VIETNAM BUSINESS NEWS OCTOBER 17
10:31 More quality
manpower needed for logistics sector
Amid the
logistics industry’s development and the Fourth Industrial Revolution, new
logistics services have increased and required more quality and creative
human resources, heard a forum held both in person and virtually on October
15. Vo Tan
Thanh, Director of the Ho Chi Minh City branch of the Vietnam Chamber of
Commerce and Industry (VCCI), said developing human resources is one of the
five focal tasks during the country’s socio-economic process in the time
ahead. Improving logistics services and developing infrastructure are also
considered important factors for enhancing the economy’s competitiveness,
especially as the COVID-19 pandemic and Industry 4.0 have generated new
challenges, affected Vietnam’s economic development, and changed the business
environment around the globe. Truong Anh
Dung, General Director of the Directorate of Vocational Education and
Training under the Ministry of Labour, Invalids and Social Affairs, said the
Prime Minister recently approved a pilot programme on training and re-training
to improve human resources’ skills to meet requirements of Industry 4.0. This
programme aims to improve workers’ knowledge and skills so that they can
master and effectively apply technological advances of Industry 4.0 and meet
enterprises’ human resources demand, and helps improve labour productivity
and national competitiveness. At the
forum, participants discussed issues relevant to education, training, and
improvement of the quality of human resources, including in the logistics
industry. They also shared initiatives, new mindsets, and forecasts about
logistics manpower. Assoc. Prof.
and Dr Thai Van Vinh from the Australia-based RMIT University pointed out
that logistics and manufacturing businesses in Vietnam always face a serious
shortage of manpower for logistics job positions. He held that
amid the development of the logistics industry and Industry 4.0, new
logistics services have increased, requiring more quality and creative human
resources. State
agencies, schools, and enterprises need to join hands to anticipate trends,
opportunities and challenges; and to work out solutions so as to improve the
quality of logistics manpower as well as general human resources in Vietnam,
he added. The forum
was part of the Vietnam - Australia cooperation in promoting the quality of
vocational education, with a trial enterprise-led training model carried out
in the logistics sector since 2017, under the Vietnam - Australia Partnership
for Human Resource Development (Aus4Skills) programme./. MoIT should give more support to businesses in expanding
markets: VCCI The Ministry
of Industry and Trade (MoIT) needs to give more support to enterprises in
establishing stable and reliable distribution channels for expanding trade
promotion activities and consumption markets, especially for agricultural
products. This is one
of the recommendations from the Viet Nam Chamber of Commerce and Industry
(VCCI) to complete a draft Government resolution on support for and
development of business in the 2021-25 period, compiled by the Ministry of
Planning and Investment. MoIT should
also organise national brand promotion campaigns and national trade promotion
programmes with support from Viet Nam’s trade offices and trade promotion
centres aboard. Based on
those, the ministry would establish channels on market information,
connection and support for enterprises in doing business and taking advantage
of opportunities from free trade agreements, thereby promoting
export market expansion. This
ministry needs to review the legal framework for the development of domestic
trade on online platforms, limiting commercial fraud, and building sanctions
to promote the development of domestic commerce and e-commerce. At the same
time, MoIT should have support for building electronic trading floors to
enhance the consumption of domestic products and expand export markets, said
VCCI. The chamber
has also proposed tasks for the Ministry of Agriculture and Rural Development
(MARD), including coordination with the MoIT in expanding domestic and international
markets for Vietnamese agricultural products; and increased negotiations with
potential markets for such products. MARD needs
to set up more facilities and centres of testing products according to
technical standards, such as sanitary and phytosanitary (SPS), and technical
barriers to trade (TBT) for exported agricultural and aquatic products and
handling issues relating to those standards. That would reduce costs for
those activities. According to
VCCI, tasks relating to stimulating demand and expanding markets should be
implemented with regular and efficient coordination of the business community
via VCCI and other associations. The chamber
has suggested that the drafts should stipulate more coordination with
ministries, sectors and localities for VCCI and commodity associations in
implementing trade promotion programmes and promoting domestic consumption. VCCI and the
associations also have support for the businesses in joining the programme
"Vietnamese people give priority to using Vietnamese goods" and
programmes on stabilising prices and trade promotion. At the same
time, they need to actively participate in important bilateral and
multilateral agreements in the region and the world, and to carry out trade
and investment promotion activities. Those activities would improve Viet
Nam’s integration and attract more foreign investment to the country. They would
implement programmes on providing information and training for enterprises in
the process of carrying out preferential commitments in free trade
agreements. In addition,
they would support businesses to effectively cope with arising international
trade barriers, especially trade remedy lawsuits in export markets. They
would have recommendations relating to the negotiation of free trade
agreements. Regarding
solutions in building supply chains of major Vietnamese commodities, VCCI has
also suggested building a large commodity trading floor with futures
contracts, helping farmers and producers minimise price risks. In addition,
to improve the business and investment environment, VCCI has proposed adding
dialogues with ministries and sectors into the draft to remove difficulties
and obstacles relating to mechanisms and policies. Along with
that, the Government working group should closely coordinate with VCCI and
commodity associations to assist businesses in recovering production and
business after the COVID-19 pandemic, seeking new investment opportunities in
Viet Nam. Ministries
and sectors should be responsible for sharing information on policies and
regulations related to domestic and foreign enterprises with the business
community via VCCI and commodity associations. Quang Binh welcomes first tourists from outside after
pandemic-caused hiatus The central
province of Quang Binh on October 15 welcomed the first tourists from another
locality after a long hiatus triggered by the latest COVID-19 wave. The six
tourists, arriving by air from Ho Chi Minh City, are visiting Quang Binh in a
package tour permitted by the provincial People’s Committee. They will
experience services at Chay Lap Farmstay, explore the Tu Lan cave system, and
wrap up their trip on October 17. This is one
of the package tours offered by the Oxalis Adventure company and attracting
much interest from travellers from HCM City, Hanoi, and many other
localities. Nguyen Ngoc
Quy, Director of the provincial Tourism Department, said Quang Binh has been
ready to welcome travellers back, describing the welcoming of this tourist
group as an important event marking the resumption and gradual recovery of
the local tourism industry. The tourist
reception process complied with regulations of the Health Ministry and the
Government. Accordingly, visitors must have been fully vaccinated against
COVID-19 and undergone rapid testing before their flight’s departure and
after arrival, the official added. Quang Binh
is now opened to travellers from COVID-19-free zones (green zones) and those
