VIETNAM BUSINESS NEWS SEPTEMBER 10
10:31 Viet Nam's
benchmark VN-Index bounced back yesterday after a two-day drop as blue chips
recovered, especially aviation shares. On the Ho
Chi Minh Stock Exchange, the VN-Index increased 0.78 per cent to close at
1,343.98 points. The southern market's index lost nearly 1 per cent in the
two previous sessions. There was no
surge in money flow in the market as nearly 643 million shares worth VND19.6
trillion (US$852 million shares), a low level since the beginning of
September. Blue chips
rebounded yesterday. Twenty-one of the top 30 shares by market value and
liquidity gained value, of which Mobile World Investment (MWG) was the most
influential share on the VN-Index. MWG climbed
6.7 per cent to VND118,900 ($5.17) per share. Aviation
enterprises also moved positively. The national flag carrier Vietnam Airlines
(HVN) leapt 6.9 per cent while Vietjet (VJC) increased 3.5 per cent. They
were also two of the top 10 shares pulling the VN-Index most. Many banks
also bounced back with popular names such as BIDV (BID), Vietinbank (CTG),
VPBank (VPB), Techcombank (TCB), Military Bank (MBB) and Asia Commercial Bank
(ACB) gaining between 0.4 per cent and 2.3 per cent. On the other
side, heavyweights such as Vingroup (VIC), Vinhomes (VHM), Vinamilk (VNM) and
Sabeco (SAB) still sank into the red. According to
Maybank Kim Eng (MBKE), the market will face challenges in September when
COVID-19 has brought the economy to a halt, thus the general sentiment of
investors has now turned to be defensive. "However,
with better vaccination roll-out in the fourth quarter and 2022, Viet Nam is
expected to be able to reopen from October and the economy can rebound
strongly from the third quarter decline," it said in a September report. MBKE's
analysts expect the VN-Index to consolidate in the longer term which will
offer opportunities to buy good stocks at very reasonable valuations. On the Ha
Noi Stock Exchange, the HNX-Index extended its rallying streak to 10
consecutive sessions, rising 0.91 per cent to end at 350.44 points. Liquidity
continued to decline, however, to just 124 million shares worth nearly VND2.6
trillion. Vietnam holds upbeat growth potential despite COVID-19: VEIL Vietnam’s
first half growth demonstrates the underlying strength of the economy, which
will provide a platform for the country's growth once its new COVID-19
outbreaks are contained, said Stanley Chou, Chair of the Vietnam Enterprise
Investments Limited (VEIL). Chou said in
his statement issued on September 8 that the economy remained resilient in
the first half of 2021, posting GDP growth of 5.6 percent, despite being
negatively affected by two new waves of the virus. The
statement said the key driver in Vietnam's economic performance for the first
six months was manufacturing, which expanded by 8.4 percent on-year. This was
reflected in robust trade numbers, in which exports increased by 28.5 percent
to 158 billion USD and imports increased by 36.3 percent to 159 billion USD.
Increased imports supported production and much of the surge came from
inventory restocking. The resulting trade deficit was 1.5 billion USD and is
widely expected to be reversed in the second half of 2021. According to
VEIL, the Vietnamese stock market was among the top performing indices in the
world in the first half of 2021 and hit an all-time record high of above
1,400 points in June 2021. Against such
backdrop, VEIL rose strongly by 42.1 percent in the period and is ahead of
its reference index, VN-Index, by 13.3 percent. Chou stated
VEIL believes that in the long-term, Vietnam still offers one of the
strongest structural growth outlooks among developing markets, led by
industrialisation and urbanisation./. Action urged to lighten the load for seafood groups
The seafood
sector is clamouring for further governmental support as production costs
skyrocket in the face of extra testing and safety measures. On August
28, the government issued Resolution No.97/NQ-CP to support power tariff and
electricity bills reduction for seafood processing enterprises, vegetable
processing enterprises, and export manufacturing enterprises with a 2020
export turnover of more than $1 billion each. The
conditions to receive the reductions involve operational production
facilities located in cities and provinces which are implementing social
distancing. Accordingly, eligible businesses will enjoy a 10 per cent power
tariff discount before tax on bills within three months in invoicing time
from September to the end of November. “The
pandemic has caused heavy damage to the aquaculture sector. Therefore, we
need supporting to maintain production and reinvest,” said Truong Dinh Hoe,
general secretary of the Vietnam Association of Seafood Exporters and
Producers (VASEP). “Reduction of electricity bills will support the recovery
of the chain of production and export.” Previously,
the Ministry of Planning and Investment also proposed that the government
should support a maximum of VND15 billion ($660,500) for an aquaculture
project to build infrastructure; and a maximum of the same amount for
enterprises with ships providing fishing logistics services. Commenting
on the aid, a representative of Sao Ta Foods JSC appreciated the government’s
concern. However, he told VIR, enterprises need even more help to keep up
with the pace of operations. Sao Ta Foods
is amongst a modest number of seafood producers that still maintain
operation. The representative said that although its factories in the Mekong
Delta province of Soc Trang are running, workers in affected areas are not
allowed to go to work, so Sao Ta cannot reach its normal capacity. “Our factory
is located in a safe zone in the province so we are allowed to continue
production. But our capacity will only be 80 per cent of the usual because we
lack workers. Moreover, to ensure safety, the factory has to carry out
medical tests for at least 20 per cent of its workers every three days, which
adds more costs,” he said. Meanwhile,
Thuan Phuoc Seafoods and Trading Corporation based in the central city of
Danang is struggling with high testing costs while its factories’ operation
only works at 30 per cent capacity. “If the
factories are not working at full capacity, production costs will be much
higher than usual. Our desire is to ensure all of our workers get vaccinated
to keep up with production and reduce costs,” Le Thi Minh Thao, deputy
general director of Thuan Phuoc Seafoods and Trading Corporation said. She said that
seafood producers need more support such as on bank interest rates and union
dues. “It is good if social insurance agencies can help us pay wages to
underemployed workers in lockdown areas. Furthermore, we are bearing a high
social insurance fee, so it is useful to spend accumulated insurance funds to
support us,” she added. Statistics
from VASEP showed that, in August, only about 30-40 per cent of seafood
producers in the southern provinces were operating with less than half staff,
causing the average production capacity reduced to 40-50 per cent compared to
previous months. Also, VASEP
forecast that seafood exports in September will continue to decrease by at
least 20 per cent to about $660 million in value. After September, if enough
workers are vaccinated and producers can return to normal production, exports
in the last three months of the year will recover slightly and could achieve
$8.5-8.6 billion. Phung Duc
Tien, Deputy Minister of the Ministry of Agriculture and Rural Development,
highlighted that if current burdens are not solved, seafood producers will
have to deal with human resources issues when they return to close-to-normal
production. He said that
the ministry is closely coordinating with related parties in order to grasp
the difficult situation of these enterprises and help them maintain
operations, while avoiding production chain disruptions. It has also proposed
that the government coordinates in clearing obstacles as well as creating
more favourable conditions for the production, processing, circulation,
import, and also export of aquatic products. Financial wellness & digital money management apps are the
key to igniting Vietnam’s digital banking boom New data
published this week in a Backbase commissioned study, conducted by Forrester
Consulting, reveals a potential future spark for igniting Vietnam’s race for
digital dominance in the retail banking sector. Like other areas of the
world, smartphones and digital-only services have changed how people live in
Vietnam. However, compared with other developing countries, the uptake of
digital banking has been slower. One reason
for this, as highlighted in the research, was a lower level of confidence in
digital-only banks, with only 16% of consumers saying they currently trust
them. However, looking at other more mature markets in the research, it’s
proven that the implementation of free financial wellness and digital money
management tools – full of features and benefits – greatly improves this
sentiment. Talking
about the results of the research and how empowerment and knowledge improve
trust in the banking system, Regional Vice President for the Asia Pacific
region, Iman Ghodosi, said: “Vietnamese banks and their customers are only at
the start of their digitization journey. The more information and control we
can put in the hands of Vietnamese to make their own informed financial
choices, the more they will trust the organizations providing them with this
opportunity. Technology now enables us to do this. This is happening around
the world, and our research shows it will work here in Vietnam too. This
could be the catalyst for Vietnam’s digital banking to really take
off.” “Now more
than ever, it is important to own the relationship with your customer. We’ve
entered the Engagement Banking Era, an evolution that stresses a one unified
platform approach for banking. The number one priority in this new era is to
completely re-architect the bank around the customer, moving away from siloed
technology investments,” Mr. Ghodosi added. Through advancements
in A.I, behavioural analytics from the spending habits of users, better user
experience, and mobile-first technology such apps can provide customers with
a huge range of financial literacy tools such as: spending analysis, creating
savings goals, transaction categorization, personalized recommendations, and
the scheduling of bill payments, to name a few. “One can see how this level
of insight and assistance would empower and build trust for users,” Mr.
