Vietnam Industry and Trade Press Review July 7, 2017
1. Energy Policy and Environmental Sustainability
- Controversy over Coal Power: Economic expert Pham Chi Lan has criticized Vietnam’s “eagerness” for coal power, which currently accounts for 45% of the power plan. She argues that this goes against global trends toward renewable energy and warns of severe environmental consequences similar to the 2016 Formosa disaster,.
- Waste Management: The government is pushing to convert ash and slag from thermal power plants into construction materials to save land and protect the environment. The goal is that by 2020, the amount of stored ash/slag at plants must be less than the total output of two production years.
- Recycling Paradox: While many plants struggle with waste, businesses are actually competing to buy ash and slag from the Haiphong Thermal Power Plant.
2. Macroeconomic Trends and Indicators
- Economic Forecast: Experts from MBS predict the economy will “peak” in 2018. Inflation remains stable, with the June CPI rising 4.1% year-on-year.
- Trade Balance: In the first half of 2017, Vietnam returned to a trade deficit of $2.7 billion, with exports reaching $97.8 billion and imports at $100.5 billion.
- Financial Burden: Vietnamese enterprises are currently paying approximately 200,000 billion VND in bank interest annually.
3. Petroleum and Market Management
- Biofuel Transition: The government is determined to “eliminate” RON 92 gasoline and replace it with E5 biofuel nationwide by January 1, 2018. However, retailers report difficulties selling E5, often having to offer extra discounts to subsidiaries to move stock.
- Tax Transparency: Ho Chi Minh City has approved a plan to seal and stamp fuel meters at over 530 gas stations to prevent tax evasion and invoice fraud.
- Global Impact: World oil prices saw a slight increase (WTI reaching $45.52/barrel) following news that U.S. strategic petroleum reserves dropped to their lowest level in over 12 years.
4. Industry and Manufacturing
- The “Coal Paradox”: Domestic coal inventories are high, yet Vietnam continues to import large quantities of coal for industrial use. TKV (Vietnam National Coal-Mineral Industries Group) has even threatened to cut 4,000 jobs if EVN (Electricity Vietnam) reduces its coal purchases.
- Steel and Automotive: Hoa Phat Steel saw a 33% increase in consumption, exporting heavily to the US and Australia. Meanwhile, the automobile market grew by 5% in June following widespread price reductions.
5. Import-Export and International Integration
- Export Targets: The Ministry of Industry and Trade (MoIT) has raised its 2017 export forecast to $195 billion (a 10-11% increase), far exceeding the initial government target of 6-7%.
- Global Trade Barriers:
- US Tax Reform: The proposed “Border Adjustment Tax” (BAT) in the US could negatively impact Vietnamese exports of wood, seafood, and tires.
- Agricultural Challenges: Vietnamese shrimp exports are facing stricter disease-control regulations from major markets like Australia and South Korea.
- Strategic Partnerships: During a recent forum in Berlin, Vietnam and Germany signed 28 cooperation documents valued at over 1.5 billion euros.
6. Domestic Market and Consumer Protection
- Agricultural Volatility:
- Lychee: Prices in Bac Giang plummeted from 55,000 VND/kg to 18,000–20,000 VND/kg after Chinese traders stopped purchasing.
- Fruit Prices: Dragon fruit prices are rising, much to the delight of farmers, while rice prices continue to decline.
- Consumer Scams: Authorities have warned the public against “power-saving devices” sold online, labeling them as scams.
- Counterfeit and Smuggling: There is a surge of Chinese cherries being sold as premium goods at low prices. Additionally, the Ministry of Finance is considering auctioning confiscated smuggled cigarettes that still meet quality standards.