applying the Prime Minister’s Directive 15/CT-TTg on pandemic prevention and
control (yellow zones). Those from “yellow zones” can only take part in
“sandbox” package tours or certain services on small scale to ensure safety. Travel
companies and those operating tourist attractions can serve a maximum of 20
visitors per group, and groups must keep distance from one another during
their stay in the province. The tours
offered to travellers must also be licensed by the provincial People’s
Committee. Quang Binh
is dubbed the "Kingdom of caves" with hundreds of caves of various
sizes as well as incredible mountain scenery and sprawling beaches. It is home
to Son Doong Cave, accredited as the world’s largest and most beautiful
natural cave by the World Records Union and the World Records Association, as
well as the UNESCO-recognised world heritage site Phong Nha - Ke Bang
National Park./. Over 80% of industrial firms resume operations in Dong Nai Nearly 1,400
firms, or over 80 per cent of those operating in 31 industrial parks in the
southern province of Dong Nai, have resumed operations, according to the
provincial Industrial Zones Authority. Due to
COVID-19, many businesses had to scale down or suspended production. However,
since the end of September, nearly 1,400 firms have resumed operations,
drawing more than 334,000 workers back to work or 54 per cent of the total
number of labourers at the local industrial parks. The
authority said the province prioritised vaccinating workers and issued many
documents to help enterprises ease difficulties and recover production. It is
forecast that in the fourth quarter of this year, firms in Dong Nai will
stabilise their production and obtain more export orders. Le Van Danh,
deputy head of the authority, said thanks to the local effective
implementation of social security, the majority of migrant workers had stayed
in the province. Most
enterprises in the industrial zones had solid financial capacity, therefore,
the production recovery would take place quickly and smoothly, he
added. Hopes high for year-end rally to reverse shaky trade balance In spite of
massive woes, Vietnam’s goods import-export landscape is gaining momentum
thanks to bit-by-bit recovery in domestic production and gradual reopening of
many foreign markets. Nguyen Hai
Hoang, vice director of electronics manufacturer Duc Hoang Electronics JSC in
the southern province of Binh Duong, recently had online meetings with three
partners from Malaysia and China to negotiate new export orders. His firm
will provide them with electronics items at a total value of nearly $10
million for the fourth quarter and about $5 million for the first three
months of 2022. “We earned
export turnover of $11 million in the first nine months of 2021, up from $10
billion in the corresponding period last year. If our partners hadn’t reduced
production, we could have earned about $15 million in the first nine months
of this year,” Hoang said. The firm has
also imported electronic items for its production. The import turnover in the
same period rose 5 per cent on-year. “It is expected that if COVID-19 is well
controlled in the foreign markets in the rest of 2021, our company’s export
and import turnover will climb about 6 per cent this year,” Hoang said. Duc Hoang
Electronics has contributed to a rise in Binh Duong’s electronics export
turnover of 32.6 per cent on-year, at over $1 billion in the first nine
months, and also contributed to an expansion in the Vietnamese electronics
industry’s nine-month export turnover of $36.4 billion, up 13.1 per cent
on-year. Vietnam also
earned $41.33 billion from exporting mobile phones and their spare parts in
this period, up 12.4 per cent on-year. South Korea’s Samsung holds more than
90 per cent of Vietnam’s total export turnover from electronics and mobile
phones. As for
garments and textiles, over the past few weeks producer No.26 JSC, based in
Hanoi, has boosted recruitment of new employees who will work for the
company’s new facilities in the city, with high allowances and bonuses in
addition to salaries. “We need
many new workers as we are expanding exports to a number of new markets in
Europe, ASEAN, and Japan, besides our traditional markets of South Korea and
the US,” explained company representative Nguyen Viet Thang, adding the
nine-month export and import turnover hit about 5 per cent on-year. The
company’s exports and imports were boosted during January and June in
particular. However, since July exports have slowed down due to the pandemic.
“However, we expect that with the new orders we will be able to increase
exports thanks to the new markets gradually reopening their doors to import
activities.” The Ministry
of Industry and Trade (MoIT) said in the first nine months of 2021, Vietnam’s
garment and textile export turnover hit $23.46 billion, up 5.8 per cent
on-year. The MoIT
reported that while many items in the period witnessed a cut in export
turnover, garments and textiles as well as electronics are among key export
items with an on-year rise in export turnover, such as assorted steel ($8.23 billion,
up 125.4 per cent), machinery and equipment ($26.25 billion, 44.5 per cent),
wood and wooden products ($11.14 billion, 30.9 per cent), footwear ($13.33
billion, 9.8 per cent), transportation means and equipment ($7.86 billion,
23.1 per cent), plastics ($3.57 billion, 37.4 per cent), and chemicals ($1.66
billion, 32.5 per cent). In the first
nine months, Vietnam’s total export turnover reached $240.52 billion, up 18.8
per cent over the same period last year – in which local exporters fetched
$62.72 billion, up 8.5 per cent and foreign firms raked in $188.8 billion
(including crude oil exports), up 22.8 per cent. Meanwhile,
total import turnover hit $242.65 billion, up 30.5 per cent on-year - in
which local importers spent $83.72 billion, up 25 per cent and foreign firms
forked out $158.93 billion, up 33.6 per cent. Thirty-six items had an import
turnover of over $1 billion, holding over 90 per cent of the economy’s total
import value. In the same
period, Vietnam saw a trade deficit of $2.13 billion, with domestic firms
suffering from a trade deficit of $21 billion and foreign businesses enjoying
a trade surplus of $18.87 billion. However,
according to the MoIT, the majority of the imported products are used for
domestic production, and only $14.77 billion (or 6 per cent of the total
import value) worth of imported goods needs to be controlled. Tran Thanh
Hai, vice director of the MoIT’s Foreign Trade Agency, was optimistic about
the nine-month trade picture which contributed greatly to the GDP growth of
1.42 per cent, especially amid the health crisis. “This is a
big effort of all sectors, localities, and enterprises,” Hai said. “Vietnam’s
export activities are enjoying advantages from free trade agreements and
global markets’ growing demands for goods in the remaining months of the
year.” “In the
fourth quarter, if COVID-19 is well controlled, the southern region will
strongly recover, boost exports, and regain growth momentum. It is strongly
believed that by late 2021, the country will see a trade balance, and if more
favourable conditions come, there may be a trade surplus,” he said. The MoIT
forecasted that Vietnam’s total export turnover will be around $313 billion
this year, up 10.7 per cent on-year. This will help the economy grow at about
3-3.5 per cent this year. Under a
General Statistics Office survey conducted in the third quarter, covering
around 5,700 manufacturing and processing firms and nearly 6,200 construction
businesses, 77.6 per cent of respondents believed their new export orders in
the fourth quarter will “increase or be unchanged” as compared to the third
quarter. Only 22.4 per cent of the surveyed firms predicted that their new
orders will be reduced in the fourth quarter. Standard
Chartered revised down its GDP growth forecast for Vietnam in 2021 to 2.7 per
cent from 4.7 per cent, reflecting the unexpected third-quarter contraction
of 6.17 per cent on-year. The bank expects recovery to accelerate in 2022 and
maintains its growth forecast for next year at 7 per cent. “While we
