VIETNAM BUSINESS NEWS AUGUST 5
Cập nhật lúc 09:51
Farm produce exports grow strongly despite COVID-19
Despite complicated developments of
the COVID-19 pandemic, export revenues from agricultural products have
increased strongly so far this year, greatly contributing to the country’s
economic growth. According to
the Ministry of Agriculture and Rural Development (MARD), with export
revenues of 28.6 billion USD, up 26.7 percent year on year, and import
turnover of 24.7 billion USD, the agriculture sector enjoyed a trade surplus
of 3.9 billion USD in the first seven months of 2021. Deputy
Minister of Agriculture and Rural Development Phung Duc Tien said that export
revenues of major agricultural products hit 12.2 billion USD, a year-on-year
rise of 15.1 percent, while earnings from forestry products rose 54 percent
to about 10.2 billion USD, seafood up 12 percent to 4.9 billion USD and
livestock increased 16 percent to 245 million USD. Particularly,
strong growth was seen in exports of product groups with revenues of over 2
billion USD, including rubber, wooden furniture and aquatic products, he
said. In order to
complete the target of about 44 billion USD in exports of farm produce in
2021 in the context of COVID-19, MARD has coordinated closely with
ministries, sectors and localities to roll out comprehensive measures to
adjust production plans and crop structure to ensure the highest
productivity. At the same
time, the sector will strengthen processing of the products and expand export
markets, while working to remove trade and technical barriers for Vietnamese
farm produce in foreign markets. The ministry
will foster connectivity among businesses, localities and Vietnamese
representative offices abroad to increase exports of agricultural products,
especially lychee and longan to the EU, UK, China and Japan, while making
risk assessments of cassava residue for exporting to China./. Container freight trains from Vietnam to Belgium help boost
railway logistics services Container
freight trains from Vietnam to Belgium will open up a new cooperation
direction to increase benefits of railway logistics services, Deputy General
Director of the Rail Transport and Trade Joint Stock Company (Ratraco) Nguyen
Hoang Thanh told the Vietnam News Agency (VNA). The first
train departed from Hanoi’s Yen Vien station on July 20 for Liege city of
Belgium, where the goods continued to be transported to Rotterdam of the
Netherlands by lorries. The second
train left the Yen Vien station on July 27, while the third and fourth are
expected to set off on August 5 and August 10. This is the
result of cooperation between the Vietnamese railway sector and Maersk Lines
of Denmark, Thanh said, adding that the Vietnamese side is in charge of
packing goods into containers at warehouses and transporting them to the Yen
Vien station and then to the country's border with China. Regarding
the issue that Vietnamese railways cannot operate a train on its own to
provide direct freight transport services to Europe instead of just serving
as an intermediary to supply logistics services, Thanh said that at this
time, it is very difficult for the sector to organise a rail transport route
from Vietnam to Europe. At present,
Vietnam's railway infrastructure remains limited, as it can only set up a
23-carrriage train while the Asia-Europe freight train must have a minimum of
41 carriages. Therefore,
Vietnam's railways must cooperate with other partners to ensure the necessary
conditions, he said. However,
Thanh said that cooperation with major businesses such as Maersk Lines – the
world’s largest container shipping company – will open up more opportunities
for Vietnam’s railway industry. Seafood industry urges vaccination for workers as 70 per cent of
factories are closed The Vietnam
Association of Seafood Exporters and Producers (VASEP) has just sent an
official dispatch to the prime minister and the Ministry of Agriculture and
Rural Development, requesting vaccination for their workers as more than 70
per cent of businesses had to halt production. Due to the
COVID-19 pandemic, many businesses and factories have carried out the “three
on the spot” mechanism, in which workers execute their tasks, take their
meals, and rest after work at the same place to keep safe. However,
businesses have found it extremely difficult to maintain stable production
while costs have skyrocketed considerably. According to
VASEP, 270 enterprises, mainly located in the Mekong River Delta and the
South Central provinces, have strictly implemented the "three on the
spot" model. Almost all
localities in the area have also directed businesses to only maintain their
operations if they can follow the “three on the spot” or “one road, two
locations” mechanism to prevent infections at factories and industrial parks. According to
VASEP, only about 30 per cent of seafood enterprises in the southern provinces
can comply with "three on the spot" production. The remaining 70
per cent had to close. Besides,
even though some factories can operate, they can only maintain active
staffing at 30-50 per cent while the rest had to quit or take unpaid leave. Truong Dinh
Hoe, general secretary of VASEP said that although fighting against the
pandemic is the top priority at the moment, it is still necessary for the
government to support businesses in maintaining production and the
circulation of essential goods and restore production and export. Apart from
people working at health facilities and related officials who have to come
into contact with people, the elderly, and people with underlying diseases,
workers in production in factories in industrial zones should also be
prioritised for vaccination. “Adding
workers at seafood processing plants to the list of people for immediate
vaccination will maintain both exports and production while securing jobs for
many workers, including farmers and fishermen exploiting the sea and
producing raw materials,” Hoe said. Besides,
VASEP suggested that the implementation of the "three on the spot"
