VIETNAM BUSINESS NEWS SEPTEMBER 6
14:58
E-commerce sales in Vietnam expected to reach $56
billion in next five years
Vietnam is expected to experience a
significant increase in e-commerce sales from $12 billion in 2021 to $56
billion in 2026, according to an annual report by Facebook Inc. and Bain
& Co. By the end
of 2021, the Southeast Asian region’s e-commerce GMV is projected to reach
$132 billion, which is 1.8 times higher than the $75 billion recorded in
2020. But it does not stop there. In five years, e-commerce GMV is expected
to reach $254 billion., nearly double of the figure by the end of 2021,
representing a compound annual growth rate of 14 per cent. 5-year
growth will be even more dramatic for Vietnam, the Philippines, and
Indonesia. By the end of 2026, Vietnam’s e-commerce GMV is expected to grow
4.5 times from 2021 levels, while the Philippines’ is projected to grow 3.8
times and Indonesia’s by 1.6 times, the report claims. Vietnam
enjoys the second-highest growth rate in Southeast Asia at 8 per cent
trailing behind Indonesia (15 per cent) and followed by Malaysia (5 per
cent), the Philippines (5 per cent), Singapore (5 per cent), and Thailand (2
per cent). Vietnam's digital consumer population is expected to grow from 49
million in 2020 to 53 million in 2021. In addition,
Vietnamese consumers appear to be open to trying new stores, with 61 per cent
of respondents expressing willingness to do so. The reports
also points out that digital spending continues its expansion amid the
pandemic, with spending per person and overall e-commerce sales both seeing
explosive growth on-year. The average
spending per digital consumer is expected to grow 60 per cent by the end of
the year, from $238 per person at the end of 2020 to $381. This figure is
projected to reach $671 by 2026, nearly double of this year’s figure and 4.9
times as much as the figure in 2019. The
contribution of online retail to total retail for key categories rose faster
in Southeast Asia than in Brazil, China or India, going from 5 per cent in
2020 to 9 per cent in 2021. Gov’t to issue new resolution on assistance for businesses
affected by COVID-19 The
Government will issue next week a new resolution on assistance for
businesses, including foreign foreign-invested ones, affected by the COVID-19
pandemic, stated PM Pham Minh Chinh. PM Pham made
the above statement at his reception for Chargé d'Affaires of the U.S.
Embassy in Viet Nam Christopher Klein and American business
representatives. Given the
difficulties posed by the pandemic, he said a special working group of the
Prime Minister was established with the prime task of removing obstacles for
businesses and people. Pham also
said he has tasked relevant ministries and agencies to envisage COVID-19
adaptive recovery plan while drastically implementing free vaccination
campaign for all, including foreign experts and industrial workers. As the
COVID-19 pandemic is a global issue which requires stakeholders to join hands
and share risks, the PM extended sincere thanks to the U.S. for having gifted
Viet Nam with vaccines and medical equipment so far, calling on the Chargé
d'Affaires and American investors to lend a voice so that the U.S.
Administration and partners would continue assistance, especially vaccines,
for Viet Nam’s fight against the pandemic. Klein and
American business representatives expressed their belief that with the joint
efforts of the Governments, business communities and people of Viet Nam, and
the U.S., both nations would soon overcome difficulties caused by the
pandemic and the Viet Nam-U.S. comprehensive partnership would grow and
flourish in a more substantive and effective manner across fields./. Bailout for corporate sector: In need of new measures, urgent
implementation Although all
the current possible resources are being devoted to the pandemic fighting,
support for the corporate sector is also urgent. Aside from maintaining
production and distribution of necessities, financial assistance lent to
businesses in different industries to help them withstand the raging pandemic
is the prerequisite for their efforts to stabilize the livelihood of the
relevant work force and reinstate production in the next phase. How to
support companies of various sizes and in various sectors? In addition to
attempts made to increase the budget to assist enterprises and acquire more
vaccine supplies to inoculate workers in line with reasonable priorities, it
is essential to manage and implement effectively aid packages so that they
reach needy firms as soon as possible. The author
would like to cite five issues and related measures. First, the
increase in resources for financial bailouts of companies. The amount of
Government’s leeway in expanding the budget of financial bailout for
businesses and individuals remains significant. As Dr. Dinh Truong Hinh put
it in his article “How Much Vietnam Can Increase Fiscal Spending to Cope with
Covid-19” (the Weekly No. 35-21, dated August 28, p. 27), by mid-July 2021,
Vietnam spent around 1.4% of her GDP supporting individuals and businesses
from budgetary resources. The rate is way below 4% the average of GDP by
emerging economies. Furthermore, there is still room for Vietnam’s fiscal
policies. The ratio of public debt to GDP in 2020 was 55.8% (according to the
old method of calculation, and it may be lower if the new one is used),
significantly below the rate of 62% of GDP in the end of 2015. That means the
Government may opt to further raise the budget for aid packages. While the
Government can spend more helping the people, it still has leeway for
financial bailout to companies. Second,
aside from budgetary support, which has so far mainly been in the form of
delayed tax payments or land rents, it needs as well other cost-cutting
measures for businesses, for instance reduction of payments for social
insurance, trade union fees, port charges and electricity rates. Social
insurance and trade union funds are with huge balances currently, whose
collections may be stopped or waived for a while, say, for one year. Third, an
urgent increase of vaccine supplies and inoculation of workers are among the
crucial support for businesses. The vaccine supplies are now limited, but
they will expand gradually later. The Government should clearly set the
priorities for people to be immunized. The first to do so are healthcare
workers and officials who have to be in close contact with the people. Next
come staff members and workers in production and distribution of necessaries
in the people’s life. Next in line
are senior citizens, patients with chronic diseases and workers in export
processing zones and industrial parks so that operation for export production
can be sustained to help Vietnam retain her positions in global supply
chains. Vietnam’s
key export markets are currently little affected by the pandemic while their
economies are coming back. Vietnam’s exports to these markets will therefore
significantly contribute to her production growth and maintenance of domestic
workers’ jobs. In 2020, despite the pandemic spreading on a global scale,
Vietnam’s exports to the United States posted a staggering growth rate of 24%,
and to China, 17%. Vietnam’s major export commodities—such as electronic
components and cell phones—have been more attached to global supply chains
and positively affected local production. In the first half of 2021,
Vietnam’s year-on-year GDP growth was 5.6%. Yet her processing-manufacturing
industry jumped by 11.4% on account of the exponential growth of key exports
(export of cell phone components soared by 39%, and that of cell phones grew
by 18%). Vaccines for
workers in export processing zones and industrial parks are meaningful. The
good news is at least one dose of vaccine has been administered to 80% of the
workers there. However, in many northern provinces, where Covid-19 is raging,
immunization of workers in export processing zones and industrial parks has
not been paid due attention to. As far as I’m concerned, at a big company
whose entire production is exported and work force is considerable, only 5%
of the workers have been given one jab. Fourth, the
next thing to do is to make the aid packages accessible to needy enterprises.