expect growth to start recovering in Q4, this hinges on progress towards
reopening businesses. We expect post-pandemic acceleration but turn more
cautious pending clearer signs of recovery. Vietnam’s pandemic management is
crucial to the near-term outlook,” said Tim Leelahaphan, economist for
Thailand and Vietnam at Standard Chartered. Vietcombank completes 98 percent of yearly credit plan By the end
of the third quarter, the credit of the Foreign Trade Joint-stock Bank
(Vietcombank) was 923,385 billion VND (40.550 million USD), an increase of
11.5 percent over the whole of 2020 and representing 98 percent of this
year’s plan, according to the lender. Since 2020,
the bank has conducted 9 interest rate reduction to help people and firms
adversely affected by the COVID-19 pandemic. This year alone, its reduction
of interest for customers will amount to 7.1 trillion VND. Besides,
Vietcombank is also realising its commitments for support to social welfare
work and the pandemic fight with about 350 billion VND. In the last
months of this year and toward next year, the bank will continue to focus on
renovating the intensive growth model, shifting its operation structure, thus
ensuring sustainable growth with a high efficiency and productivity to serve
the economic recovery. It also
commits itself to maintaining a reasonable interest rate to continue
supporting firms in adapting themselves to the new context, and to providing
social welfare to those directly affected by the pandemic./. Waves of variance in seaport growth Despite
aspects of strong growth, a mixed picture remains dominant in Vietnam’s
seaports so far this year, with prospects uncertain amid sluggish global
economic recovery. Total volume
of goods and commodities via seaports in Vietnam hit over 535.7 million
tonnes between January and the end of September, up 3 per cent on-year. Of
that, container throughput enjoyed double-digit growth of 15 per cent to
nearly 18.6 million TEU, with over six million TEU exported (up 13 per cent)
and over 6.1 million imported, up 18 per cent. Seaports
have been performing well despite social distancing, including those of VIMC,
which enabled the group to enjoy an on-year rise of 16.8 per cent in volume
and a 30.5 per cent increase in revenues during the period. VIMC now has
35 member companies, managing over 13,000 metres of piers and accounting for
nearly 30 per cent of the country’s total. These piers are capable of
handling over 100 million tonnes of cargo, making up over 20 per cent of the
country’s total. For
instance, the SSIT and SP-PSA ports experienced a strong growth in the volume
of commodities during the nine-month span. Both are located in the Cai
Mep-Thi Vai area of the southern province of Ba Ria-Vung Tau. SSIT port, a
joint venture between VIMC and SSA Marine, accommodated over 10 million
tonnes of goods, equal to over 545 per cent compared to the same period last
year, while its container throughput rose 44.1 per cent. Likewise, SP-PSA, a
joint venture between VIMC and Singapore-based PSA, witnessed an on-year
increase of over 22 per cent in volume and 17.42 per cent in revenues. A
representative of VIMC told VIR, “It is an impressive result amid social
distancing. No seaports of ours stopped operations in this situation.” However, not
all seaports performed well, including some of the commonly most-profitable
ones like Cai Mep International Terminal (CMIT) and other joint venture
seaports like Cai Lan International Container Terminal (CICT). According to
VIMC statistics, CMIT has Denmark’s APM Terminals as a foreign stakeholder
and saw its volume rise by 16.3 per cent on-month in September. The port
handled over 18 million tonnes of goods in the nine-month period, including
1.2 million TEU in container throughput, equal to more than 96 per cent
compared to the same period last year. Nguyen Xuan
Ky, general director of CMIT, told VIR, “Since late July, the stay-at-work
policies have been affecting not only seaports but also companies that
manufacture key items for export because their operations require a lot of
workers. The reduced production capacity of factories in Ho Chi Minh City,
Dong Nai, and Binh Duong – the southern economic hubs – resulted in a fall in
commodities and goods for export via seaports.” CICT,
located in the northeastern province of Quang Ninh, accommodated more than
3.18 million tonnes of commodities and 12,000 TEU of container throughput,
down 12.7 per cent, and nearly 69 per cent on-year, respectively. September
was not a rosy month for many others. Big seaports at Haiphong, Danang, and
Quy Nhon saw a fall in profits during the month, together with Transvina,
VIMC Dinh Vu, and VIMC Hau Giang. Seaports in
which VIMC holds a controlling stake have started to see an on-month
reduction in goods and commodities since June, with on-month decreases
ranging from 3 to 7.9 per cent. According to
VIMC, there remain some challenges ahead. “We see recovery in October
compared to previous months, but the progress is still slow,” Ky noted. The
Organisation for Economic Co-operation and Development anticipates global
economic growth of 5.7 per cent in 2021, down 0.1 per cent from initial
forecasts; and 4.5 per cent in 2022. But recovery remains uneven, with
countries emerging from the crisis at varying paces. Ba Ria-Vung Tau firms move to adapt to new normal
Despite
being battered by the COVID-19 pandemic, enterprises in the southern province
of Ba Ria-Vung Tau have done their utmost to protect and maintain production
activities. Chien Chung
Chih, Administration Manager of San Fang Chemical Industry Co., Ltd.,
said: "We applied the “three on-site” model for 750 workers, or 60
percent of our workforce. They lived in a 70-room dormitory, each from 20-40
square metres. The company was in charge of transporting them from their
living quarters to the worksite every day. They were directed to strictly
follow the “5K message” while at the dormitory and the workplace." "We
recommended to local authorities that workers be given vaccinations at the
earliest possible time," he said. "We
have calculated that the “three on-site” model will cost us billions of VND.
But we accept this to ensure production and worker safety," said Le Van
Tinh, Director of Pacific Lighting Equipment Production & Trading JSC. The
two-month social distancing order under Directive No. 16 affected enterprises
in Ba Ria-Vung Tau province, with employee numbers falling, logistics
services disrupted, charges incurred in COVID-19 testing and pandemic
prevention work, and a surge in wages and business costs. Eighty
companies with 16,500 workers had to suspend operations. After
several discussions with local companies, Ba Ria-Vung Tau introduced a number
of policies to support the restoration of production and boost socio-economic
development. According to
Nguyen Cong Vinh, Vice Chairman of the Ba Ria-Vung Tau Provincial
People’s Committee, said: "We have provided local companies with tax and
credit support policies. Favourable conditions have also been created for
enterprises to gain access to support under the Government’s Resolution No.
68." Together
with pushing up the vaccination drive, the provincial People’s Committee also
established a working group in charge of hearing from local companies about
challenges and solutions to removing bottlenecks. This aimed to accelerate
the recovery of local production and adapt to the development of the
pandemic./. Changes to break e-commerce stride Operators in
e-commerce are at odds over the impact of a new governmental decree, which
could render the booming e-commerce market more challenging for local and
foreign participants alike. According to
Samuel Son-Tung Vu, partner at law firm Bae, Kim & Lee Vietnam, Decree 85
creates additional barriers for foreign investors in the e-commerce market.
Those who wish to control one or more of the leading e-commerce enterprises
may face difficulties when applying or amending the respective licence. Thus, such
applications shall not only be reviewed by the Ministry of Industry and Trade
(MoIT) but shall also be appraised by the Ministry of Public Security (MoPS).
