Top Story of the week: GDP growth forecast at 5.5 percent in 2013
Nineteen export products have earned more than US$1 billion each so far this year, according to the Vietnam General Department of Customs. The garment and textile sector fetched more than US$11.1 billion, topping the list. It was followed by phone handsets and electronic components (US$8.63 billion) and crude oil (US$6.3 billion).
In September alone, three more export commodities that earned more than US$1 billion each were cassava and its products( US$1.06 billion); bags, wallets, cases, hats and umbrella (US$ 1.1 billion), and steel (US$1.01 billion). In nine months, Vietnam’s total import-export turnover hit US$167 billion, up 12 percent compared to the same period last year.
Defense & Security
Mines Advisory Group (MAG) America is excited to announce that MAG has expanded its landmine and unexploded ordnance clearance into Quang Nam province in Vietnam, becoming the first international organization to conduct Humanitarian Mine Action activities there. First, an advance team of community liaison specialists were sent into Thang Binh district to commence operations in July, and on October 12, 2012, U.S. Ambassador to Vietnam David Shear had the honor of conducting the first explosion of demolition.
The community liaison staff are communication specialists that will methodically work through the district, talking to inhabitants, often household by household or in village meetings, and village leaders to find out the most contaminated areas. They will also educate community members about how MAG works and the timeframe it takes to clear areas. In the team's first week, it already recorded 27 dangerous items in Tra Doa 1 village. There were items of unexploded ordnance (UXO) that were clearly visible and exposed on the ground, including mortar, rifle grenades, artillery projectiles, and BLU-63 cluster munitions.
Businesses are optimistic that they will not have to scale back their operations this year despite tough market conditions, according to a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI).
The survey on business during the third quarter, conducted through the chamber's website www.vbis.vn, found that nearly 97 percent of local enterprises will maintain their current business scales by the end of this year.
About 18 percent of respondents said they would possibly expand business activities while over 11 percent intend to narrow the scale of their operations. About 0.7 percent might suspend operations and 0.2 percent said they may close down or dissolve. Surveyed companies said their production and business situation was much tougher in the third quarter than that in the second, but they anticipate conditions would ease during the remainder of the year.
Vietnam-US trade turnover reached US$18 billion in the first three quarters of 2012, representing a year-on-year increase of 13.22 percent, according to the Ministry of Industry and Trade (MoIT).
The MoIT says Vietnam’s exports to the US earned US$14.32 billion in the past nine months, up 14.83 percent over the same period last year. With its export surplus estimated at US$10.75 billion from the US market, Vietnam’s total export turnover is likely to rise to US$20 billion by the end of this year. Key export items include garment and textiles, footwear, seafood, and timber products. The Vietnam Association of Seafood Exporters and Producers (VASEP) says tra fish export to the US made up 22 percent of its total earnings in the first eight months of this year.
Vietnam will miss this year’s economic growth target of 6-6.5 percent as the economy, though improving, is not completely stable, the Ministry of Planning and Investment says.
The expansion is now forecast at 5.2 percent, in line with recent projections from the World Bank and the Asian Development Bank. Despite the lower forecast, the ministry said in its latest report that the economy is moving in the right direction, with interest rates falling, foreign reserves rising and the local currency remaining stable.
Exports to the European Union and the US have accounted for 34.6 percent of the country’s total export turnover so far this year. They reached US$29.1 billion in the first three quarters, and are expected to rise to US$38.5 billion by the end of the year, much higher than last year’s figure. Nguyen Tien Vy, Head of the Planning Department under the Ministry of Industry and Trade (MoIT), estimates Vietnam’s total export turnover at US$83.78 billion by September, up 18.9 percent over the same period last year.
He says even there are growing demands for consumer goods from these two markets, local exporters should be more cautious about seasonal fluctuations and anti-dumping suits against imports from Vietnam. Susan Schwab, a former US trade representative, suggests Vietnam should also boost exports to other countries. Too much dependence on the US market may put them at risk. History shows that Vietnam has more than once run into trouble when the US put up technical barriers to maintain its trade balance, she says.
The International Monetray Fund (IMF) has estimated Vietnam’s GDP growth in 2012 at 5.1 percent, 0.3 percent lower than its latest prediction in July. In its October World Economic Outlook, the IMF said Vietnam’s GDP is likely to reach 5.9 percent in 2013 and 7.5 percent in 2017.
Its rate of inflation will be down to 8.1 percent in 2012 and 6.2 percent in 2013, from 18.1 percent in 2011. However, the IMF said, it seems unlikely that Vietnam will be able to ease its monetary policies, unless it slows down the domestic demand through financial solutions.
Vietnam is on the way to achieving an annual GDP growth of 5.5 percent in 2013 and maintaining the consumer price index at around 7-8 percent. The Ministry of Planning and Investment (MPI) presented a report on major targets proposed for 2013 at a meeting of the National Assembly’s Committee for Economic Affairs in Hanoi on October 10.
