VIETNAM BUSINESS NEWS AUGUST 15
16:26 Positive outlook for pangasius exports to Brazilian
market Banks expect positive profit growth at year-end Despite the
pandemic, banks will still see a positive profit growth until the end of the
year, said many bank experts. Many
research units have predicted that bank profits will continue to surge for
the rest of the year after banks posted hefty profits over the past two
quarters. A recent
report showed that many securities firms had revised up the prices of bank
stocks. The market
research division of Viet Capital Securities Company (VCSC) has adjusted its
consolidated net bank profit forecast in 2021 up 37.8% from the previous
estimate of 20.5% in early 2021, according to a VCSC report. VCSC
attributed the upgrade to the strong demand for credit and a high net
interest margin. In addition, management agencies will prepare to maintain
the economic growth, while controlling inflation. Echoing the
view, Maybank Kim Eng Securities Company (MBKE) also forecast that banks
would be granted higher credit growth limits. Speaking at
a recent online talkshow, Nguyen Hung, general director of TPBank, said that
the impact of Covid-19 in July and August would affect the full-year profits
of the bank. However,
Hung said that TPBank had yet to revise down its profit target. Extending
loan payment deadlines and restructuring customers’ debts will reduce the
bank’s revenue, but it is not much, Hung said. Bank profit
is expected to fall in the third quarter of the year, but will rebound in the
fourth quarter, he added. MSB will
also set aside a provision and lower the bad debt ratio to balance
coefficients, said Nguyen Hoang Linh, general director of the bank. VCSC said
that the provision cost for the rest of the year was expected to decrease by
2.95% year-on-year and from the earlier forecast at 4.3%. “Though the
credit growth is forecast to expand in 2021, the provision cost of
restructured loans will fall,” said VCSC. Banks will
control credit costs effectively and successfully when some key fields such
as property, export-import and retail develop more healthily in 2021 than
last year, according to VCSC. BIDV
Securities Company also said that the good control over asset quality could
contribute to the profit growth of banks in the second half of the year. The banking
industry is moving toward positive changes compared with the credit cycle
before, benefiting from lowered interest rates, said many analysts. “We are
still positive about the Vietnamese banking sector due to strong credit
growth, increasing revenues from service fees, stable provisions,
contributing to an expanding return on assets to 1,8%-2%,” according to the
research unit of MBKE. Hi-tech park businesses want workers to stay at home, say
on-site accommodation unaffordable The Sai Gon
Hi-tech Park Business Association has sought city authorities’ permission for
its workers to travel to work from home since organising accommodation
on-site for them is difficult. Since July
15 businesses at the park in District 9 have been providing accommodation to
workers as mandated by the city, either in their premises or other lodging
places nearby. Besides the
enormous cost, they are also facing problems such as vehicles transporting
staff or meals getting stuck at checkpoints, delaying work and stressing
workers. Many skilled
personnel needed by their employers are also stuck at home, and their
availability again would help restore production. According to
the association, long term solutions are needed to reconcile the strict
distancing requirements under Directive 16 with the financial and
psychological burden on businesses and staff. In the
event, it has suggested a pilot initiative allowing key, experienced workers
at two businesses who have received their first COVID-19 vaccine dose to
commute to work from home between July 16 and 30. They have to
sign commitments to only travel to their home and workplace, and strictly
follow pandemic regulations. Their movements will be monitored by an
application or other methods. Their
workplace will be separated from the other workers’. Their family
members too will not be allowed to leave home during the duration of the
trial, and will be tested at home for COVID. The two
businesses will transport them and frequently test them. The pilot
will continue even if some test positive as long as their number is less than
10 per cent of the total. The plan has
been submitted to the park management board and HCM City Business
Association. Ho Thi Thu Uyen, head of SBA, hoped it would help the Government
and businesses overcome the pandemic. HCM City is
the COVID epicentre of the country with almost 140,000 cases by Friday
morning. Many export orders await Vietnamese enterprises According to
the Trade Promotion Agency under the Ministry of Industry and Trade (MoIT),
many orders from foreign enterprises have been sent to domestic exporters.
However, the disruption of circulation, especially the circulation of goods
at seaports, along with the reduction in production capacity of enterprises has
caused many domestic enterprises to hesitate to receive orders. According to
the Trade Promotion Agency, recently, through many online trade promotion and
connection activities, the agency has received many orders from foreign
enterprises, with most orders from Europe, Japan, South Korea, the US, and
Middle East countries. They need the supply in large quantities of
agricultural products, seafood, food, and processed food. Many
enterprises in Osaka, Japan, which import and distribute agricultural
products, raw materials for the production of spices and processed foods of
all kinds, need to find Vietnamese partners to supply the apple jam product.
