012 and inflation will be kept at a single digit for the whole year.
In a report released on October 2, HSBC says Vietnam has succeeded in cooling down its over-heated economy to sustain its macro level, but growth has not reached the targeted level and will probably stand at 5 percent this year. However, economic slowdown can be seen as an opportunity for the State to review structural shortcomings such as the troublesome business environment, unprofitable enterprises and inefficient public investment.
It is urgent to provide permanent employment for everyone as around 1.3 million Vietnamese people, half of them ages 15 to 24, are out of work. International Labour Organization (ILO) Country Director in Vietnam Gyorgy Sziraczki says the number of unemployed young people is on the rise, and providing permanent employment for everyone, including poor and vulnerable people, is key to reducing poverty and developing human resources in Vietnam. At a recent conference on an ILO-Vietnam cooperation programme for permanent employment in the 2012-2016 period, the ILO said it will offer Vietnam US$4.56 million to carry out the project.
Vietnam's export reached 83.789 billion U.S. dollars in the first nine months this year, an increase of 18.9 percent over the same period last year, while its import hit 83.755 billion U.S. dollars, up 6.6 percent, posting a trade surplus of 34 million U.S. dollars, reported the Vietnam General Statistics Office on Tuesday.
Of the export turnover, the foreign direct investment (FDI) sector (including crude oil) contributed 52.5 billion U.S. dollars (or 63 percent of the total), up 34.6 percent.
Almost exactly two years ago this week, Christine Gregoire, the governor of the U.S. state of Washington, was in Vietnam handing out french fries made from potatoes grown in her state at a Kentucky Fried Chicken outlet in Ho Chi Minh City. Gregoire, accompanied by representatives of more than 50 companies from home, was in Vietnam trying to drum up business with America’s former military adversary. But the most important stop on Gregoire’s itinerary may have been a ribbon-cutting ceremony for a new deepwater shipping terminal at Cai Mep.
Rising input costs, together with high interest rates, taxes and institutional costs are threatening the competitiveness of local businesses. Regarding the economic prospects for the remainder of the year, economist Nguyen Minh Phong says that although there are signs of recovery, progress remains slow and the market is not prospering. The government will continue managing the macro economy in the last three months of 2012 as directed by Resolution 13 with no changes of policy, he notes.
Phong says the total export-import value in the first eights months of this year reached US$147 billion, of which exports accounted for US$73.35 billion, up 17.8 percent against the same period last year, thanks to the US$45.6 billion in earnings by FDI businesses, representing a year-on-year increase of 34.1 percent. Meanwhile, local business exports in August fell by 8.5 percent, bringing the total decline for eight months to 1.9 percent.
Vietnam enjoyed an export surplus of US$10.2 billion in trade with America over the first eight months of this year. According to the General Statistics Office (GSO), two-way trade between Vietnam and America reached US$20.8 billion during the period, up 17 percent compared to the same time last year.
Vietnam exported goods worth US$15.5 billion to the continent while importing US$5.3 billion worth of products, representing year-on-year increases of 18 and 13 percent respectively. The US remained Vietnam’s biggest trade partner with two-way trade reaching US$16.2 billion, up 18 percent year-on-year, followed by Brazil with US$1.2 billion (up 38 percent), Canada with US$1.04 billion (up 22 percent), Argentina with US$593 million (down 1 percent), and Mexico with US$549 million (up 30 percent).
Vietnam's economic growth continued to rebound in the third quarter, as government efforts to revive the economy bear fruit. But authorities will face a delicate task in coming months to maintain robust growth without letting inflation get out of hand.
Vietnam's gross domestic product rose 5.4% in the third quarter, up from 4.7% growth in the second quarter and 4% in the first quarter, the General Statistics Office said on Thursday.
In principle, the economy stimulus package would give Vietnam the opportunities to export more to the US, where the demand increases thanks to the stimulus by the government. However, economists still keep cautious when asked if Vietnamese enterprises can grab the golden opportunity.
The opportunity for seafood industry?
The Vietnamese market in June and July received a big amount of white shrimp imports from Thailand. Vietnamese businessmen cannot understand why Thai shrimp was still one dollar per kilo cheaper than Vietnamese products, though Thai shrimp had to “transit” in Cambodia, which pushed the prices up.
