VIETNAM BUSINESS NEWS SEPTEMBER 2715:55 Vietnam’s seaports handle over 537.7 million tonnes of goods in nine months Vietnam’s seaports handled in excess of 537.7 million tonnes of goods in the first nine months of the year, posting a year-on-year rise of 3 percent, according to the Vietnam Maritime Administration. Despite the negative impacts of COVID-19 on some major ports in the southern region, the total volume of container cargo going through seaports maintained a double-digit growth rate of 15 percent compared to the same period last year to near 18.6 million TEUs. Of the figure, the volume of exports was estimated to hit over 6 million TEUs, surging 13 percent, that of imports over 6.1 million TEUs, up 18 percent, and that of domestic goods 6.3 million TEUs, up 13 percent. Although some seaport areas were put under strict social distancing measures in an effort to curb the spread of COVID-19, the volume of goods that went through those in Ho Chi Minh City expanded more than 7 percent, in Ba Ria-Vung Tau 5 percent, and in Hai Phong nearly 11.7 percent year on year. Under a freshly approved master plan on developing domestic seaport network over the next 10 years, with a vision towards 2050, Vietnam aims to develop a uniform system of modern seaports that provide high-quality services, meet needs for socio-economic development, and ensure national security and defence, maritime safety and environmental protection, and improving the economy’s competitiveness. It is expected to help the country fulfill its goal of becoming an upper-middle-income developing country with modern industry by 2030. The plan classifies Vietnamese seaports into five groups based on their geographical locations. About 313 trillion VND (13.74 billion USD) mobilised outside the State budget will be needed for its implementation./. Vietnam shares entrepreneurship experience with Algeria An international conference with the theme of “Algerian economy with a vision to 2030” was organised for the first time in Skikda province on September 25-26, aimed to promote the entrepreneurship among young Algerians. The conference was organised by the Algerian Youth Association, under the auspices of the Minister in charge of entrepreneurship in Algeria and the Governor of Skikda province, a southern locality which holds potential in oil, agriculture, tourism and seaports. It attracted a large number of local officials, business leaders and representatives of a number of embassies and diplomatic missions in Algeria such as Poland, Uganda and Zimbabwe. According to Abdelmalek Benlaouar, President of the Algerian Youth Association, the conference provided an opportunity to enhance the spirit of business among young people and enabled the emergence of a new generation of entrepreneurs and project leaders who have the capacity and ability to penetrate new markets. It aimed to realise the ambitions of young people, especially business owners who play an important role in promoting national production and exploring foreign markets, and can create a new impetus for the Algerian economy, especially in the post-COVID-19 period, he said. Benlaouar said the conference was an opportunity to help the country increase exports of non-petroleum products through the signing of trade and investment agreements. Addressing the event, Vietnamese Trade Counselor in Algeria Hoang Duc Nhuan talked about bilateral trade and investment relations between Vietnam and Algeria, sharing experience and information about the startup environment in Vietnam as well as measures of the Vietnamese government in supporting young people and start-ups in innovation and creativity, especially in the fields of science and technology, e-commerce, media and entertainment. Nhuan also had meetings with the Director of the Department of Commerce, the President of the Chamber of Commerce as well as businesses of Skikda province to discuss cooperation and investment opportunities between the two countries. An exhibition displaying local and foreign products in information technology, electronics, farm produce and traditional clothes also took place within the framework of the international conference./. Ha Noi boosts technology application in 'One Commune, One Product' programme Under the 'One Commune, One Product' (OCOP) programme, investment in technology is key to improving both product quality and the effectiveness of production. OCOP goods are highly localised products, often food, that come from a small specific area. In recent years, OCOP businesses in Ha Noi have made efforts to invest in applying technology to production, help improving product standards and raising product quality, under the OCOP Programme. Fourty-seven products from Ba Vi District have been evaluated and obtained a high ranking in the OCOP Programme. Of them, 34 products have achieved a 4-star rating as quality products such as; dairy products, ostrich sausage, vermicelli, and vegetarian products. Businesses in the district have utilised technology in breeding and processing. Nguyen Thi Mai, General Director of Ba Vi Dairy Farm Joint Stock Company said her company has worked with 20 dairy farming households in Ba Vi District. To ensure milk quality, the company and dairy farmers have developed a hygienic barn system equipped with an automated milking system. The company has also invested in advanced production lines to ensure high-quality dairy products. As a result, 10 out of 20 various kinds of dairy products have been recognised as 4-star products by the Ha Noi People's Committee. The company’s dairy products are currently sold in Ha Noi as well as neighbouring provinces such as Hai Duong, Hung Yen, Yen Bai, Bac Giang and Bac Ninh. Do Quang Trung, Vice Chairman of Ba Vi District People's Committee, said “Over the last months, to build and develop OCOP goods in Ba Vi, the district authority has implemented many solutions to support cooperatives and firms. After being certified as OCOP goods, all cooperatives and businesses now know how to apply science and technology into their production, to enhance product quality and output". Businesses in Dong Anh District of Ha Noi have also implemented technology into their production. As a result, many OCOP goods from the district have been exported, such as eco-friendly straws made from fruit and vegetables, director of the Song Hong Co-Op, Le Van Tam, said. Tam said "1,500sq.m of arable land has been turned into six growing areas by applying Israeli greenhouse farming technology, to grow organic vegetables and fruits to make the raw materials for the production of eco-friendly