VIETNAM BUSINESS NEWS NOVEMBER 515:48 Plastic companies experience worst quarter due to high material prices and COVID-19 Many plastic enterprises witnessed strong declines in revenue and profits in the third quarter of the year due to higher raw material prices and disruptions in production and business activities caused by the COVID-19 pandemic. At the online meeting on the third-quarter business results of Binh Minh Plastic JSC (BMP), General Director Nguyen Hoang Ngan admitted that this year’s third quarter was a bad record in 44 years of operation, with all three months posting losses. This was the first quarterly loss since it was listed on the stock market in 2006, with a consolidated loss of nearly VND26 billion (US$1.14 million). In the same period last year, it posted a profit of VND153 billion. During the period, its output was only 11,000 tonnes, down 59 per cent year-on-year. The fall was due to production suspension after HCM City applied social distancing. Its two key factories in Binh Duong and Long An provinces have a total capacity of 120,000 tonnes/year, but during that period, they could only run at 15-20 per cent. Bao Viet Securities Company (BVSC) said that the third quarter of 2021 was an extreme quarter for Bao Minh as the price of raw materials increased, revenue decreased and the “three-on-site” model resulted in more expenses, including allowances for workers, medical tests and on-site accommodation. As of September 30, Bao Minh Plastic’s revenue reached VND3.1 trillion, down 8 per cent, with profit after tax down 75.7 per cent to VND99.8 billion. Higher raw material prices since the beginning of 2021 have created huge pressure for businesses in the plastics industry. Bao Minh Plastic leaders said that the prices of plastic materials increased sharply in May, then fell slightly, but have now rebounded. Last year, the average price of plastic raw materials was about $1,000/tonne, but in 2021 it could rise to $1,600/tonne due to the influence of supply and difficulties in transportation. Tien Phong Plastic JSC (NTP) said that its third-quarter profit still posted a big fall after adjusting the selling price due to a rise in raw material costs. Of which, Tien Phong Plastic recorded consolidated revenue of VND1.01 trillion, down 15 per cent over last year, while its consolidated profit after tax slid by 43.6 per cent to VND77.7 billion. The company said that the reduction in interest expenses and other operating expenses helped increase profit after tax by VND24 billion, but a decrease of VND176 billion in sales caused profit after tax to fall VND53 billion. In the first nine months, Tien Phong Plastic’s revenue was nearly VND3.4 trillion and profit after tax was VND347.7 billion, up 1 per cent and 2 per cent year-on-year, respectively. Similarly, the pressure of rising input costs and struggles in operation due to COVID-19 caused Da Nang Plastics JSC (DPC) to record a fall in revenue and profit after tax by 43 per cent and 62 per cent, respectively to only VND8.21 billion and nearly VND543 million. For the first nine months of 2021, Da Nang Plastic’s revenue slid by 27 per cent in revenue to VND39.4 billion, but profit after tax still rose 40 per cent over last year to VND6.06 billion. This was thanks to high profit in the first quarter, which was mainly due to cost savings. Bao Minh Plastic has prepared all resources to return to production, Ngan said. As of October 19, about 98 per cent of the company's employees have received the first dose of the COVID-19 vaccine and 92 per cent the second dose. The rate of workers ready to return to work was 95 per cent. The general director added that revenue is showing signs of improvement as in the first 20 days of October, it recorded an average daily revenue of about VND21 billion. This motivates Bao Minh Plastic to expect better business results in the fourth quarter of 2021. However, the pressure of raw material prices is still a burden. Ngan forecast that in the last quarter, the prices of raw materials could reach $1,800/tonne, and could even set a record of $2,000/tonne. Accordingly, businesses will have to raise selling prices to ensure profit margins. Plastic enterprises entered the fourth quarter with great pressure when business results were far from the whole year’s targets. Bao Minh Plastic planned to achieve revenue of VND5.2 trillion in 2021, with profit after tax of VND523 billion. However, by the end of September, it completed more than 60 per cent of the revenue target and more than 19 per cent of the profit target. Da Nang Plastic set a revenue target of VND85 billion, but only completed 47 per cent after nine months. Meanwhile, it expected to earn VND9 billion in profit after tax, down 11 per cent over 2020, and it has accomplished 84 per cent of the target. Tien Phong Plastic also lowered its profit target in 2021 to VND432 billion, down 17 per cent. By September 30, it completed 70 per cent of the revenue plan and 80 per cent of the whole year profit plan. HCM City issues COVID safety criteria for enterprises The HCM City Department of Health has issued safety criteria for COVID-19 prevention and control at production facilities, businesses and industrial zones. Enterprises must quarantine COVID-19 patients on-site and report the cases to health authorities. They must suspend operations at COVID-19 patients’ working sites for disinfection, and test people who have close contact with them. If COVID-19 patients experience rapid or difficult breathing, or an oxygen saturation level under 96 per cent, they will be transported to the hospital. Patients who have no or mild symptoms will be quarantined at home. Those who do not meet the criteria for home quarantine will be allowed to stay at a designated quarantine facility in their local area or at their company, or pay a fee to spend their quarantine period at an approved hotel. If the production facility has more than 80 per cent of fully vaccinated employees, all people who have close contact with COVID-19 patients will keep working. They will be tested on the third and seventh day, and every seven days until the company has no COVID-19 patients. If the company has less than 80 per cent of fully vaccinated employees, people who have had one vaccine shot must quarantine for 14 days at home or stay in a quarantine zone, but fully vaccinated people can keep working. The department has asked production facilities to have adequately ventilated areas in the workplace. Employees have to be vaccinated with at least one dose or have fully recovered after contracting COVID-19 within the last six months. They must strictly comply with the Ministry of Health’s 5K protocol, and keep a distance of at least one metre at the working site. Vietnamese economy forecast to recover over next six months The national economy is anticipated to enjoy a recovery over the next six months until the growth momentum becomes stronger ahead during the second half of 2022. This assessment was made by Alain Cany, chairman of the European Chamber of Commerce in Vietnam (Eurocham), during the “Vietnam Day" event held on November 4 in order to seek greater opportunities for the nation move into the post-COVID-19 pandemic period. Delegates in attendance at the event, hosted by the Hong Kong Shanghai Banking Corporation (HSBC), noted that the complicated nature of developments relating to COVID-19 pandemic across the country in late April considerably disrupted supply chains and impacted the production activities of local firms. These moves have also made Vietnamese economic growth during the third quarter to endure negative growth of 6.17%, whilst GDP growth in the opening nine months of the year reached only 1.42%. The World Bank (WB) has also lowered its forecast for the country’s economic growth this year to between 2% and 2.5%, a figure much lower than the growth projection of approximately 4.8% made in August. Despite this, many economists have expressed their belief in the recovery of the Vietnamese economy moving forward, particularly as the country has gradually controlled the pandemic thanks to a range of flexible and effective anti-pandemic measures. These drastic actions have therefore created favourable conditions in which the production and business activities can flourish. Frederic Neumann, co-head of Asian Economics and managing director at HSBC, revealed that the nation is not likely to become vulnerable to high US$ interest rates due to its strong economic fundamentals and possessing an export-oriented economy. He analysed that rising energy prices could contribute to pushing up inflation and slowing down the recovery of Vietnamese economic growth, adding that the situation will become more stable in the second half of next year. Dr. Truong Gia Binh, chairman of FPT Corporation, also pointed out the bright spots in the Vietnamese economic picture, including high export growth, a rise in newly-registered FDI capital, and a positive growth of GDP during the nine-month period. Dr. Binh added that the Government’s flexible policies regarding its COVID-19 response, digital transformation, and new bailout package to boost economic recovery, as well as the application of artificial intelligence (AI) and advanced technology, are expected to help the national economy bounce back soon. Public investment capital disbursement reaches 55.8 percent in 10 months
