Arrest records

Mr. Ngo Hung, Secretary of the Party Committee of Vinh Chau Town of Soc Trang Province, on April 17, said that the price of shallots was at an all-time low, and the locality was carrying out many solutions to help farmers to consume their produce.

The Economic Department of Vinh Chau Town informed that at present, there are more than 51,000 tons of shallots that cannot be sold. Earlier, farmers had harvested shallots massively from January to February, with a total area of 5,300 hectares. However, up to now, shallots have not been able to consume yet.

The price of shallots packed in mesh net bags is currently from VND15,000 to VND20,000, while that of unharvested shallots grown on sandy soil is only VND4,000-VND5,000 per kilogram and VND9,000-VND10,000 per kilogram for those grown on field soil.

Mr. Ma Chi Tho, Head of the Economics Department of Vinh Chau Town, said that because shallots originating from China and Thailand were sold on the market at only VND3,000 per kilogram, so domestically-grown shallots also declined. Besides, due to the complicated situation of the Covid-19 pandemic, shallots could not be exported in the past months. Previously, Vinh Chau shallots were mainly exported to China.

Mr. Thach Nua, 52, a farmer in Vinh Hai Commune in Vinh Chau Town, said that his family had planted 1.5 hectares of shallots and finished harvesting nearly a month ago. However, because the price of shallots was too low, his family had to stockpile about 60 tons of shallots to wait for the price to go up. With the current average price of VND6,000-VND9,000, farmers suffer heavy losses, with an average loss of nearly VND10 million per 1,000 square meters of shallots. Currently, the prices of seeds, fertilizers, and plant protection drugs are quite high, so the prices of shallots at the fields must be from VND15,000 per kilogram upwards for farmers to earn profits.

Not only Mr. Thach Nua’s family, but many other shallot farmers in Vinh Chau also face difficulties because of the record low price of shallots. Many families cannot afford to start a new shallot crop and do not have warehouses to store shallots, or they have to sell shallots at low prices because they must pay for fertilizers and plant protection drugs.

Mr. Ngo Hung said that besides focusing on carrying out solutions to find a market for shallots, the Party Committee of Vinh Chau Town has agreed to call for support of local officials to “rescue” shallots, contributing to helping shallot farmers to overcome the current difficult situation.

The market ended lower last week as many large-cap stocks faced selling pressure after the VN-Index hit a new high of over 1,255 points.

Dung, the owner of a hotel, said he has a “treasure” hidden at the bottom of the pond which yields about VND34 billion a year.

Goldman Sachs expected exports to be Vietnam’s major driving force for economic recovery.

In 2020, Vietnam’s GDP growth is set to slow to 2.7% and rebound to 8.1% next year, according to the US-based investment bank Goldman Sachs.

Forecast for Vietnam’s GDP growth.

Goldman Sachs’ 2.7%-GDP growth forecast for Vietnam in its first ever macro-economic report on the country, one of the fastest growing economies in Asia, is lower than that of the World Bank (2.8%), but higher than ADB’s 1.8%.

While Vietnam’s economy growth slowed to 3.8% and 0.4% in the respective first and second quarters, the US bank expected GDP growth to quickly recover in the third quarter, mainly thanks to public investment, retail’s revenue and exports.

Notably, Goldman Sachs expects exports to be Vietnam’s major driving force for economic recovery. In the first eight months of 2020, Vietnam’s trade surplus reached an all-time high of US$13.5 billion, representing a 150% increase compared to the same period of last year (US$5.47 billion)

The bank’s report pointed to three major advantages contributing to a growing export turnover.

Firstly, Vietnam holds significant advantage in regional supply chains as the country is located in close proximity with China.

The labor cost in Vietnam is also considered competitive, which remains at half of China’s. For example, the minimum wage in major cities such as Hanoi or Ho Chi Minh City is regulated at US$190 per month, significantly lower than the US$360 in Shanghai. Meanwhile, the minimum wage in other cities in Vietnam and China were estimated at US$132 and US$220 per month, respectively.

According to Goldman Sachs, these factors led to a shift in production of firms in the fields of textile and footwear from China to Vietnam, especially during the US – China trade war. Since 2010, the FDI investment capital that was initially bound to China, South Korea, Japan or countries in ASEAN have now flowed to Vietnam.

Meanwhile, the fact that Vietnam is currently member of a number of free trade agreements (FTAs) with major trading partners could shield the country from growing protectionism globally. For instance in 2019, at the peak of the US – China trade tension, Vietnam’s exports had not been much impacted, which eventually led to a record trade surplus of US$11.12 billion that year.

In the future with the presence of the EU – Vietnam Free Trade Agreement (EVFTA), Goldman Sachs expects Vietnam’s exports to continue growing.

Secondly, Vietnam’s structure of export products with a focus on hi-tech items would continue to be a major plus point for Vietnam. Since 2015, export turnover of products such as smart phones and electronic appliances have exceeded that of traditional items like textile or footwear.

In the January – August period, Vietnam’s export turnover of electronic products increased by 6.3% year-on-year amid the Covid-19 pandemic, accounting for 70% of total exports.

Thirdly, Vietnam’s long-standing trade partnership with China is also an advantage, as the latter would be among a handful of economies with a positive economic growth this year.

It is worth mentioning that China is currently Vietnam’s largest buyer.

In its baseline scenario, Goldman Sachs expects Vietnam’s exports to reach US$180 billion by the end of 2021, assuming the world would gradually contain the pandemic and the development of Covid-19 vaccine remains on track.

Amid global uncertainty, Vietnam continues to attract fresh FDI and remains an exception to a subdued private investment outlook of the Southeast Asian region in recent quarters.

Despite the second Covid-19 outbreak that will likely moderate the pace of third-quarter growth, Vietnam is predicted to remain the strongest growth performer this year in the Southeast Asian region with a GDP growth rate of 2.9%, thanks to effective virus containment, according to HSBC.

Source: HSBC.

In fact, the HSBC expected Vietnam would be the only country among six major economies in the region, or ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), to record a positive economic growth, and then rebound to over 8.55% in 2021.

In contrast, the ASEAN-6 is predicted to contract 4.4% in 2020. This is ultimately a reflection of the fact that all ASEAN economies except Indonesia announced some form of hard lockdown to combat the virus, stated HSBC’s report.

The lockdowns and corresponding hit to mobility have significantly impacted private consumption, which is the largest component of growth in ASEAN. As a result, this was the main drag on growth in the first half of the year in all the economies, with investment a close second.

According to the HSBC, while the region’s private investment outlook has been subdued in recent quarters, owing in part to a moderation in FDI inflows, Vietnam has been an exception. Amid global uncertainty, the economy continues to attract fresh FDI.

A report from the Ministry of Planning and Investment (MPI) revealed that year to August 20, 1,797 new projects have been approved with total registered capital of US$9.73 billion, up 6.6% year-on-year in capital.

The report shows that out of 106 countries and territories investing in Vietnam in the first eight months of 2020, Singapore took the lead with US$6.54 billion, followed by South Korea (US$2.97 billion), and China (US$1.75 billion).

The World Bank in late July predicted Vietnam’s economic growth at 2.8% this year, the world’s fifth-fastest-growing economy, while the government targets a growth rate in range of 3 – 4%.