VIETNAM BUSINESS NEWS NOVEMBER 20
15:26 Binh Duong
remains attractive to foreign investors The southern
province of Binh Duong attracted 59 foreign direct investment (FDI) projects
in the first 10 months of this year, a local official told a conference on
November 19. During the
period, 23 FDI projects in Binh Duong also increased their capital, while 155
others contributed capital or purchased shares with total registered
investment exceeding 1.9 billion USD, according to Vice Chairman of the
provincial People’s Committee Mai Hung Dung. As of
October 31, the province counted 4,008 projects worth 37 billion USD from 65
countries and territories, ranking second nationwide in FDI attraction, only
after Ho Chi Minh City. Binh Duong
has set up cooperative ties with 10 foreign cities and provinces, and become
an official member and a reliable partner of the Intelligent Community Forum
(ICF), the Horasis Asia Meeting and the World Trade Centres Association
(WTCA), Dung said at the online conference that sought ways to lure more
investments from Taiwan (China). He affirmed
that after the COVID-19 pandemic was brought under control, Binh Duong has
entered the “new normal”, restored socio-economic activities and further
invested in infrastructure to better serve domestic and foreign investors. Binh Duong
always pays attention to creating the most favourable investment climate, and
stands ready to cooperate with Taiwanese investors, he said. Currently,
the province is calling for investments in high-tech, environmentally
friendly sectors that can create high added values, as well as financial
services, logistics, support industries, high-tech agriculture and
science-technology. Briefing the
participants on Binh Duong’s economic development over the past time, the
official said the province wishes to welcome and have in-person working
sessions with foreign investors in 2022 when the pandemic is completely
contained. Dung said
Binh Duong hopes to continue receiving cooperation from relevant Taiwanese
agencies and associations in the time ahead./. Major industrial complex under construction in Binh Thuan A major cluster
of three large industrial parks worth over USD 2 billion are under
construction in the southern central province of Binh Thuan’s La Gi Town and
Ham Tan District.  One of the projects is the Becamex VSIP Binh Thuan Industrial, Service and Urban project in La Gi Town and Ham Tan District, covering nearly 5,000 hectares and worth VND18.84 trillion (USD 820 million). This is a joint venture project between Becamex IDC Corporation of Vietnam and Singapore’s Sembcorp Development Group. La Gi has attracted a series of billion-dollar projects and is becoming the largest economic centre in southern Binh Thuan. The second project is the 300-ha Tan Duc Industrial Park in Ham
Tan District and La Gi Town which is invested by Sonadezi Binh Thuan JSC with
an investment of VND1.20 trillion (USD 53 million). This project is scheduled
to start construction in 2022. Positive outlook ahead for Vietnamese FDI attraction Foreign
direct investment (FDI) attraction in Vietnam is expected to peak up steam in
the coming months following several foreign investors’s decisions to inject
huge amounts of capital into a number of major projects across the country,
according to industry insiders. Notably, the
Republic of Korea (RoK)’s SK Group moved to pour US$340 million into
acquiring a 4.9% stake in The CrownX, which owns the WinMart and WinMart+
store chains, further affirming its keen interest and major ambitions in
Vietnam. De Heus
Group of the Netherlands also acquired Masan’s entire animal feed production
segment as a way of expanding its factory chain in the country to 22,
officially becoming the country's leading animal feed manufacturer with total
investment reaching up to VND4 trillion. Explaining
the reasons, Gabor Fluit, general director of De Heus Asia, said Vietnam is a
potentially lucrative market in Southeast Asia boasting a high economic
growth rate among the group of developing countries. In addition, it has
signed numerous bilateral and multilateral free trade agreements (FTAs), with
14 of them currently in force. Among other
investors, Kurz Group of Germany recently decided to invest US$40 million in
constructing a coating and thin film technology factory in Becamex VSIP Binh
Dinh, while the RoK’s Amkor Technology, Inc planned to funnel US$1.6 billion
into a semiconductor manufacturing plant in Bac Ninh. Authorities
in Quang Tri have agreed to allow the consortium of investors SSF Investment
Co., Ltd., Sunshine Homes Development JSC (SSH) and Truth Assets Management
from Singapore to conduct a survey for exploring investment in three projects
in the Cua Viet maritime area. Elsewhere,
Denmark’s Orsted Group proposed investing in an offshore wind power project
in Hai Phong, with the site set to feature a total capacity of 3,900 MW and
investment capital reaching between US$11.9 billion and US$ 13.6 billion. Statistics
compiled by the Foreign Investment Agency indicate that newly and
additionally registered FDI capital in Vietnam over the past 10 months
increased by 15.8% annually, which reflects foreign investors’ trust in the
country’s economic recovery from COVID-19 in the short term. Prime
Minister Pham Minh Chinh, during his speech at the National Assembly’s
year-end session, affirmed that despite the impact of the COVID-19 pandemic
foreign investors have placed trust in Vietnam’s improved business and
investment climate. He said besides transparent preferential policies,
political stability and a young, abundant labour force are Vietnam’s
advantages in attracting foreign investment. Recently the
UK market research company IHS Markit expressed its optimism about Vietnamese
economic recovery thanks to a number of factors, including its low labour
costs and and an abundant and qualified workforce compared to regional
competitors. Experts said
Vietnam remains an attractive investment destination in the future, as
several foreign firms are moving their production lines to nations in Asia,
and a number of multinational companies are seeking to diversify their
production supply chains. Vietnam setting sights on medicinal herb scale-up The
reopening of the Chi Ma-Ai Diem border gate in Lang Son last month to import
medicinal herbs and raw materials from China is putting pressure on the
implementation of domestic production of similar products. Last year,
Nhung had to re-evaluate the efficiency of her hollyhock plantation and
compare this with her investment. Meanwhile, the imports of sage, one of her
raw materials, were increasing, and thyme became scarce. Nhung, the
first woman to begin growing hollyhock in Lao Cai province, decided to expand
her plantation for sage in Quan Ho Than commune, from 3,000sq.m to a hectare.
She reserved a part of it as a nursery to provide seedlings for farmers in
the area and committed another part to sales. Her bet paid
off last year. As the pandemic broke out, the Chinese government ordered
suspension of customs clearances at all border gates with Vietnam, causing
local businesses to rush to find alternative sources for medicinal herbs.