Complicated administrative apparatus, favoritism, cumbersome formalities and
overlapping stipulations had existed prior to the pandemic outbreak. They
were improved step by step, resulting in belated implementation of many
policies on small and medium enterprises. Take for example, policies on
businesses in the supporting industries which failed to reach their goals. A project
conducted by the World Bank to survey the impact of Covid-19 on Vietnamese
enterprises (presented in November 2020), indicates that when it comes to aid
packages implemented by September 2020, only 27% of small enterprises and 37%
of big ones (of the respondents in the survey) had accessed the financial
bailout. The key hurdles to businesses receiving bailouts were their failure
to meet the conditions although they were in trouble; the procedures were too
complicated; and they did not know about the bailouts. Fighting
pandemics is like fighting the enemy. Vietnam’s administrative apparatus and
officials who run it must be in a hurry now. They must assume full
responsibility similar to that during wartime so as to combat Covid-19
efficaciously and to make aid packages accessible to needy enterprises. In
the current state of emergency, new measures are needed, such as cooperation
between officials in charge of local governments and business associations in
urgently implementing government aid packages. Finally,
once again, it is necessary to make information on the pandemic and financial
bailout policies known accurately to businesses. This issue has been raised
to the author of this article on the phone by some business proprietors he
knows. A World Bank report also indicated that up to 17% of the respondents
said they did not know about government bailout policies. In addition to
announcements of policies on websites of ministries and agencies, it is
necessary to air them also on television and radio. For example, information
on support policies, and pandemic developments and its effects should be
aired three times a day at fixed timing so that the public can watch or
listen to them easily. Additionally, a new policy should be aired repeatedly
for one or two weeks. Destinations from Vietnam and ASEAN to be introduced to ROK
people Tourists
destinations from Vietnam and ASEAN countries will be promoted to people from
the Republic of Korea (ROK) through videos produced by the ASEAN-Korea Centre
(AKC). The AKC say
that the production and posting of videos promoting the tourism of ASEAN
countries aims to enhance the cooperation and development of tourism between
the ROK and ASEAN in the context that tourists cannot travel due to COVID-19
pandemic. The first four
episodes on Brunei, Indonesia, Myanmar and Vietnam will be published from now
until September 8. The Korean actress So Yu-jin, along with young people from
Southeast Asian nations, will talk about destinations in their native
languages. The videos
will be posted on the Youtube channel of the ROK-ASEAN Centre and the
official information channel of the tourism sectors of the four ASEAN
countries. The episode
about Vietnam, one of ASEAN nations welcoming the most visitors from the ROK,
introduces the traditional dishes of the Vietnamese people such
as pho (noodle soup), banh mi (bread), banh
xeo (literary sizzling cake or fried pancakes made of rice flour,
turmeric powder, and slivers of fatty pork, shrimp) and Hue’s imperial
cuisine. In addition,
audiences will have the chance to visit the ancient town of Hoi An,
recognised as a world heritage by UNESCO, as well as famous landscapes
including Tam Coc, Trang An, Dong Van rock plateau, Phu Quoc island and Nha
Trang. Dong Thap Province keen to develop agricultural products with
geographical indications The Cửu Long
(Mekong) Delta province of Đồng Tháp plans to develop at least one
agricultural product with geographical indication by 2025. It has
prioritised rice, mango, flowers and ornamental plants, citrus fruits,
longan, sweet potato, lotus, taro, tra fish, red tilapia, gourami,
dried snakehead fish, eel, and egg-laying ducks for this. It will have
at least five farming areas zoned for key agricultural produce like mango,
citrus fruits, vegetables, gourami fish, and sweet potato. In 2021-25
it will establish at least two more showrooms for its key agricultural
products and maintain the existing two in Hà Nội and Phú Quốc Island. It will set
up a portal to trace the origins of its key agricultural products. To promote
those products both in domestic and foreign markets, it will strengthen
quality inspections and support linkages between various stakeholders in
producing and consuming agricultural products. Its rice
output last year was worth VNĐ15.7 trillion (US$686.8 million). Farmers’
income from rice increased by VNĐ12.9-28.6 million ($560-1,250) per hectare
per crop from 2015 as they adopted advanced farming techniques which help
reduce costs. The province
has focused on developing rice – related products to add value and promote
their sales through modern distribution channels. The largest
mango producer in the delta, the province reported output worth VNĐ2 trillion
($87 million) last year, a 28.2 per cent increase from five years earlier. Its mango
co-operatives and farmers have adopted advanced techniques for growing,
harvesting and post-harvest preservation to improve yields and quality. To develop
agriculture rapidly and sustainably, it has solicited private investment in
it and sought to restructure it in combination with implementation of the
national target programme on building new-style rural areas and reducing
poverty. It has
licensed 75 companies involved in processing crops, seafood and livestock.