model is only a temporary initiative that is not sustainable over a longer
timescale. Therefore,it is necessary to adopt a flexible plan for enterprises
that are temporarily suspending production so that they can resume production
by the end of the year and meet increased export orders. For example,
enterprises will actively coordinate with the Centers for Disease Control and
Prevention (CDC) to organise testing for their employees twice a month. The
test samples will be sent to the health agency, with those testing negative
receiving permission to pass through transport check points. The CDC will
also organise testing for enterprises once a month, thus ensuring each worker
is tested three times a month. Vietnamese dragon fruits seek export market in India, Pakistan The office
of the Ministry of Industry and Trade, on the morning of August 3, informed
the press that the Trade Promotion Agency in association with the Vietnamese
Embassy in India and the Vietnamese Embassy in Pakistan would hold an online
trade conference to introduce and promote the export market for Vietnamese
dragon fruits to Indian and Pakistanis partners. This event
is a part of the national program on trade promotion in 2021 to support
dragon fruit growing localities, and enterprises and cooperatives that supply
Vietnamese dragon fruits to update information on the current situation,
trends, and market demand, search and connect with buyers, distribution
systems, and importers in India and Pakistan. Thereby, it will strengthen the
export promotion of fresh dragon fruits and products from Vietnam to these
two potential new markets. The
conference is expected to take place on August 5. According to
the report of the Ministry of Industry and Trade, dragon fruit is grown in
many localities across the country. However, the capital of this agricultural
product is Binh Thuan Province. According to the Department of Agriculture
and Rural Development of Binh Thuan Province, the province currently has
33,750 hectares of dragon fruits, of which 11,000 hectares meet the VietGAP
standards, and 517 hectares meet the GlobalGAP ones. In 2020, the output of
dragon fruits harvested here reached nearly 700,000 tons. For a long
time, Binh Thuan dragon fruits have been mainly exported to the Chinese
market. Recently, the Covid-19 pandemic has affected the export of
agricultural products to China in general and Vietnamese dragon fruits in
particular. Some border gates stop customs clearance for some time to control
the pandemic, leading to a backlog of goods. Therefore, accelerating trade
promotion and seeking new markets for Vietnamese dragon fruit and
agricultural products is the current new requirement. Industrial property segment sees rising FDI despite new COVID-19
outbreak  Despite a
new outbreak of COVID-19 in Vietnam, the industrial property segment saw
positive signs with new industrial zones established and key industrial
projects beginning operations, according to a report by Savills Vietnam. This year
has witnessed new M&A deals and improvement in industrial land supply.
The largest manufacturing projects in the first half of 2021 came from Hong
Kong (China) and Singaporean investors that targeted northern Quang Ninh and
Bac Giang provinces. Vietnam’s
FDI inflows rose by 3.8 percent year-on-year to 10.5 billion USD in the first
seven months of 2021, with processing and manufacturing taking the lead,
raking in 7.9 billion USD, or 47.2 percent of the total, data from the
Ministry of Planning and Investment showed. The real estate came third with
registered FDI of 1.16 billion USD. “By region,
the North received the majority of newly registered manufacturing investments
with a substantial 1.97 billion USD, representing a 64 percent share,” said
John Campbell, Manager of Savills Vietnam’s Industrial Services. The South
followed with 728 million USD (23 percent), while the Central region
attracted 395 million USD (13 percent). In terms of
provinces, Bac Giang received the highest amount of newly registered
manufacturing capital with 589 million USD, closely followed by Quang Ninh
with 569 million USD, and Bac Ninh with 222 million USD. Representing the
South, Binh Duong came in fourth with 208 million USD. For foreign
investors, Hong Kong invested the highest amount of manufacturing FDI during
the period with over 852 million USD, accounting for a 27 percent market
share. Singapore was in the second place with 655 million USD (21 percent),
followed by China with 549 million USD (18 percent), and the Republic of
Korea with 330 million USD (11 percent). John said
the largest manufacturing projects in the first half of the year were from
Jinko Solar and Fukang Technology from Hong Kong and Singapore investing 498
million USD and 270 million USD in Quang Ninh and Bac Giang, respectively. Regarding
new projects, Logos Property’s 81,000-sq.m project in the Vietnam-Singapore
Industrial Park (VSIP) Bac Ninh 1 is expected to begin operation in the
fourth quarter of 2021. New player in the market, KCN Vietnam Group JSC,
acquired a significant 250-hectare land plot with an investment of 300
million USD, aiming to develop premium, sustainable factories and warehouses
for rent in Vietnam with a national portfolio spanning across Bac Giang, Hai
Phong, Hai Duong, Dong Nai and Long An. He also
noted that various new M&A deals have been inked this year. Boustead
Projects Co. Ltd., for example, singed an options agreement for the proposed
acquisition of 49 percent stake in KTG & Boustead Industrial Logistics
JSC. If successful, the partnership will consist of 13 real estate seed
assets amounting to 141 million USD in gross asset value covering about
840,000 sq.m of land and about 550,000 sq.m of gross leasable area, he added. ESR Cayman
Limited, the largest Asia-Pacific-focused logistics real estate platform, and
BW Industrial Development JSC (BW), the leading logistics and industrial real
estate developer and operator in Vietnam, have entered into a joint venture
to develop 240,000 sq.m in My Phuoc 4 Industrial Park near Ho Chi Minh City.