Ghodosi adds. The research
shows that 50% of Vietnamese are not achieving their financial goals, 62%
feel overwhelmed by debt and 71% don't know where to go for reliable
financial advice. “Through digital money management tools, banks can address
all of this and more. They could make a big difference to the financial lives
of their customers”, Mr Iman Ghodosi emphasized. Banks in
Vietnam are moving forward into digital, but for some it’s a slow paced
journey. Of the Vietnamese retail-banking business decision-makers
interviewed as part of the report, 58% said their company was implementing or
expanding their digital banking offering, while 28% said their company had
‘no interest in’ or was ‘removing’ its digital banking offering. According to
Riddhi Dutta, Regional Director for Backbase ASEAN & South Asia, “There
seems to be a wide disparity between some banks who are progressing and
others who are yet to start; this could be a huge opportunity for those
disruptors who want to put their ‘pedal to the metal’ and gain first-mover
advantage.” “From our
research, 42% of the interviewed Vietnamese retail banking business
decision-makers said they are going to increase spending on financial
wellness initiatives over the next 12 months. 74% said they were ‘planning
to’ or ‘actively expanding’ digital financial wellness initiatives, so there
are some positive signs there too,” Mr. Dutta added. With banks
well aware of the challenges their consumers face, and with the knowledge
that digital financial wellness apps are an ideal solution for these
challenges, all thoughts go to why some Vietnamese banks are slower in
getting started. The research
revealed that in Vietnam, 72% of the banking sector sees a ‘lack of
understanding of customer needs and outcomes’ as an obstacle in further
developing digital tools for its customers, and 74% said they are ‘unsure of
how to work with or partner with a fintech company’ to implement the
activity. 70% said it was due to ‘outdated or legacy technology’ and 68% said
it was due to ‘competing priorities.’ Talking
about the points raised, Mr. Ghodosi said: “It seems there is a lack of
understanding; we can empathize with these challenges because at one time
every bank in the world faced them. Change is not easy. However, for those
institutions who want to take the lead, the slowness of some of the sectors
is definitely an opportunity.” “There is no
doubt that financial wellness apps aimed at consumers can play a large part
in improving trust in digital banking and adding value to the lives of
Vietnamese. 12 months from now, adoption will be much further advanced, and
24 months from now Vietnamese will have a whole different digital
relationship with their banks. It all comes down with who wants to be first”,
Mr. Ghodosi concluded. Room remains for Vietnamese exports to Russia There
remains huge room for Vietnam to boost exports of farm produce, seafood,
foodstuffs and beverages to Russia, which has great demand for these goods,
experts have said. Currently
many Vietnamese products are unpopular in Russia despite the huge market
demand, online newspaper dangcongsan.vn cited Vice Chairwoman of the Russia –
Vietnam Friendship Association (RVFA) Regina Budarina as saying. For example,
fresh Thai mangoes are available in Russia, but lack of consumption channels
has led to the rare presence of Vietnamese mangoes in this market thus
customers who have demand for this fruit have to go to markets or cafes
operated by the Vietnamese. Also,
Russian customers prefer Indian rice to that of Vietnam due to more
competitive prices. In order to
effectively penetrate the Russian market, she suggested Vietnamese businesses
follow the shortest path which is to promote market research. Although
initially, market research might cost businesses a lot of money, but in the
future, it would facilitate their exports to Russia, she said. Frequent
seminars and exhibitions would be also needed to bring Vietnamese products
closer to the Russian market, she said, adding that Vietnamese firms should
consider shipping their goods to Russia by rail through China to reduce
transportation costs. According to
the Vietnamese Trade Office in Russia, farm produce, food and consumer goods
are mainly sold at retail chains. Besides product quality and design,
businesses also needed to ensure sufficient supply of goods. In order to
bring goods into these chains, in addition to product quality and design;
businesses need to meet the important requirement of constantly having stock
at the warehouse to supply regularly to stores. The good
news is that at present, a number of agricultural products and processed
agricultural products from Vietnam have gradually accessed Russian retail
systems, such as mango, chili sauce, dipping sauce, pomelo and dragon fruit,
the office said. However, the
quantity of items was still modest, it noted. Over the
past years, the office has connected many Vietnamese enterprises with
suppliers who provided Vietnamese agricultural products such as ginger,
grapefruit, and vegetables to the Russian supermarket chains. However,
Vietnamese firms have still encountered several difficulties due to their
failure in ensuring stable and long-term supply of goods in large quantities.
Therefore, in order to export to Russian stably, the firms needed to draw up
a suitable strategy and build a supply system in the host country to supply
supermarket chains there, the office said. Along with
the efforts of trade promotion organisations and domestic industry
associations in connecting the two countries' businesses amid the complicated
development of the COVID-19 pandemic, the office said it would continue to
facilitate trade promotion activities in order to support businesses in the
new context while organising seminars and business matching events on
specific industries and fields in order to create opportunities for
Vietnamese goods to enter the Russian market. Meanwhile,
in order to maintain growth and improve the market share of Vietnamese
agricultural and seafood products in Russia, economists advised businesses to
focus on ensuring the prestige and quality of export products, boost
processed farm produce exports, and diversify the range of products made from
fresh fruits to improve their competitiveness in Russia. Relevant
authorities needed to strengthen assistance for trade promotion and market
forecasting, and provide specific information to help businesses prepare for
approaching and expanding trade with Russia, they said. Over the
past six months of 2021, two-way trade reached 2.62 billion USD, up 16
percent percent year-on-year, with Vietnamese exports worth 1.66 billion USD,
up 31 percent year-on-year, according to the General Department of Customs. Among
staples recording a significant turnover increase were textile and garment
with 195 million USD, up 54 percent; seafood with 87.5 million USD, up 64
percent; fruit and vegetables with 42 million USD, up 50 percent; cashew nuts
with 25.3 million USD, up 48 percent; electronics, computers and parts with
253 million USD, up 46 percent, handsets and component with over 500 million
USD, up 6.4 percent. From January
to June, Vietnam's imports from Russia saw a modest decline of 3.3 percent to
over 967 million USD with main goods including chemical products; paper,
pharmaceuticals, plastic materials and automobiles./. Vietnamese farm produce introduced in Italy
Vietnam
has introduced its fruit, vegetables, and other farm produce at Macfrut 2021:
the Fruit & Veg Professional Show, which opened on September 7 in Rimini
city, the Emilia Romagna region of Italy. It offers a
good chance for Vietnam to set up partnership and seek export markets for its
agricultural products in Italy and other EU member nations. The fair
also serves as a bridge helping Vietnamese businesses access and connect with
Italian partners who possess advanced technologies for producing, processing
and preserving fruits. The two-day
event features 800 booths, and is expected to attract about 500 fruit
importers worldwide./. Seafood producers hard to resume as normal Only a
modest number of seafood producers have the capacity to resume production
immediately after social distancing while the rest will need quite a long
time to pick up pace. With
operational factories, only 30-50 per cent of employees could work on site,
the rest had to leave work or take unpaid leave. As a result, processing
capacity has reduced by 50-60 per cent. It is estimated that the overall
capacity of the whole region has decreased by 60-70 per cent. Tien Giang,
Can Tho, Hau Giang, and Dong Thap are the provinces with the largest number
of seafood producers that have stopped operating either completely or
temporarily. The
operational seafood enterprises try to maintain a key labour force to
continue production while temporarily laying off other workers or pay
themminimum wages. Other businesses stopped working but still try to maintain
wages for workers to retain them for the bounce back. Recovery in
production is greatly affected by a broken supply chain of raw materials,
difficulties in transportation, and customer loss. Especially, it is
difficult to keep the labour force unchanged as many workers have not been
vaccinated or have returned to their hometown, are in quarantine, or are
undergoing COVID-19 treatment. Although
workers in industrial zones and export processing zones are prioritised for
vaccination, only 30-40 per cent have received their first jab by the end of
August and no workers have received the second injection. Different
localities implement vaccination at different paces. While businesses in Ca
Mau province are vaccinated the fastest (90-95 per cent of workers have
already received the first injection) other localities like Long An, Can Tho,
and Hau Giang are far slower. As of July,
the number of orders placed at seafood enterprises increased 10-20 per cent
compared to 2020 due to global market recovery. However, from August 23, all
southern provinces and cities implemented strict social distancing, affecting
production and delivery. At the end
of August, 40-50 per cent of orders were delivered late and about 10-15 per
cent of orders were cancelled. In addition, many importers have considered
finding alternative sources. Efforts made to turn Vietnam into world’s spice supplier Vietnam’s
agriculture sector along with the spices and seasonings industry have enjoyed
a remarkable transition which turns the country into a supplier of those
products for the global market. Le Hoang
Tai, Vice Director of the Vietnam Trade Promotion Agency (Vietrade) under the
