Vietnam Business & Weather Briefing (Sep 24): Vietnam Airlines named among world’s Top 100 Airlines

Vietnam Business & Weather Briefing (Sep 24): Vietnam Airlines was named among the world’s Top 100 Airlines in 2022 by Skytrax, Central bank of Vietnam raises interest rates to rein in inflation

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Business Briefing

Gold rate: VND 65.75 million/tael (buying) – VND 66.55 million/ tael (selling)

Aviation news: Vietnam Airlines named among world’s Top 100 Airlines in 2022 by Skytrax

Finance news: Central bank of Vietnam raises interest rates to rein in inflation

Export news: Garment-textile sector must go green to boost exports to EU: experts

Weather Forecast

Cool-weather and rain remains in both Hanoi and Ho Chi Minh City

Business Briefing

Gold rate

On the morning of September 24, SJC’s gold bar is listed at VND 65.75 million/tael (buying) and VND 66.55 million/ tael (selling), down VND 50,000 compared to yesterday.

Aviation news: Vietnam Airlines named among world’s Top 100 Airlines in 2022 by Skytrax

The national flag carrier Vietnam Airlines has been ranked 48th in the World’s Top 100 Airlines in 2022 announced at the World Airline Awards by Skytrax. The ranking is based on more than 14 million customer surveys in more than 100 countries between September 2021 and August 2022.

In different categories of the 2022 World Airline Awards, Vietnam’s Bamboo Airways was ranked 15th among the world’s Best Regional Airlines, and second among Asia’s Best Regional Airlines. Meanwhile, Vietjet Air was named the Best Low-Cost Airline in Vietnam.

The World’s Top 10 Airlines included Qatar Airways (Qatar), Singapore Airlines (Singapore), Emirates (UAE), ANA (Japan), Qantas Airways (Australia), Japan Airlines (Japan), Turkish Airlines (Turkey), Air France (France), Korean Air (the Republic of Korea), and Swiss International Air Lines (Switzerland). This year marked the seventh time Qatar Airways has been named the world’s Best Airline since 1999.

Vietnam Business & Weather Briefing (Sep 24): Vietnam Airlines named among world’s Top 100 Airlines
Photo: Zing

Finance news: Central bank of Vietnam raises interest rates to rein in inflation

The State Bank of Vietnam (SBV) has decided to raise operating interest rates by approximately 1% as of September 23 in an effort to keep inflation in check and maintain macroeconomic stability. Accordingly, the central bank increased the refinancing interest rate from 4.0% to 5.0% per year, the rediscount rate from 2.5% to 3.5% per year, and the overnight lending rate in interbank electronic payment and lending to offset the capital shortage in the clearing payment of SBV with banks from 5.0% to 6.0% per year.

The interest rate for non-term and one-month deposits in VND is to be capped at 0.5% annually, while that for one to six-month deposits will stand at 5%. The move comes following the Federal Reverse (Fed) raising interest rates by 0.75% on September 21, marking the third rise this year in an attempt to tighten monetary policy and curb high inflation.

Addressing a press briefing in Hanoi on September 23, Dao Minh Tu, deputy governor of the SBV, affirmed that the central bank would continue to execute monetary policy in a cautious, flexible, and synchronous manner. Controlling inflation and sustaining macroeconomic stability is the top priority of the State Bank of Vietnam, affirmed Tu. He went on to say that the central bank would continue to keep a tight grip on risky areas such as real estate and securities, including the purchase and sale of corporate bonds of credit institutions in accordance with regulations to ensure the safety of the system.

VNDIRECT Securities experts described the SBV’s decision as being a timely, yet relatively drastic move amid rapid changes occurring in the international financial market. However, they were a bit surprised at the 1% hike, a figure which is higher than their previous forecast of 0.5% for 2022. After adjustments made in the interest rate hike, it is unlikely that there will be another rise in operating interest rates this year. It is forecast that the deposit interest rate may increase by between 0.3 – 0.5% from the existing level by the end of the year. In line with this, the 12-month deposit rate of commercial banks is anticipated to increase to between 6.1% and 6.3% annually by the end of the year.

