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Standard Chartered forecasts Q3 GDP to show ongoing recovery

Standard Chartered Bank forecasts Việt Nam’s Q3 GDP growth to pick up to 5.1 per cent year-on-year (from 4.1 per cent in the second quarter). A rebound is expected in the second half of the year, after early signs of recovery in the second quarter.

The bank’s 2023 GDP growth forecast remains at 5.4 per cent.

This information was released in its recent global research report titled “Việt Nam Macro: Q3 GDP to show ongoing recovery”.

According to the international bank, September data is likely to show a slight improvement over August, supported by retail sales. The bank expects September retail sales growth to stay robust at 8.2 per cent year-on-year, exports are predicted to fall 6.2 per cent year-on-year, imports to fall 7.0 per cent, and industrial production growth to pick up to 3.2 per cent. The trade surplus may narrow to US$1.3 billion.

Inflation may rise again to 3.2 per cent year-on-year from 3.0 per cent year-on-year in August. Education, housing, and food prices have driven inflation recently, while transport inflation has eased. Việt Nam received close to 7.8 million foreign visitors in the first 8 months of 2023, close to the full-year target of 8 million. However, the recovery remains tentative – trade is still contracting, manufacturing might remain lacklustre for some time, and FDI recovery prospects are unclear.

Tim Leelahaphan, Economist for Thailand and Việt Nam at Standard Chartered Bank, said: “While easing price pressures should allow policymakers to focus on growth, renewed concerns about an inflation rebound in the second half of the year could deter such a move. With the economic recovery starting to gain momentum, there should be less need for monetary policy support.”

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External factors weigh on Việt Nam’s economic outlook: ADB

Việt Nam’s economic recovery is expected to pick up in the near term, driven by strong domestic consumption, moderate inflation, acceleration of public investment, and improved trade activities.

That remark was made by Shantanu Chakraborty, ADB Country Director for Việt Nam, at the “Asian Development Outlook September 2023” press conference.

However, the global economic slowdown and the weak recovery in China would continue to weigh on the outlook. Sustained high interest rates in Europe and a stronger US dollar might lead to further challenges to the recovery of external demand and weaknesses in the đồng exchange rate.

“Việt Nam’s GDP growth projection in 2023 has therefore been adjusted downward by ADB to 5.8 per cent, reflecting lower global demand compared with our earlier projection of 6.5 per cent,” said Shantanu.

The director also said the growth forecast for 2024 had been downgraded to 6.0 per cent from an earlier projection of 6.8 per cent to capture the tightening monetary policy in some advanced countries and the continuing geopolitical uncertainty.

Nguyễn Bá Hùng, ABD Principal Country Economist, said the inflation projection for Việt Nam had been marked down to 3.8 per cent for 2023 from 4.5 per cent in April’s forecasts, and 4.0 per cent for 2024 from 4.2 per cent.
The manufacturing purchasing managers’ index edged above 50 in August, indicating a recovery of consumption-led manufacturing. Services are expected to keep expanding, supported by the reinvigoration of tourism. Agriculture would benefit greatly from rising food prices and is forecast to expand by 3.2 per cent in 2023.

Public investment, meanwhile, would be the key driver for economic recovery and growth as accelerating government spending could give a big push to demand for the rest of the year.

Weak global demand would dampen trade prospects for the rest of 2023 and 2024. However, import and export growth rates are projected to return to a modest 5.0 per cent this year and next year with the revival of external demand.
Robust trade activities are forecast to create a current account surplus of 3.0 GDP for 2023. Nevertheless, as the recovery of manufacturing would push up imports of input materials, the current account balance is projected to fall to 2.0 per cent of GDP in 2024.

Bank credits are expected to grow slowly owing to rising gross non-performing loans and increased provisioning requirements.

“But several factors will continue to pose risks to the outlook, including strong external headwinds, pandemic-exposed structural issues, and climate change,” said Hùng.

EXPORT-IMPORT IN 2023 Jan to August

Sweden exports to Vietnam

Sweden imports from Vietnam

Denmark exports to Vietnam

Denmark imports from Vietnam

Norway exports to Vietnam

Norway imports from Vietnam

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OTHER NEWS

Norway – Viet Nam Business Cooperation

This week Ambassador Solbakken spent two days in the South with Eagle Technology AS and Carbon Circle AS. She took part in the opening ceremony of new offices of Eagle Technology AS in Binh Duong Province and attended the Steel Cut Ceremony of the World’s First Post Combustion Carbon Capture Unit for FPSO (Floating production storage and offloading) in Vung Tau Province.

