Mekong Monitor: Challenging year expected for Vietnam’s steel industry
Photo credit: SGGP
TRADE, ECONOMY, AND INVESTMENT
Challenging year expected for Vietnam’s steel industry
(15 January 2020) The steel industry in Vietnam is expected to face difficulties in 2020 due to an increase in production capacity, lower demand and protectionist measures by countries reducing imports. In 2019, exports to the US and the EU markets, the second and third largest markets for Vietnamese steel, fell by a combined 44% in terms of volume. While opportunities in 2020 such as the EU-Vietnam Free Trade Agreement is expected to boost steel production and exports, a slowdown in the Chinese economy may negatively impact steel demand, indirectly affecting steel prices in Việtnam. According to the Vietnam Steel Association, China’s steel demand is forecasted to rise by only 1% in 2020, much lower than the estimated 2019 growth rate of 7.8%.
Thailand’s Kasikorn Bank to acquire a 35% stake in Myanmar’s Ayeyarwaddy Farmers Development Bank
(13 January 2020) Thailand’s Kasikorn Bank has sought approval from the Central Bank of Myanmar to acquire a 35% stake in Myanmar’s Ayeyarwaddy Farmers Development Bank. The move follows the Central Bank of Myanmar’s decision in January 2019 to allow foreign banks to hold shares in local banks. Kasikorn Bank mainly provides services in small and medium-size enterprise lending, and retail and digital banking. The acquisition will allow it to expand its reach in Myanmar by leveraging Ayeyarwaddy Farmers Development Bank’s network. Ayeyarwaddy Farmers Development Bank has registered capital worth US$27 million and assets worth US$213 million.
Thailand, Myanmar to collaborate on cross border transfers
(9 January 2020) Thailand’s Siam Commercial Bank (SCB) and Myanmar’s Ayeyarwady Bank (AYA Bank) signed a memorandum of understanding (MoU) to work together on the development of cross border payments and fund transfer services between the two countries. The move cements an October 2019 agreement between the two countries’ central banks to promote the official use of the Thai baht and Myanmar kyat for cross-border trading. Trading at the Thai-Myanmar border is already conducted in baht and kyat but for payments that are processed through banks, the transactions are conducted in US dollars which results in leakages through foreign exchange losses.
Cambodia seeks further inroads into Thailand’s retail market
(14 January 2020) Cambodia is looking into ways to increase the display of its products in supermarkets across Thailand. Ouk Sorphorn, the Cambodian Ambassador to Thailand has asked Thailand’s Siam Piwat Company Limited to distribute Cambodian goods in its retail outlets. According to him, Cambodia currently has a trade deficit with Thailand and stocking its products in Thai supermarkets can help reduce the deficit. The products to be displayed include the Kampot Pepper and Kampong Speu Sugar. A report by the Thai Embassy in Phnom Penh revealed that the trade volume between the two countries reached US$4.2 billion in the first half of 2019, marking a 7% increase over the same period in 2018.
MoU signed for the development of sustainable clam supply chain in the Mekong Delta
(10 January 2020) Vietnam’s Ben Tre, Tien Giang and Tra Vinh provinces signed an agreement with the Netherland’s Lenger Seafoods Vietnam to establish closed clam supply chains encompassing all stages from breeding and harvesting to transporting and processing. The memorandum of understanding (MoU) was signed under the EU-funded “Inclusive and sustainable clam and bamboo value chains development in Vietnam” project carried out by Oxfam, ICAFIS and the Vietnam Chamber of Commerce and Industry in 2018-2022. The project aims to achieve sustainable clam production in the country and prevent overexploitation.
About Greater Mekong Subregion (GMS)
The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.