Furthermore, Decree 85 is silent on the duration for the MoPS to provide
their appraisal opinion, thus issuance of e-commerce licences for
foreign-invested enterprises could be more time-consuming and difficult. Vu added
that the new decree will likely hinder foreign investment activities in
Vietnam, especially for those planning to takeover one of the major
e-commerce platforms. In addition
to these obstacles, overseas enterprises may also face higher costs due to
the requirements to amend and upgrade their respective internal system,
regulations (for example, regulations on operation of e-commerce trading
floors), employee conduct training, and more. “Considering
the size and the number of processed transactions of major e-commerce
platforms, it can be a real challenge to ensure compliance with new
regulations in such short amount of time,” Vu stressed. In one
example, Decree 85 requires e-commerce platform providers in Vietnam to
verify the identity of foreign traders and organisations selling goods on the
platform. Previously, Decree52 only requested foreign sellers to provide such
information to e-commerce platforms but the latter was not obliged to verify
this. With a large number of foreign traders, it can be challenging for
e-commerce platforms to meet the deadline. However,
Filippo Bortoletti, senior manager of International Business Advisory at
Dezan Shira & Associates, told VIR that implementation of Decree 85 will
not hinder the majority of foreign investment into Vietnam’s e-commerce.
“Decree 85 has been under discussion for several years and the main goal of
the new prescriptions is to revise the local legal framework related to
e-commerce to regulate on-demand TV services and the cross-border provision
of such services like Netflix or Spotify.” Thus,
foreign businesses cannot provide cross-border e-commerce services in Vietnam
without registering their activities and establishing a representative office
or appoint an authorised representative in Vietnam. “Another
goal of Decree 85 is to protect local e-commerce players from new entrants,”
Bortoletti said. “Foreign players must comply with market access provisions
according to Decree 85, which means that those controlling one or more
enterprises in a group of five leading enterprises in Vietnam’s e-commerce
shall undergo an appraisal regarding national security matter. This surely
brings uncertainty over market entry for big e-commerce players.” According to
a study conducted by Malaysia’s e-commerce company iPrice Group and US-based
digital intelligence provider SimilarWeb, the e-commerce game is dominated by
foreign e-commerce businesses like Shopee and Lazada, followed by Tiki and
Sendo. These players already have local establishments to support their
business. In this case, they need to comply with the new obligations on
e-commerce trading. “However, as
such provisions are extended to all actors in the market, I think that new
regulations are not providing a clear advantage to local players,” Bortoletti
added. “Decree 85 is filling a gap in the local legal framework related to
cross-border provision of e-commerce services. Now those companies will have
to register their e-commerce activities in Vietnam and establish a
representative office.” According to
Facebook and Bain & Company’s annual Southeast Asia report, Vietnam’s
e-commerce sector is expected to reach $12 billion in 2021. The market ranks
second in size in the region after Indonesia, and is estimated to grow 4.5
times to reach $56 billion by 2026. “For
domestic players, with the new barriers on e-commerce license, they may avoid
hostile takeovers by foreign investors,” Samuel Son-Tung Vu said. “In terms of
e-commerce in general, new regulations have set forth a clear legal basis on
obligations of platforms to ensure a safe market for both sellers and buyers,
especially amid an increasing number of cross-border transactions conducted
via e-commerce,” he added. “Some newly-added requirements may certainly
provide additional protection to consumers and hold e-commerce platforms
responsible to supervise foreign traders.” Vietnamese shrimp remains competitive in Germany due to price
advantage Local shrimp
enjoys a competitive advantage over other rivals such as Greenland,
Bangladesh, India, and Ecuador in the German market thanks to its lower price
amid challenges caused by the COVID-19 pandemic, according to statistics
released by the General Department of Vietnam Customs. Germany
represents the largest import market for Vietnamese shrimp in the EU, thereby
accounting for 26% of the total value of local shrimp exports to the EU. The nation’s
shrimp exports to Germany during the opening seven months of the year saw an
increase of 40% to US$83.6 million. However,
shrimp exports in August and the first half of September to the demanding
market endured a decline due to social distancing measures serving to disrupt
production activities. Thanks to
robust growth seen over the previous months, shrimp exports to the
Central European country by mid-September enjoyed an increase of 24.5% to
US$97.2 million. Kim Thu, an
expert of the Vietnam Association of Seafood Exporters and Producers (VASEP),
revealed that Vietnamese shrimp exports to Germany have sufficiently taken
full advantage of the EU-Vietnam Trade Agreement (EVFTA), largely due to the
tax reduction placed on several products coded HS03061792, HS 03061799, HS
16052110, HS 16052190, and HS 16052900. Amid the
ongoing complex nature of the COVID-19 pandemic, Germany has moved to
increase its import demand for convenient, instant, and easy-to-cook products
both at home and canned products, with certified sustainable shrimp products
consistently being favoured by German consumers. These
factors represent advantages for Vietnamese shrimp enterprises as they
strive to increase exports to the fastidious market moving forward. Pig prices sharply fall Pig prices
in Vietnam have dropped considerably to record lows, mainly due to the
Covid-19 pandemic. In the first
nine months of this year, pig prices in the northern region decreased to
VND35-40,000 per kilo from VND100,000 per kilo in 2019. In reality, farmers
have had to spend VND60,000 per kilo of pig to raise them Bac Ninh
Province saw the sharpest fall in pig prices at VND35,000 per kilo. Pig prices
in the central and Central Highlands region were VND38000-45,000 per kilo. Meanwhile,
animal feed prices are on the rise, causing more losses for big breeders. Experts
forecasted that pig prices would drop to VND25,000 per kilo in the coming time
due to oversupply. At present, roughly eight million pigs are old enough to
be sold for meat, accounting for around 30 percent of the country’s pig
number. Vietnam’s
import of different kinds of meat has been on the rise. In the first eight
months of this year, the country imported 257,000 tonnes of meat worth USD508
million, up 62 percent and 84 percent on-year. Le Van
Quyet, Chairman of the Southeast Breeding Association, proposed that frozen
meat product imports should be suspended to protect domestic producers. Rubber firms eyeing buoyant performance thanks to favourable
export Soaring
rubber prices have cast a strong impact on the rubber sector’s profitability
in the year to date, helping many rubber firms to post upbeat business
results. With
September export price averaging $1,646 per tonne, 0.3 per cent more than in
August and 22.7 per cent higher than in the year prior, Vietnam counted an
estimated $2.17 billion in value from exporting 1.3 million tonnes of rubber
in the first nine months of 2021, up 17.1 per cent in volume and 52.7 per
cent in value compared to the same period in 2020. The
favourable market situation has been instrumental for many rubber firms to
post upbeat business results in the year to date. The demand
for natural rubber in 2021 is expected to hike 9.3 per cent worldwide to 14.1
million tonnes compared to 2020, attributable to higher demand from China,
India, Thailand, and Vietnam during the year. Accordingly,
Hoa Binh Rubber JSC raked in VND126 billion ($5.48 million) in total revenue
and VND2.8 billion ($121,740) in pre-tax profit, equal to 72 and 282 per cent
of full-year plan in the first nine months this year. Meanwhile,
Phuoc Hoa Rubber JSC counted VND281.5 billion ($12.24 million) in net revenue
from sales and services in the third quarter this year, up 22.7 per cent
on-year; and posted VND38 billion ($1.65 million) in accrued profit during
the period, up 192 per cent on-year. Generally,
the company reaped VND119 billion ($5.17 million) in net profit from business
activities in the first three quarters, a 3.5-fold increase on-year. According to
its third-quarter financial report, Ba Ria Rubber JSC earned nearly VND34
billion ($1.5 million) in after-tax profit during the period, 3.1 times the
figure the company posted in the corresponding period in 2020. In the first
three quarters, the company witnessed a 21 per cent hike to reach VND243
billion ($10.57 million) in net revenue and 187 per cent jump in after-tax
profit to surpass VND68 billion ($2.96 million). Earlier, in
the first half, state-owned Vietnam Rubber Group saw a sharp growth in