Together with their local partner Alpha ECC, these two companies play a significant part in this ground-breaking initiative. This $500,000 post-combustion carbon capture unit will be installed on FPSO Agogo, invested by Norway’s Azule Energy. Delivery of the unit is scheduled for the third quarter of 2024.

Carbon Circle AS is a Norwegian company with expertise on Carbon Capture and Storage (CCS) and EPC project execution.

Eagle Technology AS is a Norwegian company focusing on the development, sales, engineering and delivery of advanced mechanical systems and component deliveries. The company’s head office is located in Stavanger, with branch offices in Halden, Bosnia, Vietnam, and Brazil.

Congratulations to Eagle Technology and Carbon Circle!

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Export of rice, fruits, vegetables spike in H1

The export of rice, fruit and vegetables to China and other markets posted a remarkable surge by 34.7 per cent and 64.2 per cent, respectively in the first half, said an official during a meeting of the Ministry of Agriculture and Rural Development (MARD) in Hà Nội on Wednesday to review the market situation and launch tasks for the coming quarters of this year.

Director of the MARD’s Agro-Forestry-Fisheries Quality Assurance Department Nguyễn Như Tiệp predicted export growth of fruit and vegetables to be maintained in the second half, assuming firms pay attention to quality, design, packaging and origin tracing to meet market demand.

He said the MARD will sign a memorandum of understanding on cooperation in agriculture development and trade in agro-forestry-fisheries China’s Guangxi and Yunnan provinces in September, on the occasion of the 20th China-ASEAN Expo (CAEXPO) in Guangxi. It will also consider working with the Việt Nam Trade Office in China’s Nanning to step up the consumption of farm produce at the expo.

Efforts will be made to establish the Việt Nam-Guangxi Association of Agro-Forestry-Fisheries Enterprises. The MARD will also expedite technical measures to soon conclude a Protocol with the General Administration of Customs of China on food safety requirements, quarantine and inspection for aquatic products imported and exported between the two countries.

Deputy Minister of Agriculture and Rural Development Trần Thanh Nam said MARD will focus on trade promotion and market development to boost the export of key agro-forestry and aquatic products to the three major markets of China, the US and Japan.

An online forum is slated for July 21 to connect production, processing and export of Vietnamese shrimp to the US.

Trade promotion activities for fruit products will be also held on the sidelines of events marking the 50th anniversary of Việt Nam-Japan diplomatic ties and the ASEAN-Japan Summit in Tokyo in this December.

Every quarter, MARD units update market regulations and consumer preferences through commercial attachés and the Việt Nam business associations in various markets.

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Norwegian Embassy in Hanoi, SINTEF, and NORAD visited Quang Ninh Cement Company

On 25 September, a working group of the Norwegian Embassy in Hanoi, SINTEF, and Norwegian Agency for Development Cooperation (NORAD) visited Quang Ninh Cement Company (QNC) to learn about its industrial waste processing practices, green shift efforts and discuss cooperation opportunities.

Norwegian Foundation for Scientific and Industrial Research (SINTEF) is scaling up the co-processing method in the cement industry in Vietnam after its successful inception phase under the regional OPTOCE (Ocean Plastics Turn into Opportunities in Circular Economy) Project. Cement companies play a crucial role in this process.

QNC has been active in adopting environment-friendly and innovative solutions in its production activities and pioneering with its green shift efforts towards a circular economy.

Norway, through NORAD, has been funding some projects on the environmental protection and tackling marine litter in Quang Ninh Province including “Scaling Up a Socialised Model of Domestic Waste and Plastic Management in 5 Cities” (DWP5C) and “Ending Plastic Pollution Innovation Challenge” (EPPIC).

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More than $20 billion of foreign investment capital registered in Việt Nam in 9 months

Foreign investment capital into Việt Nam continues its increasing trend, with US$20.21 billion in nine months, a year-on-year growth of 7.7 per cent.
Disbursed capital also reached more than $15.9 billion, an increase of 2.2 per cent.

Data from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI) showed that the total newly-registered foreign investment capital, adjusted and contributed capital to buy shares, and buy contributed capital of foreign investors reached approximately $20.21 billion as of 20 September this year, up 7.7 per cent year-on-year.

