Henig: State Treasury to auction VND400 trillion worth of government bonds in 2023
08:47 | 13/02/2023
The State Treasury has announced that it plans to raise VND400 trillion (over US$17 billion) worth of Government bonds via auctions on the Hanoi Stock Exchange (HNX) this year.
In the first quarter of 2023, the State Treasury will offer 108 trillion VND worth of G-bonds with different maturities, including 5-year and 7-year bonds valued at 8 trillion VND, 10-year and 15-year bonds each valued at 45 trillion VND, and 5 trillion VND worth of 20-year and 30-year bonds each.
On February 1, the HNX organised three auctions of 5-year bonds worth 500 billion VND, and 10-year and 15-year bonds worth 5 trillion VND each.
The State Treasury said in 2023, the agency will issue G-bonds closely following market developments, and the revenue collection and disbursement progress of the public investment capital plan from the State budget.
It will manage interest rates of auctioned G-bonds in line with the Government’s direction of fiscal and monetary policies, and issue G-bonds with different maturities to meet the needs of investors, thus promoting the liquidity of the G-bond market, raising more capital for the State budget and supporting the development of the capital markets.
Source: VNA LINK
Henig: Bắc Giang’s train station to offer int’l freight transportation services
February, 13/2023 – 10:35
The Kép station will organise a fleet of trains running from Kép to Đồng Đăng Station in the border province of Lạng Sơn and then to China’s Pingxiang station.
HÀ NỘI — Kép train station in the northern province of Bắc Giang will offer international freight transportation services from February 20, as it meets all necessary conditions, according to the Vietnam Railways Corporation (VNR).
Specifically, the station will organise a fleet of trains running from Kép to Đồng Đăng Station in the border province of Lạng Sơn and then to China’s Pingxiang station.
The Kép Station’s load and unload capacity is from 80 to 100 carriages or containers per day. Freight includes electronics and industrial products, construction materials, industrial wood and raw ore.
A bonded warehouse is expected to be built at the station to serve the import and export activities of enterprises in Bắc Giang and Bắc Ninh provinces and neighbouring localities. It specialises in receiving refrigerated containers transported from the South which will then be exported to China.
Currently, VNR is managing international freight terminals, namely Lào Cai, Yên Viên, Hải Phòng, Đồng Đăng, Giáp Bát and Sóng Thần.
— VNS LINK
Henig: Knock wood: UKVFTA boosts exports to UK
06:00 | 13/02/2023
(VEN) – The UK-Vietnam Free Trade Agreement (UKVFTA) has served as a catalyst to Vietnamese timber exports to the UK, said Ngo Sy Hoai, Vice Chair and General Secretary of the Vietnam Timber and Forest Products Association (VIFORES) in a talk with Vietnam Economic News’ Hoa Quynh.
How did Vietnamese wood exporters exploit market opportunities after the UKVFTA took effect?
Before Brexit, the UK was an important market for Vietnamese wood products, which accounted for 30-40 percent of Vietnam’s export value to the EU. While Brexit raised exporters’ concerns, the UKVFTA, taking effect in May 2021, helped increase Vietnam’s wood export value to the UK to more than US$265 million in 2021, up over 18 percent from 2020. More than 90 percent of wood exports to the UK are furniture products.
According to the agreement, refined furniture exports to the UK are subject to a 1.2-2 percent tax that will be gradually reduced in the near future, while wood product and intermediate material exports to this market are subject to a 2-10 percent tax, which will be also gradually reduced according to the agreed roadmap. The export growth shows that wood enterprises have taken advantage of UKVFTA opportunities. The EU and the UK are discerning markets and without the UKVFTA’s tax incentives, wood enterprises would find it hard to increase exports to the UK, as similar products from other countries like China have carved a major niche in this market.
What difficulties do timber exporters face under the UKVFTA?
