Cán cân Thanh toán Việt Nam HongKong

TABLE OF CONTENTS I Introduction of The Balance of Payments II Overview of Economy in VietNam and HongKong 2 1 Overview of VietNam’s Economy 2 2 Overview of HongKong’s Economy III Balance of Payments of VietNam IV Balance of Payments of Hong Kong V Some features of The Balance of Payment between Viet Nam and Hong Kong 4 1 Import and export between Vietnam and Hong Kong in March 2020 Vietnam trade surplus 4 2 FDI capital from Hong Kong poured into Vietnam VI Solutions for Viet Nam and Hong Kong’s.

TABLE OF CONTENTS

I Introduction of The Balance of Payments.

II Overview of Economy in VietNam and HongKong

2.1 Overview of VietNam’s Economy.

2.2 Overview of HongKong’s Economy.

III Balance of Payments of VietNam.

IV Balance of Payments of Hong Kong.

V Some features of The Balance of Payment between

Viet Nam and Hong Kong.

4.1 Import and export between Vietnam and Hong Kong in March 2020: Vietnam trade surplus.

4.2 FDI capital from Hong Kong poured into Vietnam.

VI Solutions for Viet Nam and Hong Kong’s Balance of

Payments.

I Introduction of The Balance of Payments.

The balance of payments is a summary statement in which, in principle,all transactions of residents of one country with residents of all other countriesare recorded for a specific period, usually a calendar year

The main purpose of the balance of payments is to inform the government

of the international position of the nation and to help it in its formulation ofmonetary, fiscal, and trade policies Governments also regularly consult thebalance of payments of important trade partners in making policy decisions Theinformation contained in a nation’s balance of payments is also indispensable tobanks, firms, and individuals directly or indirectly involved in international tradeand finance

There are three components of balance of payment: current account,

capital account, and financial account The total of the current account must

balance with the total of capital and financial accounts in ideal situations

In this essay, I refer to the balance of payments of Vietnam and HongKong From that, it is possible to infer the connection of these two countries interms of balance of payments as well as offer some solutions for both countries

II Overview of Economy in VietNam and HongKong.

2.1 Overview of VietNam’s Economy.

The development of Vietnam over the past 30 years is remarkable.Economic and political reforms since 1986 have spurred economic development,rapidly transforming Vietnam from one of the poorest countries in the world to alow-middle-income country From 2002 to 2018, GDP per capita increased 2.7times, reaching over US$2,700 in 2019, with more than 45 million peopleescaping poverty The poverty rate dropped sharply from more than 70% to lessthan 6% ($3.2/day at purchasing power parity) The majority of the remainingpoor in Vietnam are ethnic minorities, accounting for 86%

Due to extensive economic integration, Vietnam's economy was heavilyaffected by the COVID-19 pandemic, but also showed considerable resilience.GDP growth is estimated at 2.9% in 2020 Vietnam is one of the few countries inthe world with positive economic growth, but the pandemic has left long-termimpacts on households - income of about 45% of surveyed households decreased

in January 2021 compared to January 2020 The economy is forecast to grow by6.6% in 2021 if Vietnam well controls the spread of the virus- At the same time,export-oriented manufacturing industries performed well, and domestic demand

is witnessing rapid changes in population and social structure, rapid growth andindustrialization Vietnam's population has reached 96.5 million in 2019 (fromabout 60 million in 1986) and is expected to increase to 120 million by 2050.According to the results of the 2019 Vietnam Census, 55, 5% of the population isunder the age of 35, with an average life expectancy of nearly 76 years, higher

than other countries with similar incomes in the region But the population isaging rapidly A growing middle class – currently 13% of the population and is

Human Capital Index is 0.69 That means that a Vietnamese baby born todaywill grow up to be 69% more productive than the same child with adequateeducation and health care This is higher than the average for the East Asia -Pacific region and lower middle-income countries Although Vietnam's HumanCapital Index increased from 0.66 to 0.69 between 2010 and 2020 Vietnam,disparities still exist within the country, especially for ethnic minorities

Over the past 30 years, the provision of basic services has seen manypositive changes People's ability to access infrastructure has been significantlyimproved As of 2016, 99% of the population used electricity for lighting,compared with 14% in 1993 Rural access to clean water has also improved,from 17% in 1993 to 70% in 2016, while the rate in urban areas is over 95%.However, in recent years, Vietnam's infrastructure investment as a percentage ofGDP is among the lowest in the ASEAN region This creates challenges for thecontinued development of the modern infrastructure services needed for the nextphase of growth (Vietnam ranks 89th out of 137 countries in terms ofinfrastructure quality)

2.2 Overview of HongKong’s Economy.

The Hong Kong economy is a developed capitalist economy built on amarket economy, low taxes, and little economic intervention by the government.This is an important financial and commercial center of many corporateheadquarters of the Asia-Pacific region

Hong Kong's economy is primarily service based The share of this sector

in its GDP is up to 90% In the past, manufacturing was the most important

sector of the economy as it industrialized after World War II With exports as thedriving force, the economy grew at a rapid pace an annual average of 8.9% inthe 1970s The region experienced a rapid transition to a service economy in the1980s, when growth reached 7.7% per year year Much of the manufacturingactivity was transferred to mainland China during this period, and industry nowaccounts for only 9% of the economy As the land grew to become a financialcenter, growth slowed to 2.7% per year in the 1990s Along with Singapore,South Korea, and Taiwan, Hong Kong is known as one of the Four Asian Tigersdue to its high growth rate and rapid industrialization during the period from the1960s to the 1990s.