straws. Besides replacing plastic straws, the unique product is also a nutritious foodstuff with a unique taste. The straws are made from 100 per cent organic ingredients and the use of advanced production lines ensures good quality. Every day, his cooperative produces about 50,000 straws that are supplied to domestic supermarkets, coffee shops, airports and tourist companies, as well as foreign countries such as South Korea and Germany. Head of the Economic Office of Dong Anh District, Nguyen Van Thieng, emphasised that “firms and cooperatives in Dong Anh District have learned how to apply high-tech solutions to produce high-quality OCOP goods, allowing them to gain a firm foothold in the domestic market. As a result, the value of OCOP products has increased by 15-25 per cent." According to Nguyen Van Chi, Permanent Deputy Chief of the Hanoi Office of New Rural Development Program Coordination, “The application of science and high technology is a key factor in helping OCOP goods improved in terms of quality while stimulating competitiveness. To continue enhancing the quality of OCOP goods, Ha Noi will continue to support businesses, cooperatives and localities in applying technology, biotechnology, and scientific and technological advances into the production of agro and forestry products, especially regional specialities.” Online shopping rises 50% in Ha Noi during social distancing Online shopping through e-commerce platforms by consumers in Ha Noi rose 30-50 per cent in four social distancing periods, according to the city's Department of Industry and Trade. Acting Director of the department Tran Thi Phuong Lan said that supplies of goods have been ensured in the city to meet the demand of local residents amid the social distancing measures. The department has also rolled out measures to support farmers in selling their products, while allowing farm produce from 22 other cities and provinces to be sold in the capital city, she said, noting that over 200,000 tonnes of agricultural and aquatic products were consumed in only 10 days as of September 21. Along with creating optimal conditions for the transport of goods, the city has quickly conducted testing and vaccination on labourers working in the goods distribution system. So far, all of them have received at least one COVID-19 vaccine shot, said Lan. She said that the department has urged the diversification of sale methods, focusing on promoting e-commerce. Meanwhile, it has given advice to the municipal People’s Committee on the issuance of a set of safe production and business criteria, along with guiding local firms to devise safe operation plans. The department has also listened to ideas from local enterprises to make proposals to authorised agencies on solutions to remove obstacles facing them, especially those relating to capital, tax, goods transport and export. Once the pandemic is completely controlled, the department will give advice to the city's authorities to launch trade facilitation programmes to help local firms sell their products, she said. VCCI launches virtual workplace
platform on COVID-19 response solutions According to VCCI, given the complicated developments of the COVID-19 pandemic, businesses will have to live with the pandemic in the long run. Thus, it set up the Business Cooperation Council in Response to COVID-19 and coordinated with Facebook to build the virtual platform. The council aims to promptly update and reflect arising issues and difficulties facing the business community and to collect the community’s recommendations and suggest related policies and solutions to coping with COVID-19 to the Government and relevant agencies. It will create links among business leaders for cooperation, and information and experience exchanges to combat COVID-19 and sustain production and business operations. The platform works round the clock to collect enterprises’ feedback on their issues and proposals to the government and to provide them with consultancy. It will also help connect participating enterprises for experience sharing, mutual support, and trade promotion. All businesses can participate but only those who are chairmen, general directors, and directors of the businesses are eligible to interact on the platform. Interested representatives from enterprises can register on the council's website at https://covid19.vcci.vn. According to Nguyen Quang Vinh, General Secretary of VCCI and head of the council's secretariat, the VCCI-Workplace platform will allow fast and multi-dimensional information sharing and support in making timely decisions as well as more effective teamwork, helping to improve the cooperation between the council and members who are business representatives. Viet Nam to stay on dual-target virus strategy The government is to continue with the country's dual-target strategy, pursuing socio-economic development while keeping the spread of the novel coronavirus in check, said Prime Minister Pham Minh Chinh during an online meeting with local government leaders and the business community across the country on Sunday. "We cannot afford to commit all available resources to fight the virus. Conversely, we cannot put the people's wellbeing at risk for the sake of economic development," said the PM. The Government, therefore, is to focus on keeping COVID-19 at bay while implementing laws and protocols to help the business community resume and maintain operations. The government leader highlighted the business community's contribution to the successful effort to contain the virus in HCM City and other provinces in the Mekong Delta including Binh Duong, Dong Nai and Long An. The Government, for their part, has rolled out a number of policies to support businesses and workers affected by the pandemic such as Government Decree 105/NQ-CP to assist businesses, Government Decree 116/NQ-CP to assist workers and their employers. The Government has also required Vietnam Electricity, the country's main power provider, to offer a 10 per cent cut on power bills for cities and provinces that have had to go under lockdown. Several other major support policies are also on the way including Government decrees 52, 54, 80 to provide additional support to businesses with land-use fee reduction, tax payment deadline extension and assistance for small-and-medium-sized enterprises (SMEs). The PM said the pandemic was a particularly challenging time and that's why the country and its people must stand together to overcome adversity and turn disaster into opportunity by speeding up the Viet Nam digitalisation transformation. "We cannot thank you [the business