VIETNAM BUSINESS NEWS JUNE 2515:10 Hai Duong greenlights three new industrial clusters  The Hai Duong People's Committee has approved the establishment of three new industrial clusters with a combined investment capital of more than VND1.7 trillion (US$75 million). The Quang Trung, That Hung and Binh Giang 1 industrial clusters are projected to cover a total area of nearly 210ha. Financed by the Ha Noi-based Hyosung Vietnam Real Estate JSC, the 74.5ha Quang Trung Industrial Cluster in Quang Thanh Commune has an investment capital of VND515 billion and the 75ha Binh Giang 1 Industrial Cluster in Nhan Quyen Commune will cost VND470 billion. Meanhwhile, the 60ha That Hung Industrial Cluster in That Hung Commune, will be developed by Nha Viet HD Group JSC in Hai Duong City, with a total capital of more than VND756 billion. The three industrial clusters aim to attract firms in several industries, including agricultural and food processing, handicrafts, mechanical engineering, consumer good production and supporting industries. It is expected that these zones will be finished within 36 months from the date of the investment decision. Secretary of the provincial Party Committee and Chairman of the provincial People’s Council Pham Xuan Thang told a recent meeting that Hai Duong always stood side by side with businesses and would create the best possible conditions for investors in industrial zone infrastructure to build facilities and attract secondary investors, generating economic benefits for businesses and the province. The province is now home to 14 zones with a total area of 2,567ha. Among them, 11 have had their infrastructure completed with an average occupancy rate of 82 per cent. They are home to more than 300 projects from 21 countries and territories, including 235 foreign direct investment projects worth more than $4.7 billion and 64 Vietnamese projects worth $772 million. Thang said apart from developing industrial zones, Hai Duong would also step up investment promotion, improve its business climate and competitiveness, and attract investment in a more selective manner. Vietnamese lychees sell like hotcakes in Australia A kilo of Vietnamese fresh lychees was sold for AU$3,000 (US$2,254) at a special auction in Perth City, Australia last week. The auction opened the Vietnamese Lychee Week held by the Vietnamese Trade Office in Australia. The auctioned lychees were chosen from the first batch of 17 tonnes of fresh lychees in the 2021 crop that recently arrived in Australia. The auction, which took place in MCQ supermarket on June 16, drew a large number of visitors who praised the outstanding quality of Vietnamese lychees. Head of the Vietnamese Trade Office in Australia Nguyen Phu Hoa said that along with the high quality, this year, importers and distributors have paid a lot of attention to packaging. The auction aimed to show the value of Vietnamese lychee and support the promotion of the fruit's trademark, he said, adding that all the money from lychee selling at the event will be sent home to support children in lychee-growing regions. Prior to the harvest season in Viet Nam, the office launched a trademark-building programme to promote the consumption of Vietnamese lychees in Australia. Vietnamese Lychee Week featured a series of activities to advertise the Vietnamese lychee trademark. The leading importer of Vietnamese farm produce in Australia, 4wayfresh, said that this week, an additional batch of lychees will arrive in West Australia as part of its plan to import 100 tonnes of lychees from this crop. In other areas such as Victoria and South Australia, importers are importing fresh lychees from Viet Nam to meet market demand. Vietnamese lychee was first sold in Australia in 2015. Last year, 80 tonnes of fruit were sold. Ly Hoang Duy, Director of 4wayfresh, said Vietnamese lychee has an outstanding taste and quality thanks to improved storage and transport technology. The majority of consumers in Australia agree it is the best of its kind in the market. This year, Australian importers plan to bring in 300-500 tonnes of Vietnamese lychee. Tax hammer falling on foreign OTT apps The Vietnamese government is taking further measures to force compliance out of overseas over-the-top platforms. The Ministry of Information and Communications (MIC) is planning to adjust the Law on Cinematography to prevent the rampage of misleading content via foreign over-the-top (OTT) applications in the country. The US-based Netflix will be the first platform affected by the move. According to the MIC’s Authority of Broadcasting and Electronic Information (ABEI), the decision to revise the law stemmed from the constant appearance of distorted historical content on the platform despite the authority’s requests to remove them. Netflix has not complied with the local government’s requirements stipulated in Document No.1330/PTTH&TTDT dated July 2020 that requires the company to comply with Vietnamese regulations related to providing television services in the country, according to an MIC report. ABEI also emphasised the necessity of the adjustment. In comparison with movies presented at cinemas, content provided on OTT platforms do not necessarily undergo censorship before they are made accessible to viewers. In addition to Netflix, other overseas OTT operators such as China-based WeTV and iQIYI, and US-based iflix will also be hurt by the government’s actions. To boot, most of them have yet to be licensed to actually operate in Vietnam. Responding to the issue, Amy Kunrojpanya, Netflix’s Asia-Pacific vice-president of communications, told VIR, “Netflix respects the rules of every country where we operate.” Tax obligations by OTT platforms also remain a headache for the local government. According to information published by the MIC, Netflix’s annual revenue in the market is $30 million based on about 300,000 subscribers across the country. However, none of that sum is cited for the platform’s tax