Over 257.3 trillion VND (11.1 billion USD) in public investment capital were disbursed as of late October, or 55.8 percent of the target assigned by the Prime Minister, reported the Finance Ministry. The figure was lower than that recorded in the same period last year (67.25 percent). Of which, 52.41 percent were domestic capital and 15.29 percent were foreign one. Statistics from the ministry showed that seven ministries and 20 localities recorded high disbursement with over 65 percent. Up to 32 out of 50 ministries and 21 out of 63 localities disbursed below 50 percent while 20 ministries and four localities reported under 30 percent. The ministry attributed that to difficulties in material supply caused by the COVID-19 pandemic, especially imported ones, the shortage of construction workers, and social distancing that hindered the assessment of projects via information technology system. Other causes included obstacles in site clearance, bidding and construction as well as rising prices of construction materials. In order to hasten disbursement, the ministry asked ministries, agencies and localities to follow the Government’s Resolution No.63/NQ-CP dated June 29, 2021; the Prime Minister’s Dispatch No.7036/CD-VPCP dated September 30, 2021 on effective pandemic prevention and control measures, and acceleration of public investment capital disbursement for socio-economic development. They were also urged to complete the allocation of detailed capital for new construction projects in accordance with the PM’s Decision No.1535/QD-TTg dated September 15, 2021./. Research on EVFTA’s one-year implementation released A research on one-year implementation of the Europe-Vietnam Free Trade Agreement (EVFTA) was launched at a workshop in Hanoi on November 3. The research, entitled “One Year Implementation of EVFTA: Impacts on the Vietnamese Economy and Policy Formation", was implemented by the Vietnam Institute for Economic and Policy Research (VEPR) with support of Konrad Adenauer Foundation (KAS) Vietnam. Signed after 10 years of negotiation, the EVFTA has become effective since August 2020 in a special context when the world was struggling against COVID-19 pandemic. With strong commitments on the opening of market, the deal is expected to become a motivation for the economic growth of Vietnam, helping diversify market and promote trade, especially on strong products of Vietnam such as agro-fisheries products. However, along with bright spots during one year of the implementation of the agreement, in general, Vietnamese firms have still faced many difficulties in making full use of the deal. Addressing the event, Associate Prof. Dr. Nguyen Anh Thu, VEPR Director, said that one year after the EVFTA took effect, Vietnam’s trade revenue from the EU market reached 39.8 billion USD as recorded by July 31, 2021, up 6.2 percent year on year. Thu noted that the legal system of Vietnam is being changed positively to meet requirements of the deal. However, Thu held that Vietnam is facing many challenges from both inside and outside. She advised businesses to be more active to improve their capacity and products’ quality to deeper engage in the global supply chain. Meanwhile, Pham Van Long, a representative from the research team said that among eight businesses involving in the research, only two said that they saw rise in export revenue from the EU thanks to a rise in order, and the remaining said that they suffered reduction. He said that the reasons behind the situation was tighter export conditions and higher logistics cost due to impacts of COVID-19. In general, the EVFTA is one of the new generation FTAs that brings about strategic benefit to Vietnam through the development of the promising trade and investment partnership with one of the biggest and most important partner of Vietnam. Due to COVID-19 impacts, the effectiveness of the deal as remarkably restricted. One year since the deal become effective on August 1, 2020, export value of goods might reach 51.04 billion USD, up 12.27 percent in case of no COVID-19 and no tariff reduction, and 36.28 percent compared to the same period in the previous year. Participants at the event proposed a number of recommendations on the reform of administrative procedure to make more favourable conditions for businesses in taking advantages from the EVFTA./. AstraZeneca announces first investment in Vietnam's manufacturing sector AstraZeneca has announced to invest VND2 trillion ($90
million) to develop Vietnam’s manufacturing capabilities and expand patients’
access to high-quality, locally-made medicines. This investment, which is the first of its kind, will be made between 2022 and 2030 and will enable the production of three AstraZeneca medicines in Vietnam. Pascal Soriot, AstraZeneca CEO said, “It was an honour to meet the Vietnamese Prime Minister to conclude several critical agreements which will bring significant benefits to patients. By establishing a local AstraZeneca manufacturing presence in Vietnam for the first time, patients will be able to access treatments to meet important medical needs. Through our new supply agreements, people will continue to receive critical access to our COVID-19 vaccine and our first long-acting antibody.” Under the Ministry of Health’s guidance, AstraZeneca will appoint a Vietnamese contract manufacturing partner and then transfer the necessary technology and knowledge to support their ability to manufacture AstraZeneca’s medicines for non-communicable diseases, ensuring high-quality products in line with AstraZeneca’s global standards. Nitin Kapoor, chairman and general director at AstraZeneca Vietnam and Asia Area Frontier Markets, said, “Vietnam will be the first Southeast Asian country where AstraZeneca will manufacture key medicines for the treatment of non-communicable diseases. We are proud of this milestone as a feature in our 27 years of active collaboration with the Vietnamese government, in addition to new agreements signed for the 2022 provision of COVID-19 vaccines and treatment.” The investment revealed today complements AstraZeneca’s ongoing VND5 trillion ($220 million) involvement in Vietnam for the 2020-2024 period, which was announced during Vietnamese President Nguyen Xuan Phuc’s visit to AstraZeneca’s manufacturing site in Sweden in 2019. On the same day, AstraZeneca and Vietnam Vaccine JSC signed an agreement for the delivery of an additional 25 million doses of vaccines, as well as 20,000 doses of AstraZeneca’s long-acting antibody (LAAB) combination candidate, AZD7442, for the prevention and treatment of COVID-19. The LAAB is designed for people with weakened immune systems who may not respond adequately to vaccination. Measures sought to promote private investment for green growth Attracting private investment in activities towards promoting green growth will contribute to realising Viet Nam’s green growth strategy and commitment to reduce greenhouse gas emissions, experts have said. According to deputy director of the Central Institute for Economic Management (CIEM) Nguyen Hoa Cuong, green growth is a very important issue and an inevitable trend for long-term development of the world and Viet Nam in particular. Businesses are both subjects and partners in the issues of global warming, environmental pollution and natural resources degradation, therefore drawing private investment in green growth activities is essential to Viet Nam’s green growth strategy, Cuong said in a workshop on enhancing the role of private investment in green growth for the 2021-30 period on Wednesday. The workshop, jointly held by CIEM and the German development cooperation agency (GIZ), is part of activities within the framework of the “Macroeconomic Reforms/Green Growth Programme” implemented by GIZ in Viet