BIDV Review 62 - July 2020

A Newsletter of Bank for Investment and Development of Vietnam JSC • Issue No.62 | July 2020

Promoting cashless payment at hospitals Moody’s affirms BIDV’s credit ratings

download Bidv review

BIDV headquarters seen from Hoan Kiem Lake, Hanoi

ABOUT BIDV Founded in 1957, BIDV is the largest commercial bank in Vietnam by assets and charter capital. The bank boasts subsidiaries in finance, banking, securities and insurance. It has a wide network of more than 1,060 branches and transaction offices as well as commercial presences in six countries and territories. BIDV stock (BID) is listed on Ho Chi Minh City Stock Exchange (HOSE). For more information, please visit www.bidv.com.vn.

EXECUTIVE PRODUCER QUACH HUNG HIEP, Ph.D Bank for Investment and Development of Vietnam JSC

Senior Executive Vice President EDITORIAL BOARD Branding and Communication department HEAD OFFICE: BIDV Tower, 35 Hang Voi str., Hoan Kiem dist., Hanoi, Vietnam Tel: (+84) 24 22205544 Fax: (+84) 24 22225316 Contact center: 19009247 Email: bidvreview@bidv.com.vn License No.15/GP-XBBT dated 27 February 2020 by the Ministry of Information and Communications Printed at Vietnam Book Printing Joint Stock Company

Editor’s Letter

J

Dear readers, uly witnessed the important cooperation of BIDV with its major partners. At the beginning of the month BIDV signed a comprehensive cooperation agreement with Vietnam GS Industry (VGSI), stating it will provide all-in-one financial and banking services to serve VGSI’s diverse project development and investment activities.

On 23 July, BIDV and Gia Dinh People's Hospital implemented uniform non-cash payment methods. The cooperation is significant for all parties, especially customers, aiming to help improve the quality of hospital services, reduce waiting times and mitigate the risk of infection for patients.

Amid the expansion of the Covid-19 pandemic, organisations continue to release forecasts on the macro-economy. Fitch Ratings assessed that Vietnam was positioned to stand out among Asia’s frontier and emerging markets this year in terms of its economic resilience and success in bringing the coronavirus outbreak under control.

BIDV Training and Research Institute updated the information about Cambodia’s macro-economy and trade partnership with Vietnam. Like many countries, Cambodia's economy was hit hard by the Covid-19 pandemic and is forecast to continue facing challenges in the second half of the year. Vietnam is Cambodia's fourth largest trading partner and maintains a close trading relationship with Cambodia.

1

J u ly 2020

Although the Covid-19 pandemic is still affecting the profits and activities of many banks, BIDV’s operation was positively assessed by the global rating agency Moody’s. The agency recently announced it will maintain BIDV's long-term local and foreign-currency deposit and long-term issuer rating, stating that the bank’s capitalisation is strengthened following the external raise. Funding is a key strength for BIDV as the bank's deposit base is supported by its extensive branch network and strong relationships with large Vietnamese corporates.

This month marks the 20th anniversary since the establishment of Vietnam’s stock market.

BIDV Review offers an overview of the country’s current stock market as well as the role of this market in the economy during the last 20 years.

Lastly, spend a few minutes escaping from the bustle of daily life on the final pages of this publication. Here you will find stunning destinations around Hoi An such as Bay Mau coconut forest, An Bang Beach and Thanh Ha Pottery village. Adventure lovers can marvel at the trekking opportunities that abound in Dak Nong – recently designated by UNESCO as a global geopark and covering more than 4,700 sq.m or two-fifths of Dak Nong Province’s land area.

contents

BIDV HIGHLIGHTS

POLICY UPDATE

03. BIDV, VGSI ink comprehensive cooperation agreement

16. Tax administration law takes effect

04. Boosting cashless payment at hospitals

PARTNER

18. BIC insures intertidal project

INSIGHTS

06. Vietnam’s economy poised to bounce back

PRODUCTS & SERVICES

19. Saving money, accumulating fun with BIDV 19. Incentives for savings customers LIFESTYLE

20. Discovering Hoi An

08. Maintaining a strong trade cooperation MARKET MOVEMENTS

10. Leading corporate bond market 11. Moody's affirms credit ratings of BIDV 22. Vietnam’s newest UNESCO geopark CSR

24. One million flags for fishermen

12. Vietnam outperforms among Asia’s frontier sovereigns 14. Stock market changes over 20 years 15. Market scenarios for the second half

2

B I D V revie w

BIDV Highlights

Tha nh Hai

BIDV, VGSI ink comprehensive cooperation agreement laying solid foundations for the two sides to further support as well as expand their business activities and deepening the cooperation in order for the two to grow together. The agreement is a good starting point, marking the successful connection and cooperation between BIDV and Korea's leading businesses in Vietnam, and will help contribute to further promoting economic and diplomatic relations between the two countries.

Representatives of BIDV and VGSI sign the cooperation agreement in Ho Chi Minh City

On 3 July in Ho Chi Minh City, BIDV and Vietnam GS Industry (VGSI) signed a comprehensive cooperation agreement.

U

nder the agreement, BIDV will provide all-in-one financial and banking services relating to credits, guarantees, deposits, payments, foreign exchange, financial derivatives, e-banking and retail banking to serve VGSI’s diverse project development and investment activities. For VGSI, the company will prioritise using the banking services provided by BIDV. Needs for cooperation and investment will be further discussed to ensure effective collaboration in the future.

