BUSINESS NEWS 20/8
Vietnam imports US$6.6 billion in textile-garment materials in H1
Though the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been in force for a while, Vietnam has not made much use of the free trade agreement and imported US$6.7 billion worth of materials in the first half of the year.
One central issue to benefit from the deal is finding ways to meet the yarn forward rule of origin, said Truong Van Cam, general secretary of the Vietnam Textile and Apparel Association (VITAS).
The textile and garment industry imported US$12.7 billion worth of fabric last year and some US$6.7 billion in January-June of this year. As VITAS data showed, materials are mainly imported from non-members of the free trade agreements Vietnam has signed, with 55% from China, 20% from South Korea, 16% from Taiwan and 5% from Japan
The CPTPP, which took effect last January, and the EU-Vietnam Free Trade Agreement (EVFTA), which was signed last June, are expected to allow Vietnamese products to approach a market with a billion consumers, which makes up around 40% of global gross domestic product.
Peru, Mexico and Canada are among the CPTPP countries that have no free trade agreements with Vietnam. Given this, Vietnam’s textile and garment exports to Canada have brought US$700-800 million, only trailing Japan.
These two agreements feature fast and deep tax cuts. Vietnam’s textile and garment products are currently taxed 9.6% on average when exported to the European Union. The duties for exports to the CPTPP bloc are varied and depend on the market: 17% to Peru and 20%-35% to Mexico. Both trade deals will soon contribute to cutting tariffs to zero.
Almost all textile and garment products will not be subject to tariffs. The European Union has created a road map for rapid tariff cuts, where over 85% of tariff lines will be cut instantly to 0% and almost 100% of tariff lines will be cut seven years later.
As for the CPTPP, the tax cut road map is longer, reaching up to 16 years in certain markets such as Mexico and Peru as these markets have production and export structures similar to those in Vietnam.
Opportunities will remain undertapped if Vietnam fails to resolve the yarn-forward issue. Clothing brands have their own supply chains, whereas domestic firms have not been able to deeply integrate with these chains and have mainly focused on outsourcing, a stage with the lowest added value of the entire chain. The problems dogging the yarn-forward rule of origin are not easy to resolve, especially if brands keep using materials from partners outside the CPTPP and EVFTA.
Materials from Vietnam are usually 10% higher priced than similar materials from China, noted Ron Dutta of Garan Incorporated, a company with 10 years of operations in Vietnam. He added that Vietnam’s material sources are limited to mostly cotton, and local labor costs are no longer cheap.
China, the supplier of more than half of the materials used by Vietnam, produces materials on a large scale, hence its competitive prices. However, China is not a party to either of the two new-generation trade deals that Vietnam has signed. Vietnam and China are now only members of the ASEAN-China Free Trade Agreement, which became valid in 2010, and the Regional Comprehensive Economic Partnership, which is under negotiation.
According to the VITAS representative, the benefits of the CPTPP and the EVFTA are expected to convince brands to seek local suppliers instead of foreign ones. If the yarn-forward rule is not met, Vietnam’s products will be taxed up to 25%.
However, support from the authorities is essential. The Ministry of Industry and Trade is formulating a textile and garment development strategy, which is expected to be issued this year. If the strategy is approved, large industrial parks will be developed to attract projects to solve the problems of the industry.
“We have high hopes for this strategy,” Cam said.
VITAS hopes that once the textile and garment industrial parks, measuring 400-500 hectares, are built, they will attract projects for fiber, weaving and dyeing. Each industrial park can provide at least one billion meters of fabric per year.
Nonetheless, the construction of industrial parks designated for textile and garment projects to solve environment-related problems is not an easy task in the context of limited land resources.
HCM City resumes property project at prime site
HCMC’s authorities have asked the relevant agencies to resume a realty project to build a complex comprising offices, trade and service facilities, condos and a 6-star hotel, to be conveniently located in the heart of District 1.
According to the municipal office, the city government has required the administering agencies to guide the investor on completing applications for project approval, land use rights, officetel function adjustments and other procedures.
According to Nguoi Lao Dong Online newspaper, the project is located on the Ben Thanh Quadrangle, an 8,600-square-meter area bordered by the streets of Le Thi Hong Gam, Calmette, Pham Ngu Lao and Pho Duc Chinh in District 1's Nguyen Thai Binh Ward. It is surrounded by many iconic landmarks of the city such as Ben Thanh Market, the Fine Arts Museum and September 23 Park.
In 2013, Bitexco Group won approval from the local government to develop the project, with one building designed to have 46-55 stories (including six underground floors) with a maximum of 420 apartments. Construction was expected to run from 2012 to 2017, but only the basement has been completed so far.
In May 2016, the city approved the land price for the project at over VND1.4 trillion. The compensation for the land in the quadrangle was more than VND1.2 trillion, using funds from Bitexco.
In July 2018, Bitexco signed a fund contribution deal with Saigon Glory Co., Ltd, for capital of VND7 trillion, comprising land use rights value of VND4.2 trillion and assets worth VND2.8 trillion. Under the contract, Saigon Glory has become the owner of the Ben Thanh Quadrangle.
