Although the Vietnamese economy has reopened in practically all sectors, the true impact of Covid-19 on the economy is still being assessed and the complete picture will not be known for a while. Meanwhile the Vietnamese government is doing all it can to help enterprises get back to normal with the resumption of key economic sectors' activities such as manufacturing, services and retail being key industries. Noticeably, during the past week, proposal from the State President for ratifying the EU-Vietnam Investment Protection Agreement (EVIPA) was submitted to the National Assembly (NA), the ratification of which will replace the 21 existing investment encouragement and protection agreements between Vietnam and EU member countries.
The past week spotlight
Proposal for ratification of EVIPA submitted to National Assembly
Along with the EU-Vietnam Free Trade Agreement (EVFTA), the EVIPA is expected to further affirm Vietnam’s important role and geopolitical position in Southeast Asia and Asia-Pacific at large. Illustration Photo
Vice President Dang Thi Ngoc Thinh presented a proposal from the State President to the National Assembly (NA) for ratifying the EU-Vietnam Investment Protection Agreement (EVIPA), at the ninth session of the 14th NA in Hanoi on May 20.
The Vice President said that with four chapters, 92 articles, and 13 annexes, the pact will replace 21 existing investment encouragement and protection agreements between Vietnam and EU member countries.
Along with the EU-Vietnam Free Trade Agreement (EVFTA), the EVIPA is expected to further affirm Vietnam’s important role and geopolitical position in Southeast Asia and Asia-Pacific at large.
Let’s look at some other related financial and business news during the past week:
1. New decree clears up points of law on economic concentration
The method of determination of the relevant market and market share prescribed in Decree 35 is similar to the superseded decree. In particular, the relevant market shall be determined based on the relevant product market and relevant geographical market; and the market share of an enterprise shall be determined by calculating turnover from sales, turnover of inward purchases, or market share of a group of affiliated enterprises.
2. Protectionism no good for economies amid COVID-19: APEC expert
Some developing countries in Asia, including Vietnam, could still grow amid the COVID-19 pandemic due to an increase in domestic demands when the manufacturing sector recovers.
That's the verdict of Rebecca Fatima Sta Maria, Executive Director of the APEC Secretariat who was speaking Thursday in a virtual briefing on the pandemic impact co-hosted by World Economic Forum (WEF) and World Health Organisation (WHO).
3. Government proposes lower growth targets after Covid-19 impacts
Vietnam's government will submit lower economic growth targets to the parliament, given the disruption of trade and business activities by the coronavirus pandemic. The government has earlier mentioned revised GDP growth targets of 4.5 percent or 5.4 percent this year, depending on the global situation.
4. Making preparations for fresh free trade climate
The upcoming adoption by the National Assembly of an International Labour Organization convention will make it more favourable for Vietnam to effectively implement new-generation free trade agreements, helping the country’s goods and services to access to more overseas markets.
5. US launches circumvention probe into Vietnam steel products sourced from China
The U.S. is investigating if Chinese steel sheets and strips were completed and exported from Vietnam to circumvent its duties.
Its Department of Commerce suspects that Vietnamese steel producers imported stainless flat-rolled steel from China, processed them and exported sheets and strips to the U.S., according to a release by the Trade Remedies Authority of Vietnam.
6. Vietnam raises monthly taxable personal income threshold by 22%
With the new threshold in place, set to take effect from January 1, 2020 retrospectively, there would be more than 1 million people whose incomes are not taxable.
The Standing Committee of the National Assembly (NA) has approved the government’s proposal to raise the personal income tax threshold from VND9 million (US$389) per month to VND11 million (US$475), according to Nguyen Truong Giang, deputy chairman of the NA’s Legal Committee and deputy general secretary of the NA.
7. Foreign investors call for greater flexibility in Vietnam's upcoming PPP law
A lack of a unified legal framework governing PPP is the main factor that Vietnam’s infrastructure sector growth potential is capped at 6.1% per year through 2029.
There may be concern that an open and flexible public-private partnership (PPP) law may lead to policy abuses, but on the contrast, limited investor protection to a greater extent can be disincentive to “good investors”, according to Toru Aguin, chief representative of Japan Bank for International Cooperation (JBIC) in Vietnam.
Overall, Vietnam is ranked 77 out of 117 countries and territories, up 14 places against 2017.
Vietnam’s budget transparency score in 2019 significantly increased to 38 out of the maximum of 100, 23 points higher than the previous assessment in 2017, according to the Open Budget Survey (OBS). The country scored 11 out of 100 in public participation and 74 in budget oversight, four and two points higher than in 2017, respectively.
9. Decisive reforms needed for Vietnam to realize full benefits of EVFTA: WB
The EU-Vietnam trade deal is the largest new-generation free trade agreement in Vietnam’s history in terms of direct benefits.
Vietnam needs to fill major legal gaps and address key implementation issues to reap the full benefits of the European Union Vietnam Free Trade Agreement (EVFTA), expected to be ratified by Vietnam’s National Assembly in its May meeting, according to a new World Bank report.
10. Cold shoulder from business owners over M&A delay plan
Mergers and acquisitions in the country could be delayed in the short term if a proposal by the Vietnam Chamber of Commerce and Industry gets approved, as overseas groups seek to take advantage of the current global uncertainties.
[…] The Vietnam Chamber of Commerce and Industry (VCCI) proposed to delay M&A deals for the duration of the current coronavirus pandemic in order to avoid leaving local businesses vulnerable to hostile takeover bids from foreign investors. The move follows recent movements from the European Union and other countries to take action to protect domestic companies by increasing scrutiny of overseas investments during the global health crisis.
Mazars Vietnam together with MoF, Smart Train and ACCA Vietnam will be hosting a webinar named “How to apply IFRS and tips for successful conversion”. This webinar is designed with the purpose of helping a wide range of entities in IFRS conversion.
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