Ministry of Industry and Trade, unveiled the information during a virtual
conference on Vietnamese spices and seasonings hosted by Vietrade on
September 8. Trade
promotions and technical support have helped firms in the sector to surmount
difficulties and develop sustainably by moving to produce more value added
items, he stated. Among
Vietnamese spices, peppercorn has gained a foothold on the international
market and holds a lion’s share in export revenues. At present,
demand for peppercorn and others has been on the rise while global exports of
such products decline due to difficulties caused by the ongoing COVID-19
pandemic. Vietnamese
firms have worked to gradually meet more stringent requirements of foreign
trade partners and are able to provide added value products with high quality
and food safety. Tai advised
localities and firms to devise production recovery plans, apply advanced
technologies, diversify products and capitalise on recent new-generation free
trade agreements that Vietnam is a signatory to bolster exports once COVID-19
is brought under control. Speaking at
the event, First Secretary and Head of the Vietnamese Trade Office in Saudi
Arabia Tran Trong Kim, said the Middle East nation consumes many kinds of
spices, mainly imports from foreign countries, including Vietnam, adding that
the country is having a high demand for organic food and spices. Statistics
showed that Vietnam shipped products worth 225 million USD to Saudi Arabia in
the first seven months of this year. The country rakes in an average of 10
million USD from exports of spices to Saudi Arabia each year./. Seminar seeks way to boost sustainable Vietnam-Africa farming
cooperation A webinar on
Vietnam – Africa agricultural cooperation for sustainable development took
place on September 9 in search of a dynamic and creative collaboration model
for the two sides. The event
was co-organised by the Ministry of Foreign Affairs, Ministry of Agriculture
and Rural Development and the International Organisation of La Francophonie
(OIF). Speaking at
the seminar, Foreign Minister Bui Thanh Son underscored that Vietnam values
its traditional ties with African nations and that the Vietnam-Africa
engagements are continuously being consolidated and expanded. He stated
room for the sides’ cooperation in agriculture remains extensive. Deputy
Minister of Agriculture and Rural Development Le Quoc Doanh recommended the
sides promote their South-South cooperation models, technological transfer,
and farming encouragement measures, adding that Vietnam is willing to send
experts and technicians to support Africa. Doanh noted
there is a need for the building of a pilot public-private partnership (PPP)
model regarding investment in the production and processing of farm produce
in some African nations, prioritising sectors of Vietnam’s strengths and
demand for consumption. Abu Bakarr
Karim, Minister of Agriculture & Forestry of Sierra Leone, said his
country’s agricultural sector will follow the successful development path of
its Vietnamese counterpart. Participants
reviewed opportunities and challenges facing farming cooperation between
Vietnam and Africa and discussed measures to bolster and expand the trade of
the sides’ key farm produce. Major
orientations for joint agricultural production collaboration and financial
solutions in aid of the ties were also tabled for discussion./. Platforms pushing digital adoption Fundraising
attention is shifting to Vietnam’s tech companies that could support other
businesses to move online. KiotViet is
a leading merchant platform for micro-, small-, and medium-sized enterprises
(MSMEs) in Vietnam. The company aims to drive the digital transformation of
such enterprises. Tri Kim Cao,
deputy general director of KiotViet, told VIR, “COVID-19 has created many
challenges for MSMEs. To support our merchants, KiotViet has developed
solutions to help them manage their businesses seamlessly offline and online. For example,
MyKiot gives KiotViet merchants the ability to create their own e-commerce
website in just five minutes, and omnichannel management allows merchants to
effectively manage sales from multiple channels, including their e-commerce
websites, Tiki, Shopee, Lazada, Facebook, and some others.” With the new
funds, KiotViet plans to continue to upgrade the quality of its products and
services to transform MSMEs, hire key executives for new services in fintech
(KiotFinance, KPay) and business-to-business (B2B) e-commerce (KiotPro), and
expand to regional and international markets. Likewise,
SoBanHang, a Vietnamese bookkeeping software for small businesses, has raised
$1.5 million in a seed round led by FEBE Ventures, a US-based venture capital
firm, and individuals like Kevin P. Ryan, founder of Business Insider.
SoBanHang will use the fresh funds to further invest in technology. The
company wants to help small businesses thrive on digital platforms with the
power of technology and smart data analytics. Bui Hai Nam,
CEO of SoBanHang shared, “During social distancing, small retailers and
traders can no longer meet their customers face-to-face, hence going online
is the only way to ensure business continuity. It’s a great opportunity for
them to expedite digitalisation, expand to modern channels, increase revenues,
and gain more operational efficiency.” However, Nam
also added that “the digital transformation is costly and complex – even for
large corporations. SoBanHang makes it fast, easy, and effortless for smaller
businesses to adopt more modern e-commerce.” According to
Nam, small retailers now understand the vitality of digitalisation and are
becoming more open to new technology. As a result, SoBanHang saw a huge wave
of newcomers on its platform in the last two months. SoBanHang earlier had
spent eight months researching the market build its app the final solution
for retailers. Likewise,
Sapo Technology JSC, a multichannel management and sales platform, is also
looking to raise about $10-15 million to fund its expansion. Tran Trong
Tuyen, CEO of Sapo said, “COVID-19 has changed the way we buy, and therefore,
it changes the way businesses operate. The digital transformation is
definitely a top priority to meet the urgent needs of both suppliers and
consumers.” Sapo has
witnessed stronger investment by SMEs in digital transformation. Especially
amid the latest wave of infections, the negative impact on businesses was
huge. However, there has been an increase in investment in sale management
software on e-commerce platforms, online sale channels, inter- and intra-regional
shipping channels, and cashless payment methods, which could be an indicator
for SMEs trying to search a long-term orientation to survive the pandemic. “The demand
for digital services has been huge, and the usage of technology has also been
increased. We have seen market assisting services, online orders via mobile
apps, super-fast shippers, and many more things. This is an opportunity for
those who know how to take advantage of it,” Tuyen said. The shift to
online has attracted the attention of overseas investors and funds. Ashish
Shastry, co-head of Asia- Pacific Private Equity and head of Southeast Asia
at KKR said, “We are excited to invest in KiotViet, an innovative business
with terrific growth potential. Our investment marks our sixth in Vietnam and
is the first made within KKR’s growth technology strategy in Southeast Asia.
This milestone reflects our commitment to providing high-growth technology
companies – including those at an earlier stage – with long-term capital and
value-added support.” Meanwhile
Olivier Raussin, co-founder and managing partner at FEBE Ventures, told VIR,
“Vietnam is a key market for FEBE Ventures. We invest in technology and SMEs
are the key segment that we like to address. We are considering more
investment in the space. Furthermore, we truly believe in the digitalisation
of customer services in the emerging middle class and B2B in the SME
segment.” According to
Raussin, SMEs need to sell both online and offline. They could meet the needs
of customers with a proper digital strategy and execution, backed by
fundamental tools like customer relationship management solutions and
customer databases. With this, SMEs could boost their new products and
promotions. Tech
startups like KiotViet, SoBanHang, and Sapo could be the ones helping SMEs to
address the challenges of the digital transformation. “Businesses must be
ready to invest in a methodical, enthusiastic, and carefully calculated
manner. It’s not just about bringing all products and services to a digital
presence. They must prepare a full presale, sale, and after-sale system that
is synchronous and compatible with digital products,” said Tuyen of Sapo. “It is also
worth mentioning that tools such as Sapo’s sales management software are to
completely reduce errors, connect sales processes smoothly and
professionally, and create a good experience for customers and stable
revenues for sellers,” he claimed. Global forum to discuss United Nations Centennial Initiative A number of
ideas and strategies on the United Nations Centennial Initiatives are
explored at the three-day high-level online Policy Lab which opened on
Tuesday. Titled
Fundamental Rights in AI and Digital Socities: Towards an International
Accord, it is sponsored by the Club de Madrid and Boston Global Forum. The digital
revolution is shaking the foundations of our societies and the immediate
rollout of AI technologies promises even greater societal disruption. These
technologies bring new opportunities for the enjoyment of human rights, but
also new threats to their protection. Policymakers
around the world and at all levels of government are becoming more convinced
of the need to ensure that digital technologies and AI serve people and not
the other way around. The event
seeks to find methods to narrow this gap between the digital and policy
worlds, and to build consensus around a rights-based agenda for the global
governance of AI and digital societies. The topics
discussed at the forum are the UN Contennial Initiative launched in 2019 by
the United Nations Academic Impact in partnership with The Boston Global
Forum. The
initiative hosts roundtable discussions, conferences, new concepts,
solutions, think pieces, and reflections to look ahead to the global
landscape in 2045, the United Nations’s centennial year. The core
concepts of the UN Centennial Initiative include the idea of a social
contract for the artificial intelligence (AI) age, a framework for an AI
international accord, an ecosystem for the AI World Society (AIWS), and a
community innovation economy. Some of
these ideas have already begun to be put into practice, including the
