VIETNAM'S BUSINESS NEWS HEADLINES JUNE 14 01:05               SBV eyes tightening non-bank credit in corporate bonds, property   A consumer speaks to a sales assistant about credit services. The State Bank of Viet Nam was looking to tighten credit in corporate bonds and real estate provided by non-bank financial institutions with an aim to ensure safety. — ndh.vn  The State Bank of Viet Nam is looking to tighten credit in corporate bonds and the real estate sector provided by non-bank financial institutions with an aim to ensure the safety of the system. Recently, the central bank made public for comments a draft circular about limits and safety ratios in the operation of non-bank credit institutions. Under the draft, non-bank financial institutions must keep six ratios within limits to ensure safety in operations, including a minimum capital safety ratio, restrictions on providing credit for corporate bonds and shares, solvency ratio, maximum ratio of short-term capital sources used for medium and long-term loans, ratio of investing in Government bonds and Government-guaranteed bonds and limits on capital contribution and share purchase. The minimum capital safety ratio aimed to enhance the financial institution’s resistance to market shocks. Under the draft, the minimum capital safety ratio would be 9 per cent, the same as the current regulation. However, the risk coefficients were adjusted higher for risk-weighted sectors, such as the high-end property sector. Accordingly, credit guaranteed by houses and land ownership rights provided for individuals to buy social housing units or worth below VND1.5 billion each would have the risk coefficients of 50 per cent, same as the current one. However, the risk coefficient would be 120 per cent from January 1, 2021 to December 31, 2021 and 150 from January 1, 2022 for receivables from individuals worth VND4 billion or higher. The central bank said that this aimed to tighten credit for individuals into the high-end property segment. With this regulation, non-bank financial institutions would be more cautious and stricter in controlling loans for real estate businesses, which would contribute to minimising risk when the property market moved and making the real estate market healthier and more stable, the central bank said. The central bank said that this regulation would not affect the demand for loans for purchases of social housing units for homes worth below VND1.5 billion, adding that it would also not affect non-bank financial institutions with good financial capacity and high capital safety ratio. Regarding the regulation about restrictions on providing credit for investing in corporate bonds and shares, the central bank said that this aimed to limit loans which would be used to invest in corporate bonds and shares which had high potential risk recently. The draft also added a regulation that non-bank credit institutions were not allowed to provide credit for customers to invest in bonds of companies which were their subsidiaries. In 2019, the central bank issued Circular 22.2019/TT-NHNN about safety ratios for operation of credit institutions and foreign banks’ branches which also tightened credit for sectors with high risks, including the property sector. Business community prepared for EU trade agreement    Minister of Industry and Trade Tran Tuan Anh said the top priority now for the business community is not necessarily to enter the European market right away but to identify ways to exploit the EVFTA and EVIPA in an effective and sustainable manner that benefits both local companies and the country’s economy. Small and medium-sized enterprises are the most vulnerable during the implementation of the trade pacts, so ensuring they benefit while adhering to the provisions must be a priority for all business sectors. Tax and trade facilitation incentives are expected to greatly help Vietnamese enterprises expand their markets and improve their competitiveness. In order for local players to fully benefit, however, strategies that are appropriate for each business sector need to be completed. The EVFTA is the most ambitious trade deal Vietnam has ever signed. Tariffs on Vietnamese goods exported to Europe will be cut by 97% immediately for a period of seven years. For Vietnam’s business community to benefit as much as possible from the trade deals, the Government has undertaken to help local companies comply with requirements and rules./. Merger to be discussed at shareholder's meeting: Haraco Details on a plan to merge the Hanoi Railway Transport JSC (Haraco) and the southern Saigon Railway Transport JSC (Saratrans) will be discussed at Haraco shareholders meeting next week, according to a letter from its board of directors. "In order to improve the company's business efficiency, details on a plan to merge Haraco and Saratrans will be discussed at Haraco's upcoming shareholder's meeting, set to take place on June 15,” the letter stated. Haraco, Saratrans and the Transportation and Trade JSC - a freight train specialist - form the country's largest railway transport business, the Vietnam Railways (VNR). With Haraco and Saratrans holding a dominant market share on railway passenger transport. The merging is part of a VNR's effort to restructure its business and investments. VNR aims to recall some of its capital by cutting down its share and maintaining a 51 per cent share in the three companies. Haraco's main transport routes including the Ha Noi - Hai Phong, Ha Noi - Dong Ðang, Ha Noi - Lao Cai and the North-South. The company began its equitisation in 2015 with a registered capital of more than VND800 billion (US$34 million). At the time VNR was its largest shareholder with 91 per cent. Haraco (HRT) has been registered on UPCoM since 2016. Since equitisation - a process to convert a former State-own enterprise into a public company in Viet Nam - Haraco has reported large sales figures but with little to no profit to show for it. For instance, the company reported it net more than VND2.5 trillion in 2019 but only a small profit-after-tax of VND13.8 billion and a gross loss of VND71 billion. Last year, the company's sale target was set at more than VND1.6 trillion with a projected loss of VND355 billion. Haraco has made sizable investments in an effort to renew its fleet with the largest project to-date to build an additional 200 cars at a cost of over VND550 billion. Saratrans held its shareholder's meeting last month but made no note of the merger plans. Sustainable production and responsible consumption project launched The Viet Nam Rural Industries Research and Development Institute (VIRI) under the Ministry of Science and Technology on Saturday introduced sustainable products from a project in the central province of Thua Thien-Hue. Funded by the USAID Green Annamites, the project aims to develop livelihoods for forest-dependent locals, reducing their dependence on forests resources via wildlife hunting and non-timber forest product exploitation. Through a market-oriented value chain approach, VIRI