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DCVFMVNMIDCAP ETF, an exchange-traded fund managed and operated by Dragon Capital Vietfund Management Joint Stock Company, listed six million units on the Ho Chi Minh Stock Exchange on September 29 under the code FUEDCMID at par.

The reference price on the first trading day was the NAV on September 28, VND9,502.13.

DCVFMVNMIDCAP is the first ETF in Viet Nam that tracks mid-cap companies.

Speaking at the listing ceremony, Beat Schurch, CEO of Dragon Capital Vietnam, said, “After DCVFMVN30 ETF and DCVFMVN DIAMOND ETF, the introduction of DCVFMVNMIDCAP ETF provides investors with an additional opportunity to invest in the growing capital markets of Viet Nam.

“And for us, by launching this product that specifically focuses on the mid-cap segment, we deepen our commitment to the promising future of Viet Nam’s economy and capital markets.

“In a Vietnamese folk tale, the carp turning into a dragon reflects resilience, bravery and a progressive spirit. Similarly, the mid-cap companies will one day overcome the challenges and rise to the dragon position on the market and contribute to the growth story of Viet Nam.”

The DCVFMVNMIDCAP ETF is a portfolio swap fund with no operating time limit. The founding members of the fund include HCM City Securities Corporation (HSC), KIS Vietnam Securities Corporation (KIS), and Viet Capital Securities Joint Stock Company (VCSC).

The custodian bank is Standard Chartered Bank (Vietnam) Limited, the transfer agent is the Vietnam Securities Depository (VSD). 

By the end of this year, oil and gas, transportation, insurance, retail, and hydropower sectors will see positive signals, while the banking and real estate sectors are not ideal options for short-term investment, said experts from DNSE Securities Company.

Experts from DNSE Securities Joint Stock Company said that the Fed continued to increase the US Dollar interest rate sharply by 75 basis points, leading to a high VND/USD exchange rate. VND depreciated against USD by 3.5-4 per cent in 2022, negatively affecting businesses that import goods or have loans in USD.

The State Bank of Vietnam (SBV) recently increased the operating interest rate by 1 percentage point due to the pressure of the Fed’s interest rate hike, showing that the SBV is prioritising the goal of controlling inflation and stabilising the macroeconomy, meanwhile maintaining low lending rates to support businesses. DNSE experts believe that this is a negative factor for the banking industry.

Amid rising interest rates to cool down inflation, global stock markets, as well as in Viet Nam, did not react positively as the cash flow sought safer havens such as the USD or Government bonds.

Inflation is under control, and the devaluation of the domestic currency is not as serious as in other countries, showing the proper management and direction of the Government and SBV in inflation control and exchange rate appreciation, and stabilising the country’s economy.

Negatively affected

“The negative fluctuations in interest rates, as well as the high VND/USD exchange rate, will increase costs for businesses with a high debt structure in USD. Interest expenses increased due to continued high anchoring interest rates combined with exchange rate losses. The group of electricity and infrastructure; real estate sectors will be negatively affected by the current context,” said Nguyen Ngoc Linh, Proprietary Director of DNSE.

“Especially for real estate businesses that have loans in USD when carrying out large projects, these businesses will have to bear higher interest costs and deeper exchange rate losses due to USD appreciation, affecting business results.

“The increase of the operating interest rate by the State Bank to reduce the devaluation of the Vietnamese dong will help real estate businesses restructure debts, reduce interest rate and exchange rate risks. However, it takes time for the policy to come into reality, so in the current period, businesses will have to make efforts to prove their internal health and have many measures to combat external risks,” she said.

Oil and gas, transportation, insurance have opportunities

The crisis between Russia and Ukraine has reshaped the global flow of crude oil and changed shipping routes, making journeys longer as the EU switches to imports from the Middle East, and Russia switches to Asian countries such as China and India. It is expected that this will increase the price of fuel tankers. DNSE experts believe that the oil and gas transport group will benefit from this.

Insurance is an industry group that can benefit in the short term due to the SBV’s move to increase operating interest rates, due to the specific nature of the industry, which is money trading and mobilising money through insurance products and bonds. Therefore, at the moment, this is the industry with the fewest risks and biggest benefits from the increase in interest rates.

Retail, hydropower

The retail industry is a notable industry group at the end of this year when the consumer demand for products increases after the COVID-19 pandemic, and at the same time, there are many holidays at the end of the year and petrol prices in Viet Nam are on the decline, causing inflation pressure to cool down.

