News Bulletin 43 - Week 3 December, 2020

A strong response to the coronavirus pandemic, surging exports and healthy public spending have helped Vietnam buck a global recession in 2020 and fast-track its recovery. However, the pain is not over for some sectors such as tourism and aviation industry, the government still takes measures to support economic recovery from Covid-19 impacts as soon as possible.

It’s noticeable that The Ministry of Finance has issued a new circular regulating companies’ information disclosure activities, which will take effect in January.

The past week spotlight

Vietnam, UK conclude bilateral trade pact negotiations

Numbered 96/2020/TT-BTC, it will replace Circular 155/2015/TT-BTC on January 1, 2021.

The previous document was released on October 6, 2015 instructing companies to publish their business information.

Subjects of the new circular include public company, bond issuer, initial public offering (IPO) issuer, bond-listed agency, investment fund, and Vietnam-based office of overseas securities firm/investment fund.

Under Circular 96/2020/TT-BTC, the proposal of the general shareholders’ meeting must be posted on the websites of the stock exchanges, the State Securities Commission and the company at least 21 days before the meeting.

See full details here

Let’s look at some other related financial and business news during the past week:

1. Vietnam, Indonesia target US$10-billion bilateral trade turnover in 2021

In a context of strong bilateral relations, Vietnam-Indonesia trade turnover exceeded US$9 billion in 2020 and could reach the US$10-billion mark in 2021.

Secretary of the Hanoi Party Committee Vuong Dinh Hue share his view in a meeting with the out-going Indonesian Ambassador Ibnu Hadi who came to bid farewell.

“Hanoi and Jakarta, the two capital cities of Vietnam and Indonesia, have contributed a significant part to the Vietnam-Indonesia relations,” he noted.

Indonesia is one of the countries with the highest number of tourists coming to Hanoi, while many projects from Indonesian investors are operating efficiently in Vietnam in general, and in Hanoi in particular, Mr. Hue said.

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2. Tax and fiscal support in response to coronavirus crisis

The Ministry of Finance (MoF) is committed to further pushing administrative reform and addressing existing problems for the business community, providing them with timely support in terms of taxes and fees to overcome the Covid-19 crisis.

The information was revealed at a conference discussing fiscal policies to support enterprises amid the Covid-19 pandemic on December 18.

“For the time being, the MoF is considering to extend validity period of existing supporting programs already in place,” said Le Minh Khiem from the MoF’s Tax Policy Department, referring to a 30% cut in environmental protection tax for jet fuel in 2021 to support the aviation industry; delaying the payment of value-added tax, income tax and land rental fees for enterprises and business households; waiving import duty for health equipment and gears to support the Covid-19 fight, among others.

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3. Vietnam PM rejects claim of currency manipulation for unfair trade gains

Vietnam’s main objective in managing its monetary policy is to stabilize macro-economic conditions, not with the intention of gaining unfair trade gains.

Prime Minister Nguyen Xuan Phuc stressed the government stance in a meeting on December 18 in response to the US Treasury Department’s decision labelling Vietnam and Switzerland as currency manipulators.

PM Phuc's statement has previously been mentioned by both the State Bank of Vietnam (SBV), the country’s central bank, and the Ministry of Foreign Affairs on December 17.

Under the SBV’s explanation, Vietnam’s trade and current account balances favorable to Vietnam with surpluses with the US are “result of factors related to the characteristics of the Vietnamese economy.”

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4. Vietnam finance ministry releases state budget estimate for 2021

The Ministry of Finance has made public detailed figures in the state budget estimate for 2021, indicating a fiscal deficit of VND343.67 trillion (US$14.82 billion) for the year, equivalent to 4% of GDP, down from an estimated deficit of 4.99. – 5.59% in 2020 (equivalent to VND319.5 – 328 trillion (US$13.78 – 14.15 billion).

Under the budget plan, Vietnam’s state budget revenue next year is estimated at VND1,343 trillion (US$58 billion) and expenditure VND1,687 trillion (US$72.78 billion). The government is set to borrow VND608.56 trillion (US$26.3 billion).