and USAID Green Annamites have promoted sustainable production and responsible consumption of local products like medicinal plants and handicrafts. The project is expected to generate direct income for about 280 people and link the markets for some co-operatives and small- and medium-sized enterprises in the province. In addition, 2 per cent of sales revenue will be raised from participating entities to contribute to the local community forest management and protection fund. With a value chain approach, they will support local people in natural rattan harvesting techniques as well as standard planting and harvest process of medicinal plants. They will also enhance the management and business capacity of affiliates and co-operatives to meet market demands and add value to products. The project will also help strengthen co-operation among people, co-operatives and businesses to ensure stable output for the products. In addition, the project will support the construction of three elite networking centres in Hue and a communication channel through Facebook, helping co-operatives and businesses participate in trade fairs. The hope is consumers will understand that buying and using local products contributes to improving the livelihoods of ethnic minorities, as well as protecting forests and biodiversity. Indonesia builds industrial park to welcome US, Japanese investors The Indonesian government plans to build an industrial park serving Japanese and US plants relocated from China amid the US – China trade tension. Indonesian industry minister Agus Gumiwang Kartasasmita said in a statement on May 29 that the construction of the Brebes Industrial Park is based on Presidential Regulation Number 79 issued in 2019 on accelerating development in the country’s Central Java, which targets an economic growth of 7 percent. The Brebes IP is targeted to be a core industrial centre for the textile, leather and footwear, food and beverage, furniture, pharmaceutical and medical equipment. State-owned enterprise PT Wijayakusuma Industrial Estate has been assigned as the developer and manager of Brebes, with no further details given on the investment for the project. The master plan and feasibility study are expected to complete in July 2020, Kartasasmita said, hoping that related land acquisition of 3,976 hectares for the development of the park can be realised soon. This area covers three sub-districts, namely Bulakamba, Tanjung, and Losari. Industrial parks are part of Indonesia’s national priority projects in 2020. Indonesian President Joko Widodo has recently approved 89 infrastructure projects to build this year./. Cambodian agriculture unlikely to absorb laid-off workers: WB Cambodia’s agriculture sector is unlikely to be able to substantially absorb laid-off workers from the garment and tourism industries, according to a World Bank report. In a report titled, “Economic Update for Cambodia in the time of COVID-19,” it notes the weak performance of the farming sector. The bank says recent efforts to modernise the agriculture sector have intensified as Cambodia endeavours to increase productivity within its major crops. In this regard, there are signs that the sector is slowly modernising by leveraging advanced cultivation techniques and new seeds made possible by technology diffusion via foreign direct investment, it said, adding that while it is still too early to draw conclusions, Cambodia’s exported agricultural products have slowly expanded to include new products such bananas and soon mangoes. Meng Sakphouseth, country programme officer to Cambodia for the International Fund for Agricultural Development (IFAD), said that the agriculture is the sector that can most easily temporarily absorb seasonal workers. However, farming is not the first choice for many young Cambodians because they prefer to work in industry or the tourism sector. IFAD said it is working with the Cambodian government to leverage a programmatic approach to ease the economic distress and prevent food security stresses caused by the COVID-19 pandemic. The collaboration is focusing on addressing the immediate economic needs of rural communities by creating opportunities for returning migrant agricultural workers and expanding prospects for smallholder farmers through enhanced production support. The global COVID-19 outbreak has severely affected the services sector, especially the hospitality and tourism industry, which provides 620,000 jobs and hundreds of thousands of garment workers. According to the World Bank, at least 1.76 million jobs are currently at risk because of the COVID-19 outbreak. The collapse of the growth drivers has not only hurt economic growth but has also caused unemployment to soar to nearly 20 percent./. Three more air routes to promote domestic tourism Three more air routes from Vinh city of the central province of Nghe An to key tourism destinations in the country will be launched as part of efforts to promote post-pandemic domestic tourism recovery, said the Vietnam Airlines Corporation. Accordingly, the route connecting Vinh to Phu Quoc island district of the Mekong Delta province of Kien Giang will run four flights per week, beginning on June 12. Meanwhile, the routes linking Vinh and the Mekong delta city of Can Tho and Nha Trang city in the south central coastal province of Khanh Hoa will kick off on June 22, each operating three flights per week. The new routes are expected to help push trade and tourism connection between Nghe An and other north central provinces with the above localities. Nghe An aims to serve 5.1 million tourists and earn over 5.2 trillion VND (over 222.9 million USD) in revenue in 2020, up 8.5 percent and 17 percent year-on-year, respectively./. Online business cannot save Soya Garden? Cutting the number of physical stores as well as shifting to online business could save the beverage store chain Soya Garden from the COVID-19 crisis?     The beverage startup Soya Garden most recently announced to close nearly 30 stores across the country due to no ability to keep surviving during the pandemic. That is completely contrary to its previous strategy – open stores as much as possible. According to its CEO Hoang Anh Tuan, the chain target to introduce 100 stores last year, and will raise to 300 in 2021. However, under the impact of the COVID-19 lockdown that has interrupted the operation of a string of F&B companies. As a result, the firms, including Soya Garden, jointly filed a document crying for help to the local government to be supported during the tough time.  