profit, hitting VND2.282 trillion ($99.2 million) compared to just VND841
billion ($36.57 million) in the same period of 2020. That was because its
member units had maintained stable production in the new normal, paired with
high and stable rubber latex prices. According to
the latest report of the Association of Natural Ruber Producing Countries
(ANRPC), the demand for natural rubber in 2021 is expected to hike 9.3 per
cent worldwide to 14.1 million tonnes compared to 2020, attributable to
higher demand from China, India, Thailand, and Vietnam during the year. The global
natural rubber output is expected to reach 13.86 million tonnes in 2021, up 2
per cent on-year, based on preliminary estimations by ANRPC member countries. Social restrictions spur gaming popularity Vietnam’s
gaming industry has been gaining further traction, with both PC and mobile
games rising in prevalence. According to
Sensor Tower, a provider of market intelligence and analytics for the mobile
app economy, the global mobile gaming sector’s on-year revenue growth
increased from 15 to nearly 40 per cent in May, and while the rate has
decreased a bit since that peak, it remains to hover between 25 and 35 per
cent. Linda Huynh,
head of strategy and operations at Video game publisher Amanotes said that
the pandemic has bolstered the digital economy across the world. Mobile
gaming in particular has seen an unprecedented surge in revenues and
downloads. “As such,
there has been a great opportunity for established and new players in the
mobile gaming industry to seize part of that market, including Vietnamese
game studios and publishers,” Huynh stated. There has
been a rise of Vietnamese indie game studios in the global charts. Companies
like Amanotes, who target global markets, have managed to reap the full
benefits of the market growth. This has encouraged other talented Vietnamese
game studios to follow this strategy, with multiple games made in Vietnam
making their way into the US top charts. “We are
excited and confident that this trend will continue,” Huynh said. “Realising
this opportunity, Amanotes is aggressively strengthening its partnerships
with local and regional studios and music partners. Recently, we successfully
sealed a strategic investment with our partner to establish a game studio.” Another key
trend in Vietnam is the fast development of a play-to-earn ecosystems centred
around cryptocurrency and non-fungible tokens, following the success of the
game Axie Infinity. The game’s creator and its players have generated $2.05
billion in sales to date for Axie Infinity, according to measurement firm
DappRadar. While the area is still at its early stages, there has been a big
potential and passion from the game and tech community in Vietnam. Dino
Strkljevic, client lead for Asia-Pacific and Japan at Intel Corporation, said
that mobile gaming is gaining popularity across the world, and Southeast Asia
is ahead of the curve. This can be attributed to factors such as portability,
high smartphone penetration, free-to-play apps, and high-speed internet
access. Vietnam has a smartphone penetration of more than 50 per cent and
widespread, affordable 4G wireless connections. “Intel also has a role to
play when it comes to cloud gaming infrastructure and cloud processing that
many mobile games rely on. From an ecosystem perspective, we are enabling
gaming from all angles and providing the best hardware available as well as
software optimisations to power gaming, streaming, and megatasking across a
multitude of devices,” said Strkljevic. Beside
smartphones, PC gaming continues to hold a definitive place in local culture.
A recent survey by Vero and Decision Lab shows that 44.9 per cent of esports
players in Vietnam play on PC, edging out mobile as the most popular
platform. According to
the 2021 Mobile Application Report by Appota - the developer of creative
platforms for the digital entertainment industry, people in Vietnam have been
spending more time engaging with esports content during social distancing.
The average gamer now spends nearly three hours a day playing games and over
two hours watching livestreams or esports tournaments. Trang Vu,
CEO of Gamota, a mobile game publisher, said that the two most popular game
genres today are esports and role-playing games. “Simply put,
if there is one factor that has the biggest impact on the gaming industry
now, it’s the focus on drawing people closer to each other in the virtual
world,” Vu said. Because of
the high user demand, game developers and other stakeholders have quickly
taken new moves to take advantage of the opportunities. The most obvious
signal is that the number of games released is increasing steadily. “This
rise reflects the efforts of many domestic enterprises to continuously adapt
to the day-to-day changes of the market,” Vu said. As claimed
by Strkljevic, in conjunction with the rapid growth of the gaming industry,
Vietnam is also witnessing a significant increase in content creators and
dedicated gaming communities that are playing a critical role in transforming
gaming from a subculture to a mainstream cultural force. To support the local
gaming scene, Intel hosted the Intel Gamer Days in Vietnam from August 27 to
September 30, where it collaborated with brands such as Dell, Gigabyte,
Kingston, Lenovo, and the Republic of Gamers to offer deals on hardware,
peripherals, and games. EU-Vietnam bilateral rises $480 million in first year of EVFTA As of the
end of September, EU corporations have invested about $22 billion in Vietnam,
half a billion dollar more than a year ago, despite the pandemic. Accordingly,
as of the end of September, there were 2,242 projects from all but one EU
countries in Vietnam, an increase of 164 projects on-year. Total registered
capital was $22.24 billion, a rise of $483 million on-year. The
Netherlands ranked first with 382 projects and a total investment of $10.4
billion (accounting for 46.5 per cent of total EU investment in Vietnam).
France ranked second with $3.62 billion, followed by Germany ($2.25 billion). Some big EU
corporations highlighted by the report for their success are Shell Group
(Netherlands), Total Elf Fina (France and Belgium), Daimler Chrysler
(Germany), as well as Siemens and Alcatel Comvik (Sweden). The
government said that EU investment focuses on industries like high-tech, and
services (post and telecommunications, finance, office leasing, retail),
green energy, supporting industry, food processing, high-tech agriculture,
and pharmaceuticals. FDI from the EU is anticipated to increase remarkably with
high-quality capital. To welcome
investment from the EU, numerous localities have been preparing clean land
banks in and around industrial zones while developing infrastructure and
human resources (especially high-quality human resources). They are perfecting
and carrying out mechanisms and policies to mobilise FDI, simplify
administrative procedures, and remove obstacles in business and investment. Some
improvements have also been reported in Vietnam-EU trade turnover since the
implementation of the EVFTA, despite the pandemic. The total two-way trade
turnover has reached $54.6 billion over the one year it came into effect, up
12 per cent on-year, including $38.5 billion of exports from Vietnam to the
EU and $16.2 billion from the EU to Vietnam. Particularly,
in the first seven months of 2021, two-way trade turnover was $32.4 billion,
up about 18 per cent on-year, including $22.81 billion in export value from
Vietnam, an increase of 17 per cent on-year. The main export items of Vietnam
to the EU included phones and components, computers, electronic products and
components, footwear, textiles, garments, machinery, equipment and
appliances, spare parts, as well as iron and steel products. Meanwhile,
import turnover from the EU reached $9.6 billion in the period, up nearly 19
per cent on-year. Major import items included computers and products,
electronic products, machinery and equipment, tools, spare parts,
pharmaceuticals, and chemical products. Some imported items reported high
growth rates such as chemical products (33.6 per cent), food livestock and
raw materials (62 per cent), materials of textile, apparel, leather, shoes
(41 per cent), vehicles and spare parts (44 per cent), wood and wood products
(27 per cent). The
government said that exports in some important categories like textile,
coffee, iron and steel products were not as high as expected, and local
corporations are struggling to approach the EU as they are unable to meet the
requirements of the high-standard market while the protectionism and application
of trade remedies and non-tariff barriers in the EU are rising. At the same
time, numerous local businesses remain indifferent, not learning about the
EVFTA. The EVFTA
was signed on June 30, 2019, and took effect on August 1, 2020. M&A, the way for local players to grow after COVID-19 Vietnam is
witnessing big changes in its mergers and acquisitions (M&A) landscape,
with domestic firms rising to secure firm niches in the market. More
favourable institutional reforms and policies are required for local
businesses to grow into conglomerates and dive into the global market.