It has
focused on developing community-based tourism in farming areas such as Sa Đéc
flower village, pink mandarin orchards in Lai Vung District and lotus fields
in Tháp Mười District. Huỳnh Minh
Tuấn, deputy chairman of the province People’s Committee, said the aim was to
develop “biological agriculture, modern rural areas and smart farmers” by
2025. The province
sought to increase agricultural production, adopt advanced techniques, foster
international integration, and adapt to climate change, he said. Linking up Farmers in
the province are harvesting the summer-autumn rice crop, and those contracted
with a company can earn VNĐ3-4 million ($130-180) per hectare higher than
others since they get paid VNĐ100-200 per kilogramme higher than market
prices. Co-operatives
and co-operative groups represent their members and sign contracts with
companies. Ngô Phước
Dũng, director of the Mỹ Đông 2 Co-operative in Tháp Mười District, said
contracts were signed with two companies at the beginning of the crop. The co-operative’s
members produce rice seeds on a total area of 58.5ha. Nguyễn Phước
Thiện, director of the province Department of Agriculture and Rural
Development, said to sell agricultural produce amid the pandemic, his
department had taken measures to harvest, transport and organise trade
promotion and create linkages between various stakeholders. Farmers
associations and other organisations had also helped sell it, he said. Phan Thị Kim
Nhung, deputy chairwoman of the province Farmers Association, said the
association used to only act as a link between farmers and companies, but
amid the social distancing now it also helped farmers sell their products to
households and others. Danang maintains favourable position as magnet for
foreign-invested enterprises As the
central city of Danang continues to be an attractive destination for
foreign-invested enterprises, the city is expected to see more scrutiny on
transfer pricing from local tax authorities and rising demand for related
consultation services. Other
foreign investors are choosing Danang to set up their production facilities.
Intex Development Company has received its investment certificatet to build a
$12-million factory at Hoa Khanh Industrial Zone to produce water filters for
swimming pools and water pumps. Meanwhile,
Japan’s Fujikin Inc. is establishing a research and development centre worth
$35 million at Danang Hi-Tech Park. The goal of the project is to accelerate
scientific research and technical progress in areas such as robotics, drones,
and nanotechnology. As of
present, Danang is home to 878 valid foreign-invested projects with the total
investment capital of $5.7 billion. In the first eight months of 2021, the
city attracted over $162 million in overseas capital, with 29
newly-registered projects and 15 adjusted capital projects, according to data
by the Ministry of Planning and Investment. The foreign
inflows into Danang reflect the city’s increasingly important role in the
global supply chain of multinational corporations. It is also important for
these companies to ensure compliance with transfer pricing tax rules. Understanding
this demand, accounting and advisory firm RSM officially opened a new office
in Danang in June. RSM Vietnam’s new office will provide transfer pricing
consultation services to companies in both Danang and the central region. The
office also helps clients to achieve their long-term objectives by providing
audit, tax, and other consulting services. Le Khanh
Lam, chairman of RSM Vietnam, said that tax authorities from various
jurisdictions have been collaborating to ensure equitable assignments of
taxable profits for cross-borders transactions. “Every
business wants to reduce its taxes, but to do it legally and pragmatically
isn’t always that simple. Often tax strategies that look good by themselves
can be less realistic, even impractical and unworkable, in the context of
your whole business,” said Lam. “RSM takes a
balanced and integrated approach. We focus on your total business picture,
not just your next return,” he added. “Our tax consultants help clients
define the best overall tax position, designed to save their money, while
meeting their larger business goals. Since we regularly provide advice on
many aspects of a client’s business, we can see opportunities that other tax
specialists might overlook.” As a result,
RSM gives clients practical, commercially-focused, and socially responsible
advice from its most experienced tax experts. Therefore, the company can help
clients to find the best possible tax solutions for their business. RSM’s new
office in Danang will bring the transfer pricing consultation services closer
to clients to facilitate their expansion and business operation in the city.
Leveraging its global network and professional service experience, RSM is
expected to contribute to improving the investment climate in Danang to
attract more foreign investors. Programme introduced to help connect producers and consumers
The Ministry
of Agricultural and Rural Development (MARD) has launched a programme to
connect and support the sales of agricultural products on a national scale. During an
online conference held by the ministry in Hanoi earlier this week,
high-ranking officials, local leaders and businesses across the country
discussed current challenges and limitations faced by agricultural producers
in recent months, especially in light of the many recent lockdowns that have
gone into effect to combat the spread of COVID-19. Some 1,300
supply points and 58 depots have been built to distribute over one trillion
tonnes of agricultural products per day during the most recent lockdown
imposed in Ho Chi Minh City, the country's largest economic hub and home to
more than 9 million people, according to a ministry report. During the
lockdown, the ministry established numerous websites and hotlines to connect
and support sales of agricultural products. The ministry has introduced combo
sales such as the 10-kg combo of products for 100,000 VND (4.4 USD), which
has quickly become a best-seller in the southern city. Similar combo sales
have also been rolled out in other provinces under lockdown in the Mekong
Delta including the provinces of Binh Duong and Tien Giang. In the
future, the programme will help connect suppliers, producers, retailers and
consumers. It will also provide producers with management training,
digitalisation guideline and geo-tagging support and serve as a platform for
local leaders to work with agricultural experts and policy-makers. Minister of
Agriculture and Rural Development Le Minh Hoan said the programme was
designed to assist producers find the right markets, both domestically and
internationally. "It's
the market that gets to decide what will be produced," Hoan said. "Hopefully,
the programme will help producers learn how to read the market demand and to
produce the right products. "Meeting
market demand is the first step. The next step is to scale up production and
minimise cost. Once we have high-valued products, it will be that much easier
to find consumers." The
programme will also start collecting information on speciality products of
localities across the country to build a database, which will support central
and local government agencies in planning and in providing warnings and
guidance on agricultural production in a timely manner./. Planning lags behind market trends Arguably,
the congestion at Cat Lai has been particularly serious for five years now
and the throughput via the port has constantly risen. It has already exceeded
the capacity planned for the port by 2030. However, special care should be
taken toward this argument. Incomprehensive
views First, the
problem of port congestion should be taken into account. By the end of July,
there had been no concerns over congestions in seaport operations following
the incident in mid-2018 related to imported scrap. After relevant
agencies—such as the Ministry of Natural Resources and Environment, the
General Department of Customs, and the Ministry of Transport—cooperated with
seaport authorities in handling the situation, operations have become smooth.