In 1998, because of the Asian financial crisis, the economyshrank by 5.3% After that, the economy recovered with a growth rate of 10% in

2000, although deflation persisted In 2003, Hong Kong's economy was severelyaffected by the SARS epidemic, making the growth rate only 2.3% Theresurgence in domestic and external demand led to a strong resurgence thefollowing year as falling costs boosted the region's export competitiveness The68-month period of deflation ended in mid-2004

In 2006, Hong Kong's GDP ranked 40th in theworld with a value of 253.1 billion dollars GDP per capita ranks 14th at

$36,500, higher than Canada, Japan, Switzerland, and the United Kingdom, andstill much higher than China

III Viet Nam’s Balance of Payments.

2.1 Viet Nam’s Balance of Payments (2006 - 2009)

I would like to specifically mention Vietnam's balance of payments after

2006, which is also the time when Vietnam officially joined the WTO

Entering the 21st century, Vietnam's economy has had many veryimportant changes, especially on 11/07/2006 Vietnam officially became amember of the World Trade Organization - WTO, has affirmed Vietnam'sposition in the international arena That changed our economy significantly, sobefore that, from 2001 to 2006, how was Vietnam's economy, specifically

Table 2.1: The Balance of Payments of Viet Nam (2006 - 2009)

A Current Account -164 -7.092 -10.023 -6.608

1 Goods -2.776 -10.438 -12.783 -7.607

Exports (FOB) 39.826 48.561 62.685 57.096 Imports (FOB) 42.602 50.999 75.468 64.703

Receipts 5.100 6.030 7.006 5.766 Payments 5.108 6.924 7.956 8.817

B Financial and Capital Account 3.088 17.730 12.341 8.755

6 Direct Investment 2.315 6.156 9.279 6.900

7 Medium and Long Term Loans 1.025 2.269 992 4.473

Disbursements 2.260 3.640 2.441 6.140 Scheduled Amortization 1.235 1.371 1.449 1.667

8 Short Term Loans -30 79 1.971 266

10 Money&Deposits -1.535 2.623 677 -4.803

C Errors and Omissions 1.390 -439 -1.046 -9.022

OVERALL BALANCE

4.322 (in surplus)

10.199 (in surplus)

473 (in surplus)

-0.076 (in deposit)

Source: SBV, IMF, WB staff calculations

Figure 1: Goods Exports/Imports FOB is the factory delivery price In 2006 we

had a trade deficit of 2.776 million USD (because of negative signs); By 2007,when we joined the WTO, the trade deficit increased to 10,438 million, nearly 8million more than the previous year The number of 2009 is 7.607 million

Goods Exports:

Goods Imports:

Import and export of services (Services Receipts/Payments): including

mainly tourism, study… The figure is also negative and tends to increase overtime; in 2009 the figure was 2,421 million USD

According to the data, we see that our remittance increases over time In

2006 it was 3.8 million, then in 2009 it was 6.018 million Remittance is animportant way to help offset the trade deficit

Figure 2:

Vietnam's balance of payments deficit in 2009 is not too serious, it isforecasted that the balance of payments deficit this year is only about 0.5 millionUSD, this is not a large level compared to the figure of over 24 million USD inforeign exchange reserves of the State Bank at present

The balance of payments imbalance is reflected in the current balance andcapital account By the end of 2009, Vietnam's balance of payments was facinggreat pressure from a deficit of nearly 3.6 million USD The situation seems to

be getting worse because the evidence given by the representative of the IMF in

Vietnam does not consider the approximately 3 million USD of trade deficit inthe last two months (July and August)

2.2 Viet Nam’s Balance of Payments (Q1 - 2021)

Table 2.2: The Balance of Payments of Viet Nam (Q1 - 2021)

Exports (FOB) 78.401 Imports (FOB) 72.507

Vietnam's Investment abroad -50

6 Indirect Investment (Net) -346

D Errors and Omissions -2.198

OVERALL BALANCE 3.436 (in surplus)

The Ministry of Industry and Trade said that despite being affected by thethird wave of the Covid-19 epidemic, Vietnam's export turnover still maintained

a high growth rate of 22% in the first quarter of 2021 This growth rate isrelatively high compared to other economies in the Asian region

In the first 3 months of 2021, Vietnam continues to have a export surplus

of 2.03 million USD, thereby positively supporting the current account and the

overall balance of payments of the economy.

