Samson: Vietnam among 10 fastest-growing economies
7th December, 2018
GDP growth forecast
While growth is set to ease in 2019, Việt Nam will still be among the top 10 fastest-growing economies globally, according to the “Economic Insight: South-East Asia” report recently released by the Institute of Chartered Accountants in England and Wales (ICAEW).
In the report, ICAEW predicts that economic growth across Southeast Asia (SEA) is expected to slow down in 2019 to 5 per cent, after an estimated 5.3 per cent in 2018.
It attributed the slowdown to US-China tensions. “The resulting slowdown in Chinese demand will weigh significantly on SEA growth, especially for export-dependent economies with a high level of exports to China, like Singapore and Malaysia,” the report said.
Economic growth continued to moderate across most SEA economies in the third quarter of 2018, with the average GDP growth slowing to 4.8 per cent year-on-year, from 5.2 per cent in second quarter of 2018, it said.
Việt Nam was the exception, with GDP growth accelerating 6.9 per cent on the year, up from 6.7 per cent in the second quarter as FDI inflows continued to support growth in manufacturing activity and exports. “GDP growth across the region is set to slow next year, as many of the region’s economies are small, open and heavily dependent on exports to China, due to both supply-chain linkages as well as tightening Chinese domestic demand,” the report said.
Domestic demand would likely provide some relief amid a more difficult outlook for exports. In addition, expansionary fiscal policy would also help, with fiscal spending expected to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in the first half of 2019.
Many governments in the region, including Indonesia and Malaysia, are expected to miss their ambitious fiscal consolidation targets for 2019. In Việt Nam, while the Government’s fiscal position has improved, there is limited space for any expansionary fiscal policy next year, the report said.
However, Mark Billington, ICAEW Regional Director for South East Asia, said that although domestic demand had held up well this year, it was unlikely to reach the stellar pace achieved in 2018, partly due to lower monetary policy support. “Combined with a moderation in export growth, we expect GDP growth across all of the SEA economies to ease next year, as a result of the ongoing US-China trade conflict and tighter global monetary conditions,” he said. LINK
Samson: US to help Vietnam develop LNG power industry
7th December, 2018
The US Government has committed to improving Việt Nam’s energy security status by providing smart, clean technology and developing the liquefied natural gas (LNG) power industry.
Speaking at a workshop in HCM City yesterday, US Ambassador to Việt Nam Daniel Kritenbrink, said: “I’m here to affirm my government’s support in assisting Việt Nam to meet its energy goals.” Việt Nam’s energy market growth represents a great opportunity for US energy and energy-related exports, especially in LNG and advanced energy technologies, he added.
Việt Nam is on the “cusp of an energy sector transformation” that can lessen its dependence on harmful coal-fired systems and rapidly deploy modern, clean energy technologies, including solar, wind and natural gas, the ambassador noted. “Energy policy and associated decisions are not always easy. Like my country and many others, Việt Nam has important – and difficult – decisions to make about its energy sector in the near future,” he said. “The investment choices Việt Nam make will impact its energy security, its environmental quality, and its ability to sustain its incredible economic growth for generations to come.”
Kritenbrink said that Việt Nam was blessed with abundant solar and wind energy resources, especially in the south where energy demand is high. “It is critical for Việt Nam to plan for and invest in a diverse and well-synchronised energy system, drawing upon a variety of generation technologies and supported by a smart and resilient grid,” he said.
About a quarter of the country’s electricity production now comes from gas-fired thermal generation, with coal and hydropower representing about 36 per cent each.
Mary Tarnowka, US consul general in HCM City, noted that with nearly 8 per cent growth in energy demand this year, Việt Nam faces significant challenges in the southern provinces to keep pace.
Over the next three years, the southern provinces could face energy shortages of 1.2-1.6 billion kilowatts per year, a huge figure if compared to the average annual energy consumption per capita of only 1,600 kilowatt hours, she said.
Lê Văn Lực, deputy director of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade, saidthat coal-fired thermal power plants were usually favoured by governments as the most affordable option.
The capacity of coal-fired power plants in the country is expeced to reach 55,300MW by 2030, with 14,600MW supplied by 11 projects in the Mekong Delta region, according to the revised National Power Development Master Plan for the 2016-30 period.
Việt Nam’s most viable source of energy is hydropower, but the 285-strong network of hydroelectric power plants, mostly small and medium sized, have already exhausted their potential, Lực said.
As much as 16-17 per cent of the country’s energy will be supplied by LNG-fueled thermal power plants, but starting in 2019 and 2020 the country will need to find supplemental sources of gas as natural reserves are running out.