These Japanese companies are looking for partners capable of producing
high-quality goods that meet quality standards and production processes and
ensure a stable supply of 100 - 120 tons of goods per year. In the
European market, right after the online consultation session on exporting
agricultural and aquatic products to the Netherlands, which took place on
August 9, the Trade Promotion Department has received many orders from
enterprises from this market. Earlier, the Vietnam Trade Office in the United
Kingdom also held an online seminar to introduce Vietnamese agricultural
products and fruits in the UK market. Mr. Kevin, a
representative of Birmingham Market in the UK, affirmed that the market
welcomes 5,000 visitors every day, consuming from tens to hundreds of tons of
each type of agricultural products that are currently the key export products
of Vietnam, such as banana, dragon fruit, mango, avocado, lychee, longan,
jackfruit, passion fruit, and pineapple. Currently, the average annual export
turnover of Vietnam's agricultural and aquatic products to the UK exceeds
US$6 billion. Exports will be expanded further soon when the EU-Vietnam Free
Trade Agreement (EVFTA) has been taking advantage of by domestic enterprises. At the
online consultation session to support enterprises to boost exports to the
Dutch market in particular and Europe in general, Ms. Nguyen Thi Thu Thuy,
Deputy Director of the Export Support Center under the Trade Promotion
Agency, said that many Vietnamese agricultural, aquatic, and seafood
processing enterprises have had long-term export experience to the European
market, so technical barriers cannot cause them difficulties. Moreover,
August 2021 marks the first anniversary of the signing of the EVFTA between
Vietnam and the EU. On that basis, the two core factors for Vietnamese
agricultural and aquatic products to take full advantage of the tax rate
preference are ensuring the rules of origin and meeting the European quality
standards. Domestic enterprises have made the most of these two factors to
increase the competitive advantage of Vietnamese goods in this market. Statistics
of the first six months of this year of the MoIT show that, after the EVFTA
took effect, the bilateral trade turnover of Vietnam and the EU reached $3.3
billion, up 28 percent over the same period, despite the outbreak of the
Covid-19 pandemic. It not only helps domestic enterprises to gain footholds
in the European market but also creates a solid foundation in production
technology standards and product quality, enough for them to enter the
fastidious export markets later. Many
domestic enterprises could not receive new orders due to congestion of goods
circulation in some provinces, cities, and seaports. Especially, enterprises
have had to reduce their production capacity by 50 percent or cease
operations to ensure safety against the Covid-19 pandemic. Many
enterprises have proposed to the authorities to quickly deploy the
conditional two-on-site production model in order not to miss business
opportunities. According to
Ms. Ly Kim Chi, Chairwoman of the Food and Foodstuffs Association of HCMC,
this model is especially suitable for the condition that the city has a large
number of boarding houses for workers near the factories. Business owners
will work with the owners of boarding houses to tighten safety on Covid-19
prevention and control, and at the same time, assign employees to control the
movement of workers after work. Workers must commit to staying home after
work. Enterprises will organize busses to transport workers from the factory
to the place of residence. It will reduce cost pressure for businesses and
make workers more comfortable. Moreover,
the trade of goods, especially at ports, is extremely important. According to
the HCMC Union of Business Association, Tan Cang Cat Lai Port has applied
many solutions to prevent overload, such as transporting goods to satellite
ports, shortening procedures, and reducing service fees. However, these are
short-term solutions, and it is essential to have more effective measures.
For instance, the import and export procedures should be simplified to help
goods jammed at the port move quickly. Conference discusses cashless payment solutions for agro-fishery
SMEs A video
conference has been held between the Vietnam E-commerce and Digital Economy
Agency (IDEA)’s Centre of Information and Digital Technology (CID)
and global payment technology company VISA to discuss cashless payment
solutions for small and medium enterprises (SMEs). Experts from
three locations – Hanoi, Ho Chi Minh City and Singapore – gathered to chalk
out directions for the development of non-cash payment platforms for
Vietnamese SMEs, particularly businesses, cooperatives, and business
households operating in agriculture and fisheries. Specialists
from VISA introduced a number of digital payment solutions and digital
technologies to facilitate enterprises’ digital transformation and talked on
how they plan to support SMEs in agriculture and fisheries. Speaking at
the event, CID Deputy Director Bui Huy Hoang said there have been
changes in the perception of people and businesses about many aspects of
digital transformation as a result of COVID-19. Non-cash
payment is evolving in parallel with online marketplaces, Hoang said, adding
that he expects VISA will be able to provide suitable solutions for
local agribusinesses and cooperatives in a programme called “Gian hang Viet
truc tuyen quoc gia” (national online shop for Vietnamese products). Cashless
solutions are also expected to boost cross-border trade as the IDEA is
cooperating with logistics service provider Viettel Post to export
agricultural products via e-commerce platforms. The two sides plan to
together develop solutions for the use of non-cash payment apps and build
capacity in e-commerce skills for local businesses and cooperatives in the
coming time./. Policy leverages help promote real estate market Despite difficulties
from the COVID-19 pandemic, the real estate market has maintained stability
thanks to support policies from the Government. According to
the Ministry of Construction, the Government and ministries, sectors have
issued a number of legal documents regarding the implementation of real
estate investment and construction projects, while banks have offered
preferential policies to give financial support for investors and
house-buyers in the field. Notably, the
Government issued Decree 54/2021/ND-CP on May 21, 2021 detailing regulations
on environment impact assessment, which is applicable to organisations,
individuals engaging in investment activities. Vu The Hung
from the Vietnam Environment Administration under the Ministry of Natural
Resources and Environment, held that this is a necessary step in the process
of issuing an investment licence for a project, removing difficulties facing
investors and ensuring the coherence of regulations on investment and
environment. Meanwhile
Decree 69/2021/ND-CP, which will become effective from September 1, is
expected to deal with obstacles in the upgrading of old apartment buildings. At the same
time, the social housing development programme has received due attention
from the Government, ministries and sectors. Decree
49/2021/ND-CP, issued on April 1, 2021 to replace Decree 100/2015/ND-CP
issued on October 20, 2015 on developing and managing social housing is hoped
to remove difficulties in social housing expansion, meeting the people's
demand of houses with stronger support from credit institutions. Meanwhile,
the State Bank of Vietnam has issued Decision 697/QD-NHNN defining the
interest rate of 4.8 percent per year for loans for purchase and renting of
low-cost houses as well as upgrading their houses. Financial
support has been offered to investors and house-buyers from banks with cut in
interest rate. Experts held
that the decrees and decisions as well as guiding circulars of relevant
ministries and sectors from early 2021 will help the real estate market
thrive despite impacts of four waves of COVID-19 pandemic./. Businesses should upgrade online strategy during the pandemic Experiencing
the effects of lockdowns, consumer buying behaviours have been changing at an
unprecedented rate. This change
forced businesses to adapt if they wanted to maintain and increase revenue,
said experts at a webinar on enhancing strategy on Thursday. The webinar
helped businesses reassess customer behaviour thereby upgrading their online
business strategy during the COVID-19 pandemic. Consumer
buying behaviour is influenced by many factors and within seconds, a buyer's
decision could change. Research by
Think With Google showed that 82 per cent of smartphone users consult their
phones for information on products they want to buy. But, one in 10 of those
end up buying a different product than they had planned. As a payment
solution provider and a business, Visa Viet Nam and Biti's are two examples
that show the awareness and strategic adaptation of businesses in the face of
changes in needs and habits, or behaviours, of customers. With the
mindset of putting customers as the focus of their business strategy, these
