VIETNAM BUSINESS NEWS SEPTEMBER 26
15:03 Domestic
retail petrol prices hit three-year high Domestic
retail petrol prices rose by more than VND500 per litre on average as of 3pm
on September 25 following the latest price adjustments made by both the
Ministry of Industry and Trade and the Ministry of Finance. This latest
changes have seen the retail price of E5 RON 92 bio-fuel record a rise of
VND573 per to hit VND20,716 per litre, while that of RON 95 increased by
VND548 to peak at VND21,945 per litre. Furthermore,
the selling price of diesel 0.05S was capped at VND16,586 per litre, while
the prices of kerosene and mazut oil stood at VND15,643 per litre and
VND16,580per kilo, respectively. Retail
petrol prices have therefore witnessed an increase for the second consecutive
time over the past month, with the price of E5 RON 92 bio-fuel rising to its
highest level since October, 2018. During the
latest price adjustments, the two ministries decided to use the Price
Stabilization Fund for RON 95 at VND150 per litre, diesel and kerosene at
VND200 per litre and mazut oil at VND100 per kilo. Both
ministries meet every 15 days to review fuel prices and make relevant
adjustments to keep domestic prices in line with global market fluctuations. Vietnamese aquatic products, fruits introduced at food
exhibition in Russia A number of
Russia businesses displayed Vietnamese foods and agricultural products at the
30th International Food Exhibition (WorldFood 2021) in Moscow from September
21 - 24, which attracted over 600 businesses from 30 other countries
worldwide. The
businesses introduce diverse products imported from Vietnam, such as plants
and vegetables, seafood, processed poultry, milk and dairy products,
confectionery, organic food, and beverage products. Mariso
Moscow Co.,Ltd - the distributor of products by Hai Vuong Co. Ltd of
Vietnam’s central Khanh Hoa province, exhibited frozen tuna fillet and canned
tuna products of the Vietnamese company at the event. Before the
COVID-19 pandemic, Mariso Moscow sold about 5,000 tonnes of frozen tuna
fillet each year in the Russian market. However, it is now facing some
difficulties in importing tuna. Fresh fruits
and vegetable products of Vietnam were also introduced by Russian importers
at the exhibition. Russia's
MevaFresh Co., Ltd is currently collaborating with a Vietnamese enterprise to
import Vietnamese fresh fruit products to serve the demand in the Moscow
market. Currently,
this company is working with Vietnamese partners to accelerate the transport
of two containers of fresh fruits from Vietnam to Russia. Aslan
Salpaganov, Director of MevaFresh said that his company wants to regularly
buy fresh fruits from Vietnam. However, due
to the COVID-19 pandemic, MevaFresh is meeting difficulties in transporting
goods by containers from Vietnam to Russia, he added. Vietnam’s rubber export to US sees sharp surge Vietnam
exported 23,510 tonnes of rubber worth 41.87 million USD to the US in the
first 7 months of 2021, up 61 percent in volume and 92.3 percent in value
year-on-year. According to
the Ministry of Industry and Trade’s Export -Import
Department, Vietnam became the 11th largest rubber supplier of the
US in the period, accounting for 2.2 percent of the US’s total imported
rubber, up slightly from 1.5 percent in the same period last year. Notably,
Vietnam is the fourth largest supplier of natural rubber to the US with
23,460 tonnes worth 41.65 million USD, up 60.8 percent in volume and 92.9
percent in value over the same period of 2020. According to
statistics of the United States International Trade Commission, the US
imported 1.09 million tonnes of rubber with a total value of 2.19
billion USD in the period, a year-on-year increase of 12 percent in
volume and 27.6 percent in value. Indonesia, Thailand, Canada, the Republic
of Korea and Ivory Coast were the largest suppliers of the product to the
US./. FDI businesses contribute ideas for production restoration in Da
Nang Representatives
of foreign invested enterprises and business associations in the central city
of Da Nang have made a number of proposals to the city on measures to recover
production, one of which is to speed up COVID-19 vaccination for workers, in
the hope of quickly resuming full production. At a meeting
with municipal authorities on September 24, they asked for the city's help in
regular COVID-19 testing fees for their workers, and favourable conditions
for foreign experts to enter the city and the transport of goods. They also
hoped to be updated with pandemic control regulations of the city. Kim Jinmo,
Vice Director of the Korea Trade and Investment Promotion Agency (KOTRA) in
Da Nang said that Korean businesses support the city's pandemic fight, but
the quick change in pandemic response policies makes it hard for them to
adjust. He said as the pandemic has basically been contained, the city should
build a scenario for safely adapting to the pandemic and maintaining
production at the same time. Ciprian
Bota, Director for Production of Universal Alloy Corporation urged the city
to give priority to giving the second shot of vaccine to workers so that
enterprises can resume operation at full capability. About 90 percent of
workers in his corporation have received the first shot. Ikeda
Naoatsu, President of the Japanese Chamber of Commerce and Industry in Danang
(JCCID) underlined the need to quickly resume trade connectivity with the
outside, as many businesses are suffering from the disruption of supply
chains, . He also suggested the city loosen regulations on travel permits,
especially for workers. Secretary of
the city Party Committee Nguyen Van Quang said that the ideas given by