The signing marked a new development milestone in the comprehensive cooperation relationship between BIDV and VGSI,

3

J u ly 2020

VGSI is a wholly owned subsidiary of GS Engineering & Construction Group (GS E&C) - a member of GS Holdings - the eighth largest multinational corporation in Korea in terms of total assets, operating in diverse fields such as construction, retail and energy.

BIDV Ba Thang Hai branch is authorised by BIDV to implement the comprehensive cooperation with VGSI. The branch and VGSI have had an established relationship since May 2019. In January 2020, the branch signed a contract of guarantee with VGSI relating to off-the-plan homes at the Zeit River County 1 project – part of the ZeitGeist metro city project in Nhon Duc and Phuoc Kien Communes, Nha Be district, Ho Chi Minh City.

The project has garnered significant attention from the property market in Ho Chi Minh City in recent months.

BIDV is the only bank that offers a bank guarantee to buyers within the project.

BIDV Highlights

Vu ong D ao

Boosting cashless payment at hospitals specific characteristics and high technology content and is superior to the methods previously in place.

The service helps shorten the medical examination and treatment process for patients and their family members.

Patients now only need to make one payment before having medical examinations or receiving treatment at clinics, or using the services of hospital

BIDV and Gia Dinh People's Hospital launch cashless payment to bring more convenience to people

On 23 July in Ho Chi Minh City BIDV and Gia Dinh People’s Hospital implemented a new system of uniform non-cash payment, contributing to improving the quality of hospital services, reducing waiting time and mitigating the risk of infection.

T

he payment solution from BIDV emphasises flexibility, utility and ease of use for people compared to more traditional methods.

Payments of hospital fees will be updated immediately on the hospital's management software system. This is an entirely new solution which features

4

B I D V revie w

The service offers diverse, modern and secure forms of hospital fee payment, particularly: • Smart health card: The card stores patient information and integrates a hospital fee payment function. Patients can flexibly deposit cash in different denominations to the card according to their medical needs.

• Paying via Smart POS: Supports patients and family members to pay hospital fees via various types of bank cards such as Napas domestic debit cards, Visa cards, MasterCard, JCB, UnionPay. • Paying via QRcode: Patients and family members can use BIDV SmartBanking and other banking/intermediary payment applications to scan the QRcode displayed on the hospital bill to pay.

• Paying via Kiosk: Patients can proactively pay hospital fees at Kiosks instead of queuing at the cashier desk.

BIDV Highlights

laboratories or pharmacies, without needing to open an account at a bank.

Furthermore, there are no transaction fees and no account balance is required, reducing stress as well as the associated risks of paying by cash.

Thanks to the effective integration between BIDV’s payment solution and the hospital’s management system, this solution will provide effective support to the hospital in collecting hospital fees and managing medical records via smart health cards, contributing to the development and modernisation of the payment system and improving the quality of the hospital services.

Hospital director Dr. Nguyen Anh Dung said: “The hospital has been implementing many solutions to improve the quality of medical examinations and treatment, and administrative reform, contributing to increasing patient satisfaction.

The successful implementation of non-cash payment solutions at Gia Dinh People's Hospital contributes to increasing convenience for people for medical examination and treatment, reducing time and steps in the medical examination and treatment process, and reducing the workload for the hospital’s accounting and cashier staff.”

Cashless payment is a criterion to evaluate service quality of hospitals

According to Dr. Tran Long, senior executive vice president of BIDV, the successful implementation of cashless payment at Gia Dinh People's Hospital will be a model for BIDV to replicate at other hospitals in Ho Chi Minh City and across the country, creating breakthrough cooperation between banking and healthcare sectors in Vietnam. This marks a strong

5

J u ly 2020

transformation in the operation of the smart hospital model, contributing to promoting electronic payment in the health sector.

With the digital transformation strategy, experience, and strength in cooperation with hospitals, BIDV is ready to provide the optimal payment solutions tailored to each unit.

Insights

Vu Van

Vietnam’s economy poised to bounce back While Vietnam’s economy has been seriously impacted by Covid-19, it remains resilient and is poised to bounce back, according to a new World Bank report.

Prospects remain positive According to the latest Taking Stock report, titled “What will be the new normal for Vietnam? The economic impact of Covid-19”, released on 30 July, although the Vietnamese economy suffered from Covid-19 in the first half of 2020, prospects remain positive for both the short and medium term. If the world situation gradually improves, economic activity should rebound in the second semester of 2020 so that the economy will grow at around 2.8 percent for the entire year, and by 6.8 percent in 2021. With less favorable external conditions, the economy will expand by only 1.5 percent in 2020 and 4.5 percent in 2021.

The main challenge for Vietnam will be finding new drivers of growth to consolidate the expected recovery.

The country’s traditional sources of growth–foreign demand and private consumption–are unlikely to return to their pre-crisis levels soon, amid continued uncertainties both at home and abroad. Covid-19 has also caused a surge in inequality as the pandemic affects businesses and people differently as, for example, workers in the service sector has seen a bigger decline in their income than farmers.

“To adapt to the new normal,

policymakers must find new ways to compensate for the weakening of the traditional drivers of growth while managing rising inequality,” said Stefanie Stallmeister, World Bank Acting Country Director for Vietnam.

“However, by being ahead of the curve of the COVID-19 crisis, Vietnam has the unique opportunity to increase its footprint on the global economy and become a leader in tomorrow’s digital world.”

