The list of visa-exempt countries should be further expanded so that tourism can quickly recover and improve competitiveness, tourism industry insiders and experts have said.
Vietnam’s restrictive visa policy has impacted international tourist flows to the country, said Luong Hoai Nam, a member of the Vietnam Tourism Advisory Board.
Vietnam should expand the list of visa-exempt countries to as many as Thailand, which grants visa exemptions for tourists from 68 countries, Nam said.
Tourists from all European countries should be allowed visa exemptions, he said at a seminar held by Thanh Nien (Youth) newspaper on March 10 in Ho Chi Minh City.
The period of stay should be extended to 30-45 days from the current 15 days, he said.
Last year, the country received 3.5 million international visitor arrivals, one-third of Thailand’s figure.
It was equal to only one-fifth of the level that Vietnam achieved in 2019, he added.
According to Tran Nguyen, deputy general director of Sun World, entry visa policy is one of the levers to attract tourists and increase competitiveness.
Vietnam grants single entry visa exemptions for tourists from 24 countries, far fewer than other countries.
Vietnam’s most common visa exemption is 15 days, much shorter than that granted to tourists elsewhere in ASEAN.
Malaysia grants visa exemptions for tourists from 162 countries, Singapore 162 countries, the Philippines 157 countries, Japan 68 countries, the Republic of Korea 66 countries, and Thailand 64 countries.
Thailand has extended the period of stay to 45 days from 30 days for tourists from countries entitled to visa exemptions and 30 days from 15 days for those eligible for a visa on arrival.
Taiwan (China) had resumed issuing Kuan Hung visas to Vietnamese tour groups.
Domestic enterprises in tourism and hospitality have been struggling due to a sharp drop in international tourists over one year after the country reopened its international tourism.
The number of visitors to Sun World Ba Na Hills during Tet (Lunar New Year) holiday was half of the level in 2019.
Sun World Phu Quoc saw a decline of 50% in the number of visitors in the fourth quarter last year and the first quarter this year.
Vietnam is falling behind in the competition to attract international tourists partly due to visa policy “bottlenecks”, she added.
Nguyen Thi Anh Hoa, Director of the Ho Chi Minh City Department of Tourism, said the strict visa policy had slowed down international travel.
Relaxed visa policies were urgently needed to increase tourist flows and facilitate the recovery of the tourism industry which is a major contributor to economic growth and employment in the city, Hoa said.
The country has set a target of receiving 8 million foreign tourists this year.
Petrol prices revised up in latest adjustment
Petrol prices increased up to 490 VND per litre in the latest adjustment from 3pm on March 13 by the Ministry of Industry and Trade, and the Ministry of Finance.
The retail prices of RON 95-III and E5 RON 92 were raised by 490 VND and 380 VND respectively to 23,810 VND (1.01 USD) and 22,800 VND per litre.
The price of diesel was increased from 20,250 VND to 20,500 VND per litre and that of kerosene was raised from 20.470 VND to 20,710 per litre.
The price adjustments are now made every 10 days and the latest one should have fallen on March 11 which is Saturday. So, the adjustment was announced two days later on Monday (March 13).
Since the beginning of this year, petrol prices have been revised up five times, down twice and kept unchanged once.
Honda Vietnam’s motorcycle, automobile sales continue to drop in February
Honda Vietnam has reported its fall in motorcycle and automobile sales at 36.8% and 7.3% respectively in February.
That is the second month in a row the company recorded sale falls after seeing a growth of nearly 19% for motorcycles and 62% for the automobile last December.
In February, it sold 140,669 motorcycles, down 36.8% compared to the previous month. Specifically, the sale of Wave Alpha – its best-seller semi-automatic model, decreased by 42.6% compared to that in January.
Similarly, Vision – its best-seller scooter model – also saw a sales decrease of 34.9%, and Winner X clutch 27% compared to the previous month.