community] enough. We intend to respond in kind with actions that show our appreciation for your confidence," said the Government leader. Since the beginning of the fourth outbreak of the virus (in late April), the PM has held numerous meetings and exchanges with businesses, domestic and international, to identify difficulties and limitations as well as to discuss solutions to address them. During the meeting, businesses voiced their support for a government initiative to reopen in the new normal, stressing the importance of a strategy to live with the virus. HCM City Real Estate Association (HoREA) asked the Government for additional interest cuts and access to new sources of finance as the real-estate sector, after a long struggle during the pandemic, was said to be at a breaking point. Nguyen Quoc Hiep, president of the Vietnam Association of Construction Contractors, called on the Government to help support construction workers and to issue safety measures to allow construction projects to continue in areas with low COVID-19-risk. The tourism sector, among the hardest hit by the pandemic, was especially concerned over the implementation of COVID-19 passports. Nguyen Quoc Ky, chairman of the board of Vietravel - one of the country's leading tour operators, said obstacles still remained in the implementation and usage of COVID-19 passports as there was no Central government guidelines on inter-province travel. "As things stand, we are pessimistic about the tourism sector's ability to recover. Especially when regional competitors and major markets are well on their way for a reopening," Ky said. In order to provide wider support to the business community, the Vietnam Chamber of Commerce and Industry (VCCI) has proposed the Government slash 30 per cent on business income tax for businesses with annual gross sales of VND300 billion or less instead of a similar proposal with a VND200 billion cut-off. VCCI also called for the Government to use the State budget to help bankroll expenses incurred by certain businesses to fight the spread of the virus. Businesses that properly implemented virus safety measures may be entitled to future reductions in their duties to the State budget. MoF proposes draft to cut corporate income tax The Ministry of Finance (MoF) has proposed a draft to reduce corporate income tax by 30 per cent to support pandemic-hit businesses for the 2021 financial year. The most important factor of the draft is that the corporate income tax cut will apply to all businesses if their total revenue does not exceed the VND200 billion (US$8.8 million) threshold in 2020. This means that most small and medium enterprises (SMEs) will be eligible for such tax breaks regardless of the number of employees and the actual financial loss due to the pandemic. Under the draft, newly-established businesses, newly-converted companies, merger and acquisition (M&A) companies and dissolved firms in 2020 are not included in the tax reduction of the fiscal year 2021. The ministry has also revised and supplemented regulations on how to determine the total revenue of businesses in the fiscal year 2021 to take them as a basis for businesses to be eligible for tax reductions. Notably, the total revenue of businesses will include income from sales of goods or services, or from other business activities. The total revenue will also consist of subsidised prices, surcharges and extras. The draft stipulates that the reduction of corporate income tax in the fiscal year 2021 will be calculated based on the total revenue of businesses. Businesses are responsible for self-determination of the tax amount to be enjoy the tax reduction. After inspecting and auditing, any businesses found not eligible for tax reduction will have to pay tax for the 2021 fiscal year and will be given penalties for administrative violations in tax procedures. The ministry said since the outbreak of the COVID-19 pandemic, it has conducted many incentives on taxes, fees and land rent to support COVID-hit businesses and citizens. However, the pandemic has had significant impacts on the activities of citizens and businesses, especially small and medium-sized enterprises, business households, individual businesses and companies in sectors including tourism, transport, accommodation and food services, cinemas, sports and entertainment and media. Therefore, the Ministry of Finance said that it is essential to conduct more incentives on taxes, fees and charges for citizens and businesses affected by the COVID-19 pandemic. Da Nang looks to economic recovery in fourth quarter Businesses in Da Nang will be offered a 50 per cent reduction in fees for COVID tests and given vaccines to boost economic recovery by the end of this year. Secretary of Da Nang City’s Party Committee, Nguyen Van Quang made the commitment at the Da Nang leadership-business dialogue with the participation of domestic and foreign direct investment (FDI) businesses on Friday. Quang said the city will soon reopen different economic activities and ease social distancing from October, provided that COVID-19 prevention and control measures remain in place. “The city administrations will build economic recovery scenarios for businesses to ready production plans after social distancing orders are lifted,” Quang said. “We always offer the best solutions in limiting pandemic-related damage for both domestic and foreign businesses in the city,” he said. “Revving up the vaccination programme and supporting businesses in testing and COVID-19 control will be prioritised from October to spark full operation at factories and industrial zones in the city." The city’s party chief also said 80 per cent of workers had received their first vaccine shots, and the second shot will be provided from early October. He stressed more flexible and smooth regulations and procedures will be offered to support the business community, residents and tourists. Quang said people will be given a QR Code to ease checks when they are travelling around the city. Da Nang, a tourism hub and key economic zone in central Viet Nam, has controlled its COVID-19 outbreak after a 20-day strict lockdown between August 16 and September 5, reducing the daily rate of infection from 200 cases to just a handful by late September. Vice chairman of the city’s People’s Committee, Ho Ky Minh, said 67 per cent of the city’s population had got the first shot of vaccine, while 10 per cent had been fully vaccinated. Minh said the city recorded 4,884 COVID-19 patients between May and September, but 87 per cent had been given the all-clear by September 24. A representative