Indeed, running store chain business model has put many F&B companies on edge because it requires companies developing the number of stores that are big enough to cover the market. Consequently, every establishment required such a large cost for operation, including land leasing expenses. Major chains, over the past time, have been pleased to spend huge expenditures to be located at the favourable positions. Last year, Soya Garden beat the coffee, milk, and tea chain Phuc Long in gaining the golden place on the roundabout at 6 Phu Dong (Ho Chi Minh City) at the leasing price of $25,000 per month, doubling the previous price of Phuc Long. Nevertheless, as soon as the nation came into social distancing, their difficulties have steadily revealed. Specifically, every operation was halted, resulting in no earnings and lacking the ability to pay many kinds of expenditure, including the out-of-sight land leasing price. Facing this dilemma, many F&B chains have accelerated their shift from offline to online as an obliged solution. And Soya Garden cannot be out of the trend. An expert in the F&B industry revealed that online business only occupies about 30 per cent of the revenue structure of an F&B company. Thus, even as they boost online channels to mitigate the shortfall at physical stores, earnings may see a significant drop. Moreover, price is one of the main reasons behind its weak performance. In Vietnam, soya milk is sold at a small price, about less than 1 US dollar for a litre. However, a cup of soya milk in Soya Garden is put on trade at VND40,000-50,000 ($1.7-2.17), the same price of bubble tea items that are very popular in the market.  Due to the inappropriate price, Soya Garden stores are commonly in a muted sense. Entering one of its stores on Hang Bun street (Ba Dinh district, Hanoi) last year, the establishment only saw a tiny number of customers. Meanwhile, nearby bubble tea stores were always crowded. Hence, the weak performance of Soya Garden indeed stemmed from the lack in penetrating local customers’ taste then applying the improper business model for a kind of product that is very familiar to Vietnamese people. Southeast Asia through Gojek investment Pouring capital into Gojek right after entering the e-commerce sector, what ambitions is Facebook harbouring? The ride-hailing circle last week was astonished by news that the social networking site announced an investment in Indonesia-based Gojek that is present in Vietnam under the name of Go-Viet. Accordingly, Facebook has been working on expanding to emerging markets as well as seeking partners for its WhatsApp application. This is the second-largest deal Facebook has conducted the last seven weeks. In April, the US-based platform purchased 10 per cent of Indian Reliance Jio at $5.7 billion. Despite not revealing the value of the investment, Gojek most recently announced that it has received more than $3 billion from its Series F investment round. This suggests that along with the recent investment of PayPal, Facebook's capital in Gojek is not small at all. Facebook is planning to set up an e-commerce platform linked with WhatsApp and integrated payment features. Currently, companies running business on Facebook can also use WhatsApp as a tool to interact with customers. “This investment will support Facebook and Gojek’s shared goal of empowering businesses and driving financial inclusion across the archipelago. WhatsApp helps small businesses communicate with customers and make sales, and together with Gojek, we believe we can bring millions of people into Indonesia’s growing digital economy,” Facebook said in a blog spot. The ambition is also reflected by its launch of the new feature named Shops last month – which is very similar to online shopping platforms and is seen as a direct offensive to break into e-commerce. The tool supports businesses in setting up virtual stores to sell items both on Facebook and Instagram. Thus, with the latest move of injecting capital into Gojek, Facebook may be nursing aspirations of dominating Southeast Asia where the market is shaped by Singaporean e-commerce giant Shopee and ride-hailing platform Grab. Meanwhile, Gojek is a big counterpart in the area, so using the Indonesian player as a jumping board to enter the market is a good choice. In addition to Facebook, Gojek is backed by Google, Tencent, and Singaporean fund Temasek. The startup's value was assessed at $10 billion in the latest investment round and is now the largest unicorn in Indonesia. Housing projects proposed to sell land parcels: Ministry Housing projects not located in any urban districts, except Ha Noi and HCM City, are permitted to sell land lots. This is the regulation proposed at the end of May by the Ministry of Natural Resources and Environment in the latest version of the draft amending and supplementing Decree 43 on specific regulations for a number of articles in the Land Law, including conditions for transferring land use rights at housing projects. According to the April version of the amended draft, the housing projects nationwide are not allowed to sell land lots. Real estate experts said the ban of selling land lots would have strong impact on the domestic real estate market and it is very difficult to implement this ban. Nguyen Tran Nam, chairman of the Viet Nam Real Estate Association said the proposal on banning the sale of land lots is not suitable with both legal and practical issues, causing many difficulties for businesses and the people. The ministry has the ban with good target of stopping illegal actions in trading land lots to cheat buyers over past time, Nam said. The fault is real estate market management of local authorities but not due to the regulations. Nam said the market has high demand on trading land lots for investment while the State could collect tax from transferring land use right. The problems on the land lot market at present included not close management for the market of the authorities and intransparent information about planning of housing projects in particular and the property market in general, he said. Le Xuan Nghia said most of Vietnamese real estate enterprises are small and medium sized ones with limited financial capacity so they have often had land lot projects to recover capital quickly, ensuring cash flow to develop new larger projects. Nghia said giving approval for selling land lots should depend on each housing project and each location because the general construction planning at present is not synchronised. Tran Kim Chung, deputy director of the Central Institute for Economic Management, said the market still has demand on trading of land lots so the State should not ban this activity. The permission of selling land lots is a policy decision and the issuance of this decision should be suitable with the practice. Pyn Elite Fund divests capital in HCM City Infrastructure Investment Pyn Elite Fund, a Finnish fund which focuses on Vietnamese shares, on Monday announced it had sold nearly 337,000 shares of the HCM City Infrastructure Investment JSC (CII). After the sale, the fund cut its ownership in CII from 8.1 per cent to 7.96 per cent. On March 20, the fund also sold more than 1.4 million shares of CII.On March 26, it sold 66,810 shares and 1.5 million shares on April 7. CII Investment Director Duong Quang Chau recently registered to sell 200,000 CII shares from May 19 to June 17. In the General Meeting of Shareholders held early this month, CII proposed two scenarios for 2020 business results. In the first scenario, CII set a revenue target of VND5.8 trillion (US$249.3 million) and post-tax profit of VND808 billion. In a more plausible scenario, the company hopes to achieve revenue of VND6.6 trillion and profit of VND1.6 trillion. The company plans to issue 1.24 million bonds in conjunction with warrants, known as warrant-linked bonds, for existing shareholders at the rate of 200:1. This means a shareholder can buy one bond for every 200 shares they own. The total amount of capital raised through bond issuance is expected to exceed VND1.2 trillion. The company also plans to issue 160 million shares to the public at a price of VND10,000 per share. CII closed Monday at VND19,250 per share.  