Nhung had never sold so much tea and powdered shiitake before this time. As trade
flows were diverted, more farmers in Lao Cai began to grow medicinal herbs,
following the demand of domestic enterprises. The area of medicinal
herbs in this province has increased to 2,300ha as of June, an increase of
2.5 times compared to 2016, according to data from the Lao Cai Department of
Agriculture and Rural Development (DARD). The
imbalance in the pharmaceutical supply system of Vietnam has led to rising
imports of medicinal materials. Vietnam’s demand for medicinal herbs stands
at about 60,000 tonnes per year, but the domestic growing areas can only
supply about 15,600 tonnes per year. The rest must be imported from abroad,
according to Vietnam’s Ministry of Health (MoH). The demand
for medicinal herbs continues to increase following the strong growth
momentum of the local pharmaceutical market, the MoH wrote in a report on
developing the pharmaceutical industry with domestically produced medicinal
herbs towards 2025. The total
value of Vietnam’s pharmaceutical market meanwhile increased from $2.7
billion in 2015 to $3.6 billion in 2018, a compound growth rate of 10.6 per
cent. Between these years, the total value of the pharmaceutical industry
grew at a compound rate of 10.6 per cent from $600 million to $800 million,
creating 7,300 more jobs. By 2030,
Vietnam wants to become a high-value pharmaceutical production centre in the
region, with the export value of domestically produced drugs reaching about
$1 billion. Previously, domestically produced drugs would reach 75 per cent
of the quantity used and 60 per cent of the market value, with the rate of
domestic consumption of herbal medicines increasing by at least 10 per cent
compared to 2020. To serve
Vietnam’s goal by 2030, the government aims to increase the area for
sustainable exploitation of natural, medicinal herbs large-scale production
according to the Good Agricultural and Collection Practices of the World
Health Organization. Meanwhile,
Lang Son Customs Department is considering setting limits for the import of
medicinal herbs through the Chi Ma border gate. “To control the quality up
until October 2023, the department will take samples of all imported
medicinal herbs for phytosanitary purposes and to identify the origin of the
goods,” said the department’s deputy director, Vi Cong Thuong. In many
Vietnamese provinces where medicinal plants are grown, the cultivation method
is mainly based on extensive experience, but not yet associated with the
market conditions. Many farmers in Dak Nong had to cut down their ginseng and
cloves gardens and switch to other industrial crops. Though
importing through the Chi Ma border gate, many pharmaceutical enterprises are
becoming increasingly aware of the supply dependence on China, and target to
expand the domestic growing area. Tran Binh
Duyen, general director of Vietnam Medicinal Materials JSC, had many working
sessions with local leaders on the development of herbal medicine areas
according to international standards. Duyen thinks that “expanding the
plantations could be a great way to reduce imports from China to below 75 per
cent of the present amount.” Farmers can
earn a decent income from growing medicinal plants, about $4,300 per hectare,
especially as the value of many types of medicinal herbs can be increased by
10-15 per cent after processing, according to calculations by the Lao Cai’s
DARD. Nhung of the
Man Than Cooperative hopes that the situation does not change suddenly.
However, “the Si Ma Cai tea production is expected to increase next year,
especially when Man Than improves its supply of Himalayan ginseng,” Nhung
said. Rules set to benefit medical suppliers Domestic and
international medical device suppliers will enjoy more favourable conditions
for trading activities in Vietnam from early next year, expecting to put an
end to a long-lasting price turmoil in the local market. Accordingly,
marketing authorisation will be changed from pre-check to post-check, while
administrative reform will be intensified and measures on price management
will be added to facilitate price declaration. The process includes prime
cost of imported goods or prime cost of production, management cost, training
cost, estimated profit, and final selling price, among others. For Class C
and D devices, the time for granting marketing authorisation will be reduced
from 60 to 10 working days if these devices are licensed for circulation in
the US, Australia, Japan, and Canada. Medical
devices in Vietnam are classified in terms of risks in accordance with the
ASEAN Medical Device Directive, which lists four classes from low risk (Class
A) to high risk (Class D). The new
decree also removes some conditions and procedures in administrative
processes, as well as simplifies some procedures for businesses. For example,
it simplifies the requirements on manufacturing, sales, and consultancy
towards removing direct submission of paperwork to state agencies and allows
businesses to make online registrations. In addition,
the validity of circulation numbers will be revised towards allowing an
unlimited time, instead of five years as it did in the past. Thus, medical
equipment enterprises will not have to carry out procedures for an extension.
They must, however, update relevant documents when they make changes in
circulation. Also
importantly, Decree 98 supplements measures for medical device price
management to solve the existing problems related to price variation in
winning tenders among health facilities, and when there is no reference price
for the building plans on the selection of contractors. Coming into
effect from January 1, the new rules are aimed to increase transparency in
the local market and prevent wrongdoing. Vietnam has seen some serious issues
in medical device purchases, with the latest scandal being related to alleged
illegal profiteering in medical equipment purchases at the state-run Bach Mai
Hospital. Multinational
corporations, including brands like Abbott Diagnostics, B. Braun, Bayer,
DKSH, GE Healthcare, and Roche Diagnostics are expected to benefit from the
new rules. They are among the 26 global group members of EuroCham’s Medical
Devices and Diagnostics Sector Committee (MDDSC) responsible for most of the
$2 billion market. After more
than 25 years, Abbott has built stable business growth. The company has
broughts to Vietnam some innovations in nutrition, medicines, diagnostics,
and medical devices. Likewise, B.
Braun is said to be working on its expansion in Vietnam, with the relocation
of its Hanoi factory being among its main focuses. B. Braun has some
manufacturing sites for medical devices in the country, with 20 per cent of
total production assigned for its domestic consumption. The company
is working in exchange with hospitals to directly deliver equipment to them
and hopes that these processes will be more convenient once consistent
policies are in place. According to
the MDDSC, Vietnam’s medical devices and diagnostics market has had
double-digit annual growth in recent times, with 90 per cent made up of
imports, which stimulated companies to better serve the market through
investments in a solid local network of partners. This has involved the setup
of representative offices and, very often, the creation of local Vietnamese
branches employing and training highly qualified local experts. With the
EU-Vietnam Free Trade Agreement in force over the past year, further
improvements of regulatory standards, information exchange on customs
requirements, and investments in the modernisation of customs procedures have
come. It is forecast that the local market will become even more bustling as
more multinationals are expanding to and in the market. Manufacturers proactive in ensuring continuity for industrial
zone operations Manufacturers
are taking the initiative in building isolation areas in industrial zones as
an effective solution to avoid the spread of coronavirus and evade
manufacturing disruption. Covering an
area of 1,500 square metres with 200 spare beds, the temporary isolation area
is equipped with full facilities for daily living and emergency equipment
such as oxygen bottles and monitoring machines. The park is
a manufacturing hub for 170 multinational manufacturing companies with a
workforce of more than 60,000 people. Thus, Amata’s leaders decided to focus
on ensuring production safety and supporting its customers. Nguyen Van
Danh, deputy head of Dong Nai Industrial Zones Management Authority (DIZA),
said Amata’s case sets a strong example for industrial zone (IZ) developers
in supporting enterprises to maintain stable operations. To date, 31 such IZs
in the province have resumed operations, and 29 of them have arranged
temporary isolation areas for workers infected with COVID-19. According to
Danh, the temporary areas are renovated from facilities, offices, and
technical housing and cover a total area of more than 87,000sq.m and capacity of
over 10,000 beds. Employees who are detected to have COVID-19 infection after
rapid testing can be placed in temporary isolation areas while waiting for
healthcare authorities to take them for treatment. Statistics
from the DIZA show that to date, approximately 1,660 of the total 1,700
enterprises in the province’s IZ resumed operations and 525,000 employees
have returned to work (equalling 86 per cent) after nearly three months of
social distancing. “Having new
COVID-19 cases in IZs when enterprises resume operation is understandable but
we are determined to stay safe during the pandemic, and the most importance
is to limit its spread,” Danh said. “Almost all employees live in rented
houses with their families, thus the risk of community transmission is high.
