VIETNAM BUSINESS NEWS SEPTEMBER 5
14:55
Ports see increase in goods handling despite COVID-19
Thanks to
the adoption of drastic COVID-19 prevention measures at ports, the volume of
goods that passed through ports in the first eight months of the year
increased by 18 percent year-on-year to 16.8 million TEUs, the Vietnam
Maritime Administration said. They
comprised exports of 5.4 million TEUs, up 16 percent, and imports of 5.5
million TEUs. With 3.2
million TEU, the Cai Mep - Thi Vai Port Cluster in Ba Ria-Vung Tau province
accounted two thirds of the imports and exports in the south and 100 percent of
shipments from and to the US. Amid the
COVID-19 outbreak in many southern provinces and cities, port authorities
have been adopting many preventive measures like keeping its employees on
site and testing them all every three days. Nguyen Xuan
Ky, general director of the Tan Cang - Cai Mep International Terminal Company
Limited, said thanks to the strict implementation of prevention and control
measures, some COVID cases were detected in time and immediately quarantined. But after
more than two months the model has also revealed certain limitations, he
said. The cost for
the "three on-site" model and the periodic COVID-19 test fee for
more than 350 company employees, up to more than 1 billion VND (44,000 USD) a
week, are causing many difficulties for businesses, Ky said. Keeping the
workers at the port and not allowing them to go home for a long time also
adversely affects their psyche, directly affecting productivity and safety,
he added. His company
has called on the provincial People's Committee to allow the adoption of
other solutions such as allowing local employees living in areas with little
or no COVID-19 cases to go home./. Bloomberg hails Vietnams as hotspot for branded residence The US’s
Bloomberg has hailed Vietnam as a growth hotspot for branded
residences in Asia in its recent article. The newswire
said Vietnam’s number of high and ultra high network individuals have
increased impressively over the past five years, with those amassing over 1
million USD and 30 million USD accounting for 26 percent and 108 percent,
respectively. Therefore, owning a branded apartment is considered a
“testament” to their class, apart from the purpose of living and pure
investment. The growth
arose from Vietnam’s impressive economic growth. In
2019, Bloomberg said Vietnam was one of the fastest growing
economies globally with a growth of over 6 percent in 20 consecutive years. The South
China Morning Post also wrote that Vietnam’s property sector has been
increasingly favoured by international investors because of its stellar
economic growth. The US-based hotel operator Marriott
International is also making a foray into Vietnam’s branded residence
segment. In early
2021, Marriott International announced the first branded residence project in
Vietnam – Grand Marina Saigon in District 1, Ho Chi Minh City. It also plans
to embark on another branded Ritz-Carlton in downtown Hanoi in late 2023./. Demand for domestic travel information plunges due to COVID-19 Since late
April when the latest wave of COVID-19 hit Vietnam, the volume of domestic
tourists searching for travel information has dropped sharply to a very low
level, according to statistics from Google Destination Insights. Data from
the Vietnam National Administration of Tourism also showed that the number of
domestic visitors fell from 9 million in April to 3.5 million in May and 0.5
million in July. Demand for
seeking information about tourism accommodation services has plunged since
May. In major tourist destinations nationwide, the rate of room cancelation
has exceeded 90 percent and lodging facilities have been forced to close on a
large scale. The entire
nation logged 4.6 million in-house tourists in April, with the figure
dropping to 1.8 million in May, 0.9 million in June, and 0.3 million in July. Following
the downward trend, demand for aviation information between May and now
declined by 85 percent compared to the same period last year. According to
Google Destination Insights, the top searched domestic destinations included
Ho Chi Minh City, Da Lat, Phu Quoc, Hanoi, Da Nang, and Nha Trang. Joint efforts needed to surmount COVID-19 challenges Local
economists have underlined the need to reach consensus, share difficulties
and seize upon opportunities among the State, businesses, and workers amid
the national economy facing several challenges caused by the fourth wave of
the COVID-19 pandemic. Dr. Nguyen
Duc Kien made this assessment when analysing the resilience of domestic firms
over the past seven months, making projections, and discussing solutions
aimed at overcoming the challenges caused by the pandemic from now until the
end of the year. Despite
social distancing measures being applied across several localities due to the
complicated developments relating to the COVID-19 pandemic, the country’s
total additional registered capital during the seven-month period hit
VND2,432.1 trillion, representing a rise of 16.1% against the same period
last year. Of the
figure, the registered capital of newly-established enterprises enjoyed a
surge of 13.8% to VND1,065.4 trillion. Dr. Kien therefore attributed these
encouraging results during the reviewed period to the recovery of production
activities by businesses and COVID-19 containments efforts, particularly as
the six-month GDP increased by 5.64%. However,
there continues to be a number of difficulties relating to the adverse
impacts of the fourth wave of the COVID-19 pandemic. In line with
this, the number of newly-established enterprises has endured a decline of
22.8% compared to the previous month, along with a drop of 33.8% against the
same period last year. Furthermore,
the registered capital of newly-established businesses has also decreased by
25.3% compared to the previous month with a fall of 48.7% in relation to last
year’s corresponding period. Most
notably, the bankruptcy rate in July saw an increase of 17%, while the number
of newly-established firms rose only between 1.6% and 2%, an issue which is
anticipated to pose numerous challenges ahead in the remaining months of the
year. In this
context, Kien emphasised the need to reach a consensus, gain
understanding and share difficulties among the State, enterprises, and
employees. Indeed, the Government has already made decisions aimed at
supporting residents and businesses, including bailout packages such as tax
exemptions and reductions. He also