M&A is an open playing field where they can realise these ambitions. In the past,
M&A deals were mainly featuring foreign investors on the buyers' side
while domestic companies primarily acted as the sellers or the 'prey'. Things
are different now. A string of Vietnamese enterprises has turned the tables
to become the 'hunter' pursuing an aggressive M&A strategy to go regional
and global. Masan Group
was one of the first to stir up the retail market through M&A, THACO has
boosted investment in agriculture through acquisitions, while Vinamilk has
picked the channel to go global. Meanwhile, Vingroup is refocusing on its
industrial ecosystem by acquiring research and development capabilities
across the globe. At the same time, NovaGroup has been reinforcing its
multi-disciplinary ecosystem under its sustainable development strategy. At the
online seminar on M&A held by VIR yesterday, Phan Duc Hieu,
standing member of the National Assembly Economic Committee said that the
resurgence of local forces is lead by Vietnam's flagship corporations. Local
players are on a drive to improve their competitiveness in both the domestic
and foreign markets. A number of Vietnamese corporations have been actively
conducting M&A transactions overseas – and "are very wise to do
so." The upsurge
of Vietnamese businesses has brought the market to an inflection point, he
added. The ratio of Vietnamese companies acting as buyers in M&A deals
has jumped from 11.8 per cent in value in 2018 to over 30 per cent in 2019-2020.
The most prominent M&A deals between 2019 and 2020 all bore the marks of
Vietnam's leading private companies as overseas transactions were held up by
COVID-19 complications. Pham Van
Thinh, CEO of Deloitte Vietnam said that local companies have long been
preparing to step up their M&A game. "They have even hired
professional teams to support their strategy, which has generated great
values for them. Efforts have been made to mobilise capital and identify
suitable investment targets," urged Thinh. The
increasing role of domestic companies as both buyers and sellers in the
M&A market has made significant contributions to the rise of the
country's leading corporations, enabling them to go further and play a larger
role in the M&A game. The
resurgence and "maturity" of domestic groups are felt through their
market and their approach and conduct throughout M&A activities. More
proactive participation has helped local corporations to shape and even
transform many economic sectors. Meanwhile,
Nguyen Thai Phien, deputy CEO of NovaGroup, shared that the company pursues
an M&A strategy to find potential businesses and well-developed
platforms, which could help the group to expand its revenue, profit, and
market share, thus perfecting the NovaGroup ecosystem for customers' benefit. "We are
seeking cooperation opportunities with those capable of joining our culture
and ecosystem, sharing the same foundation and core values, and capable of
contributing to our sustainable development goals," he explained. Meanwhile,
the ambition of Masan Group is to represent Vietnam in the overseas M&A
market. "We have had hundreds of brands carry out an array of M&A
transactions in Vietnam, as well as in Europe and other foreign markets. We
conduct M&A deals with both upstream and downstream companies, which has
helped reinforce our structure and boost digital transformation, which is
also expected to underpin exponential growth," Danny Le, CEO of Masan
Group said. Companies
can leverage M&A to swiftly ramp up their presence in new markets or
industries, while enlarging their market share and penetrate deeper into
value chains. A proper M&A strategy can act as a vital tool for
businesses to overcome challenges and grow robustly in the current context
and the coming years. "Certainly,
M&A activities in the pandemic will create a foundation for the
Vietnamese economy to have more powerful economic groups building a value
chain for a breakthrough," VIR's editor-in-chief Le Trong Minh
said. M&A amid the pandemic – Growing the value chain After the
interruption by the health crisis, businesses are reaching for mergers and
acquisitions (M&A) to resume and enlarge their value chains. It has been
two years since the world has been feeling the press of the COVID-19
pandemic. The global economic slowdown has shaken even the largest economies
and the most powerful corporations in the world. As a country that is deeply
integrated into the global economy, Vietnam also faces many challenges,
affecting all aspects of social and economic life. However,
businesses are gradually adaption to the new normal of generating growth
while combating the pandemic. Many businesses which have already built solid
ecosystems have found their way with development opportunities, even breakthrough
achievements. Once again, the pandemic has proven that enterprises must go
together if they want to go far. M&A, in this case, is the most effective
solution to find reliable companions. In his
opening remarks, Le Trong Minh, VIR's editor-in-chief highlighted
the opportunities emerging amid the challenges. With each M&A deal, the
parties will benefit and reach toward their goals while growing stronger and
larger. "While
we cannot tell for sure when the pandemic will end or how many crises and
pandemics will come after it, all businesses are looking for a way to
develop," he said, adding that finding the silver lining is the true
test of the intelligence and strength of enterprises. "The enterprises
that can find a way will dominate." He said that
over the last two years, big corporations in Vietnam were not only leading
the fight against the pandemic but were also the most dynamic in
restructuring, expanding their ecosystems, and creating value chains through
M&A. NovaGroup is
an outstanding example that was highlighted during today's seminar.
"NovaGroup did not seem to stop for a second in enlarging itself, but
each M&A deal was a result of careful consideration and foresight,"
said Minh. So far,
M&A has been a favoured channel for foreign investors to penetrate the
Vietnamese market. But now, under the new normal, it has also become a means
for domestic businesses to rapidly boost their growth. At the same time, more
favourable institutional reforms and policies are required for local firms to
grow into conglomerates by seizing opportunities and diving into the global
market. M&A is an open playing field to realise these ambitions. In the past,
M&A deals were mainly featuring foreign investors on the buyers' side
while domestic companies primarily acted as the sellers or the
"prey". Things are different now. A string of Vietnamese
enterprises has turned the tables to become the "hunter", pursuing
ambitions to go regional and global. Phan Duc
Hieu, standing member of the National Assembly Economic Committee said:
"The resurgence of local forces is powered by outstanding corporations.