two businesses have actively researched and found new business solutions. Biti's made
a bold change in its business strategy, which is to switch to trading
agricultural products from last month. This
business said that this was a new direction to meet the most urgent needs of
the people, and at the same time a solution to help businesses work. Visa Viet
Nam conducted a survey on the change in payment habits of users at the end of
last year. The survey showed that when affected by the pandemic, 44 per cent
of consumers made their first online transactions on social networks, while
82 per cent spent more online than in the previous year. Statistics
showed that more and more Vietnamese people know how to use online payments
and most are spending more through online and card payments. Through the
webinar, brand owners who have been successful in e-commerce implementation
helped businesses to learn how to connect with customers through the internet
and electronic devices, understand consumers' online shopping behaviour to
seize opportunities for e-commerce during the COVID-19 pandemic. The workshop
also helped businesses grasp solutions on e-commerce and digital
transformation, helping businesses to gradually transform their operations
from traditional methods to do business in the online environment, and
attract customers through online tools. Banks commit to cutting lending rates for pandemic-hit firms Sixteen
banks have pledged to reduce lending rates for enterprises affected by the
Covid-19 pandemic this year with a total support value of VND20.3 trillion. At a press
briefing after the regular Cabinet meeting on August 11, Dao Minh Tu, Deputy
Governor of the State Bank of Vietnam (SBV), said the pandemic had been
raging in many localities and the Government had repeatedly sought action
plans to eliminate the difficulties facing enterprises to reach the dual
goals of fighting the pandemic and ensuring stable socioeconomic development. Following
the Government’s directives, the banking sector launched multiple solutions,
such as rescheduling loan repayments and reducing lending rates, Lao
Dong newspaper reported. Most
recently, 16 banks have committed to supporting the economy with the capital
sourced from their profits. Four big State-owned banks--Vietcombank,
VietinBank, Agribank and BIDV---have also committed a VND1-trillion package
to reduce lending rates for enterprises and residents in localities facing
difficulties caused by the pandemic and practicing social distancing under
the prime minister’s Directive 16. In addition,
these banks have exempted all customers in HCMC and Binh Duong from banking fees. SBV will
ensure banks are living up to their commitments and will require them to
regularly report the results of their support solutions, Tu added. Since the
Covid-19 pandemic broke out in Vietnam, the central bank has cut the
operating interest rate by 1.5 to 2 percentage points and called on
commercial banks to reduce their lending rates. Tu said
banks had cut lending rates with a total value of VND18.83 trillion since
last year, benefitting multiple enterprises. The central
bank has also adopted social policies to contribute some VND7.5 trillion to
the VND26-trillion support package for the disadvantaged during the pandemic. Outdated framework impedes rail recovery State-owned
Vietnam Railways suffered severe losses during the last 18 months and now
plans to cope by expanding international shipments of fruits and other
agricultural products. However, various infrastructure issues need to be
remedied beforehand to materialise feasibility. Vu Anh Minh,
chairman of the VNR’s board, realised that the risk of capital loss was more
than real, as accumulated losses in 2020 amounted to $56.5 million, while
anticipated losses for 2021 currently stand at $40.9 million. By trying to
implement international routes, VNR is aiming to cut losses in the long term. The first
train with 23 40-foot containers by VNR’s Railway Transport and Trading JSC
(Ratraco) departed on July 21 to Europe, opening up opportunities to
transport agricultural products by rail from Vietnam to the “old continent”.
Ratraco and its European partners will continue to organise eight such trips
every month from Vietnam, with transit time for the entire journey estimated
at 25-27 days. Meanwhile,
railways are already an optimal solution for exporting agricultural products
to China, also representing a great opportunity for VNR to cut losses amid
rising air and sea freight rates, as well as manual procedures and customs
clearances at border gates. Currently,
the border gate between Vietnam and China in the northern province of Lang
Son allows nine types of fruits to be exported to China. Nguyen Quang Tung,
general director of TSY Co., Ltd., said that the Chinese side stipulates what
fruit can be exported through a specific border gate. TSY is an
exporter of seafood and fruit to European and Chinese markets. For export by
railway, goods go directly to Pingxiang Station in China for quarantine and
import procedures. Meanwhile, transporting agricultural products by trucks
takes twice as long and costs more. Since last
February, the refrigerated trains transporting dragon fruit are running
directly from the Dong Dang border gate to Pingxiang, with a stable volume of
goods regularly every week. Similarly, frozen fruits and other agricultural
products can be exported by rail to China and from there to Central Asia and
Europe. While road
transport has to deal with congestion at border gates, railways have a
distinct advantage because they can clear customs very quickly as pandemic
prevention and quarantine work for drivers and accompanying personnel is much
simpler than on the road. Ratraco’s
cooperation with the General Department of Vietnam Customs allows the opening
of more railway stations in Vinh, Dong Ha, and Dong Hoi in the central region
to serve as international hubs for imports and exports via railway. It is
likely that these connections will also attract fruit transports from
Thailand that are transshipped by road through Laos to Vietnam, and then
exported to China through the Dong Dang border gate. Despite the
advantages of international railways, the infrastructure remains the biggest
weakness, limiting VNR’s cooperation plans to promote Vietnam’s agricultural
exports. In 2020, VNR opened a route to transport agricultural products from
the south-central province of Binh Thuan to China. However, while the amount
of transported goods was high, their absolute value remained low. The biggest
difficulty for VNR is that most of its warehouses have been deteriorating,
without any facility suitable to store and preserve fresh and high-value
goods. The entire railway system has currently only four stations with cargo
yards and equipment for handling and storing containers: Lao Cai, Dong Anh,
Yen Vien, and Trang Bom. Tran Thanh
Hai, deputy director of the Foreign Trade Agency under the Ministry of
Industry and Trade, spoke at many domestic and international conferences
about the lack of synchronous infrastructure planning for the transportation
of specialised goods such as agricultural products and, at the same time, the
lack of connections between railways and river and seaports. “Vietnam Railways
has four international transport stations for agricultural products and all
of them are in the northern region. Meanwhile, it is required to also have
several of these stations in the central and southern regions to facilitate
international trade by railways,” Hai said. VNR built
one more temporary warehouse with a capacity of 2,000 square metres at Song
Than Station in the southern province of Binh Duong for standard bulk cargo
handling, but Hai argued that this warehouse fails to meet the standards for
the distribution of commercial goods. VNR’s plan
to stop its losses is also affected by the lack of synchronous connectivity
with other modes of transport. Some important economic regions such as the
Mekong River Delta and the Central Highlands do not yet have any railways. Investment
and development in the railway sector requires high synchronisation with
infrastructure and facilities. The railway investment rate is high, but
commercial advantages remain low compared to other types of investment, with
long payback periods and an unattractive feasibility for financiers. Positive outlook for pangasius exports to Brazilian market Despites
facing difficulties in entering the European Union and Chinese markets,
Vietnamese pangasius exports to the Brazilian market by mid-July enjoyed an
annual surge of 86.8% to US$35.5 million, according to industry insiders. At present,
Brazilian consumers are seeking to purchase nutritious, high-quality and
healthy frozen seafood products such as pangasius as the world moves into the
post-pandemic recovery period, and Vietnam is considered a potential supplier
of this type of fish, said the Vietnam Association of Seafood Exporters and
Producers (VASEP). Approximately
20 Vietnamese businesses got involved in exporting frozen pangasius fillets
to Brazil in the first half of the year, said VASEP adding demand for