The partnership marks ESR’s entry into Vietnam, expanding the group’s Asia-Pacific
footprint in the high-growth Southeast Asia region./. Cashew nut exports projected to enjoy positive growth in third
quarter Vietnamese
cashew nut exports are anticipated to see robust growth ahead in the third
quarter of the year due to growing demand in both the United States and the
EU, according to the Ministry of Industry and Trade. Statistics
released by the General Department of Vietnam Customs indicate that the
country exported 50,000 tonnes of cashew nuts worth US$324 million in July,
representing a rise of 19.6% in volume and 33.5% in value compared to the
same period from last year. Throughout
the initial seven months of the year, the country shipped 324,000 tonnes of
cashew nuts worth US$1.97 billion abroad, an increase of 21.4% in volume and
14% in value compared to last year’s corresponding period. Despite
cashew exports to the US and EU markets enduring a decline, the export
proportion to the Asian market saw an increase from 28.02% in the second
quarter of last year to 33.59% in the second quarter of this year. Meanwhile,
the US reduced cashew imports from the Vietnamese market during the
past five months of the year, with turnover reaching US$341.61 million,
a decline of 17.7%. In contrast,
France increased its cashew imports from the Vietnamese market in the
reviewed period as turnover reached US$34.41 million, marking a rise of
36.2%. Moreover,
Japanese cashew imports from the nation also increased by 4.5% to reach
US$12.92 million, with the market share of Vietnamese cashew nuts as part of
Japan's total import value accounting for 38.97% during the opening five
months of the year. According to
industry experts, cashew exports are projected to record positive growth
moving into the third quarter of the year, with the US being the largest
consumer of Vietnamese cashew nuts, followed by France. Despite this
expected growth, the cashew sector is anticipated to face a number of hurdles
amid complicated developments relating to the fourth wave of the COVID-19
pandemic, including high transportation costs and a shortage of empty
containers. The
Import-Export Department has therefore recommended that the cashew industry
strive to fully tap into the Asian market, including China, Japan, and other
niche markets in the EU moving forward. Local firms
are therefore encouraged to use other forms of transportation, such as
utilising rail networks, in order to transport goods directly to the EU
market. FMCG groups made aware of trends Fast-moving
consumer goods groups are bearing the brunt of disruptions caused by pandemic
restrictions, leading to price hikes and product shortages in the market. Diana
Unicharm is one of the leading manufacturers in personal hygiene products in
Vietnam possessing well-known brands including Diana sanitary napkins, Bobby
diapers, and E’mos tissue brand. If the
blockages in the supply chain are not removed, the products will soon be in
short supply in the market, affecting health and hygiene, warned the company. Ho Chi Minh
City and other southern provinces only allow trucks with essential goods to
travel during the social distancing period under Directive No.16/CT-TTg
released in March 2020 on measures for preventing and controlling COVID-19.
However, due to the differences in classifying essential products among
localities, some fast-moving consumer goods (FMCG) manufacturers are facing
difficulties to move products within the southern region. In some
provinces, milk and other drinks were considered non-essential, making it
hard for businesses to deliver certain products to retailers. Last week,
the Ministry of Industry and Trade proposed the government to issue a list of
goods “prohibited from circulation” instead of a list of “essential goods”.
