VIETNAM'S BUSINESS NEWS HEADLINES AUGUST 19   02:35         Fruit exporters seek new markets to survive pandemic Dragon fruit cultivation in Long An Province. Fruit exporters have been urged to seek new export markets instead of depending too much on traditional ones. Chanh Thu Fruit Import and Export Company Limited in Ben Tre province continues to operate normally despite the resurgence of COVID-19 since it has shifted to new export markets instead of overly depending on traditional ones like China. Ngo Tuong Vy, its deputy director, said exports of frozen durian have increased by more than 30 percent. “Frozen durian is popular since the quality is almost fresh after thawing. Frozen durian is also mouth-watering as it is similar to ice cream and the smell is not as strong compared to when it is fresh.” The company now focuses on exports to the US, she said. “There is no shortage of durian in the US market, but Vietnamese durian is popular since it is delicious yet reasonably priced.” This month, despite a significant drop in the prices of dragon fruits, farmers in Long An province’s Chau Thanh and Tan Tru districts were still able to sign a contract with Lavifood, an exporter of processed fruits and vegetables, to sell the fruit at 13,000 VND and 23,000 VND (1 USD) per kilogramme, depending on quality, relatively higher than the market price. Lavifood buys 80 percent of the fruits grown in Long An. Dang Ngoc Can, general director of the company, said it has focused on the processing of dragon fruit into juice, dried and frozen products. The company has a factory in Long An province with an annual capacity of 10,000 tonnes of processed products, and another in Tay Ninh with a capacity of 60,000 tonnes, and could process more than 500 tonnes of dragon fruit per day, he said. The company plans to increase exports to markets with high demand such as the Republic of Korea, Japan, the US, and Europe, he said. Nguyen Quoc Trinh, chairman of the Long An Dragon Fruit Association, said his company bought 500 tonnes of the fruits at high prices within 10 days of harvest, making farmers very happy. “Farmers can export ‘beautiful looking’ dragon fruits and keep the rest for freezing, drying and making juices for domestic consumption. “The price is based on how the fruits look.” To sell well, farmers must follow “clean” processes based on VietGAP standards, he said. Nguyen Dinh Tung, chairman and general director of Vina T&T Group, said the company’s plant could preserve fresh coconuts for 80 days, 20 more than before, and targets new markets like Australia, Japan and the Republic of Korea in addition to its traditional market, the US. “The company exports eight to nine containers of coconuts a week now, compared to only three or four in past years. Each container contains 20,000 coconuts. To get 20,000 good coconuts, the company has to buy 30,000-40,000 from farmers.” Phung Van Hien, director of Global Fresh Fruit Company Limited (Ben Tre), said the company decided to suspend rambutan exports to the EU a few months ago because of lack of supply due to the saltwater intrusion and drought in the Mekong Delta, and the Covid-19 outbreak, and surge in air freight. It quickly found new export markets like Japan, Australia and the US for fresh coconuts instead, he said. It also exports copra to the Netherlands, he said. “Businesses must now focus on quality and branding their products to ensure sustainability.” According to the Vietnam Fruit and Vegetable Association (Vinafruit), exports to China, the country’s largest market, were only worth 1.044 trillion VND (45 million USD) in the first half, down 29.35 percent year-on-year. It attributed the slump to the fact that cross-border trade has been tightened due to the pandemic, causing shipments of many agricultural products, including dragon fruit, to be stuck at the borders for days. To survive, businesses have to expand to new export markets and learn to adapt to each market’s tastes and improve quality, packaging and traceability, according to the association. The agricultural sector is expected to continue facing challenges this year due to the pandemic and unfavourable weather conditions. Experts said it should continue to adapt to climate change, use technology and improve human resources. Enterprises need to continue to seek new markets, they added. The sector has a growth target for the agriculture, forestry and fisheries sector for this year of 2.6 – 3 percent, the same as last year, with exports rising to 41 billion USD. To achieve the target, it should also take advantage of tropical agriculture and develop high-quality specialised areas that meet food safety requirements, the experts said. It should speed up key projects in agricultural and forestry processing and increase the capacity of existing processing plants to reduce costs and serve domestic and export needs, they said. Agriculture should be closely linked with the processing industry and preservation, market, export, and global value chains. Minister of Agriculture and