processed convenience products continues to rise in the South American
country. As several
major cities in Brazil are bouncing back from the COVID-19 crisis, Vietnamese
pangasius businesses have more chances to export their products to this
market in the near future. However,
pangasius enterprises in the Mekong Delta region are facing numerous
challenges due to the latest resurgence of the pandemic, according to experts. They said
almost all pangasius firms are currently struggling to iron out snags,
including a rise in the price of input materials and high transportation
costs of their products. Meanwhile,
Duong Nghia Quoc, chairman of the Vietnam Pangasius Association, suggested
workers should be vaccinated against COVID-19 to maintain the workforce for
production. He also
suggested that support should also be provided to local enterprises in terms
of credit, tax exemptions, and reductions to enable them to overcome the
challenging period as soon as possible. Railway sector sees great opportunities amid COVID-19
The current
COVID-19 crisis is creating opportunities for the railway sector thanks to
its prominent advantages in international transport. According to
Tran The Hung, General Director of the Railway Transport and Trading Joint
Stock Company (Ratraco), said that while a drop was seen in passenger
transport, the transport of goods rose 20 percent in volume and 16 percent in
revenue. Regarding the
efficiency of the Vietnam-Belgium direct railway route, which has been
launched since July with three trips so far, Hung said that although specific
effectiveness has yet to be evaluated, the Vietnamese railway sector’s
engagement in logistics service supply chain has provided more options for
exporters when maritime shipment faces surging costs and takes longer time. Departing
from Yen Vien Station in Hanoi, the train with 23 containers stops at
Zhenzhou city of China’s Henan province and connect to the Asia-Europe train
to reach its destination. Due to
limited railway infrastructure and container management, Ratraco has yet to
be able to carry all 41 containers in a train to Europe, said Hung. He added
that the firm is working with partners to develop plans to operate one trip
per week in a fixed schedule from Vietnam to Belgium. The firm expects to
launch additional routes from Vietnam to Germany, Russia and Poland at the
end of the third quarter. The Ratraco
leader held that in the long term, it is necessary to connect railways with
seaports, thus optimising the efficiency of both transport types and reducing
cost and environmental pollution./. Quang Ninh: Disbursement of public investment increases 43
percent in seven months The northern
province of Quang Ninh disbursed more than 8.1 trillion VND (352.8 million
USD) as of July 31, equivalent to 43.3 percent of the plan for the full year,
according to the province’s Department of Planning and Investment (DPI). It
represented an increase of 5.5 percent compared to the same period last year. With such a
good disbursement, it is expected that many key projects of Quang Ninh
province will be inaugurated on schedule. Specifically, three projects of the
Van Don - Mong Cai highway, Ha Long - Cam Pha coastal road, and Cua Luc 1
bridge are expected to be inaugurated on January 1 next year at the latest. The Ha Long
- Cam Pha coastal road, which connects Ha Long and Cam Pha city, is part of
the provincial transport development plan through 2020 with a vision to 2030. The project
has a total investment of over 1.36 trillion VND (59 million USD) sourced
from the local budget. It is designed to have four lanes for vehicles with a
maximum speed of 60km per hour. Once the
project's construction is completed, it is expected to attract domestic and
foreign tourists to spiritual, resort and medical tourism sites in the
province, especially popular destinations such as Ha Long Bay and Bai Tu Long
Bay. The project
is scheduled for completion in 2022 which is expected to ease the overload of
Bai Chay Bridge and ensure smooth traffic between the north and south of Ha
Long, even during the rainy season. According to
provincial Department of Planning and Investment, in the context of the
COVID-19 outbreak, Quang Ninh has performed well in disbursing
public investment capital thanks to its concentrated resources for
investment, which has ensured expenditure tasks, especially for important
projects. There is no
need to supplement additional capital for its key projects, but
focussing on disbursement of capial that was planned at the beginning of the
year. Investment procedures are being completed to ensure the progress
of the projects, the department said. The
settlement of outstanding debts for basic construction is done step by
step. However, there arose some factors that affected the province’s
disbursement of public investment capital this year, it said. The COVID-19
pandemic from the beginning of the year has slowed down the collection of
land use fees and leasing water surface of localities. As a result,
it affected the balance of the capital already arranged for the projects as
well as the progress of their implementation and disbursement. For projects
using capital from the new rural building programme, the capital was not
allocated until April, thus, the disbursement would be made after June 30. Quang Ninh
province has the target of 100 percent of public investment as planned at the
beginning of the year. By the end of the third quarter, the disbursement will
reach at least 80 percent. It is
striving to achieve the gross regional domestic product of over 10 percent
for the whole year and total state budget revenue will obtain 51 trillion VND
(2.2 billion USD). To achieve
the above targets, the province will focus on accelerating the construction
progress of key projects such as Van Don - Mong Cai expressway, Ha Long - Cam
Pha coastal road, Cua Luc 1 bridge, Cua Luc 3 bridge, a road connecting Ha
Long - Hai Phong highway and provincial road 338, said the Department of
Planning and Investment. It will also
tighten financial discipline at all levels and attach responsibilities of
heads of agencies, units, and localities to disbursement results, considering
this an important basis for evaluation of officials. Outstanding
debt relating to basic construction will be strictly controlled. The project
is implemented only when the capital source and balance of capital have been
identified. Heads of localities have to take responsibility for any
outstanding debts incurs, the department said./. Vietnam's exports of phones, components continue to surge Vietnam's exports
of phones and components brought in 29.35 billion USD in the first seven
months of 2021, a year-on-year rise of 11.9 percent, according to the
Ministry of Industry and Trade. They
continued to be the top export products of Vietnam, accounting for 15.8
percent of the country’s total export revenue in the January-July period,
followed by electronic products, computers, and components with an export
value of 27.4 billion USD. Leading
export markets of Vietnam in the period included China, the US, members of
the European Union and ASEAN, Japan and the Republic of Korea. In the
coming time, Vietnam will seek new potential export markets for the products
in Africa, Latin America, Middle East and India, among others./. Essential goods production hit by lack of workers, lack of
transport Many
businesses in HCM City and southern provinces producing essential goods,
including medical masks and personal protective equipment, face difficulty in
sustaining their operations due to a lack of workers and transportation
problems due to social distancing. The HCM City
Department of Industry and Trade said they face difficulties mainly because
of regulations that only 30 per cent of workers are allowed on site and
suspension of operations after workers were found to be infected with
COVID-19. Those that
remain open have difficulty transporting both raw materials and finished
products. Earlier this
week, the department called on relevant agencies to create favourable
conditions for medical equipment firms to remain operational. It urged
export processing and industrial zones, Hi-Tech Park, Thu Duc City, and
districts to mitigate difficulties and ensure smooth distribution of
essential goods. MoT sets target to disburse at least 60 per cent of public
investment plan by September The Ministry
of Transport (MoT) has just issued Notice No.285/TB-BGTVT, ordering that at
least 60 per cent of the public investment plan be disbursed (about $1.13
billion) by September. Along with
that, an additional around VND980 billion ($42.6 million) must be disbursed
to compensate for delayed progress in July. The relevant units have to
complete the disbursement of more than VND24.4 trillion ($1.1 billion) in the
rest of the year. By September 2021, at least 60 per cent of the plan must be
disbursed (around $1.13 billion). According to
fresh data, by the end of July, the MoT has disbursed 44.1 per cent of the
assigned plan. The
disbursed capital mainly went to site clearance compensation, advance payment
for contracts and capital recovery, as well as payment of outstanding debts.
