Weekly Vietnam Economy News (8 – 14 June, 2020)
Congress approved EVFTA, EVIPA
On the morning of June 8, the National Assembly officially pressed the voting button to approve the Free Trade Agreement between the Socialist Republic of Vietnam and the European Union (EVFTA).
EVFTA is expected to help Vietnamese companies gain better access to European markets, thus ensuring Vietnam’s economic security.
The trade agreement will remove import duties on Vietnamese products. In return, Vietnam is expected to become more attractive to European investors.
This trade agreement is expected to increase Vietnam’s gross domestic product (GDP) to 2.4% and export 12% by 2030 while helping reduce poverty for 100,000-800,000 Vietnamese.
In the first phase, tariffs will be reduced to 0% for 71% of Vietnam’s exports thereafter, all Vietnamese products will enjoy 0% when shipped to Europe.
EVIPA will help Vietnam strengthen its important political and economic position in Southeast Asia and Asia-Pacific, and enhance its national position in ASEAN and other international organizations. EVFTA will contribute to diversifying the market so that it does not depend too much on a certain market, thereby helping to ensure Vietnam’s economic security.
EVFTA is expected to have a positive impact on both sides, nearly 100% of Vietnam’s export value to the EU will be eliminated import tax after a short journey.
COVID-19 to create the M & A wave in Vietnam
Weak financial stability and lack of capital are forcing many businesses to look for M&A deals in the context of the COVID-19 pandemic.
Foreign investors spent about 2.99 billion USD to contribute capital and buy shares in the first five months of the year. Although the volume of such activities was only 39.1% over the same period last year, the value of transactions increased by 11.6% compared to the first five months of 2019.
COVID-19 is an additional element to drive the M & A trend, saying: Domestic enterprises do not have the financial potential and need to quickly turn around a partner to buy back a project or company of them as a way to solve their problems. It is likely that a pandemic will promote real M & A transactions faster because buyers are willing to negotiate a more appropriate price than before.
The procedure for establishing a business in Vietnam is quite complicated, so instead of having to set up a new company, some investors will choose to buy another company to reduce costs. A pandemic is the right time to make companies lower prices to sell faster, easier to create successful M & A transactions. ”
M&A is a new development trend in this period. Viet Nam should welcome all types of investment in such a difficult context, but there should also be a strict control mechanism to avoid the risk of receiving bad capital flows or acquiring important industries.
Actions that promote economic growth bring momentum
Vietnam’s efforts to promote public investment have gained strong momentum, creating a solid foundation for the country to promote economic growth.
According to the Ministry of Finance, the total public capital available for 2020 is about VND 700 trillion (US $ 30.4 billion), 2.2 times higher than last year’s 312 trillion VND (13.56 billion). About 31.1 trillion dong (US $ 1.35 billion) was disbursed in May, up 17.5% during the year. In the first five months, this figure was 116.3 trillion dong (more than 5 billion USD), up 15.6% year on year. The government requires VND 700 trillion to be fully disbursed during the year.
The Government develops policies to promote key economic regions
Prime Minister Nguyen Xuan Phuc has asked related ministries and agencies to develop policies to develop key economic regions to promote post-pandemic economic growth.
Action plans must be developed to attract investment flows from changes in global value chains, keeping an eye on large multinational groups and technologically advanced, modern and eco-friendly groups. school.
Investment and credit incentives can be considered for key economic sectors to attract large-scale projects in a number of priority areas.
The northern key economic region will focus on attracting high-tech projects, processing, manufacturing, electronics, services, banking, finance and logistics to form research centers. and develop to promote scientific and technological application and innovation.
The central key economic region will give priority to the development of marine economy and ecosystems for the automotive industry, transportation and tourism services.
The focus of the Southern Key Economic Region will attract large-scale and high-tech projects to build the value chain.
The Mekong Delta (Mekong River) will focus on developing high-tech agriculture, agricultural processing industry, Phu Quoc island tourism as well as effectively implementing measures to promote the sustainable development of areas suitable for climate change.
The Prime Minister also asked important economic zones to improve their linkages to promote economic growth.
Compiled from many sources by LOOKOFFICE
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