Local firms are on a drive to improve their competitiveness in both the
domestic and foreign markets. A number of Vietnamese corporations have been
actively conducting M&A transactions overseas – and are very wise to do
so." Experts said
that Vietnamese companies have long been preparing to step up their M&A
game. They have even hired professional teams to support their strategy,
which has generated great values for them. Efforts have been made to mobilise
capital and identify suitable investment targets. Tran Dinh
Thien, former director of the Vietnam Economics Institute said that M&A
is one of the best ways for domestic businesses to restructure operations and
grow stronger. "This is a golden opportunity for enterprises after the
chaos of the crisis. However, they should carefully consider potential
partners and how they can utilise their respective advantages for the benefit
of all stakeholders," said Thien. With the
theme of "M&A amid the pandemic - Growing the value chain", the
seminar provided views from leading deal makers and experts on
"friendly" and effective M&A to create win-win deals and grow
value chains. The seminar included two sessions named Turning risks into opportunities
- An opening for Vietnamese businesses, and NovaGroup: M&A - Synergy for
development. Participants
discussed opportunities for businesses to restructure, expand their
ecosystems, build value chains, as well as the strategy and directions of NovaGroup
after the pandemic and sustainable synergies. IZ groups clamour for accommodation Foreign
manufacturers in Vietnam are still waiting for land site support from local
authorities in order to build accommodation for their employees so that
production can be maintained. SuperCap
Group – the parent company of Weitai Halong – also has plans to take a
lighting equipment manufacturing factory in Viet Hung IZ into operation in
mid-2022, and recruit 1,700 workers here. But the company is concerned over
the ability to recruit such high numbers as it cooperates with local
authorities and training facilities in the province to set up a functional
system for new employees. Vu Quang
Truc, deputy director of Quang Ninh Department of Labour, Invalids and Social
Affairs, said that arranging accommodation is one of the most difficult
aspects of labour recruitment to solve. “Almost all
workers live in rented rooms with poor living standards. Besides that,
companies have to spend large amounts hiring shuttle buses for transporting
employees. Numerous employers have asked the province to hand over land funds
for building housing areas for workers,” Truc said. “The province agrees with
them and we are cooperating with relevant authorities to arrange such a land
fund for them,” Truc said. In reality,
many manufacturers have benefited from being proactive in building housing
areas and other infrastructure for their employees. Lee & Man Paper
Vietnam, a fully foreign-owned paper manufacturer in the Mekong Delta
province of Hau Giang, invested VND380 billion ($16.52 million) in a housing
area with four buildings and over 400 apartments, suitable for 1,500
employees. A company’s representative told VIR, “In the housing area there
are other utilities such as a cafeteria, training room, football field, gym,
and table tennis and billiards areas. This helps create an ideal living and
working environment for employees.” The
representative added that the company has maintained a stay-at-work model at
full capacity, and has reported zero COVID-19 infections. However, not
all businesses have been so lucky or proactive. The pandemic has exacerbated
these issues, with many struggling to take care of both food and
accommodation for thousands of workers under stay-at-work production models.
Many businesses as a result simply had to stop production entirely or
severely reduce capacity because they could not meet the model’s conditions. Meanwhile,
other businesses have been forced to hire out hotels for employees at great
expense in order to avoid operational disruption. Local
authorities cannot also hand over land funds to all and sundry. In the
southern province of Dong Nai, the demand for housing for workers is large
and enterprises are willing to invest money to build accommodation, but land
is often not available. Taekwang
Vina JSC, based in Dong Nai, makes shoes for export and assembles products
for brands like Nike with capacity of approximately 40,000 employees. Dinh Sy
Phuc, chairman of the company’s Trade Union, told VIR that the company had
the idea to build dorms near the factory many years ago. At the time, the
company worked with local authorities to arrange a land fund for the housing
project, but failed to come to an agreement. “The company
entered Vietnam more than 20 years ago but before 2005, IZs were not planned
to have infrastructure for housing, schools or medical facilities to support
employees,” Phuc said. According to
statistics from the Ministry of Planning and Investment, by the end of May
this year the country boasted nearly 400 IZs and thousands of industrial
clusters, attracting millions of workers. However, the whole country has only
214 official social housing projects for workers, at a scale of about 600
hectares. Of those,
only 116 projects have been completed, or around 250ha. In IZs, housing areas
are currently only enough to accommodate around 330,000 people, meeting about
40 per cent of the 2020 target of housing workers in IZs, according to the
Ministry of Construction. Le Hoang
Chau, chairman of the Ho Chi Minh City Real Estate Association said, “Many
workers are migrants from poor localities, and if there is no stable
accommodation they will have to leave their place of work to return to their
hometowns when there are incidents. The pandemic illustrated the
disadvantages of lack of accommodation for employees, making it hard for
enterprises to maintain a stay-at-work model, leading to disruption of
operations.” Remittances steady as lenders apply fresh transfer services Remittance
flows from Vietnamese expatriates working abroad are predicted to remain
resilient throughout the rest of the year, with the country’s central bank
keeping its policy steady for now. Last year,
the number of overseas remittances to Vietnam in 2020 was $17.2 billion,
making Vietnam one of the top 10 beneficiaries among low and middle-income
countries. Nguyen Hoang
Minh, deputy director of the State Bank of Vietnam Branch in Ho Chi Minh
City, said in the first seven months of this year, remittances pouring into
the city reached $3.7 billion, up more than 19 per cent over the same period
last year. “Specifically,
remittances mainly focused on production and business. This not only
contributes to supporting the city’s economic development but also helps
stabilise the foreign currency reserves across the country in general,” Minh
said. “Undoubtedly, remittance inflow plays a crucial lifeline to the
vulnerable.” Remittances
to the city are expected to at least double over the second half of the year
and possibly surpass the contribution rate of more than one-third of the
country’s total remittances in the year. Back in May,
the World Bank upgraded its forecast for remittances to low- and
middle-income countries for 2021, predicting flows of $553 billion over the
course of the year, reflecting a growth rate of 2.6 per cent. The strong flow
of remittances underscores their importance to many emerging market
economies. Le Hoang
Chau, chairman of the Ho Chi Minh City Real Estate Association, stated the
high inflows of cash that have caused real estate prices to reach record
highs also includes remittances. Agribank’s
Remittance and Payment Service Centre also expects remittance inflows to
Vietnam to remain stable. A large share of Agribank customers are workers who
are now abroad in markets including Japan, South Korea, Taiwan, and the US. The World
Bank said that with remittances expected to increase by another 2.2 per cent
to $565 billion in 2022, there are concerted efforts underway to reduce
transfer costs. A handful of
banking and payment services have jumped onto the remittance transferring
bandwagon. Last week, Visa partnered up with Sacombank to deploy an inbound
remittance transfer service through Visa Direct. Vietnamese people who are
also Sacombank Visa debit cardholders can use the service to transfer money
to any other Visa card issued in 44 countries and territories. It is
applicable to the nine most-traded foreign currencies worldwide. Sacombank is
the first local lender to implement this form of money transfer in the