underlined the necessity to effectively implementing the government's
support policies from now until the end of the year. Moreover,
local firms continue to face several hurdles, including supply chain
disruptions, high transportation costs and a shortage of workers, while
factories have been forced to reduce their capacity, according to Kien. Dau Anh
Tuan, director general of the Legal Department at the Vietnam Chamber of
Commerce and Industry (VCCI), expressed his hope that these negative impacts
will be minimised in the near future due to prevention and control activities
being carried out in a drastic manner. According to
the VCCI, despite facing a limited state budget, the National Assembly and
the Government have issued several policies which can support
negatively-affected businesses. Sharing this
viewpoint, Kien revealed that the VND 26,000 billion bailout package is
expected to bring about a range of practical benefits to residents and
businesses. Indeed, through the aid package, businesses will be able to pay
basic wages for workers and keep them in order to maintain production
activities, he added. Experts also
highlighted the flexible method of fighting the pandemic whilst
simultaneously maintaining production in some localities, noting that despite
the social distancing order in several provinces in July, a total of 29,600
businesses were able to resume operations, an annual increase of 3.6%. Both Tuan
and Dr. Kien note that these moves have been consistent with the Government's
policy by containing the pandemic and simultaneously maintaining economic
development, adding that these support policies should be promoted in a
timely manner in the near future. Seven-month credit in HCMC rises 5.8 percent According to
the Ho Chi Minh City Statistical Office, by August 1, the total credit
outstanding balance of the banking system in the city had exceeded VND2.68
quadrillion, an increase of 13.1 percent over the same period last year and
5.8 percent compared to the end of last year. This is a good credit growth in
the context of the Covid-19 pandemic. The State
Bank of Vietnam-HCMC Branch said that credit in the first months of the year
in the city mainly flowed into export processing zones and industrial parks
because export orders still posted optimistic growth. In addition, foreign
enterprises still maintained their operations efficiently, so credit demand
increased steadily. However, this group of customers mainly belongs to
foreign banks in Vietnam. Accordingly,
in the first seven months of this year, the credit growth rate of foreign
banks was stable at 5.35 percent. In July alone, the credit growth of foreign
banks in HCMC reached 2.2 percent, higher than the general credit growth in
the area. Besides,
credit into many business lines of essential goods, such as food, masks, and
medical protective clothing for pandemic prevention, also grew positively. Canadian firms hopeful on medium-term Vietnamese economic
prospects Despite the
negative impacts of the latest COVID-19 wave in the nation, Canadian
businesses remain optimistic about Vietnamese economic prospects in the
medium term and future business opportunities. Marc
Djandji, founder and managing director of ASEAN Strategy Group Ltd – a
firm which provides key services in the areas of market access, sourcing,
import/export, and management consulting, said that the country is one of the
best performing stock markets in the world. Indeed, the local economy also
maintained a strong recovery until the first half of the year. However, the
recent wave of COVID-19 infections has forced a number of businesses in major
cities and industrial centres to close, thereby limiting Vietnamese economic
activities over the subsequent months. The
industrial, manufacturing, and construction sectors have all been affected,
while household income, savings, and spending are also forecast to suffer a
decline. Despite
this, Djandji expressed his appreciation for the spirit of solidarity shown
by the Vietnamese people in the fight against the invisible enemy,
emphasising that the economic recovery this year will depend on the results
of the COVID-19 vaccination campaign. On that
basis, he predicts that in the medium term the growth prospects for the
Vietnamese economy will remain solid, driven by the process of
industrialisation and urbanisation. Moving
forward, the country will continue to benefit from integration into the
global supply chain, FDI attraction, and rapid growth in the manufacturing
sector, he said. Echoing this
viewpoint, Phil Witherington, chief financial officer of Manulife Financial
Corp., expressed his optimism about the future growth of the Vietnamese
economy. Although the resurgence of COVID-19 may have a short-term negative
impact, the market's long-term potential remains strong and will stand firm,
he stated. The
Vietnamese Government is therefore on the right track to work alongside firms
like Manulife to protect workers and customers, whilst also taking actions to
encourage greater economic development. Witherington
outlines that Manulife sees a great opportunity in meeting the health,
protection, savings, and investment needs of customers nationwide, with the
firm having a long history of operations in Asia. Indeed, it has already
established a presence in several ASEAN markets such as Singapore, Malaysia,
Indonesia, and the Philippines over the past 100 years. He went on
to highlight the Vietnamese market as being one of the region's biggest
economic success stories and one of Manulife's biggest markets within ASEAN. With an
estimated population of 120 million by 2050, the country can be viewed as an
attractive destination for Canadian businesses. Alongside
trade in goods and services, many co-operation opportunities have emerged in
other areas such as investment, financial service, infrastructure
development, supply chain diversification, technology, and human resource
development. Businesses careful with ethylene oxide content in exports to
different nations The
Department of Science and Technology of the Ministry of Industry and Trade
has said businesses should be careful with ethylene oxide content
in exports to various countries because the regulation of technical standards
for each type of food in each country is different. The
Department has just released detailed information on the results of
controlling Ethylene Oxide residues in the food production process in Vietnam