evolution of an AIWS City being developed by NovaWorld in Phan Thiet, Viet
Nam, on a pilot basis. AIWS City is
a virtual digital city dedicated to promoting the values associated with
AIWS. It looks to bring together a global enlightenment community of
scholars, innovators, leaders, and citizens dedicated to fostering thought,
creativity, and ethical behavior. Professor Dr
Tran Dinh Thien, senior advisor to the Vietnamese Prime Minister, expressed
excitement at NovaWorld Phan Thiet City being built into a leading healthcare
and wellness tourism destination: “NovaWorld Phan Thiet and AIWS City will
become a model, representative of the standards and ambitions of the United
Nations Centennial Initiative and the World Leadership Alliance-Club de
Madrid. “Viet Nam
invites world leaders, ideologists and innovators to Phan Thiet to support
the plan to build NovaWorld Phan Thiet City… We look forward to receiving
unique ideas and suggestions to help Phan Thiet develop and become a leading
ecosystem for a new economy, one for those looking to pioneer in the Age of
Global Enlightenment, celebrating the 100th anniversary of the United
Nations.” Ramu
Damodaran, co-chair of the United Nations Centennial Initiative, will be the
lead speaker at the Plenary V session which will discuss the United Nation’s
Centennial Initiatives. The panel
will also feature the former president of Latvia, Vaira Vike-Freiberga, a
member of the Club de Madrid; Greek Minister of State and Digital Governance
Kyriakos Pierrakakis, who is chair of the Global Strategy Group, OECD; Thomas
Patterson, research director of The Michael Dukakis Institute for Leadership
and Innovation and professor of government and the press at the Harvard
Kennedy School; Sean Cleary, advisor to Club de Madrid, executive vice-chair
of the FutureWorldFoundation and member of the Carnegie Council artificial
intelligence & equality initiative’s board of advisors; and Thien. The
facilitator for the session will be David Silbersweig, chairman, department
of psychiatry, and co-director of the Institute for the Neurosciences,
Brigham and Women's Hospital, Harvard University Professor. Ahead of the
meeting, the Boston Global Forum teamed up with United Nations Academic
Impact to release a book titled ‘Remaking the World: Toward an Age of Global
Enlightenment’. The book
takes a major step towards creating a “rights-based agenda for the global
governance of AI and digital societies,” Nguyen Anh Tuan, who edited the book
and serves as CEO of the Boston Global Forum, said. “We’re
moving toward a framework, an ecosystem, a social contract for the AI age.” The book is
made up of white papers, speeches, remarks, and other presentations at events
held during the pandemic and sponsored or co-sponsored by the Boston Global
Forum. Among the
contributors are well known policy makers and innovators such as Ashton
Carter, former US Secretary of Defense; Vint Cerf, ‘the father of the
Internet’ and chief internet evangelist for Google; former UN
Secretary-General Ban Ki-moon; and former Massachusetts Governor Michael
Dukakis. The opening
chapter, authored by leading scholars and policy makers affiliated with the
Boston-based group, proposes a “social contract,” or an agreement among
members of global society to cooperate in the interests of social wellbeing. Elsewhere in
the book, political scientist Nazli Choucri of MIT articulates a framework
for artificial intelligence international accords, including “the
precautionary principle,” which aims not to impede innovation but to “explore
the unknown with care and caution.” Likewise,
Ursula von der Leyen, president of the European Commission, discusses the
need for an AI “ecosystem of trust.” This would include regulation “not for
regulation’s sake,” but for the purpose of protecting basic rights,
encouraging innovation, and spurring technological leadership. Tuan added
that Remaking the World, along with the Policy Lab, represents the first time
that prominent international leaders are coming together to lay the
groundwork for global AI accords.The book is currently in an electronic
edition and will be available in print soon. Protracted restrictions put main growth drivers at risk A continued
trade deficit over the past few months and an expected drop caused by the
global health crisis in inflows of foreign investment are unlikely to weaken
Vietnam’s external position this year. According to
the World Bank, it is still expected that a surplus in the current account
will be seen this year in Vietnam. The economy
has continuously earned a current account surplus since 2011. Additionally,
it hit 2.9 per cent in 2017, 3 per cent in 2018, and 3 per cent in 2019. On the
external front, Vietnam maintained a positive external position with an
increase in international reserves, but both merchandise trade and current
account balances have deteriorated, according to the World Bank. The country
accumulated $6 billion in international reserves between December 2020 and
April this year. Yet, the growth of imports outpaced that of exports while
the services account continued to be negatively impacted by the closing of
the country’s borders to most international visitors. After
recording its highest ever merchandise trade surplus in 2020 of $19.95
billion, Vietnam’s trade balance turned into a deficit in the first eight
months of 2021, worsening since May. Figures from the General Statistics
Office (GSO) showed that in the first eight months of 2021, the economy’s
total export turnover is estimated to reach $212.55 billion, up 21.2 per cent
on-year, while the total estimated import value hit $216.26 billion, up 33.8
per cent on-year. This period
saw a trade deficit of $3.71 billion, following a similar shortfall of $2.41
billion in the first seven months and $1.47 billion in the first half of this
year. Such a deficit was also seen in May ($2.07 billion), June ($1 billion),
July ($1.25 billion), and August ($1.3 billion). The GSO also
reported that in the first eight months of this year, Vietnam was visited by
only 105,000 international arrivals, down 97.2 per cent on-year, with total
revenue of merely VND4.5 trillion ($195.65 million), down 61.8 per cent
on-year. The Vietnam
National Administration of Tourism reported that in 2019 before the pandemic
emerged, Vietnam welcomed over 18 million international tourist arrivals – up
16.2 per cent on-year, and served 85 million domestic tourist arrivals. Total
revenues from tourists in 2019 were over VND720 trillion ($31.3 billion), up
16 per cent on-year. Last year,
however, the figure reduced to only VND17.9 trillion ($778.26 million). “The
external sector has lost some of its dynamism, since accumulated foreign
direct investment inflows were 11 per cent lower in the first seven months of
2021 than during the same period in 2020, while the merchandise trade balance
turned into a deficit after reporting the highest-ever surplus in 2020,” said
the World Bank report. “It appears
that exporters are facing disruptions due to the resurgence of the pandemic,
forcing them to close factories or delay production, and are increasingly
confronted with competition from other countries that are witnessing a
stronger rebound in their production activities.” The Ministry
of Planning and Investment reported that in the January-August 20 period,
foreign direct investment (FDI) inflows into Vietnam – including
newly-licensed, newly-added capital, and capital from stake acquisition and
capital contribution – totalled $19.12 billion, down 2.1 per cent on-year. Of this
figure, foreign investors pledged to pour $11.33 billion in newly-licensed
1,135 projects, an on-year expansion of 16.3 per cent in terms of capital
volume. Foreign investors also committed to investing an additional $4.98
billion in 639 existing projects, down 11 per cent in the
number of projects and up 2.3 per cent in capital over the corresponding
period last year. There were
also 2,720 instances of capital contribution and share purchases by foreign
investors, with $2.81 billion, down 43.4 per cent in number and 43.4 per cent
in capital on-year. In the first
eight months of this year, total disbursed FDI hit $11.58 billion, up 2 per
cent on-year. According to
the World Bank, though FDI inflows into Vietnam have been affected by the
health crisis, the capital has “proven resilient compared to the rest of the
world, suggesting continued confidence in Vietnam’s economic potential.” Since early
May, manufacturing and services activities have been increasingly hamstrung
by targeted lockdowns to contain community transmission of the virus. In
mid-July, mobility restrictions widened, with the southern part of the
country, Ho Chi Minh City, and then Hanoi, placed under strict quarantine,
affecting economic activities. In the
meantime, the economy also faces the risk of increased competition in its
external markets as competitors who are ahead in vaccinations are restarting
their production and could recapture some of the market shares they lost to
Vietnam due to pandemic-related production disruptions in 2020. “Therefore,
the economy could be at risk of losing both its domestic and external drivers
of growth if the current outbreak is not rapidly contained,” the World Bank
warned. However, one
of the reasons behind Vietnam expected to see a surplus in its current
account this year is its expanded exports on the back of global economic
recovery. “Going forward,
Vietnam’s exports should continue to expand due to the country’s solid
competitiveness in international markets and the decision to continue the
diversification of trading partners, and therefore economic opportunities, as
recently signalled by the signing of the massive Regional Comprehensive
Economic Partnership,” said Dorsati Madani, senior economic expert from the
World Bank in Vietnam. “It is also
expected that the country will be able to reopen gradually to international
visitors in 2022–2023,” Madani added. “With respect to the financial account,
FDI inflows are expected to recover to pre-pandemic levels, boosted by the
revamping of global value chains and the demand by many governments and
multinationals to diversify their sources of production.” While the
near-term outlook is still bright, Vietnam could become a victim of its own
success as existing resources are stretched, pushing up costs and eroding the
economy’s competitiveness. Vietnam has
a strong need to improve the level of human capital in the country, with
skills training being paramount. The government aims to ascend the
manufacturing value chain in an environmentally sustainable way according to