As for renewable energy, it is still at the nascent stage in Việt Nam, with most solar and wind power projects located in Ninh Thuận or Bình Thuận provinces.
These projects, however, cannot guarantee a stable supply because they are heavily dependent on weather conditions, and need energy storage and battery technology, he said. The price of electricity from renewable energy is also high, he added.
At the meeting, the US Trade and Development Agency (USTDA) announced its intention to support Electricity Việt Nam’s (EVN) development of a Liquefied Natural Gas terminal in the southern part of the country.
USTDA will fund a feasibility study that will aid EVN in its assessment of site selection, a marine port, LNG storage, regasification and infrastructure. This will allow EVN to plan its terminal and vessel facilities.
In addition, the UN Agency for International Development (USAID) is working with Việt Nam to design the country’s first direct power purchase agreement that will allow private parties to directly enter into a contract for the procurement of renewable energy.
Last year, the US became a net exporter of natural gas for the first time since 1957 and will become one of the top global LNG exporters in the coming years. At the event, leaders from AES, Alaska Gasline Development Corporation, Cheniere, Energy Capital Việt Nam, Excelerate Energy, ExxonMobil and Marsh, among others, shared their best practices.
The workshop also featured presentations from Việt Nam’s power project owners, developers and stakeholders, including PetroVietnam Gas Corporation, PetroVietnam Power, Electricity Việt Nam and the Ministry of Industry and Trade.
The workshop was part of the US government’s “Enhancing Development and Growth through Energy” or Asia “EDGE” initiative. Asia EDGE brings together government and private sector resources to help grow sustainable and secure energy markets across the Indo-Pacific region.
In Việt Nam, the US Government will advance bilateral cooperation under the banner of EDGE Việt Nam. “EDGE Việt Nam is our vision that, together, we can boost Việt Nam’s energy efficiency, improve air quality, and decrease the need for imported coal,” Kritenbrink said. More than 140 public and private sector representatives from both countries took park in the Energy Industry Workshop organised by the US Government. LINK
Samson: Việt Nam, Republic of Korea (RoK) ink action plan to lift bilateral trade to US$100 billion by 2020
7th December, 2018
Vietnamese Minister of Industry and Trade Trần Tuấn Anh and Korean Minister of Trade, Industry and Energy Sung Yunmo signed a memorandum of understanding in Seoul
Vietnamese Minister of Industry and Trade Trần Tuấn Anh and Korean Minister of Trade, Industry, and Energy Sung Yunmo signed a memorandum of understanding (MoU) in Seoul on Thursday on an action plan to reach US$100 billion in bilateral trade by 2020.
The signing was witnessed by National Assembly Chairwoman Nguyễn Thị Kim Ngân, who is on an official visit to the Republic of Korea from December 4 to 7. The MoU reflects the commitment of the two ministries to further lift two-way trade as agreed by the two countries’ top leaders at the APEC Economic Leaders’ Week in Đà Nẵng last year.
Under the action plan, the two sides will co-operate to help Vietnamese enterprises enhance their competitiveness in the fields of spare part manufacturing, automobiles, garments and textiles, footwear and electronics. They agreed to facilitate trade of agricultural products with the establishment of a working group among the Vietnamese Ministry of Industry and Trade; the RoK’s Ministry of Trade, Industry, and Energy and relevant ministries from both sides.
The Korean side agreed to help build the capacity of Vietnamese officials in trade policymaking and to improve the skills and competence of Vietnamese engineering workers and specialists in basic industries. After the signing ceremony, Anh and Sung co-chaired the mid-term meeting of the Vietnam-RoK Joint Committee for co-operation in nuclear power, energy, industry and trade. The two sides reviewed the progress of their co-operation since the eighth meeting in HCM City in February.
Both ministers conveyed their satisfaction as most of the agreements reached during the last meeting have been effectively implemented. The two ministries have inked a variety of MoUs on co-operation in supporting the industries of automobiles, garment-textiles and footwear, energy saving, electricity, defence and intellectual property.
This year, the Korean Ministry of Trade, Industry and Energy has organised more than 20 training courses for Vietnamese officials, focusing on trade policy, SME management and policies to support industrial development and manufacturing techniques for automobiles, mechanics and metallurgy, electronics and more.
The RoK has completed and transferred the $21.1 million Korea-Việt Nam Incubator Park (KVIP) to the Mekong Delta city of Cần Thơ. It has also approved official development assistance (ODA) funding for a Việt Nam-Korea technological consultancy and solution centre (VITASK) and partnered with the Vietnamese Ministry of Industry and Trade to survey the demand for support industry products from large Korean corporations. It has also made a list of qualified Vietnamese producers to help them enhance capacity in manufacturing electronic and automobile parts so they will be able to join supply chains of Korean enterprises in Việt Nam.