Rural Development Nguyen Xuan Cuong said his ministry expects to quickly establish linkages between cropping areas, processing plants and logistics systems to expand export markets and join the global value chain./. Central bank cuts reserve interest rate to aid the economy The State Bank of Viet Nam (SBV) on Thursday announced its decision to cut the interest rate it pays on commercial banks' reserves by 0.2-0.5 percentage points as part of its efforts to help the economy weather the impact of the COVID-19 pandemic. The adjustment, which took effect immediately, was the second time this year following the cut on March 16. The rate the SBV pays for the Vietnamese dong-denominated compulsory deposits that commercial banks hold there was cut to 0.5 per cent, and for non-compulsory deposits to zero per cent. Meanwhile, the interest rate paid for compulsory deposits of the Vietnam Development Bank (VDB) and Vietnam Bank for Social Policies (VBSP); People's Credit Funds and microfinance institutions at the central bank will be reduced by 0.2 percentage points to 0.8 per cent per annum. The interest rate for deposits of the State Treasury and the Deposit Insurance of Viet Nam at the SBV is revised down to 0.8 per cent per annum, down 0.2 percentage points. The SBV said the adjustment was made based on macro-economic developments and the level of interest rates in the market./. Textile, footwear companies feel confident Armed with experience from coping with the first wave of the COVID-19 epidemic, many textile and footwear enterprises are quietly confident they can alter their plans as required and find new markets to cope with the second. The situation is worsening, according to most companies in the two sectors as the epidemic returns to Vietnam and continues to rage in many countries around the world. Le Tien Truong, general director of the Vietnam National Textile and Garment Group, said that in the first six months of the year, though affected a great deal by the COVID-19 pandemic, his company sustained its operations and cash flows thanks to its decision to produce face masks and personal protective equipment (PPE). But the situation would be very different in the second half since the demand for those products is shrinking rapidly, he said. The fact that many manufacturers switched to producing PPE has seen supply shoot past demand, he added. Since the global outbreak began in April, many Vietnamese garment and textile businesses have been told by their US and EU partners that they would temporarily stop taking delivery of goods. Pham Xuan Hong, chairman of the HCM City Association of Garment Textile Embroidery and Knitting, said this was because governments in the US and EU have declared a state of emergency and tightened border controls due to the rapid spread of COVID-19. “They have asked Vietnamese businesses to suspend delivery, including of those en route, until borders are reopened.” He said the US and EU are two important textile export markets for the country, while half of all exports from HCM City go to the US and 15-18 percent to the EU. “Partners in these markets have announced the suspension of deliveries, meaning the market for textiles and garments has narrowed by nearly two-thirds.” Truong said developing the domestic market is the most feasible way to survive the pandemic. Though the domestic market accounts for only 10 percent of the industry’s capacity and cannot fully mitigate the unemployment problem, it is still a solution, he said. Support from the Government in the form of access to cheap credit and deferred tax payment is also imperative, he said. Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association (LEFASO), too said though the domestic market is very small, developing it would be a key solution amid the difficulties in exporting. Nguyen Van Mieng, general director of the Nam Dinh Textile and Garment Corporation, said companies have restructured their markets to sustain jobs. In the past, his company produced 1,100 tonnes of yarn and exported 65 percent of it, but has now cut it to 45 percent. It produces around 1.2 million metres of fabric per month, but this is likely to decrease to 23,000-300,000 metres in the last two quarters of the year, he said. The company is seeking to expand its market for new products in the north and taking advantage of dyed fabrics to sell finished products and supply to garment companies, he said. It also wants to strengthen the yarn-weaving-dyeing links so that all companies in the chain could benefit, he added. The EU-Vietnam Free Trade Agreement (EVFTA) that took effect on August 1 will reduce import taxes on Vietnam’s garment exports by more than 70 percentage points. Vietnamese footwear and textile and apparel enterprises will benefit significantly from the EVFTA because of the tariff cuts, according to Bao Viet Securities Joint Stock Company. With most other countries that export textile and garments to the EU not having a trade deal with the bloc, the EVFTA would open a great opportunity for Vietnam’s footwear, textile and garment exports if companies enterprises meet origin requirements, it added./. Face mask exports suffer drop amid COVID-19 second wave Vietnam’s exports of face masks in July were hit by a decline of approximately 35% in comparison to last month, according to figures released by the General Department of Customs. A total of 62 Vietnamese companies were able to produce 153.82 million medical face masks throughout July, marking a drop of 82 million items from June.  