after the Food Safety Authority of Ireland recalled some batches
of Acecook Vietnam's Hao Hao and Thien Huong noodles for containing
banned Ethylene Oxide substance. Moreover,
the Department added that Ethylene Oxide content in exports greatly depend on
the balance of trade between countries, regions or countries, import and
export policies of each country, technical conditions, management methods,
and consumers’ habits. According to
the Department of Science and Technology, these products have many components
such as dry noodles, seasoning packages, vegetable packages, chili oil
packages and there are many branches in the supply chain dedicated to
different ingredients before being packaged in the final product. Vietnam has
not yet issued the regulation on the use of Ethylene Oxide in agricultural
production or limiting Ethylene Oxide residues in food. Therefore,
the allowable Ethylene Oxide residue limit for the same food item may meet
the regulations of this country or region but exceed the allowable threshold
of another country or region. As a result, the Department of Science and
Technology has asked enterprises to study and regularly update the
information to control the standards of their products before exporting. Moreover,
businesses were advised to often evaluate production processes, machinery and
equipment, and factory hygiene for the risk of causing food insecurity. They
should periodically inspect their products and materials, especially
outsourcing and manufacturing components to assess risks, control quality,
and reduce risk levels. Efforts to maintain safe green zones at seaports Considered
as one of the leading important links in the global shipping chain, over the
past time, despite being heavily affected by the Covid-19 pandemic, Vietnam's
seaport system in general, and the Cai Mep - Thi Vai port system in
particular still achieved impressive growth. Accounting
for two-thirds of the import and export activities of the South and 100
percent of import and export activities to the US, in the last days of
August, the road to Cai Mep - Thi Vai port is still bustling. In the context
that the Covid-19 pandemic recurs and develops complicatedly in many cities
and provinces in the Southern key economic region to minimize damage to import
and export activities, seaport enterprises have been implementing effective
solutions to prevent the penetration of Covid-19 to maintain operations. Specifically,
at Tan Cang - Cai Mep International Port (TCIT), from July 7 to now,
enterprises have actively applied the three-on-site solution. They arrange
the living and working areas independently among departments, implement
distancing each workgroup that often directly contacts customers, such as
sales and cashiers, and maintain quick testing every three days. The
representative of TCIT said that the unit encouraged customers to register
for service procedures and deploy online payment to prevent the pandemic. Along with
TCIT, Hung Thai Marine Offshore Service Port and Cai Mep International Port
(CMIT) also quickly implemented the three-on-site solution, carefully
controlling workers, contractors, and customers entering and leaving the
port, separating areas and cargo flows to minimize contact between areas and
cargo flows and easily localize when there is an F0 case in each area. According to
the Vietnam Maritime Administration, more than 90 percent of commercial cargo
is transported by sea. Deep-water ports are essential infrastructures for
export activities. Thanks to drastic and synchronous solutions, in the first
eight months of this year, the volume of cargo containers through the seaport
system still reached nearly 16.8 million TEUs, up 18 percent over the same
period. Exported goods exceeded 5.4 million TEUs, up 16 percent, while
imported goods surpassed 5.5 million TEUs, up 21 percent year-on-year. In the
Cai Mep - Thi Vai port cluster alone, cargo containers through the port
reached 3.2 million TEU, up 35 percent. Thanks to
strict implementation of Covid-19 prevention and control measures, some
Covid-19 cases appeared at some ports and were detected in time. However,
after more than two months of implementing the “three-on-site” and “one
route, two destinations” models, it has also revealed certain limitations. Mr. Nguyen
Xuan Ky, CEO of CMIT, said that the investment costs of essential
infrastructure, accommodations, living, allowances, and periodic Covid-19
testing fees for more than 350 employees and contractors in the port were up
to more than VND1 billion per week, which have been causing many difficulties
for the company. Besides, if the pandemic prolongs, workers' sentiment will
be affected after a long stay at the workplace, directly affecting
productivity and work safety. CMIT has
sent a proposal to the provincial People's Committee to allow it to combine
many solutions. Specifically, the company only continues to apply the
“three-on-site” solution for employees with the place of residence in other
provinces and employees living in the red and high-risk yellow zones. In
addition, it will apply the solution “green zone + two-on-site + one route”. Specifically,
employees in green zones will be allowed to go to work every day provided
that when they return home, they will not go anywhere outside their current
residence area; comply with the 5K message and implement “two-on-site” at
work. The company also recommends the province to develop a consistent policy
between localities and businesses to be able to pick up and drop off
employees at some specified pick-up points on a route instead of picking up
at home or being forced to carry out "one route, two destinations”. These
combined solutions will open a new direction to both ensure Covid-19 prevention
and help port enterprises maintain flexible operations and at the same time,
can provide support and receive more ships from Cat Lai Port or other ports
in HCMC if these places are congested. Amid the
difficulties of enterprises, the People's Committee of Ba Ria - Vung Tau
Province has issued a document requesting enterprises to assess the
implementation of safe production models, clearly analyze the advantages and
disadvantages, and choose the most suitable model for implementation in the
coming time. However, they must ensure the principle of “production is only
carried out when it is safe, and production must be safe". Banks do away with physical offices to aid digital services As Vietnam
implements strict social distancing measures, banks have been stretched thin