duty in Vietnam. To solve this, the Ministry of Finance is planning to require overseas service providers to directly perform the tax registration and declaration through the official online portal of the General Department of Taxation. Those are stipulated in the ministry’s latest draft circular offering the guidelines to perform the Law on Tax Administration and Decree No.126/2020/ND-CP providing detailed regulations on the implementation of some articles under the tax law. The ministry is currently gathering opinions for the draft circular and will soon submit them to the government. Hoang Minh Hai, business development manager of local OTT platform FPT Play, said that the regulations are necessary for the evolution of OTT sites in Vietnam. “Entertainment via OTT sites is growing in the country,” Hai said. “But local supervision over them has been far from efficient, causing inequality between domestic and overseas platforms.” He explained that for the tax issue alone, local OTT companies have been paying many kinds of tax, while overseas platforms have not paid anything. “Vietnamese OTT operators have been shouldering significant costs for copyrights and diverse taxes,” Hai said. Echoing this, Ngo Thi Bich Lien, director of local media company BHD Star Cineplexes, said that it is necessary to create equality between local and international companies, as these bigger groups simply do not pay enough tax, which leads to major challenges for local groups in the same segment. “They have to take responsibility for what they earn in Vietnam, like us,” Lien said. In addition to a corporate income tax rate of 20 per cent, local OTT companies also have to pay 10 per cent copyright tax and 5 per cent VAT for an overseas movie or TV show. Escalating shipping charges hinder local manufacturers Skyrocketing shipping costs, seen as the key culprit
behind the higher burdens for businesses and rising retail prices for
end-consumers, are expected to linger amidst the ongoing pandemic. “Imported materials also rose by 40-60 per cent due to freight cost surges. If a company uses all imported materials to make furniture, it needs to increase its selling prices by 20-30 per cent. Local manufacturers still have large export orders until the year-end due to the strong demand in the US market but they have to suffer a lower profit margin due to the costly rates,” he said. On the other hand, Phuong noted that local consumers prefer imported items. It means the rising shipping costs will result in higher construction expenses, which in turn delays the development of local property projects and raises concerns about bubbles. The soaring freight cost is a global phenomenon. With upwards of 80 per cent of all goods transported by sea, freight cost surges are threatening to raise the price of everything from toys, furniture, and car parts to coffee, sugar, and anchovies, compounding concerns in global markets already bracing for accelerating inflation, according to Bloomberg. Jola Pasku, senior economist at IHS Markit, told VIR that similar to other countries in the region, the outbound flow of Vietnamese goods has been squeezed by a shortage in containers. Representatives of shipping lines in Vietnam reported that they are facing a serious shortage in empty shipping containers, which has spiked rental prices of these containers and interfered with a lot of enterprises’ ability to export goods. “Container rental prices have been on an accelerating trend since October 2020 with exporters complaining having to pay five times the regular price, as well as paying to import an empty container just to have it available for export,” Pasku explained. “The key driver of this has obviously been the pandemic, which has slowed down the processing cycle of unpacking and rotating containers at various ports around the world, but the soaring demand for Vietnamese exports has exacerbated this issue even more,” Pasku said. “Many exporting factories are reporting having to make tough adjustments from this development from being forced to close or delaying orders, as skyrocketing rental prices are weighing on their profits.” Apart from an outbreak in southern China, Vietnam has also been hit with a more intense resurgence of COVID-19 cases since late April. A number of industrial zones in the north were forced to close and Ho Chi Minh City has extended a city-wide lockdown. Depending on how severe the current outbreak proves and whether it prolongs closures, it is expected to see more disruptions in Vietnam’s manufacturing production activities in the coming months. According to the Vietnam Logistics Association, transporting a 40-feet container of cargo by sea from Vietnam to the United States and the European Union now costs into five figures, wreaking havoc for businesses. Many ocean carriers attributed the high shipping costs to the critical shortage of empty containers, and so raised the rates to around $10,500 currently for a 40-feet container. Pre-pandemic, freight only accounted for a small proportion of the cargo value such as 6-7 per cent for electronic products and 15-20 per cent for agri-products. Transport expenses from ports to import destinations are now equalling or even exceeding order values, and thus shipping bottlenecks are hurting the transport of Vietnamese products. Andrew Harker, economics director of IHS Markit, said that higher freight charges were one of the key reasons given by Vietnamese manufacturers for increasing cost burdens during May, and has also contributed to surging input prices globally. In fact, a JP Morgan Global Manufacturing index has signalled the sharpest rise in input costs for a decade in May. Any further disruption is likely to exacerbate these trends. “Rising charges have the potential to dissuade customers from committing to new orders, but so far the strength of the rebound in demand seen globally in manufacturing has meant that Vietnamese companies have continued to see new