The past seven months has seen the country export more than 711 million masks of various types to dozens of nations globally, including the United States, Europe, Singapore, and the Republic of Korea. Prime Minister Nguyen Xuan Phuc gave the green light to export medical face masks without any caps in regard to export volume. This policy was initiated to ensure that Vietnam would not miss out on the opportunity of becoming the largest face mask producer in the world amid the novel coronavirus (COVID-19) pandemic. The Government therefore enacted Resolution No 60/NQ-CP dated April 29 which removes Resolution No 20’s regulations on licenses for the export of medical face masks. In effect, this eases rules and regulations on the product’s exports and means that medical face masks can be freely exported without caps imposed on export volume. Despite these plans, coupled with complicated developments of the COVID-19 pandemic, plenty of domestic enterprises believe that the demand for different types of face masks, such as medical masks and antibacterial cloth masks, is starting to become saturated. Evidence for this can be seen as July witnessed a slowdown of national exports of the product due to the second wave of the pandemic showing signs of abating in many countries worldwide. According to local drugstore owners, the demand for medical and antibacterial masks originally began to decrease due to citizens purchasing a sufficient supply and opting to use cloth masks instead./. Thai economy sees biggest contraction in more than 20 years The Thai economy contracted the most in more than two decades due to impact of the COVID-19 pandemic. The National Economic and Social Development Council announced on August 17 that the country’s GDP dropped by 12.2 percent from a year ago – the biggest decline since the Asian financial crisis in 1998. The figure, however, is lower than an estimate of a 13 percent contraction in a Bloomberg survey of economists. The second-quarter unemployment rate was at 1.95 percent, and an additional 1.8 million workers may be at risk of losing their jobs. Thailand has to date reported 3,377 COVID-19 cases, including 58 fatalities. The country has resumed economic activities since August 13./. Steel consumption down 9.6 pct. in first seven months Consumption of steel in the first seven months of 2020 fell 9.6 percent year-on-year to 12.37 million tonnes, according to the Vietnam Steel Association (VSA). Production output was down 6.9 percent year-on-year to 13.7 million tonnes. Vietnam exported over 2.28 million tonnes during the period, a decline of 19.3 percent against the same period last year, VSA reported. The global steel market is hoped to improve in the third quarter of the year but the ongoing COVID-19 pandemic presents myriad challenges. Vietnam has met with difficulties in selling steel in international markets due to many countries remaining in lockdown mode and supply chains being interrupted. The steel industry is also facing the effects of higher raw material prices, which put substantial pressure on the production and business activities as well as the profits of steel enterprises. The VSA said Vietnamese steel exporters need to be cautious about control over pre-engineered steel products exported to the US, as this item has been given early warning status in regard to trade defence measures. Such measures will continue to be imposed by foreign markets on imported products, especially steel, it noted. Apart from meeting requirements in standards, techniques, and origin, Vietnamese steel enterprises are also advised to pay more attention to trade defence provisions when exporting to markets such as the EU and the US./. Batch of Chilean apples marks first foray into Vietnamese market The first shipment of Chilean apples recently arrived in Vietnam through Phu Nhuan Food Company, an importer and distributor of high-quality fruit, with the firm set to bring 1,176 cases of Fuji brand apples from Frutera San Fernando S.A of Chile to the local market. According to Chilean Ambassador to Vietnam Jaime Chomali, the appearance of apples from the South American country will create a fresh milestone in bilateral trade ties between the two nations. Furthermore, Ambassador Chomali expressed his hopes that Vietnamese consumers will be able to enjoy access to leading Chilean products, with his country working closely with Vietnamese quarantine agencies in an effort to bring Chilean fruit into Vietnam whilst simultaneously sending Vietnamese fruit to Chile. “We are doing