News Bulletin 05 - Week 3 March, 2020
As Vietnam continues to deal with the economic impact of Covid-19, other business and economic news other economic and business news are also making headlines. This week's bulletin includes Vietnam jumping 23 places in the economic freedom index and the changes in roadmap for adopting IFRS in Vietnam as Ministry makes adopting the international accounting standards compulsory after 2025.
Mazars Vietnam summarized some of the lastest news below to see extensively Vietnam economic and business situation last week:
1. Việt Nam jumps 23 places in economic freedom index
Việt Nam jumped 23 places from last year to reach 58.8 points, ranking 105th place in the economic freedom index this year.
The country’s overall score has increased by 3.5 points due to a dramatic gain in fiscal health. Việt Nam is ranked 21st among 42 countries in the Asia–Pacific region, and its overall score is slightly below the regional and world averages.
2. Vietnam cuts rates to boost lending amid coronavirus carnage
Vietnam’s central bank has lowered its policy rates by 0.25-1 percentage point to support businesses hit by the coronavirus pandemic.
The refinance rate has been cut from 6 percent to 5 percent and the discount rate from 4 percent to 3.5 percent, the State Bank of Vietnam (SBV) said in a statement.
3. Electronics, seafood and garment industries to benefit the most from
Vietnam is the second country in Southeast Asia, following Singapore, that has signed an FTA with the EU. The European Parliament (EP) on February 12 ratified the EU-Vietnam FTA (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA).
According to VNDIRECT Securities, the tariff cuts will create a competitive edge for Vietnam’s exports over other rivals such as China and ASEAN member countries. Vietnam’s footwear products, for example, will enjoy tariffs which are 3.5-4.2 percent lower than Chinese when the tariff is cut to zero percent after three to seven years.
4. Ministry tightens corporate bond issuances to prevent risks
The corporate bond market had seen exponential growth in recent years as banking credit for several sectors was narrowed, forcing firms to shift to bond issuance to raise capital, Nguyễn Khắc Quốc Bảo, head of the Financial and Bank Department at the HCM City Economics University, told Thời báo Kinh doanh (Business Times).
5. Public capital disbursement improves in first two months
Almost 34.75 trillion VND (1.49 billion USD) of public investment capital was disbursed in the first two months of 2020, equivalent to 7.38 percent of the year’s plan and nearly doubling the value and progress in the same period last year.
6. Central Vietnam seeks solutions for large-scale projects across sectors
Local authorities in the central provinces are doing their utmost to break impasses as a raft of projects in the region are behind schedule or in danger of having their plans crossed due to diverse problems of land clearance and investment resources.
7. EVFTA expected to create great pressure on domestic logistics firms
The expected execution of the EU-Vietnam Free Trade Agreement in 2020 will create great pressure on Vietnamese logistics businesses, insiders said.
When the deal comes into effect, it would open the door wide to EU logistics service providers to enter Vietnam, and provide protection for them. Meanwhile, the domestic logistics firms have limited competitive capacity.
8. Ministry makes int’l accounting rules compulsory after 2025
The Ministry of Finance has issued a decision regulating the roadmap for the application of International Financial Reporting Standards (IFRS), replacing the current Vietnamese accounting standards (VAS).
Under the Decision 345/QD-BTC on the development of plans, roadmaps and support the application of IFRS, the roadmap for adopting IFRS in Vietnam would be divided into phases – from 2022 to 2025 and after 2025.
9. Banks lower interest rates following SBV’s policy rate cut
By March 17 noon, most of the commercial banks in Vietnam had lowered their interest rates on savings accounts with terms of less than 6 months after the State Bank of Vietnam (SBV) announced its policy rate cut a day earlier.
10. ECB launches emergency €750bn coronavirus package
The European Central Bank (ECB) has launched an emergency €750bn ($820bn; £700bn) package to ease the impact of the coronavirus pandemic.
It will buy government and company debt across the eurozone, including that of troubled Greece and Italy.