Photo credit: Vietnam News/Asia News Network
TRADE, ECONOMY, AND INVESTMENT
Private sector minimum wage set to rise 5.5% next year
(15 July 2019) The minimum wage in Vietnam’s private sector is set to rise by 5.5% starting in 2020 following negotiations held by the National Wage Council on July 11. According to local media, the minimum wage for workers in urban Hanoi and Ho Chi Minh City will rise to US$190.3 (4.42 million dong); US$168.8 (3.92 million dong) in rural Hanoi and Ho Chi Minh City, Can Tho, Da Nang and Hai Phong; US$147.8 (3.07 million dong) in the provincial cities and districts of Bac Ninh, Bac Giang and Hai Duong; and US$132.3 in the rest of the country. Vietnam’s National Wage Council comprises 15 members, with three representatives each representing the State, employers and employees. Nevertheless, the Vietnamese Chamber of Commerce and Industry (VCCI) argued that there was no need for an increase in the minimum wage since the current rate already meets 95% of the labour force’s minimum living standards. Such an increase, they said, would increase business expenditure and affect their performance.
Bank lending in Laos moderates amid economic dip
(16 July 2019) Credit growth in Laos continued to slow in the second quarter of 2019 as it recorded only a 3.13% growth, signalling a moderation in the injection of bank credit into the country’s economy. The figure represents only 46.32% of Laos’ GDP, far lower than the 55% GDP target set by the National Assembly. Lao planning and investment minister Souphan Keomixay attributed the decline in bank credit growth to three factors: insufficient capital funding and ineffective lending practices by some commercial banks (with some banks having more debts than anticipated), underperforming state banks who are unable to compete with private banks, and the effects of informal lending. Asian Development Bank economist Rattanatay Luanglatbandith, for his part, attributed the decline to a drop in demand due to the government’s budget expenditure tightening measures which included suspending salary increases for public servants. Blame has also been attributed to the government’s decision to phase out many state-funded projects.
Plans to revive airport in northeast bordering Laos to revitalise development
(17 July 2019) The Cambodian government is mulling the revival of an old airport in the northeastern Steung Treng province as part of its plans to resuscitate development in areas bordering Laos, said State Secretariat of Civil Aviation spokesman Sinn Chanserey Vutha. According to the spokesman, the Steung Treng airport is one of three northeastern airports being considered for revival, with the other two being the Mondulkiri and Ratanakiri airports. However, the main barrier to the revival of the airport is financing, which requires up to US$50 million for the rehabilitation and construction of infrastructure required to accommodate larger aircrafts. The Steung Treng airport, which was closed in 2003, currently has one runway and a helipad which is still used occasionally by officials visiting remote areas in the northeast.
CAMBODIA, LAOS, VIETNAM
Cambodia, Laos, Vietnam agree to intensify tourism connectivity
(15 July 2019) A meeting discussing tourism cooperation between the three Mekong countries held in Vietnam’s second largest province Gia Lai on July 15 concluded with all sides agreeing to pursue greater cooperation in the development of sustainable tourism and tourism connectivity in the Cambodia-Laos-Vietnam (CLV) Development Triangle Area. During the meeting, representatives from the Vietnamese side expressed their hope that greater connectivity and cooperation would help promote tourism development in smaller localities, while Lao representatives noted the need to develop the industry’s human resources and diversify its tourism offerings. According to Vietnam’s National Administration of Tourism, the CLV Development Triangle Area, which was created in 1999, welcomed 860,000 foreign visitors in 2018.
Vietnam, Laos foster cooperation in deposit insurance
(17 July 2019) The Deposit Insurance of Vietnam (DIV) and Depositor Protection Fund of Laos’ (DPF) reviewed their cooperation last year and discussed possible cooperation areas during a meeting held recently. During the meeting, the Lao protection fund also expressed its interest in learning from the Vietnamese side’s experience in capital management, deposit data collection, as well as the management of information data, internal network systems and human resource management. The Vietnamese side, for their part, suggested that they continue exchanging experiences especially with regards to data exchanges and supervision of member banks under their purview, in accordance with the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems.
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.