Nam under the authorisation of the Federal Ministry for Economic Cooperation and Development (BMZ). Michael Krakowski, Director and Chief Technical Advisor of the Macroeconomic Reforms/Green Growth Programme in Viet Nam, said that Viet Nam is experiencing rapid economic growth but also suffering negative impacts from climate change, air and environmental pollution. This is a huge challenge that requires timely and effective response measures to ensure sustainable development, he said, adding that Viet Nam needs to persistently promote and support clean production on a large scale and expand investment in clean and renewable energy development. Meanwhile, Ho Cong Hoa, a representative of the CIEM’s research team, said that it is necessary to have a consensus in opinions on building and completing a legal corridor, mechanisms and policies towards encouraging private enterprises to invest in green growth and environmental protection. He proposed the Government and relevant agencies issue a pilot mechanism to implement projects in the form of public-private partnership (PPP) in water and waste collection and treatment and water supply in rural areas. Besides, it is necessary to force polluters to pay, and accelerate administrative reforms to ensure a transparent and fair investment environment for private firms in this field, he added. Participants also mentioned shortcomings and weaknesses in formulating and implementing solid waste treatment plans, and unstable power purchasing and selling policies, saying that these are reasons that affect the access, investment and implementation of private-funded projects to serve the goal of green growth. The Government needs to synchronously carry out solutions to create an attractive investment environment, improve the legal framework quality and capacity in realising policies to attract private investment in green growth in the 2021-30 period, they said. Australian commission suggests ending probe on Vietnamese copper pipes The Australian Anti-Dumping Commission (ADC) has concluded that Vietnamese exporters were not dumping copper pipes in Australia due to inconsiderable dumping margins, reported the Vietnamese Ministry of Industry and Trade’s Trade Remedies Authority. In its conclusion on preliminary anti-dumping investigation on copper pipes imported from Vietnam, the ADC suggested ending the probe. The result is very likely to be maintained in the final conclusion of the commission, which is expected to be reported to the Australian Minister for Industry, Energy and Emissions Reduction no later than December 13, 2021. The minister will then decide whether to impose anti-dumping tariffs on copper pipes or not within 30 days from the date of receiving the ADC’s report. According to the commission, the Vietnamese exports to Australia subject to investigation valued at roughly 19.6 million USD last year./. ASEAN leader: RCEP to offer boost to post-pandemic economic recovery ASEAN Secretary General Dato Lim Jock Hoi has hailed regional member states for approving the Regional Comprehensive Economic Partnership (RCEP), saying that the implementation of the agreement will provide a tremendous boost to post-COVID-19 economic recovery efforts. As of November 2, the ASEAN Secretariat had received instruments of ratification/acceptance (IOR/A) from six ASEAN member states, including Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, as well as from four non-ASEAN signatory states, namely China, Japan, New Zealand and Australia. As provided by the agreement, the RCEP will enter into force 60 days after the date at which the minimum number of IOR/A is achieved. This means that the deal shall enter into force on January 1, 2022. “The expeditious ratification process by signatory states is a true reflection of our strong commitment to a fair and open multilateral trading system for the benefit of the people in the region and the world”, said Lim Jock Hoi on November 2. The ASEAN Secretariat said preparatory work for the entry into force of RCEP will continue, thus laying a solid ground for the full and effective implementation of the deal through finalisation of its technical and institutional aspects. Signed on November 15, 2020, the RCEP comprises 10 ASEAN member states together with Australia, China, Japan, the Republic of Korea and New Zealand. It is the world's largest free trade agreement covering about 30 percent of the world's population and 30 percent of the world’s gross domestic product. With the removal of tariff on 91 percent of goods and standardisation of regulations on investment, intellectual property and e-commerce, the deal is expected to improve the efficiency of supply chains in the region./. Vietnam Airlines among top 10 Customer Experience Excellence brands Vietnam Airlines is the only representative of the aviation industry in the top 10 Customer Experience Excellence brands in Vietnam this year announced by KPMG, a global network of professional firms providing audit, tax and advisory services. This is the second consecutive year the national flag carrier has won the title. To make the rankings, KPMG has surveyed more than 1,500 consumers and evaluated more than 90 local and international brands across eight different sectors in the Vietnamese market to see how companies have fared during turbulent times. According to KPMG, the CEE score is used to measure brands’ customer experience performance. The CEE score is derived via a weighted average of the brand’s score for each of the six pillars – integrity, resolution, expectations, empathy, personalization, and time and effort to minimise customers' efforts and creating frictionless processes. Over the past years, Vietnam Airlines has stepped up investments in digital transformation to improve its operational efficiency, while bringing more convenient and safer experiences to passengers. It is expected to become a digital airline by 2025. Vietnam Airlines is also the pioneer in coordinating with the Government, agencies and organsations at home and abroad to pilot the IATA Travel Pass, a mobile app that allows travellers to store and manage certifications for COVID-19 tests or vaccines./. Vietnam calls for investments in 157 projects Vietnam is calling for foreign investments in 157
projects in the 2021-2025 period, according to a decision recently signed by
Deputy Prime Minister Pham Binh Minh. Despite impacts of the COVID-19 pandemic, the inflow of foreign direct investment into Vietnam still rose 4.4 percent year on year in the first nine months of this year to over 22 billion USD. Notably, 12.5 billion USD was poured into newly-licensed projects, up 20.6 percent over the same period last year, while 6.4 billion USD was added into underway projects, a rise of 25.6 percent./. Stability sought for variance in local sales Building robust links and decreasing import taxes on
materials for feed production are considered urgent requirements in order to
deal with the fluctuation of live pig selling prices in the marketplace. The representative of a foreign-invested livestock company told VIR that the company has a large volume of commercial pigs, and it has been projected that it will take at least two months to consume the unsold products. “There are currently other large amounts of mature pig to be sold in the coming months, thus it causes serious overload for the market.” “If the selling price falls to $1.50 per kg, the company will suffer a loss of 69 US cents per kg. The cost for growing pigs has increased, including in materials for feed production, maintaining pandemic stay-at-work models, and incurred expenditure for transporting products across localities this year.” In general, livestock companies are reporting zero profits in August and September and losses for October, the representative said. The variation is so serious that the government has organised an extraordinary meeting to determine reasons and look for solutions. According to Deputy Minister of Agriculture and Rural Development (MARD) Phung Duc Tien, a sharp reduction in pig prices in the domestic market has been caused by the complications of the pandemic, including social distancing, operation disruptions, and lowering demand for products. “Although social distancing has been loosened, demand has yet to recover as before,” Tien said. In a meeting between representatives of the MARD and livestock companies and associations organised last week, Vu Anh Tuan, senior vice president of C.P. Vietnam, emphasised the role of animal feed in breeding, equivalent to 60 per cent of total costs. Meanwhile