export business expand despite these price rises,” Harker said. In terms of measures to help deal with higher costs and disruption to supply chains, he noted that one thing companies have started to mention is efforts to stockpile materials to guard against supply shortages. They have been ramping up their input buying in recent months and inventories of purchases have risen in the past quarter. Ho Chi Minh City will start collecting infrastructure fees at seaports, putting a bigger burden on logistics businesses amidst the resurgence of the pandemic. Last week, Ho Chi Minh City Department of Transport began a pilot programme to collect infrastructure fees at the city’s seaports. The programme will officially launch on July 1 to mobilise funds for transport infrastructure development around the city’s seaports. While the exact fees charged are not available yet, the department said they will be determined based on the type of goods. The lowest fee will be VND15,000 (65 US cents) per tonne and the highest VND4.4 million ($191) for a 40-foot container. Tran Viet Huy, managing director of Tracimexco - Supply Chains and Agency Services JSC, told VIR that the fees will put more burden on exporters and importers, and end-consumers. Transporting a container from the southern province of Binh Duong to Ho Chi Minh will incur a surcharge of VND500,000-1 million ($22-44), raising logistics costs by 22-40 per cent. This, coupled with the new toll introduced on Hanoi Highway, will put more pressure on businesses. Huy added that most logistics service providers will be affected by the charges. As they need to pay fees in advance on behalf of businesses, this will cause them financial stress. The fees will also be shifted to the retail price of imported goods. Meanwhile, along with other global supply chain headwinds, the added charge will likely make export products less competitive. “The investment environment will not be favourable for businesses in the short term, especially during the pandemic. However, if the city can use the funds to improve infrastructure, it can benefit them in the long term,” he said. Ta Ha, an expert from the Vietnam Association of Seafood Exporters and Producers (VASEP) said that it is unreasonable to collect seaport infrastructure fees at this stage, given that 70 per cent of Vietnam’s seafood imports go through seaports in Ho Chi Minh City. Meanwhile, logistics costs in Vietnam are already at a high level compared to the region, significantly reducing the competitiveness of local seafood exporters. He added that businesses have to pay a variety of fees related to infrastructure. In particular, toll booths make up a significant portion of their transportation fees. VASEP proposed delaying collection during the pandemic at least until the end of 2021. Other experts also voiced concerns about additional seaport service charges amidst skyrocketing logistics expenses caused by the global health crisis, which can dampen the recovery prospects of businesses in the coming time. 120,000 workers in Bac Giang province slated to return in November There will be more than 30,000 workers back to work by
the end of July, and 120,000 workers by the end of the year in the four
industrial zones in Bac Giang province. Nguyen Xuan Ngoc, deputy manager of Bac Giang Industrial Zones Authority, said the province plans to bring about 400 enterprises back to production by July 1. Bac Giang has appraised and approved 153 enterprises with nearly 24,000 employees. There have been 86 companies with approximately 16,000 workers who have officially returned to work so far. The number of working employees accounts for nearly 11.4 per cent of the total number of about 140,000 workers in this region. The province will work with enterprises to arrange accommodation for workers inside and outside the production area. Expenses for renting shelters are covered by enterprises. People who work on the same line and factory will stay together. If there is any suspected case of COVID-19, the authority can easily control the situation. Localities will arrange backup scenarios for isolation areas, and enterprises will pay the costs if workers have to go into concentrated isolation. Regarding labour recruitment, enterprises are asked to give priority to workers living in the province to create jobs for workers staying in the area. If the production recovers smoothly, and requires more workers, Bac Giang could consider recruiting labour outside the province. "In the beginning, it may be difficult to arrange a large number of workers. But the province is planning to support enterprises as much as possible,” Ngoc explained. Moreover, Bac Giang asked mobile checkpoints in the province not to obstruct transport. Pandemic prevention forces are asked to only require the drivers to declare their health, measure body temperatures, record travel schedules, and note down contact phone numbers. For trucks carrying goods from Bac Giang to other provinces, enterprises will need to make COVID-19 safety records for both people and vehicles. Testing results will be returned to drivers within 24 hours. New rule reshuffles tax burden While new efforts from the Vietnamese government to
press e-commerce platforms to declare and pay tax on behalf of individual
vendors and business households would unscramble tax enforcement for local
authorities, e-commerce platforms are pushing back against the extra burden