Kien Giang calls for investment in agriculture development The Mekong Delta province of Kien Giang is calling for investment in agriculture and rural development projects in Go Quao district. According to the provincial Department of Agriculture and Rural Development, the projects will focus on the fields of water supply, farm produce processing, hi-tech vegetable and fruit cultivation, development of concentrated cattle and poultry slaughter facilities, and production of rice varieties. Vo Van Tra, Chairman of the district People’s Committee said these projects are part of the locality’s socio-economic development strategy. It is in line with the agriculture restructuring plan of Kien Giang province in general and Go Quao district in particular, Tra added. The locality hopes to attract 100 billion VND (over 4.3 million USD) to construct five clean water plants with a capacity of 1,200 cu.m each in Vinh Thang, Vinh Phuoc B, Vinh Phuoc A, Vinh Hoa Hung Bac and Thoi Quan communes; and 188 billion VND (over 8 million USD) for fruit, rice and pepper processing plants in Vinh Hoa Hung Bac and Vinh Hoa Hung Nam communes. Meanwhile, hi-tech vegetable and fruit cultivation zones in Dinh An and Dinh Hoa communes, and concentrated poultry slaughter and rice variety production establishments in Dinh Hoa commune, are expected to get a total investment of 52 billion VND (2.2 million USD)./. Collective economy – cooperatives forum scheduled for third quarter The 2020 national forum on collective economy and cooperatives will be held in the third quarter, with the number of participants expected to reach about 500. Themed “connection, cooperation for mutual development – a trend for cooperatives’ growth in the era of the 4th industrial revolution”, the event will gather Party and Government officials, representatives of authorities and cooperative alliances across the 63 cities and provinces nationwide, experts, scientists, and businessmen, among others. Participants will discuss the foundation for the construction and development of the collective economy, which are collaboration and connection among cooperative members, between cooperatives, and between cooperatives and other economic sectors. Deputy Prime Minister Trinh Dinh Dung has asked the Ministry of Planning and Investment and the Vietnam Cooperative Alliance to coordinate in organising the event. The People’s Committees of centrally-run cities and provinces, meanwhile, have been requested to engage in activities of the forum and get prepared to answer questions related to issues to be tabled. On the sidelines, there will be a space displaying products of some cooperatives. As of June 2019, Vietnam had 14,502 agricultural cooperatives, 55 percent of which operated efficiently, much higher than the 15 percent in 2015. Along with reducing production cost for member households, the cooperatives helped increase their income by 14 percent per year./. Quang Ninh - ideal destination for foreign investors The northeastern province of Quang Ninh has emerged as an ideal destination for investors who want to diversify production activities and expand their supply chains outside China. "For investors operating in Guangdong (China), Quang Ninh is a destination worth considering in the plan to relocate production bases to Vietnam," said Pritesh Samuel, an expert from Dezan Shira & Associates Company. According to the expert, Quang Ninh is considered a strategic investment destination in northern Vietnam and an important link of the northern economic growth triangle Hanoi - Hai Phong - Quang Ninh. The province has great advantages with Van Don district planned to become a multi-sectoral marine economic zone, and an entertainment center with casino, high-class sea-island tourism, and general services, he explained. In addition, this is also the gateway for international trade, creating unique, modern and high-quality products which can be internationally competitive, he went on. Therefore, foreign investors expect Van Don district and Quang Ninh in general to be an important business center that is convenient for trade connectivity with China and ASEAN, he added./. Vietnamese firm exports 1 million masks to US JSC Central Pharmaceutical I (Pharbaco) has shipped 1 million face masks to the US. Pharbaco is the first pharmaceutical business in the north to be licensed for exporting masks to the US. Earlier, the firm completed orders from Poland and Hungary. Pharbaco is capable of producing 20 million of face masks per month. The company is importing more machines to increase its production capacity. Vietnam exported 415.7 million face masks worth 63.19 million USD in the first four months of 2020, according to the General Department of Customs. Japan was the biggest importer of made-in-Vietnam face masks in the period, with 32.7 million, followed by the Republic of Korea, Germany, and the US, with 17.1 million, 11.1 million, and 10.4 million, respectively./. Southern Focal Economic Zone benefits from smart farming Smart farming has played an important role in developing agriculture in the Southern Focal Economic Zone. In the past few years, smart farming has been used successfully in many localities in the zone, attracting great attention from farmers and the business community. The HCM City-based Quang Trung Software Park has introduced a number of smart farming models, including ones that use LED lamps and systems to grow vegetables in containers with high output and quality. According to figures from the HCM City Department of Agriculture and Rural Development, agricultural land accounts for over 46 per cent of the land in the zone compared to just 34 per cent in HCM City. Dr Từ Minh Thiện, deputy chief of the HCM City Hi-tech Agricultural Park, said ecological agriculture and improvement in quality were both needed. The zone should be developed into a national centre for hybridisation with laboratories that use advanced technologies and create new innovative technologies for agricultural use. It should also build brand names for regional specialities. HCM City had led the way in smart farming models for farmers and the business community. Thiện said its Department of Agriculture had focused on the development of sustainable urban agriculture "using biotechnology and is a hub for developing high–quality plant and animal varieties”. This acted as an impetus for sustainable agricultural development in the Southern Focal Economic Zone. "Smart farming also can help turn HCM City into a centre for technology, including biotechnology," he said. Statistics from the Việt Nam Chamber of Commerce show that investment in the zone accounts for only 1 per cent of total investment in agricultural development in Việt Nam and 3 per cent of companies’ investments in business and production activities. Ninety per cent of investment in agricultural development is from small and medium-sized enterprises. Thiện said relevant agencies had yet to issue policies to promote smart farming and tech companies had not focused on agriculture.  