It forecast that the country would record an export turnover of around US$124.3 billion while keeping its import surplus ratio at 8 percent. Over budget spending would not surpass 4.8 percent of GDP, and total social investment capital would account for 30 percent of GDP.
The first round of talks on the Vietnam-EU Free Trade Agreement (FTA) officially kicked off in Hanoi Monday.
Sixty experts from Vietnam and the EU, led by Vietnamese deputy minister of industry and trade Tran Quoc Khanh and Mauro Petriccione, a trade official of the European Commission are participating in the first round. As scheduled, the two sides will hold three other rounds by 2013, and are expected to conclude negotiations in 2014.
Vietnam may 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. “The draft measure is surprisingly good as we did not expect any new developments this year with regards to changes in the rule,” said Attila Vajda, Ho Chi Minh City-based analyst at ACB Securities.
The Export-Import Bank of the United States (Ex-Im Bank) is scheduled to offer a series of trade-finance seminars in cities throughout Vietnam, one of the Bank's nine key markets, from Oct. 10 to Oct. 16 as part of a "roadshow" designed to boost U.S. exports to the region.
The half-day seminars, organized in conjunction with the American Chambers of Commerce of Hanoi and Ho Chi Minh City, will introduce the Vietnamese participants to Ex-Im Bank's menu of products by way of outreach, training, and market sounding. Ex-Im Bank representatives will publicize the availability of the Bank's export financing, explain how Vietnamese companies can access the Bank's programs, and listen to Vietnamese buyers to learn how the Bank can accommodate their needs.
Vietnam's Deputy Prime Minister Hoang Trung Hai has ordered the Ministry of Finance to respond more quickly to oil company proposals to adjust retail fuel prices in a bid to stop pump stations hoarding fuel ahead of price hikes.
It currently takes 4-5 days for a response to an oil price adjustment proposal to be issued, Dao Minh Hai, Deputy Director of the Department of Market Management, Ministry of Industry and Trade, said last Friday. Vietnam's domestic oil suppliers seek Ministry of Finance approval before making any price adjustments, even though the law requires only that they register any adjustment with the ministry.
Vietnamese government bonds fell, pushing the five-year yield to the highest level since May, on speculation accelerating inflation will deter policy makers from cutting interest rates. The dong was little changed.
The securities declined for a third day after Finance Minister Vuong Dinh Hue said in a televised interview posted on the government’s website last night that authorities will try to keep consumer-price gains under 10 percent for the rest of the year. Inflation quickened to 6.48 percent in September, the fastest pace since June, official data show.
Vietnam’s investment landscape is about to get a facelift that could ultimately boost its private equity industry, as fund management companies seek to establish open–ended funds that will allow domestic investors to participate in trading, increasing liquidity across all asset classes.
One fund management company in Vietnam, which is minority-owned by a private equity firm, is currently drawing up the paperwork to establish an open-ended fund. This structure, more commonplace in developed countries, will allow local investors, who are typically retail, to purchase shares in the fund directly, said a Hanoi-based lawyer who works at an international firm.
The Hongkong Shanghai Banking Corporation (HSBC) in Vietnam inaugurated its online financial library, the first of its kind in Vietnam on October 9. The free-of-charge library is designed to help people improve their personal financial management through training courses on personal and business finance management.
It also aims to provide them with financial knowledge and information about banking businesses.
HSBC Vietnam CEO Sumit Dutta expressed hope that individuals and businesses will benefit from the library. Nguyen Toan Thang, Deputy Governor of the State Bank of Vietnam (SBV) highlighted the library as a bridge between the bank sector and the public.
Vietnam’s government has ordered the central bank to strengthen discipline in the banking sector and completely “deal with” all weak lenders next year.
The State Bank of Vietnam needs to take timely measures, including those to reduce bad debts, in order to stabilize the banking system and regain the confidence of the public and investors, according to a resolution issued by the government Friday. Vietnam’s economy faced many challenges in the first nine months of the year, with inflation speeding up in September and loans expanding at a much slower pace than expected, the government said.
Food & Agriculture
Vietnam’s seafood export turnover reached nearly US$4.5 billion in the first nine months of this year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
However, VASEP General Secretary Truong Dinh Hoe, says that the amount is just equal to half of last year’s figure and, so it seems, the sector's set export target of US$6.5 billion this year, is hard to come by. Hoe says the main cause for concern is the impact of the global economic crisis on every market around the world.
Vietnam is likely to export a record volume of 7.5 million tonnes of rice this year, up 4 percent over 2011, according to the Vietnam Food Association (VFA).
VFA says businesses have so far signed contracts to sell 7.2 million tonnes to foreign importers, and the volume of rice in stock is more than 1.7 million tonnes, big enough for domestic use and export. A 40-percent fall in rice exports in the first quarter prompted Vietnam to lower its rice export volume set for this year to 6.5 million tonnes, but the export level has picked up in the following months.
The presence of McDonald’s or the announcement of the fast food giant to land in a market always catches the special attention from the public.
