VIETNAM BUSINESS NEWS MARCH 24
14:36
Vietnam aims to rank
among world’s top 15 exporters by 2030
 Vietnam has set a target of becoming
an industrialised country with highly competitive industries, and among the
world's top 15 exporters by the end of 2030. According to a report by the Ministry
of Industry and Trade (MoIT), the country's immediate target is to develop 20
products with strong international brands, to strengthen its position in the
global supply chain, to bring its supporting industry's capacity to meet 70
percent of domestic demand and localisation of production to 45 percent. The country's supporting industry,
which remained underdeveloped and overly reliant on imports, has been
identified as a major weakness for Vietnam, especially in key industries such
as electronics, textile, leather and footwear, manufacturing and automobile. The effect has been made painfully
clear since the pandemic as Vietnam's top suppliers of parts, including Chia,
the Republic of Korea and Japan, were hit hard by COVID-19, causing severe
disruptions to production in Vietnam. In order to address the issue, the MoIT
has proposed a restructuring plan for Vietnam's industries with a focus on
the development of supporting industries. According to the ministry,
significant progress had been made in the 2011-20 period with industrial
production accounting for around 27.45 percent of the country's total GDP
annually. Foreign investors interested
in Vietnam's future workforce Vietnam's assessment of future
employment trends and how Vietnam is preparing for its workforce to respond
to such trends are issues attracting attention from foreign businesses at the
ongoing Singapore Apex Business Summit (SABS) 2022. Vietnamese Ambassador to Singapore Mai
Phuoc Dung said Vietnam has become an attractive destination for foreign
investors, and multi-sectoral corporations in the country are also growing
stronger, so the demand for highly skilled and trained workers in Vietnam is
increasing day by day. Regarding future employment trends,
Vietnam has a great demand for skilled technicians or middle- and high-level
managers in industries, namely electronics and semiconductors, information
technology, banking, finance, energy and marine economy, Dung said. For Vietnam’s preparations, the
diplomat said foreign companies highly valued Vietnamese workforce for their
working ability and quickness in learning new skills. However, the ambassador noted that
Vietnam also faces challenges to have a large enough skilled workforce to
meet the high demand for its economic development in the future. The ratio of
skilled workers in Vietnam only accounts for 26.1 percent of the labor force,
he added. Therefore, Vietnam's socio-economic
development plan in the next five years has emphasised the importance of
building high-quality human resources, considering it one of Vietnam's top
priorities for development in the coming time. RoK calls for Vietnam’s
support in joining CPTPP Minister for Trade of the Republic of
Korea (RoK)’s Ministry of Trade, Industry and Energy Yeo Han-koo has
suggested Vietnam support the RoK in joining the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP). During his online meeting with
Vietnamese Deputy Minister of Industry and Trade Tran Quoc Khanh on March 23,
Yeo said since late 2021, the RoK has conducted internal discussions and
prepared procedures to join the CPTPP. He also highly valued the close
economic ties between Vietnam and the RoK, saying their trade link reached
its peak last year. Welcoming the RoK’s application for
the CPTPP membership, Khanh expressed his hope that Vietnam and the RoK will
continue their cooperation in relevant areas. The two sides also compared notes on
the Indo-Pacific Economic Framework (IPEF) which the US is stepping up in an
effort to enhance comprehensive economic cooperation in the Indo-Pacific
region. HCM City needs to improve
business climate: experts The southern metropolis Ho Chi Minh
City needs to develop policy mechanisms and legal frameworks and improve its
business climate, infrastructure and human resources to recover the economy,
experts say. Speaking at a conference on March 22,
Johnathan Hanh Nguyen, chairman of Imex Pan Pacific Co. Ltd., said: “To
attract strategic investors, the city needs to have breakthrough incentives
and internationally competitive policies.” Johnathan Hanh Nguyen, an overseas
Vietnamese businessman, said the city needed to improve its competitiveness
to ensure a favourable business environment for enterprises, encouraging
start-ups and innovation. It needs to invest in significant
projects such as building an international financial centre, high-end
duty-free shops and shopping malls in the city centre. He recommended the
city develop AI education programmes and build a logistics warehouse in Thu
Duc city. Nguyen Thi Phuong Thao, CEO of Vietjet
Air and general director of Sovico Holdings, said the city should become an
international tourist destination to receive 15 million visitors this year,
including 3.5-4 million international tourists. In addition, it should develop the
stock market to compete with major markets globally, she added. “It also
needs to accelerate digital transformation to build a digital economy,” she
said. Nguyen Thanh Binh, general director of
Gemadept Group, said it was paramount for the city to invest in
infrastructure, especially at seaports. It should also develop a distribution
centre of high-quality consumer goods worldwide based on a modern retail
system. Park Hyun Bae, general director of
KCTC Vietnam, recommended the city expand cargo ports, including Cat Lai port