foreign investors will help the city design a plan for pandemic prevention
and control and socio-economic development amid COVID-19. The city
will promptly issue support policies to enterprises and workers, he said,
affirming that the city will strive to inject the first COVID-19 vaccine
shots to all local workers in early October and the second shots by the end
of this year, while supporting local firms with 50 percent of COVID-19
testing fees. He lauded
efforts by FDI firms in pandemic prevention and control, expressing his hope
that they will continue to strengthen the application of information
technology in pandemic control, while increasing communications among workers
on the need to strictly implement COVID-19 prevention measures, and providing
support to workers to ensure their normal life./. Vinamilk represents ASEAN in Top Valuable Global Brands in 2021 With a brand
value of 2.4 billion USD, Vinamilk is the only representative of
Southeast Asia to be listed in four global rankings on the world’s most
valuable and strongest brands in 2021. In Brand
Finance’s latest Food & Drink 2021 report, Vinamilk was ranked
eighth in the world’s top 10 most valuable dairy brands with a brand value of
2.4 billion USD, up 12 percent compared to 2020. In addition,
Vietnam’s largest dairy firm is listed as one of the three most potential
dairy brands with the second-highest score. Out of the
dairy industry, Vinamilk also appeared in the two global rankings of the food
industry, including the “Top 5 strongest global food brands” and “Top 30 of
the 100 most valuable food brands worldwide”, placing 27th position, up 9
notches over 2020. According to
experts in the food and beverage industry, Vinamilk’s appearance in global
rankings has demonstrated its strong sustainable development strategy,
especially as the COVID-19 pandemic brought the world economy to a halt,
affecting supply chains and making consumers tighten their purse strings. According to
Tran Thanh Hai, deputy director of Import-Export Department under the
Ministry of Industry and Trade, dairy products are not Vietnam's advantageous
export commodity nor traditional agricultural product, but with active
contribution and efforts of Vinamilk, Vietnam increased its export value. “In addition
to ensuring export product quality, building a business brand which also
represents the country is very important, showing the development of an
enterprise as well as Vietnam’s dairy industry,” Hai said. Previously,
Vinamilk has also appeared in prestigious world rankings with high positions.
Most recently, Vinamilk was ranked 36th in the top 50 world dairy producers
with the highest turnover and is also the only representative of Southeast
Asia in this list. “From being
a milk importer, we are very proud that after 45 years of efforts and
development, Vinamilk has stood in high positions in the global rankings in
terms of both revenue size and brand value,” said Mai Kieu Lien, Vinamilk’s
General Director. “These
results will further motivate Vinamilk's leaders and employees to make more
efforts to introduce the best products to consumers, and to bring Vietnamese
milk to higher places in the world.” Vinamilk
currently has a system of 13 factories, 13 domestic dairy farms, three
factories abroad and one large-scale dairy complex project in Laos. Braving
challenges in the past two years due to COVID-19, Vinamilk has maintained
stable production and business growth, especially posting impressive export
growth. In 2020,
export revenue reached 5.56 trillion VND (242 million USD), up 7.5 percent
compared to 2019. In the first six months of 2021, Vinamilk's export
activities recorded double-digit growth, reaching 2.8 trillion VND, up 13.1
percent compared to 2020. The company
is continuously expanding its foothold in the world. It is investing in the
US, New Zealand, Cambodia, Laos and most recently it has set up a joint
venture in the Philippines with Del-Monte which expects to launch products
this month./. Vinamilk represents ASEAN in Top Valuable Global Brands in 2021 With a brand
value of 2.4 billion USD, Vinamilk is the only representative of Southeast
Asia to be listed in four global rankings on the world’s most valuable and
strongest brands in 2021. In Brand
Finance’s latest Food & Drink 2021 report, Vinamilk was ranked
eighth in the world’s top 10 most valuable dairy brands with a brand value of
2.4 billion USD, up 12 percent compared to 2020. In addition,
Vietnam’s largest dairy firm is listed as one of the three most potential
dairy brands with the second-highest score. Out of the
dairy industry, Vinamilk also appeared in the two global rankings of the food
industry, including the “Top 5 strongest global food brands” and “Top 30 of
the 100 most valuable food brands worldwide”, placing 27th position, up 9
notches over 2020. According to
experts in the food and beverage industry, Vinamilk’s appearance in global
rankings has demonstrated its strong sustainable development strategy,
especially as the COVID-19 pandemic brought the world economy to a halt,
affecting supply chains and making consumers tighten their purse strings. According to
Tran Thanh Hai, deputy director of Import-Export Department under the
Ministry of Industry and Trade, dairy products are not Vietnam's advantageous
export commodity nor traditional agricultural product, but with active
contribution and efforts of Vinamilk, Vietnam increased its export value. “In addition
to ensuring export product quality, building a business brand which also
represents the country is very important, showing the development of an
enterprise as well as Vietnam’s dairy industry,” Hai said. Previously,
Vinamilk has also appeared in prestigious world rankings with high positions.