This proposal aims to remove issues for businesses in transporting essential
goods at this time. Like other manufacturing industries, FMCG groups are
required to maintain a COVID-19 bubble or the three-on-spot plan for its
workers to live, eat, and work at factories. This has put more pressure on
these businesses to maintain manufacturing activities and supply products to
end-users. Processed
food producer Vissan announced last week that it would cease operations. The
company has detected coronavirus infection cases among its workers although
it had established a COVID-19 bubble on site. Vissan is responsible for
nearly 29 per cent of the goods supplied to Ho Chi Minh City during the
social distancing period. Retailers are sourcing products from other
suppliers to make compensation for the shortage from Vissan. The
disruptions among FMCG manufacturers are likely to cause price hikes. As
reported by Wall Street Journal, Unilever was grappling with higher costs for
ingredients, packaging, and transportation, which would likely lower its
full-year profitability. Thus, the London-listed consumer goods giant said it
would step up price increases across the world, having already raised prices
1.6 per cent in the second quarter. Other producers, including Procter &
Gamble, have also warned of rising prices this year. In the
second quarter, Kantar Worldpanel Vietnam’s report showed that the increase
of average paid price for FMCG (+2-3 per cent) is higher than the previous
quarter and the average consumer price index (+1.5 per cent). However it is
still lower than the same period last year. Given the worsening COVID-19
situation with an all-time high number of confirmed cases in July, the report
said rising prices are inevitable as raw material costs increase due to
stricter lockdowns. This is more likely to elevate further in the next two
months. According to
Peter Christou, commercial director of Kantar Worldpanel Vietnam, because of
price increases of ingredients, logistics, transportation, and others,
producers cannot maintain current prices and may need to pass on price
increases to consumers. “They are
concerned that if they increase prices, retailers and consumers will have
negative reactions and cut back on their products or stop buying altogether.
They need to understand the price elasticity – at which point consumers are
willing to pay more for a given product by different consumer groups in order
to manage the risk,” Christou said. “This time, the impact is more severe,
with more cases and tougher lockdowns, and therefore the impact on household
finances and job security is greater because it impacts people’s ability to
go to work and do business, and therefore get paid.” According to
Kantar’s latest survey on consumer confidence in June, up to 40 per cent of
households in the country’s biggest cities are struggling. The lower-income
groups are even more affected with half of them facing financial restraint.
There will be a spending cut on luxury and less essential categories and a
downtrend in many other categories. In terms of
shopping behaviours, consumers started to stock up essentials such as
packaged foods at the end of May, but not at a level seen in 2020’s first
wave of coronavirus infections. Kantar’s data showed that the share of
minimarkets has grown to almost the same level as hypermarkets and
supermarkets in June. With new and even tighter restrictions together with a
more severe impact on people’s income, there will be changes in consumers’
daily routines, with potential new behaviours emerging in the long term.
Thus, FMCG producers will have to monitor the changes to adjust their
strategy during the pandemic, the survey concluded. E-commerce sees strong growth during pandemic The Covid-19
pandemic has shaken the core of many businesses and industries that are now
facing innumerable difficulties and challenges, with many struggling to stay
afloat even as the pandemic continues unabated. However,
during this extremely difficult phase, the financial industry has shown
immense resilience and still maintains growth largely due to a strong shift
towards online payment methods. This opinion has been shared and discussed a
lot recently by financial experts both globally as well as within the
country. Data shows
that in the first twenty days of the month the whole country implemented
Directive No. 16/CT-TTG, and the average transaction value through the
inter-bank electronic payment system increased by 8.85%. During the last four
months of 2020, domestic payments via bank cards increased by 26.2% in
quantity and 15.7% in value; and payments via internet channels increased by
3.2% in quantity and 45.7% in value. In particular, payments via mobile
phones increased by 189% in quantity and 166.1% in value, as compared to the same
period in 2019. This
positive growth continued until the end of November 2020, when the number of
payment transactions via mobile phones reached about 1,044 million
transactions with value of nearly VND 10.900.000 bn, an increase of 118.5% in
quantity and 121% in value, as compared to the same period in 2019. The
number of payment transactions via the internet reached nearly 421.8 million
with value of around VND 24.600.000 bn, up by 10.8% in volume and 24.4% in
transaction, as compared to the same period in 2019. According to
the latest statistics published by the State Bank of Vietnam, by the end of