Previously, the Vietnam Association of Motorcycle Manufacturers (VAMM) forecasted that the Vietnamese motorcycle market had entered a period of saturation and was shifting from manual transmission motorbikes to automatic ones. Currently, the automatic transmission motorbike lines account for more than 45% of the market share and will be a strongly growing segment soon when Vietnam’s per capita income increases.
In February, Honda Vietnam also exported 23,917 motorcycles.
Meanwhile, the Japanese manufacturer last month sold 1,385 automobiles, down 7.3% from the previous month. Honda City and Honda CR-V continued to be the two best-selling models of Honda Vietnam with 1,235 vehicles, accounting for 89.2% of its total car sales in February.
Vietnamese exporters attend Seafood Expo North America
Seventeen Vietnamese enterprises are participating in the 2023 Seafood Expo North America, which opened at the Boston Convention & Exhibition Centre in Massachusetts state on March 12.
This year’s three-day expo draws the participation of hundreds of aquatic product and seafood exporters from different states of the US, and other countries like Canada, Brazil, Japan, India, Scotland, Ireland, Norway, Spain, and Vietnam.
Vietnamese businesses are showcasing the country’s key products such as tra fish and shrimp which have impressed a lot of visitors.
Talking to the Vietnam News Agency, Ambassador Dang Hoang Giang, Permanent Representative of Vietnam to the United Nations (UN), stressed the bright outlook for the export of Vietnamese seafood and aquatic products to the US in general and North America in particular.
The participation of Vietnamese enterprises in North America’s largest seafood expo shows that Vietnamese products have gained a firm foothold in such a choosy market like North America.
The US is the leading importer of Vietnamese seafood and aquatic products. Last year, the export turnover to this market reached 2.1 billion USD, accounting for 20% of the total value of the country’s seafood and aquatic product exports.
Credit growth slowing down, raising fear of business contraction
Credit growth in the first months of this year slowed significantly due to high interest rates and firms’ poor health, raising concerns about rising bad debts.
Credit growth by the end of February 2023 increased by nearly 0.8%, equal to only one-third of the rate in the same period last year.
However, the low credit growth is not because of banks’ shortage of capital and credit growth quota like at the end of last year.
The banking system’s liquidity is currently in excess with more than 50 trillion VND (2.1 billion USD), higher than the SBV’s mandatory requirements. The credit growth quota of banks is also very abundant in the wake of the State Bank of Vietnam (SBV)’s credit growth quota granting early this month.
SBV Governor Nguyen Thi Hong attributed the slow credit growth to some reasons.
First, she said, the first two months of the year coincided with the Lunar New Year, so capital demand was low during the long holiday.
Secondly, many firms are still affected by the COVID-19 pandemic, thus they are unable to meet the banks’ lending conditions.
Orders at many firms declined, making the demand for loans to fall from last year.
Finally, the difficulty of the real estate market has also caused the loan demand to decline, the Governor said.
In a report sent to the Government, the Ministry of Planning and Investment said the low credit growth showed difficulties in absorbing the capital of firms and the economy.
According to many firms, their orders decreased, so they almost had no demand for loans. Even instead of borrowing more capital, many firms have tried to pay off existing loans to reduce financial pressure.
Most export firms are facing a decrease in orders. High inflation and declining purchasing power in major markets such as the US and the EU directly hurt firms.
A representative of the Vietnam Textile and Apparel Association said the decrease in global purchasing power would likely cause the number of orders of the whole textile and garment industry to decrease by 25-30% in the first quarter of 2023.
The situation is not brighter for firms in the wood and furniture industry. Do Thi Kim Loan, General Director of Sao Nam Trading and Production Company Limited, said orders from her company decreased by 30-35% compared to last year.
Banking expert Can Van Luc told the Viet Nam News that besides decreasing consumer demand, firms are also facing difficulties in accessing capital and high interest rates.
As firms’ health is exhausted, Luc is very concerned about the risk of rising bad debt.