Maintaining temporary isolation areas in IZs is necessary because it helps
businesses isolate cases, avoiding confusion for workers and some operation
disruption.” The strategy
to build temporary isolation areas has reached other localities, including Ho
Chi Minh City. Earlier this month, Saigon High-tech Park (SHTP) officially
started to operate its own areas and received workers who have mild symptoms
or are asymptomatic with underlying diseases. It also aided people who are
not eligible for self-isolation at home. Le Thi Bich
Loan, deputy manager of SHTP, said that the first facility has a scale of 100
beds, fully equipped with essential utilities such as televisions,
refrigerators, Wi-Fi, and gym rooms. A second
facility located in Linh Trung Export Processing Zone 2 in Thu Duc, with 250
beds, is also being installed. The management board of SHTP has plans to
establish a third facility in another IZ located in Cu Chi district, with up
to 300 more beds. “This is a
non-profit activity and does not use the state budget. Entire costs for
establishing facilities and installing equipment and machinery are
contributed by enterprises in SHTP in order to take care of employees and
ensure stable operation,” Loan said. Stable figures for M&A as groups rebuild Dealmaking
in Vietnam is showing signs of recovery after a subdued year, and domestic
figures are even surpassing pre-pandemic levels. Over the
past few years, Masan has been the most active player in Vietnam’s merger and
acquisition (M&A) scene. It has actively scooped up numerous businesses
such as VinMart+, Phuc Long Kiosk, and Mobicast JSC, a startup mobile virtual
network operator, to scale up The CrownX’s mini-mall, Point-of-Life concept. On November
5, Masan MEATLife announced the signing of strategic agreements with
Dutch-backed De Heus Vietnam, pursuant to which De Heus will obtain control
of the feed business and invest $600-700 million in Vietnam’s animal protein
supply chain. Last week,
KIDO also announced that it has spent more than $52.98 million buying more
than 44 million shares or 36.3 per cent stake in Vietnam Vegetable Oils
Industry Corporation (Vocarimex) from State Capital Investment Corporation.
Following the deal, KIDO has increased its ownership from 51 per cent to 87.29
per cent in Vocarimex. According to
the latest report by international law firm White & Case, Vietnam’s
M&A market for this year is set for another robust year following 2020’s
potent performance. In the first three quarters of 2021, deals with disclosed
value totalled $3 billion. With one and a half months of dealmaking left in
the pipeline, 2021 is on track to overtake 2020’s annual total of $3.9
billion. This strong
performance was largely due to an active second quarter. The total volume of
deals came to 19 during the quarter, reaching the highest quarterly volume on
record. A quarterly deal value of $2.5 billion, meanwhile, marked the
second-highest quarterly value on record, below the $5.2 billion struck in
the fourth quarter of 2017. Although
dealmaking dipped in the third quarter after a wave of lockdowns, Jon Bowden,
partner of US law firm White & Case, said that the endurance of Vietnam’s
dealmaking in the face of ongoing disruption displays both market resilience
and an enduring appetite for local assets. “Strong underlying fundamentals
such as an educated, low-cost workforce, a burgeoning middle class, and a
stable political climate will continue to make the country an attractive
investment destination,” Bowden said. He added
that high-growth industries such as consumer finance, electronics, and retail
will continue to attract attention from both strategic and private buyers,
providing plenty of opportunities for dealmaking in the final quarter of the
year. The easing of restrictions in October and the ongoing vaccination
programme will only further boost the country’s recovery. On the same
note, Vu Thi Que, chairwoman of Rajah & Tann LCT Lawyers, told VIR, “All
enterprises should have realised that they will need to strengthen
cooperation, rebuild strategies, and transform and innovate business models
due to the emergence of new business needs, policy changes, and consumer
demands.” M&A
transactions appear to be more active in sectors that have been seriously
affected by the pandemic. Specifically, the real estate business was mostly
frozen but acquisitions in this area, especially industrial and hospitality
real estate, have become very active, focusing on up to 40 per cent of
M&A deals. Que added
that there is an increasing number of domestic enterprises participating in
M&A. Only 18 per cent of Vietnamese enterprises were buyers in 2018, but
during 2019-2020, the rate rose to 30 per cent. Enterprises
have tended to restructure their business by cooperation and association – 9
per cent of joint ventures and 11 per cent of mergers in the period of 2019
to 2021, according to Que. On the other
hand, 45 per cent of M&A deals are operating in one relevant market, 19
per cent are involving enterprises operating in different related markets,
and 36 per cent are mixed transactions. “Having said
that, M&A in Vietnam will continue to grow strongly under the impact of
COVID-19, but with a strategy of a chain link, business model transformation,
and business expansion rather than an acquisition or a merger. M&A deals
after this long pandemic year will likely turn more to the form of
cooperation and association for more sustainable growth,” she stressed. Capacity for maximum growth in rooftop solar arena Mergers and
acquisitions in the solar energy sector in Vietnam are expected to rise in
2022, reflecting the country’s economic fortunes, since the country has a lot
of potential for solar energy due to its geographical location. In addition,
as a consequence of global supply chain adjustments and the country’s overall
trend of rapid development, Vietnam’s prominence has risen. The pair are
considering forming a joint venture to promote and expand the rooftop solar
power industry in Vietnam, as stipulated by the law. SOGEC will contribute 70
per cent of the charter capital while LOOOP will contribute the remainder.