Even in the previous three attacks of Covid-19 in Vietnam, activities of the
seaports were little affected. In fact,
congestions did happen at HCMC’s seaport system in recent years. However,
they involved mostly overland traffic jams on the ports’ access roads for
various reasons like traffic accidents at the bottlenecks or the peak
shipping season. Although the congestions might have affected seaports and
the related enterprises, say, late goods sending and delivery as well as
higher logistics costs, they are not the cause of stagnation in port operations.
In other words, that is a problem of traffic congestion, not port congestion. It is this
reason that the HCMC government has concluded the city’s transport
infrastructure fails to keep up with the growth of the cargo volume through
local ports and has mapped out a plan to pour heavy investment to traffic
infrastructure and facilities in the near future via the collection of
seaport infrastructure fees. Next comes
port capacity. The proponents of the argument that Cat Lai Port has exceeded
its capacity point to the planned capacity for this port area: 4.01-4.02
million TEUs by 2020 and 4.02-4.03 million TEUs by 2030 (Decision
3655/QD-BGTVT signed by the Minister of Transport on December 27, 2017
approving the detailed planning of the group of seaports in the southeastern
region). The throughput reached more than 5.58 million TEUs in 2020, and thus
far exceeding its operational capacity, they argued. This point
of view is inappropriate considering what actually happens in this port area
and is in conflict with the HCMC’s government’s viewpoint. It is also at odds
with the Ministry of Transport’s planning. The planning
according to Decision 3655 only allows the facilities at Cat Lai Port to
receive ships with a tonnage of up to 30,000 tons. However, the Vietnam
Maritime Administration (under the Ministry of Transport) has granted permits
for vessels with a tonnage of one and a half times greater (45,000 tons) to
enter and exit this area. This suggests the capacity of Cat Lai is no longer
at the level planned for the handling of smaller ships. Furthermore, the new
draft of Vietnam’s seaport planning has stated that ships that may make a
call at the port may be up to 45,000 tons each. Moreover,
the total of approximately four million TEUs proves too modest versus the
actual operational capacity of Cat Lai Port. The formula commonly used to
calculate the capacity of a container terminal is one Panamax crane, three
deck cranes and six tractors capable of handling 200,000 TEUs per year. At
present, there are 26 Panamax cranes, 89 deck cranes and 255 tractors at Cat
Lai. The port’s annual capacity may thus total 5.2 million TEUs at the
minimum. According to Saigon Newport Corporation, the maximum capacity of Cat
Lai is 5.5 million TEUs per year, whereas in dossier No. 4602/TTr-UBND dated
December 3, 2020 on the issuance of seaport infrastructure fee, the HCMC
People’s Committee noted that the capacity of this port is 5.3 million TEUs,
which may expand to 6.5 million TEUs if all the access roads are developed in
accordance with planning. As a result,
although in 2020, Cat Lai Port exceeded the capacity designed for it in 2017,
this capacity estimated by the Ministry of Transport is outdated to a certain
extent. The role of
Cat Lai Port As per the
Ministry of Transport’s scheme, in the port area of Cat Lai (or more exactly,
the port area by the Dong Nai River in HCMC’s seaport system), there are
three container terminals, namely Tan Cang-Cat Lai, Ben Nghe-Phu Huu and
SP-ITC—the last of which is for international shipping. Notably, in the list
of the world’s largest container ports, those in HCMC collectively rank 21st
with a total throughput of 7.2 million TEUs. As the 20 ports with a higher
rank are all deep-water, those of HCMC are unofficially the biggest non-deep-water
port in the world. The city’s seaports even rank above deep-water and
transshipment ports as sizable as Colombo (Sri Lanka), Piraeus (Greece), or
Dalian (China). This
informal title is not necessarily something to be proud of, but it makes it
obvious that, although it is not a deep-water port by nature, HCMC’s seaport
system functions efficiently as Vietnam’s import-export gateway, with Cat Lai
Port leading the way. The port
area of Cat Lai is currently the first choice for shipping lines, import-export
companies, and freight forwarders. It is true that the formation of the Cai
Mep-Thi Vai port complex will trigger a shift of cargo away from the
HCMC-based ports. Yet this has not happened, as Cai Mep-Thi Vai now mainly
takes care of the goods bound for the U.S. and Europe. The reason is, while
the previous versions of Vietnam’s seaport planning tend to keep all the
ports apart which creates fragmentation and unhealthy competition, Cat Lai is
a highly concentrated port area, under the same management of Saigon Port
Area 1 Customs Branch in terms of customs. What’s more, despite the presence
of many port rivals, only two main operators are effective in the entire
region, Saigon Newport Corporation and International Transportation and
Trading Joint Stock Company (ITC) . Considering
the characteristics of the shipping industry, certain ports should be placed
adjacent to one another to make favorable the exchange of containers between
them and to optimize their operational capacity. Meanwhile, shipping lines are
able to minimize risks. All these points have benefited in one way or another
businesses when they carry containers to and from Cat Lai Port. It is
customary that the world’s container shipping industry is undergoing a
consolidation and cooperation process. In the port industry in particular,
there have been similar moves, for instance the top four port
operators—Hongkong International Terminals (HIT), Cosco-HIT, Asia Container
Terminals and Modern Terminals—formed an alliance to jointly manage and operate
eight ports including 23 terminals in Hong Kong. Another example relates to
Cosco Shipping Ports, Tianjin Port Holdings and China Merchants which reached
an agreement on the merger of their terminals in Tianjin to optimize the