placed on them. Under the circular, from August 1, the owners of e-commerce platforms will be responsible for declaring and paying tax on behalf of the individuals according to a roadmap announced by the tax authorities. While this is not yet possible, as a temporary measure, e-commerce platform owners are now legally obligated to provide information related to individuals’ business activities on their platforms at the request of tax authorities. The income threshold for business households and individuals to be subject to VAT and PIT will remain at VND100 million ($4,350). Taxpayers include individuals earning income from e-commerce businesses as well as digital content and service provision. Circular 40 is part of the ongoing regulatory clampdown on Vietnam’s e-commerce market. With the new regulation, the government can now ensure e-commerce platforms play their part in tax collection. The circular will also create a level-playing field for brick-and-mortar retailers which have been fighting from a tax disadvantage in past years. Tracking these e-commerce platforms to ensure VAT and PIT are paid through data sharing and extending liability to platform owners will allow local tax authorities to focus enforcement efforts on the relatively few marketplaces rather than the millions of vendors operating through them. E-commerce platforms, including the likes of Shopee, Lazada, Tiki, and Sendo, will have to declare and pay tax for their online sellers from August 1, but many questions remain unanswered. A representative of Lazada Vietnam said that it is managing online sellers across many countries so the app is built uniformly to ensure the efficiency and safety of the e-commerce platform. Any technical change to serve tax management will require close coordination between e-commerce platforms and local tax authorities. To accommodate this work, Lazada has proposed extending the roadmap to implement the new regulation. In addition, she suggested the clarification of which tax authorities are entitled to request businesses to provide information as well as the exact information businesses will have to disclose to ensure information security and avoid clashes with other laws. Meanwhile, a spokesperson for Shopee Vietnam said that regulations need to provide clear guidance on distinguishing business households and individuals as e-commerce platforms will only have to declare and pay tax on behalf of individuals. Clear classification will help e-commerce platforms to upgrade their apps to comply with Circular 40. She added that regulatory bodies should also pass regulations to manage individuals selling on social networking platforms to ensure fairness. Voicing agreement, Nguyen Ngoc Dung, vice chairman of the Vietnam E-commerce Association added, “The new rules will trigger inequality between e-commerce and social commerce, such as Facebook. Inevitably, this will discourage businesses from increasing their presence here via e-commerce, which goes against the government’s policies to encourage the development of the digital economy.” He also voiced concerns over major challenges stemming from the new tax regulation. Specifically, due to the short time until Circular 40 comes into effect, businesses will find it difficult to prepare data in time to report to the tax authorities. Furthermore, there will be great geographic disparities as according to Article 45 of the Law on Tax Administration, tax declarations have to be submitted to local tax authorities where the tax subject is physically located. However, e-commerce platforms maintain extensive networks with a myriad vendors located across many cities. “This will create conflicts with other regulations,” Dung warned. Moreover, by creating additional administrative procedures, the new circular clashes with Article 3.1 of Decree No.63/2010/ND-CP and the Law on Promulgation of Legal Documents 2016. Requests to provide information also need to ensure compliance with current regulations on the protection of personal information in the Law on Cybersecurity, the Law on Protection of Consumers’ Rights, and the Law on E-transactions, Dung added. Bringing farm products and local specialties to "e-market" From June 21, cooperatives and farmers' households in the provinces of Bac Giang, Hai Duong, Vinh Long, Dak Lak and Son La simultaneously put farm products and local specialties up for sale on the "Vietnamese farm produce e-market" on the Sendo e-commerce platform. This is the first time that farmers have built their own "brand" to consume agricultural products in the digital environment. As part of activities within the framework of the cooperation programme "Vietnamese products e-stall" between the Sendo e-commerce platform and the Vietnam e-Commerce and Digital Economy Agency (IDEA) under the Ministry of Industry and Trade, the programme is considered to be a bridge between cooperatives and farmers in the provinces with consumers across the country. The programme has selected a variety of products to be sold on the Sendo e-commerce platform, including Son La plum, Dak Lak avocado, Bac Giang lychee, Vinh Long purple sweet potato and Hai Duong lychee. As the message of this market is "from the garden to the table", the orders of farm products by customers will be harvested by farmers from the growing area, packed according to the specifications under the guidance of the specialist, and shipped directly to the buyers. There is no intermediate stage, so the products have both attractive pricing and high freshness. According to a representative of the IDEA, with the expectation of spreading the message “Vietnamese people prioritise using Vietnamese goods” or "Vietnamese people love Vietnamese agricultural products", the IDEA will coordinate with e-commerce platforms to continue implementing programmes to support online consumption for many other agricultural products in all regions of the country. The "Vietnamese farm produce e-market" is taking place on the Sendo e-commerce platform from June 21 to June 26 at https://www.sendo.vn/su-kien/nong-san-book. Consumers can directly access the above address to order high-quality agricultural products, with a direct connection to gardeners. The products are committed to meet Vietgap, Global Gap standards, labelled with traceability stamps, and certified for food hygiene and safety. The programme is also offering 7,000 discount codes of up to VND50,000 per order when paying with Zalopay. VNR proposes borrowing VND800-billion