April 2021, transactions via the internet channels increased by 65.9% in
quantity and 31.2% in value; transactions via mobile phones increased by
86.3% in volume and 123.1% in value; and transactions via QR Code channels
increased 95.7% in quantity and 181.5% in value. Some
statistics show that during the time of the Covid-19 pandemic, many people
had access to cashless payment methods for the first time. For example, in
2020 the number of registered users of Momo e-wallet were 23 million, an
increase by nearly two times compared to 2019. In 2020, the number of
transactions of Momo e-wallet crossed 403 million transactions, with
transaction value of about US$ 14 bn, an increase by 3.5 times compared to
2019. In 2020, the
number of new openings for bank cards also increased sharply. Domestic card
online payment transactions through the Vietnam National Payment Services
Joint Stock Company (NAPAS) also grew quite well compared to 2019, with the
number of transactions increasing by about 185% and the transaction value
increasing by around 200%. The pandemic
is being seen as a catalyst for explosive growth of mobile apps usage. Many
people agree that the growth of the non-cash payment field has grown vastly
during the Covid-19 pandemic. The pandemic has made many people more afraid
to use paper currency because cash is being believed to be one of the factors
that can spread the infectious disease. Moreover, as many businesses have had
to close down and people have to accept strict social distancing, it is much
more convenient to order for supplies online and pay online for almost all
goods and services. Vietnam has
currently around 79 payment service providers offering services via the
internet, besides also 44 service apps via mobile phones. Other than these,
many payment institutions are also connected to e-commerce exchanges. In the first
quarter of 2021, the growth rate of total value of e-commerce transactions
increased by 5.5 times compared to the fourth quarter of 2020. Accordingly,
non-cash payment channels via cards and e-wallets also increased due to the
fear of using paper currency by consumers. Moreover, before this trend took
off, e-commerce platforms had combined with payment units to deploy dual
incentives for users to prioritize electronic payments, which added to the
push for non-cash payment popularity. According to
a report by the Vietnam E-commerce Association (VECOM), the Covid-19 pandemic
has had a profound and deeply lasting impact on the economy and society,
including e-commerce platforms. Vietnam's e-commerce is expected to grow by
about 15% and reach a scale of about US$13.2 bn. During the Covid-19
pandemic, the online payment industry has continued to grow strongly. In only
the first six months of 2020, businesses recorded an increase of 81% in
domestic card payments and sales through e-commerce channels. However,
although non-cash payment methods have changed significantly, this change has
only occurred mainly in urban areas, focused more on technology savvy young
people. Although cash payments have declined, they are still the main form of
payment. Therefore, despite the growth of the non-cash payment system, more
efforts are still needed to establish its wide scale usage. Currently,
the legal framework to meet the requirements for new business models and
products and services based on technology for non-cash payments is also being
promoted. For example, the State Bank of Vietnam has just completed a draft
for a new Decree on non-cash payments and developed a Decree on a controlled
trial mechanism for Fintech activities in the banking sector to submit to the
Prime Minister for promulgation of Project to develop non-cash payment for
the 2021 to 2025 period, with a pilot implementation of mobile money. According to
Ms. Pham Chau Loan, Deputy Head of Digital Channel Development of Partners of
Vietcombank, the Covid-19 pandemic has had a strong impact on consumer
behavior which is seeing a radical shift. At this time, many people are
working from home and hence have limited contact with the outside world. In such a
situation, non-cash payment methods solve many problems. These methods are
now being considered as solutions to save the economy in the future, and for
consumer activities to continue to flow continuously and conveniently as
normal in future. In 2020, many economies saw sudden negative growth, but
Vietnam's GDP growth remained positive at 2.91%, which was partly due to the
growth of e-commerce platforms and e-payment methods. EVFTA, CPTPP bring about great economic benefits for Vietnam Vietnam has
enjoyed significant economic benefits, especially in terms of exports, from
new-generation free trade agreements (FTAs) such as the EU-Vietnam Free Trade
Agreement (EVFTA) and the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP), according to a report sent to the prime
minister by the Ministry of Industry and Trade. Thanks to
these FTAs, Vietnam’s exports to the European Union (EU) and member states of
the CPTPP have seen positive achievements despite the complicated Covid-19
situation, the ministry said in the report. Data of the
ministry showed that two-way trade between Vietnam and the EU reached US$55.4
billion in 2020, falling 1.8% from 2019. The country exported goods worth
US$40.1 billion to the EU, while it imported US$15.3 billion, leading to a
trade surplus of US$24.8 billion last year with the bloc. Vietnam’s