common resources of all three parties. In Vietnam, Cat Lai should be a case
of successful development, rather than being labeled as breaching the
planning. Vietnam’s
seaport development planning carried out in previous years is plagued with
shortcomings. Therefore, such inadequacies should not be the ground for
misjudging a case in line with market demand which achieves success. Thu Thiem 2 Bridge completes installation of final steel beams The last
girder span of Thu Thiem 2 Bridge has been installed, connecting the two
banks of District 1 and Thu Duc city. Thu Thiem 2
Bridge is one of the key construction works. The project was allowed to be
constructed by the city People's Committee but has to ensure prevention and
control measures against the COVID-19 pandemic. The investor
also face many difficulties to complete the work during the social distancing
measures such as construction schedule disruptions and additional expenses. However, the
investor has still managed to arrange enough materials and fuel for
construction, ensuring the project is implemented on schedule. Kien Giang develops marine aquaculture towards sustainable
development
The
Mekong Delta province of Kien Giang will develop sea aquaculture, focusing on
breeding fish in floating cages and bivalve mollusc farming effectively and
safely, thereby contributing to enhancing agricultural economic growth in the
context of the COVID-19 pandemic. The province's
number of fish cages at sea will rise to 5,500 with an expected
output of 5,200 tonnes in the remaining months of the year. The bivalve
mollusc farming area will cover 25,560 hectares and is hoped to produce
nearly 75,000 tones while clam breeding area will account for 250 ha with a
projected output of 150,000 pearl. Organisations
and households who take part in marine aquaculture will undergo training and
be supplied with technical guidances on the fish cage and bivalve molluscs
farming. A
network of environmental monitoring and disease prevention and control
relating to marine aquaculture will be built within areas approved
by competent agencies. Fish
breeders will receive support in the application of scientific and
technological advances with such new materials as plastic cage
structures or lighting on rafts with solar energy./. Thousands of MSMEs to receive support with digital
transformation Thousands of
enterprises, including micro-, small-, and medium-sized enterprises (MSMEs),
cooperatives, and even business households could benefit from the digital
transformation programme in 2021-2025 to overcome woes and achieve
sustainable growth. The
programme will promote digital transformation by increasing awareness among
enterprises as well as supporting the digitisation of business activities,
management processes, technology and production processes. Bui Thu
Thuy, deputy director-general of the MPI’s Enterprise Development Agency
shared, “A comprehensive digital transformation will improve the efficiency
of production and business, enhance capacity and competitiveness, create new
values for enterprises, cooperatives and business households.” By 2025, at
least 500,000 production facilities and businesses will receive support from
the programme in the form of training, consultancyof digital transformation.
At least 800 businesses, 100 cooperatives, and 4,000 business households
receiving this support will be conduct successful digital transformation. Besides
these, an expert network of at least 500 organisations and individuals will
be gathered to advise and promote digital transformation in every enterprise,
cooperative, and business household. A map and a database of at least 100
digital transformation technology solutions for production and business
establishments will also be released. “A programme
website and a smartphone app have already been built and linked to
the SME portal to publish all information related to SMEs,
assistance for digital transformation, as well as connect SMEs with experts
and technology solutions,” Thuy shared. Last week,
30 medium-sized enterprises from across the country from industries such as
processing, manufacturing, and agricultural production have been selected to
receive support and consultancy in the first phase of the Supporting
Enterprises' Digital Transformation 2021-2025 project funded by USAID LinkSME
(United States Agency for International Development Linkages for Small and
Medium Enterprises). They will
get in-depth consultation to build a digital transformation roadmap from
experts between August and October 2021. Do Hoang
Hai, an expert of the programme said, “The roadmaps will enhance the
competitiveness of businesses, helping them to quickly resume operations
after the pandemic and participate deeper in global value chains.” Since
launching the programme, numerous forums have been organised and direct advisory
has been provided to around 6,000 SMEs in Hanoi, Ho Chi Minh City, and Hue,
setting up the foundation for the MPI to begin drafting the support programme
for enterprises. Particularly,
in combination with the Ministry of Agricultural and Rural Development and
the Vietnam Cooperatives Alliance, the programme supported SMEs,
cooperatives, and business households with digitisation to boost agricultural
products consumption. At first, localities applying social distancing
received guidance to sell their agricultural products on digital platforms.
After that, all cooperatives and business households will receive training to
enhance their competitiveness and expand consumption markets domestically and
globally. Prime
Minister Pham Minh Chinh’s Decision No.942/QD-TTg dated June 15, 2021
approving the e-government development strategy towards the digital
government in the 2021-2025 period with a vision to 2030 targets that every
business household and SME will easily use a digital technology platform for
production and business. As of June 2021, there were about
870 enterprises, 26,000 cooperatives (including 6.8 million members), and
over 5.1 million business households operating across the country. Micro- and
small-sized enterprises account for an overwhelming 94 per cent.