of the Japanese Business Association in Da Nang, Ikeda Naoatsu, said many FDI businesses want to resume full operations after suffering damage due to COVID-19 over the past two years. He said businesses lost profit and customers as social distancing and lockdowns prevented workers from travelling, leading to a shortage of staff on the production lines. Naoatsu, who is general director of Daiwa Viet Nam, asked the city to speed up vaccinations and end the requirements on travel permits. “We have been facing difficulties with travel permits as workers could not come to the factory. We could not complete procedures for the permits for thousands of workers quickly,” Naoatsu said. He asked the city to drop the travel permits, but maintain protection measures among residents and workers. Naoatsu said traffic limits from province to province had disrupted the supply chain as trucks could not carry material from other provinces to Da Nang. “We asked the city to review travel certificates or allow vaccinated drivers to leave the city. Cargo loading and unloading sites at inter-provincial checkpoints are provided, while free traffic in industrial zones should remain." He called for regulations on quarantine to be changed to allow entry of foreign experts and engineers. Kim Jong Bok, from LG Electronics, said staff had to work from home during social distancing, but poor internet connectivity caused issues. He said the company had difficulties in recruitment and exchanging staff between branches in Viet Nam due to travel regulations. “New staff from other provinces as well as those from Ha Noi and HCM City could not come to Da Nang. Meanwhile, equipment from our parent company in Hai Phong could not be transported to Da Nang,” Kim said. Up to 538 enterprises in Da Nang have permanently closed, while 2,200 others have suspended operation during the pandemic. Vice chairman of the city’s People’s Committee, Ho Ky Minh said at least VND6 trillion ($260 million) had been spent on reductions and exemptions of taxes and fees. He said revenue from tourism declined sharply in the first nine months this year with only VND2 trillion ($87 million) – a third compared to the same period last year. While the city’s state budget has collected only 69 per cent of its target at an approximate VND15 trillion ($652 million). At least 90 per cent of businesses called for a 50 per cent land rent cut; two or three years of debt payment extension as well as delayed payment of VAT, social insurance and two or three per cent reduction in bank loans. The city plans for economic reopening by easing social distancing regulations, travel, transport and trade from October when 100 per cent of the population has had at least one shot of vaccine, the city’s party chief, Nguyen Van Quang said. As HCM City reopens, businesses realise flexible is the way to go Many businesses in HCM City’s ‘green zones’ (safe zones) that have been allowed to reopen since September 15 have adopted flexible models to meet the market’s new requirements. Tung Minh, owner of a store that sells imported fruits in District 7, said the first thing he did on reopening his store was to start investing in online infrastructure and building a network of potential online customers. The store has started to receive orders via phone and website, he said. It connects closely with loyal customers, and through them introduces and markets its products to their relatives, friends and neighbours, he said. It also digitises product images, prices and origins to enable people to shop online, he added. Thanh Tam, owner of a shop that sells processed and packaged foods in Cu Chi District, said he has switched to receiving orders by phone and customers could come to pick up their products or get delivery at home. "By receiving orders by phone, the store can easily inform customers what products are available and unavailable. It is also convenient for customers to pay and ensure social distancing while shopping and other pandemic prevention measures." Lien Huong, owner of a pho eatery on Dien Bien Phu Street in District 3, said customers sympathised with eateries for the difficulties they faced during social distancing, and did not make high quality demands, and so with the city gradually reopening safely, eateries must strive to ensure quality and service. Saigon Co.op’s Co.opmart, Co.opXtra and Co.opmart stores in safe areas like districts 7, Can Gio and Cu Chi now serve customers after the city allowed people in such areas to shop at supermarkets. Some also adopt the shopping-on-demand method, with customers picking up products at the supermarket gate. Co.op Food convenience stores use buses to deliver purchases to ward-level response teams that do the shopping on behalf of residents. This not only reduces the number of people and time required to buy the goods, but also minimises the risk of infection, addresses transport difficulties amid a shortage of delivery people and ensures food hygiene and safety. Satramart - Saigon supermarket in District 10 has tied up with Be Group to sell 12 grocery combinations and also sells them on the G1 Mart app. According to insiders, though allowed to reopen, many business households, especially those selling food and beverages, in green zones are still quite cautious, opening only in the morning and serving mainly those who have ordered in advance. The city has been gradually reopening while still ensuring all safety criteria are met, according to its Department of Industry and Trade. Analysts cautious over market movements amid volatility Recent volatility on the global market has raised cautiousness among market experts about Viet Nam’s stock market movement this week. The VN-Index on the Ho Chi Minh Stock Exchange inched down 0.12 per cent to close Friday at 1,351.17 points. An average of 841 million shares was traded on the southern exchange during each session last week, worth VND21.7 trillion (US$952.3 million). MB Securities Joint Stock Company (MBS) said that in the last session of last week, the overall Vietnamese stock market decreased slightly, but stocks fell on a large scale as small and medium stocks continued to adjust, together with a sharp drop in liquidity, which showed cautious investor sentiment. Liquidity on HOSE on Friday decreased to VND16.7 trillion from VND21.8 trillion in the previous session, this was also the lowest level of liquidity in the week. The market had been moving sideways for the past three weeks amid volatile world stocks, MBS said. “Therefore, it is likely that the market will continue to fluctuate in a sideways trend