The release of these figures came following the National Assembly’s decision to approve the state budget estimate in 2021 last month, but also a key step in promoting transparency and publicity of Vietnam’s state budget.

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5. World’s largest trade accord heightens interest in Vietnam

Vietnam’s southern province of Binh Phuoc is going to welcome fresh investment of $230 million from Indonesian-based group Japfa Comfeed Vietnam. The move, to be implemented in two phases over the next four years, is helping to demonstrate the company’s ambition to further boost its footprint in the Southeast Asian nation.

While Indonesia’s investment in Vietnam remains modest, reaching around $10 million between January and October and an accumulated $608.1 million as of November 20, Japfa Comfeed’s new investment is expected to change this picture soon.

See full details here

6. Japan supports firms engaging in smart city building in Vietnam

The Japanese government will set up a fund worth JPY250 billion ($2.4 billion) to support Japanese companies' "smart-city" projects and to help further decarbonisation measures in Vietnam and other Southeast Asian nations, reported the Nikkei Asia.

The fund will consist of some 50 billionJPY from the Japan Overseas Infrastructure Investment Corporation for Transportand Urban Development (JOIN), a government fund for infrastructure development,and a line of credit worth 200 billion JPY from the Japan Bank forInternational Cooperation (JBIC).

The government will encourage Japanesecompanies to participate in projects in 26 cities in 10 member countries of theAssociation of Southeast Asian Nations, including Hanoi, Ho Chi Minh City,Jakarta, Bangkok, Singapore and Kuala Lumpur.

See full details here

7. RoK contributes more than half of FDI in education in Vietnam

The Republic of Korea (RoK) poured about 8.2 million USD into Vietnam’s education sector during the first 11 months of this year, accounting for 57 percent of the country’s total FDI in the field.

One-third of the total of 112 foreign investors who contributed capital and purchased shares in educational projects this year were also from the RoK.

Visang Education Inc. invested 3.34 million USD in its subsidiary in Vietnam, Visang Education Vietnam, making the RoK-based group a leader in FDI in the country’s education sector.

Le Khac Anh, head of Visang Education Vietnam’s marketing department, said there is plenty of space for the company to expand its services in the country, as local demand for Korean language courses have been on the rise in recent years.

See full details here

8. Rice exporters have bumper year, VN becomes No 1 in the world

The year 2020 has been a challenging year for many business fields, but not for rice production and exports. Vietnam has surpassed India and Thailand in terms of rice export price.

In the beginning of 2020, Vo Tong Xuan, a respected rice expert, predicted that Vietnam would have a prosperous year in rice exports with increases in both export volume and price.

At that time, chair of the Thailand Rice Exporters Association Charoen Laothamatat shared the same view, saying that Vietnam may surpass Thailand in rice exports in the context of stiff competition in the market. The production cost in Thailand has become increasingly high, the baht is fluctuating, and the production is threatened by drought.

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9. Fiscal deficit to stay at 4 pct. of GDP next year: Finance Ministry

The Ministry of Finance has announced the State budget estimates for 2021, which target over VND1.34 quadrillion ($58.2 billion) in State budget revenue.

Of the amount, more than 1.13 quadrillion VND is expected to be sourced from domestic collections, 23.2 trillion VND from sales of crude oil, 178.5 trillion VND from imports and exports, and 8.13 trillion VND from foreign financial assistance, according to the ministry’s newly-released decision.

State budget spending next year is projected to near 1.69 quadrillion VND, including more than 1.03 quadrillion VND in recurrent expenditures, 477.3 trillion VND for development investment, 110.06 trillion VND in interest payments, 1.6 trillion VND in aid disbursement, 25.5 trillion VND on wage reform and payroll reductions, and 34.5 trillion VND for State budget reserves.

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10. Vietnam gives second electricity discount as Covid-19 relief

The government has cut electricity prices by 10 percent for the year’s last quarter to support economic recovery from Covid-19 impacts.

The discount applies to businesses and households for a maximum of 300 kilowatt-hour consumption per month from October to December. Consumption above this limit will attract normal prices.

Covid-19 quarantine centers will get a 100 percent discount on their electricity bills, while medical facilities which test and treat Covid-19 patients can enjoy get a 20 percent discount.

See full details here