Chủ Nhật, 18 tháng 7, 2021

 

VIETNAM BUSINESS NEWS JULY 19

 10:59  

The State Treasury recently announced a plan to auction Government bonds worth of 120 trillion VND (5.21 billion USD) via the Hanoi Stock Exchange in the third quarter.

 


Illustrative image (Photo: baochinhphu.vn)

Vietnam expects to raise 120 trillion VND worth of G-bonds in Q3

The State Treasury recently announced a plan to auction Government bonds worth of 120 trillion VND (5.21 billion USD) via the Hanoi Stock Exchange in the third quarter.

Specifically, five-year bonds will be worth 10 trillion VND, seven-year ones 8 trillion VND, 10-year bonds valued at 40 trillion VND, 15-year bonds 50 trillion VND, 20-year bonds 5 trillion VND and 30-year bonds 7 trillion VND.

The State Treasury could adjust the volume of issued bonds to suit market situation and meet demand for State budget use.

In the first half of this year, it mobilised over 141.4 trillion VND worth of Government bonds, or 40.4 percent of the target assigned by the Finance Ministry./.

Italian firms seek investment opportunities in Vietnam

Vietnam is emerging as a promising trade and investment destination for the business community in Italy’s Sicily region, as heard at a forum aimed at connecting Vietnam and Sicily held on July 14-16.

Speaking at the event, Alessandro Albanese, head of the General Confederation of Italian Industry (Confindustria), said in the coming time, the Confindustria in Sicily will promote its role in linking firms in the region with the Vietnamese market via creating the foundation for specific trade agreements.

Vietnamese Ambassador to Italy Nguyen Thi Bich Hue highlighted diverse cooperation fields and a myriad of trade and investment opportunities for the two sides, particularly after tariffs will be gradually eliminated following the ratification of the EU-Vietnam Free Trade Agreement (EVFTA).

Vietnam is also a gateway to the ASEAN market, she added.

Participating enterprises paid attention to Vietnam’s development and investment priorities, farm produce trade prospects, smart city, environment, new energies, and links between local businesses and Vietnamese students studying in Italy, among other matters.

President of Sicily Nello Musumeci said he supports the EU-Vietnam Investment Protection Agreement (EVIPA) as it is a drive to boost investment between Vietnam and Italy.

He pledged to call for accelerating the ratification of the pact.

Vietnam – Italy trade in the first five months of 2021 reached 2.29 billion USD, up 29.3 percent year-on-year./.

Vietnam expects to raise 120 trillion VND worth of G-bonds in Q3

The State Treasury recently announced a plan to auction Government bonds worth of 120 trillion VND (5.21 billion USD) via the Hanoi Stock Exchange in the third quarter.

Specifically, five-year bonds will be worth 10 trillion VND, seven-year ones 8 trillion VND, 10-year bonds valued at 40 trillion VND, 15-year bonds 50 trillion VND, 20-year bonds 5 trillion VND and 30-year bonds 7 trillion VND.

The State Treasury could adjust the volume of issued bonds to suit market situation and meet demand for State budget use.

In the first half of this year, it mobilised over 141.4 trillion VND worth of Government bonds, or 40.4 percent of the target assigned by the Finance Ministry./.

Remittances to HCM City rise by over 22% in first half of 2021

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Remittances to HCM City topped 3.2 billion USD in the first half of the year, a 22.34 per cent increase year-on-year.
 
The growth was impressive considering the difficulties posed by the COVID-19 pandemic.

The remittances went mainly into manufacturing and other businesses.

This year the city is expected to get around 6.5 billion USD worth of remittances.

For many years they have been rising, and the city accounts for half of the country’s remittances.

Around two million people hailing from HCM City live abroad, and last year they sent home 6.1 billion USD, up 15 percent from 2019, before the pandemic struck.

Banks have been making investments to improve remittance services and launching promotional programmes to attract more of them.

Vietnam received 17.2 billion USD worth of remittances last year, the third highest in the East Asia and Pacific./.

Local shrimp exports likely to reach US$4.2 billion this year

Vietnamese shrimp exports are anticipated to increase by 12% to reach US$4.2 billion this year compared to last year’s figures, accounting for more than 40% of the domestic seafood industry’s export value, according to industry insiders.

According to information provided by the Directorate of Fisheries, the local shrimp sector will continue to face numerous difficulties over the course of the year due to the complex nature of the COVID-19 pandemic and unpredictable international trade competition.

This will be especially prevalent due to changes occurring in quarantine requirements coupled with food safety regulations being imposed on imported products in several countries.

Most notably, China, one of the nation’s major shrimp import markets, has tighten regulations on importing frozen products, including shrimp, due to the COVID-19 pandemic, a move which has caused shrimp exports to the market to decrease by over 20%.

Furthermore, the Republic of Korean (RoK) market now also requires shrimp products to meet heat treatment regulations in order to be exempt from quarantine requirements.

During the first half of the year, brackish water shrimp output surged by 12% to 371,000 tonnes against the same period last year, with total shrimp export turnover reaching US$1.5 billion.

Shrimp exports ahead in the second half of the year are projected to enjoy robust growth, with the export target anticipated to reach between US$3.8 billion and US$4 billion.

The United States, Japan, China, the EU, and the RoK are considered as the largest consumers of Vietnamese shrimp.

Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said local shrimp products are exported to 106 markets worldwide, an increase of five markets compared to the previous year.

Aside from these challenges, the domestic shrimp industry will see plenty of opportunities to expand markets for shrimp and tra fish products moving forward thanks to the signing of numerous free trade agreements (FTAs).

Bac Giang strives to become modern-oriented industrial area by 2030

Identifying industrial development a key economic drive, the northern province of Bac Giang eyes turning itself into an industrial locality following a modern and sustainable orientation.

Goals have also been set for the sector’s gross regional domestic product (GRDP) to grow by 19 percent annually during 2021-2030 and for its value to exceed 652.15 trillion VND (28.3 billion USD) by 2025 and hit 2.2 quadrillion VND by 2030.