Three complementary measures are suggested for the government to act today so that the country can avoid the Covid-19 economic trap and return to its historical trajectory of rapid and inclusive growth. First, it should consider removing mobility restrictions on international travel, gradually and carefully to balance with safety concerns, as Vietnam’s economy is dependent on foreign visitors and investments. The second measure is to accelerate the execution of the existing public investment program to enhance domestic demand. However, the effective implementation of this action will require significant improvements in the allocation of resources and financial management. Indeed, the authorities will need to ensure that their resources are directed to the projects with the biggest positive impact on the economy and jobs, while

6

B I D V revie w

minimizing technical and financial losses during implementation. Third, it should provide targeted support to the private sector, particularly to the hardest-hit industries such as tourism and manufacturing exports, through a combination of financial assistance and smart incentives.

Vietnam can also exploit several global trends, which have been accelerated by Covid-19, to push ahead its domestic agenda. For example, in a new global trading system, Vietnam can consolidate its existing footprint by developing strategic alliances with countries that have also low rate of Covid-19-infections and boosting promotion efforts to attract companies planning to diversify their supply chains. Similarly, Covid-19 presents a unique opportunity to move toward a more “contact-free” economy by promoting digital payments, e-learning, telemedicine and digital data

Insights

pandemic was weighing on FDI attraction in the period but also created significant opportunities for Vietnam to capture the capital flow spurred by the global shift of value chains, given the country’s improved investment climate and infrastructure system.

sharing and, by so doing, help respond to the fast-expanding demand for quality services by the middle-class in the country.

FDI rises in July Between January and July 2020 Vietnam attracted a total sum of USD18.82 billion foreign investment, equivalent to 93.1 percent of the same period last year. A sum worth USD10.12 billion was disbursed in the seven-month period, equivalent to 95.9 percent.

There were 1,620 new FDI projects in the period with a total registered capital of USD9.46 billion. About 619 projects had their registered capital increased in the period by more than USD4.7 billion altogether, up 37.7 percent. However, capital construction for share purchases dropped by around 50 percent to USD4.64 billion.

According to the Foreign Investment Agency under the Ministry of Planning and Investment of Vietnam, FDI flowed into 18 sectors, led by the manufacturing and processing industry with total registered capital of more than USD8.96 billion. Power production and distribution ranked second with a total registered capital of USD3.95 billion.

104 countries and territories have invested in Vietnam. Singapore was the largest investor in the period which registered to pour USD6.44 billion in Vietnam, followed by the Republic of Korea with USD2.8 billion, and China with USD1.7 billion. In terms of new projects, the Republic of Korea ranked first with 421 projects, China came second with 237 projects and Japan came third with 175 projects.

The agency said that the Covid-19

7

J u ly 2020

According to a research on FDI attraction policies of countries in the region, most of the governments use the following 5 instruments: (i) tax (Indonesia plans to cut corporate income tax from 25 percent to 22 percent this year and to 20 percent in 2022; Thailand offers tax incentives for investment projects in medical equipment and pharmaceuticals); (ii) land (Indonesia is committed to set aside 400 ha for investors and is expected to establish 19 industrial zones by 2024); (iii) commitment to improving investment climate (such as Indonesia and Vietnam); (iv) offering professional training package to workers (Thailand) and (v) measures to increase barriers in order to prevent acquisition in some areas (USA, Japan, EU, UK, Australia).

The recent European Chamber of Commerce in Vietnam’s Business Climate Index survey found that European business leaders were positive about the country’s business and investment environment with around half predicting that Vietnam’s macro-economic climate would “stabilise and improve” in the next quarter.

Insights

Thu Chi

Maintaining a strong trade cooperation The Cambodian economy is highly dependent on international trade. Its heavy industry has yet to develop and its light industry holds a relatively weak position in the global value chain.

Its areas of strength include processing sector for export (such as garments and footwear) and orders from FDI enterprises or from abroad. Meanwhile, domestic consumption still depends on supply from overseas.

Like numerous economies around the world, the Cambodian economy has been strongly impacted by the Covid-19 pandemic.

While the effect is likely to take years to fully recover from, according to BIDV Training and Research Institute, there are still positive figures for Cambodia’s economy.

Macro-economy amid Covid-19 The assessment from BIDV Training and Research Institute is based on statistics from the National Bank of Cambodia (NBC) as of 14 July on the latest information and developments related to the Cambodian macroeconomy, financial and banking market in the first six months of 2020.

In the first half of the year Cambodia's economy was hit hard by the Covid-19.

The pandemic is considered the country’s largest unprecedented shock since 1994, affecting both supply and demand for the country.

8

B I D V revie w

The Cambodian economy is forecast to continue facing challenges in the second half. The NBC and other international organisations (such as the WB, ADB and CEIC) predict that it will be hard for the country's economy to achieve high growth in 2020. GDP growth is forecast to be only 2.3 percent in 2020 (down sharply from 7.1 percent in 2019), before recovering and reaching 5.7 percent in 2021. This is mainly due to the decline of some of Cambodia’s important industries and sectors such as exports, services (especially tourism) and production.

In particular, service sector growth in 2020 could well decrease by 1.7 percent compared to 2019 (especially tourism and real estate). Industrial sector growth is expected to reach 6.5 percent in 2020 (lower than the growth rate of 10 percent seen in 2019), mainly due to difficulties in exporting and narrowing garment and footwear production, construction and real estate industries.

However, the Cambodian Government

Insights

Phnom Penh, Cambodia

and a number of international organisations agree that following the serious impact of the Covid-19 pandemic, the Cambodian economy will recover quickly in 2021. In June, the World Bank forecast that Cambodia's economy would recover and grow by 6 percent in 2021. ADB expects Cambodia to recover quickly by 5.9 percent in 2021.