our best to promote trade links between the two countries”, the Chilean diplomat added. The South American nation allocates approximately 35,000 thousand hectares for growing apples and exports an average of 740,000 tonnes per year, making them the fourth largest apple exporter in the world and a major exporter within the southern hemisphere./. Singaporean firms keen to partner with local enterprises on digital transformation With Vietnam possessing huge potential for development amid a strong digital transformation process, Singaporean technology firms are increasingly viewing the Vietnamese market as a key area for growth. Alexander Gold, chairman of Singaporean fintech company Bankograph Pte Limited, shares that Vietnam is regarded as an important strategic market in which to develop cross-border financial supply chains that are capable of connecting Southeast Asia with the rest of the world. With plenty of opportunities available to enter markets such as the Philippines, India, and Malaysia, Bankograph prioritises Vietnam as the first market in which to expand its operations into, he adds. After conducting an evaluation and comparison of Bankograph growth models across different developing markets, it can be seen that the nation stands out as a top destination for foreign financiers, not just in the financial sector, but also in a range of other fields. Bankograph is therefore committed to helping the country become a launch pad for the firm’s various subsidiaries in the Asia-Pacific region, Gold underlines. Furthermore, other fintech company from Singapore such as Finaxar have also partnered with INDOVINA Bank Vietnam in an effort to provide a suitable financial assistance solution for small and medium sized enterprises (SMEs) based in Southeast Asia. According to Finaxar, up to 60% of all Vietnamese SMEs, who also account for more than 96% of all enterprises, have difficulty accessing working capital sources. The financial solution that Finaxar and its partners provides is to offer online and automatic operations in both a convenient and suitable way within a credit limit of VND500 million. Upon analysing the potential of the Vietnamese market, Le Ngoc Hai, CEO of Doctor Anywhere Vietnam, an online healthcare application from Singapore, concludes that an ideal population demographic, combined with the growth of macroeconomics, the speed of digital transformation, and many technological talents, are all viewed as attractive factors for regional technology companies. "Vietnam is the first foreign market in which Doctor Anywhere has decided to expand its investment in 2019. Although online medical examination and treatment, known as telehealth is a new field, we see that demand is increasing in Vietnam. In the future, Vietnam will become a key market for Doctor Anywhere in Southeast Asia,” says Hai. In March, Doctor Anywhere raised US$27 million in a Series B fundraising round for the purpose of using this new capital inflow to invest in human resources, as well as services locally. This will be done to provide optimal health care at affordable prices for Vietnamese people, he adds. The recent wave of Singaporean businesses investing in the country has received encouragement and support from the Government. Milestones include Enterprise Singapore, a government agency under the Ministry of Trade and Industry of Singapore, whose role is to support the development of Singapore, officially announcing in 2019 the expansion of the Global Innovation Alliance (GIA) in the nation. The alliance has been expanded in order to connect technology start-ups from Singapore to the innovation market locally, as well as promoting co-operation ties between the two countries. In addition, the move creates a wide range of exchanges among students, including internship opportunities for students from Singapore at start-ups and businesses domestically. Upon discussing the GIA launch ceremony, Png Cheong Boon, CEO of Enterprise Singapore emphasises that Enterprise Singapore incentivises Vietnamese start-ups to take full advantage of the innovative startup ecosystem. Through this they can make progress to connect with multinational corporations and Asia's leading businesses, most of whom are headquartered in the island city-state, to expand their business activities. Simultaneously, Bankograph is planning to invest in processing infrastructure facilities within the country and is committed to increasing capital whilst co-operating alongside Vietnamese partners to boost comprehensive financial development with efficient consumer credit products at good prices. With this added investment, Gold voices his hope that the introduction of a Variable Capital Company structure will be an effective tax solution for foreign investors, increasing the number of Singaporean fintech companies who will see the nation as a leading investment market with unique risk premiums compared to other regional markets. This increased level of co-operation will allow Vietnamese companies and financial institutions to