preferential loans Vietnam Railway Corporation (VNR) has proposed borrowing preferential loans worth VND800 billion to deal with the difficulties caused by the Covid-19 pandemic. A VNR leader on June 23 said that the proposal had been sent to the Commission for the Management of State Capital at Enterprises, news site VnExpress reported. If the pandemic lasts until next year, VNR might lose all of its equity and would not be able to pay employees’ salaries. Therefore, besides the VND800-billion preferential loans, VNR suggested support policies for its 13,000 staff. The corporation also proposed reducing the railway infrastructure use fees this year and in the following years and reducing or exempting the land use fees for railway transportation firms this year and extending the fee payment deadlines. Moreover, it expected over 6,000 employees of the railway sector--at high risk of being infected with the coronavirus--to be vaccinated against Covid-19. Over the past five months, VNR’s revenue plunged. During the Lunar New Year, Reunification Day and International Labor Day, passengers returned more than 11,000 train tickets worth nearly VND4 billion. In May, 393 trains were suspended. In some periods, only two trains on the Hanoi-HCMC route were operational, while all trains to localities were suspended. Over the past five months, the railway sector earned more than VND1.1 trillion in revenue, equal to 81% of the figure in the same period last year and 60% of the figure in the period in 2019, when the Covid-19 pandemic had yet to break out. The number of passengers was equal to 64% of that in the same period last year. Cargo transport was a bright spot of the sector as the cargo volume transported by trains increased 26% to 2.4 million tons and the revenue from the service rose 21% to VND713 billion. In 2020, VNR incurred losses of more than VND1.3 trillion. At present, nearly 1,200 employees of VNR have their employment contracts suspended and 136 others have taken unpaid leave. HoREA proposes apartment lessors’ taxable income threshold at VND200 million The HCMC Real Estate Association (HoREA) has proposed increasing the income level of apartment lessors subject to value added tax (VAT) and personal income tax (PIT) from VND100 million to VND200 million to encourage the development of the apartment-for-lease market. The taxable income threshold of VND100 million for apartment owners in the Ministry of Finance’s Circular 40 has caused controversies, the local media reported. According to HoREA, the VAT and PIT rate of 5% each for apartment owners is high. For example, a two-bedroom apartment with an area of 75 square meters in HCMC’s outlying districts has been sold at some VND3.5-4 billion. If it is leased, its owner can earn VND144-180 million per year. Thus, it will take 19-24 years to recover capital, while apartment owners have to pay loan interest and apartment maintenance costs. As a result, the apartment-for-lease market will be less attractive. In addition, apartment lessors should be offered family allowance policies like other taxpayers. The pilot of a plan to tax apartments for lease in HCMC’s District 11 has put many apartment lessors at a disadvantage, especially amid the fourth Covid-19 wave. HoREA also cited the example of developed countries in Europe and Northern America, wherein some 70% of their population rents apartments rather than buying them. The trend should be encouraged in Vietnam as it matches the economic restructuring policies. Moreover, the 2014 Housing Law encourages organizations, households and individuals to develop apartments for lease. However, they still have made up a small proportion in the total property supplies and met part of the demand from foreigners, workers and immigrants. Real estate credit growth slows down Outstanding loans for the real estate sector grew 4.84% in the first four months of this year and are expected to expand 5.5% by June, lower than the figures recorded in the previous years, according to the State Bank of Vietnam (SBV). At a press conference on June 21, Nguyen Tuan Anh, head of the Department of Credit Policies for Economic Sectors at SBV, said in 2018, loans for the property sector rose 26.76% versus 2017, but the rate fell to 21% in 2019 and 11.89% in 2020. He attributed the fall to the impact of Covid-19, leading to a decline in investment activities. As the prices of real estate products, especially land lots, increased in March and April, the central bank kept a close watch on the market. Anh assessed the real estate sector was still risky, so the competent agencies must not be heedless in controlling credit for the sector. As for the securities sector, Anh said the outstanding loans for it were estimated at VND46.7 trillion by June, equivalent to the figures by the end of April and May. However, the central bank will continue tightening its control over credit for the sector due to fluctuations in the stock market over the past six months. Banks’ investment in corporate bonds reached VND257.7 trillion, which was not too high. However, the investment in corporate bonds is also sensitive, so the central bank will focus on managing these activities, Anh added. By the end of this month, the investment in the sector was forecast to increase by some VND2 trillion. SBV Deputy Governor Dao Minh Tu said the monetary, stock and property markets were linked with each other. Therefore, SBV would facilitate their development in a healthy and safe manner and prevent bubbles. To reach the targets, Tu said the cooperation of management agencies such as SBV and the Ministry of Finance was needed. SBV will regulate the interest rates in line with the market development and currency policies, and create conditions to reduce capital mobilization costs, thus removing the difficulties facing local residents and enterprises hit by the Covid-19 pandemic. SBV also asked credit institutions to enhance control over the credit quality and