Henig: Vietnam’s top 10 socioeconomic developments in 2022
06:00 | 21/01/2023
(VEN) – Vietnam overcame difficulties induced by COVID-19 and achieved significant economic growth in 2022. Vietnam Economic News has compiled a list of the country’s 10 most outstanding socioeconomic developments of the year.
- GDP grows an estimated 8.02 percent – a 10-year record
According to a General Statistics Office of Vietnam report, Vietnam’s gross domestic product (GDP) reached US$409 billion, an estimated increase of 8.02 percent compared with 2021 – a record annual GDP growth of the 2011-2022 period.
The economy grew in all three major sectors: agro-forestry-fishery: 3.36 percent; industry and construction: 7.78 percent; and services: 9.99 percent.
- Inflation kept under control
While the world was struggling with growing inflation, Vietnam successfully curbed the domestic inflation rate at lower levels compared with most other countries in the region. The consumer price index (CPI) grew 3.15 percent compared with 2021, with the core inflation rate curbed at 2.59 percent (the National Assembly-set target was below four percent).
Vietnam’s inflation control efforts were praised by international organizations and experts.
- FDI attraction reaches nearly US$27.72 billion
Vietnam attracted nearly US$27.72 billion of foreign direct investment (FDI) through new projects, capital increases of ongoing projects, capital contributions and stock purchases by foreign investors.
Foreign investment covered 19 of 21 sectors of the Vietnamese economy, focusing on processing and manufacturing industries, real estate, and electricity generation and distribution. Currently, 108 countries and territories invest in Vietnam. Singapore takes the lead with nearly US$6.46 billion, accounting for 23.3 percent of total FDI in Vietnam; the Republic of Korea ranks second with nearly US$4.88 billion; and Japan ranks third with more than US$4.78 billion.
- Major policies foster economic growth
Resolutions adopted by the Communist Party of Vietnam had a significant impact on Vietnam’s socioeconomic situation.
These include Resolution 18-NQ/TW on further efforts to accelerate institutional and policy improvements, aiming to enhance the effectiveness of land use management, and striving to turn Vietnam into a high-income developed country; Resolution 19-NQ/TW on agricultural and rural development until 2030, with a vision to 2045; Resolution 20-NQ/TW on further innovation and development of the collective economy in the new period with a vision to 2035 and 2040; and Resolution 06/NQ-TW regarding sustainable urban development until 2030, with a vision to 2045.
- Import-export value hits record, with strong trade surplus increase
Total import-export value reached an estimated US$732.5 billion, an increase of 9.5 percent compared with 2021. The export value was estimated at about US$371.5 billion, up 10.6 percent (the target set by the National Assembly and the Government was eight percent).
The list of goods with export value exceeding US$1 billion each consisted of 39 products, an increase of four products compared with 2021. These included nine products with export value of more than US$10 billion each, an increase of one product compared with 2021.
Trade surplus reached US$11.2 billion, marking 2022 as the seventh consecutive year of Vietnam’s trade surplus.
- Vietnam ranks fifth among e-commerce markets worldwide
The Vietnamese e-commerce market continued to develop and has become an important distribution channel. In 2022, the market value reached an estimated US$16.4 billion, accounting for 7.5 percent of total consumer goods and services’ sales nationwide. With an annual growth rate of 20 percent, Vietnam was listed by eMarketer among the world’s five fastest-growing e-commerce markets.
- Outstanding results of external relations
This was a busy year for Vietnam’s external relations, after two years of interruptions due to COVID-19. Party Chief Nguyen Phu Trong’s visit to China in late October following the success of the 20th National Congress of the Communist Party of China was of special significance. President Nguyen Xuan Phuc visited Singapore, the Republic of Korea, Indonesia, and attended APEC 2022 meetings in Thailand. Prime Minister Pham Minh Chinh visited the US, Cambodia, European countries, and attended ASEAN summits and related summits in Cambodia. National Assembly Chair Vuong Dinh Hue visited Laos, the Philippines, Australia and New Zealand. External relation activities continued strengthening Vietnam’s position and role in the international arena.
- Effective control of COVID-19
This was considered the most impressive success resulting from major efforts of the Vietnamese people, the political system and particularly the health sector. The government changed its pandemic prevention policy toward safe, flexible adaptation to and effective control of COVID-19, aiming to protect at a maximum level people’s health and minimize new infections and deaths. It also promoted socioeconomic recovery and development and ensured social security.