with some temporarily closing their brick-and-mortar offices to help
customers go digital. Meanwhile,
the Vietnam Banks Association (VBA) has sent a document to the people’s
committees of cities and provinces, requesting further support for
vaccination for bank officials and workers. “Although
the government, the Ministry of Health, and local authorities have specified
bank staff as the prioritised group for vaccination, until now the number of
officials and employees receiving vaccines remains limited,” the VBA stated. “Due to the
nature of the banking industry, many employees have to physically work in the
office and regularly interact with customers. Therefore, the best solution at
present is to promote vaccination for bank staff,” the VBA added. In these challenging
times, banks are redoubling their efforts to smooth customers’ transition to
digital means. However, a minority of branches are being allowed to open in
case of emergency. Nguyen Hoang
Minh, deputy director of the State Bank of Vietnam’s (SBV) Ho Chi Minh City
Branch emphasised, “Due to the latest wave of infections, more than 300
branches and transaction offices of commercial banks are temporarily shut
down. However, all banks will ensure smooth payment activities to address the
customers’ demands, and all ATMs are always open for people to withdraw
cash.” A
representative from Viet Capital Bank told VIR that the bank had to
temporarily shut down some of its branches and transaction offices in the
city due to the pandemic. “Despite
temporary closures, we are managing our services on an integrated online
platform and a user-friendly portal. We believe an effective approach in this
health crisis is clear communication in an advanced digital infrastructure –
our digital banking “Digimi”. Viet Capital Bank is fully equipped to help
customers maintain their banking needs and discover new services remotely,”
the representative said. Another
southern-based bank, OCB, also announced the closure of 26 of its 30 branches
and transaction offices in order to implement social distancing. The
remaining four locations that are still operating are its main Business
Centre in District 1 as well as branches in Thu Duc, Tan Thuan, and Tan Binh. Other
commercial banks such as HSBC Vietnam, ACB, Eximbank, VPBank, Techcombank,
and Shinhan Bank also announced the temporary closure of many offices and
branches and maintained only a few other transaction points to meet the needs
of customers. From August
23 to September 6, VIB would maintain 11 branches and transaction offices in
Ho Chi Minh City to serve the needs of customers in District 1, Phu Nhuan, Go
Vap, Binh Thanh, District 5, and District 7. VIB also encourages customers to
make online transactions via the MyVIB app or internet banking. Meanwhile,
Sacombank has arranged for employees to work at home as well as at
transaction points. “Currently, Sacombank’s system can fully address
customers’ transaction needs, including both in-person and online
transactions. We also prepare contingency plans and ATM funding plans to ensure
operation in difficult situations and a smooth supply of cash for the
people,” the bank’s representative said. Nam A Bank
also announced the temporary suspension of a number of business units in Ho
Chi Minh City to ensure pandemic prevention at the request of the local
authorities. Transaction points will be temporarily closed from August 23
until further notice. Currently,
Nam A Bank only maintains a few branches and offices to serve customers at
the Business Centre in District 3, Ham Nghi in District 1, and Ly Thuong Kiet
in District 11. The bank encourages customers to use the Open Banking
application for payments, transfers, and open online accounts via the
electronic Know Your Customer method (eKYC). “As soon as
the pandemic is brought under control in Ho Chi Minh City, banks will reopen.
At the moment, customers are encouraged to adopt cashless payments and limit
contact in a bid to reduce the risk of infections,” said Minh of the SBV. Long Thanh International Airport to operate in 2025 The first
phase of the Long Thanh International Airport project in the southern
province of Dong Nai will be completed by the first quarter of 2025, in time
for the airport to be put into operation at the end of that year. The
information was revealed in a report on the progress of the project sent by
the Ministry of Transport to the government. According to
the report, the Airports Corporation of Vietnam (ACV) has conducted some 65%
of the bomb and mine clearance work and is expected to complete this December,
making land available for the construction of the foundations for the
passenger terminal in February 2022. Water
drainage and power system construction are also on schedule. Construction
of the terminal is planned to start in February 2022 and be completed in June
2025. Meanwhile, the air traffic control tower will be built between January
2023 and January 2025. These are the two most important parts of the project
so should be given special attention according to the transport ministry. In the first
phase, the project will build Runway1 with a length of 4,000 metres, width of
75 metres and a system of taxiways and aprons to ensure that all types of
aircraft can operate with a capacity of 25 million passengers and 1.2 million
tonnes of cargo per year. One
passenger terminal will also be built with a designed capacity of 25 million
passengers per year and a total floor area of 373,000 square metres. The
contractors have been warned to prepare for the challenges posed by the
Covid-19 pandemic which is affecting the import of equipment and the work of
foreign experts. Once fully
operational, Long Thanh International Airport will reduce the load on Tan Son
Nhat International Airport in HCM City as it is expected to handle 100
million passengers and 5 million tonnes of freight each year. The project
has a total investment is VND336.63 trillion with construction divided into
three phases. Lam Dong faces labour shortage for coffee harvesting season The central
highland province of Lam Dong is facing a shortage of labour as the coffee
harvesting season nears. Lam Dong
needs over 7.8 million working days to complete the harvest of 173,000ha of
coffee in 2021. However, the province can currently only meet 45-50% of the
demand. Nguyen Van
Chau, deputy director of Lam Dong Department of Agriculture and Rural
Development said, "It's difficult to hire people from other provinces.