Bac Giang aims to set up 23 new industrial parks (IPs), expand five IPs, and merge six industrial clusters into a 6,518-ha IP, pushing the total number of local IP to 29 spanning 7,840 ha by 2030.

Meanwhile, 29 new industrial clusters will be established and three other expanded, covering a total area of 1,853 ha. By 2030, Bac Giang hopes to house 66 clusters spanning 3,209 ha.

The local IP development follows a model that consists of an IP and an urban-service area with modern technical and social infrastructure. Prioritised industries include mechanics and manufacturing, and farm produce and food processing. Investment attraction, high-quality human resources building, and technological transfer and application are also focal points.

According to the provincial Department of Industry and Trade, to date, Bac Giang has six IPs covering 1,322 ha; five of them have become operational. They have attracted 409 projects from domestic and foreign investors worth 9.4 trillion VND and nearly six billion USD, respectively.

In 2020, budget collection from the IPs reached over 2.2 trillion VND, or 11 percent of the provincial budget./.

Vietnam's wood industry moving towards transparent trade

The Vietnamese wood manufacturing and processing industry needs to be more cautious to show other countries that Vietnam is moving towards transparent trade and is a reliable partner.

Deputy Minister of Agriculture and Rural Development Le Quoc Doanh made the statement regarding the US's investigation into some wooden products imported from Vietnam at a conference held on July 7 to review its performance in the first half of the year and set tasks for the second half of 2021.

To gradually meet the demand for transparent domestic raw materials, the VNFOREST plans to issue a certificate of sustainable forest management, said Bui Chinh Nghia, Vice General Director of the Vietnam Administration of Forestry (VNFOREST) under the Ministry of Agriculture and Rural Development.

The administration will work closely with the Programme for the Endorsement of Forest Certification (PEFC) to accelerate the recognition of the national forest certification system and link with the PEFC forest certification.

It is reported that the area of the newly-planted forest has so far reached 108,258 ha, accounting for 41.6 percent of the plan and that of the whole year is expected to hit 260,000 ha, meeting the year’s target.

As many as 109 forest fires and 1,329 forest-related violations were recorded in the first six months of the year. The damaged forest area was 1,210 ha, a decrease of 53 percent compared with the same period last year. Of which, 283 ha were damaged by forest fires and 672 ha due to illegal deforestation.

The administration will strengthen the forest protection and management to meet the target of reducing the number of violations by 10 percent and the damaged forest area by 20 percent compared with last year’s figures.

It is forecast that the total export turnover of wood and forestry products for the whole year will reach 15.5 billion USD, a year-on-year increase of 17 percent, Nghia said.

The export value of wood and forestry products in the first six months of this year was estimated at 8.71 billion USD, up 61.6 percent compared to the same period last year, the conference heard.

Wood processing enterprises continued to push up the export of products with high added value such as kitchen cupboards and furniture, Nghia said, adding that these are also products that have achieved a great growth rate of 40 percent.

While appreciating the good results gained by the VNFOREST over the past six months, Doanh said it should not rest on its laurels as the industry has been facing challenges from the impacts of the COVID-19 pandemic and natural disasters. Trade barriers would directly affect export activities, he added.

Thus, the deputy minister demanded the administration to build scenarios for the forest industry to cope with emerging challenges./.

Tourism in Thanh Hóa down but not out

Thanh Hóa Province is on the hunt for solutions to the prevailing crisis in the province’s tourism industry as a result of the COVID-19 pandemic.

Almost 700 tourism businesses and more than 300 business households in Thanh Hóa have been severely affected by the pandemic.

To date, two travel companies and 16 accommodation providers have registered to temporarily suspend operations, while most of the remaining businesses operate intermittently.

Tourism businesses have felt massive drops in revenue but still have to maintain their operations, including paying bank interest, taxes, corporate income tax, rent, electricity and water, social insurance and staff salaries.

Lê Trường Sơn, director of two hotels in Sầm Sơn City, said that there were almost no guests staying at the hotels.

“Customers cancelled in bulk after the pandemic broke out,” he said.

“This is severely affecting our revenue. The company had previously repaired and upgraded the hotels at a cost of billions of Vietnamese đồng to prepare for the peak summer tourist season.”

“Fortunately, they are company hotels. If we had owned them, they would probably have closed a long time ago.

Sơn said the revenue of each hotel would usually reach about VNĐ 7 billion per month but that "it is currently almost nothing".

For Lê Doãn Sơn, owner of a hotel on Hồ Xuân Hương Street in the same city, things have been much worse.

“At the beginning of the year, my family signed a contract to sublet a hotel for business with a large initial investment cost, but now there are no guests, so it was forced to close,” he said.

“If the pandemic won’t stop, my family don’t know what to do. We are exhausted, so we need the State's support to be able to hold on.”

Just 76 days ago, Sầm Sơn beach was still crowded during the April 30-May 1 holidays. Photo thanhnien.vn

Recently, the Department of Culture, Sports and Tourism has proposed that the People's Committee of Thanh Hóa Province lend capital from the provincial social policy bank at an interest rate of zero per cent.

The proposal also suggests prioritising spending from the provincial budget to support programmes related to tourism stimulus and human resources training so that as soon as the pandemic is under control the province's tourism can be restored.

The department also proposed policies to support tourism businesses such as vaccinating the workforce at accommodation facilities that can double as quarantine facilities.

They’ve also recommended discounting appraisal fees by up to half for official star-rating accreditation.

Restructuring debts, reducing and extending the loan repayment period and reducing lending interest rates for businesses are all included in the proposal.

One idea is for the suspension of insurance premiums to be extended without penalty so that employees’ health insurance cards will still be valid.

The province has also been promoting Thanh Hóa as “a safe, friendly and attractive destination".

The Department of Culture, Sports and Tourism of Thanh Hóa also sees a key role for sea tourism and events.

