Under a fresh report on ASEAN economic outlook, global analysts FocusEconomics based in Spain stated, that though Vietnam’s economic growth should decelerate this year due to cooling
household spending, investment activity and exports, Vietnam is still “set to remain among ASEAN’s top performers” in 2023 and 2024.
Under FocusEconomics’ forecast, the respective growth rates of Vietnam this year and next year will be 5.2 and 6.4%, while those rates are 4.2 and 7.7% for ASEAN as a whole, including Brunei (3.1 and 3%), Indonesia (4.8 and 5%), Laos (3.6 and 4.4%), Malaysia (4 and 4.5%), Myanmar (3.9 and 4.4%), Singapore (1.4 and 2.6%), and Thailand (3.6 and 3.7%).
According to FocusEconomics, despite massive difficulties, confidence in general in Vietnam remains on an uptrend month after month.
In May 2021, Tran Minh Thuy suspended the operation of her footwear factory in the northern province of Hai Duong, due to a grave lack of export orders and domestic feeble demand. The factory was inaugurated in 2019 and is the third Thuy opened in the northern region of the country.
Then in August 2022, the second factory, also based in Hai Duong, faced the same plight, leaving the first factory, also in this province, operating in moderation. The three factories are managed by Thuy Khang Footwear JSC, where Thuy is the vice director.
However, since March this year, the two halted factories have resumed operations, thanks to some big contracts landed. This would mean nearly 800 workers have had incomes again.
“We are trying to recover and provide sufficient jobs for workers,” Thuy said. “Though massive difficulties remain, we believe that the economy will continue bouncing back in the coming months.”
Thuy Khang Footwear is among nearly 37,700 businesses resuming operations in the first six months of this year, throughout the country.
According to the General Statistics Office (GSO), also in the first half of 2023, there were more than 75,900 newly-established businesses registered at 29.48 billion USD, employing close to 510,000 workers. If another 39.94 billion USD registered by 25,200 operational businesses is taken into account, the total capital added to the economy in the period was about 69.42 billion USD.
In June, the number of newly-established companies reached almost 14,000 registered with 5.78 billion USD, using nearly 104,000 workers – up 14.9% in the number of businesses, 33.7% in registered capital, and 39.2% in the number of workers, as compared to those in the previous month.
These were also up 4.8% in the number of enterprises, 14.6% in registered capital, and 34.7% in the number of workers, as compared to those in the corresponding period last year. In addition, there were also 7,100 businesses resuming operations in June – up 19.3% month-on-month and 3.2 times year-on-year.
According to the GSO, these are “extremely positive signals” for the economy in the context that businesses’ business and production activities remain in difficulties.
The Ministry of Planning and Investment reported to the government last week, that despite big difficulties lingering, “local production and business activities have been gradually bouncing back, and the confidence of enterprises is also escalating.”
In the first six months of this year, the total number of businesses that were newly established and resumed operations, reached about 113,600, down only 2.9% year-on-year.
Bullish expectations
Under a survey conducted by the GSO in Q2 of 2023, the business community’s confidence in the government’s macroeconomic management is on the rise. Up to 72.6% of surveyed companies forecast that their performance in Q3 will be better than and keep stable as it did in Q2.
Of these state-owned enterprises are the most optimistic, with a rate of 74.5% of respondents projecting their performance will be better than and keep stable as compared to Q2. This rate is 73 and 71.1% for domestic private businesses and foreign-invested ones, respectively.
In reality, the added value of the economy’s industrial sector rose from 0.75% in Q1 to 1.56% in Q2, meaning a gradual recovery in industrial production.
According to FocusEconomics, Vietnam’s industrial production, which is bouncing back, is expected to expand 5% in 2023, and 8.4% in 2024.
For example, in April 2021, Tran Hai Van, director of Red Lotus Trading JSC, suspended the operation of her factory producing home appliances in Hanoi, due to shortages of orders and an expansion in input costs. The factory was established in 2018 and is the second in the city.
Then in May last year, the first factory also faced the same difficulties and was forced to operate in moderation.
However, in March this year, the company landed several orders and obtained some loans, the two factories resumed operations and have now gradually returned to their full operations.
“We hope difficulties will abate later in this year so that we can expand our outlets to the central and southern regions,” Van said.
At a recent meeting between the government and localities nationwide, on Vietnam’s socioeconomic situation in the first half of 2023, Prime Minister Pham Minh Chinh stated that despite difficulties with a drop in industrial production, the economy is expected to continue bouncing back in the coming months.
“Confidence of enterprises and investors are bouncing back, facilitating the economy to get bigger growth, with more jobs to be created,” PM Chinh said.
Offering more assistance
To fuel the economy and support enterprises and investors, the government will enact a resolution on key tasks for implementation of the socio-economic development plan, from now until the year’s end, as well as on continuing deployment of measures to improve the domestic business climate and enhance national competitiveness in 2023.
The resolution, which embraces dozens of groups of key solutions with concrete tasks, is aimed to achieve the ultimate goals of securing an economic growth rate of 6.5% for 2023, with improvements in national economic competitiveness, and in the local investment and business climate, in favour of investors and enterprises.
“We pledged to create an open investment climate and complete the legal system for effective investment, in the spirit of harmonising interests and sharing risks between the state, people and businesses,” PM Chinh stated.
On June 24, the National Assembly voted to continue the reduction of the VAT by 2% from July 1 through December 31, 2023. Specifically, goods and services which are currently subject to 10% VAT shall be entitled to a reduced VAT rate of 8%, except for some types of goods and services including telecommunications, IT services; finance and banking services, securities, and insurance; real estate business; metal production and manufacture of prefabricated metal products; mining industry (excluding coal mining), production of coke, refined petroleum, production of chemicals and chemical products; and goods and services, which are subject to special sales tax.
Tran Minh Thuy of Thuy Khang Footwear JSC said that this fresh policy will help her company sell more goods.
“The economy is bouncing back and we hope more new feasible solutions will continue being promulgated, helping enterprises like us to not only stay afloat but also weather all difficulties now and ahead. This will help the economy ensure the government desired economic growth,” Thuy said.