We need plans for Covid-19 preventions while ensuring that the harvest season
will go smoothly." Nguyen Van
Thuy from Lam Ha District, said, "We have nearly 4ha of coffee. I don't
know if we can hire enough people to harvest the coffee. I hope the outbreak
can be controlled in the last months of the year so I can hire more people.
Last year, I hired five H'mong people for VND1,000 per kilo. They told me
they would work for me again but I'm not sure. The payment will be higher
too." Districts
and cities with a large area of coffee like Bao Lam, Lam Ha, Dam Rong, Bao
Loc and Da Lat review the crops and capability of each household to have
suitable support plans, especially to families with few members or whose
members stuck in outbreak areas. "Harvest
groups can work in shifts. We can also call for local organisations to help
families in difficulties," Chau said. He went on
to say that local authorities can connect workers with employers and ensure
that all fees and payments are reasonable. They have asked Lam Dong
Department of Labour, Invalids and Social Affairs to direct work centres to
help. Port stocks boom thanks to thriving businesses in Vietnam Foreign fund
Asia Frontier Capital noted in its latest investment report that port
businesses in Vietnam would benefit in the second half of 2021 thanks to
higher demand. The fund
believes port stocks would be a main beneficiary of the Vietnamese export
boom in a controlled competitive environment. Port
businesses in Vietnam will also continue to benefit in the second half of
2021 with a strong increase in demand in many developed markets such as the
US, Europe, and the UK. Meanwhile, the virus outbreak in Asian countries
continued to have a negative impact on sea freight cargo handling efficiency,
which created a supply and demand imbalance and therefore led to dramatic
increases in shipping fees. In Vietnam,
shipping fees also increased sharply but port fees remained almost unchanged
in the first half of 2021. Since July 2021, most of the ports in Vietnam
started to increase their fees due to strong demand and limited capacity. The
COVID-19 outbreak in Vietnam has lengthened loading and unloading times from
an average of five to eight days at most ports. This forced many ships to
line up for a long time to load and unload their cargo. Since
shipping companies already benefitted from increasing shipping fees, they are
willing to pay higher fees to the ports to get priority handling of their containers
and many ports had already increased their fees with shipping companies for
H2/2021 and 2022. AFC, therefore, expects their profits to increase strongly
during this period. According to
the Vietnam Maritime Administration (VMA), container throughput via
Vietnamese seaports hit double-digit growth in the year to date despite
COVID-19. Some
seaports witnessing the highest container throughput in the first seven
months of 2021 were Quang Nam, My Tho, Haiphong, and Ho Chi Minh City.
Meanwhile, seaports at Quang Ninh, Danang, and Can Tho saw strong falls in
container throughput, according to the VMA. Becoming a billionaire by growing cinnamon Local
residents' efforts to cover the hills with cinnamon fields, a valued herbal
tree, have changed the face of the northern province of Yen Bai. Sau piled
money on the table, saying that he wanted to deposit VND4 billion ($173,910)
that he earned from selling one of his cinnamon hills. Bank staff helped the
young man count the money while everyone looked on with eyes of admiration. Giang A Sau
is not the person owning the largest cinnamon field area in An Luong commune,
as commune officials say many other households have several dozen hectares of
cinnamon fields. But the story of his making money from cinnamon trees is
unlike others. In the
1990s, Sau often left the village to make a living elsewhere as his homeland
was bereft of almost everything: no fields, no decent roads, no electricity,
and very little water. Eventually,
he found out that there is no place safer than home and settled down at his
home village to grow cinnamon forests to protect water resources. The larger
cinnamon trees grow, the higher theri value. In the first years, to make a
living, Sau grew rice and other cereals on his cinnamon fields which also
helped reduce grass, floods, and nourished cinnamon trees by keeping the soil
humid. His efforts
paid off. In the 2019 season, Sau sold a cinnamon hill for VND3 billion
($130,430), setting a record not only in An Luong commune but also in Van
Chan district. Early this June, he sold his other hill for VND4 billion,
breaking his own record. He deposited the whole sum at VBSP’s Van Chan
district and became the largest depositor across VBSP’s system in Yen Bai
province. The cinnamon
trees have been grown in An Luong commune for many years now. Not just a
herbal tree, cinnamon trees are regarded as the "money" tree by
ethnic minorities in the area as all parts of the tree can be sold, from
branches and leaves to the trunk, bark, and even the roots. In the late
1990s, Dang Van Thong, an old man living in Tang Cham hamlet, logged down and
sold seven cinnamon trees to buy a Honda Dream motorbike for a more than
VND30 million ($1,300). The story had created a stir in the province's
different parts, encouraging many locals to start growing cinnamon trees. These days,
the hills and mountains in An Luong are covered with a lush green coverage of
cinnamon trees, and the entire commune is now home to more than 1,700ha of
this valued tree. According to
Loc Van Doan, Deputy Chairman of An Luong People’s Committee, in light of the
communal Party Committee’s latest resolution, the cinnamon growing area will
reach 2,200ha by 2025. Currently, a kg of preprocessed cinnamon skin fetches
