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Vietnam News Roundup: May 31 to June 6

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Aviation news

Vietnam Airlines to lease planes to unprofitable subsidiary

Vietnam Airlines is reportedly gearing up to transfer some of its planes to its subsidiary Pacific Airlines so that it can start flying again. Pacific Airlines is reportedly looking to lease three aircraft from Vietnam Airlines which is the minimum it needs in order to keep its aircraft operator’s certificate.

For some context, Pacific Airlines has no planes because it gave them back to its lessor in exchange for having VND 3 trillion or US$118 million worth of debt cancelled. This was months ago and the airline hasn’t run a passenger flight since. With this in mind, it’s difficult to see any organisation, other than Vietnam Airlines, leasing aircraft to Pacific Airlines moving forward which could severely limit the airline’s growth prospects.

See also: Vietnam’s Airline Industry Turbulence: Unpacked

Banking and Finance News

State Bank open market operations as of COB June 6

The State Bank of Vietnam has continued to issue treasury bills to suck up excess liquidity in the economy. There are currently US$2.6 billion worth of T-bills outstanding as of the close of business on June 6. Also of note, the State Bank has outstanding loans to local banks to the tune of US$1.54 billion.

Outstanding loans

IssuedLengthMaturingVND*US$
24-May147-Jun27,019$1,062,590,875
3-Jun710-Jun473$18,605,840
27-May1410-Jun6,557$257,877,097
28-May1411-Jun2,017$79,335,364
29-May1412-Jun3,110$122,293,971
Total39,1761,540,703,146

*billions

Outstanding T-bills

IssuedLengthMaturingVND*US$% p.a.
10-May287-Jun3,700$145,511,7463.75
13-May2810-Jun1,500$58,991,2493.75
14-May2811-Jun550$21,630,1243.75
15-May2812-Jun200$7,865,5003.75
16-May2813-Jun650$25,562,8743.75
17-May2814-Jun3,100$121,915,2473.75
20-May2817-Jun800$31,461,9993.85
21-May2818-Jun500$19,663,7503.90
22-May2819-Jun650$25,562,8744.00
23-May2820-Jun750$29,495,6244.20
27-May2824-Jun200$7,865,5004.20
29-May2826-Jun5,150$202,536,6204.25
30-May2827-Jun4,900$192,704,7454.25
31-May2828-Jun16,250$639,071,8594.25
3-Jun281-Jul8,450$332,317,3674.25
4-Jun282-Jul6,150$241,864,1194.25
28-May352-Jul3,700$145,511,7464.20
5-Jun283-Jul3,160$124,274,8974.25
5-Jun283-Jul5,800$228,099,4944.25
Total66,160$2,601,907,334

*billions

Corruption news

Amnesty proposed for corrupt officials in Vietnam 

An amnesty for corrupt officials to report their misdeeds and pay restitution without prosecution has been suggested at Vietnam’s National Assembly. The representative from Dong Thap asserted that corruption was so widespread that by investigating almost anyone it would be possible to find some form of corruption.

This proposal comes amidst the ‘blazing furnace’ corruption crackdown, which has been blamed for a slowdown in project approvals. It’s not clear what the response was or will be to this suggestion.

See also: Corruption in Vietnam: Cheat Sheet 2024

Education news

Vietnam university applies height restrictions to business management courses

The School of Management and Business at Hanoi National University is applying height restrictions as part of its admissions process. Female students should be at least 158 cm tall and male students should be 165 cm tall according to the policy.

Of note, local businesses have been struggling to keep up with their foreign counterparts for some time. The share of Vietnam’s exports belonging to foreign invested enterprises, for example, is around 70 percent. This approach to developing local human resources from the School of Management and Business may shed some light on why that is.

Gold news

Vietnam’s new gold price strategy sparks rush to buy cheap gold

Gold buyers have rushed to Vietnam gold retailers to buy gold at under VND 80 million per tael, down from a peak of VND 92.5 million back in May. This has been made possible through a State Bank of Vietnam initiative through which it sells gold from its reserves into the market through four majority state-owned banks at reduced prices.

No plans as yet have been announced to import more gold and with local production and the State Bank’s reserves limited, this looks to only be a temporary reduction in the gold price. In this context, it will likely recover when the State Bank stops selling from its reserves.

See also: The Gold Price in Vietnam: Explained 2024

Investment news

South Korean consumer finance firm doubles down on Vietnam

South Korea’s Lotte has almost doubled its investment in its Vietnam consumer finance subsidiary Lotte Finance, with its total investment jumping from VND 2.46 trillion or US$96.8 million to VND 4.19 trillion or US$164.8 million. This is despite general challenges for the firm cracking the local market reported earlier this year.