The venture’s area of operation will include the provision of energy
generated by solar photovoltaic (PV) systems that it purchases and installs
on the rooftops of industrial or commercial clients’ buildings, as well as
industrial zone (IZ) businesses and tenants in Vietnam. SOGEC is a
subsidiary of Sojitz Corporation, a Japanese multinational corporation with
operations in several countries. Sojitz has subsidiaries and related
businesses in a variety of industries in Vietnam, including selling
industrial machines, IT, fertiliser manufacturing, logistics services, and
gas, as well as creating wood chips and developing IZ infrastructure. LOOOP is a
Japanese business that specialises in the manufacture and marketing of solar
panels, as well as the sale, maintenance, and repair of solar modules and
related equipment. In contrast, LOOOP has never done business in Vietnam. The joint
company will purchase solar PV systems from worldwide suppliers and install
them on the roofs of industrial clients in IZs that demand rooftop solar
power. Following that, it will continue to own and maintain the rooftop solar
system, selling the electricity generated to consumers in accordance with the
provisions of the two parties’ direct power purchase agreement (PPA). Rooftop
solar is a type of renewable energy produced by a PV system, which has its
electricity-generating solar panels installed on the roof of a residential or
commercial structure to provide backup power in the event of an outage,
accounting for a relatively small fraction of an industrial park’s overall
electricity consumption. Furthermore,
the rooftop solar power system contributes to less burden on the national
grid while boosting corporate efficiency. It is most visible in business
investments, notably manufacturing businesses, as rooftop solar power systems
enable these organisations to maximise production capacity while also
extending the life of the machinery. Recently,
foreign and domestic investors in the rooftop solar business in Vietnam have
finally received significant support and encouragement from the government
for development as prescribed under various regulations. Rooftop
solar power is a young, rapidly developing, and fiercely competitive sector,
with many new entrants likely to boost total installed capacity soon. Hexagon
Peak, Shire Oak International, Skylight Power Ltd., SkyX Solar JSC, and Nami
Solar Energy JSC are among the newest rivals to enter this industry. Several
months ago, SP Group and BCG Energy JSC, a fully-owned subsidiary of Bamboo
Capital JSC, also announced the formation of a joint venture in Vietnam to
engage in rooftop solar and explore additional renewable energy projects. SP stated
that it will hold 49 per cent of the venture, while Bamboo Capital’s
wholly-owned subsidiary would possess the rest. By 2025, it will have
achieved its initial goal of 500MW of rooftop projects, contributing to
Vietnam’s goal of generating 30 per cent of its power from renewable sources
by 2030. In addition,
Coro Energy Plc, a Southeast Asia-focused company, announced plans this
summer to buy 85 per cent of a portfolio of commercial and industrial rooftop
solar projects in Vietnam from Vinh Phuc Energy, with a combined capacity of
150MW. The deal commences with a low-cost entry, starting with a 5MW pilot
project. Stepping up green energy through direct purchase deals Vietnam-based
groups from fashion brands to brewers are likely to miss their global climate
change commitments if the long-awaited direct power purchase agreement for
them fails to come online next year. “The MoIT is
urgently building a competitive electricity retail market. In particular, the
implementation of the DPPA between the power plant and electricity users is
the first step in implementing a competitive electricity retail market in our
country,” Dien said. The
mechanism is an enormous opportunity for solar and wind developers to
mobilise private capital to build major new solar and wind farms. Over 30
large international and domestic businesses represented by the Renewable
Energy Buyers Alliance Vietnam – including Nike, Adidas, and Puma – are
supporting this effort in order to meet their sustainability goals, and
emphasised the critical need for accurate power market data to support
low-risk transactions to power the clean energy revolution in Vietnam. Nike’s chief
sustainability officer, Noel Kinder, who had a meeting with the Vietnamese
Prime Minister Pham Minh Chinh at COP26, said the group is working towards
its sustainability targets, including powering its owned and operated
facilities worldwide with 100 per cent renewable energy by 2025. Home of many
global groups, Vietnam plays an important role in supply chains. Thus the
DPPA, which has been sought after by top names such as H&M, Adidas, and
HEINEKEN, would promote private sector investment as well as meet green
targets. Meanwhile, these groups are under pressure from shareholders and
customers to reduce emissions in their supply chain. Nearly 30
leading international companies and organisations signed a declaration of
support for a DPPA in Vietnam in 2019. However, industry insiders said that
the draft has not yet set a floor price for negotiation between the parties.
Electricity users want to buy electricity at a low price, but conversely,
renewable generators do not want to sell at a lower price than the selling
price to state-run Electricity of Vietnam to ensure business efficiency. Under the
draft, the pilot programme is planned for nationwide rollout and a total
maximum capacity of selected wind or solar projects of 1,000MW. Should this
number exceed the number of applications for this scheme, the MoIT will
select participants (both consumers and renewable energy generation
companies) on a first-come, first-served basis. Vietnam aims
to double the installed wind and solar generation capacity to 31-38GW by
2030. Thanks to feed-in tariffs and other policies, Vietnam is among the top
three nations leading the shift to renewable energy in Asia-Pacific,
according to the latest research from London-based information provider IHS
Markit. The country saw a staggering eight-fold increase in rooftop solar in
2020 compared to the previous year, driven by the attractive tariffs, tax
incentives, and a land-lease exemption scheme. Meanwhile,
Minister Dien said that the policy for the wind sector will transfer to an
auction step after applying the FiT mechanism set at 8.5 US cents per kWh for
all projects achieving commercial operations before November 1 this year. It was
deemed an impressive result after the rush to invest in wind to take
advantage of the government’s incentives before transitioning to a
competitive auction scheme as wind projects totalling nearly 4GW have
achieved commercial operations in time for the feed-in tariff before October
31. Coastal provinces shape up for real estate rejuvenation The
hospitality real estate segment in some famous tourist destinations in
Vietnam are showing positive signs of recovery in anticipation of a reopening
of the country for international tourists. “Welcoming
international tourists back to Danang on a safe route will contribute to
boosting the real estate market and Danang’s tourism in particular,” Binh
said. The pandemic
has caused 98 per cent of tourism businesses in the city to suspend
operations. Accommodation, riverside, and coastal real estate have all since
been in a state of hibernation. Representatives
from real estate businesses forecast that the hospitality real estate market
in both Danang and Quang Nam will have cautious growth for now, but perhaps
even a boom period in 2022. Nguyen Ngoc
Thuy Linh, general director of Sun Property Group, insisted that Danang’s
real estate market will soon rise thanks to tourism and the increasing
quality of life. “Last year
the prime minister approved the adjustment of the general planning of Danang
to 2030. The related projects will be gradually implemented, and many
existing problems for real estate such as a shortage of supply and lack of
new projects will be solved,” Linh said. Linh added
that 2022 will be the right time for Sun Property Group to develop more
luxury and hospitality real estate segments. The recovery
of tourism will also lead to positive recovery signals of hospitality real
estate in other destinations on the pilot list to open to international
visitors – Phu Quoc, Nha Trang, and Quang Ninh, as well as other beaches
which are famous for many luxury resorts, such as Phan Thiet and Vung Tau. Nguyen Van
Dinh, chairman of the Vietnam Association of Realtors (VARS), said land
prices in coastal cities have increased sharply and are at a high level.