The increase in electricity consumption thanks to the recovery of demand from the manufacturing sector after the pandemic also creates a push for the power sector, including hydroelectricity. 

The Ministry of Construction (MoC) has proposed that real estate projects must sell their products on real estate trading floors, according to the draft amending the Law on Real Estate Business.

The ministry has also suggested that individuals engaged in brokerage activities must have a practising certificate.

Deputy Minister of Construction Nguyen Van Sinh said this revision is mainly to clarify some contents relating to real estate trading floors, regulations on trading property products via the floor, and new types of real estate products. Notably, the amendment includes regulations for the real estate market to ensure stable and sustainable development.

The domestic real estate market saw strong growth in many localities in the first half of 2021. At that moment, the market needed the State to have policies and regulatory tools to help its sustainable development. They included regulatory tools on tax, credit, land and finance.

The Law on Real Estate Business will be revised to solve inadequacies that hinder socio-economic development; and eliminate overlaps in enforcement and administrative procedures.

According to director of the Department of Housing and Real Estate Market Management Bui Xuan Dung, the draft would add regulations on the types of marketed real estate products and clarify the types of available houses and future residential houses.

Regarding the types of houses, Hoang Van Cuong, member of the National Assembly’s Finance and Budget Committee, said that it is necessary to pay attention to the type of future housing products. This includes whether they should be recognised or not as they are just on paper.

Therefore, the transactions, management and registration cannot be the same as those for finished housing products.

At present, the market often witnesses disputes regarding this type of housing product, according to Cuong.

Pham Thanh Hung, vice chairman of the Cen Group, said future real estate products often cause market growth. Therefore, the proposal on transactions on trading floors is necessary.

These projects are formed without a red book until they are completed, so they must be verified on a trading floor to ensure legality and safety for buyers and sellers, Hung said. Payment for this product often takes a long time, therefore the transactions via the floor will ensure benefits for the traders.

Hung said brokerage activities need to be certified, and it is also necessary to distinguish between brokers and sales agents. Brokers can be individuals or organisations with legal status.

Now, there are many individuals who are engaged in agency-style sales, but they have poor experience, so it is necessary to consider the authority in signing and closing the transaction.

Hung has proposed only brokers with practising certificates should be eligible to appraise and sign transactions.

Vice Chairman of the Vietnam Real Estate Brokers Association Nguyen Chi Thanh agreed that trading future housing products on trading floors should be compulsory, but the law needs to have specific conditions for establishing a real estate trading floor.

Thanh has added that the draft sets out detailed conditions for granting practising certificates for real estate brokers, but making the certificate valid for two years is not reasonable. This puts pressure on the brokers because the examination is difficult.

Many countries do not specify the period of validity for this certificate, which makes the brokers feel safe in doing business, he said.

Apartments

The ministry has proposed regulations on the duration of ownership and use of apartments in the draft amending the Law on Housing.

According to Cuong, a member of the National Assembly’s Finance and Budget Committee, this draft has many new points, including the regulation of apartment use terms. This regulation will help people have more chances to buy apartments.

People want to have permanent ownership of property products to hand down to their children. If the State has regulations on switching to ownership with a term, then people will have to consider renting or buying.

If there is a term of ownership for the apartment, it should also have a term of renting land for projects building those apartments.

Nguyen Quoc Hiep, chairman of the Vietnam Construction Contractors Association, said the proposal setting a term of ownership for apartments is reasonable because the apartments do not exist permanently.

Hiep said the State should solve existing obstacles for old apartment buildings before having regulations on terms of ownership. That would help get agreement from the people.

Now, there are hundreds or thousands of households in apartment buildings, so it is difficult to renovate apartments.

Lawyer Nguyen Dinh Vinh, director of VietThink Law Firm, said many countries have regulations on the term of using apartments. Condotel, a type of apartment, has better quality than many current apartment buildings. However, the condotel only has a 50 year lease, while apartment buildings are granted indefinite ownership. Therefore, the Housing Law should be equal in terms of apartment ownership.

However, some businesses such as CEO Group, Sunshine, Sun Group, and VinaCapital, believe that regulations on terms of apartment ownership may affect the property market.

With this regulation, it is possible that people will want to buy land to build houses for long-term ownership, affecting apartment development.

