Vietnam Business & Weather Briefing (July 9): Vietnam to Benefit from Capital Relocations.

Business Briefing

Gold rate

The domestic gold price as of 9 am on July 9 was listed by DOJI Group at VND 67.95 million per tael (selling), and VND 68.55 million per tael (buying). Meanwhile, Saigon SJC Company listed the buying price at VND 68 million per tael and the selling price at VND 68.6 million per tael.

Photo: VNA

Growth forecast: Growth target of 6.5 percent poses a big challenge to Vietnam

The growth target of 6.5 percent set for 2022 is likely to pose a big challenge to Vietnam given difficulties in production and business at home and global uncertainties, head of the General Statistics Office Nguyen Thi Huong has said. In an interview with the Vietnam News Agency, Huong suggested the entire political system needs to roll out support packages, keep a close watch on the situation, and adopt solutions to handle emerging issues.

Close coordination in the implementation of this work between agencies as well as the resolve, effort, and flexibility of businesses and people will be vital to reaching the target. She also pointed out that surging fuel, material, transportation and service prices have caused production and business costs to increase, thus affecting both domestic and global production and supply chains.

Moreover, small-and medium-sized enterprises (SMEs) that have been greatly affected by Covid-19 are struggling to combat the pandemic, maintain production and seek new markets at the same time. The GSO head proposed the Government quickly adopt measures to stabilize gasoline prices, and policies to support businesses that rely on oil and gas.

Ministries and agencies should work to expand export markets, and encourage laborers to return to work, contributing to the economic recovery, Huong said, adding that the Government should issue suitable policies to make it easier for SMEs to access credits and support packages.

According to the official, Vietnam’s consumer price index (CPI) in the first half of this year grew 2.44 percent year-on-year, and domestic prices are still under control thanks to the Government’s drastic management, according to VNA.

Vietnam’s gross domestic product (GDP) in the first half of this year expanded by 6.42 percent, and that in the second quarter was up 7.72 percent. With the stimulus packages, the national economy is expected to further grow in the remaining months of this year, Huong said, expressing her belief that Vietnam will be able to control inflation as targeted by the legislature.

Photo: VietTimes

Investment news: Vietnam to benefit from large corporations’ capital relocations

Capital reallocation plans announced by multinational corporations will offer opportunities for Vietnam to attract foreign direct investment, experts said. According to Yoshinaga Kazuyoshi, General Director of Goertek Vina, a company that specializes in producing electronic devices, network equipment, and multimedia audio products, the group has decided to make Vietnam its largest base abroad, with Nghe An selected as the location to expand production. Since the beginning of this year, Goertek has raised its total investment capital in Vietnam to 1 billion USD. The figure is likely to grow to 1.5 billion USD in the coming years.

Many other large foreign corporations also have factories in Vietnam, including Samsung, LG, Foxconn, and Intel. The US chip manufacturing corporation Intel is making a plan for the second phase after investing 1 billion USD in the first stage. Samsung Corporation earlier this year poured an additional 920 million USD into the Samsung Electro-Mechanics Vietnam Co. Ltd in Thai Nguyen province, and LG and Foxconn are making similar moves.

Recent surveys conducted by the European Chamber of Commerce (EuroCham) and the Japan External Trade Organisation (Jetro) showed that investment flows are recovering after the COVID-19 pandemic and Vietnam continues to be a favored destination.

According to a report recently released by the International Finance Corporation (IFC) under the World Bank, multinational corporations are planning to significantly reallocate investments in East Asia - Pacific and Europe - Central Asia. Notably, up to 190 out of 1,060 respondents - accounting for about 18% - said that China will be one of the three countries where they expect to reduce investment the most.

Companies like Goertel, Foxconn, Compal, Luxshare, and Pegatron are the leading ones in providing business process outsourcing (BPO) services. These enterprises have increased their investment in Vietnam in recent years. According to Yan Liu, a World Bank economist, the "China plus one" trend and the shift of production closer to the final market are driving investment away from China.

Businesses are looking to expand operations in other developing countries such as India, Indonesia, Brazil, Philippines, Vietnam, and Malaysia, she said.

The "China plus one" strategy and the trend of shifting investment away from China have developed strongly since the outbreak of Covid-19. In this regard, Vietnam has benefited and the opportunities are more open than ever with China still applying its "Zero Covid" policy. If Vietnam capitalizes on this, it will attract a larger amount of investment. The country could enjoy up to a 4% increase in investment if multinational corporations reallocate in the next few years, the report said.

Photo: VOV

Weather Forecast

July 9-11: It is expected that a tropical convergence range will appear and sweep through the middle of the South China Sea tomorrow, leading to the occurrence of a low-pressure zone triggering thundery showers in the territorial waters from Binh Thuan to Ca Mau and the middle of and the southern South China Sea including the Spratly Islands from July 9 to July 11.

The Standing Office of the National Steering Committee for Natural Disaster Prevention and Control sent an official letter to require steering committees of the coastal provinces and cities from Da Nang to Ca Mau to regularly monitor the weather situation affected by the tropical depression in the South China Sea, provide timely its position and path to captains and vessel owners working at sea so that they can proactively move to safe places, ensure safety on people and property, regularly keep in touch with vessels and arrange rescuers on duty to promptly cope with the bad situation ahead.

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