Of these, 2,254 new projects were granted investment registration certificates, with more than $10.23 billion, an increase of 66.3 per cent in the number of projects and 43.6 per cent in capital compared to the same period last year.
Additionally, 934 projects registered to adjust investment capital, with a total additional capital of more than $5.15 billion, a growth of 21.5 per cent in number and a decrease of 37.3 per cent in capital compared to the same period last year.

Furthermore, there were 2,539 capital contributions and share purchases, with a total capital contribution value of more than $4.82 billion, down 5.9 per cent in number and up 47 per cent in capital compared to the same period.

The drastic solutions of the Government and the Prime Minister in the first months of the year have been effective in supporting and removing difficulties for businesses to disburse investment capital, said FIA.

Moreover, adjusted investment capital continues to show improvement month by month compared to the first months of the year.

The number of adjusted capital projects also maintained an increase over the same period, affirming investors’ confidence in Việt Nam’s investment environment and continuing to make decisions to expand existing projects.
FIA data shows that foreign investors have invested in 18 industries out of 21 national economic sectors in the past nine months.

Of these, the processing and manufacturing industry leads with a total investment capital of more than $14 billion, accounting for nearly 69.3 per cent of total registered investment capital and an increase of 15.5 per cent over the same period.

Next is the real estate business, with a total investment capital of nearly $1.94 billion, accounting for more than 9.6 per cent of total registered investment capital, down 45 per cent over the same period.

The finance-banking, wholesale, and retail industries ranked third and fourth with total registered capital reaching nearly $1.54 billion and nearly $734 million, respectively.

Meanwhile, in terms of investment partners, Singapore still leads with a total investment capital of more than $3.98 billion, accounting for more than 19.7 per cent of total investment capital in Việt Nam.

China ranked second with $2.92 billion, accounting for 14.5 per cent of total investment capital, followed by Japan, South Korea, Hong Kong (China), and Taiwan (China).

Commenting on Việt Nam’s situation of attracting foreign investment, the FIA said that new investment projects still focus on provinces and cities that have many advantages in attracting foreign investment such as Hà Nội, Hải Phòng, HCM City, Bắc Giang, and Bình Dương.

These are all localities with good infrastructure, stable human resources, efforts to reform administrative procedures, and dynamism in investment promotion.
Meanwhile, in terms of partners, investors come from Asia; traditional investment partners such as Singapore, China, Japan, South Korea, Hong Kong (China), and Taiwan (China) still account for a large proportion.

These six partners alone accounted for 78.8 per cent of the country’s total investment capital in nine months.

Numerous foreign firms eye stronger investment in Việt Nam

Nearly 1,000 foreign enterprises from 28 countries and territories, including giants such as Boeing, Walmart, and Central Retail, have entered Việt Nam to explore investment opportunities and seek partners since the beginning of this month.

According to Avaneesh Gupta, Senior Vice President of General Merchandise & Apparel Sourcing at Walmart – the world’s number one retailer – Việt Nam is among the top five countries for exports of wood and agricultural products and ranks 10th globally for textiles and footwear exports.

Notably, Vietnamese products are increasingly gaining popularity among consumers worldwide, Gupta said.

As part of the 2024 supplemental sourcing strategy for the Walmart network, the firm has deployed procurement teams to Việt Nam to explore sourcing opportunities in the country. The product categories include seafood, cashew nuts, soy milk, coffee, fresh fruits, and fruit-based snacks, he said.

Lionel Adenot, Director of Decathlon Việt Nam Group, mentioned that his company is expanding its textile product supply without volume limits.
However, to become suppliers for the firm, Vietnamese businesses need to meet specific conditions. These include ensuring that factories do not use coal and have a roadmap to eliminate the use of fossil fuels by 2025, achieving self-sufficiency in raw material supply, favouring environmentally-friendly, on-site material usage, and implementing digital transformation in their production processes, he said.

Decathlon Việt Nam Group will prioritise businesses that meet criteria related to responsibilities towards workers and the community, he added.

Agriculture also represents an enticing industry for foreign investors.

Central Retail Group has offered technical assistance and methodologies for cultivating organic honeydew melons to Danny Green Corporation, which has successfully established and currently operates a 120-ha organic honeydew melon farm in the south-central province of Bình Thuận.

Insiders have said that foreign companies are willing to collaborate with Vietnamese businesses to standardise farming and production processes in order to improve the supply capacity of these businesses, thus stabilising the supply of goods for their supply chains.