Thai Binh 2 thermal power plant expected to join national grid
by April 30, 2022 Deputy Prime
Minister Le Van Thanh has asked the Vietnam Oil and Gas Group (PVN) to exert
more effort to connect the Thai Binh 2 thermal Power plant to the national
grid by April 30, 2022 instead of June 2022 as originally set out by PVN. The Deputy
PM made the request while visiting the plant in Thai Thuy district, Thai Binh
province on September 4, his second visit to the plant within over the past
month. According to
PVN, the group has set a target to connect the first turbine of the plant to
the national grid on June 8, 2022 and put it into commercial operation on
November 30, 2022 while the second turbine is scheduled to begin commercial
operation on December 31, 2022. PVN Deputy
General Director Pham Tien Dung said that PVN calculated the necessary costs
to complete the project by the end of 2022 to ensure that they will not
exceed the total adjusted investment plan approved for the project. Deputy PM Le
Van Thanh lauded PVN for having addressed a number of issues in a short time,
creating important initial changes to complete the project by the end of 2022
as requested by the government. The
government official said that he will inspect the construction site and hold
meetings with the units in charge of the project once a quarter to solve
problems in a bid to connect the plant to the national grid by April 30, 2022
because the operation of the plant will save tens of billions of Vietnamese
dong per day. He also
suggested the organisation of three working shifts per day to accelerate the
progress of the project while paying more attention to workers and giving
rewards to collectives and individuals showing initiative in shortening the
duration of the project. Key report on Vietnam innovation landscape to come out in
December The Vietnam
Open Innovation Landscape Report 2021, which provides an overview of the
startups ecosystem in Vietnam for investors to learn and look for investment
opportunities, will be launched at the end of 2021. This is the
first-ever inclusive report on the Vietnamese innovation ecosystem, developed
by the one-stop innovation platform BambuUP with the support of the National
Startup Support Centre (NSSC) of the Ministry of Science and Technology's
(MoST) National Agency for Technology Entrepreneurship and Commercialisation
Development (NATEC). According to
the General Statistics Office, there were 135,000 newly-registered
enterprises and 3,000 startups in Vietnam last year. International
organisations said that Vietnam is among top 3 most dynamic startups
ecosystems in Southeast Asia. In fact,
along with the development of a startup ecosystem, an ecosystem of support
and interaction among economic sectors to jointly innovate is gradually being
established, shaping Vietnam's open innovation ecosystem. They need
comprehensive and up-to-date information about Vietnam's open innovation
ecosystem, which helps startups innovative and businesses, domestic and
foreign investors timely grasp the trends of innovation, new opportunities
for cooperation and investment, and become greater than ever. Nguyen Huong
Quynh, CEO of BambuUP said, "During discussions and connection with
businesses, startups, and investors, we realised that there are a lot of
promising innovative solutions in Vietnam. So if startups can access
financial support and opportunities to resolve the big troubles of
businesses, they can benefit all sides and become the driving force of the
economy. We hope that the report will contribute to the development of
Vietnam's startups ecosystem and advertise it to foreign partners." The Vietnam
Open Innovation Landscape Report 2021 will provide comprehensive,
multi-dimensional and updated information for state-run agencies,
organisations, startups, enterprises, corporations, and investors to grasp
the new and hottest trends. It will also
point out the trends of startups and innovation in Vietnam and over the
world, analysis of innovation in some key industries, as well as the
challenges and demands of startups. A startup
map across prominent economic sectors will be included in the report, including
retail, fintech, edtech, health-tech, mar-tech and sales tech,
sustainability, logistics, agritech and food-tech, and travel and tourism. The COVID-19
pandemic has been a source of extreme economic challenges, pushing
stakeholders towards technology and innovation to quickly resume operations
after or even during the pandemic. Pham Dung
Nam, director of the NSSC said, "It is quite essential to adopt new
mindsets for economic development at this time. This is contained in the
three keywords: Innovation, Open, and Linkage, in order to mobilise the
startup ecosystem to improve services, products, processes, and models, as
well as further cooperation to create a larger value chain and stronger
development." The report
is expected to be a foundation to promote and expand potential cooperation
and investment opportunities among local and overseas startups, businesses,
and investors. This will create a stronger push for innovation across
economic sectors, contributing to active recovery and growth in the new normal.
Information in the report will also be used to advise the government and
policymakers in crafting development directions for the startup ecosystem and
long-term open innovation. John Kojiro
Moriwaka, general director of Silicon Valley Ventures and CEO of Startup
Grind Fukuoka said that the report would help investors, especially those
from the US and Japan to learn more about startups in Vietnam. "I will
cooperate with the one-stop innovation platform BambuUP to take the open
innovation landscape of Vietnam to the world," he said. Standard Chartered lowers Vietnam’s 2021 GDP growth forecast to
4.7 per cent The
UK-backed lender predicts Vietnam's GPD growth in 2021 to be 4.7 per cent,
instead of the previous forecast of 6.5 per cent. Standard
Chartered Bank has revised its GDP growth forecasts for Vietnam for 2021 to
4.7 per cent from 6.5 per cent and 7.0 per cent from 7.3 per cent for 2022
due to softening economic indicators, the worsening pandemic, and a
still-slow vaccination rollout. The bank
anticipates a further downgrade and an interest rate cut by the State Bank of
Vietnam (SBV) if COVID-19 cases are not brought under control by September.