in the range of 1,327 - 1,360 points as the cash flow becomes more cautious and disbursed in correction sessions,” MBS said. BOS Securities Joint Stock Company (BOS) said VN-Index might continue to struggle as the demand in the market showed signs of weakening. “Most likely, VN-Index will move sideways and accumulate within 1,345-1,355 points in the next sessions, before confirming the next trend,” it said. "Investors should give priority to monitoring the market's movements, limiting chasing when the market rallies strongly and strengthening risk control in the current portfolio," recommended BOS. According to Saigon-Hanoi Securities Joint Stock Company (SHS), the market corrected in the first two sessions of last week because investor sentiment was negatively affected by the Evergrande crisis, but quickly recovered after that when the stock markets around the world simultaneously recovered. SHS forecasts that this week VN-Index may recover to the next resistance area in the range of 1,375-1,380 points if the psychological support level of 1,350 points is conquered. In the negative scenario, if VN-Index loses the psychological support level of 1,350 points, the index may head to the next support zone in the range of 1,325-1,340 points. "Investors with a large proportion of stocks can wait for the recovery sessions to reduce the proportion," SHS recommends. Banking stocks gained the most last week with typical gainers of Saigon-Hanoi Bank (SHB), up 0.7 per cent, Asia Commercial Bank (ACB), up 1.3 per cent, Techcombank (TCB), up 1.7 per cent, Tien Phong Bank (TPB), up 2 per cent, Vietcombank (VCB), rising 2.4 per cent and Military Bank (MBB), gaining 3.1 per cent. They were followed by consumer services group with gainers such as Digital World Group (DWG), increasing 1 per cent, and Mobile World Group (MWG), rising 6.1 per cent. On the other side, a few industries lost ground. Steel stocks such as Hoa Sen Group (HSG) lost 2.4 per cent, Hoa Phat Group (HPG) fell 1.9 per cent, and Nam Kim Group (NKG) was down 1.3 per cent. Chemicals and fertilisers also performed poorly with losers such as Phu My Fertiliser (DPM) down 1 per cent, and Petro Viet Nam Ca Mau Fertiliser JSC (DCM) down 2 per cent. Lockdown chance to readjust retail The pandemic is continuing to hamper the development of retail centres in large cities, despite the positive future predicted for Vietnam’s consumer market by both international and domestic consultants. Amid the long social distancing, almost all retail centres have been closed for the past few weeks, with many utilising this time to repair and renovate their spaces. In Hanoi, the lockdown has also delayed the openings of several malls such as Vincom Mega Mall Smart City in South Tu Liem district, which may be opened at the end of this year, six months after the original schedule. In Ho Chi Minh City, the retail real estate market was predicted to see 170,000 square metres of new floor area come online in 2021. However, only Co.op Mart Truong Chinh in Tan Phu district was opened with 16,000sq.m in May. Plans for new retail centres in 2021, including the Socar Mall in Thu Duc and other neighbourhood shopping centres, are also unlikely to meet required occupancy rates for a launch. Many projects have also delayed construction or opening, even after finishing construction work. In addition, the latest outbreak and ensuing social distancing policies have limited new retail lease transactions as both landlords and tenants are waiting for the situation to improve. The market’s bright spot in 2021 was the opening of a 3,000sq.m centre by French sporting goods retailer Decathlon at Vincom Mega Mall Thao Dien in April and the latest outlet of UNIQLO in May. Meanwhile, domestic brands are struggling under financial pressure, with revenues depending solely on domestic demand. Due to lockdowns, it is unlikely that there will be any additional retail projects coming into operation by the end of the year. In addition, the pandemic is also delaying the entry and expansion of other international brands in Vietnam. According to CBRE Vietnam, 2019 saw the highest number of new retailers arriving in Vietnam, with more than 30 new entrances. The figure was 15 in 2020 and was expected to be 18 for the whole of 2021. However, so far, only some of them such as Robin May, Garmin, and Tory Brunch have actually entered the market so far. In Hanoi, the most noteworthy transactions in 2021 included brands like premium automobile supplier Jaguar Land Rover, which opened its first experience studio in Trang Tien Plaza in May and South Korean fashion brand Hazzys that set up a new store in Vincom Ba Trieu in June. In the first months of 2021, most tenants were optimistic and continued to show demand to expand store networks in Ho Chi Minh City, mainly targeting October-December to keep up with the peak festival season. However, due to the pandemic situation turning worse since the beginning of June, many shops and malls remain closed and wait for permission from the government to reopen. Retailers are expected to take at least three months to recover after the social distancing, and at least a year to get back to stable operation, according to Savills. Despite the difficulties, many retailers are laying plans to develop through e-commerce in Vietnam and abroad. In Ho Chi Minh City, increasing vacancies now allow brands that could maintain stable finances to take up positions that were previously highly contested. Spots on the prime retail streets of Ho Chi Minh City such as Nguyen Hue, Dong Khoi, and Ho Tung Mau are offering rental prices at 30-50 per cent discounts compared to early 2020. Meanwhile, others are making strategic investments and partnerships to beef up their retail offering once the economy recovers. For instance, Masan has bought a 20 per cent stake in the Phuc Long coffee and tea chain to set up more than 2,200 kiosks at VinMart+ convenience stores. Nova F&B, a subsidiary of Nova Group, has also entered a cooperation with the Mango Tree brand after partnering with JUMBO, Crystal Jade Palace, Gloria Jean’s Coffee, and other brands. Small businesses, on the other hand, are focusing on streamlining operations and cutting operating costs while shifting to e-commerce to retain some revenue. Investment plans under review for Ho Chi Minh City Beltway 4 The Government Office on September 19 issued Document No.6607/VPCP-CN on the direction of Deputy Prime Minister Le Van Thanh about the Ho Chi Minh City Beltway 4 project. Accordingly, he has asked the Ministry of Transport (MoT) to work with relevant cities and provinces