Most recently, Vinamilk was ranked 36th in the top 50 world dairy producers
with the highest turnover and is also the only representative of Southeast
Asia in this list. “From being
a milk importer, we are very proud that after 45 years of efforts and development,
Vinamilk has stood in high positions in the global rankings in terms of both
revenue size and brand value,” said Mai Kieu Lien, Vinamilk’s General
Director. “These
results will further motivate Vinamilk's leaders and employees to make more
efforts to introduce the best products to consumers, and to bring Vietnamese
milk to higher places in the world.” Vinamilk
currently has a system of 13 factories, 13 domestic dairy farms, three
factories abroad and one large-scale dairy complex project in Laos. Braving
challenges in the past two years due to COVID-19, Vinamilk has maintained
stable production and business growth, especially posting impressive export
growth. In 2020,
export revenue reached 5.56 trillion VND (242 million USD), up 7.5 percent
compared to 2019. In the first six months of 2021, Vinamilk's export
activities recorded double-digit growth, reaching 2.8 trillion VND, up 13.1
percent compared to 2020. The company
is continuously expanding its foothold in the world. It is investing in the
US, New Zealand, Cambodia, Laos and most recently it has set up a joint
venture in the Philippines with Del-Monte which expects to launch products
this month./. France increases pepper imports from Vietnam France
imported nearly 2.900 tonnes of pepper worth EUR8.2 million from Vietnam in
the first seven months of 2021, up 28.6% in volume and 44.3% in value year on
year, according to Eurostat. Notably,
Vietnam’s pepper market share in total French imports rose to 37.2% in the
reviewed period from 30.7% from a year earlier. The
Import-Export Department under the Ministry of Industry and Trade reports
that France is one of the important import markets for global pepper
exporters. Apart from domestic consumption, France imports pepper for
re-export to other European countries. In Vietnam,
the gradual easing of social distancing post COVID-19 has enabled businesses
to increase the purchase to ensure a sufficient supply of pepper for export, that
fuels pepper prices to rise considerably. However, to
have a competitive advantage in the world spice market, the Import-Export
Department recommends that localities and businesses restore production to
ensure export supply as soon as the COVID-19 pandemic is brought under
control. Vietnam represents promising market for Polish businesses in SEA Vietnam is
one of the most promising markets for Polish businesses in Southeast Asia,
especially following the 2020 enforcement of the EU-Vietnam Free Trade Agreement
(EVFTA), according to Piotr Harasimowicz, chief representative of the Polish
Trade and Investment Agency in HCM City. The European
Parliament's Committee on International Trade (INTA) reports Vietnam’s
exports of goods and services to the EU are anticipated to increase by EUR15
billion, while EU exports to the country are set to rise EUR8.3 billion by
2035. The EVFTA is
expected to eliminate roughly 99% of tariff on goods between the bloc and
Vietnam. The pharmaceutical, agricultural, machinery, and automobile sectors
are all set to benefit the most from the bilateral trade liberalisation. Most
notably, almost half of pharmaceutical products from the EU, including
Poland, are anticipated to be exempt from customs duties of 8% following the
enforcement of the trade pact. Statistics
released by Poland's trade and investment agency indicate that bilateral
trade between Vietnam and the Polish market surpassed the US$3 billion mark
in 2019, whilst recording double-digit growth over the past few years. The major
fields for co-operation include farm produce, pharmaceuticals, cosmetics,
green technology, and wastewater treatment. There are also strong prospects
ahead for co-operation in several potential areas of information technology,
heavy industries such as mining, shipbuilding, machinery and equipment for
agricultural production, and food processing. Moreover,
Vietnam mainly exports electronics and equipment, footwear, textiles and
agricultural commodities such as coffee, pepper, coconut and cashew nuts to
the Polish market. State Bank of Vietnam draft regulations on social housing
lending cause controversy. The State
Bank of Vietnam (SBV) has proposed that commercial banks not be allowed to
provide preferential loans to low-income people seeking to purchase, lease
and lease-purchase social houses. The proposal
is part of draft amendments to the central bank’s Circular No. 25/2015 on
instructions for concessional loans for social housing. Specifically,