(in Thu Duc) and Hiep Phuoc port in Nha Be district, and improve warehouse,
port and logistics services. Boris Cohen, general director of MSC,
a global container shipping company, said it was vital to improve the seaport
infrastructure to develop an international cargo service hub in Vietnam. “The
city should plan to build a new transhipment port in Can Gio district by
2030,” he said. Other conference participants said the
city was lagging behind other major cities in the region regarding living
quality, competitiveness and urban planning. Its infrastructure is ageing
while its human resources have failed to meet development needs, and many of
its major infrastructure works are progressing too slowly. Other city issues
include traffic congestion, air pollution, flooding and robberies and
burglaries. Sun Air becomes Gulfstream’s
international sales representative in Vietnam Luxury airline Sun Air has become
Gulfstream Aerospace’s international sales representative in the Vietnamese
market following the signing of an agreement between the Vietnamese carrier
and the US aircraft manufacturer in Hanoi on March 23. Under the deal, Sun Air will support
Gulfstream in developing the market in Vietnam and introduce the American
aircraft company's jets to potential customers. The first luxury airline in Vietnam
will also provide airplane management and private jet charter services using
Gulfstream's business jets with transcontinental range, cutting-edge
technology and world-class cabin space. Travel operators expect a
bonanza in coming four-day holiday Along with airfares, room prices in
tourist destinations are forecast to surge considerably as holidaymakers are
hurriedly booking tours for the coming national holiday on April 30 & May
1. A survey conducted by VTC News
revealed that several hotels and resorts in Hanoi, Ho Chi Minh City, Da Nang,
Ha Long, Tam Dao, Sa Pa, Nha Trang City, and Quy Nhon have been fully booked
during the coming four-day break, starting April 30. Currently hotels and lodging houses
are keeping room rates unchanged and offering promotions to attract guests.
Pham Viet Cuong, manager of Dana City Hotel in Da Nang, said he is now
offering room rates at VND200,000 to VND500,000 less than the pre-pandemic
rates. However, Dana City and other hotels
anticipate that after April 20 room prices will rise by between 30% and 50%,
or even climb as high as 70% in some places in the event of a booking boom. At present, the majority of people
across the country have been fully vaccinated against the SARS-CoV-2 virus.
Localities have gradually opened their doors to welcome the return of both
domestic and international tourists. Fruit and vegetable exports
to the US, Europe surge Vietnam is boosting fruit and
vegetable export to the US and Europe after facing difficulties with the
Chinese market. Nguyen Thanh Binh, chairman of the
Vietnam Fruit and Vegetable Association, said that China had been the biggest
importer of Vietnamese fruits and vegetables for many years. However, Vietnam’s fruit and vegetable
export value to China dropped by 19 percent on-year to USD260 million in the
first two months of this year. In contrast, the export value of fruit and
vegetables to the US grew by 70 percent to USD25 million. While Japan
imported fruit and vegetables valued at USD23 million, up 12 percent on-year. Minister of Agriculture and Rural
Development Le Minh Hoan said the EU was the biggest importer of fruit and
vegetables in the world. However, Vietnamese products accounted for just
around 1 percent of the EU's total import value of fruits and vegetables. The US has licensed the import of
Vietnamese grapefruit. The US plans to import more Vietnamese coconuts and
star apples in the coming time. Material prices strike
domestic feed groups Supply shortages, with global
uncertainties including the Russia-Ukraine clash escalating, are driving
Vietnam’s animal feed production sector into bigger difficulties as a large
part of raw materials are sourced from these two markets. Almost all the animal feed producers
in Vietnam, including CJ Vina Agri, Cargill, and Japfa Comfeed Vietnam, have
had to adjust the selling prices of feed products to offset the increasing
momentum of imported materials. Statistics published by the Department
of Livestock Production (LPD) under the Ministry of Agriculture and Rural
Development (MARD) showed that in the first two months of this year, imported
soybean prices increased by 21 per cent, raw corn 9 per cent, soybean oil 22
per cent, and fish paste 11 per cent. Feed producers have adjusted the
selling price 10 times since the end of 2020. Duong Tat Thang, director of the LPD,
said that one of the reasons impacting the materials for feed production is
the big hikes in prices of animal feed materials in the global markets
currently affected by the conflict between Russia and Ukraine, which lead the
world in the export of wheat and corn. These two countries currently make up
29 per cent of exported wheat and 19 per cent of exported corn worldwide. The General Statistics Office (GSO)
said that the total of Vietnam’s wheat and corn turnover imported from Russia
and Ukraine are 20 and 3 per cent, respectively. Cashew container confusion
points to payment issues In the midst of supply chain
headwinds, a suspected scam related to 100 containers of cashew nuts exported
from Vietnam to Italy is prompting more businesses to buy via the freight on
board model and sell via cost, insurance, and freight agreements. Bach Khanh Nhut, vice chairman of the
Vietnam Cashew Association (Vinacas), said that businesses have lost control
of 36 containers worth about $7 million due to a loss of original documents.