Meanwhile, apartment buildings are a current suitable development model to save land resources. At the same time, the enterprises are afraid of investing in the development of apartment buildings.

This year’s budget revenue could exceed the target of VND1,410 trillion ($59 billion).

Vietnam’s budget revenue during the first nine months of 2022 stood at VND1,330 trillion (US$55.7 billion), up 22% year on year, and equivalent to 94% of the year’s estimate.

The Ministry of Finance (MoF) revealed the figures at a press conference on September 29.

Upon breaking down, domestic revenue rose by 18.8% year on year during the period, and was equivalent to 88.9% of the estimate; revenue from crude oil reached 213% of the estimate, up 103.5%; and trade revenue hit 108.8% of the estimate, up 22.1%.

Given the positive revenue collection during the nine months, the Ministry of Planning and Investment (MPI) forecast GDP growth of 7.75% for this year, high export performance, and rising oil prices while the MoF suggested the budget revenue for this year surpass the year’s target of VND1,410 trillion ($59 trillion).

The MoF expected key income sources from crude oil, trade, and land use rights, while revenue collection from environmental protection tax and state divestment at state-owned enterprises have been behind schedule.

The ministry attributed greater efficiency in budget management, especially in e-commerce and real estate transactions, supervision efforts against tax evasion, trade frauds, and the use of e-invoices, among the factors, to higher state budget revenue.

Allocating $3.35 billion for Covid-19 response

A government report noted it has allocated around VND79.7 trillion ($3.35 billion) for Covid-19 response in the past two years.

The report, submitted to the National Assembly for review, revealed over VND51.2 trillion ($2.14 billion) was allocated for Covid-19 prevention and control.

Vietnam has also received over 95 million doses of Covid-19 vaccines from donation sources. This year, the Government allocated VND36.1 trillion ($1.5 billion) for Covid-19-related purposes, but only VND1 trillion ($42 million) has been disbursed as of late May.

According to the Government, localities have received nearly VND8 trillion ($335 million) in aid against the pandemic, 62% of the amount was to support workers and businesses affected by Covid-19.

To ensure sufficient funds for Covid-19 prevention in 2021, the government has cut 50% of spending on foreign and domestic meetings and business travel by public agencies, along with a 10% saving in recurrent spending.

In its latest market report, Yuanta Securities Vietnam said that the country’s economic background in February showed a positive recovery momentum.

Although registered FDI capital in the first two months of the year decreased slightly, the prospects are good for the coming months. Trade activities and industrial production maintained last year’s growth momentum amid the longer Tet holiday.

The bright spot in February was the growth of the travel and tourism industry after declining for nearly two years, supporting the growth momentum of total retail sales and consumer services in February.

Despite the rising number of COVID-19 infections, Yuanta found that it did not affect life and production as much as before. Labour shortages still persist but have improved compared to pre-Tet.

With the Russia-Ukraine conflict, the risk of higher raw material prices due to the impact of soaring oil prices and supply chain disruptions will put pressure on inflation in the coming months. However, the securities firm said that the government will take measures to stabilise gasoline prices when necessary, as well as regulate the market to help stabilise prices and keep the inflation rate below 4 per cent.

“The growth drivers in the future are clearer thanks to the growth of consumer demand, the recovery of tourism and travel services when Viet Nam is reopening normally to international tourists,” Yuanta said.

“In addition, the Government is speeding up public investment projects. According to the plan in April or May, the public investment package under the VND350 trillion programme is started, which will be a great driving force for economic growth in the coming future.

“We believe that the Russia-Ukraine issue will not greatly affect Vietnamese economic growth, and still think that economic growth in 2022 will be around 6.39 per cent.”

The Vietnamese stock market has seen corrections due to political tensions between Russia and Ukraine, so the US Federal Reserve’s rate hikes may no longer have a negative impact on the stock market in March.

Yuanta reaffirms that the market benchmark VN-Index’s valuation remains at an attractive 17.2x with return on equity (ROE) still being the highest in the region, showing that the valuation of the stock market is still attractive.

“We forecast that the VN-Index may fluctuate in the range of 1,440 – 1,512 points in the first half of March and gradually head back to the peak of 1,535 points in the second half of the month,” said Yuanta. 

(Bloomberg) — China’s V-shaped economic rebound is fading faster than expected, catching analysts off guard and posing a new headwind for the already uneven global recovery.

