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News Bulletin 55 - Week 3 March, 2021
There was interesting reporting of economic numbers last week in Vietnam that showed Vietnam's resiliency during Covid-19. Foreign directed enterprises collectively had usd$5.5 billion in trade surplus during the first two months of the year, with exports exceeding usd$37 billion. Vietnam's trade surplus was lead in most part by foreign invested enterprises, a figure that belies Vietnam's dependence on FIEs and an unbalance that the Vietnamese government wants to address.
In regulatory news, with the recent draft circular to guide the implementation of Decree 126, which provides guidance for the application of the Law on Tax Administration, the Vietnamese authorities are requiring banks and payment intermediary service companies to withhold and pay tax from the accounts of e-commerce foreign contractors who do not register as a taxpayer in Vietnam. Bank are understandably wary of this measure as it caused concerns over overload and risky transactions at local lenders.
The past week spotlight
Deputy Minister: UKVFTA to officially enter into force on May 1
The Vietnamese Government has issued a resolution approving the UK-Viet Nam Free Trade Agreement (UKVFTA) and will complete procedures this month to officially bring it into force on May 1, Deputy Minister of Industry and Trade Đặng Hoàng An has said.
During phone talks with Minister of State for Trade Policy Greg Hands earlier this week, An said the UKVFTA temporarily took effect from January 1 to ensure undisrupted trade between Việt Nam and the UK.
Let’s look at some other related financial and business news during the past week:
1. Vietnamese banks concerned as mandate forces withholding of tax money from client accounts
In a bid to collect due tax from foreign service providers, Vietnamese authorities are requiring banks and payment intermediary service companies to withhold and pay tax from the accounts of e-commerce foreign contractors who do not register as a taxpayer in Vietnam, raising concerns over overload and risky transactions at local lenders.
2. VinFast, Foxconn discuss partnership for electric car production
Automaker VinFast and Taiwan’s Foxconn are discussing a partnership instead after the latter sought to buy the Vietnamese company’s electric vehicle production line.
3. FIEs retain pole position in bolstering trade surplus
While many developed countries have been struggling with the pandemic, Vietnam has maintained a trade surplus of nearly $1.29 billion in the first two months of 2021. However, a large portion of this relies on foreign-invested enterprises, a fact that government officials and economists want to balance with their domestic counterparts.
4. Nearly half of Vietnamese fear job losses due to automation
Forty five percent of Vietnamese are worried about losing their jobs to machines in future, a survey has found.
Most respondents, 83 percent, think technology would change their jobs in the next 3-5 years, and 90 percent think that would happen in the next 6-10 years, according to the survey by global accounting giant PwC, which polled over 1,100 people in November and December last year.
5. Alibaba has major ambitions for Vietnamese businesses
Chinese e-commerce giant Alibaba wants to have over 10,000 Vietnamese small and medium-sized enterprises selling on its platform by 2025.
6. FDI firms enjoy US$5.5 billion in trade surplus in two months
Foreign direct investment (FDI) firms’ import-export value reached US$68.52 billion in the first two months of 2021, a surge of 31.5 per cent from the same period last year, according to the General Department of Vietnam Customs.
7. Moody's affirms Vietnam positive move in fiscal vigour
Moody’s Investors Service (Moody's) has affirmed Vietnam’s long-term credit rating at Ba3 and raised its outlook for the country to "positive".
8. HCMC eyes spot as Southeast Asia startup hub
HCMC has approved a plan to foster 1,000 startup projects by 2025 as part of efforts to become a Southeast Asian innovation hub.
It plans to enable 3,000 businesses to improve their innovation capacity and help 100 access venture capital.
9. Vietnam speeds up development of supporting industries
The Ministry of Industry and Trade (MoIT) will pay greater attention this year to the implementation of projects manufacturing products in supporting industries, as many opportunities have appeared for Vietnam to bolster production and exports.
10. Criteria for identifying high-tech enterprises set from April
The prime minister issued Decision No.10/2021/QD-TTg providing criteria for identifying high-tech enterprises, effective from April 30.
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Jack Nguyen Partner - Business Development - Ho Chi Minh City
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