Trade cooperation continues to rise A number of Vietnam’s outstanding projects have been successfully implemented in Cambodia, contributing to the latter’s socioeconomic development. These include projects belonging to Vietnam Rubber Industry Group, Viettel Group (Metfone Telecommunications Company), BIDV and BIDC (Bank for Investment and Development of Cambodia). The Cambodia-based companies have reported profits, paid taxes and make significant contributions to Cambodia's social security. In the first

six months of the year, four companies invested by Hoang Anh Gia Lai Group have contributed significantly to the positive results of Cambodian agricultural exports.

It can be said that Vietnam’s investment projects in Cambodia are long-term and effective and are contributing to the Cambodian government’s budget revenue, social security, infrastructure and economic development.

Currently, Vietnam is Cambodia's fourth largest trading partner (ranking after the US, China and Thailand). As of 14 July, Vietnam accounted for about 15 percent of Cambodia's total import-export turnover, according to statistics from the NBC. Meanwhile, Cambodia is Vietnam’s 19th largest trading partner.

A noteworthy point in the trade relationship between the two countries: Vietnam has always been a trade surplus to Cambodia with a high

9

J u ly 2020

proportion of exports to total trade turnover (about 80 percent), meeting the demands of Cambodian consumers and economic development. The main export items from Vietnam to Cambodia include petroleum, textiles, iron and steel, textile materials, apparel, leather and shoes. In 2019, Vietnam's trade surplus to Cambodia reached USD3.46 billion - the highest to date.

In the first six months of 2020, affected by the Covid-19 pandemic, the import-export turnover between Vietnam and Cambodia reached USD2.55 billion, down 7.93 percent over the same period last year. In particular, Vietnam's export turnover to Cambodia reached USD2.02 billion, down 6.78 percent year-on-year, and imports from Cambodia reached nearly USD528 million, down 12.08 percent year-on-year, mainly due to the decline in exports of agricultural products from Cambodia to Vietnam. It is forecast that Vietnam will continue to be among Cambodia’s top five largest trading partners.

market movements

Tr a ng Th u

Leading corporate bond market issuers, raising a total of VND47.3 trillion (USD2.05 billion) of corporate bonds. Real estate firms raised a total of VND45.6 trillion (USD1.97 billion) and construction companies raised VND8.5 trillion (USD368 million).

The five banks gaining the largest bond issuance value in the first six months of 2020 include BIDV, Ho Chi Minh City Development Commercial Joint Stock Bank (HDBank), Vietnam Prosperity Joint Stock Commercial Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank) and Saigon - Hanoi Commercial Joint Stock Bank (SHB).

A transaction office of BIDV in Hanoi

BIDV was the biggest corporate bond issuer in the first six months of this year, according to a report from the Hanoi Stock exchange (HNX).

T

he bank raised a total of nearly VND15.17 trillion (USD657 million) in the first half of the year. The two runner-ups were residential real estate firm Vinhomes and consumer staples company Masan, which raised VND12 trillion (USD519 million) and VND10 trillion (USD433 million) in the first six months of 2020.

By sector, banks were the biggest bond

The HNX reported the energy sector, especially wind and solar power firms, are becoming more attractive to investors.

After six months, 130 companies have raised nearly VND156.33 trillion (USD6.78 billion) in total from selling corporate bonds.

The total value of the corporate bond market is equivalent to 8.6 percent of the banking sector’s total deposits and savings, and equal to 19.5 percent of the three local stock exchanges.

In the latest bond issuance on 16 July 2020, BIDV successfully issued VND418 billion (USD18 million) of medium and long-term bonds as a private placement.

Specifically, the bank issued VND260 billion (USD11.3 million) of seven-year bonds, with the right to call the bonds after two years from the issue date; VND125 billion (USD5.4 million) of eight-year bonds, with the right to call the bonds three years from the issue date and VND33 billion (USD1.43 million) of 10-year bonds, with the right to call the bonds after five years from the issue date.

The bonds are non-convertible, non-warranted, non-guaranteed, denominated in Vietnam dong and are subordinated debts of BIDV. Direct debt repayments are required.

The bonds meet the current regulations as calculated in BIDV’s tier 2 capital.

10

B I D V revie w

market movements

Anh Tuan

Moody’s affirms credit ratings of BIDV The global rating agency Moody’s recently announced the ratings of BIDV. According to Moody’s release, BIDV's long-term local and foreigncurrency deposit and longterm issuer ratings were maintained.

M

oody's assessed that the bank’s capitalisation is strengthened following the external raise in 2019, as well as steady improvements in asset quality following the resolution of legacy problem assets and write off of VAMC bonds. Funding is a key strength for BIDV as the bank's deposit base is supported by its extensive branch network and strong relationships with large Vietnamese corporates.

BIDV's long-term local and foreigncurrency deposit and long-term issuer ratings were maintained and were the highest ratings among Vietnamese banks. The bank received the following ratings: Long term Bank Deposits Local/Foreign currency: Ba3/B1; Local and Foreign currency Long term Issuer Rating: Ba3.

As of 31 March 2020, BIDV’s total assets reached VND1.45 quadrillion

BIDV headquarters in Hanoi

11

J u ly 2020

(USD63 billion), resulting in it maintaining the leading position among Vietnamese commercial banks.

The bank has developed an extensive network, covering 63 provinces and cities nationwide, with 189 domestic branches, a branch in Myanmar and 871 transaction offices.

2020 marks the 15th consecutive year that BIDV has been reviewed by Moody’s. The bank is pioneering in this regard - confirming its commitment to financial transparency as well as compliance with international standards.