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That’s the emerging consensus as falling property prices, nervous consumers and a cooling manufacturing sector all point to slowing momentum in the world’s No. 2 economy. A surprisingly restrained policy response from Beijing has dampened hopes for more support, at least for now.

To put the turnaround in context, only months ago economists had banked on China cruising past an 8% growth rate for 2021 and carrying strong momentum into 2022. While this year’s expansion may yet hit the forecast range, the slowdown means Goldman Sachs Group Inc. and others warn China could see sub-5% growth next year.

For the world economy, the development threatens to strip away a key ballast of support. China’s hunger for raw materials and its quick reopening after the initial pandemic wave helped to fuel the global rebound too.

Data on Monday is expected to confirm the slowdown, with numbers for retail sales, fixed asset investment and industrial production all due.

An energy crunch over September and October coupled with elevated cost pressures is squeezing corporate profits and hitting factory output. Economists expect China’s industrial production to expand at the slowest pace since early 2020, at 3%. A leading sub-index in China’s PMI data that measures output also pointed to further softness, which was at its weakest since February 2020.

What Bloomberg Economics Says:

“China’s October activity readings are likely to show some resilience in industrial production and consumption, which probably started to stabilize following shocks from the power shortages. But fixed asset investment may have faced headwinds.”

–For full analysis, click here

Falling real-estate prices and credit-market turmoil for heavily indebted developers means fixed asset investment in the first 10 months of the year is expected to have slowed to 6.2% from 7.3% previously.

Although policy makers have started fine-tuning some policies and state media reports are fanning speculation of an easing in curbs, economists warn that the downturn in real estate — which accounts for up to 25% of output — could hurt the wider recovery.

China’s aggressive approach to controlling outbreaks of Covid-19 is weighing on consumers, especially for catering and off-line retail sales. Consumer confidence remains weak, and analysts expect retail sales growth to slow 3.8% in the month.

In other economic news due in the coming week, Hungarian policy makers may hike interest rates while their Turkish counterparts cut borrowing costs. Pivotal U.K. labor market data informing the BOE before its December decision will also be released.

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

Asia

Elsewhere in Asia, Japan releases figures on Monday that are expected to show the recovery of the world’s third-largest economy slipping into reverse after hitting a summer virus wave and global supply-side glitches.

A particularly bad result could fuel even more stimulus from Prime Minister Fumio Kishida later in the week, when he decides on a package of economic measures. Trade and inflation numbers also come out from Japan this week.

Governor Philip Lowe will be among the Reserve Bank of Australia officials talking as markets and the central bank continue to differ on the trajectory of the economy Down Under.

Minutes from the RBA’s recent meeting may shed more light on the central bank’s decision to abruptly scrap its yield curve control in the face of market pressure and strengthening economic data. Meanwhile, Indonesia and the Philippines set interest rates on Thursday.

• For more, read Bloomberg Economics’ full Week Ahead for Asia

U.S.

Retail sales are the headline for U.S. economic data releases in the coming week. Economists project a solid advance in the value of purchases in October, indicating a stronger pace of household spending after a soft third quarter.

The week’s reports also include data on industrial production and housing starts in October, and readings on November manufacturing activity in several Federal Reserve districts.

Eyes are also on the White House. President Joe Biden is expected to announce his choice for Fed chair before Thanksgiving, Nov. 25. He’s weighing whether to keep Jerome Powell in the job for a second term, or elevate Fed Governor Lael Brainard.

• For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Europe, Middle East, Africa

U.K. economic reports, in particular from the labor market, may prove pivotal in the coming week. Bank of England Governor Andrew Bailey cited the workforce situation as a crucial element in why policy makers defied widespread expectations and held off raising interest rates this month.

“If you ask the question why haven’t we done it now, the answer is all to do really with the labor market,” Bailey told BBC Radio 4 on Nov. 5, explaining how more people than previously thought were on the U.K. furlough program when it ended in September.

Unemployment and wage data are due on Tuesday. On Wednesday, inflation may show an acceleration to 3.9%, the fastest in a decade. Retail sales on Friday will also provide clues on the resilience of consumers.

Meanwhile, in the euro zone, European Central Bank President Christine Lagarde will appear publicly at half a dozen events, providing multiple opportunities to guide investors before an all-important decision in December on the future of stimulus. Most prominent in her diary will be two hours of testimony to the European Parliament on Monday.