to study and propose the investment plan and gather comments from relevant ministries for Ho Chi Minh City Beltway 4 to ensure its feasibility. Earlier in July 2021, Deputy Prime Minister Truong Hoa Binh, who has retired since, asked the MoT and relevant localities to speed up work on component projects with a focus on public-private partnerships. The Ho Chi Minh City Beltway 4 is expected to be 197.6km in length, running through Ho Chi Minh City and the four southeastern provinces of Ba Ria-Vung Tau, Dong Nai, Binh Duong, and Long An, joining the southern economic hubs. Ho Chi Minh City, Dong Nai, Binh Duong, and Long An are now among the most attractive investment destinations in Vietnam. In the first eight months of 2021, Long An ranked first in terms of total registered foreign direct investment with $3.6 billion, followed by Ho Chi Minh City with nearly $2.2 billion, and Binh Duong with around $1.7 billion. Vietnam to miss out on potentially lucrative opportunities if it delays reopening Foreign business associations in Vietnam have warned that slow reopening could cost Vietnam great opportunities to attract investment. Four leading foreign business associations in Vietnam including AmCham Vietnam, the US-ASEAN Business Council, EuroCham, and KoCham have recently shared its concerns and recommendations to Prime Minister Pham Minh Chinh. Accordingly, the associations said that Vietnam is missing out on investment opportunities that may not return due to the slow reopening. Investment will not increase without a clear plan for reopening and recovery. Even existing businesses have most investment plans on hold, given the current uncertainties. Potential new investors cannot visit without streamlined policies for entry of foreigners. "Vietnam will miss out on a huge opportunity to capitalise on diversification of supply chains away from China if it cannot demonstrate it is a reliable alternative. To maintain regional and global competitiveness, including compared to Malaysia, Indonesia, and Thailand, Vietnam must take action now," said the associations. In addition, they urge the government to reopen manufacturing to a “new normal” now. Businesses with proven track records and clear plans need to be enabled to take on more responsibility for their operations and worker safety and reopen as they are able, with post-implementation monitoring. Overtime caps need to be lifted to allow for the unique requirements of the manufacturing bubble models, and the need to meet pent-up demand when more normal manufacturing operations resumes. The manufacturing bubble models created in Ho Chi Minh City and in other provinces to allow continuity of operations during COVID-19 have been extremely useful as an interim measure. But the models do not work well for large, labour-intensive factories, such as in the footwear and apparel sector. And they are not sustainable long-term, from a cost, logistical, and worker health, safety, and morale perspective. Surveys that the associations have conducted show that at least 20 per cent of our manufacturing members already have shifted some production to another country, with more discussions underway. Many of their members have calls every night with regional and global headquarters deciding what customers to honour, which to turn away, and what production to shift. Once production shifts, it is difficult to return, especially once production lines have been expanded elsewhere. Therefore, it is crucial that businesses need a clear roadmap and date certain for reopening now. The representative of the associations said, "We support Vietnam's strategic policy direction to adapt to 'living with the virus safely'. We want to join hands together with you and provincial leaders throughout the country, particularly in Ho Chi Minh City and the Southern Economic Region and Danang, to reopen the economy safely, enabling economic recovery and a 'new normal'. That will mean moving away from Directive 15 or 16 soon, and avoiding returning to similar restrictive measures in the future." Vaccines are the key to enabling a safe reopening and economic recovery. The foreign business associations have been strong advocates of vaccine diplomacy for Vietnam. So far, the associations have welcomed donations of nearly 10 million doses of vaccines from member countries, and support a transparent, equitable, efficient, and safe distribution of vaccines, according to priority risk groups. As Vietnam moves toward a new normal, in addition to more vaccinations, it will be important to have country-wide coordination of policies, including for transportation of goods and people, availability of rapid tests, and policies to isolate and remove F0s rapidly to ensure worker safety and minimise the impact on operations. Uniqlo facing sourcing challenges as Vietnamese factories deal with COVID-19 Uniqlo is the latest big apparel retailer experiencing sourcing challenges because Vietnamese factory are struggling with the COVID-19 pandemic. According to the announcement of Fast Retailing, Uniqlo's parent business, a number of goods in its "Uniqlo U" collection that were supposed to be published in September and October had been postponed. The four new items were due to be released across Uniqlo’s home market in Japan, as reported by Reuters. The Japanese retailer outsources all products to its partner factories overseas. Among them, Vietnam is one of the group's key production countries in Asia. Due to the COVID-19 outbreak, most clothing manufacturers in Vietnam are currently overburdened with orders, yet they are experiencing labour shortages to meet the delivery schedule, particularly in virus-hit localities. This results in stock delays for Uniqlo. The group and its Vietnamese factory partners are reported to produce an annual output of $3 billion for export markets. Before the pandemic, the Japanese retailer also planned to increase output in the country. Besides Uniqlo, other global fashion retailers such as Adidas and Nike are also affected by the COVID-19 outbreak in Vietnam as their suppliers temporarily suspend operation. Wood export dips as country hit by virus outbreak The novel coronavirus has finally caught up with Vietnamese wood exporters, who have reported robust growth during the first half of 2021. According to the country's General Department of Customs, Vietnamese firms exported just shy of US$9.6 billion worth of timber and wood products in the first seven months of 2021, a 55 per cent increase year-on-year, an impressive feat during a global pandemic. The industry, however, appeared to have run out of luck