around VND100,000 ($4.35); the leaves can fetch VND1,500-1,600 (6.5-7 US
cents) per kg, while a trunk of more than 30cm in radius is also sellable. Doan is
confident that An Luong commune would soon reach the target, turning the area
into a thriving cinnamon "kingdom" as Dai Son and Vien Son communes
in Van Yen district. These days,
the people of ethnic minorities in An Luong commune are growing more vocal
about their need for decent roads and power infrastructure to improve their
daily lives. With better roads and stable power, more households would build
permanent houses and could use machinery for production to drive down the
rate of poor and near-poor households in the area. The project
to build Nghia Lo-Mau A Road crossing An Luong commune is now under intensive
constructionm and transmission lines are being laid to provide more
households in An Luong with access to power, helping to make the dreams of
the local H’Mong, Dao, and Tay people come true. Vietnam in a stronger spot for Thai bankers Thai
financiers are forging a stronger partnership in Vietnam’s alluring
demographics to scale their businesses further, particularly with the
increasing assistance from deep-pocketed Thai banks. Under this
agreement, SHB will transfer 50 per cent of SHB Finance’s charter capital to
Krungsri and the remainder will be transferred after three years. Seiichiro
Akita, Krungsri president cum CEO said, “SHB’s local expertise and an
extensive network in Vietnam complemented by Krungsri’s strength in consumer
finance will enhance SHB Finance’s business competitiveness. This milestone
also underscores our commitment to our ASEAN expansion strategy following the
current medium-term business plan for the 2021-2023 period.” “Currently,
Krungsri has secured its foothold in the ASEAN market including a branch and
a consumer finance business in Laos, a commercial bank in Cambodia, a
consumer finance business in the Philippines, and a representative office in
Myanmar,” the bank said in a statement. Japan’s
Mitsubishi UFJ Financial Group (MUFG) is currently the major shareholder of
Krungsri, owning more than 77 per cent stake of the Thai bank. MUFG also
holds nearly 20 per cent of VietinBank in Vietnam. According to
the Ministry of Planning and Investment, in the first seven months of 2021,
Thai financiers invested in 23 new projects in Vietnam, with the newly-registered
capital of nearly $106 million. There were nine projects registered for
adjustment of capital amounting to almost $24.5 million. Meanwhile, Thai
investors have made 24 capital contributions and share purchases with a
combined value of $107.5 million in the given period. Almost all
investments made from Thailand have been via corporates looking to expand
their value chain into sectors such as food and beverages (F&B), retail,
construction, and packaging-related materials and industrial products. Also last
week, the Thai cabinet greenlit a capital injection of nearly $128.2 million
for the Export-Import Bank of Thailand (EXIM Bank). EXIM Bank can use the
money to support small- and medium-sized enterprise (SME) loans for
investment in trading, both domestically and internationally. Meanwhile,
Vietnam’s F&B and retail market has lured numerous Thai giants, such as
Central Group’s acquisition of Big C Vietnam and TCC Group’s purchase of
METRO Cash & Carry Vietnam. In April, Central Retail announced its 5-year
plan with an investment value of approximately $1.12 billion for the
Vietnamese market. Speaking at
last week’s webinar themed Emerging Vietnam Market 2021 by the Thai Business
Association in Vietnam, Cong Ong, co-founder of food distributor Good Food,
said that the growth potential of the Vietnamese market has attracted many
overseas financiers. Vietnam will
be the second-fastest growing economy in ASEAN with expected GDP growth of
6.5 per cent in 2021, higher than the global average of 6 per cent. It is
estimated that Vietnam will be home to 17 million middle-class households in
2030, becoming the third-largest urban market in terms of consumer numbers
and the fifth-largest in terms of total spending in Southeast Asia by 2030. In addition,
Ong also pointed out other favourable indicators such as the projected
increase of household income by about 40 per cent in the next five years and
the expansion of purchasing power in rural areas. Emerging channel formats
including online channels, mini supermarkets, and convenience stores continue
growing at a fast pace. Meanwhile, mass grocery retail expansion drives up
per capita food consumption levels, making the Vietnamese market more
attractive to Thai investors. SCG, one of
Thailand’s top industrial groups, is another active Thai investor in Vietnam.
After 25 years of operation here, SCG has 21 local subsidiaries in packaging,
chemicals, and cement and building materials. During the global crisis, SCG
still stepped up its expansion in Vietnam by acquiring Bien Hoa Packaging in
2020 and Duy Tan Plastics this year. Aurojyoti
Bose, lead analyst at GlobalData said, “Vietnam remains a prolific market in
ASEAN. It was the best performing Southeast Asian country in 2020 without a
single quarter of contraction despite the pandemic. GlobalData forecasts that
the Vietnamese economy will grow at an annual average of 7.3 per cent over
the next three years.” According to
GlobalData’s Country Risk Index (GCRI) 2020, Vietnam is a manageable risk
nation ranked 65 out of 136 nations in the GCRI Q4 2020. The country’s risk
score was 42.8 out of 100 according to the GCRI, placing it in the manageable
risk nations band. “On the back
of economic stability and decent risk score, Vietnam is attracting various
investments from several companies globally, including those from Thailand.
