Vietnam Industry and Trade News Bulletin for Febuary 5, 2021

A. OUTSTANDING ECONOMIC AND INDUSTRY NEWS

1. Sugar Industry and Trade Defense

• Price and Competition: Vietnamese sugar prices are currently the lowest in the region. There is a sudden surge in imports from Cambodia, Malaysia, and Indonesia, which is suspected to be an evasion of trade defense measures.

• Proposed Solutions: Experts suggest applying anti-dumping and anti-subsidy taxes to create a level playing field for domestic producers and prevent farmers from abandoning their fields due to losses.

2. Petrol Price Stabilization Fund (BOG)

• Operation Principles: The fund is non-profit and managed by head traders through separate bank accounts. It serves solely to stabilize domestic fuel prices under the direction of the Ministry of Industry and Trade.

• Management Thresholds: If the total fund balance across all traders reaches 7,000 billion VND or more, the appropriation of the fund will be suspended.

3. State-Owned Enterprise (SOE) Privatization

• Slow Progress: For the 2016–2020 period, only 28% of the privatization plan was completed (37 out of 128 enterprises).

• Major Delays: Significant delays remain in Hanoi, Ho Chi Minh City, and various ministries, including the Ministry of Industry and Trade and the Ministry of Construction.

4. Investment and Business Climate

• Attracting “Eagles”: Vietnam is positioned as a safe destination for large technology corporations shifting investments due to global political instability. The focus is shifting from quantity (small/medium projects) to quality (high-tech, sustainable, and energy-efficient).

• New Business Growth: In January 2021, approximately 10,100 new enterprises were established, a 21.9% increase year-on-year. Total registered capital added to the economy reached over 395,000 billion VND.

5. Informal Economy Review

• Proposed Adjustments: The Ministry of Finance suggested removing several activities from the “underground economy” list, such as insurance fraud and certain stock/bond violations, because they are governed by criminal law or are outside the ministry’s current jurisdiction.

B. ENERGY AND ENVIRONMENT

1. Oil and Gas Trends

• Global Shift: Japan is exiting upstream oil and gas projects as part of its energy transition, focusing only on LNG for supply security.

• Geopolitical Tensions: The US warned of potential sanctions on the “Nord Stream 2” pipeline project between Russia and Germany to protect European energy security.

• Market Fluctuations: Global crude oil prices continue to rise due to supply cuts from OPEC+ and a decrease in US inventories.

2. Renewable Energy

• Domestic Wind Power: Quang Tri province approved three new wind power projects (Phong Nguyen, Phong Huy, and Lien Lap) with a total investment of 5,800 billion VND.

• International Policy: Germany approved a law to increase the share of renewable energy in the transport sector to 28% by 2030, nearly double the EU target.

3. Hydropower and Agriculture

• Irrigation Support: Hydropower reservoirs have released 4.17 billion m3 of water to ensure gieo cấy (planting) for over 82% of the Winter-Spring crop area in the Northern Delta.

C. IMPORT – EXPORT AND LOGISTICS

1. Trade Performance in January 2021

• Export Boom: Total export turnover reached 27.7 billion USD (+50.5% YoY). Phones and components were the top items, earning 5.8 billion USD (+114.8% YoY) driven by the launch of the Samsung Galaxy S21.

• Import Growth: Import turnover reached 26.4 billion USD (+41% YoY), primarily in electronics, computers, and machinery.

• Trade Balance: Vietnam recorded a trade surplus of 1.3 billion USD in the first month of 2021.

2. Logistics and Supply Chain

• Southern Key Economic Region: Infrastructure bottlenecks remain a major hurdle. There is an urgent need for a strategic vision to connect regional logistics and improve competitiveness.

• Pandemic Adaptation: Businesses are diversifying markets and switching to producing essential goods like masks and protective clothing to maintain exports during COVID-19.

D. TECHNOLOGY, INTEGRATION, AND MARKET MANAGEMENT

1. National Technology Innovation Fund

• New Charter: The Prime Minister issued a new charter for this non-profit state financial fund. It supports businesses in R&D, tech transfer, and decoding technology, operating as a 100% state-owned LLC.

2. Biotechnology Success

• Local Production: Vietnamese scientists successfully produced Lactoferrin (a protein that boosts immunity) from recombinant yeast. This helps reduce reliance on expensive imports for functional foods.

3. International Integration

• FTA Commitments: The EVFTA and RCEP provide mechanisms to remove Technical Barriers to Trade (TBT). Businesses are encouraged to participate in policy-making to turn these commitments into competitive advantages.

• CPTPP News: China is officially studying the requirements to join the CPTPP following the UK’s application.

4. M&A Trends

• Global Surge: Despite the pandemic, global M&A value increased by 94% in late 2020. The technology and telecommunications sectors saw the highest growth.

• Vietnam Outlook: The domestic M&A market is expected to recover strongly in 2021 due to pent-up demand and high interest in digital assets.

5. Market Control and Consumer Protection

• Fake Products: Authorities seized 1 ton of mislabeled functional foods in Hanoi. There is also a warning about the proliferation of fake anti-counterfeit stamps.

• Pork Prices: Pig prices remained stable across three regions (80,000–82,000 VND/kg). Efforts are being made to support farmers in COVID-hit areas like Hai Duong.

E. CORPORATE SOCIAL RESPONSIBILITY (CSR)

• Supporting Workers: Coal mining companies (Than Duong Huy and Than Mong Duong) provided financial support, free Wi-Fi, and Tet gifts for workers in quarantine or those staying back for the holiday due to the pandemic.

• Charity for the Poor: PetroVietnam donated 500 million VND to the poor in Thai Binh. Petrolimex donated 19 tons of rice and Tet gifts to disadvantaged families in Ha Giang’s border districts.