benefit from their partnership with Singaporean fintech company due to the "lion island nation" continuing to secure its standing as an international commercial and financial hub. The joint efforts of businesses from the two countries promises to create a unique cross-border ecosystem within the financial sector, along with the wider technology sector. Japanese businesses keen to expand operation in Vietnam A survey recently carried out by the Japan External Trade Organization (JETRO) indicates that 41% of Japanese companies are considering expanding their operations in Vietnam over the next three years, a 5.5% rise from a year earlier. The survey, which was originally conducted in November and December, 2019, reached out to 9,975 Japanese firms that are strongly interested in business and investment overseas, of which 3,562, equivalent to 35.7%, responded.  Kyodo News quotes the JETRO report, which was first released on July 30, as saying that an increasing number of enterprises from the Far East nation are making moves to expand their business operations in Southeast Asia. Indeed, many are scaling back their participation in markets such as China due to escalating tensions between Beijing and Washington. "Since 2018, an intensified confrontation between the United States and China has ramped up investment by Japanese companies in the Association of Southeast Asian Nations," the report states. Furthermore, the survey indicates that 36.3% of respondents provided a similar answer when questioned about expansion in Thailand, a rise of 1.5%, while 48.1% said they would look to boost their business operations in China, a decline of 7.3%. “The gap between the amount of Japanese investment in ASEAN and China expanded to JPY20.4 billion, equivalent to US$191 million, in 2019 from JPY10.2 billion in 2017”, the report notes. According to JETRO, a maker of steel and nonferrous metal in the Shikoku region in western Japan said it is planning to shift exports bound for Mexico from China to the country./. Vietnamese logistics in high need of young talent Vietnam is still lacking high-quality manpower to serve the future growth of the logistics industry, pushing the country to take more action soon. The Vietnam Young Logistics Talents 2020 contest was officially kicked off in early August and will last until December as part of the effort to deal with the difficulty and to raise people’s awareness about the importance of logistics development in economic development.  According to a recent study from the Vietnam Logistics Business Association (VLA), from now to 2030, the country will need about 250,000 employees for the logistics service industry to serve business demand and the sector's development. The aim of the 2020 edition of the contest was to unleash innovative ideas at the semi-final and final rounds. The four-month tournament will hold the final round in Hanoi, promising a thrilling competition among excellent teams. The Vietnam Young Logistics Talents competition has been launched in 2018 with support from the Agency of Foreign Trade under the Ministry of Industry and Trade, attracting the interest of students nationwide. In 2019, the contest attracted 400 teams from 40 universities and colleges and education establishments nationwide. As expected, the number of participating teams will rise further this year, driven by the growth of the industry and due attention from universities and schools in logistics training. Ngo Huong, a member of Logi team from the Banking Academy, which won last year's competition, said, “Despite being a newly-launched contest, its scale and professionalism has made it an attractive playground for students. Especially, the competition not only welcomes logistics students but also those with a strong interest in logistics. This was a motivation for us to win the award.” As Vietnam integrates ever-deeper into the global economy, logistics has become one of the sectors with the highest growth in the past years, with 12-14% according the Logistics Vietnam Report 2019 of the Ministry of Industry and Trade. At present, local logistics firms are still struggling to seek skilled manpower who have good skills, professionalism, and English skills. This is a challenge for Vietnam amidst the strong development of the industry. 