"When the pandemic is under control, the province will continue to expand its promotions, and advertising programme and introduce stimulus packages to key tourist destinations via airlines,” Phạm Nguyên Hồng, director of the Department of Culture, Sports and Tourism of Thanh Hóa, has said.

“We will focus on supporting businesses by organising training courses to improve the quality of human resources in the tourism sector, apply digital technology and develop smart tourism by promoting, advertising and managing businesses," he added.

The provincial Department of Culture, Sports and Tourism has also sent official letters to tourism businesses with COVID-19 guidelines.

Information technology, including electronic medical declarations via QR Codes, destination registration, and utilising the "Safe tourism in Vietnam” app will be key to the province’s success.

Pharma rules unable to stand test of time

After four years of enforcement of certain pharmaceutical rules, multinational corporations remain concerned and are changing operations in Vietnam, with import being one of the main focuses.

Decree No.54/2017/ND-CP which entered into force in July 2017 to guide the implementation of the Law on Pharmacy was expected to be a breath of fresh air in the pharmaceuticals market. However, troubles still linger in regards to lengthy procedures and drug registration, with the long-awaited distribution rights remaining far from the grasp of Adamed Pharma and other foreign-invested enterprises (FIEs).

According to Magdalena Krakowiak, head of Public Affairs and CSR in Vietnam at Adamed Pharma, the changes in 2017 were supposed to be a step towards granting FIEs the right to directly import pharmaceutical products and sell them to Vietnam-based wholesalers. However, FIEs are still not allowed to distribute pharmaceutical products.

“The changes from Decree 54 were not that meaningful from the perspective of Adamed. From the beginning, the company has been eyeing up the incentives from the country’s plan to prioritise domestically manufactured pharmaceuticals,” she told VIR.

When in 2017 Adamed acquired a controlling stake in Davipharm, one of the fastest-growing pharmaceutical companies in Vietnam, we were quite clear that we wanted to expand our local production.

With over $10 million invested by Adamed by the end of 2020 in Davipharm’s production plant in Binh Duong province, Vietnam’s first high-potency zone for production of oncological drugs in solid forms and with EU-GMP certification, we continue to execute our strategy focused on raising standards of drug production in Vietnam.

The company’s ambition is to offer domestically produced and high-quality medicines at affordable prices to Vietnamese patients. By establishing the local production of these affordable drugs, the company plans to expand to other markets, with Vietnam as a production hub.

Davipharm’s portfolio has 28 high potency drugs, including oncology drugs for the treatment of various cancers and leukaemia. In general, Davipharm provides medicines for 12 different therapeutic areas including the cardiovascular and respiratory systems.

Through its local company Davipharm, Adamed aims to increase the capacity of domestic drug manufacturers, improve patient safety, and provide medicines to treat some of the most common diseases in Vietnam.

Krakowiak added that the additional administrative burdens resulting from the Ministry of Health’s (MoH) Circular No.32/2018/TT-BYT dated November 12, 2018 on marketing authorisation of drugs and medicinal ingredients such as drug registration requirements, which are not in line with international standards and created lengthy procedures, forced new barriers for importers.

Like Adamed, other FIEs have been facing similar challenges.

“In the four years since the issuance of Decree 54, we our members have been finding it hard to expand our business activities in Vietnam because of the ban on the distribution of pharmaceuticals among FIEs,” confirmed a representative of an international pharma firm, who denied to be named.

Specifically, FIEs claim processing applications to renew marketing authorisation runs far beyond the set timeline, and new submissions are not processed. To boot, the provisions of Circular No.29/2020/TT-BYT issued at the end of 2020 will soon elapse, bringing the situation back to the regulations of Circular 32.

Over the past years, to adapt to the new rules and to benefit from the right to directly import pharmaceutical products, multinational corporations have been changing their business strategies. France’s Sanofi-Aventis Vietnam Ltd. has turned it into the first lawful multinational importer in drug production in the country since 2019.

A representative of Sanofi Vietnam said, “Sanofi Vietnam always desires to bring more and more innovative healthcare solutions to Vietnam which can help people enjoy a healthier and fuller life. We always respect the regulations and instructions of local authorities, and we also work closely with the MoH, its Drug Administration of Vietnam, and other health authorities as well as follow their instructions.”

Switzerland-based Novartis has also inaugurated a new legal entity in Vietnam since early 2020, when it became one of the first MNC in the country to successfully transform from a representative office to a foreign importer. Elsewhere, AstraZeneca transformed its Vietnamese arm into an FIE by launching AstraZeneca Vietnam last year. With the transition, MNCs are now increasing their role in Vietnam’s pharmaceutical market, where 50 per cent of pharmaceuticals are imported.

Statistics from Vietnam Customs show that Vietnam spent nearly $1.2 billion on pharmaceutical imports in the first five months of 2021, down 5.8 per cent on-year. The main markets are France, Germany, the United States, India, Italy, the United Kingdom, and Belgium.

Real estate market on firm basis in first half

Moves to slow the damage being done by the pandemic and curb resulting land fever issues have helped keep the fortunes of the domestic real estate market in good stead so far in 2021.

In the first six months of the year, Vietnam’s average GDP reached 5.64 per cent, of which real estate grew by four per cent over the same period.

Reported land fever reduced in the second quarter, stemming from the Ministry of Natural Resources and Environment requesting 26 local authorities to inspect the planning, leasing, and transferral of land in March.

The interest in land plots located within a radius of about 50-100km from Hanoi also decreased sharply. In which, Thai Nguyen decreased by 6 per cent, Bac Giang by 35 per cent; Bac Ninh was down 38 per cent; and Hanoi’s Quoc Oai district in fell by 17 per cent, according to figures released by Batdongsan.com.vn.

In Q2 the outbreaks of COVID-19 have led many localities across the country to apply social distancing measures, meaning the residential real estate market in Ho Chi Minh City and surrounding areas only truly operated mainly in April and early May. Notably, there was a significant decrease in supply and consumption in the apartment segment.