Up to now, the investigation into the suspected cashew nut export scam has
not been concluded. Several Vietnamese cashew processing
and exporting enterprises have signed contracts with some customers to import
Italian cashews through the brokerage company Kim Hanh Viet. The consignments
had been packed into 100 containers which were being shipped to the ports of
Genoa and La Spezia by international shipping lines Cosco, Yangming, Hmm, and
One. Vietnamese banks said they had shipped
all original documents of the shipment of 36 containers via international
courier services. However, banks in Italy responded that they only received
copies of the documents. Vinacas has sent an express document
to the Vietnamese Embassy and the Vietnam Trade Office in Italy to request
support. Vinacas has also worked with five Vietnamese banks, related
businesses, and shipping lines. However, most of them said that it was
impossible to find the original documents of the shipment. It is thought that it is an urgent
situation because all original documents are in the hands of the buyers.
Shipping lines will be forced to deliver the goods to the holders of the
original document according to international practice. Meanwhile, Italian police released a
written response about the blockade of three containers on March 8 and
another two on March 11 to wait for the case to be resolved. However, the
number of blocked containers is very small compared to the 36 containers
being at risk of loss. Vietnamese cashew exporters have
negotiated disadvantageous payment terms with first-time purchasers who do
not fully comprehend customer needs. The nature of payment methods like
Documents against Payment, Cash against Documents, and Letter of Credit (L/C)
are settled with banks. All these methods require payment for a set of
documents prior to obtaining the goods. Therefore, they are considered quite
secure in terms of paperwork. However, if the buyer has a fraudulent
intention to appropriate documents, there are some risks. Concerned about a payment scam in the
African market, the Vietnam trade offices in Algeria, Gambia, Mali, Niger,
and Senegal issued a warning for Vietnamese businesses to not use the L/C
payment method with African importers in April 2020. In addition, they were advised never
to use Document Acceptance as a payment method. Due to financial restrictions
at that time, African importers frequently offered to buy products on a
deferred payment basis under cost, insurance, and freight agreements. They
did not open L/C accounts due to expensive fees. L/C is the least risky payment method
but it is not the most popular one in the agricultural trade. L/C agreements
only account for about 5 per cent of transactions. Although L/C is the most secure
payment method for the sellers, it is the most disadvantageous for the
buyers. To guarantee payments, banks often require buyers to deposit a
certain amount, even all of the value of the contract. In commercial transactions, both
parties want to close the deal quickly. The question is which side is in the
bargaining position. When buyers have a bargaining advantage over sellers,
they will offer a payment method that is convenient for them, or vice versa. The European economy is still
recovering from a series of supply chain headwinds over the past two years.
The commodity demand gradually recovers, opening up the opportunity for
Vietnam to increase cashew exports to Europe by 15 per cent to over 155,000
tonnes in 2022. Cashew exports reached a record of $3.64 billion in 2021. Ta Quang Huyen, chairman of Hoang Son
1 JSC in the southern province of Binh Phuoc, one of Vietnam’s leading cashew
nut exporters, said that exporters can reacquire their exported containers
which have yet to leave the ports if they use a different approach. “After receiving the buyers’ deposits,
sellers will make a contract. The deposit amount ranges from 20-30 per cent
of the order value. This will ensure that the buyers pay the rest when
receiving the goods. If the importers do not make the deposit, the
transaction is cancelled,” Huyen said. He added that exporters should
actively win the right to charter ships. Paying the charter will enable businesses
to be more proactive in understanding schedules and deal more easily with
shipping lines in the event of a mishap. This strategy is akin to selling via
carriage and insurance paid to contracts rather than freight on board, which
is the current bottleneck in Vietnam’s exports. “For many years, Vietnamese exporters
have been accustomed to transferring all charter rights to their partners.