2019 marked an important landmark in logistics training at universities as many universities officially opened a major in logistics. As of October 2019, among the 286 universities nationwide, 28 had a logistics major. However, the improvement has yet to meet the growing demand./. Kien Giang maps out marine-economy plan The Mekong Delta province of Kiên Giang has been developing a sustainable marine economy in recent years by taking steps to increase the output and value of its marine-based products. Đỗ Thanh Bình, chairman of the province’s People’s Committee, said the province has been focusing on building industrial parks as well as urban areas in coastal areas, and promoting renewable energy and other new marine economy sectors. The marine economy now accounts for nearly 74 per cent of the province’s Gross Regional Domestic Product (GRDP). The province has invested in infrastructure such as the Phú Quốc international airport, coastal roads in rural areas, coastal erosion-prevention projects, and power-supply projects for islands. It has also built sluice systems that help regulate salt and fresh water for agricultural production in coastal areas. Bình said: “The building of infrastructure projects in coastal areas and islands has contributed positively to the province’s socio-economic development, especially the marine economy. The spiritual and material lives of residents have improved and the rate of poor households has fallen rapidly." In recent years, the province has developed offshore fishing and aquaculture in coastal areas, with a catch of 500,000-600,000 tonnes of seafood and an aquaculture output of more than 217,000 tonnes each year. The province’s seafood catch accounts for 40 per cent of the delta’s total seafood catch and 16 per cent of the national seafood catch. Nguyễn Văn Tâm, director of the province’s Department of Agriculture and Rural Development, said the province has promoted off-shore fishing but has not increased the number of fishing ships. The province has either banned or strictly punished fishing activities that violate regulations and cause depletion of seafood resources, and has strengthened protection of near-shore seafood resources, he said. The province has also provided vocational training to near-shore fishermen and helped them switch to other jobs. It is completing the installation of black box devices that help monitor trips on nearly 4,000 off-shore fishing ships. The device provides information on permitted fishing areas, supports search and rescue efforts, and traces the origin of caught fish. The province has zoned aquaculture development by setting up breeding areas in coastal areas and islands, and applying advanced techniques to the farming of aquatic species.   The province breeds mostly marine fish in about 4,500 floating cages at sea, with an output of 3,550 tonnes last year. Caged aquaculture is located mostly in the island communes of Kiên Hải, Phú Quốc and Kiên Lương districts and Hà Tiên City. Farmers breed mostly cobia, grouper, red drum and pomfret. The province is also successfully breeding more kinds of marine species like giant trevally and lobsters which have high economic value. To develop sustainable marine aquaculture, the province will set up suitable breeding zones for each sea area and provide advanced farming techniques to farmers, according to its Department of Agriculture and Rural Development. Quảng Trọng Thao, deputy director of the department, said the province has made investments to ensure the quality and supply of fish fry of various marine species for breeding. The province has also promoted cage-bred fish to domestic and foreign markets, and has strengthened research and applied high-technology to marine fish breeding. Kiên Giang has urged domestic and foreign companies to invest in breeding marine fish with advanced breeding techniques. Investment in breeding high-value aquatic species like lobster, pearl oysters and babylon snails has also been encouraged. The province has called for investment in renewable energy and other new marine economy sectors like resource exploitation, marine biotechnology, maritime safety and inspection, and high-tech marine products and services.    Renewable energy investment includes wind, gas, wave and solar power. Investment priority is given to renewable energy on islands to serve production and household use. The province is also developing marine medicinal materials and the cultivation and processing of seaweed, algae and seagrass. It has plans to develop industrial parks and clusters to attract investment and to develop coastal urban areas. Bình, chairman of the province’s People’s Committee, said that new technical and social infrastructure would be built in the coastal areas. Phú Quốc Island will be developed into a sea tourism city that meets national and international standards, he said. The province will establish urban areas in the island district of Kiên Hải to promote the development of islands, he said. Rạch Giá City, which will be developed into one of four urban areas in the delta’s key economic zone, is expected to become the delta’s trade and marine economy hub. With a coastline of more than 200 kilometres and 143 islands, Kiên Giang has great potential for marine economy development. Under the province's plan, the marine economy will account for 80 per cent of its GRDP by 2030. It also targets having an average income per capita in coastal districts and cities that is 1.5 times higher than the average per capita income of the province. The province targets an increase of 30-50 per cent of tourists in 2030 compared to 2020, and expects seafood exports to increase by an average of 10 per cent a year in the 2021-30 period. All of its islands with human settlement will have adequate