people who want to purchase, lease or lease-purchase will only be able to
borrow money at low-interest rates from the Vietnam Bank for Social Policies
(VBSP). The
rationality for the amendment, according to the central bank, is to make it
suitable to the current Housing Law 2014, which stipulates that the VBSP is
the only source of funds for social housing seekers. Currently,
some commercial banks are designated by the SBV to provide preferential loans
for social housing buyers, including Joint Stock Commercial Bank for Foreign
Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Industry and
Trade of Vietnam (Vietinbank), Bank for Agriculture and Rural Development of
Vietnam (Agribank), Joint Stock Commercial Bank for Investment and
Development of Vietnam (BIDV). Instead of mobilising people’s savings, these
banks use funds from the State budget to lend to would-be home buyers. Le Hoang
Chau, chairman of the HCM City Real Estate Association (Ho REA), said that in
the 2015-20 period, few low-income earners were able to access preferential
lending to buy social houses, due to a shortage of supply and slow allocation
of capital from the State budget for commercial banks to disburse. Therefore,
the draft amendment, he said, would negatively affect the State’s policy of
offering long-term concessional loans to home buyers at low-interest rates. Low-income
people will therefore be deprived of opportunities to buy, rent or rent-buy
social houses. This in turn will mean that the State’s target of ensuring
social security might not be met. From the
perspective of project investors, Dinh The Quynh, Deputy General Director of
Hai Phat Land, said to BizLive news that many investors had not been keen on
social housing projects, due to complicated licensing procedures and low
benefits, leading to the short supply of social housing. Thus the
amendments might further discourage investors, as it would be more difficult
for people to acquire cheap capital, especially when it had already been
difficult to obtain loans from VBSP. From 2018 to
2020, the funds lent to social housing buyers reached VND1.26 trillion
(US$55.7 million), equivalent to only 12 per cent of the State funds
allocated to VBSP for the social housing development purpose. Dang Van
Quang, general director of Thai Nam Real Estate Business and Management Joint
Stock Company, however, said the draft amendment was quite reasonable because
it would be unlikely to affect many people. Instead of
trying to get a loan from many different commercial banks, people would
instead go to one place – the VBSP. In nature, the amendment would not change
the source of capital as the capital for lending social housing buyers would
still be from the State budget, Quang added. While VBSP
would be the only source of funds for the social housing buyers, it would
have to operate more actively and openly to make it easier for people to
access this cheap capital, he stressed. According to
economic expert Dinh The Hien, policies on social housing change in line with
targets of social security and welfare programmes, but are not subject to the
financial law. Therefore, it is time to separate the commercial banking
system from the policy of social housing development. It is
necessary to continue preferential loan deals for social housing programmes,
but commercial banks should be withdrawn from the programme and this
responsibility should be assigned to VBSP or Housing Development Fund, Hien
said. Hotel/quarantine model offers a lifeline for many in tourism Converting
hotels and resorts into quarantine centres has offered many hospitality firms
a lifeline during the COVID-19 pandemic. The pandemic
has hit Viet Nam's tourism sector hard and among the most affected was the
hotel industry. Hotel occupancy rates in Ha Noi, Da Nang and HCM City dipped
to the lowest levels in the last ten years, according to a recent survey by
the Vietnam National Administration of Tourism. Occupancy
rates among hotels with three stars and more in Ha Noi have dropped to a
dismal 30 per cent at US$81 per night on average in 2020, compared to a 74
per cent at $113 per night pre-pandemic. The first half of 2021 saw a further
decline to 25 per cent at $72 per night. Things have
been even worse for Da Nang, the country's largest tourism hub. Occupancy
rates fell from an average of 61 per cent at $108 per night in 2019 to 17 per
cent at $54 per night in 2020. The first half of 2021's figure was reported
at 11 per cent at $49 per night. HCM City was
a rare exception with its hotel occupancy rate increased by 5 per cent from
its lowest to 18 per cent at $69 per night during the second quarter of 2021.