Meanwhile, the number of completing construction is still relatively low. SHB temporarily locks foreign ownership ratio at 10 per cent Saigon-Hanoi
Commercial Joint Stock Bank (SHB) confirmed that it would temporarily lock
its foreign ownership ratio at 10 per cent, and is now negotiating with
several foreign investors. The rules of
the State Securities Comission stipulate that the FOL cannot be locked for
longer than six months. At the end of this time limit or in case the bank
completes the issuance or offering to foreign investors at an earlier time,
the bank will have to coordinate with the Vietnam Depositary Centre to adjust
the ratio. Previously,
the bank approved paying stock dividends in 2019 and 2020 at the rate of 10
and 10.5 per cent, respectively. If these
plans are completed, the bank's charter capital will increase significantly
to more than VND26.6trillion ($1.16 billion). Do Quang
Hien, chairman of the Board of Directors at SHB, revealed that there are a
number of international financial groups, banks and investment funds
expressing their interest to become strategic investors of SHB. Furthermore,
the bank’s shareholders also approved a plan to increase capital by VND5
trillion ($217.4 million) from the issuance of shares for foreign investors
and foreign strategic investors. Besides
strengthening its foundation, SHB targets forging stronger connections with
international stakeholders and tap into a more vibrant ecosystem. Earlier this
month, Nguyen Van Le, former general director of the bank, resigned after 21
years of working, citing poor health. According to
local media, SHB is currently in the final rounds of negotiations to choose a
foreign partner from a line-up including high-profile names from the US,
Singapore, and South Korea that are looking to collaborate with SHB and
develop its retail and digital banking services. SHB is also selling its
shares in two overseas subsidiaries, SHB Laos and SHB Cambodia. The bank now
aims to find a potential suitor to sell a part of its ownership in consumer
finance company SHB Finance. Given its
solid growth foundation, SHB wants to partner up with foreign investors to
diversify its sources and enhance its operation to be in line with
international standards. Currently,
SHB is working with 2-3 partners to sell capital at SHB Finance, and the deal
is almost completed. The bank will publicly announce the final results to its
shareholders. Incredible potential in reach for fintech Fuelled by
generous amounts of venture capital, Vietnam’s fintech landscape is flying
high on Singaporean investors’ agenda, promising to offer more innovative
customer value propositions than traditional banks. Niraan De
Silva, VNLife’s managing director, said that the fresh investment valued the
company at well over $1 billion. He also said the proceeds will be used to
strengthen its fintech business, as well as its online travel and retail
software units. However, the company is still years away from an initial
public offering, according to Nikkei Asia. De Silva
also noted that VNLife, in comparison to international peers such as Visa and
Mastercard, is more profitable because of its focus on selling services to
businesses. The
potential for cashless payments in Vietnam is vast, according to Visa’s
Consumer Payment Attitudes Study 2021. Besides
VNLife, GIC also owns 2.55 per cent stake in state-owned Vietcombank – one of
Vietnam’s largest lenders. The Singaporean sovereign wealth fund also
accelerates the latest digital banking services and fintech trends in Vietnam
through its Vietcombank investment. Likewise,
Vietnam’s major e-wallet company MoMo is allegedly reported raising
additional capital from international private equity funds, particularly from
Singaporean financiers. The e-wallet
successfully raised $100 million in January from a group of investors
including Warburg Pincus, Goodwater Capital LLC, Kora Management, and others.