Central banks elsewhere will command attention as well. On Tuesday in Hungary, monetary officials may accelerate rate hikes after inflation surged more than forecast and regional counterparts embarked on aggressive tightening.

Iceland, the first country in Western Europe to raise interest rates since the pandemic struck, could deliver another hike on Wednesday. The same day, Norway’s central bank governor, Oystein Olsen, will speak on the economy just weeks before a decision that may also feature a rate increase.

In contrast with those countries and much of the Group of 20, Turkish officials are expected to continue the country’s unconventional monetary experiment on Thursday by slashing their policy rate for a third month.

The lira has borne the brunt of the fallout, dropping another 25% against the dollar this year, the biggest loss among major currencies worldwide.

The same day, the South African Monetary Policy Committee’s vote on its benchmark interest-rate decision is likely to be a close call as it weighs anemic economic growth against inflation edging closer to the top of its 3% to 6% target range.

• For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Peru’s statistics agency posts October labor market figures for the country’s capital, Lima, on Monday. The unemployment rate has risen marginally, and underemployment has edged up since June as the economy rebounds.

Brazil’s September economic activity report out Tuesday may again underscore the fragile state of its recovery as confidence wanes and headwinds mount, with a negative third quarter a distinct possibility.

Three of the region’s big economies post third-quarter output reports. Analysts expect Colombia’s data on Tuesday to show a sharp quarterly rebound and a year-on-year reading of better than 10%.

The next day, the hottest of Latin America’s bigger economies, Chile, is expected to at least maintain the torrid pace set in the second-quarter as billions of dollars in stimulus measures propel the expansion of one of the region’s richest nations.

Rounding out the week, Peru’s quarterly GDP figures are likely to trail those of its Andean peers but still put the economy on track to lead Latin America in growth for 2021. Central bank chief Julio Velarde on Thursday said the economy may grow 13.2% in 2021.

The first bitcoin upgrade in four years has just gone live. It is a rare moment of consensus among stakeholders, and it’s a big deal for the world’s most popular cryptocurrency. 

The Taproot update means greater transaction privacy and efficiency – and crucially, it will unlock the potential for smart contracts, which can be used to eliminate middlemen from transactions. 

“Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility,” said Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark.

Unlike bitcoin’s 2017 upgrade – referred to as the “last civil war” because of the contentious ideological divide separating adherents – Taproot has near universal support, in part because these changes involve fairly incremental improvements to the code.

What’s changing

A big part of bitcoin’s makeover has to do with digital signatures, which are like the fingerprint an individual leaves on every transaction.

Right now, the cryptocurrency uses something called the “Elliptic Curve Digital Signature Algorithm,” which creates a signature from the private key that controls a bitcoin wallet, and ensures that bitcoin can only be spent by the rightful owner.

Taproot will add something known as Schnorr signatures, which essentially makes multi-signature transactions unreadable, according to bitcoin miner Alejandro De La Torre.

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It won’t translate to greater anonymity for your individual bitcoin address on the public blockchain, but it will make simple transactions indistinguishable from those that are more complex and comprised of multiple signatures. 

In practice, that means greater privacy, because your keys won’t have as much exposure on the chain. “You can kind of hide who you are a little bit better, which is good,” said bitcoin mining engineer Brandon Arvanaghi, who now runs Meow, a company that enables corporate treasury participation in crypto markets.

Smart contracts

These souped-up signatures are also a game changer for smart contracts, which are self-executing agreements that live on the blockchain. Smart contracts could theoretically be used for practically any kind of transaction, from paying your rent each month, to registering your vehicle.

Taproot makes smart contracts cheaper and smaller, in terms of the space they take up on the blockchain. Killeen says that this enhanced functionality and efficiency presents “mind blowing potential.” 

Currently, smart contracts can be created both on bitcoin’s core protocol layer and on the Lightning Network, a payments platform built on bitcoin, which enables instant transactions. Smart contracts executed on the Lightning Network typically lead to faster and less costly transactions.

“Lightning transactions can be fractions of a penny…while a bitcoin transaction at the core protocol layer can be much more expensive than that,” explained Killeen.

Developers had already begun to build on Lightning in anticipation of the upgrade, which will allow for highly specific contracts.

“The most important thing for Taproot is…smart contracts,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings. “It’s already the primary driver of innovation on the ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.”

As more programmers build smart contracts on top of bitcoin’s blockchain, bitcoin could become more of a player in the world of DeFi, or decentralized finance, a term used to describe financial applications designed to cut out the middleman.