It sees a rebound in the fourth quarter and expects trade data to remain
supported by improving global trade. Softer economic growth is expected in
the third quarter of this year, Standard Chartered noted. The COVID-19
situation will likely continue to dampen inward investment for the rest of
2021 and may create further tourism uncertainty. “Vietnam’s
economy is being hit by the pandemic like many others in Asia and other parts
of the world; however, we remain bullish on its economic prospects over the
medium and long term,” said Tim Leelahaphan, economist for Thailand and
Vietnam, Standard Chartered. South Koreans strive to keep hold of production presence Despite
Vietnam’s prolonged trade deficit with South Korea and continuing
complexities with the pandemic, the latter is boosting its investment and
exports to the former for production and re-export to take advantage of tax
cuts under a trade pact. Over the
past few weeks, South Korea’s LG Display Vietnam Haiphong Co., Ltd. has been
boosting its recruitment of employees for its $1.5 billion plant in the
northern city of Haiphong, producing OLED products for mobile phones,
smartwatches, TVs, and tablets. The company is in need of lawyers, general
affairs assistants, engineers for research and development, production,
health and safety, and technology, and IT assistants as well. Meanwhile,
LG Electronics Vietnam Haiphong has been doing the same, with many engineers
and staff required for its $1.5 billion facility making home appliances,
smartphones, and car infotainment products. South
Korea’s Samsung has also followed suit, with new employees to work for its
plants in Ho Chi Minh City, Hanoi, and the northern provinces of Bac Ninh and
Thai Nguyen, with total investment capital of over $17.5 billion and
employing over 160,000 local workers. Samsung’s production focuses on mobile
phones and home electronics appliances, both locally consumed and exported. Both Samsung
and LG are taking the lead in Vietnam’s export of electronics items. In the
first seven months of 2021, the country earned $29.4 billion from exporting
mobile phones and their spare parts, which accounted for 15.8 per cent of
Vietnam’s total export turnover and up 11.9 per cent on-year. The country
also fetched $27.4 billion, up 16.5 per cent on-year from exporting laptops,
their spare parts, and other electronics items. However,
according to the Korea Chamber of Business in Vietnam (KorCham), many of the
9,300 South Korean businesses in Vietnam have also boosted imports worth tens
of billions of US dollars into Vietnam since early this year, in defiance of
the health crisis. This has caused a trade deficit between both nations,
whose trade relations are strongly increasing. In the first
seven months of this year, South Korea was Vietnam’s third-largest foreign
investor, with total new registered capital of $2.4 billion, after Singapore
($6.2 billion) and Japan ($3.2 billion). Figures from
the General Department of Vietnam Customs showed that in the first seven
months of this year, Vietnam’s total export-import turnover with South Korea
hit $42.22 billion, or 11.25 per cent of Vietnam’s total trade turnover of
$375.12 billion, and up from $35 billion recorded in the same period last
year. Also in the
first seven months of 2021, South Korea was Vietnam’s fifth-largest export
market with a total turnover of $12.15 billion, up 12 per cent on-year and accounting
for 6.5 per cent of Vietnam’s total export turnover of $186.35 billion – up
26.2 per cent as compared to that in the corresponding period last year. Meanwhile,
South Korea was also Vietnam’s second-largest import market, with total
turnover of $30.07 billion, up 21.4 per cent on-year, and occupying 15.9 per
cent of Vietnam’s total import turnover of $188.76 billion – a 35.8 per cent
rise on-year. Thus, in the
first seven months of the year, Vietnam witnessed a trade deficit of $17.92
billion with South Korea (see box). KorCham vice
chairman Hong Sun told VIR that the trade deficit is not a negative for
Vietnam, because many South Korean corporations have been boosting investment
and imports of machinery, equipment, and materials into Vietnam to serve
production. A large part of Vietnamese-made products are also exported to
foreign markets such as South Korea. “Many are
showing their concern about a big trade deficit for Vietnam from South Korea.
However, they shouldn’t because Vietnam’s imports from South Korea are
largely conducted by South Korean businesses in Vietnam, especially major
ones like Samsung, LG, Hyosung, and HanHwa that are implementing large
investments here,” Sun said. Meanwhile,
Vietnam’s exports to South Korea, mostly end-products and consumer goods,
have risen quickly by double digits over the past few years. Under the
Vietnam-Korea Free Trade Agreement, since 2018 over 90 per cent of the import
tariff lines have been eliminated. Moreover, Vietnam will completely remove
its import duties on nearly 90 per cent of all products from South Korea over
a 15-year period from 2015. Tariff
reduction and elimination by South Korea are expected to offer new
opportunity for export of Vietnam’s important export-categories such as
agro-products, pivotal aqua-products of shrimp, fish, tropical fruits,
industrial products of garment, mechanical instruments. South Korea
is also committing to grant market access in service and investment and has
agreed to promote economic cooperation, technical support in diversified
sectors. South Korea, for the first time, opens its market for products of
high sensitivity such as garlic, ginger, honey, shrimp, offering considerable
opportunities for Vietnam in competition with other suppliers from across the
region. Vietnam
commits to offer concession for South Korea in categories of industrial
products such as garment materials and accessories, plastic materials,
electronic accessories, trucks and cars having capacity of 2,500cc and more,
car-parts, electrical home appliances, steel products, and cables. On July 22,
Prime Minister Pham Minh Chinh had phone talks with South Korean counterpart
Kim Boo Kyum to discuss specific measures promoting bilateral strategic
cooperative partnership, towards the 30th anniversary of bilateral diplomatic
ties. They reached
a consensus on achieving the target of lifting two-way trade to $100 billion
in a balanced trade manner, including facilitating Vietnam’s key exports such
as agro-forestry-fishery products and seasonal fruits. Vietnam
vowed to create all favourable conditions for South Korean businesses to
continue expanding and shifting investment to the nation while actively
assisting those hit by COVID-19. Both nations
are also expected to implement a plan on opening their doors wider to each
other to boost trade and investment ties. During an
official visit to South Korea last November by Prime Minister Nguyen Xuan
Phuc, now Vietnam’s state president, President Moon Jae-in stressed that
Vietnam is “a key partner in South Korea’s New Southern Policy”, and that
South Korea wishes that both nations continue boosting the bilateral ties to
new highs. Figures from
the Vietnamese General Statistics Office showed that as of August 20, South
Korea is Vietnam’s biggest foreign investor, with over 9,100 valid projects
registered at $72.16 billion. Samsung is
now the biggest foreign investor in Vietnam. It is now constructing a $230
million research and development centre in Hanoi, which is expected to become
operational in 2022, employing 2,200-3,000 people. Despite
massive difficulties, Samsung’s export turnover last year sat at $57 billion,
holding 20.16 per cent of Vietnam’s total export turnover of $282.65 billion.
This was an important milestone for the company as one of its most important branches,
Samsung Electronics, aims to become the largest chip manufacturer in the
industry, targeting a value of around $400 billion in the global market. However,
KorCham’s Hong Sun said that many big brand names such as Adidas and Nike
have delayed signing new contracts with enterprises in Vietnam for fear that
they cannot meet the conditions. “The
Christmas holiday will see the biggest consumption of products and production
must begin now, but producers are afraid that their partners will turn to
India, Malaysia, or Pakistan which are also famous for footwear products,”
Sun said. “It is suggested that the Vietnamese government are flexible in
controlling COVID-19 and supporting enterprises thoroughly.” Steeper downturn in Vietnamese manufacturing sector in August The Vietnam
Manufacturing Purchasing Managers' Index (PMI) fell to 40.2 in August, down
from 45.1 in July and signalling the worst deterioration in the health of the
manufacturing sector since April 2020. The downturn
in the Vietnamese manufacturing sector intensified during August amid the
worst outbreak of the COVID-19 virus in the country since the pandemic began.
