Vietnam Business & Weather Briefing (Oct 12): Consumption Taxes on Gasoline to Stay in Place

Business Briefing

Reference exchange rate

The State Bank of Vietnam set the daily reference exchange rate for the US dollar at VND 23,480/USD on October 12, up VND 29 from the previous day. With the current trading band of +/-3 percent, the ceiling rate applied to commercial banks during the day is VND 24,183/USD, and the floor rate VND 22,777/USD.

The opening-hour rates at many commercial banks increased. Vietcombank listed the buying rate at VND 23,760/USD and the selling rate at VND 24,070/USD, both up VND 50 from the end of October 11. Meanwhile, BIDV also added VND 60 to both rates, listing at VND 23,795/USD (buying) and VND 24,075/USD (selling).

Petrol price

The Ministry of Finance said it does not support removing current special consumption taxes on petroleum in response to recent calls to drop taxes from the Vietnam Chamber of Commerce and Industry (VCCI). Petrol use should remain conservative according to the ministry’s proposal to the National Assembly, citing similar taxes worldwide.

The ministry cited France’s 0.6829 euro per liter, Germany’s 0.3545 euro per liter, and Italy’s 0.4784 euro per liter. Similarly, the Republic of Korea, Australia, Singapore, China, Laos, and Cambodia also maintains fuel taxes ranging from 15% to 16%. Vietnam’s special consumption taxes on gasoline remains at 10% (8% for E5 and 7% for E10). “Vietnam’s current special consumption taxes can be considered as mid to low, especially in comparison to neighboring countries such as Laos and Cambodia,” said a ministry spokesperson.

Meanwhile, the ministry said it supported other measures to bring down fuel prices, including a 50% reduction of special consumption taxes on gasoline (E5 and E10 included), up to a 50% reduction of VAT on diesel, kerosene oil, and Mazut oil. However, how much of a reduction in special consumption taxes on fuel is a matter for the NA’s Standing Committee to decide, according to the ministry.

In March, fossil prices in the Southeast Asian country earlier hit a record high at over VND 30,000 (USD 1.256) per liter. However, prices have since come down after several fees and tax cuts to around VND 20,000 per liter. However, economists predict that fuel prices will likely rise again, at least in the short term, after a recent OPEC decision to cut output by two million barrels daily.

Photo: Suc Khoe & Doi Song

Aviation news: Vietjet resumes direct flights from Da Nang to Tokyo

The route connecting Vietnam’s central city of Da Nang and Tokyo at “the land of Sunrise” – Japan has come back, being ready to welcome people and tourists. With return flights daily, Vietjet makes it easy for people and tourists to fly between Da Nang, dubbed as the “most livable city in Vietnam”, and the interesting tourist, shopping, and discoveries destinations of the most bustling city in Japan.

With just over 4 flying hours along with a reasonable cost of VND 684,000 per flight, Vietjet is the only Vietnamese airline flying directly from Da Nang to Haneda Airport, offering more options to fly to Tokyo in particular and Japan in general besides familiar destinations including Narita airport, Osaka, Fukuoka, Nagoya.

Market news: Automobile sales up 8.5% in September

Members of the Vietnam Automobile Manufacturers’ Association (VAMA) sold 33,463 vehicles of all kinds in September, representing a month-on-month rise of 8.5%. The figure included 25,611 passenger cars, up 2%; 7,539 commercial vehicles, up 37%, and 313 special-purpose vehicles, up 17%. Of the units sold, 17,193 were domestically assembled, up 11%, while the remaining 16,270 were imported, up 6% from the previous month.

In the January-September period, VAMA members sold 296,403 units, surging by 57% year-on-year. The sales of passenger cars surged 78% to 231,698, while that of commercial vehicles was up 10% to 40,495, and special purpose vehicles, up 2% to 4,210. In the period, the sales of domestically assembled and imported cars reached 169,958 units and 126,445 units, up 58% and 55%, respectively, over the same period last year.

Photo: Zing

Growth forecast: IMF forecasts Vietnamese GDP growth to continue at 7% this year

Vietnamese GDP growth is projected to surge by 7% this year, thereby taking the lead among the group of five emerging markets in Southeast Asia (ASEAN-5), according to the International Monetary Fund (IMF)’s World Economic Outlook Report for October. Most notably, the IMF has described the country as a bright spot in the global economy and continues to forecast Vietnamese GDP growth to grow 7% this year, higher than its previous projection of 6%.

In line with this, Vietnamese GDP growth is the highest among the ASEAN-5 group made up of Vietnam, Indonesia, Malaysia, the Philippines, and Thailand. The ASEAN-5 group is therefore forecast to grow 5.3% this year, rising from 3.4% last year, but will slow down to 4.9% in 2023, according to details given by the report. The IMF’s latest report outlines that Asia’s real GDP growth is projected to reach 4% this year, in comparison to recorded 6.5% last year.

This represents the fourth time that the IMF has moved to lower its economic growth forecast for the region amid global instability as several major economies such as Europe, the United States, and China has experienced high inflation coupled with an economic growth slowdown, according to VOV.

According to details put forward by the IMF, the dynamic Asia region has been significantly affected by escalating commodity prices, lower demand from major economies, as well as the consequences of disruptions occurring in the global supply chain. Emerging Asian economies are forecast to reach 4.4% this year, rising to 4.9% in 2023, representing a drop of 20 percentage points and 10 percentage points respectively compared to the IMF’s projection made in July. In 2023, Vietnamese GDP growth is also projected to slow to 6.2%.

Previously, international organizations also highlighted Vietnamese economic stability. For example, in the World Bank’s East Asia and Pacific Update in October, Vietnamese GDP growth is projected to stand at 7.2% compared to the projection released in June of 5.8%. In the latest ASEAN+3 Regional Economic Outlook (AREO 2022) report, the ASEAN+3 Macroeconomic Research Office (AMRO) also outlined an optimistic prediction for the Vietnamese economy by raising the country’s GDP growth to 7% from 6.3% in July.

Photo: VNA

Weather Forecast

On October 13, Hanoi is cloudy and sunny during the day. During the night, the city will be windy with a low possibility of rain. The lowest temperature is from 19 to 21 Celcius degrees. The highest temperature ranges from 28-30 degrees.

The Northwest region will be foggy in the morning, while sunny during the day. It will be cold in the morning and at night. The lowest temperature is from 19-22 degrees. The highest temperature is from 27-30 degrees. The Northeast will also be cold in the early morning and late at night. The lowest temperature is from 19-22 degrees, while the highest temperature is from 27-30 degrees.

The area from Thanh Hoa to Thua Thien Hue will have the lowest temperature of 20-23 degrees, and the highest temperature of 27-30 degrees. Provinces from Da Nang to Binh Thuan will have scattered showers and thunderstorms. The lowest temperature is from 23-26 degrees. The highest temperature is from 27-30 degrees.

The Central Highlands will have gentle wind. The lowest temperature is from 19-22 degrees. The highest temperature is from 27-30 degrees. The Southern region will enjoy the lowest temperature of 23-26 degrees and the highest temperature of 30-33 degrees.