Besides seeking reliable supply sources, numerous businesses from the RoK, the US, and Europe are keen on directly investing in Việt Nam.

Jean Jacques Bouflet, Vice-Chairman of the European Chamber of Commerce in Việt Nam (EuroCham), said that with its strategic geographical location, stable economy, young workforce, and favourable policies, Việt Nam is emerging as an increasingly important destination in the global supply chain.
Since the signing of the EU-Việt Nam Free Trade Agreement (EVFTA) in 2019, European enterprises have invested in 2,250 projects worth $26 billion in Việt Nam.

Additionally, the race for investment in Việt Nam has attracted numerous leading US corporations such as Apple, Qualcomm, Nike, Morgan Stanley, Intel, GE, ACORN International, General Dynamics, and Google.

Recently, Boeing also explored opportunities to expand its investment in HCM City, especially in material supply facilities and establishing technical centres, the Sài Gòn Giải Phóng (Liberated Saigon) Newspaper reported.

According to Maxime Dourdan, Director of Supply Chain Development for Boeing in Southeast Asia, Japan, and the RoK, compared to Japan and the RoK, Việt Nam holds a significant advantage when it comes to production costs.
Furthermore, the capacity of the Vietnamese supporting industry has significantly improved in recent years, with many Vietnamese businesses becoming part of the global supply chains of large corporations like Samsung, Sanyo, Intel, and others. This serves as a foundation for Boeing to explore cooperation and expand its supply chain investments in Việt Nam, Dourdan said.

To attract more sustainable investment inflows, there should be consistency in investment incentive policies to reassure investors about long-term business operations in the Southeast Asian nation, said Hong Sun, Chairman of the Korean Chamber of Business in Việt Nam.

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Solutions for enterprises in reducing greenhouse gas emissions

Energy transition and greenhouse gas emission reduction play a crucial role in achieving Việt Nam’s goal of net-zero.

According to regulations from the Ministry of Natural Resources and Environment, from the beginning of 2023, about 1,920 businesses will start having periodic inventories of greenhouse gas emissions. This is a new requirement being applied in Việt Nam for the first time, so businesses face many difficulties in implementing it.

Dr Nguyễn Phương Nam, a United Nations’ expert on climate change, speaks to the Vietnam News Agency about challenges and solutions relating to this issue.
From the start of 2023, thousands of businesses have had to conduct greenhouse emissions inventories. How have the businesses implemented this requirement?
According to the Law on Environmental Protection, effective from January 1, 2022, Vietnamese businesses will be obliged to conduct inventories of greenhouse gases and assess the current status of their greenhouse gas emissions under the guidance of this law and Decree 06 on elaborating some articles of the Law on Environmental Protection.

The Government understands that this is a new regulation for businesses. So, if enterprises cannot undertake the greenhouse gas emission inventory, they can send the data to the relevant ministries for assistance in conducting the inventory in the initial years. From 2025, businesses will be required to undertake the inventory work themselves.

Thus, this year, businesses are very interested in this matter and hope to receive more detailed instructions on the implementation of the greenhouse gas inventory from the State.

Enterprises also view the greenhouse gas inventory as an opportunity to begin their green transition.

How do you assess the role of the enterprise sector in energy transition and the reduction of greenhouse emissions?

Like all countries worldwide, no nation can reduce greenhouse gas emissions without the contribution of businesses. Enterprises produce goods and services for society, which emit greenhouse gases.

Việt Nam’s ambition is to achieve net-zero carbon emissions by 2050.

Therefore, businesses play a vital role in helping the country achieve this ambitious commitment. It is also a task that businesses must undertake as part of the green transition, using low-carbon technologies and renewable energy sources instead of traditional energy sources such as coal, oil, and gas.

However, this is a long-term transition process. Every enterprise has established production processes and technologies, so it requires time and a roadmap for transition. The initial step in this transition is the greenhouse gas inventory, the most fundamental step that allows businesses to determine their position on the national map of greenhouse gas emissions. Subsequently, they can develop appropriate plans and strategies to reduce their emissions.

Based on the greenhouse gas inventory, state management agencies will allocate emission quotas to businesses. Meanwhile, businesses will seek green financial resources and support from international organisations, enabling them to undergo a green transition without disrupting their production plans or the developmental needs of the enterprise.

What difficulties are the businesses facing in the process of implementing energy transition and reducing greenhouse emissions?