Thai Cabinet approves e-business tax draft law Thailand’s Cabinet on June 9 approved a draft bill allowing the government to collect VAT from electronic services, as proposed by the Ministry of Finance. With that move, Thailand has become the latest country in Southeast Asia to seek to boost tax revenue from international technology companies. The bill requires non-resident companies or platforms that earn more than 1.8 million THB per year from providing digital services in the country to pay a 7 percent VAT on sales, deputy government spokeswoman Ratchada Thanadirek was quoted by the Bangkok Post newspaper as saying. Thailand is expected to add about 3 billion THB (95.6 million USD) to its coffers annually from the move, which will affect services such as music and video streaming, gaming, and hotel booking./. Webinar discusses new tools for firms to seek partners amid COVID-19 A webinar was held by the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC) on June 9 to discuss new connection tools for businesses to access foreign partners amid the COVID-19 pandemic. Speaking at the event, ITPC Deputy Director Cao Thi Phi Van said thanks to the successful containment of the pandemic, Vietnam has started resuming production and business activities and been viewed as a safe destination by foreign investors. However, the country’s export-oriented economy has been still badly hurt by the disease since many of its major markets are under lockdown and global trade has been disrupted by travel restrictions, Van said. To recover foreign trade, domestic firms must take advantage of IT platforms to maintain connection with traditional partners and seek new importers, and make them adaptive to the pandemic which may be far from over. Echoing her view, CEO of Source of Asia Thiery Mermet said the COVID-19 pandemic has not only caused stagnant production but also disrupted connection between partners. Sellers and buyers are no longer able to directly interact with each others, adding more challenges to market forecasting and significantly reducing business opportunities, he said. Amidst the COVID-19 outbreak, firms have two options, he continued, the first is to reduce their production scale and wait for the disease to end and the second is to actively renovate themselves and come up with new business strategies and new marketing tools. The first one is safer but only those who choose to change can make use of gaping holes in the global supply chains and be fully prepared when the pandemic ends, he explained. Director of international relations at SOA Blandie de Quatrebarber suggested Vietnamese businesses to employ digital tools to seek new customers, saying they should make their products regularly available on online platforms, such as websites and social media, and maintain close contact and become familiar with customers and their culture. Firms must be aware that online business can become more trending in the coming time as it helps save costs and time so they need to find suitable marketing tools and strengthen connection with providers of supporting services in foreign markets so as to promptly and effectively gain access to the markets, experts said./. German media laud opportunities from EVFTA The European Union – Vietnam Free Trade Agreement (EVFTA), recently ratified by the Vietnamese legislature, will not only help Vietnam boost production and exports but also enable European firms to increase their presence in this emerging Asian nation, said the German media. The DPA newswire said once the deal takes effect in early August, 99 percent of all tariffs on both sides will be cut after seven years. The EVFTA will allow Vietnam, which is already one of the world’s fastest-growing economies, to increase its export turnover to the EU by about 20 percent by 2020 and 44 percent by 2030, it said. Meanwhile, the DW said the FTA with Vietnam is the EU's most ambitious trade deal with a developing country. The deal is set to give the Southeast Asian country a much-needed economic boost amid the coronavirus pandemic. In ratifying the deal, Vietnam committed to implementing sustainable development standards, protecting labour rights and to uphold its pledges to tackle climate change under the Paris Accord. The Finanznachrichten cited Vice President of the Federation of German Wholesale, Foreign Trade and Services Ines Kitzing as saying that the deal not only creates an economic driving force but also offer a clear answer to protectionism under the disguise of COVID-19 crisis. General Manager of the Federal Association of the German Footwear and Leather Goods Industry Manfred Junkert, for his part, said opportunities for German producers in Vietnam rely on how Vietnam overcomes the pandemic as well as financial capability of domestic enterprises. He also hailed Vietnam as a promising market for German leather and footwear. Last year, Vietnam was the second largest supplier of footwear to Germany./. PetroVietnam to cut crude oil exploitation costs during 2020-2025 The Vietnam Oil and Gas Group (PetroVietnam) has set a goal of reducing average crude oil exploitation costs in order to sustain business during the 2020-2025 period, even if crude oil price drops to 30 USD per barrel. During the third congress of the Party organisations at PetroVietnam for the 2020-2025 tenure in Hanoi on June 9, General Director Le Manh Hung said the group is facing difficulties during 2015-2020, especially in exploration and exploitation. Secretary of the Party Committee and Chairman of the Board of Directors at PetroVietnam, Tran Sy Thanh, asked the group to focus on two key tasks. The first is following the Resolution adopted by the fourth plenum of the 12th Party Central Committee on Party building and rectification while preventing and driving back degradation in political thought, moral virtue, and lifestyle. The second is improving corporate governance to achieve set goals, especially those regarding production and trade as well as finance, and paying attention to petrol price forecasts to better control risks, he said. PetroVietnam will put into operation Lot B and the Ca Voi Xanh gas fields, the largest in Vietnam, during the 2020-2025 period. The group’s total revenue in 2015-2020 is estimated at 3,397 trillion VND (over 146.37 billion USD) and State budget contributions at 592 