Meanwhile, DKRA Vietnam released that in Ho Chi Minh City, with limited new supply, the price of all segments has increased. Specifically, in the second quarter, land plots in both the city and neighbouring provinces recorded a more abundant supply than the first quarter, increasing 125 per cent. The consumption rate, meanwhile, increased by 59 per cent.

The apartment market in Ho Chi Minh City and nearby recorded a slight decrease in supply and consumption compared to Q1, of which supply dropped by 28 per cent and consumption fell by 26 per cent.

Notably, the Ho Chi Minh City market recorded more exciting developments with new supply mainly from Grade A and B apartments. There were not any Grade C or affordable apartments released in the market during this time.

In the second quarter, apartment prices in Ho Chi Minh City saw a slight rise of about 3-5 per cent compared to the beginning of the year and were mainly in the next phase of nearly completed projects.

The new supply of townhouses and villas in the metropolic and in provinces next door had a sudden surge, about 78 per cent compared to the previous quarter, but only concentrated in the first period of the second quarter, according to DKRA.

Dong Nai province continued to lead the supply and consumption of the whole market, while Ho Chi Minh City experienced a sharp decline due to the influence of the social distancing measures implemented for the latest wave of the pandemic.

In the hospitality segment, the supply increased significantly in coastal townhouses and shophouses (up five times) and condotels (up 26 per cent) compared to the previous quarter. These hospitality projects are concentrated on Kien Giang’s Phu Quoc Island, and in Ba Ria-Vung Tau and Binh Thuan provinces.

The consumption of the market as a whole from the end of the first quarter to the beginning of the second recorded positive signals. Still, there was a decline from the middle of Q2 due to the widespread impact of the pandemic.

A forecast from some experts pointed out that most segments will maintain new supply at the same level of the first half of 2021, but apartment supply may increase slightly. In particular, the new supply of land plots is concentrated mainly in the market of neighbouring provinces from Ho Chi Minh City. The demand may recover in the latter months of the year if the pandemic is under control.

The real estate market movement will inevitably depend much on the process of mass vaccinations in the coming months. Currently, the government is making significant efforts in community vaccination. The number of people vaccinated is likely to increase rapidly in the third quarter of 2021 with millions more vaccine doses due to arrive in the country in Q3 and beyond.

The government is aiming for 50 per cent of workers in the major cities to have access to vaccines by the end of the year and if this scenario plays out according to the schedule, the demand for real estate transactions will be expected to grow.

Corporate bonds issuance in first six months reach over $8.3 billion

Corporate bonds issuances have been on an uptrend in June, led by banking and real estate groups.

According to Bao Viet Securities Company (BVSC), the total issuance of corporate bonds in Vietnam in June 2021 reached over VND36.61 trillion ($1.6 billion), contributing to a total of VND190.66 trillion ($8.3 billion) of corporate bonds issued in the first half.

Numbers from Fiin Group show that the banking group accounted for the largest portion of the total issuance value in June (52 per cent) with around VND18.87 trillion ($820.43 million). Following is the real estate industry, accounting for 26 per cent with over VND9.370 trillion ($407.4 million). In H1, the real estate industry accounted for the largest proportion (42 per cent) with a total issuance of VND80.665 trillion ($3,5 billion), followed by banking with 29 per cent or VND55.244 trillion ($2.4 billion).

Enterprises with large deposits through the bonds in June include Trung Nam Dak Lak 1 Wind Power JSC (VND3.9 trillion or $169.57 million), LienVietPostBank (VND3.5 trillion, or $152.17 million), Orient Bank (VND3.5 trillion), Vietnam Construction and Import-Export JSC (VND2.2 trillion or $95.65 million) and ABBank (VND2.2 trillion). Compared to the same period last year, the total issuance value of corporate bonds in June fell by 44.38 per cent, BVSC commented.

However, accumulated in the first six months of 2021, the total value of corporate bond issuance reached over VND190 trillion ($8.26 billion), up 6.18 per cent.

After Decree No.81/2020/ND-CP came into effect from September 1, 2020, conditions for private bond issuance were tightened and then Decree No.153/2020 required investors in corporate bonds to be professional securities investors.

"These led to a significant decrease in corporate bond issuances. Therefore, in 2021, there will likely be fewer issuances than in 2020," said BVSC.

Scope remains for new capital influx

With its uptrend in economic growth since early last year driven in part by a rise in foreign investment and good control of COVID-19, Vietnam has earned big applause from high-profile international organisations who are expected to revise the country’s growth outlook this year. However, some big risks may still linger in the economy.

According to a reliable source, a company which is one of China’s largest online retailers and a member of the Fortune Global 500, is set to invest into Vietnam in this year. The company also operates in logistics, with sophisticated data-driven delivery technologies.

“The capital investment cannot be revealed now, but it will likely be huge,” the source who declined to be named and works at the company told VIR. “When the company enters Vietnam, the country’s online retail and logistics landscapes will likely be changed, with bigger competition.”

Vietnam’s total retail revenue in the first half of 2021 hit VND1.99 quadrillion ($86.52 billion), up 6.2 per cent on-year. According to the General Statistics Office (GSO), this figure was relatively high, especially given the COVID-19 pandemic forcing the public to tighten their belt.

“Our company will invest in Vietnam thanks to the country’s good economic growth, good control of the pandemic, a growing middle class with big expenditure power, and a rise in foreign direct investment (FDI) in the market,” the source stressed, adding that the logistics industry in Vietnam is developing strongly.

“All logistics firms are expected to reap double-digit growth this year,” said the source, “We will strongly develop business-to-customers logistics services in Vietnam in the coming time.”

The GSO reported that despite difficulties, the local logistics industry is still increasing in the first six months of 2021 thanks to many reasons including the world’s recovering economy. Vietnam’s total goods transportation reached 903.5 million tonnes, up 11.5 per cent over that of -7.8 per cent in the same period last year. The figure in the second quarter hit 439.6 million tonnes, up 15.2 per cent on-year.

Over the past months, CEVA Logistics (Vietnam) under CEVA Logistics – a global logistics and supply chain company, is boosting recruitment of new employees and expanding its network to ship goods to the US, which is Vietnam’s largest export market – with total six-month export turnover of $44.9 billion, a 42.6 per cent rise over that of the same period last year.

CEVA Logistics (Vietnam) is expected to rake in a rise of 20-35 per cent in revenue for the entire year, after reportedly reaping double-digit growth in the first half of this year.

In June 2020, CEVA Logistics expanded its contract logistics footprint in Vietnam with the new multiuser facility in the southern province of Dong Nai. The facility is strategically located with easy access to Cat Lai Port and Tan Son Nhat International Airport.

According to the GSO, despite COVID-19, the Vietnamese economy in general has been bouncing back, with an on-year growth rate of 3.68, 0.39, 2.69, and 4.48 per cent during Q1-Q4 of 2020 respectively. In the first and second quarter of this year, the rate touched 4.48 and 6.61 per cent on-year.

Last November, the National Assembly set an economic growth target of 6 per cent for this year. In January, the government set a target of about 6.5 for the whole year.

The Ministry of Planning and Investment (MPI) has reported its two economic growth scenarios for the second half of 2021 to the government last week. In the first scenario, to hit the growth target of 6 per cent for 2021, the economy must grow 6.2 per cent in the third quarter, and 6.5 per cent in the fourth quarter.

In the second scenario, for the economy to increase 6.5 per cent for this year, the economy must climb 7 per cent in the third quarter, and 7.5 per cent in the fourth quarter.

“Based on these two scenarios, localities must formulate their own growth scenarios for implementation. We must be persistent and patient in carrying our dual target of economic development and pandemic fighting, though it is a very difficult choice in economic macromonitoring,” said Prime Minister Pham Minh Chinh at the government’s recent meeting with localities nationwide on six-month economic development.

Though the government has been showing great caution in directing the economy, which is gradually recovering, a number of high-profile organisations are highly expecting Vietnam’s brighter prospects for this year and beyond, saying the economy is greatly supported by a series of factors, with a rising inflow of FDI continuing to serve as the key pillars for economic growth in the coming time.

The World Bank has just released it fresh forecast, saying that the Vietnamese economy will grow 6.6 per cent in 2021 and 6.5 per cent in 2022, thanks to a rise in investment and production, but still depending on how well the pandemic will continue being controlled.

Global analysts FocusEconomics told VIR in a statement that Vietnam’s GDP is projected to grow at the fastest pace in the region this year (see chart), with a strong manufacturing sector driving domestic activity and improving foreign demand boosting exports.

“However, the impact of the recent surge in daily COVID-19 cases on the already-stifled tourism sector remains a key downside risk to the outlook. Our panelists expect GDP to expand 6.9 per cent in 2021, and 6.8 per cent in 2022,” said the statement.

Meanwhile, the Asian Development Bank (ADB) has also predicted that the Vietnamese economy is expected to grow by 6.7 per cent in 2021 and 7 per cent in 2022 – strong and steady growth made possible by Vietnam’s success in containing the COVID-19 pandemic.

The growth momentum is expected to continue, thanks to ongoing reforms to improve the business environment and Vietnam’s participation in multiple free trade agreements involving almost all advanced economies.

According to the ADB, looking ahead to 2021, investment will be boosted by improving disbursement of public investment, the continuing diversion of production from China to Vietnam, recovery in China’s economy, and the implementation of a trade agreement with the European Union to greatly liberalise trade.

“The Japan External Trade Organization has released a list of 15 Japanese firms to shift their manufacturing from China to Vietnam. The majority of those moving to Vietnam make medical equipment while the rest produce semiconductors, phone components, air conditioners, and power modules,” said an ADB report released recently.

During January-June 20, total newly registered FDI in Vietnam reached $9.55 billion, an on-year climb of 13.2 per cent. Operational firms increased their capital by another $4.12 billion, up 10.6 per cent on-year. Total disbursement hit $9.24 billion, up 6.8 per cent on-year.

PM Chinh stressed that it would be a hard job to reach the set targets of economic growth, but the targets would not be changed now. “In the coming time, amid the increasingly complicated pandemic, we must be well aware that challenges will be much bigger than opportunities. We must make greater efforts to overcome all difficulties to hit the targets,” he said.

According to the World Bank, close attention should be paid to the evolution of industrial production and retail sales as both could be further affected by the latest outbreak. Exports may also suffer from the slowdown of activities in some industrial zones (IZs).

“If the current outbreak is not contained quickly, the government may wish to consider adopting a more accommodative fiscal stance to support affected people and businesses and to stimulate domestic demand,” said the World Bank bulletin for Vietnam in June.

The bank said that while the economy appears to have fared relatively well, several signs suggest slowdown in economic activity if the pandemic is not contained in the short term.

ADB country director for Vietnam Andrew Jeffries told VIR that the major downside risks are the re-emergence of the pandemic by new virus strains and delayed implementation of the vaccination plan. An ongoing resurgence is affecting not only major urban areas like Ho Chi Minh City and Hanoi, but also in the IZs in places like Bac Giang and Bac Ninh, where critical portions of the electronics supply chain are located.

“If the labour force in these zones is affected, it would impede manufacturing which is one of the key drivers of economic growth. Also, vaccination delays could have immediate impact on Vietnam’s economic recovery,” Jeffries said.

As for the Chinese retail company planning to set foot in Vietnam, despite numerous difficulties, it believed Vietnam’s big purchasing power and growing economy will continue being a major magnet for investors.

“Some big investors have come to Vietnam, such as Alibaba and Amazon. So there is no reason that our company will not enter Vietnam,” said the company’s source. “However, it is also expected that more administrative reform is needed because businesses are still facing complicated procedures in tax payment and customs clearance, hampering them from reducing production and business costs.”

Rain or shine, stock index rises

It is perplexing that despite the many signs of economic uncertainties, the S&P 500 index in the United States has kept rising and consistently set new records. While this is possibly related to stimulus packages in the U.S., it is worth noting that the VN-Index has also fared well. In fact, the VN-Index has outpaced its American counterparts since the end of March 2020.

Something seems amiss. In 2020, when Vietnam was rather successful in combating the pandemic, the world struggled; Vietnam’s economy was extremely open. In 2021, when large economies have shown signs of recovery thanks to Covid-19 vaccines, a new wave of infections has swept through Vietnam. Some enterprises need financial support but others need help in terms of policies because stringent social distancing poses challenges for them. If the Government decides to offer significant support and/or social distancing persists, will the stock index continue to rise? If it increases regardless of economic prospects, how long can this trend continue?

Rational and irrational expectation

Recent breakthroughs in S&P 500 are ascribable to policies by the Federal Reserve (Fed) and the U.S. Treasury. However, probably very few notice the share of technology firms in the profile of the index. According to statistics, technology firms, especially GAFAM or FAANG, accounted for up to 27.6% as of late 2020, followed by health (13.44%), discretionary consumer goods (10.70%), telecommunications (10.79%), finance (10.34%) and real estate (only 2.41%).

Technology and health are sectors that benefit from the pandemic as social distancing fuels demand for working from home (WFH). Soaring demand for healthcare products and services to fight the pandemic has helped shares in this category surge ahead. However, despite convincing reasons for the stellar performance of S&P 500, many analysts say that the U.S. stock market is valued at high levels and risks will erupt as soon as the Fed adjusts policies.

Vietnam’s stock market is led by banks, securities, steel and real estate. While good management of the pandemic in 2020 partly explained the recovery in this market, the sharp increase when neighboring countries remain cautious and the global supply chain is hampered may be harder to account for.

Many firms may survive in 2020 but face more problems in 2021. Are the profit prospects of banks and realty firms sufficient to justify current market prices?

Money flows into stock entail risks

According to the General Statistics Office (GSO), as of late May 2021, the stock market mobilized about VND116.4 trillion, up 68% year-on-year. The average transaction value in the stock market was about VND22.5 trillion per session, thrice as much as that in the same period last year. Higher trading value and market capitalization value have lured more new investors.

It is worth noting that among new investors, there are small and medium enterprises. They usually focus on their own business and only pour a small fraction into stock. However, since Covid-19 started in 2020, they have not seen many opportunities from their core business. The financial market has proven irresistible, so money has flown into stock.

As a result, risks may emerge. While small investors join in large numbers, they pale in comparison with small and medium enterprises. An enterprise’s account may be equivalent to thousands of small investor accounts. Some enterprises pour tens or even hundreds of billions of dong into the stock market.

When professional investment funds, the prop trading arm of securities firms and other financial institutions attain their profit target, they will rebalance their portfolio. If this takes place on a large scale, there may be drastic changes during some sessions. Enterprises may invest only in the short run. Once business prospects improve, they will withdraw money. Large withdrawals of funds may leave significant impacts on the market.

A recent report by the GSO based on quarterly surveys of enterprises regarding business trends shows that 48.6% of firms forecast that the third quarter of 2021 would be more challenging than the second quarter; only 17.8% expect an improvement. Some independent surveys show that business leaders are pessimistic about the upcoming months. Many enterprises must halt or restrict their business or streamline their workforce.

Vietnam still abounds in potential for long-term development and the price to earnings (P/E) ratio remains decent. However, if prices continue rising and profit growth cannot justify the trend, risks may escalate. Some international investment funds predict that the VN-Index will reach 1,400 in late 2021, but this target has been achieved too early.

The World Bank has just unveiled a report on global business prospects, emphasizing that developing countries may not recover rapidly due to the lack of vaccines. Many countries must review growth rates and inflation. The VN-Index is led by banks, stock, real estate and steel rather than technology, health or telecommunications (as in the U.S.). If other sectors continue facing trouble, how long can the stock index fare well?

(*) HCMC Economics University, IPAG Business School Paris and AVSE Global

Vietnam GDP growth predicted to hit 6.2% in 2021: CIEM

In the most optimistic scenario, Vietnam’s GDP growth in 2021 would reach 6.2% year-on-year on the assumption that the pandemic is contained in August, higher than the 6% target set by the National Assembly.

Head of the General Research Department under the Central Institute for Economic Management (CIEM) Nguyen Anh Duong revealed the forecast at a meeting on July 15.

Duong, however, said the economic growth would be 5.9%, slightly lower in case the pandemic could only be put off in October.

CIEM Director Nguyen Hong Minh said since early 2021, Vietnam has faced two Covid-19 outbreaks, with the latest breaking out in April the most complicated yet.

“Despite the severe economic consequences, Vietnam continues to show its resilience with GDP growth reaching 5.64% in the six-month period,” Minh added, saying the country remains among a handful of fast-growing economies in Asia.

According to Minh, such results came as the government has been flexible in its approach towards the twin goal, including the permission for manufacturing plants remaining operational on the condition of meeting Covid-19 countermeasures, or allowing enterprises to import vaccines.

On Vietnam’s economic prospect in the last six months of the year, Head of CIEM’s General Research Department Duong said the country’s capability to fight the pandemic, progress of public investment, and the utilization of free trade agreements (FTAs) would determine its economic performance.

To help the economy realize the twin goal, Duong expected the government to continue providing support measures for businesses and workers, especially in simplifying criteria in accessing relief packages.

“Pushing for innovation, digital economy and effective implementation of next-generation FTAs are priorities,” he noted.

However, in the long-term, a new mindset in economic reform to ensure substantial and comprehensive improvements in the legal framework would support sustainable recovery, Duong added, with the immediate goal would be to expand the use of public online services and non-cash payment in the economy.