At the end of 2018, the HCMC Department of Construction suggested the city government recognize Saigon Glory as the investor for the project. Construction is slated for completion in 2021, instead of 2017.
BIM Group develops water park on Phu Quoc
Vietnamese property developer BIM Group on August 12 signed a technical service agreement with Samsung C&T to develop Phu Quoc Marina Water Park, the first and only international standard water park on Phu Quoc, Vietnam’s largest island.
Phu Quoc Island is becoming one of the hottest holiday spots in Vietnam over recent years as authorities have pressed ahead ambitious plans to develop it into an international hub for eco-tourism, resort tourism and amusement.
BIM Group and Samsung C&T Resort will develop the water park in phases over a site of approximately 13 hectares.
This promises visitors a completely unique paradise where they can experience a host of dining and entertainment options, plus dynamic, fun rides for the whole family.
Being an essential part of BIM Group’s Phu Quoc Marina - a 155-hectare hospitality and entertainment complex, the water park is surrounded by a series of luxury hotels such as the Intercontinental Phu Quoc Long Beach Resort, Regent Phu Quoc, vacation residential and a waterfront retail precinct.
“We are thrilled to be working alongside Samsung team on this exciting project which is scheduled to open by the third quarter of 2021. Phu Quoc Marina Water Park emphasizes on integration, immersion and landscape in order to create a family-oriented and holistic theme park that will be able to accommodate more than 450,000 guests per year,” said Doan Quoc Huy, vice chairman of BIM Group.
Byungsuk Jeong, executive vice president of Samsung C&T, said: “It is such an honor to offer our services and share operational expertise with BIM's Phu Quoc Marina Water Park. It is our new venture in Vietnamese market. We believe Phu Quoc has great potential to lead Vietnamese tourism and we are glad to be part of its growth.”
HCM city lures over 3.6 billion USD of FDI in 7 months
As much as 3.63 billion USD of foreign direct investment (FDI) capital was poured into Ho Chi Minh City in the first seven months of this year, an annual rise of 15.2 percent, according to the municipal People’s Committee.
Of the amount, nearly 688.8 million USD came from 678 newly registered projects, up 26.9 percent in the capital and 18.3 percent in the number of projects year-on-year.
In the period, 2,668 foreign investors bought shares and acquired stakes of domestic enterprises with a total registered capital of 2.6 billion USD, 28.3 percent and 16.7 percent higher than those in the same period last year.
Meanwhile, HCM City granted business licences to 24,529 new domestic enterprises worth over 396 trillion VND (over 17 billion USD), up 0.9 percent and 25.7 percent respectively.
Up to 71,874 existing enterprises were allowed to add a combined of over 160.4 trillion VND (over 6.9 billion USD) to their investment, up 2.2 percent and 63 percent respectively.
The municipal People’s Committee said trade and investment promotion activities have contributed to accelerating economic restructuring of the city and promoting export of high value-added processed products.
These have also helped increase confidence of investors in the city’s investment and business environment.
To further expand the development of domestic and FDI enterprises, municipal authorities will continue to pay attention to simplifying administrative procedures and removing difficulties facing enterprises related to investment, thus facilitating their production and business in the locality.
Trade promotion activities and conferences will be arranged to enhance dialogues with enterprises, towards promoting cooperation between domestic and foreign investors.
HCM City’s investment stimulus programme yields solid results
It has been a remarkable transformation for Ho Chi Minh City’s People's Hospital 115 which recently became the first medical facility in the country to successfully carry out a robotically-assisted brain tumour surgery.
Thirty years ago, its only piece of equipment had been an x-ray machine.
It currently gets 3,000 to 4,000 patients a day and provides emergency aid to over 400 of others, and was one of the city's first stroke treatment centres, said Dr Phan Van Bau, the hospital’s director.
An investment stimulus programme carried out by the city had enabled the hospital to acquire the most advanced technologies and equipment with loans under the programme, he said.
Tien Tuan Pharmaceutical Machinery Co. Ltd was another to benefit from the programme.
A company spokesperson said it had got an interest-free loan of 45 billion VND (1.93 million USD) for building a factory and buying advanced equipment to expand production.
This enabled it to expand from having 40 workers and revenues of 40 billion VND (1.72 million USD) a year to 200 employees and revenues of nearly 200 billion VND (8.6 million USD), he said.
It is awaiting approval to invest in high-tech metalworking equipment using a loan of 10.5 billion VND (451,800 USD) with interest fully subsidised.
In 2015, the municipal People’s Committee had begun the programme, with technology, manufacturing, supporting industry, trading, agricultural, healthcare, education and training, culture and sports, infrastructure, and environment companies receiving 50-100 percent interest rate subsidies on loans of up to 100 billion VND (4.3 million USD).
Speaking at a recent meeting held by the municipal People’s Committee to review the programme, delegates said it had significantly stimulated investment in certain sectors, helping shift the city’s economic structure in the right direction and improving its competitiveness.