animal feed costs, which depends on around 90 per cent of imported materials, are increasing by 16-36 per cent on-year. Logistics costs are also causing headaches, meaning such companies are generally spending an additional 9 US cents per kg for animal feed. It is forecasted that in the early-2022, the reduction of freight rates will gradually reduce the cost of animal feed. “In order to proactively supply animal feed, breeding enterprises need supporting mechanisms to develop the production of animal feed made from local raw materials,” said Tuan. Nguyen Thanh Son, chairman of the Vietnam Poultry Association added, “It is necessary to reduce import tax on animal feed materials and input materials, as well as credit support and bank interest rates, for production facilities to reduce input costs and ensure food supply heading towards Lunar New Year.” Resolution No.128/NQ-CP dated October 11 is promoting the resumption of wet markets and socioeconomic activities, which Son says means demand will certainly rise, leading to an increase in the price of livestock products. “However, in the long term, it is necessary to build a strategy of developing animal feed materials, which will not be heavily dependent on imports as like present,” added Son. Indeed, due to the sharp increase in production costs, numerous farmers and similar facilities have already stopped breeding because they do not have enough capacity to re-herd, and it is too difficult for them to borrow money from credit institutions. In order to stabilise breeding, processing, and consumption of livestock products, associations are suggesting strengthening connections and supporting cooperative groups, farms, and companies to expand the market, bringing products to supply directly through existing distribution chains. Vu Thi Hau, chairwoman of the Vietnam Retailers Association, said that modern retailers like supermarkets are not dependent on price fluctuations. However, due to the fresh food products, modern retailers do not have enough large storage and processing warehouses, so the selling price depends entirely on the suppliers. “We sign contracts with large suppliers only to ensure quantity and quality. However, if the links between producers and distributors is not good, the price will fluctuate also. Therefore, we need sanctions to ensure close cooperation between producers and consumers,” emphasised Hau. Deputy Minister Tien said that the ministry has already asked the government to consider a bailout for farmers, in the form of cuts in corporate income tax or environmental protection tax, and VAT payment delays, among other options. “Over half of pig breeders across the country are small farming households. To stabilise breeding and consumption, we should develop horizontal and vertical chains and if export activities develop, local production will get stronger and enterprises can then further invest into the chains,” Tien noted. Trade cooperation – momentum of Vietnam-US ties The relations between Vietnam and the US would continue to grow stably in the time ahead, with economic and trade cooperation the centre and key momentum of the bilateral ties, Vietnamese and US officials said. Deputy Minister of Industry and Trade Do Thang Hai, also Vice Chairman of the Vietnam-US Trade and Investment Framework Agreement (TIFA) Council, and Dawn Shackleford, Assistant US Trade Representative (USTR) for the Office of Southeast Asia and the Pacific shared the view during their working session in Hanoi on November 4. Hai said Vietnam always considers the US a leading important partner and wishes that the economic and trade ties will develop stably and sustainably, and serves as a pillar of the Vietnam-US comprehensive relationship. The deputy minister highlighted joint efforts in rolling out an action plan towards harmonious and sustainable trade with strong measures, contributing to building strategic trust between the two nations Vietnam supports fair trade and has no intention to impose any measures that would cause discrimination, put burden on trade activities, or harm the production and labourers in the US, he affirmed. The Vietnamese Government will continue to cooperate with US partners to address issues of shared concern in a comprehensive manner, thus maintaining the stable trade ties, towards harmonious, sustainable and mutually beneficial trade balance, Hai pledged. As Vice Chairman of the TIFA Council, Hai called on the US to issue objective and fair assessments in line with WTO rules during investigations into trade remedies. He welcomed the US’s recommendations on Vietnam’s legal framework, which he said helped to create an open business environment and bring benefits to both sides. For her part, Shackleford highly valued the Ministry of Industry and Trade (MoIT)’s views on fair trade and acknowledged results of substantive, effective policy dialogues between the two countries over the past time. She said issues relating to economy, trade and rights of labourers will be priorities under President Joe Biden's administration, and the USTR will continue to hold working programmes with Vietnamese ministries and agencies within the dialogue framework of the TIFA. According to the European-American Market Department under the MoIT, Vietnam’s export value to the US expanded 230 percent over the past five years, while the US’s export to the Southeast Asian nation increased more than 175 percent. The US has become Vietnam’s biggest buyer and Vietnam is also the US’s 10th biggest trade partner. Statistics by the General Department of Vietnam Customs show that this year to September, the two-way trade reached 80.6 billion USD and the figure is expected to hit 100 billion USD this year./. Logistics primed for Euro take-off While foreign investors are keeping an interest in
Vietnamese logistics, the country is being urged to take more drastic action
to solve existing problems in order to absorb more European investment in
particular. Boskalis is one of four businesses in an EU-Vietnam consortium to build Cai Mep Ha Logistics Centre and Downstream Port. The others are BESIX, Hateco, and iPEi. “The Vietnamese government is currently considering awarding an investment license for the Cai Mep Ha Logistics Centre and Downstream Port project. The logistics park is expected to facilitate foreign investment. It is also the gateway for export from Vietnam’s southern economic zone to markets in the EU, the US, and the Middle East as an alternative to China,” Reijmers added. Likewise, Royal Schiphol Group N.V. – an independent and commercial enterprise largely owned by the state of the Netherlands – has developed extensive airport investment and operation experience. It introduces innovations all around its airports and, with its strong expertise in airport logistics, Royal Schipol is also eyeing opportunities in Vietnam. Jasper Hoes from the Port of Rotterdam and Adson Hofman from STC International also discussed with Vietnamese businesses the opportunities in the logistics sector during the webinar. According to Nguyen Quang Trung, vice president of the Vietnam Maritime Corporation (VIMC), there are huge opportunities for businesses and international investors to invest in Vietnam’s logistics sector. The government in October announced a master plan for seaport development over the next 10 years with the development of related seaport logistics. Moreover, Vietnamese logistics firms are seeking technical, management, and financing cooperation with potential partners. Trung told VIR, “The Netherlands has strong expertise in trade, technology, and logistics and many powerful Dutch companies are already operating in Vietnam. VIMC is seeking partners to develop inland container depots and in our future development strategy, we prefer international partners who have advantages in technical support, market development, business governance, and finance.” According to the Ministry of Industry and Trade, Vietnam’s increasing trade, booming GDP, rising manufacturing, and e-commerce sectors have boosted demands for logistics services to meet the needs of transportation and goods storage among international manufacturers. In addition, Vietnam has ratified and put into practice 15 free trade agreements, including one with the EU, that promise a positive impact on the growth of industrial manufacturing and international trade due to larger export market penetration. This growth potential should increase even further when the EU-Vietnam Investment Protection Agreement enters into force, once it has been ratified by each EU member state. With