Vietnamese market based on Visa’s secure technical platform, and meets the
criteria of a fast and convenient service. The
government is now gradually reopening the economy, so domestic brokerage SSI expects
the trade balance to improve at the end of the year and remittance flows
usually increase sharply as Lunar New Year approaches. Supply and demand of
foreign currency in the market will be relatively balanced and help the
USD/VND exchange rate maintain a stable state, SSI explained. On the other
hand, despite the disappointing performance in Q3 2021 and with chances of a
recovery in Q4 2021, the State Bank of Vietnam (SBV) is likely to keep its
policy steady and leave the refinancing rate at 4 per cent and rediscounting
rate at 2.5 per cent, both record lows. According to
UOB Vietnam, one key consideration for the SBV is the US Federal Reserve’s
policy change ahead, which could have implications on emerging markets like
Vietnam as capital flows react to the policy shift. “While we
see low risks of disruptive or disorderly capital outflows from emerging
markets, this is likely to be one key area that central banks watch
carefully,” UOB Vietnam noted last week. “Our scenario is for the Fed to
begin the tapering of its bond purchases before end-2021 and complete the
process by mid-2022, thereafter interest rate hike to start by end-2022.” For the VND,
the unit strengthened modestly against the USD in Q3. This came as Vietnam
reached an agreement with the US Treasury in July to refrain from
deliberately weakening the VND to gain an export advantage. The outlier
strength of the VND also comes in a period where most of its Asian peers are
retreating against the USD as the Fed’s upcoming normalisation plans spurred
a recovery in the USD. More
importantly, UOB Vietnam said, a strong VND is also increasingly at odds with
the uncertain and weak economic outlook inflicted by the virus outbreak. It
predicted strong support at 22,700 in the USD/VND rate, where further
sustained gains of the VND are unlikely. Overall, the bank reiterates an
upward trajectory in the USD/VND and updated its forecasts to VND22,900 in Q4
of 2021, rising up to VND23,200 by the third quarter of 2022. Strategies sought by insurers after mixed bag in growth Foreign
corporations are gaining their momentum in Vietnam’s insurance market, with
long-term commitments being paid off – however, the non-life insurance growth
rate reached a decade-long record low. Bao Viet
Life, the only Vietnamese insurer on the list, still holds the largest market
share, with 20.8 per cent. However, other foreign enterprises such as
Manulife, Prudential, Dai-ichi Life, and AIA have accelerated their
initiatives and international expertise to improve operational efficiency and
gain customer appetite. The five
largest companies accounted for 78.7 per cent of the whole life insurance
market share, with foreign insurers enhancing their position, while a number
of major Vietnamese insurers have diminished.
Other
insurance companies have also ramped up their presence in the past few years,
such as FWD, MB Ageas, and Sun Life. UK-backed Prudential also now boasts 16
per cent of the life insurance business segment. “The vibrant
domestic stock market has bolstered the financial investment activities of
insurance companies. However, low interest rates reduce financial income of
deposit-focused insurance companies,” BSC commented. “Most insurers
have set low or even negative growth targets in 2021 due to the low interest
rate environment as a result of loose monetary policy.” Notwithstanding,
BSC added, the forthcoming amended Law on Insurance Business is expected to
lift the foreign ownership cap, which would lay the concrete foundation for
foreign investors to penetrate the domestic market. Elsewhere,
the ongoing pandemic and its resulting economic crisis are hitting the
non-life insurance industry hard. In this
sector there are six leading insurers, accounting for about 60 per cent of
the market share. However, in the past three years, Bao Viet has gradually
lost its market share, from over 20 per cent in 2018 to 15 per cent by the
end of June 2021, which is equivalent to PVI. Some other insurers have raised
their rankings, such as MIC, surpassing Pjico. According to
preliminary data from the Insurance Association of Vietnam, in the first
eight months of this year, non-life insurance revenues were estimated at
VND37.28 trillion ($1.62 billion), up 3.61 per cent. However, this figure is
the lowest growth rate in nearly 10 years. Meanwhile,
compensation reached VND11.74 trillion ($510 million) with the rate at 31.5
per cent, not including compensation provision. In which,
motor vehicle insurance revenues reached VND10.28 trillion ($445 million),
accounting for 27.6 per cent of total market revenue, down 7.7 per cent over
the same period; with a compensation rate of 48 per cent. Health
insurance revenues hit VND11.05 trillion ($480.7 million) and occupied 29.7
per cent, up 3.39 per cent on-year, with a claim rate of 29.6 per cent, not
including compensation provision. Property
damage liability insurance revenue stood at VND5.4 trillion ($234.7 million),
accounting for 14.5 per cent, up 10.26 per cent. Fire and explosion insurance
revenues sat at VND4.9 trillion ($212.4 million), occupying 13.1 per cent, up
10.4 per cent; cargo insurance revenues hit VND1.8 trillion ($79.1 million),
making up 4.9 per cent and up nearly 23 per cent; and hull insurance and
shipowner’s civil liability attained over VND1.6 trillion ($71.5 million),
accounting for 4.4 per cent and up 18 per cent. Other
insurance services include liability insurance at VND899 billion ($39.1
million), up 24 per cent; aviation insurance at VND544 billion ($23.7
million), up 26 per cent; credit and financial risk insurance touched VND540
billion ($23.5 million), down nearly 7 per cent; and business damage
insurance hit VND157 billion ($6.8 million), down 2 per cent over the same
period. Thus, the
revenue growth of the non-life insurance market in the first eight months of
2021 was roughly equivalent to 50 per cent of last year’s period. “This
segment is forecasted to encounter a bumpy road as the automobile industry is
stuck in the mud due to the economic downturn. Under pandemic pressure,
customers tend to cancel insurance policies or fail to renew them,” BVSC
said. Viet Nam likely to achieve rice export target this year Viet
Nam is expected to achieve its rice export target of 6.3 million tonnes worth
US$3.2 billion this year due to high global demand and an increase in export
prices. Statistics
from the General Department of Vietnam Customs showed the country exported
593,600 tonnes of rice in September, worth over $293.1 million, increasing by
19 per cent in volume and 20.5 per cent in value compared to last year’s
figures. Viet Nam
shipped abroad 4.57 million tonnes of rice worth over $2.41 billion during
the nine-month period, a drop of 8.3 per cent in volume and 1.2 per cent in
value year-on-year. “The rice
export has resumed since September despite the fact that social distancing is
still being applied in many southern provinces and cities,” said Nguyen Quoc
Toan, General Director of the Agro Processing and Market Development
Authority under the Ministry of Agriculture and Rural Development. Nguyen Thanh
Phong, Director of Van Loi Company, attributed the increase in the Vietnamese
rice export prices to the fact that the Government has boosted its purchase
for national reserves, along with the rising demand in the global market
since the beginning of September. Other
insiders also expressed their optimism as foreign importers allow the
resumption of rice trading once the COVID-19 pandemic is put under control. Some major
rice exporters are predicted to increase their rice exports in the last
months of this year and the first half of 2022, they said. The export
prices of Viet Nam’s 5-per cent broken rice soared to the highest level over
the past three months, according to the Viet Nam Food Association. The
country’s five-per cent broken rice is currently sold at between $433 and
$437 per tonne, surpassing that of other competitors such as Thailand, India
and Pakistan. Specifically,
the prices of Vietnamese rice were $49, $68 and $55 higher than that of
Thailand, India and Pakistan, respectively. In
mid-August, the export price of Viet Nam’s 5-per cent broken rice was offered
at $393-307, $8 lower than the Thai product. Source:
VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan |
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