In a newly released report, Moody’s said that the challenging economic and credit conditions stemming from Covid-19 will weigh on ASEAN banks' asset quality and profitability.

Moody's expects asset quality and profitability will deteriorate from good levels in 2019 across most banking systems, with Singapore, Malaysia and the Philippines having the best asset quality with nonperforming loans below 2 percent. And while government support measures will offset some of the pressure on banks, they will not fully eliminate the negative impact.

Despite the challenging outlook, the majority of banks are adequately capitalised, and Moody's expects their funding and liquidity will remain sound and stable in 2020-21. For instance, regulators in India, Thailand and Vietnam have restricted bank dividends, a credit positive for banks, while the largest banks will continue to benefit from deposit inflows as they are seen as safe-havens in times of stress.

market movements

Vietnam outperforms among Asia’s frontier sovereigns Vietnam is positioned to stand out among Asia’s frontier and emerging markets this year in terms of its economic resilience and success in bringing the coronavirus outbreak under control, says Fitch Ratings.

T

hese factors should support Vietnam’s ‘BB’ rating, which Fitch affirmed in April 2020 while revising the Outlook to Stable from Positive. Nevertheless, the country faces a number of challenges, including contingent liability risks from stateowned enterprises and structural weaknesses in the banking sector.

“Vietnam is one of only four Fitchrated sovereigns in the Asia Pacific (APAC) that we expect to post positive economic growth in 2020. Official data show the economy expanded by 0.4 percent year-on-year in the second quarter of 2020, despite the impact of the coronavirus pandemic on tourism and export demand, in line with our full-year 2.8 percent growth projection”, Fitch commented.

Foreign Direct Investment in Vietnam (Realised capital)

Fitch forecasts that the pace of expansion will accelerate in 2021, as external demand, including tourism exports, recovers.

The relative strength of Vietnam’s growth momentum owes much to its success in curbing the pandemic.

Vietnam had no reported deaths from Covid-19 as of end-June, according to the World Health Organisation.

This could reflect a variety of factors, including the effectiveness of the official health policy response.

12

B I D V revie w

Vietnam has introduced fiscal stimulus of around VND271 trillion (3.4 percent of GDP) to help offset the effects of the pandemic. This includes tax deferrals, cuts and exemptions, as well as cash transfers to affected workers and households, the latter being worth

market movements

and loan forbearance will add to asset quality problems. These factors will aggravate the structural weaknesses in the banking sector, such as low capital buffers and under reporting of problem loans, which have already dragged on the sovereign rating.

Slower credit growth may, however, provide some relief on capital.

Vietnam’s economic outlook remains vulnerable to shifts in external demand. The country has benefitted from trade diversion associated with rising costs in China and the US-China trade war, and early data suggest it made further gains as China’s exports were disrupted by the coronavirus.

Vietnam’s share of US apparel and textile imports rose to 15.5 percent in the first four months of this year from 12.9 percent of last year’s same period, according to the US Office of Textiles and Apparel. The country also attracted a healthy USD8.7 billion in realised capital investment from overseas in the first half of 2020.

Ho Chi Minh City - the largest economic hub in Vietnam

0.4 percent of GDP. Fitch expects the general government debt-to-GDP ratio to rise to around 42 percent in 2020, from 37 percent in 2019, but this still below the 59 percent median for ‘BB’ rated sovereigns.

The State Bank of Vietnam has also loosened monetary policy to support the economy, but the lower interestrate environment and state pressure on banks to ease lending terms will weigh on bank profitability.

Meanwhile, slower economic growth

13

J u ly 2020

Nonetheless, both textile and apparel exports to the US and realised capital investment were lower yoy, illustrating Vietnam’s vulnerability to the evolution and impact of the pandemic.

As elsewhere, restrictions remain on inbound tourism and remittances are declining. Tourism directly accounts for about 10 percent of GDP, with a higher contribution if indirect spillover effects are considered, while remittances were worth over 6 percent of GDP in 2019.

market movements

Phuong Th ao

Stock market changes over 20 years Vietnam’s stock market has affirmed its role as an ef fective capital mobilising channel for the economy.

F

rom humble beginnings as a securities trading centre with just two listed companies when it opened on 20 July 2000, Vietnam's stock market now has more than 1,600 firms listed and traded on the two stock exchanges with a market capitalisation of over VND4 quadrillion (USD173 billion), equivalent to 65 percent of the country’s GDP. In particular, Ho Chi Minh City Stock Exchange is taking the lead, accounting for nearly 80 percent of the market capitalisation and is the listing hub for most major firms.

In just over 10 years, the government bond market has seen strong development and quickly confirmed its role as an effective capital mobilisation channel for the government. The Government has mobilised more capital, for longer terms and with reducing interest rates, contributing to the efficient restructuring of public debt.

The derivatives market which was established two years ago has huge potential for development, providing additional investment tools and effective risk management tools.

The maturity of Vietnam’s stock market is marked by the increasing

Ho Chi Minh City Stock Exchange turns 20

interest of foreign investors, who are rising in number each year by 10 to 15 percent. As of the end of 2019, there were nearly 34,000 foreign investors accounting for nearly 21 percent of market capitalisation. According to analysts, this figure is still modest.

more efficiently and transparently.

Another remarkable feature of Vietnam’s stock market is its contribution to the process of restructuring the economy, as a dynamic and efficient capital mobilisation and allocation channel.

When the market became operational, only the VN Index showed the market performance. Later, new indexes were set up, including the HNX Index and UpCom Index. In addition, other indexes including VN30, VN100, HNX30, VNMID, VNSML, VNXALL, VNX50 and VNSI have also been launched to help investors better analyse the situation in order to make informed investment decisions.