the promising landscape, the local logistics industry is attractive to international companies, with mergers and acquisitions being a key trend now, focusing on trucking, warehouses, and the cold supply chain. Yet while the country has attracted some European investment in this field, investors from Southeast Asia, Japan, and South Korea still hold the upper hand. Despite improvements in the legal framework on logistics, there are still many barriers to the development of trade as well as manufacturing and business activities. The two latest reports from the Organisation for Economic Cooperation and Development (OECD) on package delivery services and the logistics industry in Vietnam attributed the challenges in foreign investment in logistics to legal barriers. According to the OECD, logistics is generally legalised as a conditional business, with foreign investment required to meet certain conditions with limitations. For instance, foreign investors need to seek approval for any mergers and acquisitions deals, as well as meet some requirements on economic demands. Besides that, currently foreign investors are not allowed to hold over 49 per cent of a listed company. To lift the barriers to overseas investment attraction into the sector, the OECD recommends that Vietnam removes logistics from the list of conditional businesses. Worse still, planning for logistics is another problem. Vietnam has been pivoting to encourage investment in the development and expansion of manufacturing in scale and number, while distribution, transportation, and consumption – the logistics segment for manufacturing to improve the value of goods and commodities – have yet to receive due attention. Prof. Dang Dinh Dao from the National Economics University explained, “The imbalance between manufacturing and logistics happens in strategic planning and development policies in sectors and localities. This increases costs and leaves many segments of the huge population untapped.” “In the development and expansion of national highways, expressways, and economic corridors, Vietnam has yet to attach due importance to connectivity infrastructure to link means of transport to increase efficiency,” Dao added. “In the short term, the government should complete logistics legal frameworks to create a favourable foundation for related activities, while revising and supplementing regulations in the laws on commerce and investment.” Vietnamese Bamboo Airways sign 2 billion EUR deal with Safran Bamboo Airways and Safran inked a Memorandum of Understanding (MOU) for a potential 2 billion EUR deal in Paris on November 4 (Vietnam time) in the presence of Vietnamese Prime Minister Pham Minh Chinh and his French counterpart Jean Castex. Trinh Van Quyet, chairman of Bamboo Airways, and Alexandre Ziegler, Safran Senior Executive Vice President, signed a cooperation agreement on the order of LEAP-1A engines and equipment for Bamboo Airways’s fleets of Airbus A321NEO and Boeing B787-9 aircraft. Besides, the airline sealed agreements to purchase other aircraft equipment including electronic systems, interiors and seats for its fleets with other subsidiaries of Safran. Safran is an international high-technology group, operating in the aviation (propulsion, equipment, and interiors), defense and space markets. Safran has a global presence, with 76,000 employees and sales of 16.5 billion EUR. According to Bamboo Airways, Safran and CFM International are long-term strategic partners of Bamboo Airways. Bamboo Airways' A320NEO fleet has been equipped with CFM International's LEAP-1A engines since the very beginning of the airliner. The signing would strengthen the cooperation relationship between the two sides. In September, Bamboo Airways signed an agreement with CFM International on the selection of LEAP-1A engines and maintenance service for 50 A320/A321NEO aircraft ordered from Airbus with the witness of President Nguyen Xuan Phuc in New York, US. This is also a new milestone of Bamboo Airways when it not only contributes to perfecting the technology for the modern fleet but also serves as a premise for the airline to promote trade and cooperation activities in France, towards the deployment of direct flights connecting Vietnam and France in the near future./. On-time performance rate of Vietnamese airlines reaches 94.5 percent The on-time performance rate of Vietnamese airlines reached 94.5 percent in the first 10 months of this year, equivalent to 103,186 flights, according to the Civil Aviation Authority of Vietnam (CAAV). The CAAV said that in the period, Vietnam Airlines, Vietjet Air, Bamboo Airways, Pacific Airlines, Vasco and Vietravel Airlines reported 6,060 delayed flights, accounting for 5.5 percent of the total flights. Meanwhile, 2,224 flights were canceled. In the reviewed period, national flag carrier Vietnam Airlines had conducted 41,717 flights, Vietjet Air 35,979, Bamboo Airways 21,024, and Pacific Airlines 6,490. The Vietnam Air Services Company (VASCO) and the recently-launched Vietravel conducted 2,749 and 1,287 flights, respectively. The CAAV said that bad weather conditions were the major reason behind the delays and cancellations, along with other reasons such as late arrivals and technical issues./. Ample room for Vietnamese tropical fruits to gain entry to EU market An increase in the import value of tropical Vietnamese
fruits in recent years indicates a growing interest among European consumers. The import value of fresh litchi, passion fruit, star fruit, and dragon fruit increased by 40% over the past five years to reach EUR142 million euros in 2019, while other tropical fruits grew by 21% to reach a total value of EUR202 million in 2019. According to information collected by the Vietnam Trade Office in Belgium and the EU, consumers in the bloc are increasingly interested in imported fruits, with the majority of these items being imported into Nordic nations. Tropical fruits that are increasingly popular within the EU include pomegranate, passion fruit, lychee, dragon fruit, rambutan, and star fruit. In the retail sector, fresh fruit has always played an important role due to many retailers using tropical varieties to differentiate themselves and make a variety of fruit in stalls appear more appealing. As recommended by the trade agency, it is important for tropical fruit exporters to have an attractive product and be able to provide high-quality products. Most notably, fruit exporters to the EU must meet consumer expectations in order to have a healthy, clean, sustainable, and pesticide-free product. Once the quality of fruit is consistently guaranteed, it will help products reach a wider array of customers after being transferred from specialised distribution channels to supermarkets and retailers in general. The trade office also suggested that exporters make use of smart fruit preservation technologies in a bid to reduce food waste and prevent infectious diseases. Since some Latin American and Asian countries such as Colombia and Vietnam enjoy a rich supply of tropical fruits, in order to compete, exporters must be able to supply high-quality products at specific times of the year. This is in addition to finding buyers who are familiar with the product's unique characteristics and market segments. As a means of making greater inroads into the EU market, tropical fruit exporters must fully comply with general requirements for fresh fruit and vegetables. Pesticide residue is one of the key issues faced by fruit and vegetable suppliers. Indeed, if tropical fruits contain more pesticides than permissible level or contaminants, such as heavy metals, then they will be immediately withdrawn from the market, the trade office warned. Currently, major retailers in some EU member states such as Germany, the Netherlands, and Austria, make use of more stringent maximum residue levels (MRLs) than those set out in EU law. However, other channels, such as wholesalers and food services, pay more attention to the appearance and taste of products and follow general EU guidelines. Therefore, exporters must look into relevant MRLs for tropical products by consulting the EU's MRL database. Furthermore, during the production process it is necessary to reduce the amount of pesticides by applying integrated pest management (IPM) in production, as this represents an agricultural pest control strategy that includes the practice of farming and chemical management. Exporters are required to strictly follow phytosanitary regulations, with exported fruit products must possessing a phytosanitary certificate before