work out solutions to control and limit bad debts. The banking sector will closely control the credit for risky sectors, including real estate, BOT and BT traffic projects and securities. Tu said 10 banks had proposed increasing their credit growth targets and SBV was still considering their proposals to ensure the credit growth quality. HCMC to have five new ports During the 2021-2025 period, HCMC will prioritize the construction of five new ports which require a total investment of nearly VND9 trillion, with VND870 billion coming from the city’s budget, and the remainder backed by the State budget and public-private partnerships. The five ports include a transshipment inland container depot (ICD) cluster in Thu Duc City’s Long Binh Ward, a dry port in the outlying district of Cu Chi, an inland waterway port in the Saigon Hi-tech Park, an international inland waterway port and the Den Do Cape passenger port in District 7, reported Nguoi Lao Dong newspaper. According to the city’s plan, the transshipment ICD cluster in Long Binh will cover an area of 50 hectares and serve the relocation of the Truong Tho port. It will mainly receive cargo from the neighboring provinces of Dong Nai and Binh Duong, following which the goods will be transported via inland waterways to the Cat Lai, Hiep Phuoc and Cai Mep port areas. The dry port in Cu Chi will cover an area of at least 10 hectares, while the one in the Saigon Hi-tech Park will stretch some six hectares. Bui Hoa An, deputy director of the HCMC Transport Department, said that HCMC has an advantage of nearly 1,000 kilometers of waterway. The southern hub has developed multiple waterway transport routes, renovated ports and waterway stations, but it has yet to tap the full potential of the waterway due to the shortfall of resources. The construction and operations of the five new ports and the upgrade of the existing ones during the 2021-2025 period will contribute to fulfilling the potential of the city’s 1,000 kilometers of waterway and be able to share 60% of the cargo load of road transport. The deputy director revealed that the municipal government had assigned the relevant agencies to work on capital issues in order to launch these projects. An added that the five new ports will also help ease the overload facing the Cat Lai port’s infrastructure as well as reduce shipping costs for businesses. Further, after expanding the existing ports, the Transport Department will focus on building more inland waterway routes with total investment set to reach nearly VND6 trillion, aimed at reducing pressure on the Cat Lai port and supporting road transport, An said. Ca Mau posts growth in shrimp exports in H1 despite pandemic Shrimp exports of the southernmost province of Ca Mau grew in the first half of this year despite the ravaging COVID-19 pandemic, according to the provincial Department of Industry and Trade. The province’s shrimp output was estimated to exceed 107,000 tonnes in the period, a year-on-year increase of 9.5 percent while exports raked in about 400 million USD, up 16.6 percent. This year, Ca Mau, one of the country’s leading localities in aquatic exports, is projected to earn more than 1 billion USD from shrimp shipments. COVID-19 has been kept under control in the province as well as its traditional markets such as the US, Europe, China, Japan and the Republic of Korea. Therefore, the demand for the products in the restaurant industry of the markets has gradually recovered. In addition, trade deals like the EU-Vietnam free trade agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are hoped to create favourable chances for the country and Ca Mau in particular, to seek new markets. The province is now home to over 40 export firms and 32 processing plants serving exports with a combined capacity of 250,000 tonnes per year. Its shrimp products have been shipped to 60 countries and territories. Statistics of the Ca Mau Department of Industry and Trade showed that the province’s revenue from shrimp exports to signatories of the EVFTA surged 148.56 percent; and to those of the CPTPP rose 9.8 percent in H1 against the same period last year. Amid the ravages of COVID-19, the province will bolster trade promotions via online platform with foreign distributors and businesses to search for new partners. It will also support local firms to offer their products in prestigious e-commerce marketplaces./. Da Nang draws 11 more investment projects in industrial, hi-tech parks The central city of Da Nang has attracted 11 investment projects into its industrial and hi-tech parks since the beginning of this year, including three FDI projects worth 145.3 million USD and eight domestic-invested ones totaling 188.4 billion VND (8.2 million USD). This is an encouraging achievement for the city’s investment promotion amidst complicated developments of the COVID-19 pandemic, which has greatly affects domestic and international production and business, said Pham Truong Son, head of the management board of Da Nang’s industrial and hi-tech parks, on June 23. To date, industrial and hi-tech parks in the city have attracted 499 projects, of which 368 are domestic-invested, with a total capital of nearly 26.7 trillion VND, and 131 are foreign-invested, with a total investment of 1.74 billion USD. To help enterprises maintain production and business but still ensure the safety of employees, Son said that the management board has strengthened inspection and supervision over COVID-19 prevention and control measures. Since the beginning of this year, 250 businesses have been inspected, with fines proposed for three firms for their violations of pandemic prevention rules. All 60,499 workers and labourers in local IPs and hi-tech parks have been given COVID-19 testing. Permanent Vice Chairman of the municipal People’s Committee Ho Ky Minh said that in the last six months of the year, the committee will continue keeping a close watch on the pandemic, helping businesses