since the beginning of the fourth outbreak recorded in the country in late April. During the first half of August, timber and wood products export plummeted by as much as 45.4 per cent compared to the same period last year to $373 million. The slowdown started in July when the country's timber and wood products export dropped by 14.4 per cent compared to June to $1.3 billion. Major export markets have been hardest hit. In July, export of timber and wood products to the US has fallen by 16.44 per cent, to China by 19.99 per cent, to France by 26.25 per cent, to Germany by 15.94 per cent and to Malaysia by 21.07 per cent. This shouldn't come as a surprise, said industry experts. "Since Government Directive 16 - a string of social distancing measures and mobility restrictions designed and implemented by the Vietnamese government to stop the spread of the novel coronavirus - went into effect, out of 600 HAWA members only 30-40 per cent managed to stay operational," said Nguyen Chanh Phuong, vice-president of the Handicraft and Wood Industry Association of HCM City (HAWA). "Those who have yet been forced to stop could only operate at 35-40 per cent capacity. Things looked even bleaker in neighbouring province Binh Duong - another major manufacturing hub of timber and wood products in Viet Nam - where even more firms were closed down," Phuong said. In a recent survey by the Association of Vietnam Timber and Forest Product (VIFORES) on 162 wood manufacturers in HCM City, Binh Duong, Dong Nai, Long An and Tay Ninh that employed nearly 68,000 workers, 52 per cent said they had been forced to close down with over 44,100 workers laid off. "It's very unfortunate because demand in our traditional export markets has shown signs of recovery but it doesn't look like we will be able to ensure supply for them, at least until the end of 2021," he said. For those who still managed to keep their doors open, things are getting dicey. In order to keep their operation running, firms must be able to enforce the 3 on-site rules: on-site production, on-site social distancing and on-site accommodation. This often comes with enormous additional costs associated with regular virus testing, providing workers with meals and beds in line with safe social distancing rules, all of which firms were ill-equipped and unprepared to do. "Cost to acquire a quick test typically ranges from VND280,000 or $12.3 [for firms with more than 100 workers] to VND350,000 [for one individual]. PCR test - which is slower to produce a result but tends to be more accurate - may cost up to VND2 million per individual," said a VIFORES representative. It quickly added up as firms must test thousands of workers with quick tests every three days and with PCR tests every seven days. The association said many firms were already at breaking point after almost two years of struggling to cope with the pandemic. It's unlikely that they will be able to hold out much longer. Retail sales of goods and services plunge in January-August The nation’s total revenue from retail trade and services reached over VND3 quadrillion (US$133.55 billion), down 4.7 per cent in the first eight months of 2021 compared to a modest 1.1 per cent decline seen in the same period of last year, the latest report from the General Statistic Office (GSO) has shown. In August alone, the total retail sales of goods and services saw strong declines of 34 per cent year-on-year and 10.5 per cent month-on-month to VND279.8 trillion as many localities had to implement strict social distancing measures and restrictions under the Government's Directive 16 due to the spread of the COVID-19 pandemic nationwide. In the eight-month period, retail sales surpassed VND2.49 trillion, accounting for 82.1 per cent of the total retail sales of consumer goods and services, 1.4 per cent lower than last year’s corresponding period, the GSO said. Reductions were seen in the sales of cultural and education products, down 9 per cent; home appliances (7.5 per cent); textile and garment (6 per cent) and vehicles (3.1 per cent). Localities recording strong retail sales decreases in the period due to the negative impact of the pandemic included HCM City with 14 per cent; the central province of Khanh Hoa with 8.1 per cent and Ha Noi with 2.1 per cent. Similarly, total retail sales of accommodation, catering services was estimated at VND254.3 trillion, down 20 per cent year-on-year or making up 8.4 per cent of the total revenue with significant declines recorded in many cities and provinces including Ha Noi and Binh Duong with 21.5 per cent; HCM City (20 per cent); Da Nang (14.3 per cent); Dong Nai (14 per cent); and Can Tho (8.9 per cent). Retail sales of travel and tourism services also experienced a strong slump of 62 per cent to an estimated VND4.5 trillion. Localities that posted the lowest revenue from tourism and services in the period were Khanh Hoa (89 per cent); Quang Nam (83 per cent), Thua Thien- Hue (64 per cent); Nghe An (67 per cent); HCM City (52 per cent); Ha Noi (50 per cent) and Hai Phong (47 per cent). Meanwhile, revenue from other services hit VND286 trillion, down 14 per cent or equivalent to 9.4 per cent of the total revenue. According to Phu Hung Securities Corp, the COVID-19 pandemic has caused difficulties and Viet Nam has not yet deployed vaccines for the entire population, which affects the purchasing power of consumers. Moreover, the income of a part of consumers that was reduced due to the COVID-19 pandemic has not been able to improve in the short term. The company estimates the growth rate of total retail sales of goods and services under the following two scenarios. In the first scenario in which vaccinations for the whole population are deployed in the third quarter of 2021, the growth rate of Viet Nam's retail industry could reach 9.6 per cent year-on-year In the second scenario in which vaccinations are implemented in the fourth quarter of 2021, the growth rate of Viet Nam's retail industry could reach 8 per cent year-on-year. A strategy approved recently by Prime Minister Pham Minh Chinh revealed that domestic trade is expected to contribute 15-15.5 per cent of national GDP by 2030. Under the strategy, Viet Nam expects to set up sustainable supply chains in the country that will ensure the effective implementation of regulations on food safety and quality, origin tracing, and environmental protection. It aims to ensure the fast and stable development of domestic trade, build the Viet Nam-made brand, protect the interests of both enterprises and customers while also meeting demand for socio-economic development. Total