Vietnam's service industry had a strong start to the second quarter

According to the General Statistics Office, Vietnam's service industry had a strong start to the second quarter, with gross retail sales of consumer goods and services in April reaching VND445.494bn, up 3.1 percent from the previous month and 12.1 percent from the same time last year (GSO). Since May 2021, this is the month with the highest growth rate. Gross retail sales of consumer goods and services increased 6.5 percent year over year for 4M22 (vs. an increase of 8.2 percent in 4M20). If the price factor were removed, this indicator climbed by 4.3% year over year (that in the same period of 4M21 increased by 7.2 percent yoy).

The COVID-19 epidemic was effectively contained domestically in April 2022, which led to improvements in all aspects of the service sector. First off, the travel agency reported significant year-over-year growth, with revenue rising by 1.5 times over the same period last year to VND1.2 trillion (22.7%). Additionally, in April 2022, revenue from lodging and catering services increased 6.9 percent mum to VND45.5 trillion (14.8 percent yoy). Additionally, although revenue from other services climbed 5.5 percent year over year to VND45.2 trillion (6.7 percent yoy), retail sales increased by 2.3 percent year over year to VND363.6 trillion (12.4 percent yoy).

Local businesses in various industries have access to the government's support program, which will aid in their post-COVID recovery countrywide. In the first half of this year, 76,200 new businesses were registered, an increase of 13.6 percent over the same period last year, while approximately 40,700 businesses resumed operations, a rise of 55.6 percent. The average number of newly registered and resumed firms per month was 19,500, indicating an uptick in activity.

However, Mr. Ngo Dang Khoa, Country Head of Markets and Securities Services, HSBC Vietnam, said local businesses are facing numerous challenges, including a slow rebound in tourism and rising logistics costs, which are squeezing their profits. Nonetheless, they are optimistic about the second half of the year, with 85% expecting the third quarter to be more stable and better than the second.

The government's support for its local enterprises is highly appreciated, including the 2% interest rate support policy, which could facilitate their access to low cost funding and resume their operations since Vietnam re-opened, driving the economic recovery and growth", Mr. Ngo Dang Khoa emphatized.

One of the key highlights was the Regional Comprehensive Economic Partnership (RCEP), which entered into force at the beginning of 2022, increasing the total FTAs in effect in Vietnam to 15, while the country is currently negotiating two more to expand its economic integration with the world. In order to make the most use of such FTAs and gain access to markets that are FTA member countries, local businesses should adapt to the new rules of the game by changing their model, cutting costs, increasing efficiency, improving productivity, and product quality.