“Currently, the bad debt ratio of the whole banking system is still under control with an on-balance sheet bad debt ratio of 2%,” Luc noted. “However, bad debts can worsen under the context of adverse impacts of the unfavourable conditions post-pandemic while the economy is at risk of a slight recession and the foreign exchange rate is under rising pressure.”
Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said high interest rates are the biggest concern of firms. Therefore, he suggested the SBV offer a more preferential interest rate policy for seafood exporters, who are under great pressure due to high input costs.
Pham The Anh, head of the National Economics University’s Economics Faculty, said many factors would support interest rate reduction in 2023.
Vietnam should accept the devaluation of the Vietnamese dong in the short term to reduce interest rates as high interest rates are more harmful to the economy than the devaluation of the dong, Anh suggested.
The good news for firms is that commercial banks have agreed to further reduce the interest rates by 0.2-0.5 percentage points for 6-12 month deposits since early this week to pave the way for a reduction in lending interest rates.
Currently, the highest deposit interest rate is 9% per year against more than 10% last year.
Measures sought to build high-quality Vietnamese coffee chain
A workshop seeking ways to build a high-quality Vietnamese coffee chain associated with green growth and sustainable development was held in the Central Highlands province of Dak Lak on March 12 within the framework of the eighth Buon Ma Thuot Coffee Festival.
According to a report delivered at the event, coffee is one of Vietnam’s key agricultural products with a combined area of over 710,000 hectares and a total output of 1.8 million tonnes per year. The sector has created jobs and income for around 2 million people.
Vietnam is currently the world’s second largest coffee exporter, after Brazil, and ranks first in terms of Robusta coffee exports, with the export turnover surpassing 4 billion USD las year, accounting for 15% of the world market share. This product has been shipped to at least 85 countries and territories.
However, Vietnamese coffee exported is mainly raw and unprocessed, so the added value is not high, the report said, adding that the production currently focuses on exploiting the potential and productivity of coffee trees to the maximum without paying much attention to green and sustainable development.
Permanent Vice Chairman of the Dak Lak People’s Committee Nguyen Tuan Ha said that the green and sustainable development of high-quality coffee is considered a suitable direction to stimulate and exploit the domestic and foreign coffee markets, thus bringing higher export value and economic benefits to growers.
He stressed the need to develop high-quality coffee, build concentrated raw material areas with certification and traceability, boost value chain-based production linkages, attract investment in deep processing, and finding new markets.
At the workshop, participants shared good practice and proposed measures to develop the high-quality coffee industry in association with green growth and sustainable development.
Foreign delegates also shared information on the demand of the foreign markets, and pointed to opportunities for Vietnamese coffee products.
Business environment reform is the most efficient support for enterprises: GSO
In the face of domestic and international economic difficulties, the most effective support for enterprises is to create an equal, open and transparent business environment, according to Do Thi Ngoc, head of the General Statistics Office (GSO)’s Department of General Statistics.
This was one of the solutions GSO proposed to maintain macro-economic stability and promote economic growth.
It is necessary to closely monitor the global economic situation and the fiscal and monetary policies of countries with a large economic scale.
“The Government should regularly review to promptly remove difficulties and obstacles of enterprises for promoting production and business activities, including lack of capital, high input material prices and difficulties in product consumption,” Ngoc said.
“Besides that, it needs to have prompt support for several industries being affected by declining demand of the world market such as leather, footwear, textiles and wood.”
It needs to monitor labour and job markets closely and then support the enterprises to overcome labour shortages.
State management offices should effectively implement solutions to stimulate trade and service demand and develop tourism programmes.
On the other hand, they should focus on expanding and diversifying export products and markets by effectively exploiting the signed free trade agreements (FTAs) between Vietnam and its partners. On that basis, policies also need to be adjusted to lure further high-quality foreign direct investment.