biggest importers among the European countries in 2020 were Belgium (US$2.3
billion), Germany (US$6.6 billion), the Netherlands (US$6.9 billion), France
(US$3.3 billion) and Italy (US$3.1 billion). The
country’s key products for exports to the EU were footwear, plastics, rice,
textiles and garments, and vegetables and fruits. Meanwhile,
two-way trade between Vietnam and member states of the CPTPP amounted to
US$79 billion in 2020, increasing 1.9% year-on-year. Vietnam
exported goods worth US$38.7 billion to these countries and spent US$40.3
billion on imports, leading to a trade deficit of US$1.6 billion last year. Particularly,
the country’s export value to Mexico and Canada surged 11.8% and 12.1% year-on-year,
respectively. Vietnam’s
key products for exports to member states of the CPTPP included seafood,
footwear, textiles and garments, peppercorn, wood and wooden products, and
machinery and equipment. The EVFTA
and CPTPP have also helped Vietnam attract more foreign direct investment
(FDI). According to
the Ministry of Industry and Trade, FDI of the CPTPP members to Vietnam
reached US$11.6 billion in 2020, soaring 23.4% compared with 2019. Meanwhile,
EU investors poured US$1.4 billion into the country last year, falling 6.7%
year-on-year. However,
data of the Vietnam Chamber of Commerce and Industry (VCCI) showed that only
29% of Vietnamese companies that export goods to CPTPP member states have
enjoyed tariff incentives as regulated by the agreement. Besides,
only 38 of 63 cities and provinces in the country have import/export
activities with the EU. VCCI
suggested that trade and investment potential from the EVFTA and CPTPP
remains high and Vietnamese enterprises should try harder to take advantage of
these FTAs. Chinese smartphone brands accounts half of Vietnam market in
Q2/2021 Vietnam’s
smartphone shipments witnessed 11 per cent growth on-year in the second
quarter, with Chinese original equipment manufacturers (OEMs) capturing
around half of the market, according to Counterpoint Research’s Monthly
Vietnam Channel Share Tracker. Compared to
past seasonal trends, the market performed well during the first two months
of the quarter while the third one witnessed a drastic fall in shipments as
Vietnam faced its highest ever spike in COVID-19 cases. Samsung
topped the market with a 37 per cent share riding on the Galaxy M31, Galaxy
A12, and Galaxy A02s as top models. Xiaomi captured the second spot with 17
per cent driven by the Redmi 9 series and Note 10 series. OPPO and vivo took
the third and fourth spots. The OPPO A series smartphones were the volume
driver for the brand while the Y-series grabbed the share for vivo in
Vietnam. Apple continued to do well in Vietnam and became the fifth-largest
smartphone brand in the market. Vietnamese consumers hold a greater
aspirational value for Apple, which helps the brand. Smartphone
shipment share of Top 5 brands in Vietnam, Q2/2021 against Q2/2020. Source:
Counterpoint He added
that online channels were increasingly playing a significant role in the
market, especially after the pandemic. With COVID-19 restrictions shutting
down offline stores, the share of the online channel rose on-year during the
quarter to capture 14 per cent of the total smartphone market. Vietnam has
already started its 5G trials, with Viettel becoming the country’s first
operator to do so. Vinaphone and VNPT will follow suit. Although it may take
a couple of years to have a countrywide 5G network, we can consider this a
good start. Currently, 5G capable smartphones have a 14 per cent share of the
Vietnamese market. We can expect it to grow in the coming days as operators
are gearing up to launch 5G services. Although
Vietnam is currently going through a fresh wave of the
pandemic, Counterpoint expects the country to bounce back soon as
it has contained the surge quite well in the past. Habeco reports decrease in revenue in second quarter The brewer
Habeco reported bleak business, with revenue dropping in the second quarter
due to the fourth wave of the COVID-19 pandemic. As a result,
its gross profit was VND511 billion ($22.2 million), down 10 per cent
on-year. Amid the
ongoing pandemic, the group’s expenses for operation and management decreased
over year, however, there has been a marked rise in sales expenses, including
advertisements, promotion programmes, and delivery. In general,
in Q2, the brewer acquired VND205 billion ($8.91 million) in pre-tax profit,
down 25 per cent on-year. Profit was four times higher than in Q1, however,
it is the lowest second-quarter profit of the company since 2015. In the first
half, Habeco’s net revenue and gross profit reached VND3.32 trillion ($144.34
million) and VND229 billion ($9.95 million), up 15 and 57 per cent on-year,
respectively. Habeco's H1
business results are brighterthan last year because in H1/2020 the company
suffered a loss of VND100 billion ($4.34 million) due to the dual impact of
the pandemic and Decree No.100/2019/ND-CP on administrative sanctions for
road traffic and rail transport violations, applicable since January 1, 2020. Habeco is
the second largest domestic brewer in Vietnam, following Sabeco. This brewer
currently holds 18.4 per cent of the market share. Tax cuts proposed to support businesses rocked by pandemic The Tax
Policy Department under the Ministry of Finance is drafting a proposal on tax