Areas near the sea in Danang and Nha Trang can cost up to $15,000 per square
metre, but some other locations like Quang Nam have a more reasonable price
of about $1,300-2,000 per sq.m. “The
recovery of the tourism economy will open up good opportunities for investors
in the hospitality real estate segment, and at the same time promote the
market to be vibrant again,” Dinh said. The number
of hospitality real estate products in the country is still quite modest.
According to data from the VARS, in 2020 there were 216 new tourism complex
projects approved and constructed in 10 cities and provinces along the
coastline, consisting of approximately 100,000 condotel units, 30,000 villas
and resort villas, and over 15,600 shophouses. But among the latter, only
5,000 shophouses have been put into operation. There is
light at the end of the tunnel, according to a report from the VARS. Despite
the pandemic, the hospitality real estate market in the third quarter gained
a positive transaction volume. The number of products offered for sale in the
quarter reached 7,206 units and transaction volume reached 2,280, equivalent
to an absorption rate of 31.6 per cent. However, to
serve the goal of welcoming more than 50 million international tourists and
nearly 200 million domestic tourists by 2025, Vietnam is required to invest
in developing more resorts, giving priority to famous coastal tourist
destinations such as Quang Ninh, Phu Quoc, Binh Thuan, Danang, Nha Trang, and
Phan Thiet. Smart cities the biggest game for startups in Vietnam A smarter
lifestyle that caters to the citizens of the 21st century and helps protect
the planet and stands high on Vietnam’s agenda in urban development, opening
many chances for local and foreign-funded startups in the country. Founded
three years ago, VIoT JSC is a tech startup focusing on solving the problems
of smart city development. The company
is producing a range of products, such as smart buttons with Bluetooth and
connectivity systems for outdoor and indoor advertising signs, serving urban
authorities in managing digital content remotely, such as in an industrial
zone, a port, and even a whole city. Nguyen Bach
Viet, founder and chairman of VIoT, said that using smart technology, his
group embarked on researching sensor devices for street lights on an open
platform for centralised management to reduce greenhouse gas emissions and
solve energy problems. “With this
technology we are contributing to the digital transformation of
infrastructure, developing applications for smart cities, agriculture, and
factories,” Viet said. Vietnam’s
urban areas are developing extremely quickly. Figures from the Ministry of
Construction show that the country’s urbanisation rate now is at 37.5 per
cent, and it has more than 813 cities and urban areas nationwide. This is
considered a good sign for economic development, creating conditions for more
innovation and investment, but also poses challenges such as environmental
pollution and traffic congestion. By applying
technology, cities are expected to increase management efficiency, reduce
costs, be more transparent, and bring more value to each citizen. The
development of a smart city, where many problems of a modern city are solved
through the application of technologies, is also deemed to create a more
convenient and humane living environment. According to
Pham Hong Quat, director general of Vietnam’s National Agency for Technology
Entrepreneurship and Commercialisation Development, the spirit of
entrepreneurship has not diminished despite the pandemic. In 2021,
many new technology units within smart urban and real estate technology have
joined the endeavour to create solutions for real estate management in
Vietnam. “However,
this game is not easy. Vietnam needs to be aware of the trends, and startups
need to take advantage to create breakthroughs,” Quat said. According to
a research report on real estate in the Vietnamese economy and its role and
policy recommendations, released by the Vietnam National Real Estate
Association in 2021, startups have a wide range in doing business in this
field, with 40 industries and sectors that are closely related to the real
estate market, from manufacturing, finance and banking, and construction to
tourism and many others. Meanwhile,
Phan Van Hung, head of Smart City and Proptech Villages, said that Vietnam is
a fast developing market with a young population where advanced technologies
have much room for growth, especially for smart city development. “Smart
cities, however, remain a new field in Vietnam. Therefore, startups must know
how to access this field and should learn from other countries and to apply
their expertise to the Vietnamese market,” Hung said. Meanwhile,
Assoc. Prof. Dr. Hoang Manh Nguyen, director at the Vietnam Green Urban
Research and Development Institute, emphasised that green transport,
vehicles, and the environment also must be the most concerned topics in smart
city development. “Advanced
technologies will help us to use and recycle energy. At present, our cities
and urban areas are focusing on technological solutions for waste treatment,
water supply, and traffic improvement,” Nguyen said. “There are
still challenges ahead in applying solutions for development, and startups
must improve themselves to meet these,” he added. “I believe that our
startups will become familiar and able to create a sustainable ecosystem for
developing smart cities in Vietnam.” The
Vietnamese government has issued many supportive policies and opened
corridors to create an ecosystem for creative startups. The government’s
promotion of smart city development and national digital transformation could
be an excellent opportunity for tech startups. Currently,
Vietnam has more than 1,000 organisations capable of supporting startups,
including 202 coworking zones, 79 business incubators, and 38 business
promotion organisations. The number
of venture capital funds that consider Vietnam a target market or have
operations in Vietnam stands currently at 210. Of which, 37 funds have
Vietnamese legal entities. Their number has continuously increased over the
years. Digital banks increasingly adopt new technologies to keep pace
with consumer expectations Digital
banks are embracing more modern technologies to serve the changing customer
behaviours during the Fourth Industrial Revolution. With this
new onboarding process, customers can open a credit account completely online.