They only receive products at the port for import or delivering goods to the
port for export. It is time for a change,” Huyen emphasised. Last week, the Government Office
issued Official Dispatch No.1583/CD-VPCP conveying the direction of Prime
Minister Pham Minh Chinh on exporting cashews to the European market. The PM
assigned the ministers of industry and trade; agriculture and rural
development; public security; and transport, as well as the governor of the
State Bank of Vietnam, to urgently coordinate with the Vietnam Cashew
Association and relevant agencies to inspect and clarify the cause. The regulatory bodies have to take
measures to handle and support businesses to ensure the legitimate interests
of people and businesses in accordance with the provisions of domestic and
international laws. The regulatory bodies are required to report to the prime
minister any difficulties beyond authority. Vietnam’s online B2B
marketplace relaunched as Halana EI Industrial, the first
industry-focused business-to-business (B2B) e-commerce marketplace in Vietnam
relaunched as Halana. Launched in 2019, Halana empowers suppliers and
businesses to streamline manual processes with its SaaS solutions, end-to-end
e-procurement, and warehouse management system. Vietnamese businesses suffer from
manual and inefficient procurement processes resulting in wasted time and
higher costs for purchasers. Additionally, purchases are made more difficult
with the lack of price transparency. As a result, an order can take over two
weeks to complete. With Halana, purchasers can quickly
source from multiple suppliers and identify the best deals available. The
platform is free to use for all suppliers, empowering them to digitalise and
maximise their reach to customers across Vietnam. Focused on its core mission of
accelerating digital procurement across the supply chain industry, Halana’s
vision aligns with the National Digital Transformation Programme which aims
to incentivise businesses to prioritise digitalisation in Vietnam. Indorama Netherlands to
acquire Ngoc Nghia Plastics Indorama Netherlands B.V. (IVL)
announced plans to buy Ngoc Nghia Plastics JSC, a leading enterprise in the
plastic packaging industry. Expanding its packaging business into
Vietnam will strengthen the market position of Indorama Netherlands in
Asia-Pacific, further extending the list of deals between Thai producers and
Vietnamese partners. Indorama Netherlands has offered to
buy all 81 million shares at Ngoc Nghia at VND26,219 ($1.14) apiece,
totalling $91 million for the deal. As a leading PET manufacturer, Ngoc
Nghia has four sites in the country. It has a total production capacity of
approximately 5.5 billion units of PET preforms, bottles, and closures,
equivalent to a conversion of 76,000 tonnes per annum. Once the deal is completed, it will
extend the list of acquisitions of Vietnamese plastics producers by Thai
companies. In July, SCG Packaging Plc. completed
the purchase of a 70 per cent stake in Duy Tan Plastics, the country's
largest manufacturer of rigid plastic packaging products. SCG also owns stakes in many other
plastics companies including Binh Minh Plastics JSC, Prime Group, Viet Thai
Plastchem JSC Ltd., TPC Vina Plastic and Chemical Corporation Ltd., and Minh
Thai Plastic Material Co., Ltd. Expansion of Tri An
hydropower plant requires VND3.9 trillion Work on the Tri An hydropower plant
expansion project in Dong Nai Province is set to start in the second quarter
of 2023, with a total investment of VND3.9 trillion. The project, which will have two
generators with a combined capacity of 200 megawatts (MW), will be completed
in 2026, a representative of the Vietnam Electricity Group, which is the
investor of the project, said at a recent working session with the Dong Nai
government. The working session was aimed at discussing the construction of
the second phase of the hydropower plant. The Tri An hydropower plant expansion
project is expected to generate 131 million kWh of electricity annually. Built on the Dong Nai river in Vinh
Cuu District in 1984, the Tri An hydropower plant has four generators and
turns out some 1.7 billion kWh of electricity each year. After the expansion project is
completed, with a capacity of 400 MW, the Tri An hydropower plant will become
the second-largest-of-its-kind in Vietnam, after the Hoa Binh hydropower
plant. The Dong Nai-based plant is currently ranked sixth in the country. BW announces landmark
transaction, marking its first entry into Long An province BW Industrial Development JSC on March
24 announced its acquisition of nearly 21 hectares of land in Vinh Loc 2
Industrial Park and more than 22ha in Xuyen A Industrial Park. The transaction marks BW’s first entry
into Long An province, strengthening its presence in the greater Ho Chi Minh
City area. Xuyen A Industrial Park is located
less than 10km from Tan Phu Trung, where BW has operates an e-commerce hub Ideally situated 30 minutes from the
Tan Son Nhat airport and 90 minutes from the Cat Lai Port, the site will
create synergies and value across BW’s platform, amid the increasingly
limited land supply in Tan Phu Trung. The project, which will include a
220,000sq.m logistics facility, is scheduled for completion in the fourth
quarter of 2023. Given the high purchasing power in Ho
Chi Minh City, Long An is an attractive location, especially for
agricultural, seafood, retail, and e-commerce companies looking to serve the
local market. S.Korean firm invests in
footwear factory project in Daklak The Central Highlands province of
Daklak has approved a project to develop a footwear factory in the province
by South Korea’s Taekwang Group with an investment of some US$22 million. A representative of the Daklak Branch
of Taekwang Vina JSC, under the Taekwang Group, said the factory would
recruit around 7,000 laborers in the first phase and 15,000 in the second
phase, making it the most labor-intensive project in Daklak Province, Thanh
Nien Online newspaper reported. Procedures for the project, which will
be developed in the Hoa Phu Industrial Park in Buon Ma Thuot City, have been
completed. Taekwang is building the factory and installing the equipment. Louis Holdings fined for
buying more TGG shares than registered Louis Holdings has been fined over
VND161.2 million as it acquired nearly 4.7 million TGG shares of Louis
Capital JSC while it had earlier registered to buy only 3.6 million shares.