The amended Securities Law passed by the National Assembly in November 2019 will be an important foundation for Vietnam’s stock market to operate

14

B I D V revie w

The stock market targets capitalisation representing 120 percent of GDP with bonds representing 55 percent by 2025.

market movements

Q u ang Son

Market scenarios for the second half Since April, Vietnam’s stock market has seen increased liquidity. However, by the end of the year, it is expected to experience the negative effects of the Covid-19 pandemic and be dampened by the weaker results of businesses.

Supportive macro indicators Although many countries are still struggling with the Covid-19 pandemic, Vietnam’s macro economy performed relatively positively in the first half of the year, creating the foundation for the stock market to advance.

Manufacturing PMI index continued to increase sharply from 42.7 points in May to 51.1 points in June 2020, according to research conducted by BIDV Securities Company.

A PMI above 50 indicates an expansion in the manufacturing sector. The Index of Industrial Production (IIP) rose 7.0 percent y-o-y in June (after a 0.4 percent y-o-y decline in May). The industrial sector’s recovery was driven by a strong rebound in electronics production.

According to VNDirect Securities Corporation, although GDP has risen at the slowest pace in a decade, it still surpassed the company’s expectations as the service sector made a fasterthan-expected recovery, particularly hospitality services.

VNDirect expects Vietnam’s GDP

growth to strongly bounce back in the second half of this year as the post-pandemic reopening of major economies such as the US and the EU could lift external demand for Vietnam’s products. The Vietnamese government could also accelerate public investment and ease monetary policy further to support the economy.

Market outlook in the second half Based on the evaluation of domestic and foreign impact factors, as well as using the weighting methodology from financial institutions' analysis, BSC forecasts that the VN-Index could fluctuate around 832 ± 70 points, with a focus area of 795 to 900 points in the last six months of 2020. Among two following reference scenarios, BSC considered the positive scenario the highest possibility.

Specifically, in a positive case, VNIndex created a consolidated platform

15

J u ly 2020

around 800 points and closed around 900 points by the end of the year.

After the differentiation in July, the market saw strong fluctuation thanks to speculative cash flow and the return of foreign capital flows. In a negative case, VN-Index may drop below 800 points and see a negative fluctuation direction to check the short-term bottom at 650 points when there is much adverse information from the world as foreign investors push up net withdrawal.

Among stocks, BSC highly recommends stocks with improvements and positive outlook such as banking, retail, information technology and postal and telecommunications.

VNDirect's analyst estimates that in the second half of the year, the profitability of VN-Index listed businesses will decrease by 5-6 percent y-o-y. "VNIndex can maintain at the current level and might reach around 840-920 points by the end of 2020.”

Policy update

Q u y Nguyen

Tax administration law takes effect Vietnam has passed a new Law on Tax Administration No.38/2019/QH14, effective from 1 July 2020. Under the new law, tax authorities have been granted additional enforcement powers. The new law makes it a little easier for both individuals and entities to file taxes. There are a number of other notable changes, as outlined below.

Increased enforcement on related-party transactions Under the new law, tax authorities will have additional power to collect tax, particularly in instances where individuals or companies attempt to evade tax.

This will include instances where companies fail to abide by transfer pricing requirements and transactions where entities intentionally attempt to avoid paying tax.

To help ensure compliance, Vietnamese tax authorities will increase cooperation with international jurisdictions through information exchanges.

Further, businesses that engage in

transfer pricing will be required to file these as a separate return, rather than include this information as part of the corporate income tax return.

Tax administration certificate Pursuant to the new regulations at Article 34, tax registration certificates are granted within three working days from receipt of taxpayers’ valid tax registration submissions. In instances of certificates being lost or damaged, they will be reissued by tax authorities within two working days of receipt of all required documentation.

Tax declaration and payment Taxpayers are required to make tax declarations and calculations at local tax offices where the head office is based. In cases where taxpayers adopt a centralised accounting at their head office, they must declare tax at the head office and calculate and allocate tax obligations to each province.

The deadline for annual personal income tax (PIT) filing of individuals directly declaring PIT with the tax authorities has been increased to 120 days from the end of the calendar year, from the current 90-day deadline.

before the announcement of the tax or other competent authorities on tax audit or inspection.

Taxpayers may make supplementary declarations of erroneous tax dossiers within 10 years from the date of expiration of the submission deadline of the erroneous tax declaration but

Once it has been implemented, individuals will be able to use their citizenship code to file taxes . At present, individuals are required to have a tax code and an identity card

16

B I D V revie w

Policy update

a role in the taxation of e-commerce activities, including the building and development of a nationwide payment system to facilitate the collection of taxes from e-commerce activities.

Commercial banks will be responsible for the collection of tax on behalf of overseas parties which conduct e-commerce activities and derive income from Vietnam.

Non-resident suppliers doing business in Vietnam via e-commerce, digital base and other services who do not have a permanent establishment in Vietnam are obliged to register, declare and pay tax in Vietnam, or authorise other parties to do so on their behalf.

The Vietnamese party, when making payment to foreign organisations and individuals who are not present in Vietnam but carrying out business based on a digital intermediary platform, has the obligation to withhold tax on behalf of the foreign party according to the tax code granted to these organisations and individuals.

E-invoicing number for this purpose.

Increased transparency Taxpayers have the right to know the timeline for processing tax refunds, non-refundable amounts, and the legal basis for such non-refundable tax amounts. Further, they will not

be penalised if they declare and pay taxes following the official guidance of tax authorities or competent state authorities.