MoMo is racing to expand its suite of services, branching out into areas like
motorcycle insurance and consumer loans. Elsewhere,
last week’s latest draft decision on the national strategy for the
development of the digital economy and society to 2025 has set a firm target
on digital identity and cashless payments. By 2025, around 80 per cent of
Vietnamese citizens will have an e-account with the non-cash payment rate
reaching 50 per cent. Besides this, the rate of non-cash payments for
electricity and water bills would be around 75 per cent, and 90 per cent of
points of sale will adopt cashless payment options. Given the
rapid digitalisation observed in recent years and the government’s policies
towards financial inclusivity – combined with the State Bank of Vietnam’s
policies of strengthening banks’ balance sheets – the current situation
provides a unique mix where Vietnamese banks can keep growing rapidly and
increase profitability by introducing innovative financial products to reach
out to traditionally cash-based sectors of the economy, according to
Alexander Gold, CEO of Bankograph. “About 70
per cent of Vietnam’s population are in need of financial services as they
are unbanked or under banked, which creates excellent opportunities for
Singaporean fintechs,” Gold said. “Bankograph is pioneering buy now pay later
options as a platform for banking partners and will focus on launching these
services with multiple banking partners in Vietnam in 2021.” Scott
Krivokopich, managing partner from 1982 Ventures, a Singapore-based venture
capital firm focusing on early stage fintech in Southeast Asia, told VIR,
“Vietnam is a core market for us. We have been able to execute strong
investments, and our fintech expertise and networking in Vietnam have given
us an advantage, while other investors have had to watch from the sidelines.” 1982
Ventures’ Vietnamese portfolio spans affordable mortgage and property
financing options, consumer friendly payments, and a digital investment
platform that aims to make investing more accessible to Vietnamese people. “Now more
than ever we are seeing higher quality Vietnamese deals. We expect our
portfolio to have a significant allocation to this country, and the next set
of Southeast Asian unicorns will come from the fintech space,” Krivokopich
said. “Fintech is
complex and focus is key. The seed stage is the most attractive to invest in
Southeast Asia from a risk-adjusted returns basis and presents the largest
opportunity. Historically, the best performing Southeast Asian funds had been
seed funds with less than $100 million in assets under management,” he
explained. The venture
capital ecosystem has positively developed, and venture capital funds have
already raised larger funds, focusing on series A and B investments. “The fintech
opportunity in Vietnam has an incredible potential,” Krivokopich believed.
“The support and promotion of digital payments by the government is going to
unlock additional opportunities to build more fintech businesses that not
only help to address financial inclusion issues but also build a new layer of
infrastructure to strengthen the finance system.” “In short,
we are watching all fintech segments but are very keen on the entire payment
value chain, digital banking, and lending, as well as some other sectors,” he
added. SBA proposes allowing laborers to go home after work After a
while of adopting the stay-at-work mode, the Saigon Hi-tech Park Businesses
Association (SBA) has proposed piloting a solution that allows laborers to
travel to work and back home. The proposal
has been sent to the authority of the Saigon Hi-tech Park and the Hepza
Business Association, the local media reported. Ho Thi Thu
Uyen, head of SBA, pointed out multiple shortcomings in the stay-at-work mode
such as causing pressure on and raising costs for enterprises and leading to
the lack of high-skilled workers. Solutions
should help reduce pressure on enterprises and facilitate laborers’ daily
lives and help them feel comfortable. Specifically,
SBA proposed piloting the solution for 14 days, from August 16 to 30, at
Intel Products Vietnam Co., Ltd and Datalogic Vietnam Co., Ltd. The solution
should be piloted on high-skilled laborers who hold important positions in
production lines and have received one shot of the Covid-19 vaccine. The two
companies will make a list of eligible laborers and report the detailed plans
to the authority of the Saigon Hi-tech Park before employing the solution.
The pilot should not involve more than 300 workers. Enterprises should begin
with small groups of 20-30 people but not exceed 100 people each. The laborers
must make commitments to travel only between their houses and factories and
comply with anti-pandemic measures while staying at home. Those living with
them must not leave their residences and must undergo Covid-19 tests once a
week. Enterprises will pay for the testing costs. In addition,
the laborers joining the pilot scheme will install apps chosen by the
authority of the Saigon Hi-tech Park so that their employers and the hi-tech
park can control their travel. Meanwhile,
enterprises must commit to transporting laborers, conducting Covid-19 tests
for them twice in the first five days and twice in the next week, arranging
separate working spaces for them for the first two weeks and sending daily
reports to the authority of the Saigon Hi-tech Park. SBA also
proposed maintaining the pilot even if Covid-19 cases are detected but the
number of coronavirus-infected workers must be lower than 10% of the number
of the laborers. Uyen said
since July 15, enterprises at the Saigon Hi-tech Park have applied the
stay-at-work mode. However, the cost of the mode is high, affecting their
budgets and operation plans. Moreover,
enterprises have faced multiple difficulties. For example, vehicles
transporting workers and meals for them have been stopped at checkpoints,
causing delays. Boost economy with larger stimulus package The economic
damage caused by the fourth wave of the Covid-19 pandemic has been huge, so
an economic stimulus package that is large in scale is needed to have an
effective impact on the current economic situation. However,
greater attention must also be paid to the capacity of the budget, and not to
burden the budget with undue risks. The economic
support packages during the pandemic of many countries around the world can
be divided into two main groups, namely, direct support for aggregate demand
through tax cuts, spending increase, and employment support programs; and
financial support for businesses through loans and guarantee programs. According to
IMF statistics, the economic support package of developed countries such as
Japan, Italy, the UK, and Germany will account for 30% to 40% of GDP in 2020,
while some expenditure will continue to be implemented throughout 2021.