Instead of the traditional face-to-face method, Revi’s account opening
process is simplified and takes only four steps and can be done within five
minutes. CIMB staff
will make a video call directly with users to verify the information. After
completing the registration procedure, a physical card will be delivered to
the customer after 3-5 working days. By then, users can activate the card and
set spending limits, check for their bank statement, lock and unlock the
card, or even reset PIN codes if needed. The new
solution will eliminate the requirement of going to the branch while ensuring
security criteria at the same time. CIMB not only manages the onboarding
process closely, but also makes sure customers information is strictly
confidential. “Along with
the launch of the Revi credit card, we hope to satisfy customers’ needs
quickly, conveniently, and immediately. This would contribute to promoting
non-cash payments, which the government and the State Bank of Vietnam are
encouraging.” a CIMB representative said. Likewise,
digital bank Cake has formed a partnership with BPC's payment processing
provider Radar Payments to scale its offering towards a full suite of digital
banking services. This collaboration also represents the first SaaS project
that BPC's Radar Payments has undertaken in Vietnam. Another
digital bank, Übank, has also partnered with Backbase – a global engagement
banking platform – leveraging their Backbase-as-a-Service (BaaS) managed
cloud service for its platform to enhance the bank’s mobile banking
experiences and offerings. Meanwhile,
Timo partnered with SaaS cloud banking platform Mambu to leverage the
benefits of a cloud platform as it scales its business to a full-service
digital bank. With plans to further grow its ecosystem of strategic partners
across different industries to enable maximum convenience for customers, Timo
will be relying on Mambu’s agile and responsive cloud platform to continue
powering Timo’s development. Digital
banks are accelerating operations in Vietnam to serve the rising demand. The
latest "Financial tribes you need to know" report by Mambu reveals
that around 85 per cent of Vietnamese banking consumers are more likely to
use online and digital banking services compared to 18 months ago. Approximately
90 per cent of respondents use online and digital banking services mostly to
pay bills, transfer money, and check account balances. The report
also shows that 87 per cent of local banking customers agreed with the
importance of online and digital banking services in a bank or financial
institution. Over 80 per cent of respondents prefer to save or invest rather
than spend money – the highest rates of all surveyed markets. With the
growing preference for digital banking services among customers, the
government also takes action to support the trend. On May 11, Decision
No.810/QD-NHNN on approving the plan for the digital transformation of the
banking sector by 2025 with orientations towards 2030 was promulgated by the
State Bank of Vietnam (SBV) with an ambitious objective to gradually create
solid legal foundations for the development of digital bank models, and to
set out the roadmap and clearly state nine implementation solutions for
digital bank models. The SBV not
only helps credit institutions take the right steps, in line with the general
global trend, but also helps accelerate the national digital transformation
and brings sustainable and practical values to the country. With this new
move, the legal framework and policies in payment-related activities will continue
to be improved for the application of new technologies and hopefully
introduce a license for registration of digital banks, leading to the booming
of this model in Vietnam in the near future. Low interest rates predicted to remain for last two months of
2021 Low interest
rates are predicted to remain in November and December this year. Moreover,
the risk of bad debts increasing in the next few quarters as loans gradually
mature may cause commercial banks to maintain a high net interest margin to
make room for provisions, thus lending rates are unlikely to be cut. On the other
hand, according to the financial statements of commercial banks, by the end
of the third quarter of 2021, the credit growth of listed banks was 7.7per
cent year-to-date, of which state-owned banks (except for Agribank) and joint
stock commercial banks all recorded positive growth, reaching 7.8 and 8.8 per
cent year-to-date respectively. Commercial
banks with good loan growth in the first nine months of 2021 include
Techcombank, TPBank, VIB, LienVietPostBank, MB, and MSB. Notably, the
growth of corporate bonds greatly contributed to the 9M21 credit growth of
many banks such as Techcombank, VPBank, MB, and TPBank. In the first
nine months of 2021, most joint stock commercial banks have approached their
allotted credit growth caps for this year by the SBV. KB
Securities raises its credit growth forecast in 2021 to 12 per cent from 10
per cent. Thanks to
accelerated vaccination programmes in major localities, the pandemic is
coming gradually under control, social distancing regulations are gradually
lifted and less likely to be tightened again, capital demand will soon
recover, corresponding to the recovery in the production and consumption sectors. In
particular, Q3 data shows that the asset quality of commercial banks was not
much affected by social distancing, which is the basis for the SBV to soon
grant more credit room to banks with good asset quality and capital adequacy
ratio. Risk management required in consumer finance arena Consumer
finance firms’ performance in Vietnam is deteriorating due to the minimal
capital buffer and hazardous nature of such assets – and a pressing need for
a credit expansion boost is indicated as a stipulation for consumer finance
players to rebound. Along with
that, FE Credit’s net profit margin (NIM) also continuously declined to the
lowest level since 2018, around 24.2 per cent. The capital adequacy ratio,
however, improved dramatically, rising from 17.3 to 21.6 per cent. Capital
spending in the first nine months fell to 7.4 from 8.2 per cent in the
previous year. HD Saison’s
profit reached $34.6 million, a bit higher than last year’s same period.
Despite a slowing in profit growth, it continued to expand its network of
transaction points by 1,800 points, bringing the total to 21,313 points
nationwide. HD Saison’s
credit recorded a decline for the first time since 2016 with a decrease of up
to 13.5 per cent compared to the beginning of the year. Its bad debt ratio
skyrocketed to 7.4 per cent after remaining stable at 5.8 per cent in H2. At
the end of Q3, the firm’s NIM was 29 per cent. At the same
time, MCredit reported pre-tax profit of $18.8 million, equivalent to a 105
per cent increase on-year. Notwithstanding, in Q3 only, the company’s pre-tax
profit was $3.8 million, a significant decline compared to the previous two
quarters. According to
Nguyen Quoc Hung, general secretary of the Vietnam Banks Association (VBA),
the bad debt ratio of consumer finance companies climbed from 6 to 10 per
cent in the first nine months of 2021 due to the pandemic. “Borrowers
of these unsecured consumer loans are low-income workers, employees, and small
entrepreneurs who are worst-hit. Many clients’ income has been adversely
impacted, resulting in their inability to pay. Others in strict social
distancing localities are unable to physically follow required processes.