Tax administration on e-commerce The State Bank of Vietnam will play

17

J u ly 2020

Decree 119/2018/ND-CP provides that e-invoicing application is compulsory from 1 November 2020. However, according to Article 151.2 of the LTA, the compulsory application of e-invoicing has been delayed to 1 July 2022.

partners

Manh Hai

BIC insures intertidal project On 16 July BIDV Insurance Corporation (BIC) and Ben Tre Renewable Energy Joint Stock Company (BTRE) signed an insurance contract for the 110 MW Ben Tre V1-3 intertidal wind project.

A

s stated in the contract, BIC will insure the installation process of BTRE V1-3 Ben Tre Wind Power Project – an offshore wind power project in Ba Tri district, Ben Tre province with a capacity of 110 MW and a total investment of trillions VND.

Leaders of BIC, BIDV Ha Thanh and BTRE at the insurance contract signing

The project includes two phases: the first phase with 30 MW and the second phase with 80 MW, to be implemented after the first phase is completed.

confidence and high quality service, BIC has committed to accompany BTRE from the construction and installation process through to project completion.

the project installation process will help the parties feel secure and have more confidence in the success of the project.

Ben Tre V1-3 wind power project is one of a number of projects in a plan to assist the Vietnamese government to achieve a wind power capacity of 2,000 MW by 2025 and in the campaign to convert Vietnam’s energy industry into a low emission one.

According to Mr. Le Huy Hoang, director of BIDV Hanoi Branch, the BIDV system, particularly the BIDV Hanoi, consistently devotes attention and resources to best serve customers.

In terms of renewable energy, BIDV is a vanguard commercial bank in Vietnam financing projects in this area. As such, BIDV Hanoi and BTRE have a mutual understanding and successfully signed a contract to finance the project.

BIC’s participation in insurance for

Mr. Duong Son Tung, BTRE director, stated his high appreciation of the professionalism and devotion of BIC in arranging an insurance contract for the project. “With the professionalism and cooperation from BIDV and BIC, BTRE believes the Ben Tre V1-3 wind power project, phase by phase will be safely constructed and put into operation on schedule,” Tung affirmed.

At the signing ceremony, BIC general director Mr. Tran Hoai An said that installation and construction insurance is one of BIC's strongest products. With

18

B I D V revie w

products & services

Saving money, accumulating fun with BIDV Attractive interest rates, simple procedures, and automatic renewal are on offer to entice customers to BIDV's accumulative deposit products, aiming to help them realise their future plans.

the customer’s request. This 1-month term can be automatically renewed to facilitate a customer’s urgent withdrawal.

rom 10 July BIDV officially launched two accumulative savings products: the Secured Future accumulative product for Vietnamese citizens aged 15 and above and the Growing with Love accumulative product for Vietnamese citizens under 15 years of age whose transactions will be made by their legal representatives.

The accumulative monthly savings amount depends on customers’ demands and financial capabilities and should be VND100,000 (USD4.3) minimum. In case customers want to change the accumulative savings limit, an additional contract will be entered into between BIDV and the customer.

Every month, the BIDV software system will automatically transfer the registered amount from the customer's current account to their accumulative deposit account. Customers do not need to visit the bank’s counter, thereby saving time and bringing greater convenience.

To open an accumulative deposit account, a customer must sign a 1-month deposit contract with the bank, which will then be renewed upon

Customers can jointly open a deposit account and can use the accumulative deposits as collateral for loans as prescribed by BIDV from time to time.

F

Incentives for savings customers

I

n order to increase advantages and offer more incentives to savings customers, on 20 July BIDV officially launched a promotion program totaling more than VND8.4 billion (USD362,000) for depositors who receive monthly interest payments via An Phat interest payment accounts.

To be eligible to open an An Phat interest payment account, customers are required to have a savings account, time deposit or certificate of deposit amounting to at least VND100 million (USD4,310) at BIDV while also signing up for the bank’s BSMS service. Existing current account holding customers wishing to transfer to an An Phat interest payment account should contact a BIDV branch for assistance.

The following attractive incentives will be offered to customers who sign up to open an An Phat interest payment account: Current account balance is not required.

Free account management for 12 months; free cash withdrawal at BIDV counters nationwide for withdrawal limit of VND50 million (USD2,155)/ transaction within 12 months from the date of account opening.

Free BSMS service for six months for newly registered customers.

19

J u ly 2020

lifestyle

Ca m Nghi e n

Discovering Hoi An

The ancient town of Hoi An is famous for its beautiful silk lanterns and charming ancient buildings. As well as the quaint streets, there are many stunning places around Hoi An ready to be explored.

extended to about seven acres of freegrowing coconut trees. Since then, the forest has grown to cover more than 100 hectares.

Gliding through the peaceful waterways by basket boat, visitors have the chance to admire the extensive lush green coconut groves and listen to the traditional folk-songs of the men and women paddling the boats.

Bay Mau coconut forest Bay Mau coconut forest is a special place in the heart of Hoi An. The coconut forest is located in Cam Thanh commune, just 5 km from Hoi An old town. Visitors can access the forest via road or river. “Bay Mau” means seven acres as when the forest was named it

The local people enjoy displaying their strength and talent in the basket boat through performing a special ‘basket dance’ where they use their oars to spin the boat in rapid circles.

Adventurous types can join them for a thrilling and rather wet experience.