It has been largely credited to the conversion of the city's hotels and
resorts to quarantine centres for foreign arrivals. Twenty-five hotels in the
city with over 3,000 rooms have been converted for said purpose, with most of
them being located in downtown districts and areas near the Tan Son Nhat
International Airport. Notably, some hotels have reported an occupancy rate
of 78 per cent or greater since the city's authority gave the green light. It has been
a welcoming sign for the sector, especially for small and medium-sized
businesses. While just about 10 per cent of the city's hotel managed the
conversion, more might be able to follow suit in the future to meet demand
for quarantine space and COVID-19 prevention, said Troy Griffiths, deputy
managing director of Savills Vietnam. There has
been rising demand for quarantine space among foreign diplomats, experts and
flight crews, who frequently entered Viet Nam, according to Griffiths. Ha Noi has
been overseeing 20 hotels/quarantine centres with a combined capacity of
1,600 rooms and HCM City 34 hotels/quarantine centres with a combined
capacity of 3,000 rooms, respectively. Griffiths
said he was optimistic about the sector's recovery during the last months of
the year. With 80 per
cent of the sector's business made up of Vietnamese nationals and foreign
residents living in Viet Nam, as soon as the virus can be put under control
tourism can be expected to bounce back. The introduction of vaccine passports
and promotion packages by hotels and resorts should be able to speed things
along. Binh Phuoc unveils investment incentives as it seeks to
revive economy  Phuoc Long Town in Binh Phuoc Province seen from the top of Ba Ra Mountain, a tourist destination that attracts a large number of visitors. The southern
province of Binh Phuoc plans to offer investors incentives and support to
revive its economy after the COVID-19 pandemic ends. Tran Tue
Hien, chairwoman of its People’s Committee, said at a recent meeting the
province was preparing to implement a recovery plan, which includes
incentives to attract investments. Priority
would be given to investment in key sectors such as technology, information
technology, supporting industries, agriculture, environmental protection,
infrastructure, culture, sports, tourism, and healthcare, she said. Vo Sa,
director of the province Department of Planning and Investment, said the
incentives would include waiver and reduction of land and water surface
rents, income tax and licensing fees. New projects
in certain fields or located in extremely disadvantaged areas would get a 50
per cent reduction in land rents and have to only pay tax of 10 per cent for
15 years, he said. Hien said
the National Steering Committee for Covid-19 Prevention and Control has
classified Binh Phuoc among provinces and cities that had kept the COVID
outbreak under control. The province
identified pandemic prevention as a key task together with economic revival,
job creation and social security, she said. “We are
determined to live and work safely with the pandemic.” The
resumption of business activities is imperative, but it should be done step
by step with a suitable roadmap to achieve the “double goal” of containing
the pandemic and reviving the economy, she said. The province
would consider allowing enterprises applying the ‘three-on-site’ (working,
eating, resting at the factory or workplace) or 'one route, two destinations'
model (workers travelling between their accommodation and the factory on a
set route with no stops on the way) to increase the number of workers or get
new ones. But for this
they should not have had new COVID-19 cases in the last 14 days, and the
workers who come in must be living in a green zone (COVID-free area) or have
received at least one dose of a vaccine. The province
is also seeking to support businesses that have been forced to suspend
operations due to the pandemic, and speed up vaccination of factory workers. Binh Phuoc
is one of eight provinces and cities in the southern key economic zone along
with HCM City and Binh Duong, Ba Ria - Vung Tau, Dong Nai, Tay Ninh, Long An
and Tien Giang provinces. Green finance promotes Vietnam’s sustainable growth Due to the
adverse impacts of climate change, green growth financing projects
play a very important role for the sustainable development of Việt Nam,
experts have said. According to
the World Bank, Việt Nam is one of the five countries most likely to be
affected by climate change because most of the population lives in low-lying
coastal areas. It is estimated that climate change will reduce the country's
national income by up to 3.5 per cent by 2050, Vietnam News Agency reported. Meanwhile,
an International Finance Corporation (IFC) study shows climate finance
in Việt Nam accounts for only about 5 per cent of total bank loans,
equivalent to US$10.3 billion, and the value is projected to increase
significantly in the coming years. The IFC said
the implementation of the national target of reducing total greenhouse gas
emissions by 9 per cent by 2030 to mitigate the effects of climate change
will provide a climate investment opportunity worth $753 billion for Việt Nam
in the 2016-30 period. Meanwhile, a
survey by international rating agency MSCI found 79 per cent of
investors in Asia-Pacific significantly increased their investment in
Environmental, Social & Governance (ESG) in 2020 in response to
uncertainties of the COVID-19 pandemic and 57 per cent of them planned
further study to make investment decisions by the end of 2021. Although the
growth rate of foreign direct investment (FDI) in Việt Nam is slowing down
due to the negative impact of the pandemic, capital flows into green growth
projects are still quite positive. Especially,
through domestic credit institutions, international financial institutions
are playing an important role in financing green economic development in Việt
Nam. Recently,
French development finance organisation Proparco granted a US$50 million loan
to HDBank to lend green projects to promote sustainable development. The IFC last
month also provided a $100 million long-term loan to the Orient Commercial
Joint Stock Bank (OCB) to further promote the contribution of the private
sector in green and sustainable growth in Việt Nam. The green
growth trend of international investment organisations is opening up many
opportunities to raise capital for Vietnamese firms, however, in order to
receive the international capital funding, local firms also need to make more
efforts and be consistent with their planned development goals. According to
HSBC Vietnam, as Việt Nam's economy has developed rapidly over the past
decade, the country is fertile land for investors looking for growth.