Think tanks also noted that the exchange rate will remain under pressure moving into the final months of the year, particularly as the US$ will jump to a new two-decade high as a result of the FED maintaining the roadmap in order to raise interest rates. In line with this, the VND exchange rate is projected to depreciate by between 3.5% and 4% against the US$ in 2022. Amid the impending hike in interest rates, experts emphasized the need to accelerate the implementation of the 2% interest rate bailout package for businesses as a way of contributing to stabilizing interest rates. According to the SBV, only VND13.5 billion had been disbursed as of August, equivalent to less than 0.1% of the disbursement plan for the year.

Analysts underlined the necessity of deploying the 2% interest rate support package faster in a bid to help curb the increase in lending rates to support businesses amid the possible hike in operating interest rates and deposit rates over the coming months. The effective implementation of the package is therefore expected to help reduce lending interest rates by an average of 0.2 – 0.4% and partially offset the increase in interest rates, they noted. The 2% interest rate support package is included in the VND40 trillion economic stimulus package set out in the National Assembly‘s Resolution 43 and the Government’s Decree 31 for cooperatives and businesses operating in key industries such as aviation, tourism, transportation and warehousing, agriculture, forestry and fishery, and manufacturing processing.

Vietnam Business & Weather Briefing (Sep 24): Vietnam Airlines named among world’s Top 100 Airlines
Photo: Zing

Export news: Garment-textile sector must go green to boost exports to EU: experts

Experts have advised Vietnamese textile-garment and leather-footwear firms to improve the sustainability of their production for export to the European Union (EU) after the European Commission (EC) proposed the goods must comply with ecological design criteria. Earlier this year, the EC proposed a new strategy to make textiles more durable, repairable, reusable, and recyclable, to tackle fast fashion, textile waste, and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights. Europe is a traditional and key market for Vietnam’s textile and footwear industries, especially with the EU-Vietnam Free Trade Agreement (EVFTA).

Phan Thi Thanh Xuan, Vice Chairwoman and Secretary General of the Vietnam Leather Footwear and Handbag Association (LEFASO), said to meet the EU market’s requirements, local businesses must improve the quality of their human resources and production facilities, and employ clean energy and green technology. Xuan noted the leather and footwear industry has so far made good use of the EVFTA. Turnover from shipments to the EU now makes up 30% of Vietnam’s total export value, an increase from the previous proportion of 25-28%.

Regarding exports to the bloc, in addition to ensuring product origin and the use of recycled materials, meeting labor and environmental standards is essential, she said. Echoing the view, Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS), said an important solution is to invest in technology because it will help solve the labor deficit and environmental problems. According to Giang, the number of textile enterprises using clean energy has increased to 60-65%, either via buying electricity or investing in installing solar energy projects. Giang predicted that in the next five to seven years, 100% of textile and garment companies can fully meet the clean energy target.

Experts said in the long run, improving product quality is key to ensuring sustainable export growth. The work requires efforts from enterprises and state management agencies, and incentives to encourage investment in supporting industries and material supply centers. The EU is tightening standards on environmental protection, so localities should promote the building of modern specialized waste treatment systems, they advised.

Vietnam Business & Weather Briefing (Sep 24): Vietnam Airlines named among world’s Top 100 Airlines
Photo: Zing

Weather Forecast

September 25: Hanoi will be cloudy, with moderate rain and thunderstorms. During thunderstorms, there is a possibility of tornadoes, lightning, strong winds, and flooding in low-lying areas. The highest temperature ranges from 32 – 34 Celcius degrees, and the lowest relative humidity is common at 75 – 82%.

Ho Chi Minh City will be cloudy and sunny with scattered showers and thunderstorms, especially in the afternoon. During thunderstorms, there is a possibility of tornadoes, lightning, and strong gusts of wind. The highest common temperature is 30 – 31 Celcius degrees, and the lowest average humidity of the day is 76 – 81%.

Valerie Mai