20

B I D V revie w

An Bang Beach About 3 km from Hoi An town, An Bang beach is a smooth stretch of fine sandy beach backed by palm trees that remains relatively unspoiled, although it has seen much development in recent years. The beach is popular with visitors and locals alike and a string of restaurants and bars can be found just behind the beach, offering a fantastic array of Vietnamese and international fare. The town’s main live music venues are also found here and feature regular line-ups of local and international talent.

Visitors to An Bang can relax and soak up the sun or get active with an array of seaside sports. Amongst the most popular activities at An Bang Beach

lifestyle

Thanh Ha Pottery village For visitors with time to spare time in Hoi An, a 15-minute bike ride to Thanh Ha Pottery village is a pleasant way to spend a morning immersed in the rustic scenes and peaceful village life.

are swimming, paddle boarding, and surfing. The road along the beach is home to traditional fishing villages and

is a great place for a sunrise or sunset jog to observe the local people’s way of life.

21

J u ly 2020

Thanh Ha pottery is special and distinctive, made from highly adhesive clay that is brown, yellow or crimson in colour. One special product of the village is its yin-yang tiles. The tiles are made from yellow clay that is mixed with sand and turns dark red or purple when it has been fired. Houses in Hoi An with yin-yang clay roof tiles made by Thanh Ha village are easily recognisable.

CSR

Thu Huong

Vietnam's fishing boats flying national flags

One million flags for fishermen On 16 July BIDV donated to a project organised by the Labour Newspaper titled "One million flags for fishermen". The donation represents the support of 25,000 BIDV employees towards the fishermen, encouraging them to cling to the sea and join hands to protect national sovereignty.

L

aunched in 2019, the programme has supported the fishing industry in 14 out of 28 coastal cities and provinces in Vietnam including Bac Lieu, Ca Mau, Quang Ngai, Binh Dinh, Khanh Hoa, Nghe An, Tien Giang, Tra Vinh, Kien Giang and Quang Nam. As well as this, land border areas of three provinces of Ha Giang, Cao Bang and Quang Nam and eight garrison islands have been awarded the national flag thanks to the program.

Mrs. Nguyen Thi Thu Huong, a board member at BIDV, commented: “Responding to such a meaningful program, BIDV has called for and received the enthusiastic participation of 25,000 employees system-wide.

Through the program, the bank employees do not only wish to be a part of the protection of national sovereignty, but also educate the

24

B I D V revie w

young generation about the proud tradition of Vietnam's sea and islands sovereignty.”

“We hope that this program will receive much more support from enterprises and individuals across the country to give more flags to fishermen, encouraging and ensuring them to continue to cling to the sea.” said Mrs. Huong.

BIDV has devoted much energy and resources to corporate social responsibility activities, including national sovereignty programs. In the past years, the bank has implemented many social security and investment credit programs in key areas of national defense and security, making an important contribution to the protection of the nation’s borders and defense in the Northwest, Central Highlands and Southwest regions.

lifestyle

Na m Anh

Vietnam’s newest UNESCO geopark

Dak Nong Geopark was recently designated by UNESCO as a global geopark - the third geopark in Vietnam.

C

overing more than 4,700 sq.m or two-fifths of Dak Nong Province’s land area, the geopark is the third UNESCO-recognised Global Geopark in Vietnam after Dong Van Karst Plateau Geopark in Ha Giang Province and Non Nuoc Cao Bang Geopark in Cao Bang province, both in northern Vietnam.

Located on the M’Nong plateau at average elevation of 600-700m, the geopark includes some 65 natural heritage sites including craters, a system of 50 caves created by

22

B I D V revie w

volcanoes running a total length of 10,000m and a number of waterfalls.

The geopark’s geological past dates back 165 million years when the area was part of the ancient Gondwana supercontinent. More recent volcanic activity a few tens of thousands of years ago has endowed it with spectacular craters, majestic waterfalls and Southeast Asia’s most extensive system of hundreds of magnificent volcanic caves. Its geological morphology and varied soil and climatic conditions are home to a rich

lifestyle

range in biodiversity and ecosystems, including many endemic rare species.

Undoubtedly the most special feature of the park is Krong No volcanic cave system which was found in 2007, encompassing nearly 50 caves with a total length of 10,000 metres. It has been recorded as the longest of its kind in Southeast Asia by the Japan Volcanic Cave Association. In many caves, archaeologists have discovered interesting features of natural geology and traces of early humans. The geopark can be reached by several routes via land and air, including two international border gates with Cambodia.

Characterised by a sub-equatorial tropical monsoon and plateau climate, the area features an evenly distributed network of rivers, streams, lakes and reservoirs. Many archaeological, historical and cultural relics as well as scenic spots have been recognised and conserved.

A population of 416,000 people of 40 ethnic groups, including three autochthonous, live in the area, working mostly in agroforestry, trade and services, and small industries.

Festivals and traditions celebrated by ethnic cultures, in particular the UNESCO “Gong Culture Space”

23

J u ly 2020

intangible heritage (including man’s oldest lithophone) also contribute to the value of the geopark.

Tourists can visit the cave system running inside a basal rock mountain, which starts from Krong No District and is the longest volcano cave system in Southeast Asia.

There are also attractions like the primitive natural landscapes of Bang Mo volcano (in Cu Jut District) and Nam Gleh R’luh volcano (Dak Mil District), ethnic minority cultures of Ede and M’Nong groups, Ta Dung National Park, and Ta Dung Lake.

ONLINE DEPOSIT

ADDITIONAL

0.5%

RATE OFFERED

Effective 23 Apr – 31 Dec 2020

+0.5% YEAR

BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC

U

Welcome to the world of infinite exclusive privileges of BIDV VISA INFINITE – an international credit card

BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC