VIETNAM BUSINESS NEWS JUNE 11
14:44 Pandemic
drives need for technology adoption among firms  The COVID-19 pandemic has forced many enterprises to close, with workers losing their jobs and their lives seriously affected. However, through the use of technology, businesses can rebuild management and operations to accelerate and create breakthroughs, experts have said. Nguyen
Van Khoa, General Director of FPT, said that COVID-19 has made businesses
rethink the role of technology. Many businesses have spent millions of US
dollars to improve their management and operational capabilities. Nguyen
Tuan Hong Phuc, Deputy General Director of KPMG Vietnam, said that in
addition to investing in technology, companies need to transform the way they
operate. Companies
that do not adopt digital transformation will be left behind, he said, adding
that many Vietnamese companies have advanced further than their peers in the
same industry. As
perceptions of digital transformation change, there has been a positive
spillover attributed to promotions run by state agencies, professional
organisations and the efforts of enterprises, especially technology firms, of
which FPT is an example. According
to Tran Huy Bao Giang, General Director of FPT Digital Co. Ltd, the COVID-19
pandemic has provided an opportunity for change and breakthroughs from which
businesses can accelerate. He said
the company has carried out digital transformation projects across three
pillars: business, technology and people. FPT has
also provided solutions to help enterprises automate processes and operations
with high accuracy, optimise costs, improve labour productivity by 69 percent
and create new experiences for customers. Hanoi, Nghe An shake hands to promote
economic development A
conference promoting the partnership between Hanoi and Nghe An took place in
Vinh city of the central province on June 10. As part
of the "Hanoi - Nghe An Product Week 2022" from June 9 to 12, the
event was organised by the Hanoi Promotion Agency (HPA) in collaboration with
the Nghe An Centre for Investment, Trade and Tourism Promotion. It was
attended by leaders of departments and agencies of Hanoi city and Nghe An
province as well as representatives from the promotion centres of provinces
and cities, and foreign organisations and enterprises, among others. At the
conference, participants were introduced to the overall socio-economic
situation and investment environment of Hanoi and Nghe An. This was also an
opportunity for businesses from the two localities to boost partnerships in
key and potential areas. Consumption demand on recovery path:
ministry The
Ministry of Industry and Trade (MoIT) has forecast that domestic consumption
demand will recover and grow thanks to high vaccination coverage and the
reopening of the tourism sector. However,
the ministry said the Government’s economic stimulus packages may put more
inflation pressure on the domestic market. Given
this, the MoIT said it will continue to keep a close watch on supply and
demand as well as prices of essential goods, while closely coordinating with
other ministries and agencies to control prices and prevent market manipulation. The
ministry will also partner with press agencies to provide consumers with
information about the supply of essential goods. Although
the increasing demand for goods and complex developments of global fuel and
material prices have pushed up prices, the market is still under control,
according to the ministry. Total
retail sales of goods and services in May reached 477.3 trillion VND (20.58
billion USD), up 4.2 percent month-on-month, and 22.6 percent year-on-year,
it explained. In the
first five months of this year, the value was 2.25 quadrillion VND, a rise of
9.7 percent from the same period last year. An Giang eyes over 20 trillion VND in
investment The
Mekong Delta province of An Giang is aiming to attract more than 20 trillion
VND (862.73 million USD) for at least 15 local projects in 2022 following a
freshly signed investment promotion programme. These
projects are involved in transport, urban infrastructure, agriculture,
industry, and trade-service-tourism. Highlights
among them include the 1,400m Nang Gu bridge costing about 688 billion VND; a
200ha centre for rice and freshwater aquatic products worth 9 trillion VND;
the 100ha Xuan To industrial park worth some 2.5 trillion VND; and the
1,050ha Nui Cam tourism site that will cost approximately 7.5 trillion VND,
among others. In 2021,
An Giang attracted 947 billion VND in 18 projects, including one
foreign-funded project. US mission seeks stronger cooperation
with HCM City in clean energy Vice
Chairman of the Ho Chi Minh City People’s Committee Vo Van Hoan on June 10
hosted a reception for a delegation of US government officials and business
representatives who are visiting Vietnam to find ways to boost bilateral ties
in clean energy development. The US
mission was led by Deputy Assistant Secretary for Asia Pamela Phan of the
International Trade Administration at the US Department of Commerce. Welcoming
the delegation, Hoan reiterated the southern largest economic hub’s desire to
further step up cooperation and investment in areas of mutual interest
between Vietnamese and US enterprises. HCM City
has taken drastic measures to promote green production, lifestyle and living
standards so as to realise the Government’s commitments in greenhouse
emission reduction, he said, noting that among the measures were using green
energy in transport, encouraging factories at hi-tech and industrial parks to
make transition to clean energy and motivating more people to shift to solar
power. The
official pledged that the city stands ready to support foreign investors to
do business in Vietnam in a long run and to assist US partners in
accelerating cooperation and investment in clean energy. Kien Giang channels resources into
fishery infrastructure development The
Mekong Delta province of Kien Giang has set to concentrate its resources on
developing fishery infrastructure during the 2020-2030 period serving the
sustainable growth of the sea economy of the locality and the whole country. The
investment involves 11 fishing ports and 13 storm-shelter moorings for fishing
vessels, of them five and three have already received funding, respectively. Kien
Giang has proposed the Government arrange medium-term investment capital
worth 355 billion VND (15.31 million USD) for its remaining fishing ports
during the 2021 – 2025 period. Of the sum, 155 billion VND will be sourced
from the provincial budget. The
provincial development plan also covers the building of a big fishery centre. In the
first five months of 2022, Kien Giang’s fishing output totaled 220,686
tonnes, fulfilling more than 45 percent of the yearly plan. Global uncertainties loom over textile-garment
industry growth Vietnam
reported a year-on-year surge of 23.5 percent in exports of textile and
garment to earn 18.7 billion USD in the first five months of this year in the
midst of lingering market uncertainties coupled with rising prices of inputs. A
majority of textile-garment companies have orders to fulfill by the end of
September, many are in the negotiation process to gain more for the rest of
the year. Nam Dinh
Textile Garment JSC (Natexco), a major producer located in the northern
province of Nam Dinh, has generated over 1.02 trillion VND (44 million USD)
in revenue as of the end of May, up 23 percent from the same period last
year, according to trade union president Doan Van Dung. Viet
Thang Corporation has been struggling to keep production going during the
first quarter of the year, given that the Russia-Ukraine crisis has caused
supply chain disruptions and a spike in input and fuel prices and logistics
costs, according to Deputy Director-General Dau Phi Quyet. Vietnam
National Textile and Garment Group (Vinatex), one of the leading
textile-garment manufacturers in the country, had impressive business
performance since the start of this year with a 50-percent surge in revenue.
But similar challenges could potentially put the brake on its growth over the
remaining months. Record
inflation in decades are ravaging major economies, including the US, the EU
and the UK, triggering rising inventories and declining purchasing power.
This may have substantial effects on Vinatex’s performance, CEO Cao Huu Hieu
said. Vietnam enhances cooperation with
France’s Auvergne-Rhône-Alpes Vietnamese
Ambassador to France Dinh Toan Thang made a working trip to the
Auvergne-Rhône-Alpes region on June 9-10, aiming to strengthen post-pandemic
cooperation with the French region. Welcoming
the ambassador, Philippe Meunier, Vice President of the Regional Council of
Auvergne-Rhône-Alpes, hailed the positive results of cooperation in urban
planning, public lighting, health care, and education – training between the
French region and Vietnamese localities such as Dong Nai and Ho Chi Minh
City. The
Auvergne-Rhône-Alpes region wishes to expand cooperation with Vietnamese
localities in the fields of environmentally friendly green infrastructure,
energy, medicine, as well as collaboration within the framework of the
Francophonie, he said. The
French official called on Vietnamese localities to join the International
Association of Francophone Regions (AIRF) and to attend Pollutech 2023 –
Europe’s leading international exhibition on the environment. During a
meeting at the Lyon Chamber of Commerce and Industry (CCI Lyon), Philippe
Valentin, President of CCI Lyon, emphasized that many member businesses of
CCI Lyon such as Thuasne and Boehringer Ingelheim are currently doing very successful
business in Vietnam. He expressed his desire to increase cooperation in the
areas of Lyon businesses’ strength and Vietnamese partners’ demand. Cai Mep port ranked 11th among the
world’s most efficient container ports According to the Container Port
Performance Index 2021 report (CPPI 2021) developed and published recently by
World Bank and S&P Global Market Intelligence, Cai Mep port of Vietnam
was ranked 11th among the 370 most efficient container terminals/port
clusters globally. Vietnam
has several ports ranked in this list, in which, Cai Mep port ranked 11th by
the "statistical approach" index - increased by 38 places compared
to 2020 and ranked 13th by the “administrative approach” index– increased 5
rankings against 2020. In Cai
Mep – Thi Vai area, Tan Cang - Cai Mep International Terminal under Saigon
Newport Corporation currently holds 40% of the market share, with 10
international service routes weekly connecting with North America, Canada,
Europe and Inter Asia. The data
was provided by the world's 11 largest shipping lines for a total of 370
global terminals/port clusters. Chinese market remains vital for
Vietnamese wood China is one of the leading five
consumers of Vietnamese wood and wood products, with its imports accounting
for between 10% - 12% of Vietnam’s total wood export value, according to wood
processors and Forest Trends. Meanwhile,
wood imports were valued at more than US$2.5 billion, including US$1.1
billion coming from the northern neighbour. Typically,
Vietnam mainly focused on exporting raw wood coded HS44 to China, with more
than 20 products making up approximately 80% of its total wood exports to
China. Among them, wood chips represented a large proportion of the country’s
total annual wood export turnover to this market. In the
other direction, the northern neighbour is the largest supplier of wood and
wood products to Vietnam, accounting for between 25% and 37% of the country’s
total annual wood imports. Local wood processors import more than 20 wood
products from China, with the majority of them belonging to the HS44 group. The
Forest Trends report shows that Chinese investment in the Vietnamese wood
industry remains relatively high, accounting for 17% to 35% of the total
investment capital injected into the industry as a whole. In addition, the
merge and acquisition (M&A) capital of Chinese enterprises makes up
between 6% and 35% of the total M&A capital of FDI enterprises
specialising in this industry locally. Hanoi promotes IT application to
increase farm produce consumption The
capital city of Ha Noi is promoting information technology (IT), including
the use of QR codes, in traceability to increase the consumption of farm
produce on e-commerce platforms. Director
of the Ha Noi Agricultural, Forestry and Fisheries Quality Management
Sub-Department Nguyen Thi Thu Hang said that at present, Ha Noi's agro-food
product traceability system had improved transparency in information for
about 653 businesses with almost 11,000 sets of traceability codes for
agricultural, forestry and fishery products. IT
application in production and consumption has also gradually improved the
capacity of cooperatives and enterprises in terms of production and supply of
products, according to Hang. Consumers can use smartphones to access the
date, month of manufacture, expiry date and origin of goods. Hoang
Van Tham, director of Chuc Son Organic Vegetable Cooperative based in Chuong
My District, Ha Noi, said at present, the connection and consumption of the
cooperative's products are made synchronously with modern sales channels such
as supermarkets and e-commerce trading floors. The
stamping of traceability has helped the cooperative stabilise the consumption
of vegetable products on the market. The cooperative has supplied 3 tonnes of
vegetables daily to many supermarket systems such as Big C and T-mart, large
hospitals, and schools. It has gained VND11 billion per year. Dang Thi
Cuoi, director of Cuoi Quy Organic Vegetable Production Cooperative in Dan
Phuong District, said that all vegetable products of the cooperative have QR
codes to trace their origin. This
cooperative supplies vegetables to kindergartens in Dan Phuong District and
the chain of Bac Tom clean food stores, and six wholesale markets in the
region. To
promote the application of QR codes in the production and trading of farm
produce, Dam Van Dua, director of Dong Cao General Service Cooperative in Me
Linh District, said that Ha Noi's departments and sectors should continue to
support cooperatives in applying IT in production and upload information
about the origin of farm produce at the capital city's traceability websites. EXIM Thailand opens representative
office in HCM City, inks credit deal with BIDV The
Export-Import Bank of Thailand has agreed to provide the Bank for Investment
and Development of Viet Nam with a credit facility worth US$100 million to
use as working capital and support Thai exports to Viet Nam. The deal
was signed during the opening of the Thai lender’s representative office in
HCM City on June 10. Under
the agreement, the two sides will share information that will help enhance
Thai-Vietnamese trade and investment and business between their
entrepreneurs. There
were still plenty of new opportunities in Viet Nam for Thai businesses in
view of its population of almost 100 million and average economic growth
prospects of close to 7 per cent a year. Minister
of Finance Arkhom Termpittayapaisith, who presided over the opening ceremony
online, said Viet Nam had a clear strategy to promote the use of renewable
energy to bring about energy security and lessen dependence on fossil fuels
for power generation, and had relaxed investment rules and was offering
investors privileges, particularly taxation breaks. Viet Nam
is Thailand’s second biggest trade partner in ASEAN. Banks’ asset quality to remain safe
thanks to large reserve buffers Despite
difficulties due to high inflation, declining net interest income (NIM) and
rising bad debts, analysts say Vietnamese banks can overcome risks related
asset quality thanks to their large reserve buffers and tight control in
lending highly risky areas. In a
recent report, analysts at VNDirect Securities Company said the asset quality
of banks has been somewhat affected due to impacts of the COVID-19 pandemic,
of which the average non-performing loan ratio (NPL) in the first quarter of
2022 increased while the loan loss reserve (LLR) ratio decreased slightly
compared to the end of the fourth quarter of 2021. Specifically,
the average NPL ratio increased to 1.5 per cent at the end of Q1 2022 from
1.39 per cent at the end of Q4 2021, of which the potentially irrecoverable
debts increased slightly to 0.58 per cent from 0.51 per cent. Total
outstanding loans of 15 listed banks by the end of Q1 2022 increased by 6.7
per cent compared to the beginning of the year while bad debts increased by
11.4 per cent. The five banks with the lowest NPL ratio include Techcombank
(0.67 per cent), Vietcombank (0.81 per cent), ACB (0.82 per cent) and MBBank
(0.99 per cent). The
increase in bad debt in the coming months is also noteworthy when Circular
14, which allows banks to reschedule the payment time of COVID-19 affected
debts, will expire at the end of June 2022. According to the SBV, if
including the rescheduled debts and those sold to the Vietnam Asset
Management Company (VAMC), the bad debt ratio of the banking system could
reach up to 7.3 per cent, equivalent to that in the 2016-17 period. Property market faces serious
liquidity issues: conference With the
real estate market facing liquidity problems, analysts have called for the
Government and banking industry to create a mechanism that enables property
developers to borrow and issue bonds. Speaking
at a seminar on capital sources for the real estate market yesterday, Le
Hoang Chau, chairman of the HCM City Real Estate Association Minh, said, “The
market is facing serious liquidity problems.” Businesses’
own funds account for only 15-20 per cent while the remaining 80-85 per cent
come from bank loans, bond issuance, home buyers, and foreign investment, he
said. Dr Dinh
Trong Thinh of the Academy of Finance said the tightening of corporate bond
issuance should be done with a road map, slowly and step by step. “If the
brakes are applied too suddenly, it would cause shocks to the market and
risks to the overall economy.” Le
Thanh, chairman of the Green Economy Institute, said the property market
contributed 14 per cent to the country’s GDP in 2019-21 and had a spillover
effect on some 40 other sectors such as construction, processing, tourism,
accommodation and catering, and finance and banking. In April the central
bank started tightening credit for the real estate sector, he said. According
to the Ministry of Construction, as of the first quarter of this year there
were only 24 completed real estate projects, or half the number in the
previous quarter and a year earlier. The
number of projects eligible for sale was only 56, down by two thirds from the
previous quarter, and the low supply pushed prices up dramatically, he said. Dao Minh
Tu, deputy governor of the State Bank of Viet Nam, said the focus was on
controlling credit risk to ensure market transparency and preventing a
bubble. But lenders would only tighten credit to high-risk segments to
prevent speculation, but not to segments like housing for workers and the
poor, he assured. At the
end of April total outstanding loans to the sector was VND2.3 quadrillion, up
10.19 per cent from the end of 2021, accounting for 20.44 per cent of total
outstanding loans. People will benefit from limited-term
apartment ownership: expert In the
controversy over limited-term apartment ownership, some experts see positives
and say it could change the situation of slum areas and reduce housing
prices. In the
draft of the revised Housing Law, the Ministry of Construction (MoC) offered
a proposal with two options for apartment ownership: from 50 to 70 years, or
according to the life expectancy of the apartment building. In the second
option, depending on the grade of the project, the buyer will be given
ownership for the corresponding term. Phan
Cong Chanh, a real estate expert, said: “Owning an apartment with a term of
20, 30 or 50 years is popular in many countries, with the aim of securing
land funds and diversifying housing types while ensuring the safety and
development of people's lives.” Meanwhile,
Nguyen Van Dinh, vice chairman and general secretary of the Viet Nam Real
Estate Brokers Association, said:” “If the proposal of a limited-term
apartment building is applied, the psychology of apartment speculation will
slow down. At that time, the apartment becomes a consumer asset, not a
savings asset, and apartment buyers will be hesitant because using the house
is a liability.” Chairman
of SBLaw Law Firm Nguyen Thanh Ha said that many countries in the world such
as the UK, the US, China, and Singapore have regulations on apartment
ownership for a limited time. Ha gave
an example in Singapore, in the first phase, this country stipulates
ownership of apartments for only 30 to 50 years. After that, when the quality
of the work gradually improved, the state extended the apartment ownership
period to 70 years, and with new construction zones today the "life
expectancy" was raised to 99 years. In
China, the constitution of this country regulates the purpose and duration of
land use with regulation of 40-70 years. The life of the project has a
limited time, and the issuance of a pink book for a limited-time apartment is
also used. Nguyen
Manh Khoi, deputy director of MoC’s Housing and Realty Market Management
Department said in Viet Nam, there are many different opinions regarding the
time limit for apartment ownership. According
to Nguyen Quoc Khanh, chairman of G5 Real Estate Investment Joint Stock
Company, the proposal could help void degraded collective areas that could
not be renovated. Deputy
Minister of Natural Resources and Environment, Dang Hung Vo said many old
apartment buildings in Thanh Cong and Nguyen Cong Tru needed renovation but
the residents would not accept the compensation offered by the investor so
they stayed as unsafe areas in the capital. Payment via bank transfer: compulsory
for real estate transaction, ministry proposes The
suggestion was made to prevent tax avoidance in the transactions of real
estate assets through the declaration of selling prices much lower than the
actual cost. The
ministry said that conducting payments via bank transfers would help ensure
transparency and improve tax management. Minister
of Finance Ho Duc Phoc said during a recent session of the National Assembly
that prices for tax payment in real estate transactions were often declared
much lower than the actual transaction prices to lower the amount of tax
paid. There
were cases which the prices for tax declaration were just about VND500
million, but the real transaction prices were VND10 billion, 20 times higher.
In some cases, the gap was even 40 times, Phoc said, adding that on average,
the declared prices were around six times lower than the actual transaction
prices. Under
the current regulations, the price stated on the real estate ownership
transfer contract was the price to calculate tax payment. If the contract did
not mention the price or the price was lower than the regulated land price
frame, the taxation would be based on the regulated price. |