- Vietnam hosts SEA Games 31
The 31st Southeast Asian Games (SEA Games 31) took place in Vietnam from May 12-23, 2022, following a delay due to COVID-19. The images of stadiums and sporting events attended by mass audiences impressed athletes and international friends.
The Vietnamese delegation came in first, with 205 gold medals, 125 silver medals and 116 bronze medals, making it the event champion for the first time in 19 years. The number of gold medals won by the Vietnamese delegation doubled that of the delegation that ranked second, Thailand. Vietnamese athletes broke SEA Games records in swimming, bike racing, and weightlifting. Both men and women’s football teams won gold medals.
- Vietnam reopens for domestic, international tourism
On March 15, 2022, Vietnam reopened its borders to resume tourism after almost two years. The United Nations World Tourism Organization listed Vietnam among the countries with the most open tourism policies.
The Vietnamese tourism sector has prepared to serve visitors and adapted to post-pandemic changes in demand. LINK
Henig: AMRO revises Việt Nam’s 2023 GDP upward despite regional slowdown
January, 21/2023 – 07:54
In its January update, AMRO estimated ASEAN+3 growth for 2023 at 4.3 per cent, down from the 4.6 growth in the previous projection.
HÀ NỘI — Việt Nam’s GDP growth in 2023 has been adjusted upward to 6.8 per cent in the ASEAN+3 Macroeconomic Research Office (AMRO)’s January Update, up from 6.5 per cent in its October report.
This is in contrast to its downward projection for most economies in ASEAN+3.
In its January update, AMRO estimated ASEAN+3 growth for 2023 at 4.3 per cent, down from the 4.6 growth in the previous projection. The region’s growth in 2022 was also revised down from 3.7 per cent to 3.3 per cent. The downward projection is mainly due to the continuing weakness of Plus-3 economies, especially China, where growth has become much weaker.
China’s 2022 growth was estimated at 3 per cent and is forecast to grow by 5 per cent in 2023 (down from the 5.3 per cent in October projection).
Việt Nam’s economy meanwhile was projected to expand 8 per cent in 2022.
The 2023 growth outlook for ASEAN is forecast down from 4.9 per cent to 4.8 per cent, a slowdown compared to the 5.6 per cent growth of 2022.
According to AMRO, the drag on economic activity from aggressive monetary policy tightening in the United States and the Eurozone will be felt more fully this year, translating to softer export orders for the ASEAN+3.
However, the ongoing resumption of tourism — especially with the return of Chinese tourists — will provide a much-needed boost to growth.
“With recession risks still haunting the United States and Europe, China’s economic reopening cannot come at a better time for the region,” said AMRO Chief Economist Hoe Ee Khor. “China’s stronger economy will support regional activity while the border reopening will boost intraregional tourism.”
China’s economy is expected to rebound strongly, reflecting the removal of containment measures and reopening of its economy.
Inflation is moderating across ASEAN+3, tempered by sustained policy tightening by central banks and easing global supply chain bottlenecks. Oil prices have reverted to almost pre-pandemic levels, reflecting weaker global demand. Prices of key agricultural commodities — although remaining relatively high due to the prolonged war in Ukraine — have fallen from their 2022 peaks.
Việt Nam’s inflation is predicted to come in at 3 per cent in 2023 (down from 3.2 per cent in the previous forecast). Inflation for the ASEAN+3 region was revised down from 6.3 per cent in 2022 to 4.5 per cent in 2023, and for ASEAN at 5.4 per cent in 2023 from 7.7 per cent in 2022.
— VNS LINK
Henig: Đà Nẵng to build duty-free zone
January, 21/2023 – 09:36
Đà Nẵng’s people’s committee has submitted a plan for a duty-free zone.
ĐÀ NẴNG – Đà Nẵng’s people’s committee has submitted a plan for a duty-free zone.
The area will cover 151ha at the end of Bà Nà-Suối Mơ Road – 30km southwest of the centre and near the Bà Nà Hills resort.
The city’s planning and investment department said the zone, which was sent to the ministry of planning and investment for review, would include a trade complex, with entertainment sites, duty-free shops, a logistics hub, warehouses, healthcare services, an R&D centre, international education centre, medical school and exhibition centre.