The biggest difficulty for businesses now is that greenhouse gas emissions inventory is requested for the first time in Việt Nam. Other countries also face the same problem.

Việt Nam has been doing the greenhouse gas emissions inventory at the national level for 20 years.

However, at the business level, the biggest difficulty for the businesses is not yet having the technical instructions for sectors to comply with the regulations on the greenhouse gas emissions inventory.

According to the provisions of Decree 06 and the Law on Environmental Protection 2020, the State management agencies will have to develop circulars providing technical guidance, processes and steps to conduct inventory of greenhouse gas emissions.

However, up to now, only the Ministry of Natural Resources and Environment has issued a circular guiding the inventory of greenhouse gas emissions in the waste treatment sector.

Meanwhile, for other important fields such as the energy field of the industry and trade sector, there are currently no technical guidelines.

For businesses, they need to improve their capacity to access these technical instructions.

In Việt Nam, development projects now only provide support in conducting the greenhouse gas emissions inventory for the State management agencies or non-profit organisations.

Meanwhile, profitable businesses have negligible support from international development assistance agencies in Việt Nam. So, the State management agencies as well as the development organisations should have support for the businesses in improving their capacity to make their own emissions inventory reports.

What should Việt Nam do to develop a legal framework relating to climate change and reduction of greenhouse gas emissions, especially mechanisms and policies to help the businesses in green transition?

At present, Việt Nam has strict regulations in legal documents at the highest level such as laws or decrees. However, implementation of the regulations is still limited.

Besides documents guiding to implementation of those regulations, the State needs to promote propaganda activities for the businesses, helping them be aware that the greenhouse gas inventory does not impact business profits and business production.

The State must also have policies to encourage the implementation of this greenhouse gas inventory. In the short term, it is the business’s obligation and responsibility. However, in the long-term, this is beneficial to businesses because they will have the opportunity to access green capital and green investment for the implementation of green transformation. They will have sustainable production, improve the value of products in the global market and make Vietnamese goods more competitive.

Especially, besides the Ministry of Natural Resources and Environment, it needs the participation of all other ministries and branches. For example, the Ministry of Education and Training must also develop a curriculum on greenhouse gas emission inventory, while the Ministry of Agriculture and Rural Development will have guidelines on emissions inventory for forests or the agricultural sector such as rice production. They are very important things to not only affect Việt Nam’s economic development, also improve the value of made-in-Vietnam products.

What can businesses do to accelerate the process of reducing emissions?
While waiting for detailed instructions from the State management agencies on greenhouse gas inventory techniques, and procedures for appraisal of greenhouse gas emission results, the businesses also need to learn measures to reduce greenhouse gas emissions that are easy to implement, such as saving energy, and use of renewable energy or green energy instead of using traditional energy.

In addition, corporate data in Việt Nam is very limited. Therefore, it is important that businesses should have the habit of collecting statistics relating to production and business activities.

This is the data preparation step for the implementation of greenhouse gas emission inventory in the coming time. Because if they don’t have good enough data, the report does not have much value and does not help the businesses have suitable solutions to reduce greenhouse gas emissions.

Based on the data, experts can propose appropriate solutions for the businesses.

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VN records over 38,000 valid foreign-invested projects: FIA

There were 38,379 valid foreign-invested projects in Việt Nam with a total registered capital of US$455.06 billion as of September 20, reported the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
Their cumulative disbursement so far has hit $289.9 billion, or 63.7 per cent of the total registered capital still in effect.

During the period from January to September, foreign direct investment (FDI) projects disbursed over $15.9 billion, representing a 2.2 percent increase compared to the previous year. This also marked a 0.9 percentage point increase compared to the first eight months of this year.

Foreign investors poured capital into 19 out of 21 economic sectors.
The manufacturing and processing industry attracted the most foreign investment with nearly $273.9 billion, or 60.2 per cent of the total capital. It was followed by real estate with around $67.4 billion, electricity production and distribution with over 38.4 billion.

In September, new projects from Liechtenstein raised the total number of countries and territories investing in Việt Nam to 144.

Of them, the Republic of Korea topped the list with roughly $83 billion, ahead of Singapore with some $73 billion, followed by Japan, Taiwan (China) and Hong Kong (China).

Among all 63 cities and provinces across the country, HCM City took the lead in luring FDI with approximately $57.14 billion. Coming next were Binh Dương with over $40.3 billion and Hà Nội nearly $39.5 billion.