power supply, fresh water, telecommunications, healthcare and education services by 2030./. Viet Nam promotes measures to manage local sugar market Minister of Industry and Trade Tran Tuan Anh has asked agencies to implement measures on trade remedies, import and export management and strengthen market management for sugar products. The minister requests the Trade Remedies Authority to actively monitor the domestic market and propose use of trade remedies for imported sugar products in accordance with international commitments. At the same time, this authority would establish a synchronous and accurate database on sugar import, export and production based on information from the relevant authorities to support businesses in preparing trade defence records. The Import-Export Department is asked this year to complete proposals on management measures for the import-export activities of sugar products. Meanwhile, the General Department of Market Surveillance this year must submit to the Government a decree replacing Decree 185/2013/ND-CP on providing penalties on administrative violations in commercial activities, production of, trading in counterfeit or banned goods and protection of consumer rights, and Decree 124/2015/ND-CP about amending and supplementing a number of articles to Decree 185/2013/ND-CP. This general department must strengthen management and inspections to prevent and strictly handle smuggling and commercial fraud for sugar and sweetening products, according to the minister. The solutions of the Ministry of Industry and Trade are expected to protect domestic sugar production, create a fair business environment and bring more favourable conditions in improving competitiveness of local sugar producers. Viet Nam produced 7.3 million tonnes of sugarcane and had a total output of about 769,000 tonnes of sugar in the 2019-20 sugarcane crop that ended in May 2020./. More than $267 million mobilised from G-bonds The State Treasury raised more than VND6.2 trillion (US$267.4 million) of Government bonds at an auction held by the Ha Noi Stock Exchange (HNX) on Wednesday. The issued bonds were worth VND7.5 trillion on five-year, 10-year, 15-year and 30-year terms. One billion Vietnamese dong was mobilised from five-year bonds with an annual interest rate of 1.7 per cent, 0.02 per cent lower than the previous auction on August 5. Meanwhile, more than VND3.1 trillion worth of 10-year bonds were sold with an interest rate of 2.85 per cent per annum, 0.03 per cent higher than the previous bidding. The 15-year bonds secured VND1.3 trillion with an annual interest rate of 3.03 per cent, up 0.02 per cent. The 30-year bonds raised VND500 billion with a yearly interest rate of 3.5 per cent, equal to that of the previous auction on July 22. Another VND250 billion was mobilised through an auxiliary auction of the 30-year bonds. Since the beginning of this year, the State Treasury has raised more than VND157.7 trillion from G-bond auctions at HNX./.  Companies to pump out bonds as trade will soon be restricted The corporate bond market will flourish in the third quarter of this year but will then step back in the fourth quarter in anticipation of regulatory amendments which will impose restrictions on bond trading from early September. The forecast was made by SSI Securities Incorporation (SSI) in the company’s report on Viet Nam’s bond market in the first six months of 2020. The report said a total of VND122.3 trillion (US$5.3 billion) worth of bonds were issued in January-March, up 69.7 per cent year-on-year. The figure for the first six months was VND171.5 trillion, up 61.3 year-on-year and much higher than the growth of 37 per cent in the same period last year. Of the total bond value issued during six months, VND10 trillion or 5.8 per cent of the total value was issued by Masan Group to the public. The other 94.2 per cent was issued by 133 enterprises via private placement, divided into 826 tranches. Regarding the issuance structure in the first six months, the group of real estate businesses issued the largest bond volume worth VND71.6 trillion, accounting for 41.8 per cent of the total issued volume and up by 57.5 per cent year-on-year. The banking group ranked second with a total issuance value of VND47.3 trillion, accounting for 27.6 per cent and up 31.2 per cent year-on-year. Energy and minerals group issued VND10.5 trillion, accounting for 6.1 per cent of total issued value and 5.3 times higher than the same period in 2019. The rest was issued by infrastructure development groups, financial services companies and other businesses. The size of the corporate bond market has risen 15.6 per cent compared to the end of 2019, reaching VND791 trillion and equal to 12.9 per cent of the country’s total GDP. Viet Nam’s proportion of corporate bonds in the country's GDP is far ahead of Indonesia, surpassing the Philippines but still far short of Thailand, 23 per cent of GDP; China, 33-35 per cent of GDP; Malaysia, 51 per cent of GDP; and South Korea, 80 per cent of GDP. According