The idea of penetrating the Vietnamese market has become more realistic when a high ranking manager of McDonald’s in late August arrived in Vietnam, where he had working sessions with some competent agencies. The purpose of the visit was reported as “seeking the business opportunities in the lucrative market.”
The fast food giant, who has been present in 119 countries all over the world, was thought to keep indifference to the Vietnamese market. While other big fast food franchisors, including KFC, Lotteria or Jolibee, have been in Vietnam for some years already, McDonald’s is still outside the market.
Wood exports would reach US$4.3 billion for this year, up US$400 million over 2011, said the chairman of the Vietnam Timber and Forestry Product Association, Nguyen Ton Quyen.
Wood exports would reach US$4.3 billion for this year, up US$400 million over 2011, said the chairman of the Vietnam Timber and Forestry Product Association, Nguyen Ton Quyen. Wood businesses also forecast that exports would increase till the end of the year thanks to rising demand in the world market.
Quyen said although the world woodwork market has shrunk 30 percent, the domestic wood industry has not been significantly affected, adding that the remaining 70 percent offered a great opportunity for Vietnamese businesses to tap.
A Vietnamese delegation led by Deputy Minister of Finance Truong Chi Trung has attended the 9th ASEAN Finance Ministers Investor Seminar (AFMIS) in the special administrative region of Hong Kong, China.
In his speech on October 9, Trung said Vietnam is focused on maintaining a stable macroeconomic environment to overcome immediate difficulties and achieve a long-term sustainable development goal. Since early this year, the Vietnamese Government has adopted effective policies measures to control inflation, stabilize the macroeconomy, maintain reasonable growth, renew the growth model, restructure the national economy and ensure social welfare, Trung said.
Vietnam wants to settle sea disputes by peaceful measures, deputy foreign minister Pham Quang Vinh said at the Expanded ASEAN Maritime Forum (EAMF) in Manila, Vietnam News Agencyreported Monday.
The event in the Philippines opened on October 5, was the first "expanded" AMF conference. The meeting was held back-to-back with the third ASEAN Maritime Forum (AMF) in Manila on October 3 and 4. Addressing the event, Vinh said Vietnam supported the strengthening regional maritime links on the basis of international law and the United Nations Convention on the Law of the Sea (UNCLOS), for the interests of each country and the entire region.
A South Korean company has expressed a desire to develop an airport in Quang Ninh province, while a Japanese investor is eyeing the Long Thanh airport project and US investors have arrived to seek investment opportunities.
Unable to develop airports with just state sourced money, Vietnam is seeking capital from private foreign investors. The information has driven the special attention from the international community to Vietnam, which has been developing the aviation infrastructure system with its own capital so far.
Vietnam plans to build five more airports by 2020 and upgrade the 21 existing airports in order to serve the socio-economic development. It is estimated that the works would cost 220 trillion dong, a huge capital sum which cannot arrange itself. Therefore, it has been trying to call for foreign private investment.
The Ministry of Public Security is seeking public opinion on proposed amendments to the Law on Residence that would restrict migration to centrally-administered cities.
Under the draft amendments, expected to be submitted to the National Assembly next year, applicants for permanent residence in the five cities – Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and Can Tho – must have lived there for at least three years without interruption, as compared to one year as currently regulated.
Vietnam’s ruling Communist Party has promised economic reforms and a restructuring of state firms and the banking system after a top-level meeting that criticised senior members, thought to include the prime minister, but left them in their posts.
The banks are swimming in bad debt, much of it owed by the huge state enterprises at the heart of the economy. Moody’s downgraded Vietnam last month and said bank reforms should be implemented quickly. The central committee, the powerful body of more than 170 senior members of the Communist Party of Vietnam, “came to the decision not to discipline the collective of the Political Bureau and a comrade member of the Political Bureau”, the party said in a statement on its website late on Monday.
Vietnam’s Communist Party apologized to the nation and decided against punishing one unnamed senior leader, leaving Prime Minister Nguyen Tan Dung in charge after rare online attacks. Stocks rose the most in a month.
“The Politburo and Secretariat for many terms now have made some big mistakes, especially having not prevented and remedied corruption and the deterioration among some party members,” General Secretary Nguyen Phu Trong said yesterday on state radio and television. “Some senior officials, those currently in office as well as former ones, have occasionally not been morally good role models through their lifestyles and those of their families. They have significantly impacted the prestige of the party and the state.”
Vietnam's Prime Minister Nguyen Tan Dung survived a leadership challenge Monday as he struggles to stabilize the country's foundering economy, but he and other top leaders now face growing pressure from a new and pervasive threat here: the Internet.
Ruling Communist Party Secretary-General Nguyen Phu Trong acknowledged in a televised broadcast that the party had mishandled the management of Vietnam's economy, which is now facing mounting bad debts and slowing growth rates that are taking the shine off what had been one of Asia's brightest economic success stories. Speaking at the end of a two-week meeting that analysts viewed as a judgment on Mr. Dung's performance, Mr. Trong urged the Politburo, the country's top policy-making body, to overcome its weaknesses and exert stronger leadership.