In the coming time, import and export activities are expected to continue

to prosper thanks to the recovery of the world economy, the implementation offree trade agreements more fully and comprehensively Attracting FDI inflows,especially in the high-tech sector, achieved positive results…

Global demand is improving as the world economy is entering a recoveryphase thanks to the strong deployment of Covid-19 vaccine, as well as supportfrom fiscal and monetary easing policies, thereby helping increase opportunities

to promote export of goods

New generation trade agreements such as: Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP), Free TradeAgreement between Vietnam and the European Union (EVFTA), Free TradeAgreement The agreement between Vietnam and the United Kingdom (UK FTA)will continue to create conditions for Vietnamese goods to penetrate into partnermarkets with more preferential tariffs along with commitments on facilitating

Since the EVFTA took effect in August 2020, the growth rate of exports tothe EU has gradually improved and increased by 18% in the first 3 months of

2021 Similarly, Vietnam's export turnover to other partners Partnerships in theCPTPP Agreement also achieved high growth in the first 3 months of 2021 suchas: Canada increased by 13.7%, Australia increased by 17%, Chile increased by25.6%, Mexico increased by 12.7%, New Zealand increased by 35,1%

Export turnover to the UK market also increased by 22.1% in the first 3months of this year Making good use of the advantages from free tradeagreements will be one of the important factors promoting Vietnam's exports inthe coming time

IV Hong Kong’s Balance of Payments

Table 3.1: Hong Kong’s Balance of Payments (Q1-2021)

A Current Account 59.841

Credit 1178.210 Debit -1169.533

Credit 141.858 Debit -407.248

Credit 336.337 Debit -314.802

6 Portfolio Investment -16.435

Asset -49.419 Liabilities 32.984

7 Financial derivatives -5.658

Asset 190.414 Liabilities -196.072

8 Other Investment -59.026

Asset -33.316 Liabilities -25.710

II Reserve assets -8.216

D Net errors and omissions 29.418 OVERALL BALANCE OF PAYMENTS 8.216 (in surplus)

Source: Data WB, IMF, GOV HongKong

Hong Kong recorded a BOP surplus of $8.2 million (as a ratio of 1.2% toGDP) in the first quarter of 2021, compared with a surplus of $233.5 million (as

a ratio of 32.9% to GDP) in the fourth quarter of 2020 Reserve assetscorrespondingly increased by the same amount ($8.2 million) in the first quarter

of 2021

The current account recorded a surplus of $59.8 million (as a ratio of 8.5%

to GDP) in the first quarter of 2021 This implies that Hong Kong’s savings wasgreater than its investment, enabling Hong Kong to accumulate externalfinancial assets (such as equity securities or debt securities) as a buffer againstglobal financial volatilities As against the current account deficit of $10.3million (as a ratio of 1.6% to GDP) in the first quarter of 2020, the increase inthe current account balance was mainly due to an increase in the goods balance,supplemented with an increase in the net inflow of primary income and an

The goods account recorded a surplus of $8.7 million in the first quarter of

2021, as against a deficit of $48.4 million in the same quarter of 2020 This wasdue to a larger increase in exports of goods relative to the increase in imports ofgoods Over the same period, the services surplus increased to $34.6 million inthe first quarter of 2021, compared with $29.1 million in the same quarter of

2020 This was due to a larger decrease in imports of services relative to thedecrease in exports of services The overall balance on goods and servicesrecorded a surplus of $43.3 million in the first quarter of 2021, as against adeficit of $19.3 million in the same quarter of 2020

The primary income inflow and outflow amounted to $336.3 million and

$314.8 million respectively, thus yielding a net inflow of $21.5 million in thefirst quarter of 2021, compared with a net inflow of $16.0 million in the same

quarter of 2020.

The secondary income inflow and outflow amounted to $3.4 million and

$8.4 million respectively, resulting in a net outflow of $5.0 million in the firstquarter of 2021, compared with a net outflow of $7.0 million in the same quarter

2021 was due to net outflows of other investment, portfolio investment and cashsettlement of financial derivatives

Direct investment assets and liabilities increased by $242.9 million and

$243.1 million respectively in the first quarter of 2021, resulting in a small netdirect investment inflow of $0.2 million, compared with a net inflow of $153.4million in the fourth quarter of 2020

Portfolio investment assets and liabilities increased by $49.4 million and

$33.0 million respectively in the first quarter of 2021, resulting in a net portfolioinvestment outflow amounting to $16.4 million, compared with a net outflow of

$321.0 million in the fourth quarter of 2020 The increase in portfolio investmentassets was mainly due to the increased holdings of non-resident equity andinvestment fund shares by Hong Kong residents and the increased holdings ofnon-resident long-term debt securities by the Hong Kong banking sector, partlyoffset by the decreased holdings of non-resident short-term debt securities by theHong Kong banking sector On the other hand, the increase in portfolioinvestment liabilities was mainly attributable to the increased holdings of