trillion VND. After-tax profit is expected to reach 170 trillion VND. It expects to tap 25-30 million tonnes of oil equivalent each year after 2024./. ASEAN’s economic growth could bounce back to 8 pct by 2021 Economic growth in the ASEAN region could rebound to an average 8 percent in 2021 after falling into recession in the first half of 2020, a report suggested on June 8. The report, written by Oxford Economics and commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW) suggested that most Southeast Asian economies will fall into recession in the first half of 2020 before recording a 1.9 percent contraction for the full year. The report said Thailand will be one of the worst hit in the region because tourism and travel account for 20 percent of its gross domestic product (GDP). On the other hand, Vietnam will emerge the least affected with its lead in unwinding measures as compared to other regional peers, although it is not immune to the sharp slowdown in trade flows, the report said. The adverse impact on Southeast Asian economies is forecast to turn the corner in the second half of 2020 as Chinese import demand and global trade recover at a consistent pace, while a slower pace of normalisation will continue to weigh on tourism-dependent economies, according to the report. It added that coordinated fiscal stimulus packages and monetary easing from authorities across the region will support the recovery in economic growth. On the whole, the COVID-19 pandemic is likely to cause the global economy to shrink by 4.7 percent, it noted. This is more than double the impact of the global financial crisis in 2008 and will be the biggest global recession in post-war history./. Singapore, France agree to keep supply chains for essential food connected Singapore and France have agreed to maintain open and connected supply chains for essential food supplies during the COVID-19 pandemic. The agreement was reached during a recent video conference between Singapore’s Ministry of Trade and Industry and France’s Ministry of Agriculture and Food. The two sides said it will facilitate the flow of agricultural products. The two ministries will work with relevant service providers in aviation and sea transportation. They will also facilitate partnerships and collaboration between food companies, importers, and distributors of their two countries. Singapore is also discussing reopening borders with Malaysia. Philippine economy to contract 1.9 percent in 2020: WB The Philippine economy is projected to contract 1.9 percent this year due to the economic fallout triggered by natural disasters and COVID-19, the World Bank said in an updated report released on June 9. In this report, the WB said the eruption of Taal Volcano and the global COVID-19 pandemic, including the strict containment measures against the epidemic, have led to severe disruptions in manufacturing, agriculture, tourism, construction, and trade. The cumulative impact of these events on the economy has been broad-based and deep, halting investment activity and leading to the lowest consumption growth in three decades, according to the report. The report said growth forecast for 2020 assumes that the containment measures will gradually ease in the second half of the year, and economic activities return in some sectors of the economy. Given income losses and heightened uncertainty, household consumption and private investment are expected to remain weak. However, it added, economic growth prospects and poverty figures are expected to improve in succeeding years driven by a rebound in consumption, a stronger push in public investment, supportive fiscal and monetary policies, and the recovery of global growth. The Philippines' economic growth is predicted to return to above 6 percent in 2021 and 7 percent in 2022, the report said, noting that the Philippines' strong fundamentals, built over decades of structural reforms, have helped the economy to cope with the COVID-19 pandemic. Capitalising on EVFTA sure to be a challenge The EU-Vietnam Free Trade Agreement (EVFTA) is expected to provide a host of opportunities to Vietnamese enterprises to bolster their exports, but they must also meet strict requirements in order to fully capitalise on the deal, insiders have said. Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS), said the National Assembly’s ratification of the EVFTA on June 8 is “good news” for the sector, which has suffered from COVID-19 in recent times, as businesses will have opportunities when the agreement takes effect. The EU is currently the world’s largest importer of textiles and garments, with 34 percent of the global total each year worth more than 250 billion USD in value. Vietnamese products account for just 2.7 percent of the EU’s imports. Giang said companies in the sector believe in the prospect of exports to the EU rising after the EVFTA comes into effect, as tariffs will be slashed to zero percent. Textile and garment shipments to the market are forecast to increase sharply from now to 2025, by about 67 percent compared to a non-EVFTA scenario. However, the VITAS chairman noted, businesses need to be thoroughly prepared to make use of the opportunities and have a solid grasp of the regulations within the agreement, because the EU is a demanding market with strict requirements on product quality and design. Just one simple fault may damage all export activities, he said, explaining that a batch of goods with unclear origin or indeterminate quality may expose similar batches to stricter inspections or even an import ban. Phi Viet Trinh, General Director of the Ho Guom Garment JSC, said that in order to benefit from the preferential tariffs under the EVFTA, products must have a certain proportion of materials hailing from the EU or Vietnam. This is a major challenge because most input materials in Vietnam are currently imported from China or other ASEAN countries. Therefore, management agencies and businesses alike must take certain action to maximise the opportunities, he stressed. The official added that it is necessary to promulgate policies to attract domestic and foreign investment in material production. Mechanisms in particular are needed to promote links between material suppliers and manufacturers of finished products to meet rules of origin requirements. Of a similar mind, General Director of the Garment 10 Corporation Than Duc Viet said the EVFTA will open up numerous opportunities but Vietnam must work hard to fully benefit. The EU is ready to import Vietnamese goods but such products must comply with rules of origin, he noted, voicing a hope that the textile and garment industry can grasp the available opportunities. Nguyen Quoc Tuan from Vinh Thong Co. Ltd, a footwear exporter to Europe, said the company’s operation has been hindered by COVID-19 since the beginning of the year but now he expects the EVFTA will boost exports over the remainder of 2020. Nevertheless, he also acknowledged that the company will encounter a range of difficulties in adhering to the agreement’s