The tax cut, to be effective for six months starting from June, would reduce the government's budget revenue by 35 trillion dong ($1.49 billion), the report said, citing a government forecast.
Vietnam's economic growth slowed to 3.32% in the January-March period, against a 5.92% year-on-year expansion in the fourth quarter of 2022. Its exports in the first four months of the year fell 11.8% from a year earlier to $108.6 billion.
Retail sales, in the domestic market with a population of 100 million, rose 12.8% in the January-April period from a year earlier, according to the General Statistics Office.
Manufacturing PMI extends contraction in April
Vietnam's manufacturing activity extended its declines in April as companies struggled to find new orders amid weak global demand, according to a report released by S&P Global Market Intelligence on Thursday.
The S&P Global Vietnam manufacturing Purchasing Managers' Index (PMI) dipped to 46.7 in April from last month's reading at 47.7, well below the 50.0 threshold that separates growth from contraction.
Factory output and new orders have decreased for the second month in a row and at faster paces than last month, the index data showed.
Companies were reported to find it more difficult to secure new orders at the start of the second quarter as export weakness persisted amid a gloomy global outlook.
Overall new orders fell at a quicker pace from the previous survey period while new business from overseas markets contracted again during the month but less than in March, the report found.
The decline in both manufacturing output and new orders led to falls in input purchasing activity and staffing levels, data showed.
Banks are allowed to buy back corporate bonds
The State Bank of Vietnam (SBV) has just issued Circular No. 03/2023/TT-NHNN stipulating the suspension of the implementation of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN dated on November 10, 2021 regulates the purchase and sale of corporate bonds by credit institutions and foreign bank branches.
Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN on the principles of buying and selling corporate bonds stipulates: Within 12 months after the sale of corporate bonds not listed on the stock market or unregistered For transactions on the Upcom trading system (unlisted corporate bonds), credit institutions may not purchase unlisted corporate bonds that have been sold by credit institutions and/or unlisted corporate bonds. issued in the same lot/series as the unlisted corporate bonds sold by the credit institution.
After 12 months from the date of sale of unlisted corporate bonds, credit institutions may only purchase unlisted corporate bonds that the credit institution has sold and/or unlisted corporate bonds issued with the issuance lot/same tranche with unlisted corporate bonds that the credit institution has sold when: meeting other regulations in Article 4, Circular No. 16; the buyer of this corporate bond from a credit institution shall pay the entire amount of the purchase of corporate bonds at the time the credit institution signs a contract to sell corporate bonds to the bond purchaser; bond issuers are rated at the highest level according to the credit institution's internal credit rating regulations at the latest time before the credit institution buys corporate bonds.
Central bank to restructure 4 commercial banks
Vietnam's central bank has planned to restructure four weak commercial banks in a move to strengthen the country's banking system, the Vietnam News reported on Monday.
The four poorly-performing banks are DongA Bank, Vietnam Construction Bank, Ocean Bank and Global Petro Bank, the central bank said in a report submitted to the National Assembly's Economic Committee last month.
Among the troubled banks, Vietnam Construction Bank, Ocean Bank and Global Petro Bank would be forced into takeover deals with stronger commercial banks, including Vietnam's largest lender Vietcombank, the report said.
The move was part of the central bank's efforts to consolidate the local banking system and tackle non-performing loans, according to the report.
Bad debts of the local system of credit institutions accounted for 2.91 percent of their outstanding loans by the end of February, up from 2 percent at the end of 2022 and 1.49 percent at the end of 2021, said the central bank, which set the target of keeping the bad debt ratio under 3 percent.
Meanwhile, the potential bad debts could mount up to around 5 percent of total outstanding loans due to a real estate slump, said the central bank.
The real estate market has contracted since 2022, leading to dwindling investments from developers and home buyers.
Boosts rare earths output by tenfold
Vietnam's mined output of rare earths soared tenfold last year, U.S. data showed, as global firms have flocked to the Southeast Asian country with the world's second largest estimated deposits to reduce reliance on China for the key industrial metals.
Past attempts to build up Vietnam's rare earth industry have stuttered due to falling prices and regulatory hurdles, but growing sales of electric vehicles (EVs) and firms' efforts to diversify their suppliers has revived interest in Vietnam.
Australian Strategic Materials Ltd (ASM) said on Monday that it would buy 100 tonnes of rare earth oxides this year from Vietnam Rare Earth Co and is looking for a longer term supply agreement.
ASM said a longer-term agreement with the Vietnamese firm would provide it with a multi-source feedstock option and additional supply security for its processing plant in South Korea.
Rare earths are a group of elements that have applications in electronics manufacturing and batteries, making them important for the global transition towards cleaner sources of energy and in defence.
Vietnam's rare earth mine production jumped to 4,300 tonnes last year from 400 tonnes in 2021, according to the United States Geological Survey (USGS), a government agency.
Its output is a tiny fraction of the amount top producers mined last year. China, the world's biggest producer, mined 210,000 tonnes in 2022, the United States 43,000 tonnes and Australia 18,000 tonnes.
T.Huong
Source: Vitic/Reuters