to SSI, compared to other capital mobilisation channels in Viet Nam, the corporate bond channel is still quite modest in scale. The economy still relies heavily on bank credit. The total credit scale as of June 30 reached VND8.48 quadrillion, equivalent to 138.5 per cent of GDP and 10.75 times higher than the corporate bond channel. SSI noted that the development of the corporate bond market is indispensable to create a balance and improve the quality of Viet Nam's financial market. However, the overheated growth has posed potential risks to the sustainability of the market. Since the beginning of this year, the Ministry of Finance has continuously issued warnings about risks which might arise from the abuse of this capital raising channel, giving out recommendations to investors and market participants. The ministry has made public a draft Decree 81/2020/ND-CP to amend several points of Decree 163/2018/ND-CP about corporate bond issuance for comments, which included amendments of conditions for corporate bond issuance, rates, issuance in domestic and international markets, information disclosure and reporting mechanisms. Decree 81/2020/ND-CP has been submitted to the Government and is expected to officially take effect in early September. Under the draft, regulations about bond yields and bond transactions would be tightened. Accordingly, bond yields would not be allowed to be higher than 20 per cent per year. This aimed to prevent firms from offering high bond yields which would negatively affect the capital market. In addition, bonds issued in the domestic market would be restricted from trading among less than 100 investors while under the current regulation, the restriction was applied only in the first year. This aimed to protect bond investors, the ministry said. Two issuances must be at least six months apart, according to the draft. Notably, issuing companies must ensure the outstanding value of bonds issued would not exceed three times their charter capital. The Ministry of Finance said that this regulation would help prevent firms from issuing bonds in a too large volume and value which would create risks for both issuers and investors. SSI experts said companies would accelerate issuing bonds in July and August, before the issuance conditions are tightened./.  Techcombank has new CEO VN Technological and Commercial Joint Stock Bank (Techcombank) announced the appointment of Jens Lottner as Chief Executive Officer (CEO), effective August 18, 2020.  Lottner brings more than 28 years of experience in financial services with leading organisations such as McKinsey and BCG, and has spent more than two-thirds of his career in Asia. He previously served as CFO of Siam Commercial Bank (Thailand), where he designed and led a large-scale digital transformation programme that included the implementation of a new mobile banking platform, redesign of segment business models, and installation of a cloud-based data lake and analytics platform./. Online shopping spikes amid new pandemic outbreak Retailers are focusing on online shopping as more and more consumers are seeking to avoid public places amid the new COVID-19 outbreak. Le Thi Thanh Lam, deputy general director of Sai Gon Food Joint Stock Company, said during the first outbreak, consumers panicked and stocked up on goods, and so online shopping saw impressive growth. While they are more composed this time, online shopping is still seeing huge growth on Sai Gon Food’s websites since they are familiar with them and they frequently offers good deals, she said. A spokesperson for online platform Tiki told Nguoi Lao Dong (Labourers) newspaper that ever since the first COVID-19 cases appeared in Da Nang City late last month, demand for health-related products has spiked, especially face masks, demand for which grew 12-fold, and hand sanitisers, which saw sales double. Other sought-after products have been air filters, school text books, bottled drinks, and canned foods, they said. Tran Tuan Anh, managing director of Shopee, said his company has been working with suppliers and brands to meet growing demand. The change in consumer shopping behaviour caused by COVID-19 has forced businesses to focus on their online shopping platform sooner than they had originally planned. For example, wholesaler MM Mega Market had to launch its shopping website sooner than planned to offer products in demand, and other products will be added later. Lotte Mart Viet Nam’s shopping website, speedl.vn, saw massive growth during the outbreaks in March and July and had to double its online department payroll. Many businesses have said that there is a fierce competition to offer the best prices online. Shopping platforms are also offering sellers advertising packages that are featured more prominently and reach more customers. According to the HCM City Department of Industry and Trade, retail revenues in the first seven months of the year were 8.2 per cent up year-on-year to VND463.45 trillion (US$20 billion).  Source: VNS/VNA/VIR/VOV/VNN/Dtinews/SGT