being brought into the EU. Moreover, it remains necessary to maintain high-quality standards as well as paying close attention to the preservation of safe and intact products during the transportation and handling process in a bid to ensure that the fruit is in good condition in the export market. Vietjet, French technology firm set up long-term strategic partnership Vietnam’s new-age carrier Vietjet and Safran, an international France-based high-technology group, have signed a comprehensive strategic partnership agreement during the official visit of Vietnam’s high-ranking Government delegation to France. The agreement is founded on from the existing 10-billion-USD cooperation between the two sides. The signing ceremony was witnessed by Vietnamese Prime Minister Pham Minh Chinh, his French counterpart Jean Castex, and high-ranking officials of the two countries. Building on both sides’ existing cooperation in aircraft engine and engine services through CFM International worth approximately 10 billion USD, Vietjet and Safran will extend their cooperation to a long-term strategic partnership to cover more aircraft engine deals and a variety of other aspects such as aircraft seats and interiors supply. Safran will provide Vietjet with training programmes including management and technical training whilst also supporting the airline to establish MRO capabilities in Vietnam. Vietjet and Safran Electronics & Defence will accelerate cooperation to enable Vietjet to achieve best-in-class Flight Data Analysis solution for its whole airline’s fleet. Alexandre Ziegler, Safran Senior Executive Vice President said “We are very pleased to be an integral part of Vietjet’s growth strategy.’’ “This agreement reflects the relationship of mutual trust between the airline and Safran and their recognition of our expertise and experience.” he added. Safran is an international high-technology group, operating in the aviation (propulsion, equipment, and interiors), defence and space markets. Safran has a global presence, with 76,000 employees and sales of 16.5 billion EUR. Vietjet Air - Vietnam’s largest airline in terms of the total number of passengers transported domestically, operates a fleet of 90 aircraft. With its comprehensive network in Vietnam and Asia Pacific, the airline looks to further expand across continents thanks to its new and modern fleet in the near future./. Safe pandemic control necessary to welcome back international tourists Pham Thu Hang, deputy spokesperson for the Ministry of
Foreign Affairs, has introduced safe measures against COVID-19 for both
international travelers and locals in the context of Phu Quoc and some
Vietnamese localities set to welcome the return of international tourists. Phase 1 is set to be a pilot scheme which will welcome international guests under package tourism programmes, through charter flights and commercial flights in Phu Quoc city in Kien Giang province, Cam Ranh in Khanh Hoa province, Quang Nam, and Da Nang. As a means of ensuring pandemic prevention and control, international visitors who wish to visit a locality that is piloting welcoming international visitors must have full epidemiological documents at the request of competent Vietnamese agencies, a COVID-19 vaccination certificate, or a certificate of recovery from COVID-19. Furthermore, according to Hang, tourists must also ensure that they fully comply with pandemic prevention and control regulations in accordance with the guidance of relevant agencies and localities. As part of the spirit of ensuring absolute safety for the health of local citizens, localities that are piloting receiving international visitors have been urgently injected two doses of COVID-19 vaccines in order to create antibodies for all people, including all employees working locally. This is being done by organising a number of large-scale resorts, tourist spots, and resorts into separate resorts specifically for international tourists, Hang added. Also at the press briefing, regarding direct flights to boost comprehensive Vietnam – US cooperation, the spokesperson highlighted the significance of the direct flights from Vietnam to the US as it will contribute to stepping up the all-around cooperation between the two nations, especially in economy, trade, tourism, education, and people-to-people exchange. Regarding reports that the Vietnam Airlines is to conduct the first regular commercial flight to the US, slated for late November, after 20 years of preparation, she said this preparation has been made during a long time and with close cooperation between Vietnamese and US authorities. Recently, the Vietnam Airlines has received approval from US Transportation Security Administration (TSA) for its aviation transport safety plan, paving the way for the airline to be licensed to carry out regular flights between the two countries, Hang said. According to her, Vietnamese competent agencies are coordinating to complete final procedures for the carrier to carry out its flight plan. They will continue support other airlines that desire and are capable of operating direct flights to the US. Standard Chartered Vietnam commits MoUs worth $8.5 billion for green projects Standard Chartered Bank Vietnam has recently committed
MoUs worth up to $8.5 billion in sustainable financing for three Vietnamese
businesses namely T&T Group, Geleximco Group and Van Lang Investment and
Education Management Corporation, to support their sustainability goals. Under the MoUs, Standard Chartered Bank Vietnam will arrange financing for T&T Group’s environment, waste treatment, LNG gas fired power plants and renewable energy projects, Geleximco Group’ paper, pulp and afforestation, LNG gas fired power plants, tourism complex and seaport projects and Van Lang Investment and Education Management Corporation’s construction of a green university campus. “We believe that a green recovery will bring a lot of benefits to emerging economies like Vietnam, especially as it is playing an increasingly important role in the global economy and supply chain. In that process, the private sector has a crucial role to play. Investments like these will help Vietnam in its sustainable development journey and securing its prosperity. We remain committed to Vietnam’s recovery and future sustainable growth and look forward to working closely with the Government of Vietnam, our clients and partners to support Vietnam’s sustainable development, economic recovery and ambitious net zero targets.” said Michele Wee, CEO Standard Chartered Bank Vietnam. According to Standard Chartered’s Opportunity 2030 research, the combined private sector investment opportunity in Vietnam to 2030 across United Nations' Sustainable Development Goals for clean water, clean energy, industry, innovation and infrastructure are estimated to be $ 45.8 billion. Vietnam, France sign numerous cooperation agreements, MoUs Immediately after talks held between Prime Minister
Pham Minh Chinh and French Prime Minister Jean Castex on the evening of
November 3 (local time), both sides witnessed the signing ceremony of various
co-operation agreements between the two nations' agencies and businesses. Along with documents signed by both country’s competent agencies, the two sides signed a host of memorandum of understanding (MoUs) regarding economic and trade co-operation. This includes a MoU between Vietnamese airlines, including Vietjet Air and Bamboo and Safran - the world's leading high-tech group of France, along with a MoU on co-operation in the fields of satellites, smart cities, digital identity and cyber security between Vietnam Posts and Telecommunications Group and Thales Group. Also on this occasion, the Ministry of Industry and Trade also handed over a decision on investment regulations regarding Son My 1 power project. According to a comprehensive strategic cooperation agreement based on both sides’ existing cooperation in aircraft engine and engine services through CFM International worth approximately US$10 billion, Vietjet and Safran will continue to expand their co-operation to a long-term strategic level, with a major focus on manufacturing aircraft seats, cabin furniture, providing technical management and training services, whilst applying high technology in aircraft production. Furthermore, Safran will also provide services and training schemes for Vietjet's technical team, along with assisting the airline in establishing Vietjet's training, and repairing, maintenance and overhaul (MRO) complex in Vietnam. Most notably, Vietjet and Safran Electronics & Defense will ramp up co-operation and provide Vietjet with a comprehensive and effective flight data analysis in the near future. Furthermore, Safran will also provide services and training schemes for Vietjet's technical team, along with assisting the airline in establishing Vietjet's training, and repairing, maintenance and overhaul (MRO) complex in Vietnam. Most notably, Vietjet and Safran Electronics & Defense will ramp up co-operation and provide Vietjet with a comprehensive and effective flight data analysis in the near future. Moreover, Bamboo Airways and Safran signed a MoU relating to the selection of engines and aircraft equipment for Bamboo Airways' order of 50 A321NEO and 30 Boeing 787-9 aircraft. The total value of agreements under the MoU is estimated to be EUR 2 billion. Additionally, Bamboo Airways also signed an agreement with CFM International, a joint venture of GE and Safran, an agreement to select LEAP-1A engines and aircraft equipment for Airbus A321NEO and Boeing 787-9 worth approximately EUR1.73 billion. They also inked other agreements regarding the purchase of aircraft equipment. FDI flows fly high amid pandemic uncertainties Despite mounting challenges during reopening, foreign