deal with difficulties and maintain and develop production and export. The city will focus on completing procedures for calling for investment in Hoa Nhon, Hoa Hiep Bac and Hoa Khanh Nam industrial clusters and promote investment in industrial clusters such as Hoa Son and Non Nuoc stone processing villages./. Vietnamese lychees hit shelves in Belgium “Thieu” lychees from Vietnam have hit the shelves of Carrefour Tongre supermarkets in Brussels, Belgium, since June 23 thanks to efforts of the Vinamex company and partners in bringing the Vietnamese specialty fruit to Europe to utilise the EU-Vietnam Free Trade Agreement (EVFTA). This is the first time the tropical fruit has been sold in the supermarkets, with good feedback from consumers. Weiss, the manager of five Carrefour Tongre supermarkets, said that he has never eaten such a tasty fruit. He decided to sell the fruit in the supermarket chain so that Belgian people can taste the wonderful fruit. He said that Thanh Ha “thieu” lychees has outstanding taste compared to other kinds of lychees that he has sold in the supermarkets, expressing his belief that Belgian consumers will like the fruit once they taste it. Weiss has decided to sell 100kg of Vietnamese lychees in five Carrefour Tongre supermarkets at the price of 25 EUR (nearly 30 USD) per kilo. He advised Vietnamese farmers to further improve post-harvest technology to keep the fruit fresh for a longer time. The EVFTA has paved the way for Vietnamese farm produce to enter EU markets. Besides Belgium, Vietnamese lychee has so far reached many European countries such as the Netherlands, France, and the Czech Republic. Minh Lien, Vinamex Director, said that its first batch of 500kg of “thieu” lychees was sold out only after two days. The firm will continue to import another batch of the fruit next week. Vinamex also plans to import Hung Yen longan to sell in Belgium, she said, expressing her belief that like lychee, longan will draw consumers' interest in the land of chocolate./. Networking event helps Vietnamese firms reach Europe The Foreign Ministry's State Committee for Overseas Vietnamese Affairs on June 23 held a virtual meeting to connect the Vietnam Private Business Association (VPBA) and the Vietnam - Europe international business association to the union of Vietnamese business associations in Europe. Nguyen Thu Do, VPBA Deputy General Secretary, said he hopes his association and the union will engage in specific cooperation by signing agreements and create links via their members so that together they can bring more Vietnamese products to European market. Deputy head of the committee Ngo Huong Nam said the committee is always willing to support and help connect organisations of entrepreneurs in Vietnam and other countries for economic growth and overcoming pandemic-challenges. Head of the union of Vietnamese business associations in Europe Hoang Manh Hue briefed the meeting on the union’s advantages in bringing Vietnamese goods to markets abroad, and affirmed the union stands ready to cooperate with Vietnamese enterprises at home to export their to the European market. At the meeting, leaders of Vietnamese business associations in Europe said Vietnamese goods in the continent are facing fierce competition and they need prompt measures to win it, and pledged their collaboration with their peers at home to step up export./. Profuse real estate lending on alert Loans related to real estate-backed collateral and
build-operate-transfer projects are classified as among the riskiest and
largest portion of banks’ portfolios, which might require restrictive
approaches on quantitative quotas. “The NPLs from the BOT credit package for the National Highway No.1A are a formidable obstacle,” Hue said. “According to the latest data, the NPL ratio exceeds 2 per cent, mainly because the new regulations have offered favourable conditions for banks to reschedule, reclassify, and restructure debts. When the State Bank of Vietnam’s (SBV) Circular No.03/2021/TT-NHNN, on additional conditions for debt restructuring and extending the roadmap for restructuring debts provisions until 2023 expires, the NPL ratio will be higher.” Hue also questioned the SBV about the issue at the meeting. “BOT highway projects will need more than VND300 trillion ($13 billion) of capital in 2022. Where will this money come from?” he asked. According to Michael Kokalari, chief economist of VinaCapital, infrastructure spending surged by 35 per cent in 2020 to $20 billion or 6 per cent of GDP, and likely grew by a further 16 per cent on-year in the first half of 2021. Next month, the Vietnamese government is set to formalise a plan to increase its infrastructure spending over the next five years by 38 per cent to $120 billion, compared with its aggregate infrastructure spending over the 2016-2020 period. Meanwhile, Vietnam’s policymakers have been keeping a keen eye on the real estate sector in recent years, with activity accounting for 5-15 per cent of GDP in Southeast Asia, and 8 per cent in Vietnam, according to HSBC. “The memory of the housing bubble in the 2007-2012 period, which ultimately led to a prolonged banking crisis, looms large in the collective conscience,” noted Yun Liu, economist at HSBC. “Even after a gradual recovery, real estate loans continue to account for a large proportion of bank balance sheets. While some banks do not have a specific classification of loans to the real estate sector, balance sheets of the four largest state-owned banks (Agribank, Vietcombank, VietinBank, and BIDV) reveal a key linkage with the associated construction sector.” At the 10 largest banks in Vietnam, real estate loans account for roughly 70 per cent of the total value of collateral-based loans. At Agribank and ACB, real estate collateral loans make up for 89 and 94 per cent, respectively. While lower than at other private banks, property-backed loans are also at high level, making up 69, 66, 68, and 84 per cent