the release of its 5-year plan for the 2021-2025 period, with a focus on
high-tech growth. The country currently is attracting foreign direct
investment in low value-added manufacturing segments such as electronics
assembly and apparel. This is mainly due to an abundance of low skilled
labour but an industry-recognised shortage of suitably skilled labour in
Vietnam to undertake higher value-added manufacturing. The government is
aware of this problem and has also outlined its intention to undertake
reforms to improve education and labour skills in its 5-year plan. That said,
education reform can only deliver results over a decade, which still risks
bottlenecks in labour availability and upside wage pressures during the
interim, as well as this being a factor hindering the government’s
aspirations to move the country up the value chain. Furthermore, Vietnam
faces an urgent need to accelerate transport infrastructure development. The
influx of foreign investment into Vietnam from China, especially into the
export manufacturing sector, has put significant strain on Vietnam’s existing
transport and logistical infrastructure. This caused congestion on roads and
at the ports during the 2018-2019 period at the height of the US-China trade
war, leading to long delays. Similarly, this is an issue the Vietnamese
government is cognisant of and has put in place policies such as its Law on
Public-Private Partnership Investment which took effect from January in the
hopes of stimulating private investment into infrastructure projects to
expedite the process. While we hold a cautiously optimistic view on the outlook
for transport and logistical infrastructure development over the coming years
as a result of this law, we continue to flag a number of risks to project
implementation. Land
acquisition continues to face challenges, causing delays to project
timelines. Meanwhile, COVID-19 will continue to challenge project progress,
given that lockdowns will likely cause work to stop temporarily, while travel
restrictions and risk of COVID-19 contagion will hamper access of much-needed
foreign experts and key company personnel. Source: Fitch Solutions COVID-19 forces SMEs to embark on digital transformation Digital
transformation is significant to Vietnamese small-and medium-sized
enterprises (SMEs), especially amid the COVID-19 pandemic, heard a workshop
on September 9. Jointly held
by the Vietnam Chamber of Commerce and Industry (VCCI), Hewlett Packard
Enterprise (HPE) Vietnam, and Elite Technology JSC, the online event brought
together 300 enterprises nationwide. It aims to
help domestic SMEs draw up digital transformation frameworks, seek suitable
solutions and optimise cutting-edge technologies to successfully embark on
digital transformation. The workshop
is also expected to raise their competitiveness to join global value chains,
adapt to the new situation and develop sustainably. VCCI Vice
Chairman Hoang Quang Phong pointed out barriers to local SMEs in digital
transformation regarding digital skills and capacity, IT infrastructure, and
digital mindset. He suggested
them speed up digitalisation, focusing on personnel training, develop new
products and services to meet market demand, closely cooperate with partners,
and work to improve their competitiveness. According to
a survey conducted by the VCCI, more than 87 percent of the 10,000
interviewed firms said they have been affected by the COVID-19 pandemic. The SMEs
that accounted for 98 percent have been hardest hit due to limitations in
workforce and market. Most of them have seen their revenue dropped from 50-90
percent, and many have to scale down or suspend their operations. Therefore,
the participants said, to maintain their operations and move forward, they
need to seek new ways and speed up digitalisation./. New changes to push sci-tech funding While
domestic and foreign investors are expected to delve into Vietnam’s sci-tech
market driven by ongoing and long-awaited legal amendments, their
effectiveness is still a concern as the country is urged to learn successful
global lessons. Hoang Viet
Tien, head of Strategic Advisor at Insider – a startup providing marketing
technology solutions for big companies in Vietnam, told VIR, “Some tax
incentives for investment in technological innovation are still difficult to
implement due to a lack of synchronisation in legal regulations. Moreover,
policies have not created many incentives for the use of products and
services.” “There is
also a lack of support measures from the state to companies offering access
to the market for products made by research and development or technological
innovation,” he added. The new
amendment, together with the country’s strategy to accelerate digital
transformation, is expected to give motivation for domestic and foreign
businesses in the field. Experts,
however, said that unenforceability of some incentive policies for investment
in technological innovations due to lack of consistency with other rules
means businesses still have concerns over the effectiveness of such
regulations. For example, the prevailing policy on public procurement is yet
to encourage the use of technology products and services made by domestic
firms. Also, there are still some shortcomings in the mindset of state
management agencies about taking risks in making investments in technology
application and innovations. Economies
that have succeeded in the transition from low to high income are based on
science, technology, and innovation, with South Korea, Israel, Singapore,
Poland, and Taiwan being typical examples. The story of
Israel’s economic miracle is a lesson Vietnam should learn from. According to
Tien, in the case of Israel’s science and technology development, the country
focuses mainly on its talent development strategy and the establishment of an
ecosystem to support startups. A special feature of Israel’s development
strategy is that the government is willing to support and invest capital and
private venture capital funds. They bear the risk if there is a loss, or let
projects and startup businesses use capital actively and flexibly according
to the needs of each project or startup. This has pushed the number of
projects and startups in the field of science and technology in Israel to
increase dramatically in both quality and quantity. According to
statistics, for every 1,844 Israelis, there is one startup company and there
are successful startups such as Houzz, Mobileye, Waze, and Wix. Similarly,
Singapore is a country with many attractive policies for setting up
businesses. Besides low tax rates and easy business conditions, an important
factor that attracts entrepreneurs from all over the world to Singapore is
the diversity of financial sources for startups, creating an effective
startup ecosystem and a highly competitive environment. To promote
innovation and entrepreneurship, the government introduced a framework of
support programmes for diversified and inclusive startups and innovation.
Typical are tax incentives – in 2016, Singapore’s total tax rate equalled
18.4 per cent of profits, well below the high-income international average of
41.2 per cent, according to the World Bank. To evaluate
Vietnam’s position in digital transformation, a report by the World Bank uses
a framework covering connectivity, ownership, innovation, and protection
while comparing the nation to others on the same digital transformation level
or those that have more advanced. While Vietnam has performed well against
its peers and in several areas, it exhibits important weaknesses in others. Despite
growing interest, domestic and foreign investment in this area remains
modest. Ministry of Planning and Investment data showed that foreign
investment in such activities reached over $570 million in the first eight
months of 2021, of which about $65 million was newly registered, over $200
million was added capital, and over $300 million was worth of stake
acquisitions. Vietnam’s technology market is increasingly attractive to
technology giants like Ericsson, ABB, and HCL Technologies, among others. Localities asked to ensure plant, animal varieties supply to
farmers amid COVID-19 Deputy
Minister of Agriculture and Rural Development Tran Thanh Nam has asked
localities to pay special attention to directing production activities and
ensuring the supply of plant varieties and breeding stock to farmers amid the
COVID-19 pandemic. Addressing a
conference to review operations of the Ministry of Agriculture and Rural
Development (MARD)’s Southern Working Group on September 9, Nam, who is also
head of the group, underlined the need to design production plans during and
after social distancing period to maintain long-term and stable farm produce
supply. The working
group will submit a report to the Government's Special Working Group on an
overall plan for the whole southern region, thus ensuring the coherence in
localities’ directions on agricultural production, thus preventing the
pandemic and maintaining production at the same time. Representatives
from the localities suggested that COVID-19 vaccine should be given to people
engaging in agricultural production chains, especially in the Mekong Delta
region. They
proposed that the Government should subsidise 50 percent of plant varieties
and breeding livestock for farmers to help them resume production. Nam said
that the working group will give advice to the Minister of Agriculture and
Rural Development, and the Government on the issuance of resolutions on
supporting agricultural production. The group
will also work with the Ministry of Health to give guidelines to farmers in
ensuring safety during production, while asking the ministry to prioritise
COVID-19 vaccination for people involving in agricultural production
chains. Foreign e-commerce platforms surpass local rivals in e-commerce
ranking The ranking
of e-commerce businesses in Vietnam is changing during the pademic with
Shopee taking the lead, followed by Lazada, Tiki, and Sendo. For the past
12 quarters, Shopee Vietnam has ranked first in terms of average website
traffic. Shopee Vietnam obtained 73 million visits in Q2/2021, which
increased by 9.2 million from Q1. After being
surpassed by competitors for several consecutive quarters, Lazada Vietnam
rose to second place in the "four-horse race" in terms of website
visits on a multi-vendor e-commerce platform. As a result, Lazada Vietnam's
average website traffic increased by 14 per cent compared to the first three
months of the year, reaching 20.4 million visits. Meanwhile,
the average visits to the websites of two domestic e-commerce platforms Tiki