“The Government should drastically and quickly implement the tasks and investment projects under the programme for socio-economic recovery and development in 2023, including disbursement of public investment capital for key projects to be completed this year or early 2024,” Ngoc said.
Disease prevention and control must be strengthened along with plans on preventing drought and saltwater intrusion impacts, as well as natural disasters, rain, floods and landslides to minimise damage to production and people’s lives.
Finally, it is necessary to improve the efficiency of State management agencies and tighten administrative discipline in those agencies.
According to the GSO, Vietnam’s socio-economic development in February took place in the context that the world economy continued to have many complicated fluctuations.
Global inflation cooled but remained at a high level, while world energy prices are still increasing, and the Russia-Ukraine conflict has many unexpected developments.
Global consumer demand is reducing, causing the number of export orders and turnover to decrease. Many key industries have been affected, especially in localities with large industrial scales, such as Quang Ngai, Vinh Phuc, Binh Duong, and HCM City.
Therefore, the index of industrial production (IIP) in the first two months of this year decreased by 6.3% over the same period last year.
The exports to some key markets recorded a decline, such as the EU (down 4.2%); the Republic of Korea (5.7%); Japan (5.9%); ASEAN (7.9%); and the US (21%).
In that challenging situation, the production and business activities of the enterprises were severely affected by higher input costs but lower orders. Many businesses temporarily suspended operations to find other directions or wait for dissolution procedures.
In the first two months of the year, the number of enterprises suspending business for a definite term was about 39,000 units, an increase of 18.5% over the same period last year. About 9,400 enterprises were waiting for dissolution procedures, an increase of 5.8%.
The difficulties of the world economy also prevented foreign investors from expanding the scale of existing projects in Vietnam. As of the end of February, registered FDI capital reached 535.4 million USD, the lowest from 2019 to 2023 and a reduction of 4.9% year on year.
Core inflation in the first two months of 2023 increased by 5.08%, higher than the general inflation at 4.6%.
“This is a challenge for the State management agencies in issuing monetary policy. It is necessary to have a proactive and flexible monetary policy, ensuring inflation control and supporting economic growth,” Ngoc said.
However, the IIP of the number of processing and manufacturing industries in February increased compared to the same period last year, such as the production of beverages, coke, refined petroleum and chemicals, she said.
The total retail sales of goods and services increased by 13% yearly, while Vietnam had a trade surplus of 2.82 billion USD in the first two months.
International visitors to Vietnam were estimated at 1.8 million arrivals, nearly 37 times higher than last year, due to many international tourism programmes when the COVID-19 pandemic is under control.
Favourable mechanisms needed to fuel domestic supporting industries
The processing and manufacturing sector is attractive to foreign investment, but domestic supporting industries still need favourable mechanisms to develop, heard a workshop in Ho Chi Minh City.
Le Hoang Tai, Deputy Director of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade (MoIT), said the processing and manufacturing sector is the magnet to the majority of foreign direct investment (FDI) as seen in the 14.96 billion USD or 54% of the total registered capital in the first 11 months of 2022.
To attract investment to processing and manufacturing, supporting industries which supply materials, components, and spare parts have a critically important role to play. Given this, the MoIT has issued many policies to help with the industries’ development, according to Le Huyen Nga, head of the division for supporting industries at the MoIT’s Industry Agency.
Certain results have been recorded in developing domestic enterprises’ capacity, seeking new markets, and connecting local companies with FDI firms. Domestic businesses in supporting industies are now able to produce items with high technological content meeting requirements of final manufacturers in supply chains.
However, Nga noted, the existing policies for developing supporting industries still lack mechanisms efficient enough to connect suppliers and manufacturers, capitalise on the capacity of manufacturers (mainly FDI firms) to improve the added value of the domestic content in finished products, or develop supply chains in the domestic market. They are also not attractive enough to draw major foreign investors to supporting industries.
In the time ahead, those policies will be supplemented with many preferential mechanisms and assistance in terms of finance, research and development, technology transfer, and production management.