Today, ethereum dominates as the blockchain of choice for these apps, also referred to as “dApps.”

Why the wait

Although the bitcoin community agreed to lock in the upgrade in June, the rollout itself didn’t happen until November. The couple month delay was designed to give enough time for testing and reducing the likelihood of something going wrong during the upgrade.

“Upgrades allow the – extremely remote – possibility of a bug entering the system, which would destroy confidence in the whole cryptocurrency system, effectively wiping it out – a ‘self-inflicted wound’ if you like,” said Jason Deane, an analyst at Quantum Economics.

Deane says this is why upgrade processes are so carefully tested, retested, and vetted over very long periods of time.

Many users in the community also remember the disastrous migration of 2013, when an upgrade gone wrong resulted in bitcoin temporarily splitting in half.

“You don’t want different clients or miners in the protocol out of sync. That’s how catastrophic stuff happens,” Nic Carter, founding partner at Castle Island Ventures, told CNBC. “Because we don’t want a repeat of 2013, we have these extremely long lead times.” 

The Vietnamese economy is actively recovering with a rebound in industrial production and retail sales, continued trade surplus and stabilized credit growth, a World Bank (WB) update says.

The update released Friday says the country faced challenges in restarting the economy after prolonged social distancing periods, but the contraction has bottomed out.

With HCMC and other provinces in the South progressively lifting restrictions in October, major mobility indicators have bounced back and economic activities resumed.

The recovery has been particularly strong in grocery and pharmacy, which have reverted close to pre-pandemic levels. In contrast, mobility in workplaces has rebounded at a slower pace than typically observed in previous outbreaks.

Current workplace mobility trends largely reflect the developments in southern provinces where resuming full production has proved difficult because of shortages of input materials as well as labor.

The industrial production index increased in October, largely driven by the resumption of production activities in HCMC and surrounding industrial hubs. The most dynamic subsectors included food and beverage, tobacco, garment and footwear, rubber and plastic products, metals, and furniture, registering double digit month-on-month growth rates.

The manufacturing PMI jumped from 40.2 in September to 52.1 in October, exceeding the 50.0 no-change benchmark for the first time in five months, indicating significant improvement in economic conditions.

Retail sales growth accelerated from 4.4 percent month-on-month in September to 18.1 percent in October thanks to the easing of social distancing measures. Sales of services, which were affected more severely by the fourth outbreak, continued to recover at faster pace than sales of goods.

The trade surplus reached $2.85 billion in October as merchandise exports increased by 5.7 percent year-on-year while import growth moderated to 6.9 percent from 10.2 percent in September.

FDI commitments fell 47.4 percent month-on-month in October after three months of strong recovery. This reversal likely reflects “the seasonality and chunkiness” of FDI, the WB said. Meanwhile, inflation remained subdued despite fuel price hikes.

A credit growth of 14.2 percent year-on-year in October, similar to September, reflected ongoing recovery of economic activities from the fourth outbreak, particularly in the services sectors.

Specifically, the growth of credit to the services sector, which accounted for over 60 percent of total credit to the economy, settled at 15.6 percent year-on-year in October after steadily slowing since May.

The October budget registered a surplus of $1.2 billion after two months in deficit, the WB update notes.

According to the WB, a more proactive fiscal policy would better support economic recovery. The approved value-added tax reduction for businesses in traveling, hospitality and entertainment industries in November and December are expected to help boost domestic demand.

As the economy re-opens and the number of new confirmed cases increases, persisting with the rapid pace of vaccination and increasing vigilance in testing and quarantining should help avoid a new wave of infections, the bank says.

Inflation should be carefully watched as strengthening domestic demand amid rising energy prices around the world may create upward pressure on prices, the WB cautions, adding that financial sector health should be closely monitored.

The economy grew by 5.64 percent year-on-year in the first half of the year, but contracted by 6.17 percent in the third quarter as the fourth wave of Covid raged, leading to a growth of 1.42 percent for the first nine months, according to the Ministry of Planning and Investment.

The government targets economic growth of 6-6.5 percent in 2022 despite the potential challenges posed by the Covid-19 pandemic.

Digital technology for raising capital for real estate projects is quite new but will provide many opportunities for investors. However, an appropriate legal framework is required for this purpose to cover the interests of concerned parties.