Finance Ministry says has spent VND21.5 trillion on Covid-19 fight

Vietnam has spent VND21.5 trillion from the State budget to deal with Covid-19 since the pandemic broke out early last year, the Ministry of Finance announced at a meeting on July 16.

In the first half of this year alone, the Government spent VND4.65 trillion on Covid-19 infection prevention and control activities.

Among the total spending of VND21.5 trillion on the Covid-19 fight, VND8.4 trillion was used for the purchase of Covid-19 vaccines and medical equipment, covering quarantine costs and supporting frontline forces. Meanwhile, VND13.1 trillion was used to provide relief and financial support for people affected by the pandemic following the Government’s resolutions No. 42 and No. 154.

To accelerate the purchase of Covid-19 vaccines and the Covid-19 vaccination campaign, the ministry has proposed the Government allocate VND1,237 billion from the State budget’s standby fund in 2021 for the Ministry of Health to buy Covid-19 vaccines and carry out vaccinations.

The ministry has also proposed the National Assembly Standing Committee allocate VND13.3 trillion from the State budget savings in 2020 to buy Covid-19 vaccines.

Moreover, the Government has established the Covid-19 vaccine fund to mobilize legal sources of capital, together with the State budget, to buy Covid-19 vaccines for local residents. Up to now, the fund has mobilized approximately VND8 trillion.

On June 30, Prime Minister Pham Minh Chinh signed a decision to spend an additional VND7.65 trillion on the purchase of 61 million doses of Covid-19 vaccines.

The additional fund will also be earmarked for the transport, distribution and storage of vaccines sourced from the COVAX Facility and foreign funding and sponsorship.

According to the Ministry of Finance, the Government has asked all ministries, departments and localities to cut convention expenses by at least 50% and regular expenditures by at least 10%, thus increasing the spending on development and Covid-19 containment.

Salary more decisive than employer branding in job seekers’ choices amid pandemic

Job seekers now care about salary more than employer branding when it comes to taking up a job in the context of the Covid-19 pandemic affecting all socioeconomic aspects, according to the latest report of recruitment company Navigos Group.

According to Navigos’ survey, 60% of job seekers think that salary and employee benefits, including bonus, insurance and annual leave, are prerequisite factors for them to decide whether to apply for a vacancy or not.

Meanwhile, the remaining 40% said employer branding, including corporate culture, business scale, investment model, industry, leadership type, work environment and company reputation in the market affect their decisions.

Similarly, most employers said salary and employee benefits are the key factors for them to attract candidates. Approximately 60% of businesses who participated in the survey agreed with the above statement.

Moreover, 85% of small and medium enterprises, which have 100 to 1,000 employees, believed that candidates always have a clear expectation about salary, bonus and remuneration. The above factors are also considered as motivational factors for a candidate to commit to working for a long time and helping the business achieve common goals.

Some 80% of job seekers in the survey said that the Covid-19 pandemic won’t make them change their decision to give priority to salary and employee benefits while seeking jobs.

Accordingly, 50% believe that providing a good salary and employee benefits will be one of the main keys to show how well-developed a business is and 20% explained that the economy has not returned to normal, so a stable income has become one of the reasons to help them reduce stress.

Meanwhile, 10% claimed that by maintaining salary and employee benefits, enterprises can make the work environment more positive.

Among the employee benefits, the factors that job seekers care about the most are insurance schemes and healthcare, sales commissions, a Tet (Lunar New Year) holiday and seniority bonuses as well as professional training programs.

Candidates in HCMC are most interested in insurance schemes in addition to a stable income. In Hanoi, candidates give priority to a sales bonus, a Tet holiday bonus and an attractive seniority bonus.

Regarding employer branding, factors that job seekers appreciate the most are a good work environment (68%) and business size (62%).

Contrary to the need to know the salary of job seekers, most employers today rarely disclose the salary range.

More than 15% of companies do not disclose the salary in their job posting. Only a few companies, 4-9%, will reveal the salary.

The reason is that employers want to assess a candidate’s ability and make the salary negotiation easier. In addition, employers also want to avoid questions about the salary from current employees and find more potential candidates at different levels of work.

The survey also pointed out factors that might create an attractive job posting without salary information. These include a sales bonus, a Tet bonus and an attractive seniority bonus, insurance schemes, an attractive professional training program, career trends, an interesting work environment, excellent and experienced leadership, business scale and work locations.

Navigos Group’s report on “The employees’ choice between ‘Salary, Employee benefits’ and ‘Other factors in Employer Branding’” was conducted on nearly 1,000 job seekers and more than 400 employers.

Some 200,000 MSMEs to access digital-based operation model

A new platform has been providing businesses with online and face-to-face training courses on the digital operation.

KinhDoanhSo.com, the first digital center of Vietnam, will assist the business operation based on a digital platform for 200,000 micro, small and medium-sized enterprises (MSMEs) in 2021.

It is part of the goal of the project, which is being jointly executed by the Vietnam E-commerce Association (VECOM), the Digital Transformation Alliance for SMEs (DTS), and the IM Group.

The digital center plans to cooperate with 500 technology enterprises, as well as build a team of mentors and 1,000 consultants in 30 provinces and cities across the country.

Leon Truong, DTS’s Chairman said: “We realize that digital training from basic to advanced level is very important, especially in the context of the pandemic. Before the launch, the digital center has undergone a testing phase and received positive feedback from users.”

The project helps local businesses solve the scarcity of digital-related human resources, as well as connect and facilitate easier access to the digital transformation workforce, he said.

Nguyen Ngoc Dung, Vice President of VECOM, said they plan to coordinate with all government organizations, management agencies, and departments to support the province-level businesses in digital transformation.

“We will cooperate with international organizations including the United Nations and the US Agency for International Development (USAID) to pilot digital transformation model and quality human resources training, as well as launch many consulting points nationwide,” he said.

Hanoi targets GRDP growth up to 7.5% in 2021

Given the serious Covid-19 situation, the Hanoi People’s Committee has set up three growth scenarios with the gross regional domestic product (GRDP) growth of 7.5% in the most optimistic case.