See also: Vietnam’s Financial Sector: An Overview 2024

Infrastructure news

Hitachi is suing over Ho Chi Minh City metro delays

Ho Chi Minh City’s first metro line has met more roadblocks in its implementation with a contract dispute arising between Japan’s Hitachi, which is building the metro line and the Ho Chi Minh City Urban Railway Management Board which is paying for it.

Issues with site clearance and delayed payments to contractors have caused repeated delays to the metro project which was originally scheduled to start operating in 2018. This is common among infrastructure projects in Vietnam and is in large part caused by a significant mismatch in the value of land versus what is offered to landowners. In theory, this should change, however, when the new Land Law comes into effect next year.

See also: Vietnam’s Law on Land 2024: Foreign Investor Cheat Sheet

Manufacturing news

Vietnam’s Purchasing Managers’ Index flat in May

S&P Global’s Purchasing Managers’ Index for Vietnam was unchanged in May, according to a press release from the organisation. Currently sitting at 50.3 points, this is above the 50 point breakeven threshold. This signals small but consistent growth.

Key takeaways:

  • New orders increased,
  • Purchasing activity increased,
  • The workforce shrank,
  • There was an increase in input cost inflation attributed to higher oil and fuel costs and currency weakness,
  • Selling prices increased for the first time since February,
  • Production volumes increased,
  • Outstanding business was reduced, and
  • Supplier delivery times lengthened attributed to goods shortages related to geopolitical issues.

Media news

Video game platform Steam confirmed banned in Vietnam

Video game platform Steam has been blocked by the government in Vietnam, Le Quang Tu Do, Director of the Authority of Broadcasting, Television and Electronic Information has confirmed. This was because the ‘developer failed to cooperate with authorities’, he told VN Express.

For Steam to be compliant with Vietnam’s video game regulations it will take a lot of work. For one it needs a local office and a local representative, not to mention reviews and licensing of many of its games of which it claims over 100,000. There are a lot of games that are set in the Vietnam War too, which could also be problematic in light of Vietnam’s censorship regime. Needless to say, Steam has its work cut out for it getting back online in Vietnam.

See also: Video Games in Vietnam: Cheat Sheet 2024

Mining news

Vietnam intends to process rare earths in-country

“Vietnam will not export raw rare earth elements,” Deputy Prime Minister Tran Hong Ha told Vietnam’s National Assembly on Tuesday. Instead it will encourage the development of the local processing industry which Ha sees as an opportunity to drive foreign investment in the sector, as reported by The Investor.

That said, a clear direction forward is still somewhat elusive although there has been a lot of movement in the industry over the last twelve months.

See also: Vietnam’s Rare Earth Partnership Contenders: Unpacked.

Stock market news

Foreign traders net-withdraw US$98.9 million from HoSE

Foreign traders have continued to sell down their positions in the Ho Chi Minh City Stock Exchange. In total, just shy of US$98.9 million was withdrawn from the market over the last five trading sessions to close-of-business June 6. This brings the total net-withdrawn from the market by foreign traders to US$1.45 billion so far this year.

Foreign trader activity, last five trading days

BuySellChange
DateVND*US$VND*US$VND*US$
31/51,345$52,895,4882,779$109,291,123-1,434-$56,395,635
3/61,756$69,059,0902,001$78,694,328-245-$9,635,238
4/62,103$82,705,7332,235$87,896,963-132-$5,191,230
5/61,854$72,913,1851,815$71,379,41339$1,533,773
6/61,739$68,390,5232,483$97,650,183-744-$29,259,660
Total8,797$345,964,01811,313$444,912,008-2,516-$98,947,990

Source: www.hsx.vn 

See also: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked 2024

Tax news

Vietnam ministry looks to end VAT, import tax exemption on low-value imports

Around US$1 billion worth of goods are being imported into Vietnam via e-commerce sites that are not being taxed, according to Vietnam’s Ministry of Industry and Trade. It has suggested an exemption from VAT and import taxes on goods with a value of less than VND 1 million or about US$40 is unfair on local businesses and should be abolished.

Low-value Chinese-made goods are all over Vietnam’s major e-commerce sites and can be exported from China and arrive in Vietnam very quickly and easily given the two countries are so close. This proximity also means that shipping is relatively cheap too, and in this respect it does seem that the only real difference is that goods from China, with this exemption in mind, are 8 to 10 percent cheaper.

See also: Tax in Vietnam 2024: Quick Read

The week ahead

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