reduction to support individuals and businesses affected by the COVID-19. (i) Reducing
30 per cent of corporate income tax (CIT) payable in 2021 for enterprises and
organisations as applied in 2020; (ii)
Reducing 50 per cent of payable tax amount arising from production and
business activities in the third and fourth quarters of 2021 for vulnerable
business households and individuals doing business in all industries; (iii)
Reducing 30 per cent of value-added tax for enterprises and organisations
operating in a number of service sectors; (iv)
Exemption of late payment interest arising in 2020 and 2021 for enterprises
and organisations incurring continuous losses in 2018, 2019, and 2020. It is
estimated that the implementation of solutions proposed can reduce budgetary
revenue by about VND20 trillion ($869.57 million). In addition,
the MoF is also studying and reporting to the prime minister several
solutions to reduce land rents for 2021. "The
reduction of taxes, land rent, and late payment interest will put pressure on
the state budget, but in the long term, it will have a great impact on the
whole society, demonstrating the government's companionship to support
vulnerable businesses," a representative from the MoF said. HCMC’s retail sales drop sharply in July HCMC’s total
retail sales of goods and services in July were estimated at VND51,576
billion, dropping 27.7% from June and 42.2% compared with the same period
last year. The retail
sales of goods alone were VND35,780 billion, falling 20.1% month-on-month and
25.1% year-on-year. Revenue from
catering and accommodation services reached VND1,156 billion, falling 52.9%
month-on-month and 84.1% year-on-year. Of the
figure, revenue from accommodation services dropped 26.8% month-on-month and
73.7% year-on-year to VND123 billion. Meanwhile,
revenue from catering services dropped 54.8% month-on-month and 84.8%
year-on-year to VND1,033 billion. The city
earned hardly anything from travel services as the tourism industry has been
shut down due to the raging Covid-19 pandemic. Revenues
from other services were estimated at VND14,640 billion, declining 39.4% from
the previous month and 56.5% compared with the same period last year. Of them,
revenues from real estate services reached VND9,831, falling 40.3%
month-on-month and 53.2% year-on-year. The city’s
total retail sales of goods and services from January to July were estimated
at VND583,192 billion, falling 1.8% compared with the same period last year. Of the
figure, the retail sales of goods reached VND335,788 billion, accounting for
57.6% of the total and increasing 2.2% year-on-year. Specifically,
the sales of food and foodstuffs rose 5.9% year-on-year and accounted for
17.6% of the total retail sales of goods. The sales of
household appliances, tools and equipment fell 0.6% and accounted for 14.7%
of the total, while that of oil and gas rose 8.2% and accounted for 9.4%. Data of the
General Statistics Office showed that the country’s total retail sales of
goods and services from January to July amounted to nearly 2.8 quadrillion,
increasing 0.7% compared with the same period last year. Excluding inflation,
the total retail sales of goods and services in the seven-month period fell
0.74% year-on-year. In July
alone, the total retail sales of goods and services of the country reached
VND339,000, falling 8.3% from June and 19.8% from the same period a year ago. Food suppliers channel logistics resources to address demand Supermarkets,
pharmacies, and logistics firms gearing up to supply food to consumers are
now scrambling with the large amounts of undelivered orders amidst a shortage
of shippers. About 12
tonnes of fresh vegetables and 6,000 eggs have been sold every day across 66
Guardian stores in the city. Although it has faced obstacles in mounting the
operation, the team is committed to ensuring the quality of fresh produce in
their inventory and pricing them within the cap set by the local authorities,
as reported by Retail Analysis. Another
company, VinShop, has also joined the same initiative. VinShop is a mobile
app allowing grocery store owners to get hundreds of products from suppliers
in one order within a day. With 5,000 points of sale in the city, it has
quickly arranged its supply chain to meet the growing demand for fresh
produce. Vo Duy Phu,
chief of Growth and Marketing at One Mount Distribution, which owns VinID
& VinShop, told VIR, “VinShop has heavily invested in technology
infrastructure, the warehouse system, and also an extensive delivery team,
helping us to speed up progress and set up the supply chain for fruit and
vegetables within just a few days. However, our grocers do not have much
experience and competitive advantages in selling such items. Therefore, they
have to gradually learn how to preserve and sell the items properly to their
customers.” Meanwhile,
Nhat Tin Logistics is actively channelling all its resources to participate
in the programme. General manager Nguyen Van Tu said, “Since July, Nhat Tin
Logistics has implemented price-stabilisation points to sell fruits and
vegetables at its post offices. The initiative aims to facilitate consumers
to buy food at reasonable prices so that people can feel secure during social
distancing. Thanks to the citywide network of post offices and a fleet of
hundreds of trucks, Nhat Tin Logistics can provide about 5-10 tonnes of
fruits and vegetables per day to consumers.” Tu noted