However, to sustain the growth, the country will need to develop capital
markets, and foreign capital will play an important role. HSBC
assessed anti-climate change initiatives and green finance programmes in Việt
Nam are still in their infancy, but this frontier market is gradually
catching up with governance and social factors. Many
investors were surprised to learn that Việt Nam has a detailed set of
corporate governance rules and is on the right track with meeting a
significant number of the 17 sustainable development goals of the United
Nations. For example,
in the renewable energy sector, Việt Nam is recording the highest level of
investment in renewable energy in the ASEAN region. To attract more FDI and
provide foreign companies with a more sustainable energy source, the country
has demonstrated a strong commitment to renewable energy. However,
with the increasing importance of investing in ESG, HSBC experts believe
Vietnamese firms will be under greater pressure to comply with ESG standards
so they will focus more on sustainable growth and further make public on ESG
issues. Investors will
demand more from firms. Therefore, firms operating in the high-carbon
emission sector need to rethink their business models and strategies, Vietnam
News Agency quoted Wai-Shin Chan, Head of HSBC’s Climate Change Centre of
Excellence and also Head of Environmental Social Governance (ESG) Research,
as saying. More room for insurance stocks to grow post pandemic Unlike other
financial services like banks and securities, insurance stocks haven’t
recorded significant gains despite positive business results and a bright
growth outlook. The draft
amended Law on Insurance Business is carried out with the aim to apply
international experiences and boost the development of the Vietnamese market. Viet Nam has
high potential for insurance services, but the development pace is still low
compared to the region and world. The amended Law on Insurance Business is
expected to take effect from 2023. In the first
eight months of the year, the insurance market still recorded positive growth
despite the pandemic. By the end of August, total assets in the insurance
market were estimated at nearly VND643.6 trillion (US$28.3 billion), up 22.1
per cent year-on-year, with total premium revenue during the period also
rising nearly 17 per cent to more than VND133 trillion. Different
from other industries that were affected by the COVID-19 pandemic, the
insurance industry's profit growth in the first half of the year was quite
strong. Data of nine
listed insurance companies compiled by nhadautu.vn showed that in the first
six months of the year, there were five to nine insurance companies with
profit growth of 40 - 55 per cent compared to the same period last year. Of which,
Bao Minh Corporation (BMI) posted the highest profit growth of 55.4 per cent,
followed by Vietnam National Reinsurance Corporation (VNR) with profit growth
of 54.6 per cent, Petrolimex Insurance Corporation (PGI), up 49.9 per cent,
Military Insurance Corporation (MIG), up 44.3 per cent, and Bao Viet Group
(BVH), up 41.2 per cent. During
2019-2020, some insurers recorded impressive performance, such as Post -
Telecommunication Joint - Stock Insurance Corporation (PTI)’s profit jumped
475 per cent and 113 per cent in 2019 and 2020, respectively. BIDV Insurance
Corporation (BIC) also witnessed a growth of 25 per cent and 39 per cent,
respectively, while MIG’s profit surged 30 per cent and 37 per cent,
respectively. On the stock
market, the share prices of these listed insurers also grew well in the first
months of the year. Accordingly, the market prices of five to nine insurance
companies jumped 40 - 145 per cent, with VNR shares climbing 145 per cent,
MIG shares up 66 per cent and PTI shares up 57 per cent. Notably, all
insurance stocks reported good performance in the past two months. Some
stocks have started gaining since the end of June or the beginning of July
like MIG, BMI, PVI and PGI shares, or from August like BIC shares. BVH was the
only stock that posted losses compared to the beginning of the year, but has
recovered from the bottom since mid-July. However, the
insurance group's profit growth still lags behind that of other financial
sectors like banks or securities. The strongest growth of the groups’ share
prices since the beginning of the year was only 145 per cent, while there
were many bank and securities stocks that climbed by even 4-5 times. In general,
the total capitalisation of the insurance industry has only increased by 2.8
per cent since the beginning of the year, largely due to the losses of nearly
20 per cent of BVH shares. The
capitalisation of the insurance group on the stock market occupies a very
small proportion, just over 1 per cent of the total market capitalisation,
meaning there is more room for growth among insurance stocks in the future. Financial
indicators of insurance stocks show that the industry has more potential to
grow as more than half of these nine firms have price per earning ratio (P/E)
of less than 15x and average price to book value ratio (P/B) of 1.5-1.7x. The
complicated developments of the COVID-19 pandemic are creating short-term
risks for insurance companies as they are faced with falls in customer