revenue from retail trade and services would average 13-13.5 per cent annually in the 2021-30 period and 12-12.5 per cent annually in the 2031-45 period, the strategy predicted. By 2030, revenue from e-commerce is set to account for 10.5-11 per cent of national retail sales with a growth rate of 20-21 per cent. It also said 40-45 per cent of small and medium enterprises operating in trade will take part in major domestic and foreign e-commerce platforms by then as well. To this end, the strategy emphasised the importance of improving local investment and the business environment. It said transforming domestic trade promotion and improving infrastructure for trade, especially in rural and remote areas, was key. Priority would be also given to improving infrastructure for trade especially in rural and remote areas, forming sustainable distribution channels for Made-in-Viet Nam products and training a high-quality workforce to meet the growing demand of global trade integration. Rubber exports increase but challenges ahead Rubber exports this year have exceeded a million tonnes worth US$1.68 billion, year-on-year increases of 27 per cent and 66.1 per cent, according to the General Department of Vietnam Customs. The Ministry of Industry and Trade’s import-export department said however exports had been hit hard since many businesses had to cease or reduce production as their plants were in locked-down areas or did not have enough workers. Besides, high freight rates, forecast to continue until next year due to the shortage of empty containers, also affected exports, it explained. According to the customs department, China remained the largest market, accounting for 67.4 per cent of Viet Nam's total rubber exports, followed by the EU and India. China bought 643,000 tonnes in the first seven months of this year. The EU bought 49,815 tonnes for $89.79 million, 71.4 per cent and 124.7 per cent up. Exports to India increased by 70.6 per cent in volume and 119.7 per cent in value to 47,363 tonnes and $85.5 million. The department said rubber exports to major markets were expected to grow thanks to rising demand there and their gradual economic recovery. In the domestic market, the price of raw latex had been increasing. VN’s shipping lines gear up to meet high demand The total volume of goods that passed through Viet Nam’s seaports has been growing despite continuous increases in container freight rates since the COVID-19 pandemic. The move has helped to create more motivation for domestic shipping companies to invest in new cargo vessels and renovate old ones to meet certain high-demand routes both domestically and internationally. In August, the International Gas Product Shipping JSC (GSP) purchased a 20,000 DWT oil tanker worth US$14.3 million. It is scheduled to receive another in September. The company had offered to sell 20 million shares to its existing shareholders with a view to raise its charter capital to VND560 billion (US$24.3 million) from VND360 billion (15.6 million), ensuring capital investment to purchase one more tanker. Last month, Hai An Transport and Unloading Joint Stock Company (HAH) signed a contract to build a 1,800 TEU container vessel. In April this year, HAH purchased two more container vessels. They are now in operation on international and domestic routes. In addition, the company has invested in more containers and the first batch was put into use from late May this year. The purchasing of containers offers more options to shipping companies facing a shortage due to the impacts of the pandemic. The company also sold its old vessels and purchased new ones to meet the rising demand of maritime transport. In April, Gemadept Joint Stock Company (GMD) launched a 248 TEU barge. This is one of the five barges Gemadept bought from SSMI Shipbuilding Company. The new investment has helped to raise transport capacity, saving costs, reducing shipping time while still meeting customer demand. Gemandept also bought six rubber type gantry cranes (RTG) to maximise cargo loading and uploading capacity at Cai Mep seaport. Hoa Phat Shipping Joint Stock Company, a member of Hoa Phat Group, also completed the purchase of two 90,000 TEU vessels in the first quarter this year for transportation of coal and iron ore. By doing so, Hoa Phat has been proactive in plans to import raw materials for its steel production factories and minimise the risks after the sudden rise in shipping costs. Hoa Phat group also plan to buy more vessels to serve the construction of Hoa Phat Dung Quat 2 iron and steel factory project in Quang Ngai Province. The project is expected to be built over the next three years and become operational in 2024. The outbreak of COVID-19 causes a massive disruption to the global supply chains and shipping costs skyrocketed around the world. The pandemic has prolonged the unpacking and rotation cycle of containers, while the recent rise in export goods headed to Europe or the US has caused a shortage of empty containers. Some shipping lines said that the number of shipments leaving Viet Nam for other countries had not fallen, and even increased on some routes, but freight prices had been higher due to the lack of containers. A recent report of Rong Viet Securities Joint Stock Company (VDSC) has showed that container port congestion and a lack of empty containers have stretched around the globe and has caused an 80 per cent increase in shipping costs since the beginning of 2021. Viet Nam's shipping industry has been also affected by the serve shortage of containers, causing price hikes for container rental fees and shipping costs. Industry insiders said that the purchase of new vessels and disposal of old vessels should make Viet Nam’s shipping industry more competitive and minimise the rising shipping costs for local exporters in the remaining months this year. In recent years, the total container traffic of domestic shipping companies has risen rapidly. The total volume of goods passed through Viet Nam sea ports has increased from 442 million tonnes in 2017 to 689 million tonnes in 2020. Deep-sea port systems have always played an important role in the shipping industry as the deeper draft and longer berths are an indispensable trend of marine economies. Experts at Rong Viet Securities said the total volume of goods passed via Viet Nam’s sea port system would rise as the vaccination rate increased across the country and Viet Nam still attracted a wave of investors shifting from other countries. Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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