of the loan portfolios of VietinBank, Vietcombank, BIDV, and Sacombank. The increasing appetite for the property sector is driven by an accommodative monetary policy that offers low interest rates and abundant liquidity. Meanwhile, it is also driven by a sharp rise in the price of luxury condos, growing 9 per cent on-year in 2020 versus a 4-5 per cent on-year price increase in the mid-end and affordable segments. Liu of HSBC also added that demand for luxury and high-end properties remains elevated, with their market share increasing from less than 30 per cent of total units sold in 2019 to more than 70 per cent in 2020. Foreign direct investment data reveals that even though new inflows into the real estate sector increased more than 200 per cent on-year as of May, such investment was largely concentrated in manufacturing. Meanwhile, market watchdogs cautioned that property-backed credit is among the riskiest segments. The rapid growth of credit since the beginning of 2021 was cited as the main reason. By mid-April, total credit growth reached more than 15 per cent on-year. “This is not the first time that the central bank has tightened its control over the property market to mitigate risks. The SBV has historically preferred to use macro-prudential policies to curb credit lending to the sector, targeting real estate developers rather than mortgage borrowers, as Vietnam still has a low mortgage penetration rate in ASEAN,” Liu explained. Mortgages account for 40-90 per cent and of total household debt in the region, but the ratio is only about 25 per cent in Vietnam, according to the International Monetary Fund. Evidently, tightening the ratio of short-term funds that banks could use to fund medium- to long-term projects is one of the main tools. The SBV is facing a delicate balance of curtailing excessive credit lending to real estate developers while reducing imminent COVID-19 risks to the sector, with it also being an increasing source of growth. Last year, the SBV delayed a roadmap to tighten capital requirements for an additional year. PVI Opportunity Fund becomes OPC’s large shareholder PVI Opportunity Fund has become a major shareholder of
OPC Pharmaceutical JSC (HSX: OPC) after purchasing 6.6 million shares. The shares bought account for 24.83 per cent of the total outstanding voting shares of OPC. Prior to the transaction, PVI Opportunity Fund did not own any OPC shares. The purchase took place after OPC leaders put millions of shares on sale. Previously, Nguyen Chi Linh, vice chairman of the Board of Directors of OPC, registered to sell all of his 4.6 million shares (17.31 per cent). Meanwhile, Nguyen Thi My Hanh, a member of the Board of Directors of OPC, registered to sell 958,185 shares to reduce her ownership from 3.66 to 0.05 per cent. The transaction is expected to take place from June 21 to July 20. Also, Phan Cong Cuong, a member of the Supervisory Board, registered to sell all 53,300 shares to reduce his ownership from 0.2 to 0 per cent of charter capital at OPC. In the first quarter of 2021, OPC's revenue increased by 4.8 per cent on-year, reaching VND279.5 billion($12.15 million), achieving 32.3 per cent of its annual plan. Meanwhile, pre-tax profit reached VND46.7 billion ($2 million), up 2.8 per cent, achieving 32.7 per cent of the plan. After-tax profit in the quarter reached VND36.8 billion ($1.6 million). In 2021, the company has set targets of VND866 billion ($37.65 million) in total revenue and VND143 billion (6.2 million) in pre-tax profit. The dividend is expected to be paid at 20 per cent. OPC shares closed the June 22 session at VND60,000 ($2.61). Saigonbank divests Viet Capital Bank The Board of Directors of Saigonbank (UPCoM: SGB) approved plans to divest its interest in Viet Capital Bank (UPCom: BVB). As planned, Saigonbank will publicly auction more than 8.26 million BVB shares, equivalent to 2.25 per cent of the outstanding shares, with the starting price of VND22,800 (99 US cents) per share. Saigonbank can earn nearly VND190 billion ($8.26 million) from this divestment. Purchase registration is set from June 25 to July 14. The minimum number of subscriptions is 100 shares. Previously, Saigonbank was proposed to sell BVB shares with the starting price of VND15,610 (68 US cents) per share. However, BVB shares have nearly doubled since April, so the bank has to adjust the starting price. BVB's share price has grown significantly in the past month from more than VND20,000 (87 US cents) a share to the highest level of VND26,000 ($1.13) a share on June 1. According to financial statements for the first quarter of Saigonbank, its pre- and post-tax profits were up 21 and 22 per cent over the same period last year, reaching nearly VND59 billion ($2.57 million) and nearly VND54 billion ($2.35 million), respectively. However, both deposit mobilisation and outstanding loan balance of Saigonbank grew negative. Specifically, by the end of this quarter, Saigonbank's total assets decreased by 6 per cent compared to the beginning of the year, to over VND22.46 trillion ($976.52 million). Of this, deposits at other credit institutions decreased by 12 per cent, to VND4.7 trillion ($204.35 million). Customer deposits also decreased by 2 per cent, to only VND17.88 trillion ($777.4 million). Loans to other credit institutions decreased by 88 per cent. The outstanding loan balance also decreased by 3 per cent compared to the beginning of 2021, reaching VND14.9 trillion ($647.83 million). Saigonbank has set a target by the end of 2021 with total assets of VND24.34 trillion ($1 billion), an increase of 1.64 per cent compared to the beginning of 2021. Besides, mobilised capital and credit balance are set to reach VND20.23 trillion ($879.57 million) and VND16.56 trillion ($720 million), respectively; up 1.77 and 4.5 per cent compared to the beginning of the year. Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes |
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