Vietnam is gradually becoming a wood processing center as a result of free trade agreements (FTAs) in general and the UKVFTA in particular. However, Vietnamese products accounted for only 7.2 percent of the UK’s wood and wood product import value, while the UK represents only two percent of Vietnam’s wood export value.
The UK has a long-established wood industry and has strict standards on product quality, design, environmental protection, climate change control, green growth and greenhouse gas emissions, obliging Vietnamese businesses to pay special attention to the legality of wood origin if they are to enter supply chains to this market.
Businesses have not made good use of digital platforms to introduce and bring wood products to British customers. Vietnamese producers need to improve product design and marketing if they are to enjoy bigger export opportunities. If Vietnam maintains export growth to the UK, the country will improve its prestige and attract the interest of customers from other markets.
What solutions do businesses and management agencies need to implement?
Wood enterprises need to make a breakthrough by making products with higher added value, using less labor and less input materials. They also need to better corporate governance and apply modern accounting software to ensure input and output transparency and avoid trade remedy-related lawsuits.
It is necessary to promote Vietnam as a capable, competitive and sustainable wood processing center, and identify opportunities and challenges related to the UKVFTA’s exploitation. Particularly, the Government needs to consider signing a Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) with the UK to ensure that exporters to the UK meet environmental and forest protection standards. LINK
Henig: SBV works to mitigate potential risks for non-banking credit institutions
February, 13/2023 – 10:09
The State Bank of Việt Nam (SBV) is collecting comments on its draft circular to minimise potential risks for non-banking credit institutions and ensure they work in accordance with international standards.
HÀ NỘI — The State Bank of Việt Nam (SBV) is collecting comments on its draft circular to minimise potential risks for non-banking credit institutions and ensure they work in accordance with international standards.
The draft circular stipulates the internal control system of non-banking credit institutions, which include financial companies, financial leasing companies and other non-banking credit institutions.
According to the SBV, the operation of non-banking credit institutions is simpler than that of commercial banks and foreign bank branches. Under the current legal regulations, the institutions are not allowed to receive deposits from individuals, but only from organisations; as well as not being permitted to provide payment means and payment services like commercial banks and foreign bank branches, but their operations still pose risks.
Therefore, the establishment of a risk management system according to Basel standards can be considered a solution to minimise potential risks that may occur during the operation of non-banking credit institutions, the SBV said, adding that the change is also consistent with the current trend of corporate governance in general.
The draft circular stipulates the internal control system must have three independent protection lines.
The first line has the function of identifying, controlling and mitigating risks. Banks’ divisions related to sales, risk control, accounting and human resources will take responsibility for the line.
The second line has the function of developing risk management policies and internal regulations on risk management. It also takes the responsibility for measuring and monitoring risks.
The third line has the function of internal auditing, which will be performed by the banks’ internal audit division in accordance with the Law on Credit Institutions and this circular.
According to the SBV, the draft circular is also consistent with the regulations in Basel which also has the similar three-line protection model.
Besides, the new regulations in the draft circular are dispensable as the Law on Credit Institutions has also amended and supplemented regulations that credit institutions must issue internal regulations to ensure risk management, the SBV said.
— VNS LINK
Henig: Deposit rate continues to drop but lower lending rate remains a challenge
February, 13/2023 – 09:22
Both the six-month and 12-month term rates now stand at 9.3 per cent per year, down from 9.7 per cent and 9.5 per cent per year, respectively.
Compiled by Mai Hương
Commercial joint stock banks continued to lower deposit interest rates early this month – a move that raises hope of a fall in lending rates.
After the ‘rate war” in December when saving interest rates were pushed up to 11 per cent per year at some banks, commercial banks started to adjust rates down after Tết (Lunar New Year) and cut further last week.
From Thursday, National Citizen Joint Stock Bank (NCB) lowered its saving interest rates by between 0.2-0.45 percentage points, depending on the term. Both the six-month and 12-month term rates now stand at 9.3 per cent per year, down from 9.7 per cent and 9.5 per cent per year, respectively.