companies are still looking to step up investment in Vietnam, encouraged by
the long-term prospects of the country and its moves to create a friendlier
business climate. Singaporean insurer NTUC Income began expanding operations to Vietnam last week through a strategic partnership with Post and Telecommunication Joint Stock Insurance Corporation based on the insurance-as-a-service concept to supply customers with tailored insurance products, adjusted to when and how they need them. NTUC Income’s key product Droplet provides weather insurance to clients who use ride-hailing platforms like Grab that pays out when prices go up due to rain. Japanese investors are also actively expanding operations in Vietnam. Just last week, Rakuten Card Co., Ltd., a unit of Rakuten Group Inc., established Rakuten Fintech Vietnam Co., Ltd. to recruit local IT talents and develop its internal systems. Moving forward, the new subsidiary aspires to become a hub to develop Rakuten Group’s international fintech system, as well as increase client services. Two weeks ago, Sojitz Corporation and Osaka Gas Co., Ltd. formed a new joint venture with Looop Inc., a Tokyo-based energy startup, to set up a rooftop solar company named SOL Energy in Vietnam. The new company will install rooftop solar panels on buildings at the Sojitz-operated Long Duc Industrial Park (IP) in the southern province of Dong Nai. The group also plans to expand its solar business to other areas, including Long Binh Techno Park (also operated by Sojitz) in Dong Nai, where it aims to install solar power facilities before 2030. Hirai Shinji, chief representative of the Japan Trade Promotion Organization in Ho Chi Minh City said, “The economic ties between Japan and Vietnam are expected to grow stronger as the Vietnamese economy develops. From looking at Vietnam as a production site to import parts and materials and re-export final products to Japan, more and more Japanese companies are starting to realise the opportunities in the growing local consumption market.” Meanwhile, leading global fast-moving consumer goods player Hayat from Turkey has just opened a new production facility at Becamex Binh Phuoc IP, with plans to make the market its ASEAN hub. Commenting on the deal, Thue Quist Thomasen, CEO of YouGov Vietnam said, “It is critical that Vietnam keeps a strong focus on creating the best possible conditions for foreign-invested enterprises as the country reopens. The successful investment of Hayat into Vietnam is a testament to the fact that conditions are improving.” “European businesses are sustainable, innovative, and the best long-term partners for Vietnam. With the EU-Vietnam Free Trade Agreement, Vietnamese consumers will get access to world-class products while Vietnamese businesses will flourish from the access to the world’s biggest market,” he added. Indeed, a recent report by Singapore Institute of International Affairs said Vietnam is still an attractive destination and the problems of 2021 do not mean that foreign investors will turn away. Titled “From Crisis to Endemic: Stumbling or Pressing Ahead?” the report highlighted the resilience the Vietnamese economy showed at the macro level. Even amidst the pandemic, trade remained strong, with Vietnam’s total trade turnover growing 33.5 per cent on-year in the first five months of 2021. The growth was supported by strong economic recoveries in major markets, especially the United States and China. It forecast that Vietnam would still attract some $30 billion in foreign direct investment (FDI) this year, 2 per cent more than last year. The report also noted that Vietnam’s investment environment remains prominent in the long term compared to other major ASEAN economies thanks to political stability. According to the Ministry of Planning and Investment (MPI), despite the pandemic, inflows of both newly- and additionally-registered FDI increased in past months. Specifically, throughout the first 10 months, $13 billion of new foreign capital was registered, a rise of 11.6 per cent on-year, while capital expansion projects reached $7.1 billion, up 24.2 per cent on-year. As of October 20, the total accumulative registered FDI in Vietnam hit $404 billion. Do Nhat Hoang, director general of the MPI’s Foreign Investment Agency, explained that FDI flows have recovered better than expected in 2021, driven by Vietnam’s solid long-term prospects and improving business climate. “Particularly, the number of new foreign-invested projects in labour-intensive industries like electronics, automobiles, and chemistry has reduced. Generally, there are fewer new and expanded projects, but the average valuations are higher due to the country’s selective FDI mobilisation policy,” said Hoang. In early October, the prime minister issued Decision No.29/2021/QD-TTg, offering incentives to foreign investors meeting criteria on high technology, technology transfer, added value, and supporting local suppliers in joining manufacturing chains. Mobilising more private resources for green growth Private investment is expected to be the major resource
for green growth, especially in renewable energy and environmental services. Nguyen Hoa Cuong, the CIEM's deputy director-general said that enterprises are both subjects and partners in the troubles of global heating, environmental pollution, and natural resource degradation. Therefore, attracting private investors to participate in green growth will contribute to implementing the dual-task. The role of the private sector in the economy was also fortified in Resolution No.10-NQ/TW from 2017 of the fifth plenum of 12th Party Central Committee on developing the private economic sector towards an important driving force of the socialist-oriented market economy; as well as implement the National Strategy on the Fourth Industrial Revolution, Vietnam's Green Growth Strategy, and commitments to reduce greenhouse gas emissions. Michael Krakowski, director and chief technical advisor of GIZ's Macroeconomic Reforms/Green Growth Programme in Vietnam emphasised that Vietnam has been developing rapidly, all the while suffering the negative impacts of climate change and environmental pollution. These troubles need the participation of various parties to timely find out effective measures to ensure sustainable development. Thereby, Vietnam should persistently propagate, support clean production on a large scale, and further invest in clean and renewable energy, GIZ's representative said. Ho Cong Hoa, representative of the CIEM's research team, highlighted the necessity of consensus on building and completing a legal framework and policies towards encouraging private enterprises for green growth, associated with the implementation of social responsibility for the environment. Hoa proposed to the government and authorities to study and approve public-private partnership (PPP) projects in collecting and treating wastewater and supplying clean water, with a value up to VND200 billion ($8.7 million) in rural areas. "Besides this, it is necessary to enhance the responsibilities of polluters and raise the fees for environmental protection of wastewater, collection of waste fees in a transparent and fair manner," said Hoa, recommending that administrative reforms should be carried out to improve the investment and business climate, ensure fairness, and the confidence of the private sector. The CIEM expert