Along with the Bank of Ayudhya, other Thai banks are also eyeing on
expansions in Vietnam,” GlobalData said. State budget revenue reaches over VND1 quadrillion in eight
months According to
the Ministry of Finance, in the first eight months of 2021, total State
budget revenue has been estimated at over VND1 quadrillion, equaling 74.8% of
the estimate, and up 14.3% over the same period in 2020. Of which,
domestic revenue was estimated at VND820.4 trillion, equaling 72.4% of the
estimate, up 12% over the same period in 2020 (the same period in 2020
reached 57.9% of the estimate, down 9.9%). The budget
balancing revenue from import and export activities is estimated at VND157.5
trillion, equaling 88.2% of the estimate, up 31.2% over the same period in
2020. However, the complicated developments of the Covid-19 epidemic are
expected to continue to affect budget revenues in the coming months. Meanwhile,
total state budget expenditure in the eight months is estimated at VND918.1
trillion, equaling 54.4% of the estimate; of which development investment
expenditure reached VND187.3 trillion, equaling 39.2% of the estimate. By the end
of August 2021, VND18.8 trillion had been spent from the state budget, of
which VND17.2 trillion was for epidemic prevention and control; with VND1.6
trillion used to support people facing difficulties due to the Covid-19
epidemic. Banks struggle to snap up distressed domestic lenders Financially
sound local and foreign banks are turning a deaf ear to acquire distressed
and insolvent Vietnamese banks as they find it hard to access better
equipment to address a range of adverse outcomes under a widely accepted
supervisory regime. Brokerage
VNDIRECT stated, “In its recent analyst meeting, VietinBank, given its
special state root and extensive network, would choose one among three weak
lenders to acquire as a part of its development plan.” Meanwhile,
Vietcombank Securities Company (VCBS) also said that VietinBank may purchase
GPBank and OceanBank in order to shorten the development period of
outstanding loans. “Particularly
in the case of OceanBank, because it is jointly owned by state shareholders,
the merger will only be approved if the majority of the remaining
shareholders agree,” VCBS noted. However, a
VietinBank representative told VIR that the bank has no specific plan in this
regard. VietinBank
was assigned by the SBV to support the administration and management of
GPBank and OceanBank in 2015. The bank also had a plan to merge with PGBank,
but the deal could not be completed. In late
April, Sovico’s HDBank also confirmed its cancellation in acquiring PGBank.
HDBank said that although the bank received the green light from the SBV in
October 2018 in terms of procedures, the merger transaction between the two
lenders has not been officially approved for various reasons. Last year,
Vietnam National Petroleum Group (Petrolimex), the largest shareholder making
up for 40 per cent of PGBank’s charter capital, also announced that it would
divest its stake at PGBank in case the merger plan is not approved. Nguyen Quang
Dinh, PGBank’s chairman of the board, said at the bank’s annual shareholders’
meeting in April, “PGBank has not successfully executed any collaboration
with potential suitors after six years. We will shift our focus to strengthen
independent operation to boost both the bank’s financial soundness and
performance.” “The
prolonged merger period has impeded PGBank’s business performance,” he added.
“So, at the moment, we have no plan to look for strategic partners or
acquires.” Experts
noted the common symptoms of weak banks are usually associated with their
poor asset quality, lack of profitability, structural imbalances, loss of
capital, excessive leverage, excessive risk exposure, reputation problems,
and liquidity concerns. Besides
local lenders, some foreign financial institutions have emerged as strategic
partners to join the restructuring journey. In March
2019, Japanese financial conglomerate JTrust expressed its keen interest in
the restructuring of Construction Bank (CBank). Nobiru
Adachi, director of JTrust Asia, said at that time that the group had carried
out intensive research to understand the restructuring process of CBank, and
proposed some supportive movement from the SBV. Likewise, Clermont
Group, an international business group headquartered in Singapore, had also
expressed its fondness for the emerging Vietnamese financial market and
signalled its intention to delve into the banking restructuring process. Notwithstanding,
the foreign partners are giving the cold shoulder, and expected deals have
come to fruition, as both sides did not reach mutually beneficial agreements. “Appropriate
guidance on dealing with distressed banks is not very common here in Vietnam.
Moreover, given Vietnam’s foreign ownership limit on the banking sector and
complex procedures, foreigners might find it hard to have absolute control
and completely transform an insolvent bank into a lucrative one. Furthermore,
early intervention is one of the most essential steps when dealing with
illiquid banks to avoid an escalation of the problem, but there has been more
than half of the decade since these banks were acquired by the SBV,” an
industry insider told VIR. “Emerging
markets like Vietnam have suffered significant foreign capital outflows
amidst the outbreak. And as foreign investors are repricing their risk, they
will become more selective before executing any deals regarding acquiring
weak banks. In fact, it is not economically viable and cost-effective at the
moment to go all-in with such ‘doom and gloom’ banks.” Last week,
the Hanoi People’s Procuracy issued an indictment against the accused Tran
Phuong Binh, former general director of DongA Bank, and nine accomplices, for
causing losses of approximately VND184 billion ($8 million) to the bank.