“Hanoi identifies the utmost priority would be to fight the pandemic, which would eventually lead to the successful realization of the twin goal of both containing Covid-19 and boosting growth,” said the Chairman of the municipal People’s Committee Chu Ngoc Anh.

In the most optimistic scenario, Hanoi expected an economic growth of 7.5% for the whole year, which came from a growth rate of 8.59% in the third quarter and 9.12% in the subsequent one.

In worse situations, Hanoi predicted a GRDP growth of 6.85% when the pandemic is under control within July, and 6.12% if the Covid-19 persists until the third quarter.

To achieve the highest growth rate possible, the local authorities plan to mobilize resources to contain the pandemic while looking for opportunities to restructure economic activities to overcome difficulties and boost growth.

According to the economic plan, Hanoi would take advantage of a shift in investment capital worldwide to attract foreign direct investment (FDI) into the city, while promoting the formation of value chains in domestic and foreign markets.

Vice-Chairman of the Hanoi People’s Committee Ha Minh Hai noted in 2021, Hanoi aims to improve the business environment by keeping the 100% rate of online business registration, making 100% of administrative procedures available online at advanced stages of 3 and 4, and returning 50% of results via post.

Hai informed the Hanoi Department of Planning and Investment that is planning for the organization of a conference addressing businesses’ concerns amid the Covid-19 pandemic.

In the first six months of 2021, Hanoi attracted FDI inflows of over US$694 million, including 171 fresh projects worth a combined of $96 million and $477 million in 78 existing ones.

Vietnam set to emerge as major startup ecosystem in SEA by 2022

Southeast Asia-focused venture capital funds are putting more effort into early-stage investment in Vietnam, and such a trend is expected to continue growing in the next 10 years.

Vietnam is set to emerge as a major startup ecosystem in Southeast Asia by 2022.

Golden Gate Ventures made the prediction in its latest report themed “Southeast Asia: Startup Ecosystem 2.0” while noting “stronger signs of SEA-focused venture capital funds putting more efforts into early-stage investment in Vietnam.”

With the trend of continuing to grow in the next 10 years, five industries that are predicted to catch investors’ attention are e-commerce, financial services, online media, online travel, and food & transportation.

The venture capital also expects the number of initial public offerings (IPOs) in the region to exceed 300 by 2030, nearly triple the amount recorded in 2020 at 114, as more local startups seek an exit in domestic public markets.

According to Golden Gate Ventures, over the last decade, the startup landscape in Southeast Asia grew phenomenally in terms of capital inflow with total capital invested per annum increasing 50 times from US$130 million in 2010 to $6.5 billion in 2020 – and the close of the decade culminated in 15 mega-deals of over $100 million each that accounted for over half of the total capital invested.

“Food, fintech, and logistics were amongst the vertical that drew the most investment dollars,” it added.

Meanwhile, the venture capital fund noted the first-generation entrepreneurs of the region typically came from corporates, as there was no existing startup pool.

Post-2015, mega-rounds raised by Grab, Gojek, and Rocket internet companies uplifted funding across the stages - encouraging diversity (culture, background, expertise) in a new generation of entrepreneurs.

“We have seen an emergence of Generation 1.5 - former senior employees of high-growth tech companies. As it takes an average of 8.3 years from start to exit, we are on the precipice of seeing Generation 2.0 take off,” it added.

For 10 years ahead, it suggested media and entertainment startups will gain a stronger following and funding at over $700 million by 2030 as the industry is shifting its focus into a digital-first solution – including TV/film, live-streaming, and esports.

UNDP launches a contest on digital transformation solutions in Vietnam

A contest entitled “Youth digital citizen challenge 2021” was officially launched in Hanoi on July 15 to encourage young people to create better digital transformation solutions and services.

The contest was jointly held by the United Nations Development Program (UNDP), the Hanoi Youth Union, and the Hanoi Youth Palace with a view to improving the quality and accessibility of online public services.

Speaking at the launching ceremony, UNDP Deputy Resident Representative Diana Torres said Vietnam has risen from 99th place to 86th place among 193 nations in the E-government Development Index (EGDI) of the United Nations, from 2014 to 2020, which reflected the country's efforts in digital transformation.

However, to achieve the ambitious goals set in the National Digital Transformation Program until 2025 to become one of the top 70 nations in the EGDI, Vietnam will need to work harder to ensure that all citizens engage in digital transformation and effectively use its achievements, she noted.

The UNDP has pledged to support an inclusive and people-centered digital journey, Diana Torres said, adding that Vietnamese youth have skills, knowledge, and devotion to support the local government in this process, helping the country to achieve its targets and the Sustainable Development Goals by 2030.

Joining the contest, all students, programmers, designers, and start-ups in Vietnam, as well as individuals aged between 18 and 30, can submit their ideas to the organizing board from now until August 10.

The submissions must focus on five fields including public administrative services, education, health, business support, natural resources, and environment.

Ten teams with the best ideas will be selected to participate in a two-day boot camp between August 18 and 19 with experts from the UNDP, the Hanoi Youth Union, and some of the best companies in Vietnam to develop the teams' ideas.

The three best ones will have a chance to earn rewards worth a total of VND70 million (US$3,040) and join the technology incubation program with support from domestic and international venture capital funds.

For his part, Deputy Secretary of the Hanoi Youth Union Tran Quang Hung said with energy, commitment, and innovative ideas, young people are major drivers of change to create solutions that will accelerate the achievement of the Sustainable Development Goals.

“They need support, capacity building, and more space to utilize their strength to actively participate in governance activities. This is the motivation for the Hanoi Youth Union to collaborate with the UNDP to organize this competition,” Hung said.

Besides, a programming contest named "Code war 2021: The first battle" was also launched to form a community of qualified programmers who can create their own high-quality projects with high competitiveness in the market economy and in the context of deep international economic integration.

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes

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