These factors both exert a significant pressure on disbursement and debt
collection, leading to overdue debts and high bad debts,” he elaborated. The consumer
finance sector is also confronting other roadblocks because of present
legislation. A representative of MCredit requested that the State Bank of
Vietnam (SBV) priorities early adjustment of legislation in 2022. Nguyen Dinh
Duc, deputy general director of HD Saison, stated that the average bad debt
ratio at consumer finance companies around the world is around 8-10 per cent,
and in Vietnam it is currently at 9 per cent because it primarily lends to
disadvantaged customers with unstable income. However, the SBV set a target
of less than 3 per cent bad debt for consumer financing firms, identical to
that of commercial banks, making it harder to offer credit capacity to
consumer finance companies. “Because of
the industry’s unique characteristics and distinct operational tasks, it is
hard to compare the bad debt percentage of a consumer finance company to that
of a bank. As a result, the management agency requires a distinct lane for
the consumer finance group,” Duc explained. In the same
vein, Tran Thanh Nu Tuong Vy, deputy CEO of SHB Finance, stated that the
SBV’s application of a credit growth rate of 12 per cent annually has given
rise to difficulties for consumer finance firms. New
companies with low outstanding loans are likely to hit the credit ceiling in
Q4. According to Vy, limiting credit growth while current debts are not
recovered for re-lending would raise total outstanding loans, and if new
loans cannot be provided, consumer finance businesses will be compelled to
increase their provisioning for loan risk management. Meanwhile,
based on the actual execution of digital transformation at financial
institutions, a FE Credit representative urged that the government create a
new regulatory framework for electronic transactions shortly. “Furthermore,
the VBA and other media channels should coordinate in implementing
communication campaigns to facilitate a more comprehensive financial literacy
and the crucial role of this industry in repelling black credit and loan
sharks,” the representative highlighted. Lenders explore new ways to up ownership Financial
institutions are ramping up ownership in securities subsidiaries to tap into
new and exciting investment opportunities on the stock market. To mark the
25th birthday of the State Securities Commission of Vietnam (SSC) on November
28, Vietnam Investment Review, in partnership with the SSC, will organise an
online seminar on the stock market in Vietnam. The seminar
will take place on November 18 at 8:30-11:30am, with high-profile speakers
and attendees from the Ministry of Finance, the SSC, major stock exchanges,
listed companies, leading securities companies, and prominent fund management
organisations. Meanwhile,
ASC Securities Corporation (ASCS) has recently moved its head office from Ho
Chi Minh City to VPBank’s headquarters in Hanoi. At its
recent annual general shareholders’ meeting, ASCS elected the Board of
Directors and Supervisory Board for 2021-2026, with both new members of the
Supervisory Board, Nguyen Thi Duyen and Hoang Thi Quynh Trang, also holding
positions at VPBank. Along with a
fresh capital raising and its renewed organisational structure, ASCS is
rumoured to be closely linked with VPBank’s new stock trading project. In the same
vein, Viet A Bank is rumoured to have acquired National Securities
Corporation (NSI). The brokerage company has just moved its headquarters to
Viet A Bank’s head office. NSI has also
announced tripling its capital from $13 million to $43.5 million by issuing
70 million shares to existing shareholders in 2021. Viet A Bank
was also listed in the NSI’s offering plan as one of the purchasers. Cappella
Group, one of the major stakeholder of NSI, is led by Nguyen Van Trong,
member of the Board of Directors and acting CEO of Viet A Bank. Earlier this
month, Tien Phong Securities JSC (TPS) – the brokerage arm of TPBank – was
officially listed on the Ho Chi Minh City Stock Exchange (HSX), with a
reference price of VND28,300 ($1.23) apiece. TPS,
formally Phuong Dong Securities JSC, joined TPBank’s ecosystem in April 2019. Tran Son
Hai, vice chairman of the Board of Directors cum CEO of TPS stated, “Being
listed on the HSX shows that we are part of a group of skilled and serious
firms working to develop a transparent stock landscape for domestic and
international investors alike. This also marks the success of our
reorganisation, ushering in a new era of strong and remarkable growth with
larger and more sustainable development.” Hai also
added that TPS aims to make it among the top 10 in Vietnam’s stock market in
terms of size, market share, revenue, and profit to ensure operating
efficiency and deliver the greatest advantages to shareholders. Since the
beginning of the year, more than 30 securities companies have raised capital.
Some small-cap securities businesses that were of a low profile a few years
ago have also emerged on the radar of deep-pocketed shareholders such as KS
Securities, Dai Nam Securities, and DSC Securities. Other
brokerages backed by banks such as ACB Securities, MB Securities, and KS
Securities have gained new momentum in the race for capital to intensify
competitiveness. Techcom Securities JSC, VietinBank Securities, and
Vietcombank Securities are also actively issuing bonds with support from
their parent banks. A securities
subsidiary will support banks in the issuance of valuable papers, such as
stocks and bonds, to mobilise much-needed capital. Going
against the flow, in late July Sacombank announced ambitions to offload its
entire capital in Sacombank Securities JSC. The bank expects to gain around
$6.5-7.4 million from the divestment. The move is part of the bank’s
comprehensive restructuring strategy, including divestment from ineffective
businesses. A representative of Sacombank noted that the bank had not been
the parent company of Sacombank Securities JSC since 2011, after subsequent
divestments in the preceding year. Inflation
has accelerated in recent months across the globe, including Vietnam. In
early 2020 when the pandemic hit, the State Bank of Vietnam (SBV) had
adjusted interest rates with three reductions at 1.5-2 per cent, a deep
reduction compared to other countries in the region. In addition
to regulating the interest rates of the central bank, the SBV has directed
and called on domestic and foreign credit institutions to reduce interest rates
for existing and fresh loans. The lending interest rate decreased by 1.66 per
cent compared to the pre-pandemic level. The total reduction in interest
rates of credit institutions reached $1.3 billion. The interest rate
reduction will continue to be reduced from now until the end of the year. Commercial
banks in Vietnam have actively slashed their interest rates by about $86.95
million to help customers ride out the bumps. However, the
hotter-than-anticipated inflation has triggered heated debates over a rate
hike. The monetary
policy has two tasks in terms of progressively decreasing interest rates. The
first is to manage the central bank’s policy in order to keep inflation under
control and the economy stable. The second is the economy’s lifeblood, ensuring
that the credit system functions in a way that assures people’s safety and
payment ability. In order to
determine if there is still room for further interest rate cuts when
assessing the current situation of banking activities and the macro-economy,
we assess that in 2021, we could meet inflation’s target of below 4 per cent,
which is set by the National Assembly. By the end
of October, inflation increased by 1.81 per cent. However, inflation risks
are expected to be under pressure by 2022. Vietnam is
not the only country facing great challenges posed by inflation. Inflation in
developed nations, such as in the US, is starting to look unexpected and
unwanted. Last week, the US government announced its consumer price index
soared 6.2 per cent from a year ago – the biggest 12-month jump within three
decades. Those
signals would prompt more rapid tapering and faster rate hikes than expected.
Many market participants are now expecting three rate hikes next year. With the
openness of Vietnam’s economy and impressive import-export turnover, Vietnam
bears the risk of import inflation. In addition, central banks across the
globe are also adjusting their monetary policy, with 65 rate hikes worldwide.