rules of origin, as while 60 percent of its input materials come from domestic suppliers the remainder come from elsewhere, primarily China. Updating technology and expanding production scale are also problematic given that the company’s internal resources remain modest. Nguyen Van Khanh, Vice Chairman and Secretary General of the Shoe and Leather Association of HCM City, said local leather and footwear enterprises should try and immediately put the EVFTA into full use despite up to 85 percent of them lacking capital, technology, and materials. It is also not easy to meet rules of origin requirements when 60 percent of materials are from China and other suppliers, he added. Experts predict that in the short term, the EVFTA may not give a strong boost to the textile - garment and leather - footwear industries in Vietnam, but will certainly bring about long-term benefits for them in expanding their market share in the EU. A number of enterprises have also voiced a hope that when foreign investors realise that Vietnam now has even greater potential, technology transfer and investment in material production will grow./. Kien Giang calls for investment in agriculture development The Mekong Delta province of Kien Giang is calling for investment in agriculture and rural development projects in Go Quao district. According to the provincial Department of Agriculture and Rural Development, the projects will focus on the fields of water supply, farm produce processing, hi-tech vegetable and fruit cultivation, development of concentrated cattle and poultry slaughter facilities, and production of rice varieties. Vo Van Tra, Chairman of the district People’s Committee said these projects are part of the locality’s socio-economic development strategy. It is in line with the agriculture restructuring plan of Kien Giang province in general and Go Quao district in particular, Tra added. The locality hopes to attract 100 billion VND (over 4.3 million USD) to construct five clean water plants with a capacity of 1,200 cu.m each in Vinh Thang, Vinh Phuoc B, Vinh Phuoc A, Vinh Hoa Hung Bac and Thoi Quan communes; and 188 billion VND (over 8 million USD) for fruit, rice and pepper processing plants in Vinh Hoa Hung Bac and Vinh Hoa Hung Nam communes. Meanwhile, hi-tech vegetable and fruit cultivation zones in Dinh An and Dinh Hoa communes, and concentrated poultry slaughter and rice variety production establishments in Dinh Hoa commune, are expected to get a total investment of 52 billion VND (2.2 million USD)./. PM receives leaders of Chinese firms operating in Vietnam Prime Minister Nguyen Xuan Phuc hosted a reception in Hanoi on June 12 for leaders of Chinese businesses which are investing in the fields of garment and textile, high-quality fibre, engine components and automobile tyres in Vietnam. PM Phuc said amid the impacts of the COVID-19 pandemic on many firms, including foreign-invested companies, the Prime Minister, and leaders of ministries and localities have often met with enterprises and business associations to remove their difficulties. Regarding Vietnam’s success in the fight against the pandemic, he said the country has taken timely and drastic reactions to put the disease under control, thus bringing the life, production and business activities back to normal. PM Phuc said he had early held phone talks with his Chinese counterpart Li Keqiang to discuss ways to step up cooperation and share experiences in combating COVID-19, adding that Vietnam had also donated medical supplies to China. At the meeting, representatives of Chinese firms expressed their belief in the determination of the Vietnamese government and local administrations in implementing the dual goal of boosting socio-economic development and containing the pandemic as well as opportunities offered by the EU-Vietnam Free Trade Agreement (EVFTA), the EU-Vietnam Investment Protection Agreement (EVIPA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Welcoming the businesses’ intention to expand investment, PM Phuc said China is currently Vietnam's largest importer and second biggest exporter. In return, Vietnam is the top ASEAN trade partner of China, with bilateral trade reaching 120 billion USD last year. China has invested in nearly 3,000 projects worth nearly 21 billion USD in Vietnam so far, and this amount of capital is equivalent to 5.5 percent of the total foreign investment registered in the country. As a result, China now ranks seventh among 136 countries and territories investing in Vietnam. A number of Chinese enterprises are operating profitably in various sectors in Vietnam, the PM said, noting that the two countries have also been cooperating well in tourism. As both countries have managed to bring the COVID-19 pandemic under control, Vietnam is considering the reopening of some commercial air routes with China, firstly Guangzhou, to promote trade and travel, he said. Listening to the firms’ opinions, PM Phuc said the Vietnamese Government will continue facilitating the entry to and exit from the country for foreign experts, business managers, investors and skilled workers, including those from China. At the meeting, the PM also highly valued major Chinese investors’ capability, serious attitude and investment effectiveness, including in expanding production and business activities, complying with environmental protection regulations, caring for their employees, and boosting exports, which have generated benefits for themselves and Vietnam. He particularly applauded many businesses’ decision not to lay off workers despite difficulties caused by the COVID-19 pandemic, noting that their examples should be popularised for other firms to follow. The Vietnamese Government will order ministries and sectors to deal with problems facing Chinese enterprises, including resuming flights and facilitating logistics services, the PM said, adding that it will ensure macro-economic stability and create more optimal conditions for businesses. WB, Phu Yen form partnership for strategic engagements The World Bank (WB) in Vietnam and the People’s Committee of south-central Phu Yen province have signed a Memorandum of Understanding establishing a partnership for strategic engagements. At the signing ceremony in Hanoi on June 12, WB Country Director in Vietnam Ousmane Dione expressed his pleasure to expand support for Phu Yen’s efforts to build a sustainable marine economy and boost regional economic integration. The WB said the framework will enable Phu Yen to better leverage the lender’s global knowledge, financial resources and convening power to achieve its socio-economic goals and realise the vision of becoming an industrial and tourism hub for Vietnam and Southeast Asia. Priority areas include mainstreaming urban resilience, delivering high-quality and efficient infrastructure services and fostering development in tourism and fishery sectors. Phu Yen has outperformed the nation in average GDP growth since 2008. Locating at a crossroad in the south-central region of the country, and having