income, the risk of inflation and an increase in compensation. However, Bao
Viet Securities Company (BVSC) said that in the short term, insurance stock
prices would still receive momentum from the state capital disinvestment
plan. In 2021, a number of businesses plan to divest part of their capital
such as BMI, PTI, BVH, and MIG. Moreover,
Viet Nam is always in the top countries with the highest growth rate of
premium revenue in the world, with an average annual growth of over 9.3 per
cent. BVSC
believes that once the COVID-19 pandemic is over, the non-life insurance
industry will quickly return to the previous average growth of 15 per cent,
while life insurance will still maintain high growth of 25-30 per cent/year. SSC to strictly crack down on stock manipulation cases The State
Securities Commission of Viet Nam (SSC) said that it is implementing strict
supervision and inspection measures to clarify abnormal signs in the market,
especially stock manipulation cases. The move
comes after some stocks’ prices recently showed signs of rising unusually. The
development of information technology to facilitate online trading activities
and the quick adaptation of securities companies have helped the stock market
boom in terms of liquidity. Of which, cash flows from new investors have
contributed a large part. Meanwhile
the number of groups and topics related to stocks have also surged for more
than a year. Many organisations and individuals consider these channels a
useful solution to approach new investors, communicate and support their
existing customers. Many online
forums and groups provide objective and multi-dimensional information,
exchange policy information, market developments, business results, or
corporate information. This is a
positive point, helping the stock market come closer to people, improve
knowledge and skills for investors, especially new investors. However,
there are still some forums and online groups suggesting buying or selling
stocks subjectively. These stocks showed signs of abnormal rises and falls.
There is also the phenomena of many stocks consecutively hitting celling
prices despite losses in business activities. Based on
regular observation and reports from the press, public opinion about
suspicious phenomena on social networks, as well as the movements of some
related stocks, the SSC’s supervisory and inspection units have been closely
coordinating with relevant authorities to learn about and collect information
on the above-mentioned issues, the SSC said. Despite the
impact of the COVID-19 pandemic, monitoring and handling of violations is
still conducted regularly and continuously. Inspection activities are
adjusted more flexibly to meet actual conditions. After the
pandemic is more effectively controlled, and provinces and cities ease social
distancing measures, management agencies will speed up the implementation of
direct inspections, while ensuring strict compliance with COVID-19 prevention
measures. Through
monitoring and inspection, if any violation is detected, it will be strictly
handled in accordance with the law, and even be transferred to the
investigating agency if there are criminal elements. Currently, stocks with
unusual movements are closely monitored by many agencies. “If there is
a violation, it will be punished according to the provisions of the law. In
particular, market and stock price manipulation cases will be a priority and
strictly handled to ensure deterrence and discipline for the market,” said a
leader of the SSC. In first
eight months of the year, the SSC has deployed seven teams to inspect
investors' transactions. Based on the
results of regular monitoring and inspection activities, the SSC has issued a
total of 252 administrative sanctioning decisions with fines totalling VND9.6
billion (US$420,870). More and
more cases of manipulating the market and stock prices have been discovered,
severely punished, and even criminally handled. In early
August, Ha Noi Department of Information and Communications also issued a
decision to impose an administrative penalty of VND15 million on an
individual in Hai Ba Trung District for using social media accounts to
provide fake dispatches of the Ho Chi Minh Stock Exchange (HoSE) and to
provide false information. This is the
first time an individual has been fined for providing fake information about
Viet Nam's stock market on social media. During July
- August, SSC also fined three individuals for violating disclosure norms in
bank stock trading. Buyers seek loan help The pandemic
as a force majeure event has crippled people’s ability to meet loan repayment
requirements, but while the real estate sector also appears susceptible to
the crisis, the State Bank of Vietnam and commercial lenders have taken
measures to deal with worrisome property assets. Prolonged
social distancing and the sharp decline in incomes are burdening many people
with active loans from banks. Nguyen Manh Ha, a marketing officer at a
footwear company, said that in the past few months, he only earned 70 per
cent of his previous income. Meanwhile, Ha’s wife is a trader in Phuoc Binh
market in Thu Duc city, which had been closed, leaving her without an income. As a result,