Therefore, the size of economic support packages of developing countries will
be much lower (Table 1). This fourth
wave of the Covid-19 pandemic has had a greater and more serious impact on
the national economy in general and Ho Chi Minh City in particular, so the
scale of support packages needs to be large enough to be effective. In other
words, real money must be injected to restart the economy once again. In our
opinion, this economic support package must be at 4% of GDP, which means 3%
for additional expenses and 1% for loan and guarantee support, equivalent to
VND 251,000 bn. This amount will be suitable to cover the scale of the
Vietnamese economy. With such a
strong stimulus package, the credit support this time should focus on small
and medium enterprises (SMEs), households, and individuals borrowing for
daily consumption. These are the subjects who have been badly hurt by the
Covid-19 pandemic, and their ability to withstand damage is many times lower
than that of large enterprises. This is also the group that has difficulty in
accessing ordinary banks and even more difficulty to access support packages. To resolve
this problem, the government needs to shift the creditor's risk to its side
because when the uncertainty is high, banks will limit lending. Therefore, in
order to open capital flow to these subjects, the government may need to
accept this risk. The implementation of the state credit guarantee program
here will play the same role as deposit guarantee and lender, as a last
resort. This policy, in general, will help increase social welfare in risky
situations that have been brought about due to the Covid-19 pandemic. At the same
time, it is necessary to quickly disburse public investment in the remaining
months of 2021. By the end of the first six months of 2021, the disbursement
rate for public investment was only 29.02% of the plan, so it is necessary to
accelerate public investment in the remaining months of 2021 to support the
economy. In case it is not possible to disburse according to schedule and
plan, the Government can reallocate this public investment for economic
relief activities. Policies to
support SMEs will focus on two types of support. Firstly, support liquidity,
defer taxes, fees, contributions of SMEs; financial support; job maintenance
and wage subsidies. Secondly, structural support is needed to help SMEs adapt
to the changing business environment and build resilience. Specifically, the
Government directed ministries and branches must quickly implement simplified
procedures for exemption, reduction, and postponement of payment of taxes,
fees, and contributions of operating enterprises in 2021. Supporting
businesses must restart business activities right after the end of this
fourth wave of the pandemic. The Government can support paying part wages
directly to employees for businesses that are operating with a commitment not
to reduce labor, especially those that use a lot of labor. As support
resources are limited, it is necessary to classify businesses that can
operate continuously. For example, businesses that are directly affected but
are able to continue operating should be prioritized for timely support by
various proposals such as postponement of payment of social insurance, land
rent, loan interest, and tax deferral. These enterprises can also provide
additional credit guarantees through commercial banks. The selection
of enterprises in each industry to support should have a certain order of
priority, based on two factors. First, recovery speed and second, a stable
level of output of products. Businesses that recover quickly will help
support the economy and from there have a spill over effect for other
businesses to recover. Thus, policies should have a focus on groups of
businesses, not spread out. Finally, and more importantly, it is necessary to
create a favorable business environment to help businesses quickly recover
from the pandemic. In addition,
it is necessary to develop a program to support businesses to cope with the
pandemic. Empirical studies show that enterprises with experience in
responding to natural disasters and epidemics will be able to recover labor
and output faster than inexperienced enterprises. Therefore, the Government
needs to develop programs to support businesses with information and
knowledge in preparing to respond to natural disasters and epidemics to
reduce risks. In addition, the Government should have policies to promote the
role of the private sector in the prevention and response to future events
such as the current Covid-19 pandemic. Maritime Administration of Vung Tau asks load reduction for Cai
Mep–Thi Vai Port The Maritime
Administration of Vung Tau City, on August 12, reported the review results
and proposed solutions to cope with cargo congestion at Tan Cang Cat Lai Port
in Ho Chi Minh City, which has also affected the whole Cai Mep - Thi Vai port
cluster in the neighboring province of Ba Ria - Vung Tau. According to
the Maritime Administration of Vung Tau, currently, many factories in the
Southeast region have stopped operations, so most of the imported containers
of machinery and materials all stay at ports because enterprises do not need
to pick them up to serve the production. Meanwhile, the imported containers
and empty containers of shipping lines are continuously transferred back,
causing warehouses at ports to be congested and overloaded. Currently,
the volume of goods is about 12,000 containers in the yard of Cai Mep - Thi
Vai Port and about 35,000 containers in Tan Cang Cai Mep Port and Tan Cang
Cai Mep International Port. If there is no specific solution, some ports will
have to suspend operations because the number of containers exceeds the
receipt and storage capacities. The Maritime
Administration of Vung Tau suggested that ports need to ask shipping lines to
commit to releasing imported containers in a short time and have preferential
policies if shipping lines fulfill their commitments and vice versa. Besides, it
requires synchronous coordination between agencies and departments,
especially the customs sector, to create favorable conditions for container
goods to move quickly to reduce congestion at ports in Ba Ria - Vung Tau
Province. VPBank's charter capital to reach 3.3 billion USD by 2022 By issuing
stock dividends and private offering from equity and issuing stocks for
foreign investors, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) is
expected to raise its charter capital to 75 trillion VND (3.3 billion USD). At an online
meeting with analysts and individual investors on August 12, VPBank’s leader
said that besides the recent plan to issue shares with a total rate of 80
percent, including 62.15 percent to pay dividends and 17.85 percent to be
issued from equity, the bank plans to increase charter capital through
sources like the sale of 49 percent of FE Credit's capital for nearly 1.4
billion USD and the private offering of 15 percent of capital for strategic
foreign shareholders. If these
deals are completed, VPBank’s charter capital will increase to 75 trillion
VND by 2022. This is even higher than that of State-owned banks such as
Vietcombank, BIDV and VietinBank, making it the bank with the highest charter
capital in the market. VPBank is
consulting shareholders in writing on the issuance of stock dividends and
additional issuance from the development investment fund and the reserve fund
for supplemental charter capital. Accordingly,
the bank is expected to issue a maximum of nearly two trillion new shares,
equivalent to the total issuance value of 19.76 trillion VND to increase
charter capital. Shareholders with 10,000 shares of VPBbank will receive a
total of 8,000 new shares, including 6,215 shares from dividends and 1,785
shares from equity. After the
issuance, the bank's charter capital will increase to nearly 45.1 trillion
VND. This is one of the three sources for the capital rise mentioned above. Regarding
business results, the bank’s leader said that its total revenue climbed 22.5
percent in the first six months of the year. Of which, net interest income
reached 18 trillion VND, up 17 percent./. Consumer rights protection programme approved Prime
Minister Pham Minh Chinh has approved a consumer rights protection programme
for 2021 – 2025 that focuses on the development of a consultancy and support
system for consumers. The Ministry
of Industry and Trade (MoIT) was assigned to be in charge of the programme. According to
Trinh Anh Tuan, Deputy Director of the MoIT's Vietnam Competition and
Consumer Protection Authority (VCCA), it works toward building, upgrading,
and connecting related consultancy systems; assisting consumers nationwide;
and developing a data system on consumer rights protection. The
programme aims at ensuring that 90 percent of complains and petitions are
received, advised and supported at State management agencies, social
organisations and providers of services and goods involved. The expected rate
of successfully tackled petitions is 80 percent. Under the