and Sendo slightly decreased to 17.2 and 7.9 million, respectively. Thus, the
ranking of e-commerce businesses has shifted since Q1. Based on the current
trend, the game is likely to be dominated once again by foreign e-commerce
businesses. According to
Facebook and Bain & Company's annual Southeast Asia report, Vietnam's
e-commerce sector is expected to reach $12 billion in 2021. The market ranks
second in size in the region after Indonesia, and is estimated to grow 4.5
times to reach $56 billion by 2026. This shows
that Vietnam's e-commerce business has a bright future ahead and will
continue to grow rapidly. The pandemic, on the other hand, is still ongoing,
and there is a high likelihood that it will continue to cause further changes
in the future. iPrice's
study also shows that online grocery is the only category that has maintained
steady and consistent growth since the beginning of the pandemic. This partly
explains the strong increase in demand for online stores selling essential
products during the months of social distancing. Google
searches related to online grocery stores increased by 223 per cent in
Q2/2021. The number of searches increased 11 times in July compared to May
and 3.6 times compared to June when the social distancing order under Directive
16 was implemented in some provinces and cities. People pay
more attention to fresh food, beverages, pre-packaged items, as well as
fruits and vegetables as the searches for these items surged by 99, 51, 30,
and 11 per cent, respectively, compared to the previous quarter. Thus, social
distancing could be one of the factors driving the surge in demand for online
supermarkets. With the growing necessity of purchasing essentials online,
retailers are more likely to adapt to the digital platform. Indian health experts seeking cooperation Vietnam and
India are stepping up their partnership in healthcare with both countries
sharing many common interests amid the struggle to recover from the pandemic. The current
crisis has given an opportunity to both sides to help each other and revive
supply chains for different pharmaceutical products that had been disrupted. “We all know
that vaccines are important to control the pandemic. Due to the mutation of
the virus, scientific studies are now more important than ever. We will be
happy to arrange meetings for Vietnamese companies with our vaccines
manufacturers,” Sethi added. Nanogen
Pharmaceutical Biotechnology JSC has reached a deal with Vekaria Healthcare
LLP to transfer technology, manufacture, and distribute Nanocovax vaccines in
India. The collaboration between Nanogen and Vekaria is a testament to the
stronger partnership between India and Vietnam in the healthcare area. Meanwhile,
some Indian pharmaceutical companies are manufacturing anti-viral drugs like
Remdesivir and Molnipuravir. These drugs, manufactured by Indian companies,
are cheaper and quite effective. Therefore, Vietnam is looking to import
these from India for usage at frontline hospitals. Further,
Vietnam will receive one million doses of Remdesivir for the treatment of
COVID-19 from India. A contract was reached between the Vietnamese embassy
and major pharmaceutical companies like Hetero, Dr. Reddy, Cipla, Jubilant,
Mylan, Zydus, and Cadila. Another
potential segment for cooperation is the medical device industry. The impact
of the pandemic increases the demand for several critical care supplies like
low-cost ventilators, personal protective equipment, and sanitation supplies
– as India happens to emerge as one of the largest producers of these. “India
produces quality and cheap medical devices required for intensive care units
and routine use. We are discussing partnerships with Vietnamese companies and
also look for further investment in this important sector,” Sethi explained. According to
Tran Phu Lu, deputy director of the Ho Chi Minh City Investment and Trade
Promotion Centre, the healthcare sector is considered a potential area for
trade and investment cooperation between India and Vietnam. Vietnam has
so far secured over 100 million doses of vaccines in 2021 – not enough to
meet the current demand. This will open up opportunities for cooperation in
vaccine production and supply for both countries. Meanwhile,
domestic medical equipment production only meets up to 2 per cent of the
demand. Most medical equipment is imported from developed countries. India is
the fourth-largest market for medical devices in Asia and among the top 20
markets for medical devices in the world. Thus, Vietnam could increase
imports of medical devices from India to supply its field hospitals. Lu noted
that India has been Vietnam’s third-largest pharmaceutical supplier in recent
years. However, Vietnam has not opened its pharmaceutical market to foreign
investors to distribute drugs to end-customers on a retail basis as this
remains subject to stringent regulations. Foreign
investors can only import and export pharmaceutical products into Vietnam and
sell their imported products to licensed local distributors. Despite these
restrictions, Indian enterprises and manufacturers could research and promote
mergers and acquisitions within the industry. India is
considered “the pharmacy of the world” but due to the restrictions on travel
and interactions, the Pharmaceuticals Export Promotion Council of India could
not visit Vietnam as planned. Once the situation improves, the council will
plan a business and investment meeting with the participation of companies
from the pharmaceutical sector on both sides to explore partnerships and
investment opportunities. To
strengthen partnerships in the sector, Sethi said that India has organised
webinars and training sessions for healthcare workers. Indraprastha Apollo
Hospital in New Delhi has agreed to partner with the General Hospital in Ninh
Thuan province for long-term cooperation in on-site training, as well as in
India. After the pandemic, the consulate will invite other hospitals in the
southern and central provinces, as well as in Ho Chi Minh City for future
cooperation. A joint
working group on healthcare cooperation between the ministries of health of
India and Vietnam was held virtually on August 27. The meeting provided a
valuable opportunity for both sides to share best practices and exchange
views in digital healthcare and pandemic management, as well as cooperation
for medical devices and the promotion of traditional medicine and public
health strategies. Vietnam advised to promote just energy transition Vietnam
needs to carry out fiscal policies and regulations to promote and improve
capacity in renewable energy and energy efficiency, heard the virtual Just
Transition Forum in Asia 2021 (JTFA 2021) on September 8. The
conference was jointly held by the Friedrich-Ebert-Stiftung (FES) in Vietnam
and the Climate Action Network Southeast Asia (CANSEA). Claudia
Ehing, Director of the FES’s Regional Climate and Energy project in Asia,
said that just energy transition refers not only to environmental impacts but
also to economic and social changes necessary to promote energy transition on
a global scale, and effectively implement the goals set out in the Paris
Agreement on climate change. This forum
is an opportunity for leading experts from governments, businesses, think
tanks, the labour movement, and national and international organisations to
discuss measures to build a socially inclusive and climate-resilient future
in Asia powered by renewable energy; and build partnerships for potential
collaborative projects and initiatives in the future. Dr. Nguyen
Trinh Hoang Anh, Director of the Vietnam Initiative for Energy Transition
(VIET), stated that Vietnam needs to develop a new long-term energy vision to
improve energy access and efficiency, reduce greenhouse gas emissions,
towards the use of 100 percent of renewable energy. Anh proposed
Vietnam invest in energy reserve capacity and electricity grid, and step up
the transition to efficient and renewable energies, especially solar, wind,
and biomass. Vietnam
needs to increase the financial transparency and improve techniques of state
corporations in the energy sector, Anh said, adding that this will help build
trust, enable fairer competition, improve performance, and benefit
consumers./. Leather and footwear exports continue falling in August In August,
the exports of leather and footwear products saw another consecutive drop
since June, resulting from enterprises' difficulties amid the COVID-19
pandemic. This
continues the sharp decline since June. In particular, footwear exports
decreased from $2 billion to $850 million while handbags decreased from $325
million to $150 million. Generally,
in the first eight months, leather and footwear enterprises have exported
$12.6 billion of footwear and $2.1 billion of handbags, up 16.2 and 2.1 per
cent on-year. Total export
turnover of leather and footwear to Vietnam's top 5 markets (USA, EU, China,
Japan, South Korea) accounted for 81.2 per cent, of which footwear accounted
for 80.8 per cent and handbags accounted for 82 .9 per cent. The US is
still Vietnam's largest footwear export market, with footwear accounting for
40.3 per cent and handbags for 44 per cent of Vietnam's total export turnover
in the segment. The EU ranks second with 23.4 per cent of footwear and 22.2
per cent of handbag exports. Other markets include China (9.4 and 4.4 per
cent), Japan (4.8 and 8.7 per cent), and South Korea (2.9 and 3.7 per cent). According to
the Vietnam Leather, Footwear and Handbag Association (LEFASO), the outbreak
of COVID-19 since the beginning of May has affected the production of leather
and footwear enterprises in the last months of 2021. Prolonged
social distancing in the southern provinces has forced 80 per cent of leather
and footwear factories in Ho Chi Minh City, Dong Nai, Binh Duong, An Giang,
and Kien Giang (which are home to many large leather and footwear
enterprises) to stop production after they could not comply with authorised
operation models. In the central and northern regions, leather and footwear
enterprises only operate at 50-70 per cent capacity due to social distancing
and labour shortage. Leather and
footwear enterprises suffered great losses due to the cessation and reduction
of production, cancellation of export orders, while still having to maintain
factories and pay wages to employees. Operational
enterprises must reduce production due to the reduction in employee count. At
the same time, these enterprises have to bear lots of costs such as testing,
vaccination, food, and accommodation for employees. Moreover, many workers
have returned to their hometowns, resulting in a lack of labour force.