the couple currently cannot afford to pay their bank debt of $430 a month for
an apartment in Thu Duc city. The total loan of $30,000 involves a fixed
interest rate of 10.5 per cent in the first year, which will fluctuate to up
to 11.5 per cent per year in the following years. “The sharp
decrease in our income forced me to reserve almost all of my salary to pay
the loan, and so it is hard for me to cover other expenses,” said Ha. Ha’s case is
not unprecedented. Le Minh Xuan, an employee at a trading company in Ho Chi
Minh City, said that she has worked from home since the social distancing
began and only receives 70 per cent of her regular salary. With a loan
of $43,000 and a current interest rate of 10.5 per cent a year, Xuan and her
husband do not know how to pay back their debts. “If banks do
not reduce their interest rates for homebuyers, many people like me will be
unable to pay back their loans. This will set off a domino effect to the
banking system, other homebuyers, and the real estate market in general,”
Xuan said. Xuan
suggested that if banks cannot lower interest rates right now, they could
temporarily allocate loan parts to other borrowers until the disease is bated
away. “In that case, my debt would only be about $260 per month, and I would
be able to pay normal expenses for the family,” she suggested. Homebuyers
are not the only ones who are wishing for a bank interest rate reduction.
Many real estate investors are worried because they are also depending on
loans from banks to buy assets with the aim to resell them for profits. However, due
to the current restrictions, property sales will remain low because buyers
are maintaining a wait-and-see attitude while they still have to pay bank
interests. Economist
Dinh The Hien said that while most businesses were negatively affected, banks
still continuously announced high profits. “With these profits, banks should
be able to share the difficulties of homebuyers,” said Hien. He recommended
that banks should establish policies to extend loans and reduce interest
rates to support borrowers. Moreover, Hien hopes that banks could have more
suitable policies for homebuyers for their first house. Le Hoang
Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA)
suggests commercial banks could consider reducing lending interest rates by
two per cent per year for homebuyers, which could ensure benefits for all
parties. In addition
to the interest rate policy, HoREA also suggested that the Ministry of
Finance and the General Department of Taxation support land use taxation, and
that the ministry considers proposing a delay of land use fees for commercial
housing projects until the end of the year. DKRA
statistics revealed that many investors have to cut losses and sell assets
due to heightening pressure from interest rates and unforeseeable
circumstances, with their incomes particularly hurt. Last week,
the SBV issued a new circular amending and supplementing a number of articles
of Circular No.01/2020/TT-NHNN directing foreign credit institutions and bank
branches to reschedule debt payments, waive and reduce borrowing interests
and fees, and maintain the support for customers affected by the pandemic.
The fresh move is envisaged to enable banks to assist vulnerable customers. However,
Nguyen Thi Hong, Governor of the SBV, noted that the central bank would
continue to strengthen inspection, supervision, and direction of credit
institutions on risky areas, particularly property and securities. This is not
the first time the SBV publicly has cautioned various risks in real estate.
In April, the SBV issued Official Dispatch No.3029/NHNN-TTGSNH to credit
institutions and foreign bank branches, instructing them to implement strict
control measures over the quality of credit in sectors with potential risks
such as real estate and securities. The prime
minister has directed relevant ministries to closely coordinate with
localities to strengthen supervision on land speculation or unreasonable land
pricing. “Loan-based
real estate is making up a sizeable proportion in banks’ balance sheets.
Thus, the SBV and ministries are keeping an eye on property speculation to
prevent a housing bubble like in the 2007-2012 period, which could lead to a
banking crisis,” emphasised Governor Hong at the SBV’s conference last week.
“In these challenging times, fragile industries, such as manufacturing,
agriculture, tourism, and transportation, are the centre of banks’ critical
support.” The real
estate sector is now off the support list for interest rate reductions, with
the current interest rates of the sector set at up to 11.5 per cent per year.
High lending interest rates and good credit growth explain the enormous profits
of the banking industry in the first six months of the year. Meanwhile, a
handful of lenders are rolling out preferential interest rates applicable for
all sectors, including property. Vietcombank, VIB, MB, and BIDV, among
others, have offered specific incentives for homebuyers or for home repairs. Hoang Linh,
financial director at VIB, said that the bank has optimised the costs of
capital mobility by boosting cash growth and increasing current account
savings. Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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