Restrictions leading to the temporary closure of some businesses, social
distancing measures, and limits on travel to try and contain the spread of
the pandemic resulted in accelerated declines in output, new orders,
purchasing, and employment. The
unprecedented spell of supply-chain disruption continued amid transportation
difficulties and pressure on capacity at the country's ports. This, allied
with raw material shortages, placed upward pressure on input costs which
continued to rise sharply. COVID-19
restrictions meant that a number of manufacturers were closed temporarily,
while others reported staff shortages and limits on their ability to produce.
As a result, output declined at a substantial pace. The rate of contraction
was the second fastest on record, behind only that seen in April 2020. A similar
picture was recorded with regards to new orders which decreased for the third
month running and at the fastest pace in 16 months. The rate of decline in
new export orders also accelerated as COVID-19 restrictions made exporting
difficult. The sector's labour market also suffered amid social distancing
restrictions. A number of
businesses indicated that they were operating the "three on the
spot" policy to maintain some staff presence on site, but that not all
workers were able to participate in this. Overall, employment decreased for
the third month running, and at a sharp pace that was the steepest since
April 2020. Severe
supply-chain disruption continued, with vendor delivery times lengthening at
the sharpest pace on record for the second month running. Transportation
issues were widely reported, with congestion at ports a result of them being
unable to operate at full capacity. Raw material shortages was a secondary
factor contributing to longer lead times. Raw material
shortages and transportation issues led to a further steep increase in input
costs, with the rate of inflation remaining among the fastest in a decade. In
turn, output prices were also raised, albeit to a much lesser extent than
input costs as some firms offered discounts in order to try to secure sales. August saw a
near-record reduction in purchasing activity amid temporary company closures
and lower output requirements. Despite the drop in purchasing, stocks of
inputs increased for the first time in three months. The accumulation largely
reflected the difficulties firms were having in maintaining production
volumes. Business sentiment hit a 15-month
low in August as the severity of the current COVID-19 outbreak in Vietnam led
a number of businesses to predict a sustained period of restrictions on their
operations. That said, others were confident of a rebound in production.
Vietnam advised to speed up digital transformation for
socio-economic development ietnam will
need to do more if it wants to become a digital powerhouse as envisioned in
the socio-economic development strategy adopted by the Party in February
2021, said a report of the World Bank. In its
latest edition of Taking Stock – the World Bank’s biannual update on
Vietnam’s economic performance, the WB stressed that Vietnam needs to ensure
the development of a digitally skilled labour force, the emergence of a
dynamic and agile local private sector, and good but secure access to
information. The report
reviews the recent developments in the Vietnamese economy and discusses the
economy’s short- to medium-term prospects, highlighting domestic and external
risks associated to the COVID-19 pandemic. The report
said that in order to improve its economic autonomy, Vietnam needs to take
advantage of existing conditions to become a digital powerhouse. “While
downside risks have heightened, economic fundamentals remain solid in
Vietnam, and the economy could converge toward the pre-pandemic GDP growth
rate of 6.5 to 7 percent from 2022 onward”, Rahul Kitchlu, World Bank Acting
Country Director for Vietnam, said in the WB's recent press release. Vietnam aims
to be among the top 50 countries in the ICT Development Index as early as
2025, and its digital economy is hope to account for one third of the
country's GDP by the end of the decade, instead of only 5 percent. According to
Jacques Morisset, WB Lead Economist for Vietnam, digital transformation is
happening in Vietnam and the COVID-19 shock is a big driving factor. Since
the appearance of the COVID-19 pandemic, Vietnam has witnessed a great change
in the application of new digitization tools in both private and public
sectors. The WB
estimated that in June 2021, about two-thirds of private enterprises in Vietnam
have access to technologies related to the digital economy. This is a huge
leap from the pre-COVID-19 period. Vietnam
still has a lot of work to do, Morisset said. In addition
to upgrading infrastructure, Vietnam needs to encourage the application of
digital technology and attract investment to create conditions for small
businesses to participate in the digital economy, he added. He also
underlined the necessity for Vietnam to upgrade digital technology
infrastructures, and equip workers with digital skills to help them become
more dynamic in adapting to new technologies. In the short
term, Vietnam can take advantage of the presence of many famous technology
enterprises such as Intel, Apple and Samsung to learn and improve digital
skills for local labourers working for these corporations, he said. The
Vietnamese Government can issue a series of initiatives to attract talents
from expatriates working in digital technology fields around the world, he
added./. HCM City power utility eyes integration of private renewable
energy The HCM City
Power Corporation is undertaking a number of projects to develop and
integrate power sources such as rooftop solar. This will
allow several control measures such as active reduction of grid power
consumption during peak hours, load curtailment and management of loads
through the day. According to
EVNHCMC, since power sources such as rooftop solar have become increasingly
popular around the world, cities with high urbanisation and population
density are looking for suitable distribution solutions. For the
city, rooftop solar is currently the best option for efficiency and
optimisation, and it not only helps customers reduce electricity expenditure
but also cools their houses by reducing radiation and offers the option of
selling excess production to the grid, it said. Besides, it
is a clean source of energy, it pointed out. As of August
1 the city had 14,250 rooftop solar systems with a total capacity of 365 MWp. EVNHCMC has
set up a dedicated section for rooftop solar power on its customer care
website since 2019, providing transparency on the feed-in tariff mechanism,
power purchase and connection for capacity release procedures, incentive
programmes, and a quick rooftop solar system investment cost/efficiency
calculation tool. It also
carries out negotiations for rooftop solar system connections and power
purchase. It also
plans to provide electric motorbikes to 400 of its electricians this year
after already providing them at two of its subsidiaries, Saigon and Hoc Mon
Power Companies. It is also
seeking to set up charging stations in co-ordination with electric vehicle
manufacturer VinFast in anticipation of the enormous demand in the near
future. Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes |
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