Additionally, inter-provincial travel and transport is also difficult during
the pandemic. Furthermore,
the shortage of containers has raised logistics costs 5-10 times against last
year, along with fuel and imported raw material prices, greatly affecting
production, causing many difficulties for export enterprises. In the
current situation, businesses need to reduce costs and prepare labour force
so that after the pandemic they can immediately restore production and
exports, making good use of preferential treatment from free trade
agreements, especially the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement
(EVFTA). Firms given recommendations to develop sustainably, realise dual
goals A webinar
themed “Sustainable Businesses Implement Dual Goals” was held on September 9
as part of the 8th Vietnam Corporate Sustainability Forum (VCSF). To adapt to
and overcome the COVID-19 pandemic, aside from the Government’s support, each
enterprise needs to bring into play their internal strengths and change plans
and strategies so as to achieve the dual goals of effectively fighting
against the pandemic and sustaining and recovering production and business
activities, said Nguyen Quang Vinh, Secretary General of the Vietnam Chamber
of Commerce and Industry (VCCI) and Vice President of the VCCI’s Vietnam
Business Council for Sustainable Development (VBCSD). He also put
forward an initiative to establish a council of enterprise cooperation to
respond to COVID-19, adding that this council will gather the strength of the
business community by connecting business associations, related
organisations, and the VCCI to join hands with the Government to help firms
weather this trying time and quickly recover and develop. At the
webinar, Dorsati Madani, Senior Economist at World Bank Vietnam, delivered a
speech on global economic prospects and impacts on the country, citing a WB
report as saying that the Vietnamese economy is expected to recover in the
fourth quarter of 2021 and post a GDP growth rate of about 4.8 percent this
year. Binu Jacob,
CEO of Nestle Vietnam and Co-Vice President of the VBCSD, recommended workers
and contractors to be fully vaccinated and enterprises be given
self-determination in applying anti-COVID-19 models at their factories on the
basis of the Health Ministry’s guidance. Regulations
related to COVID-19 prevention and control in localities should be simplified
and accord with central agencies’ directions while public administrative
procedures should be digitalised, thus creating optimum conditions for
businesses, especially during the social distancing period, he
suggested./. Eximbank appoints Tran Van Loc as new CEO The Board of
Directors of Eximbank has just appointed Tran Van Loc as CEO, pending
approval by the State Bank of Vietnam. Loc has
assumed the position on September 8, 2021 and will hold this position for one
year. Loc has
earned a doctoral degree in economics and has filled many important positions
at Eximbank. Eximbank has
been notorious for a string of embezzlements and internal conflict. The bank
has been postponing its annual general meeting for years and has received a
great deal of negative publicity due to its human resources reshuffles. Japan’s
Sumitomo Mitsui Banking Corporation (SMBC) holds 15 per cent stake in
Eximbank. Noi Bai airport’s upgraded runway put into operation Runway 1B
at Noi Bai International Airport in Hanoi, which has
been upgraded, is put into operation on September 9, according to the
Ministry of Transport (MoT). On September
9 morning, flight VN611 (Boeing 787-9) of Vietnam Airlines took off safely
on runway 1B. Seven minutes later, a Boeing 747 8F of Cargolux
Airlines (Austria) also landed safely on the runway. Duong Viet
Roan, Director of Thang Long Project Management Board, said all workload of
the runway 1B upgrade has been completed. Nguyen Bach
Tung, Deputy Director of the MoT's Department of Construction Management and
Quality of Traffic Works, said although the COVID-19 pandemic has seriously
affected the construction, contractors have tried their best and followed the
approved plan. The quality
of the project met the strict requirements of the aviation industry and the
standards of the International Civil Aviation Organisation (ICAO), he said. A day
earlier, the Civil Aviation Authority of Vietnam (CAAV) decided to put the
runway into operation based on the operation of the Noi Bai Airport. The CAAV
asked the airport to coordinate with Vietnam Flight Management Corporation to
notify domestic and international airlines in line with current regulations
and direct the Northern Flight Management Company to organise operations to
ensure that the flights are safe. Noi Bai is
one of the two biggest airports of Vietnam which play an important role in
boosting socio-economic development and ensuring defence-security. Works to
upgrade the 1B runway is part of the two-phase project to repair the Noi Bai
runways started on June 29 last year with an estimated cost of about 2.03
trillion VND (over 88 million USD). The upgrade of runway 1A is scheduled to
start on October 1 and complete before Tet (Lunar New Year) holiday./. Banks on the road of digital transformation Banks are
taking advantage of Vietnam's potential environment to conduct digital
transformation to meet increasingly technology-driven consumer demands. Vietnam is
home to a growing middle class. According to a report on the digital economy
in Southeast Asia in 2020 by Google, Temasek and Bain & Company,
Southeast Asia's digital economy is expected to gain $300 billion in 2025, of
which Vietnam is worth $52 billion. In addition,
Vietnam has a young population, which plays a major role in the financial
service system and will boost the diversity of financial services in the near
future. With a young population, Vietnam has the highest percentage of
digital consumers in Southeast Asia, with 41 per cent of customers across
sectors. Moreover,
the increase of super apps has created a value-added chain of goods and
services on a single platform and the government and management agencies are
opening up and encouraging digital banking systems to develop. Tran Diem
Chi, representative of Backbase in Vietnam highlighted that banks in Vietnam
have been more proactive in catching up with customers' needs, paying more
attention to competitors' activities and learning from success stories. “Banks are
moving towards a customer-centric rather than product-based approach, which
is why they see an increase in partnerships in their ecosystem. In the past
12 months, more and more banks invest in digital platforms not only for
retail customers but for small- and medium-sized enterprises, large
enterprises, and wealth management services. Vietnamese banks have invested a
lot but focused on fragmented and discrete solutions. However, banks have
also realised that to scale and to understand customers better, it is
important to aggregate data not only from their key solutions but from
partnerships with fintech and data across several sectors,” she revealed. Nguyen Thi
Quynh Giao, deputy general director in charge of the Retail and Banking
Division of BIDV said that banks have different digital transformation
strategies. “Digital
transformation is extremely challenging to large banks such as BIDV. Building
a digital ecosystem is also a challenge. Banks are not only concerned about
digital transformation, they also need to look at business conditions, market
development, and customer needs. It is imperative to participate in the
ecosystem of partners to get the best value for both the bank and the public. As for Dinh
Van Chien, deputy general director cum director of the Science and Technology
Division of TPBank, in order to build a digital ecosystem, banks must build
technology capacity and adopt new operating models with different processes
for providing and deploying products than the traditional model. Moreover,
banks should cooperate and connect with technology companies which provide
technology and capabilities that banks do not invest in and develop
themselves. Last but not
least, connecting with different fintech companies and partners such as
e-wallets and e-commerce platforms which have a large customer base, and
customer data, will help banks better understand customers. Vietnam still important link in global supply chain: experts Vietnam is
becoming a more important piece of the global supply chain, despite the
supply chain and shutdown problems facing the country at present, Executive
Director of the American Chamber of Commerce in Vietnam (AmCham Vietnam) Adam
Sitkoff has told Bloomberg Television. Acknowledging
the pandemic is hindering Vietnam from increasing its role in the supply
chain, Sitkoff said he still sees Vietnam attracting investment. He pointed
to Vietnam’s best-in-Asia growth performance of 2.9 percent last year. AmCham hopes
anti-COVID-19 policies are the least disruptive to business as possible as
firms look for ways to smooth deliveries leading into the critical year-end
holiday season, he added. Though
several international organisations have lower their forecast for Vietnam’s
growth, they retain a positive outlook on its recovery prospects. "Beyond
the near-term challenges, Vietnam’s medium-term economic prospects remain
favourable," analysts at Australia & New Zealand Banking Group Ltd
(ANZ) said in a recent note. ANZ analysts
said in the ANZ Vietnam Activity Tracker said the structural factors that
made Vietnam an attractive investment destination as a manufacturing hub
remain intact. There is
also ample room for policy support to nurture economic recovery further, they
stressed. However,
they warned about downside risks to the bank’s 5.2 percent full-year 2021
growth forecast for the country. Andreas
Stoffers, country director of the Friedrich Naumann Foundation (FNF) in
Vietnam, said that Vietnam's economic figures for the first half of 2021 are
not too bad, with its consumer price index (CPI) of 1.46 percent still under
control. He expressed
his belief that Vietnam will overcome the crisis as it did in 2020./. Vietnam accelerates the development of regulatory sandbox for
fintech The
Vietnamese government is pushing forward a regulatory sandbox for fintech
banking and cashless payments with a view to support the development of the
local fintech scene. Payments,
peer-to-peer lending, client identity support, and other banking support
services are the fintech categories that are expected to participate in the
sandbox. Fintechs will be able to test novel products and services in a controlled
environment and reach the end market faster. Amid the
Fourth Industrial Revolution, creating a regulatory sandbox for fintech is
seen as critical, especially in the short term, while the government is
developing a broad legal framework to meet market demands and avoid potential
dangers, tax losses, and illegal activities. Meanwhile,
financial innovators in Vietnam might profit greatly from a regulatory
sandbox because it would allow them to create and market innovative financial
products without fully complying with all regulatory rules. Financial
innovators would also be able to collect real market data on new financial
products and use it to improve their products and services. Scott
Krivokopich, managing partner from Singapore-based 1982 Ventures
told VIR, “The opportunities in Vietnam have an incredible potential.