expressed his concern about issues such as the large proportion of power plants using coal, which are causing environmental pollution; the slow and difficult site clearances in constructions projects; and the shortages of capital and support of the state; as well as the lack of specific guidance in PPP negotiation and poor preparation and readiness of authorities in implementing green growth. Other experts at the conference mentioned inadequacies and weaknesses in the formulation and implementation of solid waste treatment, unstable purchasing and selling policies, and electricity prices. They were said to affect the approach, investment, and deployment of private projects for green growth. The CIEM research team also pointed out that, although there are mechanisms and policies to attract private sector participation for green growth, there are still numerous challenges for this sector, particularly in renewable energy and environmental services. “The government should synchronously implement various solutions to create an attractive investment environment, improve the quality of the legal framework, and the performance of policy implementation to attract more private investment for green growth until 2030," suggested Hoa. Seaport companies expect high profit in Q3 from rising freight rates Rising freight rates have helped logistics companies, of which, seaport services have benefited significantly. On October 14, Hai An Transport and Stevedoring (HAH) announced a new tariff schedule, to be applied from the beginning of November, with a sharp increase in price. For example, the rate for transporting a 20-foot container from Cai Mep to Da Nang is VND8 million (US$351.99) per container, double the rate of January 1. For the Hai Phong to HCM City route, the rate for a 20-foot container surged by 17.6 per cent, while for 40-foot containers it jumped 20 per cent. Meanwhile, from HCM City to Hai Phong, the rate for a 40-foot container has climbed from VND5.6 million at the beginning of the year to VND10 million in November. In only half a month, the company has adjusted the rates up to two times. Previously, on September 28, Hai An announced the freight rate schedule for the third quarter with an average increase of 46 per cent, applied from October 13. This reflects the strong demand for containers in the fourth quarter as production and business activities gradually recovered and trade resumed. The rise in freight rates took place on a large scale, especially on the South - North route, with each route increasing by 70 - 160 per cent in price compared to the beginning of the year. Domestic container supply is scarce due to a lack of ships, and many domestic container vessels have been leased to the international market this year. The increase in rates will help Hai An offset the sharp rise in fuel costs in recent years, and at the same time improve its profit margin. Hai An has added two ships and built two new ships since September. From the fourth quarter of 2021, the number of chartered ships will rise from two to three, while the number of self-operated vessels will decrease from six to five, helping the company to reduce risks related to the volatility of fuel prices. The change in fleet structure also improves profit margins as leasing ships is more efficient. On the other hand, the volume of goods passing through Gemadept port of Gemadept Corporation (GMD) fell in the third quarter due to the impact of the COVID-19 pandemic and social distancing orders applied in the southern provinces. However, Gemadept’s ports are running at full capacity in the fourth quarter. Meanwhile, Cai Mep reported positive growth in the third quarter and the volume of goods through Gemalink port increased as planned. Hai Phong Port also provides new services, helping to offset the decrease in some ports in the south. Sea freight rates and service fees at ports have ticked higher in recent years, helping shipping businesses and seaport enterprises record impressive profits in the first nine months of the year. Hai An has not yet released its third-quarter business results, but a report from SSI Securities Corporation (SSI) estimated that the company’s profit will reach VND80 billion during the period, up 250 per cent over the same period last year. With profit of more than VND173 billion in the first half of the year, it is estimated that its profit will reach VND253 billion in the first nine months of 2021. The company's fourth quarter profit is expected to extend strong growth thanks to the increase in freight rates applied from October and new lease contracts with higher charter rates. SSI forecasted that Hai An will achieve a profit of VND330 billion in 2021, up 139 per cent over last year. Gemadept is also expected to achieve profit growth of 46 per cent this year. Gemadept has its own factors to attract investors. Gemalink deep-water port has been granted an official operation license with the capacity to simultaneously receive two mother ships with tonnage of up to 200,000 DWT. The port meets the mooring needs of major shipping lines and the trend of shifting goods to Cai Mep port. Therefore, the company still has more room to grow in the future. In 2021, Gemadept sets a target of consolidated revenue of VND2.8 trillion, with profit before tax of VND700 billion, up 7 per cent and 37 per cent, respectively, compared to last year. Analysts from SSI said that Gemadept will benefit from the economic recovery in the fourth quarter, forecasting whole year profit before tax of VND762 billion, up 49 per cent. Gemadept is in the group of shipping enterprises benefiting from higher demand in the shipping market. Located in a pandemic hotspot, Dong Nai Port (PDN) has just experienced a decrease in quarterly results. Of which, its net revenue fell 3.9 per cent to VND210.1 billion in the third quarter, while profit after tax dropped 21.9 per cent over the same period last year to VND38 billion. Dong Nai Port said that as many localities implemented social distancing, businesses in pandemic-affected areas had to operate the 'three-on-site' model, resulting in reduced capacity and causing a sharp fall in the volume of containers arriving at the port. However, with the shortage of empty containers, some customers switched to bulk ships, increasing market demand for general cargo. In addition, given that traditional customers stabilised, the general cargo industry increased by 6.48 per cent. In the first nine months, the company’s net revenue reached VND678.4 billion, up 21 per cent year-on-year, with profit after tax up 11.2 per cent to VND129.7 billion. As the pandemic is gradually brought under control, businesses are gradually restoring production, Dong Nai Port expects to have a more promising fourth quarter in terms of business. On the stock market, both companies are listed on the Ho Chi Minh Stock Exchange (HoSE). Although there was a correction in the past week after strong rallies, HAH shares were traded at VND70,500 per share in Wednesday's trade, up 14 per cent compared to last month. PDN shares were traded at VND99,700 per share yesterday morning, up 5.6 per cent over last month. Similarly, GMD shares rose 4.3 per cent to VND51,100 per share. Work resumption rate in Vietnam reaches 70-75%: labour minister One month after COVID-19 social distancing measures were lifted, about 70-75% of enterprises and their employees have returned to work, according to Minister of Labour, Invalids and Social Affairs Dao Ngoc Dung. During a conference on reviving the Vietnamese labour market on November 3, Dung noted that some localities had recorded work resumption rates of up to 90%. He spoke highly of local authorities’ proactiveness in introducing various policies to support those affected by the COVID-19 pandemic. Dung underlined that such prompt and effective policies have helped retain workers and ensure their normal lives. According to Minister Dung, the labour market could be restored to pre-outbreak levels by the end of the first quarter or early in the second quarter of 2022 if the current situation is maintained and vaccination is accelerated. At the conference, he asked local authorities to accept workers returning home and introduce appropriate policies to create jobs for those who want to remain. He also suggested that enterprises should carry out sound policies to retain workers by keeping frequent contact with them and providing support for those whose jobs are still suspended. Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan |
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