It is also necessary to build a law for facilitating key industries and developing both domestic and export markets for industrial products, she went on, adding that a more effective credit policy is also needed for businesses in supporting industries.
Echoing the view, Truong Chi Binh, Vice Chairman and Secretary General of the Vietnam Association for Supporting Industries, said the production capacity of Vietnamese businesses in supporting industries is not low, but they are still unable to compete with foreign rivals due to high production costs.
Therefore, reducing production costs is the key to deeper engagement in supply chains, he opined, suggesting businesses be given better access to credit, land, and factory building procedures.
Binh also recommended state agencies form clusters and ecosystems for companies in supporting industries, help them connect with foreign and multinational enterprises, and carry out policies effectively to create optimal conditions for businesses to focus on production.
Quang Trị province focuses on combating IUU fishing
The People’s Committee of the central province of Quang Tri has just issued an action plan to wipe out illegal, unreported and unregulated (IUU) fishing.
One of its key tasks is to enforce the law and handle violations of fishing vessels and fishermen.
Notably, local fishing vessels and fishermen are not allowed to illegally exploit marine species in foreign waters. All fishing vessels will be strictly handled if they violate and fail to comply with regulations, including failing to maintain cruise control equipment connection.
Regarding the management, monitoring, inspection and control of fishing vessel activities, the province has completed registration and marking of fishing vessels, granted fishing licences, and installed cruise control equipment. It has updated fishing vessel data into the national fisheries database; inspected and controlled fishing vessels entering and exiting berths. The local authorities will monitor fishing vessels operating at sea through the fishing vessel monitoring system, and control fishing vessels operating outside the province.
A fishing vessel with a length of 15 metres or more must dock at a designated port. In addition, the province has implemented an information and communication campaign to ensure transparency in IUU fishing combat efforts. It has provided diverse forms of popularisation and training for fishermen and related organizations on anti-IUU regulations.
Thanks to its efforts, Quang Tri has seen no fishing boats and fishermen violating foreign waters.
Leather industry faces challenges to maintain growth
The Vietnam Leather, Footwear and Handbag Association (Lefaso) expects to face many challenges this year in its efforts to maintain growth in the industry, according to the company’s chairman, Nguyen Duc Thuan. This is despite the sector overcoming many difficulties to achieve impressive export turnover in 2022.
The Vietnamese leather and footwear industry exported goods worth close to $24 billion last year, marking an increase of nearly 35 per cent compared to 2021. However, since the fourth quarter of last year, facing the impact of inflation, Vietnam’s main export markets such as the US, EU, and Japan have reduced consumption.
Last month, footwear exports saw a significant drop, reaching $1.6 billion, down 17.7 per cent over the same period last year. Exports of bags, suitcases, and umbrellas have also seen a downturn, touching $320 million, down 18.3 per cent on-year. This is due in part to the timing of the Lunar New Year, but also the signifiant drop in the number and value of orders. The index of industrial production for January decreased by 14.6 per cent on-month and by 8 per cent compared to January 2022.
Taiwanese shoemaker PouYuen Vietnam is a major contributor to foreign direct investment (FDI) in the footwear industry in Vietnam, with annual revenue of about $1 billion. The company announced it was cutting 3,000 jobs this month and won’t be extending labour contracts for a further 3,000 workers later this year, blaming it on a shortfall of orders.
PouYuen is not the only manufacturer impacted by reduced orders, many smaller enterprises have also had to reduce their workforce. Another Taiwanese shoemaker, Ty Hung company in Ho Chi Minh City, cut just under 1,200 workers due to a loss of business last November.
The World Bank and the International Monetary Fund lowered their estimations for global growth last month, with the possibility that the world economy might enter recession. This will further reduce the demand for goods and affect the available investment capital for many countries, including Vietnam.
Additionally, China’s return to production is expected to cause a sharp increase in supply before any expected recovery for demand, putting yet more pressure on manufacturers.