nearly 200km of coastline, the province holds great potential to become a critical link for economic exchange in the region. The two sides will establish a platform to conduct regular and strategic discussions, share knowledge and lessons learned, and pool and leverage resources and expertise. They will collaborate on a wide range of initiatives, including support for the local Socio-economic Development Plan for 2021–2030, smart city and e-governance initiatives, and public-private partnerships. Petrol prices rise in latest review Retail petrol prices rose sharply from 3pm on June 12 - the third hike in the past month - following the latest review by the Ministry of Industry and Trade and the Ministry of Finance. The two ministries review fuel prices every 15 days to ensure domestic prices are in keeping with the global market. The price of E5 RON92 biofuel increased by 988 VND to a maximum of 13,390 VND (0.57 USD) per litre and RON95-III by 955 VND to no more than 14,080 VND per litre. Diesel 0.05S and kerosene, meanwhile, now sell at no more than 11,515 VND and 9,610 VND per litre, up 766 VND and 853 VND per litre, respectively. The price of Mazut 180CST 3.5S is now no more than 10,322 VND per kg, an increase of 830 VND per kg. According to the two ministries, the prices of petrol and oil in the global market have been on the rise on the back of increasing demand as countries have begun resuming production and business activities. The ministries also decided to use 800 VND per litre from the petrol price stabilisation fund for E5 RON92, 500 VND per litre for RON95, and 200 VND per kilo for mazut. Fruit, farm produce week opens in Hanoi The second fruit and farm produce week kicked off in Hanoi on June 11 with the participation of over 20 cities and provinces nationwide. Sixty pavilions were set up at the fair, offering hundreds of local specialties such as Bac Giang, Hung Yen, Hai Duong lychee, Son La mango and plum, and Ninh Thuan grapefruit. At the opening ceremony, MM Mega Market Vietnam and some localities exchanged memoranda of understanding, pledging to support sales of farm produce this year. The event will run until June 15. Seminar explores financing options for rooftop solar power installation The Electricity of Vietnam (EVN) in Ho Chi Minh City hosted a seminar on June 11 to discuss solutions to develop and finance rooftop solar power installations in the country’s southern hub. During the event, participating solar energy solution providers introduced various options for businesses, organisations and homeowners to purchase their own rooftop solar power systems. Nguyen Duy Thinh from SolarBK, a leading solar power producer in Vietnam, said if a company has a rooftop of 3,000 – 10,000 sqm, SolarBK is ready to co-finance from 70 – 100 percent of the solar project’s total cost. Vietnam Eco Solutions (VES) and TTC Energy have also rolled out similar deals to co-invest in rooftop solar power projects. HB Bank representatives said it is offering loans with preferential interest rates for customers who borrow to install a rooftop solar energy system. By March, the bank had provided a total of 1.2 trillion VND (51.32 million USD) in loans for enterprises and homeowners to develop this kind of projects across the country. As of the end of May, a total of 7,341 solar power systems, with a combined capacity of 94.49 MWp, had been installed in Ho Chi Minh. Since 2017, 102 rooftop solar power projects with a combined capacity of 37.23 MWp have been connected to the city’s grid. ADB – HCM City’s important development partner: municipal leader Ho Chi Minh City appreciates contributions of the Asian Development Bank (ADB) to its socio-economic development, and always considers the bank an important development partner, a municipal leader has said. At a reception for ADB Country Director for Vietnam Eric Sidwick on June 11, Chairman of the HCM City People’s Committee Nguyen Thanh Phong thanked the bank for its timely financial assistance and policy consultation to developing member countries, including Vietnam, in the fight against COVID-19. He also thanked the bank for its support to HCM City in mitigating the pandemic impact on the progress of projects using ADB loans in the locality. HCM City suggested the ADB facilitate its access to preferential loans for Metro Line No. 2, the first phase of Metro Line No. 5 and the sustainable urban transport project for Metro Line No. 2. Sidwick said Vietnam is one of the very few countries in the world that have not experienced growth decrease despite of the pandemic. ADB not only supports Vietnam’s development programmes but also learns from and shares the country’s experience with other countries, especially in fighting the epidemic and maintaining economic growth. COVID-19 has partially affected the progress of ADB-funded projects in HCM City, but the bank is resolved to implement its commitments to financial support and technical advice to the city, he said. Following the meeting, Vice Chairman of the HCM City People’s Committee Vo Van Hoan and the ADB Country Director for Vietnam signed a memorandum of understanding (MoU) on cooperation between the two sides. Under the MoU, the HCM City and the ADB will conduct regular consultations, improve the efficiency of the existing projects using ADB loans, identify potential projects and promote the development of the private economic sector and the involvement of different sectors in the city’s socio-economic development. Phong lauded the signing of the MoU, saying its implementation would contribute to advancing collaboration between the two sides. Sidwick said under the deal, the two sides can seek the best working methods for both. PM welcomes Exxon Mobil’s investment in Vietnam Prime Minister Nguyen Xuan Phuc told President of Exxon Mobil LNG Market Development Inc. Irtiza Sayyed during a phone talk on June 11 that Vietnam welcomes the group’s plans of investment in Vietnam. He said Vietnam is among countries that are able to early contain the COVID-19 epidemic and is striving to seize the opportunity for development. During the process, the country has great demand for power, so the Vietnamese Government welcomes Exxon Mobil’s investment in a complex of ports, LNG storage facilities and LNG-fuelled power plants using advanced technology in Hai Phong. The PM said with a total capacity of 4,000 MW, this project will help boost the development of not only Hai Phong but also the entire northern key economic zone. Phuc also appreciated Exxon Mobil’s plan to build a gas-fired power complex with total capacity of 3,000 MW in the southern province of Long An. The group will ensure stable LNG supply for the power complex from the US and other countries. The import of LNG from the US will contribute to a more harmonious trade balance between Vietnam and the US, he said. Sayyed praised Vietnam for containing the COVID-19 epidemic with effective measures, which he said will create a safe and reliable environment for international investment and trade in the country. VNN