Vietnam Industry and Trade News Bulletin for January 13, 2016

A. GENERAL ECONOMIC HIGHLIGHTS

1. GDP Data Discrepancy: GSO Affirms Accuracy Facing public concern over a 300,000 billion VND discrepancy between GDP figures released by the Ministry of Finance (over 4.4 quadrillion VND) and the General Statistics Office (4.1 quadrillion VND), the GSO affirmed its calculation is correct . A GSO official suggested the difference might stem from the Ministry of Finance using a forecast CPI of 2%, whereas the actual CPI was only 0.6% . The Ministry of Finance clarified they used GSO’s preliminary data from August 2015 for budget estimation . Experts warn that if the lower GDP figure is used, the budget deficit would exceed the National Assembly’s target (5.4% vs. 5%) .

2. Top 500 Largest Enterprises in Vietnam Announced The VNR500 ranking for 2015 was announced, featuring top companies like PetroVietnam, Vinamilk, Saigon Co.op, and Viet Tien Garment . A survey in the “White Paper on Vietnam Economy 2016” shows 51.1% of large enterprises assessed their 2015 performance positively . Businesses identified administrative simplification as the top priority to improve competitiveness for TPP integration .

3. FDI Expected to Break Records in 2016 Foreign Direct Investment (FDI) in 2016 is expected to surpass the record $23 billion seen in 2015 . Drivers include a high forecasted GDP growth of 6.6% and the effect of various Free Trade Agreements (FTAs) .

4. Tax Evasion: Businesses Fleeing Registered Addresses At a tax review conference in HCMC, authorities reported a rising trend of businesses dissolving or abandoning their registered addresses while owing taxes . In Phu Nhuan District alone, over 1,250 businesses left their addresses owing 55 billion VND . Debt collection is difficult despite measures like account freezing and invoice invalidation .

5. UK-Vietnam FinTech Cooperation Seven leading UK FinTech companies visited Vietnam to explore opportunities . The UK Ambassador noted that Vietnam’s e-commerce market is attractive with 23 million smartphones, yet e-commerce accounts for only 1% of retail (compared to 8% in China), offering significant growth potential .

6. Banking News: Extended Hours & Remittance Tightening

• Tet Hours: The State Bank of Vietnam (SBV) will extend interbank transaction hours from the 23rd to the 27th of the Lunar New Year and ensure ATM cash supply . No new banknotes under 5,000 VND will be issued .
• Remittance Companies: The SBV issued stricter regulations for establishing remittance subsidiaries. Banks must be profitable for the last 2 years with a bad debt ratio under 3% to set up such companies .

B. INDUSTRY AND TRADE NEWS

I. ENERGY (OIL, GAS & ELECTRICITY)

• Oil Price Impact: With oil prices falling to around $30/barrel, PetroVietnam (PVN) faces reduced efficiency, particularly in exploration . PVN plans to cut costs by 10-20% and focus on processing products like electricity and fertilizer to offset revenue losses .
• Dung Quat Refinery Profit: Despite complaints about difficulty competing with imports due to tax policies, Dung Quat Refinery (BSR) reported a record profit after tax of 5,690 billion VND in 2015, exceeding the plan by 52% . Return on equity reached 20.6% (compared to 0.6% in 2014) .
• Electricity Investment: The National Power Transmission Corporation (EVN NPT) arranged over 14 trillion VND for projects in 2015. Over 5 years, nearly 77.21 trillion VND has been invested in the transmission grid .
• Daily Petrol Price Adjustment Proposed: Deputy Minister of Industry and Trade Do Thang Hai stated the Ministry is considering adjusting petrol prices daily instead of the current 15-day cycle to better track the market .

II. EXPORT – IMPORT

• Textile Exports to US: US consumer habits are shifting to buying close to the season, forcing Vietnamese exporters to shorten delivery times . While 2015 export turnover was $27 billion, 70% belongs to FDI firms. Domestic firms mostly do low-profit processing (CMT), earning only about 2% profit on revenue .
• Trade Deficit with Thailand: In the first 11 months of 2015, Vietnam exported $3 billion to Thailand but imported $10.5 billion . Thai businesses are actively seeking partners in Vietnam via trade fairs .
• Shrimp Market Shrinks: Shrimp exports in 2015 reached nearly $3 billion (down 25%), and the number of export markets dropped from 150 to 92 .

III. DOMESTIC MARKET

• Auto Market Surge: Vietnam’s auto market set a record in 2015 with nearly 245,000 vehicles sold, a 55% increase year-on-year . The market has grown 2.7 times since 2012 .
• Counterfeit Goods Crisis:
  • Hanoi: Police busted a facility producing 15 tons of fake MSG per month and another dealing in fake “Titebond” construction glue .
  • Functional Foods: Market management authorities reported many “imported” functional foods are actually made in China but labeled as US/Europe/Korea origin .
  • Gas: About 30% of gas cylinders in use are fake or smuggled, posing safety risks .
  • Impact: Businesses are “exhausted” fighting fakes; some manufacturers are discouraged and switch to importing cheap Chinese goods to re-label .
• Animal Feed: FDI enterprises are offering high discounts (20-30%) to dominate the market. While owning only 59 of 239 factories, FDI firms hold 65% of the market share .

IV. CONSUMER PROTECTION

• Sweet Potatoes Cleared: The Agri-Food and Veterinary Authority of Singapore confirmed that Vietnamese sweet potatoes are safe, debunking rumors on social media that they were grown in Agent Orange-contaminated areas and turned green when boiled .

V. INTERNATIONAL INTEGRATION

• Hungary & EVFTA: Hungary’s Foreign Minister stated the country will strive to be the first EU member to ratify the Vietnam-EU Free Trade Agreement .
• Trade Defense Awareness: Experts warn that Vietnamese companies are still passive regarding trade defense measures (anti-dumping, safeguards), often ignoring the influx of imported goods (like steel) until it is too late .