Therefore, inflation pressure and monetary policy operating pressure are
large. Furthermore, bad debts in the system of credit institutions have also
witnessed an upward trajectory. We
previously dealt with the financial crisis in the 2008-2009 period. At the
moment, the SBV would thoroughly assess the ongoing development on the
inflation front, compare realistic scenarios for policy purposes, as well as
come up with a flexible monetary approach. Throughout
the pandemic, banks have used their own financial resources to lower interest
rates. When soured debt grows, they must utilise their financial resources to
cope with it. In the worst
scenario, credit institutions’ weak performance would adversely impede the
ability to pay people and the safety of the whole system. This is an
unforgettable lesson from the past when credit growth skyrocketed
uncontrollably when we facilitated interest rate support packages in 2010. If
not calculated carefully, there is a risk that inflation will return to the
same level as in 2011, at around 18 per cent. As a result,
the SBV would continue to ramp up efforts to cut operational expenses in
order to lower interest rates, but also ensure the stability of the credit
institution system. Simultaneously, we will continue to coordinate with
relevant ministries and agencies to determine fair interest rates in support
packages based on macroeconomic stability and inflation risk mitigation. Apparel exports of Binh Duong Province exceed US$2 billion The Textile
and Apparel Association of Binh Duong Province, on November 18, said that
despite being affected by the Covid-19 pandemic, garment and textile export
turnover was estimated at more than US$2 billion in the first ten months of
this year, up 1.4 percent compared to the same period last year, accounting
for 7 percent of the province's total export turnover. Accordingly,
the export turnover of textile and garment products of Binh Duong Province
was estimated at $152 million in October, up 241.4 percent over the previous
month. The main markets included the US, the EU, South Korea, and Japan. It
is forecasted that from now to the end of this year, there will be more
orders, and businesses in the industry will gradually recover, speed up
production, and continue to increase export value. According to
the Textile and Apparel Association of Binh Duong Province, the above result
was obtained in the context of a complicated and prolonged Covid-19 pandemic
because local large-scale textile and garment enterprises had paid attention
to Covid-19 prevention measures and taken good care of workers. Workers who
temporarily left for their hometown to avoid the pandemic have been returning
to continue working. Vietnam stays firm in top 10 remittance recipients in 2021 with
US$18.1 billion The year
2021 will be the fifth in a row that Vietnam remains in the top 10 in terms
of remittance. This will
the fifth consecutive year that Vietnam remains in the top 10 in terms of
remittance, with the figure being $13.8 billion (2017), $15.9 billion (2018),
and $17.2 billion (2019). India
remained the largest recipient globally with an estimated $87 billion,
followed by China and Mexico with $53 billion. In the East
Asian and Pacific region, in 2021, Vietnam ranked third after China and the
Philippines ($36 billion) – the world’s fourth-largest recipient. Nguyen Hoang
Minh, deputy director of the State Bank of Vietnam (SBV) in Ho Chi Minh City
noted the strong remittance inflow into Vietnam amid the pandemic has had
positive impacts on the foreign exchange market. “A stable
US-Vietnam exchange rate would continue to facilitate the Government’s
policies favoring businesses and people affected by the pandemic,” he said. The
Vietnamese dong (VND) was among the most stable currencies in Asia,
with the USD/VND exchange rate fluctuating around VND23,200-23,250 per US
dollar in the first quarter of 2021, around the same as last year. In this
regard, other currencies have sharply depreciated against the USD, including
JPY (-7.26%), EUR (-4.12%), THB (-4.5%), KRW (-4.19%), and CNY (-0.57%). Fitch
Solutions forecast the VND to average VND23,000/USD, and around VND23,200 in
2022. Importance of remittance as critical lifeline On the
global scale, the World Bank noted remittances to low- and middle-income
countries are projected to have grown a strong 7.3% to reach $589 billion in
2021. For a second
consecutive year, remittance flows to low- and middle-income countries
(excluding China) and are expected to surpass the sum of foreign direct
investment (FDI) and overseas development assistance (ODA). This
underscores the importance of remittances in providing a critical lifeline by
supporting household spending on essential items such as food, health, and
education during periods of economic hardship in migrants’ countries of
origin. “Remittance
flows from migrants have greatly complemented government cash transfer
programs to support families suffering economic hardships during the Covid-19
crisis. Facilitating the flow of remittances to provide relief to strained
household budgets should be a key component of government policies to support
a global recovery from the pandemic,” said Michal Rutkowski, World
Bank Global Director for Social Protection and Jobs. Factors
contributing to the strong growth in remittance are migrants’ determination
to support their families in times of need, aided by economic recovery in
Europe and the United States which in turn was supported by the fiscal
stimulus and employment support programs. In the Gulf Cooperation Council
(GCC) countries and Russia, the recovery of outward remittances was also
facilitated by stronger oil prices and the resulting pickup in economic
activity. However, the
cost of sending $200 across international borders continued to be too high,
averaging 6.4% of the amount transferred in the first quarter of 2021,
according to the World Bank’s Remittance Prices Worldwide Database. This is
more than double the Sustainable Development Goal target of 3 percent by
2030. It is most
expensive to send money to Sub-Saharan Africa (8%) and cheapest in South Asia
(4.6%). Data reveal that costs tend to be higher when remittances are sent
through banks than through digital channels or through money transmitters
offering cash-to-cash services. “The
immediate impact of the crisis on remittance flows was very deep. The surprising
pace of recovery is welcome news. To keep remittances flowing, especially
through digital channels, providing access to bank accounts for migrants and
remittance service providers remains a key requirement. Policy responses also
must continue to be inclusive of migrants especially in the areas of access
to vaccines and protection from underpayment,” said Dilip Ratha, lead
author of the Brief and head of KNOMAD. Remittances
are projected to continue to grow by 2.6% in 2022 in line with global
macroeconomic forecasts. A resurgence of COVID-19 cases and re-imposition of
mobility restrictions poses the biggest downside risk to the outlook for
global growth, employment and remittance flows to developing countries. The
rollback of fiscal stimulus and employment-support programs, as economies
recover, may also dampen remittance flows. Vietnamese, Chinese localities step up trade exchange Trade
promotion agencies of the northern border province of Lao Cai and the Chinese
province of Zhejiang’s Hangzhou city on November 19 organised an
international conference on exports and trade exchange in both virtual and
face-to-face forms. The event
gathered 138 enterprises from 15 provinces and cities of Vietnam and nearly
100 businesses from China’s Zhejiang, Tianjin, Shanghai, Beijing, and Yunnan. Head of Lao
Cai’s centre for industrial promotion and trade promotion Ha Duc Binh said
the conference aimed to boost trade exchange and commercial cooperation
between the localities, offering chances for Vietnamese suppliers, exporters,
and logistics businesses to meet partners from Zhejiang and its neighbouring
Chinese provinces. Therefore, export cooperation between Vietnam and Zhejiang
would be enhanced, he added. As heard at
the conference, transportation by air, road and railway between Vietnam and
Zhejiang is very convenient, with goods delivery time between the two sides
ranging from one to two days by road and railway. According to
statistics of the General Department of Vietnam Customs, two-way trade
between Vietnamese provinces and Zhejiang in 2020 exceeded 8.11 billion USD. Zhejiang's
major exports to Vietnam include fabric products, textiles; steel frames;
velvet, feather; electrical components; machinery and components for the
textile and garment sector; paper and ceramic tiles. Meanwhile, it mainly
imports from Vietnam textiles; iron and steel; rubber; plastic beads; food;
clinker; and limestone. The trade
exchange of agricultural products and fruits between the two sides has so far
remained modest./. Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan
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