Inflows from the US accounted for approximately 1 percent of Vietnam's total foreign investments through September this year, even as a survey showed more than half of US investors in Southeast Asia were confident about the local economy.
It registered for a total of 37 projects valued US$94.08 million, while total foreign direct investments in Vietnam this year through September 20 amounted $9.5 billion, according to a Ministry of Planning and Investment report. Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, told Dau Tu that US investments in Vietnam were not as high as expected and not many large American companies had invested in Vietnam this year.
Vietnamese enterprises are expecting to expand exports to the US after it announced a new economic stimulus package on September 13. Exporters say the US policy, known as QE3, introduced by the US Federal Reserve in an effort to expand the economy and reduce unemployment by buying $40 billion in mortgage-backed securities each month, will raise their export turnovers, which reaped roughly US$13 billion in the first eight months, surging 18.2 percent over the same time last year, Tuoi Tre newspaper reported Tuesday.
Nguyen Van Kich, general director of seafood producer Cafatex Corp. in the southern province of Hau Giang, said the plan, which began on September 14 and is expected to add $23 billion to the market in the remaining days of the month, could give Vietnam’s seafood export a boost, especially of tra fish (pangasius).
Vietnam is proposing to allow foreigners to take full ownership of some joint-stock companies and set up wholly owned securities firms in an effort to bolster the stock market.
Overseas companies can acquire as much as 100 percent of the registered capital of brokerages, up from the current maximum of 49 percent, or establish wholly owned securities firms if they have been operating in the banking and insurance industries for two years and posted a profit in the most recent two years, according to a draft measure posted on the State Securities Commission’s website.
Vietnam’s bonds fell, pushing the five-year yield to the highest level since early May, on speculation inflation risk will deter the central bank from lowering interest rates. The dong was steady.
The nation may struggle to keep the gains in consumer prices below 10 percent because of higher seasonal food demand and increased fuel costs, Hanoi Moi newspaper reported on its website today, citing a forecast by the finance ministry’s price control department. Annual inflation quickened for the first time in more than a year last month to 6.48 percent, the General Statistics Office reported Sept. 24.
Investors are losing their confidence in the stock market as local companies are weak and lack transparency, analysts and fund managers say, warning that a recovery is unlikely to come next year.
Companies in Vietnam tend to expand into too many business activities, making themselves less competitive than foreign rivals and thus less appealing to investors, said Viasa Investment Fund Chairman Alan Phan. The trend towards non-core sectors has left the country with a lot of weak firms that are avoided by investors, he said.
Foreign partnerships in banks could help bolster the banking system, especially in terms of dealing with bad debts and improving management, but increasing the foreign ownership cap in banks should be considered carefully to prevent a wholesale takeover, experts warn.
The governor of the State Bank of Vietnam, Nguyen Van Binh, said increasing the rate up to which foreign investors can buy into Vietnamese banks would help restructure the banking system, and the central bank has recommended this. But he admitted that the issue should be carefully considered to ensure it does not harm the nation’s interests.
Food & Agriculture
Vietnam, the world’s second-largest rice exporter in 2011, shipped 5.82 million metric tons this year through Sept. 27, the Vietnam Food Association said.
Shipments from Sept. 1 to Sept. 27 were 719,619 tons, it said in a statement on its website.
The Southeast Asian nation exported a record 7.11 million tons in 2011, according to the association. The country will match or exceed last year’s exports in 2012, Cao Duc Phat, agriculture minister, said on Sept. 7.
Prime Minister Nguyen Tan Dung has approved the low-carbon agricultural support project (LCASP) with a total capitalization of US$84 million.
Of the fund, US$74 million will be provided by the Asian Development Bank (ADB) as a preferential loan. The government leader asked the Ministry of Finance to cooperate with relevant ministries and agencies in building financial mechanisms for the project. He also said the Ministry of Agriculture and Rural Development is responsible for evaluating, adopting and implementing the LCASP following regulations on the management and disbursement of official development assistance (ODA) loans.
Vietnam has actively participated in activities of the UN Human Rights Council (UNHRC) to run for a non-permanent seat in the council for the 2014-2016 tenure.
The statement was made by ambassador Nguyen Trung Thanh, Head of Vietnam’s permanent representative mission to the UN at the 21st session of the UNHRC which closed last weekend in Geneva, Switzerland. During the session from September 10-28, the UNHRC heard and discussed reports from special working groups and experts in charge of issues related to children in armed conflicts, indigenous people, mercenary, harmful effect of hazardous waste, modern slavery, safe water, poverty, anti-racial discrimination, human rights, international solidarity, democracy and just international order.