DongA Bank was previously being offered by ABBank to tie the knot. However,
the bank fell under special control before the plan could be implemented. In the past,
many financially unstable banks have merged such as Ficombank, Tin Nghia
Bank, Dai A Bank, Habubank, Mekong bank, SouthernBank, and MHB. Interest rates gradually decrease The wave of
interest rate cuts has been activated, and it is forecasted that the interest
rate level will remain low from now until the end of the year to support
businesses and the economy amid the context that the Covid-19 pandemic
prolongs as currently. In August,
the savings interest rate chart at some commercial banks is decreasing by
0.1-0.5 percent per annum, depending on the term loan. Some commercial banks
even reduced by up to 0.8 percentage points for term loans over 12 months. Specifically,
from mid-August, TPBank cut interest rates by 0.5 percentage points for the
9-month loans to 5.7 percent per annum and by 0.8 percentage points for the
18-month loans to 6 percent per annum. In addition, this bank also slashed up
to 0.75 percentage points for online savings to 6.15 percent per annum.
Techcombank, after two adjustments, currently offers a 12-month deposit
interest rate of 4.4 percent per annum and a 36-month savings rate of 4.8
percent per annum. Similarly, State-owned commercial banks have also joined
the game. At Agribank and BIDV, interest rates for terms over 12 months have
decreased by 0.1 percentage points per year. With deposit
interest rates decreasing, data from the State Bank of Vietnam (SBV) recently
showed that capital mobilization growth in the first six months of this year
was at a record low level of nearly VND5.3 quadrillion, merely up 2.94
percent compared to the end of last year. This is the lowest household
deposit growth over the same period in the past ten years. The leader of a
commercial bank recognized that as the savings interest rate would continue
to be cut in August, it is difficult to avoid the decrease of capital
mobilized from now until the end of the year. Currently, banks are under
pressure to reduce input costs to cut lending interest rates to support
businesses and the economy, so they cannot maintain high savings interest
rates to attract idle money of people. According to
an analyst of SSI Securities Company, deposit interest rates will be under
slight upward pressure, especially for long-term loans, because the SBV's
regulation on tightening the ratio of short-term capital for medium and
long-term loans will be effective next October. However, the lending interest
rate level will continue to remain low in the coming time because inflation
is forecasted to be in the control zone. In fact,
input interest rates continue to decrease, so lending rates also have a new
turn of decrease after the interest rate cut in mid-July. Currently, many
commercial banks have deployed more support packages for people and
businesses in southern cities and provinces implementing social distancing
following Directive No.16. Specifically, from now until the end of this year,
Vietcombank will cut lending interest rates by up to 0.5 percentage points
per year for all outstanding loans of customers in HCMC and Binh Duong
Province. At the same time, it will reduce the lending interest rate by 0.3
percentage points per year for all outstanding loans of individuals and
businesses in the remaining 17 southern provinces, except for loans for
securities and real estate trading activities and loans mortgaged by valuable
papers. "Especially,
customers who received lending interest rate cut in July will be considered
to receive further cut, in which priority will be given to individual and
corporate customers who are heavily affected by the pandemic," the
leader of Vietcombank said. Similarly,
besides reducing the lending interest rate by up to 1 percentage point per
year for all existing outstanding loans of customers affected by the Covid-19
pandemic, Vietinbank has just launched a low-interest credit package from 4
percent per annum, with a scale of VND20 trillion to support customers in
severely affected industries, such as textiles and garments, footwear,
pharmaceuticals, medical supplies, and essential consumer goods, increasing
the total scale of the support package to VND150 trillion. Besides reducing
interest rates for existing loan balances affected by the pandemic, the
leader of Agribank said that the lender had decided to cut the credit card
interest rate by 1.2 percentage points per year to 11.7 percent per annum -
the lowest credit card interest rates on the market - for all existing
individual and corporate customers. Mr. Pham Nhu
Anh, a member of MBBank's Executive Board, said that in the last five months
of this year, interest rates of VND1 trillion will be axed for customers
affected by the Covid-19 pandemic. By mid-August, the bank had reduced an
accumulated interest of VND400 billion. In the second half of August, MBBank
is estimated to reduce another VND300 billion, and the rest VND300 billion
will be lowered in the last four months of the year. According to Mr. Pham
Nhu Anh, at this level, about VND70 trillion of outstanding loans of
individual customers and VND50 trillion of corporate ones will be lessened by
0.5-1.5 percentage points per year, depending on the customer and the extent
of the impact. Regarding
the fact that many enterprises report that they still have not been able to
access preferential policies of the bank, MBBank affirmed that it is reducing
interest rates for priority customer groups following the regulations of the
SBV and MBBank. Accordingly, for old customers in priority sectors, the bank
will actively announce the interest rate cut in writing and send messages to
them. Customers do not need to sign any documents or propose to MBBank. For
newly disbursed customers, the bank will apply an interest rate cut of 0.5-1
percent compared to its current interest rate level. “To support
customers and maintain credit flows in the context of social distancing,
MBBank makes agreements with customers through electronic transaction
channels and simple procedures,” said Mr. Pham Nhu Anh. Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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