Some experts shared different ideas and opinions on this issue at a conference in Ho Chi Minh City held last week, which was co-organized by the Faculty of Finance at the University of Economics in Ho Chi Minh City and Saigon Investment.

New approach

It is estimated that the total value of real estate in the world is greater than the total value of all the bonds and stocks together, and four times the global GDP. Since Real Estate Property (REP) is of high value, it generally draws the attention of a large number of people, but only financially strong people are able to make investments in it.

Therefore, splitting the value of real estate properties into smaller pieces with the aid of digital technology, to give smaller investors a chance, has recently caught the interest of a large number of people. The involvement of a bigger number of people in a market can help increase transparency, with more people monitoring the investment process. By also working from home remotely, they contribute to containing the pandemic and stopping it from spreading.

Experts have analyzed that this is a way to make capital contribution by using digital technology as a medium. After that, the investors are given the profits. They do not own a square meter or half a square meter of a REP, nor do they have their names listed in a REP ownership book, but they are entitled to supervise the process of investment or transfer of such a REP.

Nevertheless, this approach may be troublesome in some ways. For instance, it is easy for young people who are adept at using the required technologies, as the knowledge about the platforms for the activities is not commonly known to the public.

Dr. Dinh Thi Thu Hong, Dean of Faculty of Finance of UEH, stressed that the approach to raise money for real estate projects by using digital technology is a new innovation. At present, Vietnam does not have any legal regulation on activities for raising funds for real estate properties by using technology like blockchain or crowdfunding. However, there has been a growing need for investment in fintech, and especially proptech, by using the blockchain technology.

Having monitored this activity for quite a while, Dr. Phan Phuong Nam, Deputy Dean of the Trade Law Faculty of UEH, said that some institutions have begun raising funds by using the token platform, with three main activities, namely, business cooperation contracts, joint ownership and real estate investment trusts.

Mr. Nguyen Trieu Dong, MA, lecturer at UEH, said that tokenization is the natural evolution of securitization, creating an opportunity for transparency of information and transactions based on the blockchain technology. Investors just need a small capital for their investment in REP. This smart-contract-based investment approach is very flexible, quick and does not require intermediaries, which minimizes the costs and administrative formalities necessary in order to get REP ownership transferred.

No legal path

Mr. Nguyen Trieu Dong, MA, believes the real challenge to this business activity includes a legal framework and a technical platform for using the technology, coping with disputes between token holders and possible conflicts, plus tax on transactions. Therefore, in order to promote this business activity in Vietnam, the State needs to provide necessary tryout rules, incentives, procedures and a tax policy as a drive for its development in the market and complete a revised legal framework for digital property so that people can feel secure about their business activities.

According to Mr. Nguyen Trieu Dong, MA, for development of this business activity in the future, it will be essential to have a digital currency system that can grow and harmonize with this area of digital property.

Additionally, it will facilitate links and connection with the global markets and increase liquidity of investment products as well as the effectiveness of product competence exploitation, contributing to the significant growth of the entire economy. He also believes that what is important is ensuring transparency of the information about REP planning and information about disputes or limited transactions.

From a macroeconomic perspective, Prof. Tran Ngoc Tho, a member of the National Financial and Monetary Policy Advisory Council, said that it is very important to manage risks of international payment activities at banks to ensure safety of proptech activities. How to control such activities satisfactorily is based on how business activities are conducted and how this kind of investment can be beneficial for the whole society and the entire economy, rather than for investors only. When it finally comes into existence, it will be absolutely imperative that we have regulations on how to manage risks and cope with problems, especially tax evasion and money laundering.

Prof. Tho believes that when a new form of investment or technology product comes into existence, competent agencies are required to take it into consideration so as to optimize the technology advantages while striving to minimize risks. As far as international payments are concerned, the authorized agencies will also need to take into account the criteria for financial leverage, anti-money laundering, counter-terrorism, internet safety and other concerns in an effort to successfully protect the interests of the concerned parties. It is vital to ensure that activities with extraordinary values will not be irrationally blocked.

Several participants at the conference questioned the legal aspects of this technology concerning business activity, as this type of business is new in Vietnam. As a result, there is no specific legal corridor, nor a legal framework for digital REP business activities. Therefore, it is not clear how risks can be managed or how disputes will be tackled either, and what can be settled in accordance with legal regulations.

A legal framework for using digital technology to raise finance for real estate projects needs to be introduced soon in order to manage risks in REP business activities and optimize its benefits.