The support and promotion of digital payments by the government is going to
unlock additional opportunities to build more fintech businesses that not
only help to address financial inclusion issues but also build a new layer of
infrastructure to strengthen the finance system.” Quang Ninh targets highest possible growth rate this year The northern
province of Quang Ninh is striving to achieve the highest possible growth in
the fourth quarter and the whole year although the COVID-19 pandemic was
forecast to remain complex. Authorities
of Quang Ninh held that in the remaining months of 2021, the pandemic will
keep developing complicatedly and greatly affecting production, business,
services, tourism, and budget collection activities. To obtain a
double-digit growth rate, the provincial People’s Committee has built three
growth scenarios for Q4 and the entire year, with advantages, difficulties,
and growth in each sector taken into account. The Standing
Board of the provincial Party Committee agreed that Quang Ninh will exert
efforts to achieve this year’s targets, set in the provincial Party
Committee’s Resolution 02-NQ/TU, at the highest possible level. Accordingly,
the gross regional domestic product (GRDP) growth is expected at over 10
percent and budget revenue to match the economic expansion. To that end,
the Standing Board emphasised the need to resolutely and persistently keep
“green zones” safe, push ahead with measures that have proved effective, and
take flexible solutions based on the reality. The province
looks to complete vaccination for 100 percent of eligible residents against
COVID-19 this year, combined with boosting the adherence to the 5K principle
(“khau trang” - wearing facemasks, “khu khuan” - disinfection, “khoang cach”
- keeping distance, “khong tu tap” - no gathering, and “khai bao y te” -
making health declarations) and technology application. It will also
step up administrative reforms, further improve the local business and
investment climate, and enhance discipline at grassroots public service
agencies, aiming to stay among the top provinces and cities in terms of the
Provincial Competitiveness Index (PCI), the Public Administration Reform
(PAR) Index, the Satisfaction Index of Public Administration Services
(SIPAS), and the Provincial Governance and Public Administration Performance
Index (PAPI). Besides,
local authorities will promote the efficiency and effectiveness of state
management over land and natural resources. They will also make detailed
planning schemes for Ha Long city, the Quang Yen coastal economic zone, and
others. The
apparatus of State agencies will be streamlined in tandem with bettering
their performance efficiency and effectiveness. Legal
bottlenecks will be removed while poor-performing rice cultivation and forest
land areas are converted, and site clearance for projects is accelerated. The
coordination between state agencies and localities in Quang Ninh will be
strengthened to boost the disbursement of all capital sources, thereby
creating an impulse for growth. In addition,
provincial authorities are requesting investors to quickly complete
infrastructure at Song Khoai, Nam Tien Phong, Bac Tien Phong, and Viet Hung
industrial parks. They are also encouraging secondary investors to speed up
manufacturing projects. Despite the
complex COVID-19 situation, which has substantially impacted all
socio-economic aspects, Quang Ninh has still managed to achieve the “twin
targets” of curbing the pandemic and boosting socio-economic development. The GRDP
growth rate in the first nine months of 2021 is estimated at 8.2 percent. In
particular, the processing and manufacturing industry has increased 36.2
percent year on year, serving as the main driving force for the industrial
sector. It has made up for the pandemic-caused downturn in services, tourism,
coal, and electricity sectors. Meanwhile,
nearly 34.38 trillion VND (over 1.5 billion USD) has been collected for the
State budget, equivalent to 67 percent of this year’s target. Administrative
reforms and the business environment have continued to be improved. Quang Ninh
is one of the three nuclei of the northern key economic region and viewed as
a strategic destination in northern Vietnam. It looks to
raise its GRDP by 10 percent on an annual average during 2020 - 2025, and the
per capita GRDP to over 10,000 USD by 2025. The urbanisation rate is expected
to surpass 75 percent, while the rate of poor households to go down to below
1 percent. The province
plans to complete new-style rural area building by the end of 2030./. Container cost chaos adds to baulking domestic limitations The container
crisis is causing headaches among exporters who are trying to ensure their
delivery schedules in the year-end shopping season. However, the global
demand vastly outruns supply, with plans of local steelmakers to support the
market with more empty containers representing merely a feeble silver lining. Vietnamese
manufacturers have spent more money on their deliveries to foreign buyers
amid the aftermath of the cargo ship stranded in the Suez Canal in March –
the effects of which are still being felt today. Moreover, the previous
closure of the Meishan Wharf had exacerbated the shortage of containers and
thus affected Vietnamese exporters. A few months
earlier, Minh Hai Seafood JSC had reduced its shrimp exports to the United
States due to the high transport costs. Last November, Minh Hai only had to
pay about $3,600 per container to the US, but in March this fee increased to
$7,000 and has now reached $11,500. Prices for refrigerated containers
increased even more. While in April one container would cost about $7,500 to
the US, the first week of July saw rates as high as $14,000 per container. The goods
flow mainly from Asia to the US and Europe, while the reverse direction sees
significantly lower shipping, which is one reason for the slowdown and
shortage of containers. Nguyen Van
Sang, CEO of Home Furnist JSC said, “The shipping prices to the German market
are now almost at the value of the goods, which renders the situation more
difficult. In addition, businesses often have to make several appointments
before even receiving a container.” The
imbalance of supply and demand in the market causes the fees for shipping
containers to increase. Le Kim Cuong, deputy director of Tan Cang Logistics
JSC, found that the capacity of deepwater ports to receive empty containers
remains limited. Ho Chi Minh City, Dong Nai, and Binh Duong have about 50
empty container depots, but only about a fifth of them is capable of directly
receiving empty containers from deepwater ports. According to
statistics from the Vietnam Maritime Administration, the transport fleet
under Vietnamese flag has currently 1,049 ships at a total of about 9.3
million deadweight tonnage, of which only 38 are container ships. “The lack of
containers may be prolonged because the pandemic has not been controlled in
many parts of the world,” said Tran Thanh Hai, deputy director of the Foreign
Trade Agency under the Ministry of Industry and Trade. Hai said
that container rental prices have increased due to two factors. Firstly,
because of the pandemic and social distancing, the cargo handling capacity at
EU and North American ports decreased, causing shipping lines to cut routes
and shortages with empty containers. The turnaround time for a container has
increased to more than 100 days, from previously 60 days, due to quarantine
policies in countries around the world. Secondly,
while the pandemic has caused production capacity in Latin America, Eastern
Europe, and South Asia to decrease, the US and EU have increased their
imports from East Asia, including China and Vietnam. In addition,
Vietnam has one major weakness in international forwarding as “there is not a
single large enough empty container depot, only small-scale and scattered
facilities,” said Hai. “These small depots cannot meet the demand for
exports, and thus the capacity to receive and manage empty containers of
Vietnamese enterprises remains limited.” Meanwhile,
Vietnam also has very few businesses that build and repair containers,
especially specialised containers, so they have to depend on foreign shipping
lines. The country has made efforts to partially improve the shortage of
containers, but has not been able to meet the demand for the year-end
shopping season. According to
Cuong of Tan Cang Logistics, many regions need to actively use new facilities
to avoid congestion and shortages when concentrating demand on one port. At
the moment, SNPL is active in shipping lines between Cai Mep Port and the Tan
Cang Long Binh depot, as well as at other depots such as Song Than, Nhon
Trach, and Hiep Phuoc. The world’s
major container manufacturers, including the three Chinese manufacturers that
supply about 80 per cent of the global shipping containers – CIMC, DFIC, and
CXIC – are at maxed-out capacity. However, the supply of containers is still
not enough to immediately reduce disruptions. UK-based
Drewry Shipping Consultants estimates that global container throughput in
2021 will reach a record high of more than 4.7 million twenty-foot equivalent
units (TEU), much higher than the 4.42 million TEU in 2018 and up to 52 per
cent higher than the 3.1 million TEU delivered in 2020. According to
Drewry, prices for new containers are increasing sharply at $6,160 per
40-foot container, up 90 per cent on-year. Usually, carriers will lease
containers for up to 10 years. However, the current shortage of empty
containers has made carriers tend to prolong their rental period. A part of
the missing containers could be added in the second quarter of 2022, when Hoa
Phat Container JSC puts its first products on the market. Vu Duc Sinh,
director of the company, said that the advantage of scale and its initiative
in acquiring raw materials could ensure more affordable empty containers,
able to compete with Chinese producers. Hoa Phat had
detailed plans for container production in 2020, when the first price hikes
amid the pandemic occurred. Hoa Phat’s factory has a capacity of 500,000 TEU
per year, focusing on popular containers with a length of 20-40 feet. However, the
current shortage of empty containers will only be resolved when the container
turnover cycle returns to normal, and this can likely only be achieved by
late 2022, according to forecasts of transportation experts. In the first
six months of 2021, the volume of goods through Vietnam’s seaports was
estimated at more than 425 million tonnes, up 6 per cent over the same period
in 2020. In which, exports reached more than 106 million tonnes, up 9 per
cent, and imported goods reached over 133 million tonnes, up 2 per cent over
the same period last year, marking a stable growth during the pandemic. For
container cargo alone, the throughput of seaports was estimated at 14.7
million tonnes, up 21 per cent over the same period in 2020, in which export
containers hit a volume of more than 4.8 million tonnes, up 20 per cent.
Meanwhile, imported container cargo reached more than 4.7 million tonnes, up
21 per cent. Some
seaports have increased their throughput volume, such as Thai Binh (up 65 per
cent), Dong Thap (up 56 per cent), and Quang Ngai (up 38 per cent), among
others. Vinh Phuc adopts solutions to promote the development of
supporting industries The northern
province of Vinh Phuc has set the goal of having 70 enterprises eligible to
become first-tier and second-tier suppliers for manufacturers of automobile,
motorcycle, electronic products and partially supply for large enterprises or
corporations or exports by 2030. This is a
part of a plan issued by the People’s Committee of Vinh Phuc Province on the
implementation of the Government Resolution on solutions to promote the
development of supporting industries in Vietnam. The
development of supporting industries is considered as one of the important
solutions to attract investment, helping the province soon fulfill its
goal of becoming a major centre of the automobile and motorcycle
manufacturing industry. To realise
the above goals, the provincial People's Committee worked out solutions such
as carrying out synchronously projects to boost the development of supporting
industries, continuing administrative reform to create favourable business
environment for enterprises, and effective operation of the provincial
Industrial development supporting the technical centre. Regarding
taxes, finance and credit, the province planned to offer preferential
interest rates for corporate income tax with investment projects on products
on the list of supporting industrial products prioritised for
development. Incentive policies on interest rates for enterprises
when borrowing short-term capital at credit institutions and compensate for
the difference in interest rates for medium and long-term loans would also be
included. Businesses
in the province were encouraged to expand cooperation with domestic and
foreign partners to participate in the global value chain. They were also
advised to step up promotion to attract investment from large corporations. More support
would be given to enterprises that engaged in innovation, research
development, and technology transfer. It was
necessary to ensure the scale of the domestic market, promote the foreign
market and take advantage of the FTAs that Vietnam has signed with other
partners, according to provincial authorities./. Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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