Early last week, Sài Gòn Commerical Joint Stock Bank (SCB) – the leading player in the ‘rate war’ last year – reduced saving rates on many terms. Its 24-month rate now stands at 9.1 per cent per year, down from 9.95 per cent, and the 12-month rate dropped to 9.5 per cent from 9.95 per cent.
Techcombank also cut saving rates by 0.5 percentage points for terms of six months or more from February 7, while PVComBank reduced rates by 0.2-0.3 percentage point, bringing the six-month rate down to 8.3 per cent per year and 12-month rate to 8.8 per cent per year.
Except the Big Four, including Agribank, Vietcombank, VietinBank and BIDV, which have kept their interest rates steady in the past several months, deposit rates listed at most banks now fall to 9.5 per cent at the highest.
At the meeting between the State Bank of Việt Nam (SBV), commercial banks and property developers on Thursday, Vietcombank General Director Nguyễn Thanh Tùng said before this meeting, banks’ leaders agreed to cut the deposit rates to reduce the lending rate.
The ceiling deposit rate may be brought down to 8.7 per cent per year in the coming time instead of the current 9.5 per cent per year, a bank leader said.
The Governor of the central bank has asked commercial banks to continue decreasing operating costs, streamlining administrative procedures and unnecessary expenses to have room to reduce lending interest rates. The SBV emphasised that it will monitor cases where banks continue to raise interest rates and take measures to deal with these banks.
Unexpected but understandable
The banks’ movements, though surprised the market, are comprehensible given the context that many global central banks have officially slowed down their rate hike roadmap on belief that inflation has passed its peak.
In the policy meeting in early February, US Federal Reserve (Fed) only raised the key rate by 0.25 percentage points after having made four consecutive hikes of 0.75 percentage point in 2022 and one more 0.5 percentage point increase in the last month of 2022.
Meanwhile in Việt Nam, some comments have suggested the pressure to continue raising the interest rate of the State Bank (SBV) to support the exchange rate in 2023 has decreased significantly.
In a recent report, Bảo Việt Securities Co (BVSC) said deposit rates were almost flat in January, showing signs of cooling down from the fever in December and may continue to decrease in 2023 due to favourable macro conditions.
“BVSC believes that (SBV’s) pressure to raise interest rates to support the exchange rate will no longer continue in 2023. Instead, monetary policy this year is likely to shift to a supportive direction for growth,” it said in the report.
The securities company expects interest rates to fall again in 2023, with clearer signs from the second quarter, when the Fed stopped raising interest rates and Việt Nam’s inflation cooled down.
According to Việt Dragon Securities Co, exchange rate pressure was the main cause for the hike of interest rates in 2022 but now this pressure has cooled down, which may lay a foundation for SBV to keep key interest rates unchanged in 2023.
In addition, the inflation target in 2023 is loosened to 4.5 per cent and fiscal policy shares the pressure with monetary policy, so the exchange rate is expected to decrease as well.
However, pressure on interest rate is still large.
It can be seen that the lending rate now doubles or more of the deposit rate, averaging between 13-17 per cent per year, even higher.
Economist Lê Xuân Nghĩa, a member of the National Financial and Monetary Policy Advisory Council said the current interest rate ground is too high.
If the inflation rate is around 4 per cent, the savings interest rates should be around 6-7 per cent per year to help keep the lending rates at rational levels.
Vietcombank Securities Company (VCBS) predicts the deposit interest rate will remain high at least until the middle of the year. Amid stiff competition to mobilise capital, VCBS believes the group of small- and medium-sized commercial banks will not reduce interest rates in major terms. It is forecast that deposit rates will peak in the first six months of 2023 with an increase of 1-1.5 percentage points.
Director of SBV’s Monetary Policy Department Phạm Chi Quang said in 2023, the global economy is likely to have a recession, and at the same time Fed will continue its rate hike. These factors will put pressure on interest rates to continue.
— VNS LINK