Industry and Trade News Review dated 31 May 2018
A. POLICY AND STATE MANAGEMENT
- Business Conditions Deregulation: The Ministry of Industry and Trade (MOIT) has successfully cut 675 business conditions, whereas other ministries and agencies are still in the review process regarding the government’s directive on administrative reform.
- Public Land Mismanagement: The Government Inspectorate has recommended the recovery of nearly 5,000 square metres of “golden land” at 8-12 Le Duan, Ho Chi Minh City, due to violations in land use rights and auctioning. This site was rented by four companies under the MOIT, and direct responsibility for the irregularities has been attributed to former city official Nguyen Thanh Tai and related departments.
- Multi-Level Marketing (MLM) Regulations: Decree No. 40/2018/NĐ-CP came into effect on 2 May 2018, introducing stricter management for MLM businesses, including a requirement to increase deposits to 10 billion VND.
- Distribution Industry Decree Concerns: The Vietnam Chamber of Commerce and Industry (VCCI) has criticised the MOIT’s draft decree on the distribution industry, arguing it is too broad, intrusive, and may create unreasonable business conditions.
B. ENERGY AND HEAVY INDUSTRY
- Solar Power Oversupply: Investors and provinces have proposed approximately 150 solar projects with a combined capacity of nearly 16,000 MWp, vastly exceeding the government’s target of 850 MW by 2020. The MOIT has already approved over 3,000 MWp for operation by June 2019.
- Major Project Updates:
- Song Hau 1 Thermal Power Plant: Inspections at this PVN-invested project revealed significant violations and capital overruns amounting to over 10.4 trillion VND.
- PVTEX Dinh Vu: The polyester plant has restarted a portion of its workshop after a long hiatus and secured product offtake contracts.
- Formosa Ha Tinh: Blast Furnace No. 2 is operating stably, having produced over 75,000 tonnes of liquid iron in its first two weeks.
- Automotive Sector: Thaco reported an 18% decline in after-tax profit for Q1 despite a 4% revenue increase. Meanwhile, the Ministry of Finance has proposed reducing the special consumption tax on electric vehicles to 0-10%.
- Corporate Personnel: Significant leadership changes are expected at Habeco, with a new Chairman likely to be appointed, while Petrolimex Aviation has appointed a new General Director.
C. EXPORT-IMPORT AND FOREIGN INVESTMENT
- Export Growth: Total exports in the first five months of 2018 are estimated at 93.1 billion USD, a 15.8% increase year-on-year. Seafood exports rose by nearly 10% to 3.12 billion USD.
- Trade Defence: The sector faces new challenges as Canada has launched an anti-dumping investigation into cold-rolled steel from Vietnam.
- Foreign Direct Investment (FDI): Registered FDI in the first five months reached only 9.9 billion USD, equivalent to 81% of the figure from the same period in 2017, due to a lack of large-scale projects.
- Import Trends: Car imports remain low, with only about 2,200 completely built-up (CBU) units imported in May.
D. DOMESTIC MARKET AND AGRICULTURE
- Livestock Prices: Pork prices have recovered strongly to approximately 45,000–50,000 VND/kg after a long slump; authorities confirmed there is no “reverse import” of pigs from China.
- Agricultural Commodities:
- Price Drops: Farmers are facing difficulties as prices for pepper, coffee, sugar, and chillies have fallen significantly. Sugar inventories have reached nearly 681,000 tonnes.
- Lychees: Early harvest lychees have seen prices drop to half of last year’s levels because Chinese traders have not arrived to purchase them.
- Destructive Trading: Authorities in the south have warned against Chinese traders buying pepper roots, prompting farmers to destroy vines for short-term gain.
- Rice Reserve Bidding: A bid to supply 9,000 tonnes of rice for national reserves in Hanoi raised concerns as the winning bids matched the ceiling price exactly, resulting in “zero savings” for the state budget.