programme, at least 500 training courses in the nation and overseas for civil
servants and workers in charge of consumer rights protection at organisations
and businesses will be held. At least 60
provinces and cities nationwide are set to establish their own consumer
rights protection associations, while about 40 of them will develop networks
of social organisations for consumer rights protection in districts. Meanwhile, a
nationwide conciliation system on consumer rights protection will be set up
in accordance with the law. Official
data showed that, in 2020, the VCCA received more than 14,000 complaints and
consultancy requests, mostly on real estate, insurance, and consumption. A total of
89 percent of the petitions received via its hotline was supported due to a
limited number of operators./. Vinh Phuc province gives priority to supporting industry
development The northern
province of Vinh Phuc is adopting a number of mechanisms and
policies to attract investment in the development of supporting
industries, considering it as an important step to build a sustainable
industry. Hoang Thi
Thuy Lan, Secretary of the provincial Party Committee, said the province has
set a target that its supporting industries will become a part of the supply
chains with high value products in the production lines of large domestic and
international corporations by 2025. Besides
incentives policies from the Government, the province has also been focusing
on many solutions to promote the growth of supporting industries. The
provincial authorities have proactively created favourable conditions for
businesses such as investing in modern and synchronous infrastructure in
industrial parks and paying attention to administrative reforms. Enterprises
are facilitated to access capital and assisted in technology innovation and
transfer as well as enhancing productivity and quality. The province
will cover costs of organising the assessment and certification of the
capacity for enterprises engaged in supporting industries and support 70
percent of fees for holding seminars to promote domestic and foreign
investment in the field as well as payment for organising trade fairs which
aims to connect supporting industries. It will
subsidise 70 percent of training costs to improve the quality of human
resources to meet the requirements of the industry. According to
the provincial Department of Industry and Trade, the province currently has
nearly 240 enterprises operating in the field of supporting industries or
related to the industry. Most of them belong to the mechanical industry,
automobiles, motorcycles, garment and textiles, informatics, and building
materials. This is considered as a foundation for industries to develop
towards using advanced and highly competitive technologies and increasing the
localisation rate of key industrial products. Despite
being affected by the COVID-19 pandemic, the industrial production index
of Vinh Phuc in the first six months of this year still reached
over 145.91 trillion VND (6 billion USD), an increase of more than 26 percent
over the same period last year. Most of the
main products of the supporting industries have obtained high growth, in
which, the production of automobiles rose by 49 percent and electronic components
rose by 34 percent. Supporting
industries in Vinh Phuc have created jobs for tens of thousands of workers
with stable incomes. The average salary for manual labourers in
the industries is between 6 to 8 million VND per person per month while a technical
or skilled worker earns up to 15 million VND per month. Vietnam
Precision Industry 1 Co. Ltd. in Khai Quang Industrial Park, Vinh Yen city,
is an example. It is an enterprise with 100 percent investment capital from
Taiwan (China), specialising in the production of components and spare parts
for automobiles and motorcycles, medical equipment for domestic and export
markets. The
company's revenue has increased steadily from 2.7 trillion VND in 2015 to
nearly 4 trillion VND last year. It has generated stable jobs for 4,100
employees with an income of around 10 million VND per person per month. Jahwa Vina
Co., Ltd., a FDI enterprise in the Khai Quang Industrial Park, is
reported to obtain revenue of over 1 trillion VND in the first months of this
year despite the impact of the COVID-19 pandemic. It creates
jobs for more than 4,000 labourers with income between 6-8 million VND per
person per month. The company is striving to complete the goal of
producing about 300 tonnes of electronic components and 150 tonnes of
information technology components a year. Vinh Phuc
province has set the goal of having more than 50 enterprises engaged in
supporting industries that are eligible to become first-tier and second-tier
suppliers for large economic groups and at least 10 enterprises in the
industry that meet international standards and participating in the global
supply chains by 2025. Positive outlook ahead for local coffee exports to Morocco There
remains bright prospects moving forward for Vietnamese coffee exports to
Morocco due to the North African country having a huge demand for coffee,
especially unroasted coffee products, according to the Vietnamese Trade
Office in Morocco. This was
unveiled during an online consultation session regardin the Moroccan
market on August 12, an event which was jointly held by the Vietnam Trade
Promotion Agency and Vietnamese Trade Office in Morocco. Do Viet
Phuong, head of the Vietnamese Trade Office in Morocco, stated that over the
past decade two-way trade turnover between both sides has maintained its
growth momentum. Vietnam's key
export items to Morocco includes rice, peppers, canned pineapples, phones and
components, computers, coffee, seafood, spices, chemical products, garment
and textiles, and footwear. According to
a report released by the Vietnamese Trade Office in Morocco, agricultural
products make up 60% of total Vietnamese export turnover to the North African
nation. Domestic
enterprises have therefore been advised to boost their exports to this market
as a result of its political stability and notable social security in
the region. Furthermore,
the country also enjoys a favourable geographical position, as it is close to
Europe and located on the route which connects the Indian Ocean to both the
Atlantic and Mediterranean. These
factors will serve to open up greater opportunities for Vietnamese
agricultural products to gain entry into other markets throughout
Africa, the Middle East, and Europe. Moreover,
the enforcement of the African Continental Free Trade
Area (AfCFTA) agreement in January 1 has made Africa the largest free
trade area, a move which will be a favourable factor for Vietnamese goods as
they seek to penetrate the market moving forward. Phuong also
pointed out that Vietnamese goods are capable of reaching the mid- and
high-end segments in the Moroccan market due to their consumers being highly
appreciative of Vietnamese export commodities. However, he
also outlined a number of hurdles in exporting local agricultural products to
the market, including fierce competition from China, Indonesia, and India,
high import tariffs, and limited payment methods. Australia increases imports of Vietnamese shrimp Australia
increased its imports of Vietnamese shrimp products during the first half of
the year, while simultaneously decreasing its imports from Thailand and
China, according to details released by the Vietnam Association of Seafood
Exporters and Producers (VASEP). The latest
statistics compiled by the International Trade Center (ITC) indicate that
Australia’s shrimp imports during the opening five months of the year surged
by 40% to US$127 million compared to the same period from last year. In line with
this, Australian imports of Vietnamese shrimp throughout the reviewed period
soared by 93% to reach US$79 million, while imports from the Thai and Chinese
markets dropped by 4% and 31%, respectively. Most
notably, Vietnam, Thailand, China, Malaysia, and Brunei remain the five
largest shrimp suppliers to the Australian market, of which the nation took
the lead with its market share accounting for 62% of total imports, despite
having a higher price compared to its regional peers. Furthermore,
Thailand and China ranked second and third with market shares reaching 16%
and 10%, respectively. The
Oceania nation represents a potential shrimp export market in the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
bloc. Over the
past two years, the export value of Vietnamese shrimp being exported to the
Australian market has witnessed robust growth. Moreover,
the second quarter of the year saw 81 Vietnamese enterprises
participate in exporting shrimp to the demanding market, of which Minh
Phu Seafood Corporation led the way as the largest exporter. There were a
diverse range of shrimp exports to the Australian market in the first half of
the year, with white-leg shrimp and frozen black tiger shrimp making
up the largest proportion. Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan
Dan/Hanoitimes |
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