Nations should strongly commit themselves to the fundamental principles of international law and the UN Charter, particularly those of peaceful settlement and non-use of force as well as respect for the national independence, sovereignty and territorial integrity of states when settling disputes.
Vietnamese Deputy Foreign Minister Pham Quang Vinh made the proposal at the General Debate of the 67th Session of the United Nations General Assembly in New York on October 1. The Debate was themed "bringing about adjustment or settlement of international disputes or situations by peaceful means".
ASEAN members have pledged to support each other’s bids for seats at the United Nations, including Vietnam’s candidacy for the UN Human Rights Council for 2014-2016 tenure.
The bloc’s foreign ministers made the affirmation at the recent Informal ASE AN Foreign Ministers’ Meeting (IAMM), which took place on the sidelines of the UN General Assembly session in New York.
The ministers agreed to continue increasing coordination on stance and raising the role of the grouping at the UN and working for a UN General Assembly Resolution on enhancement of cooperation between ASEAN and the UN.
The U.S. Export-Import Bank on Monday said it has approved an $118 million direct loan to a Vietnamese state-owned company to buy a telecommunications satellite and other goods and services from Lockheed Martin .
"By providing financing for Vietnam Post and Telecommunications Group, this Ex-Im Bank loan supports U.S. manufactured satellites and U.S. jobs," Linda Reiners, a vice president at Lockheed Martin, said in a statement. The loan represents Ex-Im Bank's first satellite transaction with the government of Vietnam.
The United States says it will give Vietnam a loan of more than $100 million to buy a telecommunications satellite from a U.S. company.
The U.S. Export-Import Bank Monday said the Vietnamese state-owned company, Vietnam Post, will use the satellite to meet the growing demand of telecommunications and television markets. Ex-Im says the satellite will provide coverage to Vietnam, Cambodia, Laos and Thailand. The bank says the U.S. company, Lockheed Martin, will make the technology and that the deal will support more than 500 American jobs.
Come July 2013, foreigners will be able to enjoy the convenience of applying for an entry visa in Vietnam thanks to the Ministry of Foreign Affairs’ new online visa issuance system.
The system, with an estimated cost of about USD 1 million, aims to manage visa issuances for the Ministry of Foreign Affairs’ (MOFA) Consular offices in Hanoi, Ho Chi Minh City and Danang, as well as for all Vietnamese representative offices abroad. Nguyen Nhu Trung, Deputy Director General of the Information and Communication Centre at MOFA, told FutureGov that the new system will provide MOFA’s agencies with a layer of services and applications on a safe, stable and effective infrastructure.
Intel Vietnam has been selected for the Secretary of State’s prestigious 2012 Award for Corporate Excellence (ACE), according to the US embassy in Hanoi. An embassy’s press release on September 25 says the selection acknowledges Intel Vietnam’s efforts in protecting the environment through generating electricity from solar power, participating in transformative educational programs, and providing scholarships to disadvantaged children, youth and women.
ACE selected Intel and ten other American companies from 82 nominations submitted by US ambassadors around the world. Its finalists recognise the vital role that US businesses play abroad as good corporate citizens promoting sustainable development and supporting local community needs in the countries where they operate.
Cambodia wants to strengthen cooperation in information technology with Vietnam and share valuable experience in the field with its neighbour.
Visiting Minister of Posts and Telecommunications So Khun was speaking at a meeting with Prime Minister Nguyen Tan Dung in Hanoi on September 27. For his part, PM Dung hailed the effective cooperation between the two countries’ ministries, expressing his hope for continued collaboration on human resources training and the legislative framework required to manage and develop the IT sector.
Vietnamese telecom companies were no longer reliant on foreign partners, resulting in the withdrawal of foreign-invested companies from the domestic telecoms market, said an official in a report published by Vietnam Investment Review.
Le Nam Thang, deputy minister of Information and Communications, said Vietnamese telecommunications companies now had the necessary conditions to develop by themselves. These conditions included capital, experience and workforce. Many domestic telecom companies did not lack capital and it was easier for them to access advanced technology, Thang said.
