Samson » July 30th, 2021
US removes tariff threats against Việt Nam
25th July, 2021
The Office of the US Trade Representative (USTR) on Friday issued a formal determination in the Việt Nam Currency Section 301 investigation, under which the agency will not take any tariff action against Việt Nam.
A statement by the USTR said the move reflects the agreement reached earlier this week between the US Department of the Treasury and the State Bank of Việt Nam (SBV). The determination finds that the agreement between the US Department of the Treasury and SBV provides a satisfactory resolution of the matter subject to investigation and that no trade action is warranted at this time. The USTR, in co-ordination with the US Department of the Treasury, will monitor Việt Nam’s implementation going forward, it said.
US Trade Representative Katherine Tai commended Việt Nam for its commitment to addressing the US’s concerns with its currency practices and setting an important example for the Indo-Pacific region. American workers and businesses are stronger when their partners value their currency fairly and compete on a level playing field, she said, adding that in coordination with the US Department of the Treasury, the US will work with Việt Nam to ensure implementation, and will continue to examine the currency practices of other major trading partners.
Earlier this week, the US Department of the Treasury and SBV reached an agreement to address the US’s concerns about Việt Nam’s currency practices.
A joint statement by the US Department of the Treasury and SBV said that SBV Governor Nguyễn Thị Hồng and US Secretary of the Treasury Janet L. Yellen held a virtual meeting to discuss the issue. The US Department of the Treasury and SBV have had constructive discussions in recent months through the enhanced engagement process, and reached an agreement to address the US Department of the Treasury’s concerns about Việt Nam’s currency practices as described in the US Department of the Treasury’s Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.
Việt Nam confirmed that it is bound under the Articles of Agreement of the International Monetary Fund (IMF) to avoid manipulating its exchange rate in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese đồng.
SBV is also making ongoing efforts to further modernise and make more transparent its monetary policy and exchange rate framework. SBV will continue to provide necessary information for the US Department of the Treasury to conduct thorough analysis and reporting on SBV’s activities in the foreign exchange market in the US Department of the Treasury’s Semiannual Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US. LINK
Việt Nam joins global peers in developing digital money
26th July, 2021
Việt Nam is playing catch-up in a global race to develop its own digital currency and experts believe this will not only help the country develop new technology but also present an opportunity for Việt Nam to join the most technologically-advanced countries.
The Prime Minister last month endorsed the strategy for developing e-Government towards digital Government in the 2021-25 period. In Decision 942/QĐ-TTg issued on June 15, the State Bank of Việt Nam (SBV) is assigned to research the pilot use of ‘virtual money’ based on blockchain technology in the next three years.
This is a remarkable change in the Government’s policymaking given the reality that Việt Nam has not yet recognised cryptocurrencies. So far, the central bank has repeatedly emphasised that owning and trading Bitcoin and other cryptocurrencies is risky for investors as these coins are not protected by law. Virtual currency is a new concept in Việt Nam. There are many different and confusing names in the market such as virtual money, electronic money, digital currency and cryptocurrency.
According to Investopedia, digital currencies can be considered a superset of virtual currencies and cryptocurrencies. Digital currencies can be regulated or unregulated currency that is available only in digital or electronic form. If issued by a central bank of a country in a regulated form, it is called the Central Bank Digital Currency (CBDC).
If existing in an unregulated form, it should be called virtual currency and may be under control of the currency developers instead of a centralised regulator. Cryptocurrencies are also an example of this type. Bitcoin and ethereum are the most popular cryptocurrencies. To date, Việt Nam’s law has no specific definition of virtual currency and virtual assets. Current regulations only refer to the concept of electronic money (e-money) which is pegged to a fiat currency and exists in the form of pre-paid bank cards, e-wallets or mobile money.
SBV has repeatedly affirmed Bitcoin and other virtual currencies are not electronic money and cannot perform the function of a legal currency as a means of payment. Currently, SBV, the Ministry of Justice and the Ministry of Finance (MoF) are studying the legal basis for managing virtual currency and virtual assets. MoF has also set up a research group on this issue.
While most experts agreed the central bank should clarify the concept of virtual money in the latest Decision 942, finance specialist Nguyễn Trí Hiếu said the “virtual” word can lead to negative thinking as it has been associated with fraudulent projects spreading in the media. “I think the central bank may use the concept of digital currency or cryptocurrency to reflect the intrinsic value of this form of money,” Hiếu told Việt Nam News.
More than 60 central banks across the world are exploring and actively developing their own digital currencies to modernise financial systems as well as counter a possible threat from cryptocurrencies, according to PwC. Last year, The Bahamas became the first country to launch a central bank digital currency (CBDC) nationwide.