It said the project would be completed by 2027.
The department said the free-duty zone would attract investors with land-rent exemptions for three years of construction, and another 11 years land-rent free in the operation of investment projects.
Investors would also enjoy a 10 per cent tax rate for 15 years, a four-year tax exemption and a 50 per cent cut in income tax for the following nine years.
Despite ranking top in the Provincial Sustainable Development Index in 2021, Đà Nẵng is still seeking economic growth and investment in the post-COVID-19 period as the city’s key tourism industry has not yet fully recovered.
The city said the zone would be a magnet for global trade and service providers and developers.
The first downtown duty-free shop was launched at the beach-front Crowne Plaza Đà Nẵng resort in Ngũ Hành Sơn District at the end of last year.
The city plans to raise more than VNĐ7.9 trillion ( $316 million) for public investment projects in 2023.
— VNS LINK
Henig: Developing mechanical industry top priority for VN
January, 20/2023 – 14:43
Developing the country’s mechanical industry sector is a top priority for Việt Nam in the coming decades, said industry insiders and experts.
HÀ NỘI Developing the country’s mechanical industry sector is a top priority for Việt Nam in the coming decades, said industry insiders and experts.
While the sector’s technical capacity has made leaps and bounds in recent years, gradually becoming a major supplier for highly advanced domestic industries, a key issue remained as it has not been able to utilise economies of scale to bring down costs and further integrate into the global supply chain.
Đỗ Quang Hòa, leader of a mechanic team in one of many factories located in the northern industrial hub of Bắc Ninh Province said his company’s biggest fear is not having enough work.
It usually takes a huge amount of investment to build a factory, set up machines, and train skilled mechanics, he said. Not having enough work makes everything expensive for the company and hurts its ability to compete in the market.
In addition, small and medium-sized companies such as Hòa’s were almost entirely dependent on larger companies. It has resulted, according to him, in mechanical firms willing to sell at lower-than-cost prices just to maintain production.
He said it’s likely the single most important hurdle to overcome for hundreds of mechanical companies in Việt Nam, holding them back from reaching their full potential.
Hòa’s opinions echoed a report on the sector by the Ministry of Industry and Trade last year, in which the ministry highlighted major barriers to overcome for mechanical firms including higher set-up costs, longer cashflow cycles, advanced technologies, and very high cost of training.
In addition, the sector’s products were typically difficult to sell compared to consumer products. The difficult environment resulted in just a handful of Vietnamese brands, which were mostly small-to-medium in size, unable to compete with larger international brands even with home-ground advantages.
The ministry said the sector’s major weaknesses were subpar product quality and a lack of core technologies. In the absence of large mechanical firms, capable of leading and improving the industry’s standards, Vietnamese firms have been falling behind in the research and development game, leaving them entirely dependent on foreign inventions and technologies.
According to the ministry, the country’s domestic mechanical firms only accounted for 32 per cent of Việt Nam’s market share. In addition, they accounted for even less share in the sector’s output value at just 18 per cent and declining by the year, showing major shortcomings and limitations in their operations.
To add insult to injury, the government has been slow, or inefficient, in implementing support policies to speed up the industry’s growth, according to the Vietnam Association of Mechanical Industry (VAMI).
VAMI urged the government to play a more active role in supporting Vietnamese firms including lowering the barrier of entry to participate in domestic projects and setting a quota for made-in-Vietnam products, to be used in such projects.
“We have observed a lack of collaboration and connection among governmental ministries, science and technology institutes, and universities in training a skilled workforce for the sector.” said a spokesperson from VAMI.
The association said while many State-owned companies enjoy key advantages such as infrastructure, financial capital and skilled workers, management has often been found inadequate, causing waste and inefficiencies.
Meanwhile, private-sector companies lacked a clear development path and often failed to communicate or collaborate with their peers, leading to several firms investing in producing the same products, with little added value to compete with imported rivals.
Huỳnh Quang Nhung, deputy director-general of THACO Industries, one of the country’s leading mechanical companies, said most Vietnamese firms have not met the standards to supply parts to major manufacturers operating in Việt Nam.
“Our approach to solving this issue is to actively seek capable partners, which allows us to not have to invest in parts they can already make. Our job is to build a strong brand, find new markets and come back to work together with them to grow.” Nhung said.