Economic situation records upward trend

Tuesday, 2017-12-05 15:46:57
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Agriculture continues its prosperous recovery, especially in vegetables and fruits export (with US$3.2 billion in revenue in the past 11 months, up 43.1%). (Credit: VNA)
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NDO – The nation’s economic situation in the past 11 months has recorded positive signs, with equal growth momentum in investment, exports and consumption. The service, tourism, consumption, export, investment and business sectors all resulted in good growth.

Impressive figures

Generally, for the whole 11 month period, the Index of Industrial Production increased by 9.3% over the same period last year (compared with the increase of 7.4% in the same period of 2016). Agriculture continued to recover and flourish in the export of agricultural products, especially vegetables and fruits with US$3.2 billion, up 43.1%. Aquatic production was estimated at nearly 6.5 million tonnes, up 4.8% over the same period as last year. Total retail sales of consumer goods and services were estimated at over VND3.6 quadrillion (US$158.4 billion), up 10.7% year on year.

Interest rates, exchange rates and foreign exchange market remain their stability, with foreign exchange reserves by the State continues to increase by US$8 billion, reaching about US$46.7 billion in total. The VN-Index, a measure of economic health, reached its peak at 950 points in the past month, the highest level in ten years.

Total State budget revenue was estimated at VND1.08 quadrillion (US$47.5 billion), equaling to 88.9% of the estimate, while total budget expenditure was at over VND1.13 quadrillion, equaling to 81.7% of the yearly estimate. Inflation is under control with consumer price index in November increased by 0.13%, while the average increase is at 3.61%.

International visitors to Vietnam reached 11.65 million, up 27.8%, the highest ever and increased in all travel channels and passenger sources. In 2017, Vietnam also added six more countries, including Australia, the United Arab Emirates, Canada, India, the Netherlands and New Zealand, to the list of 46 countries having their citizens eligible for a piloted e-visa programme when entering Vietnam.

Total export turnover was estimated at US$193.8 billion, up 21.1% against the same period as last year, of which the domestic economic sector gained US$53.1 billion, up 16.8%. The US remains the top export market for Vietnam (US$38.1 billion, up 9.5% over the same period of 2016) and also recorded the largest trade surplus with US$29.7 billion.

Total import turnover was estimated at US$191 billion, up 21% over the 11 month period last year, of which the domestic economic sector imported goods worth US$76.5 billion, up 17.9%. China remains the largest importer of Vietnam with turnover of US$52.1 billion, up 15.5% over the same period last year. During the first 11 months of 2017, Vietnam enjoyed a trade surplus of US$2.8 billion, of which the domestic economic sector recorded a US$23.4 billion in trade deficit, while the foreign invested sector gained US$26.2 billion in a trade surplus.

It is worth noting that in the 11 month period this year, as of increased imports of components from Samsung, the Republic of Korea became the largest market of Vietnam in the field of trade deficit (-US$28.8 billion), surpassing China (-US$21.8 billion). Conversely, due to the increased import of many agricultural products from Vietnam, Japan has returned to the list of markets that Vietnam enjoys export surplus (even with only US$0.5 billion), compared with many consecutive years of with Japan enjoyed surplus in exports to Vietnam.

Strong improvement in business environment

The World Economic Forum in its Global Competitiveness Report 2017-2018 has put Vietnam in the 55th place, up five levels from the previous year and 20 from five years ago. Vietnam has climbed 12 places to rank 47th among 127 countries and economies on the Global Innovation Index 2017, announced by the World Intellectual Property Organisation, Cornell University and the INSEAD graduate business school. At the same time, Vietnam’s ranking in Sustainable Development Goals Index and Dashboards Report 2017 by the UN was also raised by 20 levels to the 68th place out of 157 countries and territories.

Moreover, in the World Bank's Doing Business 2018 report, Vietnam moved up 14 places to rank 68 among 190 countries; in particular, among the five best-performing indicators, the index of getting electricity was the second-highest (only after the paying tax index), up 32 places to rank 64 among 190 countries (up 92 places compared to the 156th rank in 2013). This is the highest ranking improvement since 2013 and exceeds the ranking requirement in Resolution No. 19-2017/NQ-CP dated February 6, 2017 by the government (in which the set indicator for electricity access in 2017 was the 70th rank). By the end of 2017, 100% of the Electricity of Vietnam's power supply services will be able to register online.

Thanks to the improvement of the investment environment, the country witnessed the establishment of more than 116,000 firms in the January-November period with a total registered capital of over VND1.1 quadrillion.

Thanks to the improvement of the investment environment, Vietnam has recorded a new boom in newly-established businesses and those raising capital and returning to operation; at the same time, the number of enterprises stop operating has been halted, causing the difference in the number of newly-registered enterprises with those operating at more than 50%, the best in many years.

The country witnessed the establishment of more than 116,000 enterprises in the January-November period with a total registered capital of over VND1.1 quadrillion, up 14.1% in the number of enterprises and up nearly 42% in terms of registered capital compared to the same period in 2016.

In addition, during the 11 month period, more than 32,200 enterprises have registered to increase their capital with a total supplemented capital of over VND1.5 quadrillion and over 24,300 firms returned to operation, which has helped raise the total number of newly registered and resumed operation enterprises to over 140,000, equal to 25% of all businesses operating across the country. Meanwhile, the number of enterprises suspended in the last 11 months was 55,644, only increasing by 3% over the same period last year.

2017 also witnessed a boom in the stock market, with the VN-Index reaching over 900 points, the highest level in ten years, and a series of stocks surpassing their historical peak. This is due to improvements in macroeconomic stability, bad debt treatment and greater emphasis on the private sector.

Generally, in the last 11 months of 2017, outstanding loans to the economy increased by 14.5% compared to December 2016, of which loans for manufacturing sector increased by nearly 25%, accounting for over 17% of total proportion. The credit growth of the whole year is about 18-19%. Bad debt is at less than 3% of total outstanding loans and treatment of bad debts on the principle of market is improving.

During the last 11 months of 2017, foreign direct investment to Vietnam reached a total registered capital of US$19.8 billion, an increase of 52%; total additional capital increased by approximately US$8 billion, up 57.6%; and total FDI in the form of contributing and buying shares were at US$5.29 billion, up 57.6% over the same period in 2016. FDI disbursement reached over US$16 billion (an increase of 11% over the corresponding period last year) and equivalent to 8% of Vietnam’s total GDP worth US$203 billion.

On the sidelines of the 2017 APEC Economic Leaders' Week, held in Da Nang in early November, 121 agreements worth more than US$20 billion were signed between the world's leading corporations and Vietnamese businesses. The effect from APEC, especially from the signed agreements (including the fact that 11 Trans-Pacific Partnership (TPP) member countries pledged to negotiate to retain the TPP despite renaming it and without the participation of the US), would be an important catalyst for Vietnam to continue attracting more foreign investment in 2018.

Difficulties ahead

In addition to the initial improvement in resolving public debt and State budget balance pressure, in 2017 the country still faces a range of shortcomings, in which the State budget disbursement by the end of November was estimated at VND224.6 trillion, about 66.3% of the whole year plan. Production and business operation of a part of enterprises is still in difficulties, with high number of enterprises dissolved and suspended.

Particularly, the task of collecting capital from equitising and withdrawing State capital under the National Assembly’s resolution by the end of November is still low, at more than VND22.7 trillion, reaching only 37.84% of the set plan. Relevant ministries and localities should speed up the sale of State capital in the near future.