Among major monetary authorities, China is the front-runner in the global race to launch CBDC and is testing a digital yuan, or e-CNY, in several cities. Meanwhile, the European Central Bank is planning to introduce a digital euro within the next five years. The United States lags behind in its own research but the US Federal Reserve has said it is more important to get its approach right rather than leading the pack.
In Việt Nam, SBV seemed to be hesitant in building a legal framework for digital currency. Last year, SBV proposed a pilot regulatory sandbox for fintech companies but did not mention digital currency. “Việt Nam is relatively slow in starting to research digital currency but it’s also not too late. Digital currency is an inevitable trend for a digital future,” Hiếu said.
While major currencies of the US, EU and Japan have had great influence in the global currency basket and international trade. Hiếu said issuing digital currency of small countries like Việt Nam would lift its position in the new global financial system which will be reshaped in the future with the rapid development of technology. “The world is entering the digital economy era. Along with the development of Industry 4.0, AI, 5G, this is a challenge for Việt Nam but also an opportunity to rise in the ranks of advanced countries with the most developed technology,” Hiếu said.
Huỳnh Phước Nghĩa, Deputy Director of the Institute of Innovation (University of Economics HCM City), also said in many issued policies, Việt Nam has identified technology as key for future development. This policy is backed by the strong development of e-commerce and online payments. “The rate of non-cash payments is on the rise in Việt Nam. The issuance of digital currency could also help accelerate this process,” Nghĩa was quoted as saying on thanhnien.vn.
Vietnamese people are predicted to be ready to accept digital money. Việt Nam ranked second in terms of crytocurrency use among 74 surveyed economies by Statista in 2020.
In Decision 942, the Government also focuses on prioritising research and development of some core technologies in which Việt Nam has advantages such as QR codes, artificial intelligence (AI), blockchain, virtual/augmented reality (VR/AR) and Big Data, facilitating deployment of digital Government. “However, this is also a big challenge for the SBV as this is an infant and new market and there is no real experience in the world to refer to,” Hiếu said, noting new issues such as concepts, how to store digital money and put it in circulation, building electronic systems, national networks and ensuring information security all need to be developed comprehensively. LINK
Việt Nam welcomes US decision not to take trade action against Việt Nam
25th July, 2021
Việt Nam has welcomed the decision of the United States Trade Representative (USTR) not to take trade action in connection with the investigation into Việt Nam’s currency policy, spokesperson for the Vietnamese foreign ministry Lê Thị Thu Hằng said on Saturday.
The USTR Office on July 23 issued a formal determination in the Việt Nam Currency Section 301 investigation saying the agreement reached between the US Department of the Treasury and the State Bank of Việt Nam (SBV) provides a satisfactory resolution of the matter subject to investigation and no trade action is warranted at this time.
Responding to reporters’ question about the decision of the USTR, the spokesperson said it is a positive step following the agreement reached on July 19 between the SBV and the US Department of Treasury.
She stressed that it is also thanks to the outcome of constructive dialogue with good will by both sides to address outstanding problems in bilateral economic ties, towards building a stable and sustainable relationship in the spirit of the comprehensive partnership between Việt Nam and the US. LINK
2021 Vietnam Annual Economic Report launched
30th July, 2021
The 2021 Vietnam Annual Economic Report entitled “Repositioning Việt Nam in the Global Dynamics” was unveiled on July 29 by the Vietnam National University – University of Economics and Business.
The report analyses Việt Nam’s competitive edge based on its advantages and engagement in the global supply chain. It also touches on the adverse impacts of COVID-19 on the global economy at large and Việt Nam in particular.
The report has been released annually by the university in association with its affiliate the Vietnam Institute for Economic and Policy Research (VEPR) for 12 years.
This year, exports and public investment are projected to become a driving force for the Vietnamese economy. With influxes of foreign investment into Việt Nam, exports in the sector will have an important role to play for economic growth in upcoming years. However, the growth rate of exports may strongly rely on the global economy recovery and shipments of traditional commodities, experts warned.
Based on results obtained in the first six months and the complexities of the pandemic, the VEPR believes that the economic growth in the remaining months will depend on efforts in COVID-19 prevention and control, vaccination speed and scale and efficiency of support packages, among others. The institute also put forward growth scenarios for the remaining months.
If the pandemic is brought under control in late third quarter and Việt Nam reaches herd immunity in the second quarter of 2022, and the economic growth is projected at 4.5 – 5.1 per cent. In other scenario, the pandemic is controlled in the next months and herd immunity is reached by Q1 2022, the national economy may expand between 5.4 per cent and 6.1 per cent.
If economic activities will not be able to resume by the fourth quarter of this year, Vietnam may see an economic growth rate of 3.5-4 per cent. LINK
Source: Dinar Recaps
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