that the company is preparing to launch mobile points of sale named Mobile
Post, an improved truck model that functions and operates like a mobile post
office selling various types of goods. The new solution will make shopping
more convenient and bring essential items closer to consumers during the
pandemic. After
solving the problem of ensuring a smooth supply chain from the suppliers to
points of sale, many supermarkets and retail chains continue to face new
difficulties in distributing goods to consumers because delivery services are
being tightened. According to
Saigon Co.op, the volume of goods at points of sale is gradually stabilising
and starting to increase when the transportation and gathering of goods from
provinces to Ho Chi Minh City has been more convenient than at the beginning
of the implementation of social distancing. However, the backlog of online
orders is still quite large and the delivery of goods to customers is also
facing a lot of issues due to new regulations narrowing the list of goods to
be delivered. Nguyen Vu
Diem Thi, marketing director of Saigon Co.op, said that a list of more than
100 essential goods will be sent to areas in need. Each area will send a
focal point to record the needs of the people and then aggregate them into an
order. Saigon Co.op will deliver goods to the focal point to redistribute to
individuals and households in locked-down and quarantined areas twice a week. The AEON
supermarket system has also decided to suspend online sales in the southern
region from July 26 due to difficulties in finding shippers. AEON Vietnam
supermarkets are focusing on processing old orders of customers ordered by
phone, messages, and app, and stopped receiving online orders, including
purchases by phone and through Grab or Now applications. “Completely
meeting people’s online shopping needs in the context of applying social distancing
measures has become a huge challenge for supermarkets,” said a representative
of AEON Vietnam. To address
the need for essential goods, AEON organised nine mobile selling outlets in
Ho Chi Minh City from July 27, double compared to the previous week and
providing more than 10 tonnes of essential goods to hundreds of households in
the three districts of Tan Phu, Binh Tan, and District 6. Foreign lenders offer up new capacities in Vietnam Taiwanese
and South Korean financial institutions are pinning their faith on Vietnam’s
equity market thanks to the tremendous growth opportunities, underpinned by
the greater demand and skyrocketing liquidity in the country’s stock exchange
landscape. The 12-month
unsecured syndicated loan package, with preferential rates, is slated to be
disbursed in two different phases. Particularly,
Union Bank of Taiwan and Taipei Fubon Commercial Bank are the mandated lead
arrangers and bookrunners of the deal. Last
December, SSI broke fresh ground when the brokerage signed a mortgage loan
agreement of $85 million with a group of nine foreign banks, led by
Taipei-headquartered Union Bank of Taiwan. Previously
in 2019, SSI also wrapped up a $55 million loan from a group of foreign
lenders led by Bank SinoPac to become the first security company in Vietnam
to access unsecured foreign loans. In mid-May,
a consortium of seven Taiwanese financial institutions, led by First
Commercial Bank, earmarked a syndicated loan package of $44 million to Ho Chi
Minh Securities Company (HSC). The
syndicated loan for HSC is the first that First Commercial has made since the
bank’s establishment of its Ho Chi Minh City branch. A bank representative
said, “First Commercial and partners appreciate HSC’s firm position in the
domestic market, with sustainable growth, a foundation of financial and risk
management meeting international standards. This loan will help HSC continue
to implement its development strategy in the coming years.” In April, a
group of foreign banks, including Taipei Fubon Commercial Bank Vietnam,
Cathay United Bank Vietnam, and Woori Bank Vietnam (Bac Ninh branch) rolled
out a $60 million syndicated loan for VietinBank Securities – the brokerage
arm of state-owned lender VietinBank. Woori Bank specifically provided $50
million, while Taipei Fubon and Cathay United provided $10 million
altogether. In March,
VietinBank Securities also successfully secured a $30 million syndicated loan
with a 12-month tenure from a group of four Taiwanese lenders. These types of
deals would lay a concrete foundation for the brokerage to boost its
activities in terms of margin lending, international loan advisory, and
financing arrangements. Besides loan
contracts, Taiwanese exchange-traded funds (ETFs), such as Fubon FTSE Vietnam
ETF, have also increased their footprint in the Vietnamese equity landscape.
As of July 26, the fund’s scale reached nearly $566 million, becoming the
most active ETF in the country. Nguyen Ngoc
Anh, director of Investment Banking Division of SSI, told VIR, “Unsecured
syndicated loans which involve a consortium of lenders is having a real
moment here in Vietnam thanks to the domestic stock market’s tremendous
growth opportunities.” “However, foreign
financial institutions also often grant unsecured credits based on borrowers’
financial soundness, reputation, transparency, future outlook, potential
growth, and how their propositions outweigh others competitors.” Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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