The Ministry of Transport will initiate a project to establish a Port Authority in Viet Nam in an effort to put seaport development plans back on track and boost the logistics sector. The project, which will initially apply on a trial basis in some of the major ports, will be submitted to the government for final approval, according to Deputy Transport Minister Nguyen Hong Truong. Speaking at an industry conference held on Saturday, Truong said Viet Nam had failed to develop a competent seaport system despite applying "very early thinking" to establishing a synchronised cosmos.
A new 98.7 kilometre highway project linking Dau Giay and Phan Thiet will run parallel to National Highway 1 under a plan to enhance the financial feasibility of Vietnam’s first public-private partnership (PPP) highway project.
Under the plan, National Highway 1 will not be widened and construction is expected to start later this year and completed within four years.
All that remain of Vietnam's plan to build a major deep-water port are 114 exposed pilings trailing into the South China Sea and a barge full of rusty machinery.
Foreign investors stayed away from the $3.6 billion project and the indebted state-owned company overseeing it bungled the job. The government accused the company of "financial incompetence" and suspended the project this month. The prospects for ever reviving it are dim. The abandoned port in southern Vietnam stands as a symbol of the inefficiency of the country's Communist rulers and the need to reform a massive web of state-owned enterprises weighing down a once-booming economy.
Vietnam is calling for foreign investment in the aviation sector, particularly for building new airports, as demand for air transport continues to grow at a rapid pace.
Le Manh Hung, general director of the Airports Corporation of Vietnam, the national airport operator that was established in February, said the country has 21 airports but many of them need to be upgraded and expanded. The government used to provide funds for the construction of airports, which are big-ticket projects, but it is now necessary to attract foreign investment, he said at a conference on aviation cooperation between the US and Vietnam in Ho Chi Minh City yesterday.
The National Assembly’s Budget and Finance Committee finally reached a consensus on the amount that the personal income tax threshold will be lifted after a convention on Tuesday.
After a heated debate, chair Phung Quoc Hien concluded that all the 37 members of his committee had agreed with the proposal of the government, which seeks to increase the personal tax threshold to VND9 million a month, up from the current VND4 million, according to a source close to Tuoi Tre. (VND1 million = $48)
Debate over a proposal to allow foreign credit institutions in Vietnam to back real estate mortgages is intensifying.
National Assembly members are weighing the costs and benefits of creating a new channel for foreign capital. Accordingly, under the draft amended Land Law, land users are allowed to mortgage their land-use rights or the properties developed on the land at foreign credit institutions in Vietnam.
In the past nine months of the year, garment and textile exports fetched US$11.25 billion in revenue, up 7 percent compared to last year’s figure. The US was Vietnam’s largest importer, accounting for 13 percent of the total turnover in September alone, followed by Japan and the Republic and Korea 10 and 15 percent respectively. There were also some positive signs of exports picking up in Canada, China and other new markets. However, exports to the EU in September dropped by 5-8 percent compared to August and 5 percent from a year earlier.
According to a workshop on the elderly people in Vietnam held last week in Hanoi, the average lifespan of the Vietnamese people is increasing while the birth rate and death rate decrease. This demographic trend is one of the major achievements of Vietnam, associated with significant improvements in health, nutrition and socio-economic development. However, fast population aging also creates tremendous challenges for Vietnam.
Data from the population survey in 2011 of the General Department of Population and Family Planning shows that the number of elderly people is growing faster than any other population groups so the aging index also increases rapidly, while the potential support ratio decreases significantly.
By 2015, Vietnam will open its press representative offices in 30 countries and territories around the world. This is one of the goals in the draft decision of the Prime Minister approving the master plan on the network of overseas representative offices of Vietnamese news agencies.
The draft decision has been posted on the website of the Ministry of Information and Communications for people's comments. According to the document, the network of representative offices of Vietnamese news agencies will be established on the basis of taking full advantage of the capacity of the headquarters of Vietnamese diplomatic and cultural missions in foreign countries and the coordination between news agencies to ensure operational efficiency and avoid waste.
Nguyen Van Hai, Phan Thanh Hai and Ta Phong Tan have been charged with 'conducting propaganda against the Socialist Republic of Vietnam' and face up to 20 years in prison if convicted.
Their trial comes two weeks days after Nguyen Tan Dung, the Vietnamese prime minister, ordered a crackdown on political blogs, following widespread reports on a series of economic scandals involving tycoons with close connections to the communist party.