The two ministries agreed that the Governments of Việt Nam and the RoK must improve the business climate, as well as strengthen co-operation mechanisms to make enterprises of both sides drivers of economic growth. They also agreed they need to further expand new areas of partnership in the fields of trade, industry and energy. The RoK is currently Việt Nam’s biggest foreign investor, the second largest supplier of ODA behind Japan and the third largest trade partner of Việt Nam behind China and the European Union (EU).
Bilateral co-operation mechanisms have been maintained such as the Vietnam-RoK Inter-Governmental Committee on Economic, Scientific and Technological Co-operation and the Ministerial-level Inter-Committee on co-operation in nuclear power, energy and industry. In the first 10 months of the year, two-way trade hit $54.2 billion. As of October 2018, the RoK was the biggest investor among the 128 countries and territories investing in Việt Nam, running 7,323 projects worth $62.1 billion and accounting for 18.3 per cent of the total figure. LINK
Samson: Vietnam proactively integrates into global economy: Deputy PM
5th December, 2018
Deputy Prime Minister Vương Đình Huệ speaks at a forum held in Hà Nội on Tuesday
The Government of Việt Nam persistently pursues the policy of comprehensive integration, with a focus on international economic integration in a proactive, pragmatic and politic manner, Deputy Prime Minister Vương Đình Huệ said at a forum held in Hà Nội on Tuesday.
Huệ said “Trade protectionism is now on the rise and seriously threatening the process of liberalisation and global economic integration. “The wider and deeper integration into the global economy means Việt Nam will face more impact from regional and global economic development trends, and that is why the country needs a proactive and flexible approach to cope with this issue,” he added.
Sudhir Shetty, Chief Economist for the East Asia and Pacific Region of the World Bank shared the ideas, saying that as a highly open economy and major trading partner of both the US and China, Việt Nam would be affected but these impacts should be manageable. “Trade diversion could lead to Vietnamese exports replacing some Chinese exports to the US, and to a lesser extent, US exports to China,” he said.
He said Việt Nam should enhance its macroeconomic response to international financial and trade turbulences while strengthening national competitiveness with trade facilitation policies, improving the business environment, and strengthening the connectivity between foreign investment and domestic suppliers.
Furthermore, Việt Nam also needs extensive reform of trade and investment, including the simplification of non-tariff measures that distort trade as well as promote trade in services, deepen regional and global integration, and increase commitments to supporting the reform of the global trading system.
Deputy Minister of Industry and Trade Đỗ Thắng Hải said trade war between the US and China could make the world’s GDP growth decrease. “Facing this situation, if the policy response is not flexible, Việt Nam may fall into decline economic growth,” Hải added.
He also said that because of the trade war, the challenges to sustaining reforms would be greater. It would be more difficult to tackle this challenge as cross-border e-commerce is more common and the risk of cyber-attack is higher. “Việt Nam’s economic model and growth engine are heavily dependent on trade. Therefore, re-emerging protectionism would offer both opportunities and challenges for Việt Nam,” said Vũ Minh Khương, National University of Singapore.
He said Việt Nam would gain significant competitive edge against China in exporting goods to the US. The country is also capturing more strategic attention and interest from multinational companies and investors. He suggested Việt Nam should be a leading player in embracing and promoting free and fair trade while avoid falling into the protectionism trap (especially in regulations related to infant industries and digital transformation). In addition, it should closely monitor the changing dynamics of the economy and its outlook.
In the past, Việt Nam has made progress in preparing for the new-generation free trade agreements (FTAs), including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which was signed in March and ratified by the National Assembly in November to come into force early next year.
Việt Nam and the European Union announced the conclusion of the legal revision of the EU-Việt Nam Free Trade Agreement (EVFTA) and agreed to keep the Investment Protection Agreement (IPA) separate from the FTA in June in preparation for the signing of the deal. Việt Nam has achieved certain outcomes in international economic integration, contributing to the national socio-economic development. The total import-export turnover in 2018 is estimated at US$475 billion, of which exports are expected to reach $239 billion, a year-on-year rise of 11.2 per cent.
The country also sought to increase goods exports to traditional markets and find new ones. Exports to countries having FTAs with Việt Nam in 2018 have seen high growth compared to 2017 with preferential rates reaching about 40 per cent, a surge from 35 per cent in previous years, indicating that Vietnamese firms are increasingly focusing on optimising opportunities from the implementation of free trade deals. LINK