Besides the fine, the company was suspended from making stock transactions
for two months. On November 11 last year, Louis
Holdings registered to acquire 3.6 million TGG shares. The transaction was
planned to be conducted from November 17 to December 15 last year. However, it bought nearly 4.7 million
shares from November 17 to 30, 2021, exceeding the registered volume by
nearly 1.1 million shares, valued at some VND10.7 billion. In January this year, Louis Capital
was also fined VND232.5 million for violating the regulations on information
disclosure; and failing to ensure the numbers of non-executive and
independent members in the company’s board in line with the law and appoint a
person to govern the company. Vietnam Gov’t kicks off
interest subsidy policy for 2022-2023 The support, estimated at a maximum of
VND40 trillion (US$1.76 billion), was revealed in the recently issued
decision No.422 of the State Bank of Vietnam (SBV) and remains part of the
Government’s socio-economic recovery program worth VND350 trillion ($15.4
billion) to aid the economy. One of the key objectives of the
decision is for the SBV to manage the monetary and credit policies flexibly,
stabilize macro-economic conditions and contain inflation. In addition, the SBV also informed
that it will allow commercial banks in which the state is holding over 50%
stake to raise registered capital while stepping up efforts to ensure the
financial security of credit institutions and resolve bad debts. The SBV calls for banks to further
streamline operational expenses and cut lending rates by 0.5-1 percentage
points, as well as rescheduling debt payment and waiving/freezing lending
rates for those affected by the pandemic. In early 2022, the National Assembly
issued Resolution No.43/2022/QH15 on monetary and fiscal support programs
worth a combined total of VND350 trillion (US$15.4 billion) to aid economic
recovery and adaptation to a new normal. These include a fiscal support package
of VND291 trillion ($12.8 billion) and a monetary one of VND46 trillion ($2
billion). Russian petrochemical firm
SIBUR strengthens presence in Vietnam market The move is part of the company’s
long-term strategy to expand in the dynamic Southeast Asian market. SIBUR plans to build a warehouse network
in Vietnam in the second half of 2022 to support rising volumes of polyolefin
supplies to the country. The company sold more than 50,000 metric tons of
polyolefin products in Vietnam in 2021 and aims to increase sales in the
country by 30% in 2022. Polyolefins, such as polyethylene and
polypropylene, serve as feedstock for the production of versatile plastics. How Vietnam F&B cope with
geopolitical tensions? Vietnam’s seafood and rice are
expected to be in hot demand to replace the disrupted supplies of key
commodities as a result of the ongoing Russia-Ukraine conflict, according to
Mirae Asset Vietnam (MASVN). The securities company’s report
suggested Vietnam’s revenue from retail services and goods last year was
heavily affected by the third and fourth wave of the Covid-19 pandemic, which
resulted in an expansion rate of only 0.2% – the lowest for the past 12
years. In addition, the value from
hospitality and catering services also suffered a sharp decline of 19.3%
year-on-year, due to mobility restrictions to curb Covid-19 infections. “It is safe to say 2021 was the most
difficult year for Vietnam’s food and beverage (F&B) sector since the
1986 reform,” MASVN suggested. According to the report, economic
recovery in the post-pandemic period, the Russia-Ukraine conflict, and
inflation would remain three major factors to impact Vietnam’s F&B in
2022. In this regard, while the recovery
would have positive impacts on the majority of businesses, inflation and
rising prices of input materials, however, are putting huge pressure on their
operations. Source:
VNA/SGT/VOV/VNS/SGGP/VIR/Hanoitimes |
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