Tran Anh Tuan, Deputy Director of the Department of Planning and Investment, said so far 281 projects costing 23.78 trillion VND (1.02 billion USD) had received loans of 11.2 trillion VND (483.02 million USD).
Thanks to the subsidised loans, enterprises had boldly invested in new production technologies and equipment, he said.
Reviewing the impact of the programme on the city’s supporting industries, Nguyen Phuong Dong, Deputy Director of the Department of Industry and Trade, said the programme had encouraged businesses to invest in sectors targeted by the city such as mechanical engineering, chemicals, plastic, rubber, food and foodstuff, electronics, IT, textiles, and footwear.
However, delegates at the meeting complained about complicated procedures enterprises have to complete to benefit from the programme. This loses them market opportunities, making them hesitant about participating in the programme.
Nguyen Thanh Phong, Chairman of the HCM City People’s Committee, said the investment stimulus programme, unique in the country, had achieved positive results.
He instructed officials involved in the programme to review and simplify procedures and reduce the time it takes to appraise applications from businesses.
The Chairman also instructed the Department of Planning and Investment to advise the city on adding and removing sectors based on the situation on the ground.
The city planned to double the loan amount to 200 billion VND for a project, he said.
Phong ordered relevant agencies and business groups to propagate information about the programme to enable more businesses to benefit.
Binh Duong stays strong in investment attraction
The southern industrial hub of Binh Duong has not only been among leading localities in foreign direct investment (FDI) attraction but also an attractive destination for domestic investors.
According to the provincial People’s Committee, so far, Binh Duong has lured more than 3,600 FDI projects worth nearly 34 billion USD, ranking third among localities nationwide in the field after Hanoi and HCM City.
In the first seven months of this year, the province attracted over 1.1 billion USD of FDI, up 46 percent year on year.
Meanwhile, in July this year, the province saw the establishment of 304 new firms with combined capital of 1.3 trillion VND (55.9 million USD). In the month, 31 operating companies poured additional 623 billion VND (27.2 million USD) into their business.
In the first seven months of 2019, 21.6 trillion VND (928.8 million USD) was invested in 3,476 new enterprises, up 14.3 percent and 16.5 percent respectively.
So far, Binh Duong has hosted more than 39,800 domestically-funded projects worth nearly 334 trillion VND (14.36 billion USD).
Mai Hung Dung, Vice Chairman of the Binh Duong People’s Committee, the growth speed of domestic firms in the province was at a high 18.7 percent in 2018.
Each year, the province sees the formation of about 6,000 new companies, he noted, adding that in late 2020, the province expects to host 50,000 domestic businesses.
Meanwhile, Pham Van Xo, President of the Binh Duong Import-Export Association, said that the province has shown strong performance in supporting businesses. So far, policies of the province have become more open and smooth, ensuring favourable conditions for local firms to enhance their competitiveness, he said.
Fertiliser, chemicals corporation wins three prestigious titles
PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo) has won three prestigious titles voted by investors and press.
PVFCCo was honoured by Forbes Vietnam Magazine as one of the top 50 best listed companies in Vietnam in 2019.
This is the fifth time PVFCCo has entered the list and it is the only firm in the agricultural support industry included in the rankings.
PVFCCo was also evaluated by Forbes as one of the 50 leading brands in Vietnam.
In addition, the company was named among the top three listed companies in the mid-cap group (stocks of medium-sized enterprises) which have the most popular investor relations (IR) activities in 2019 voted by the investor community at the financial information portal of Vietstock.
Vietjet named in Forbes’ top 50 listed Vietnamese companies.
Low-cost carrier Vietjet Aviation Joint Stock Company (HOSE code VJC) was named among Vietnam’s 50 best listed companies in 2019 by Forbes Magazine during an award ceremony in Ho Chi Minh City on August 15.
This year's list also including other leading companies on the HCM Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) such as dairy firm Vinamilk, beer maker Sabeco, IT giant FPT Corp, DHG Pharmaceutical, insurance-finance group Bao Viet, digital retailer Mobile World and realty developer Vingroup.
Honoured companies this year were rated on the basis of compound annual growth, profit, return on equity, earnings per share growth between 2013 and 2018, branding, quality of corporate management, source of profit and the prospect of sustainable development.
According to Forbes, the total capitalisation of the 50 companies reached 94 billion USD, accounting for 63 percent of the total market capitalisation on the two bourses.
Vietjet has been recognised for the third consecutive year since its official listing on HOSE in February 2017. VJC shares quickly attracted investors’ attention and the company was added to the VN30 basket for the 30 largest listed firms in its first year of trading.
Vietjet’s revenue from air transport saw a yearly increase of 22 percent to more than 20.14 trillion VND (865 million USD) in the first half of this year. The company also saw a year-on-year rise of 16 percent in its six month pre-tax profit to more than 1.56 trillion VND (67 million USD).
From January to June, Vietjet operated more than 68,820 flights, equivalent to 45 percent of all flights operated by Vietnamese carriers, and transported 13.5 million passengers. These figures helped the airline maintain its leading position in domestic air transportation with a 44 percent market share.
Lang Son promotes local Chi Lang custard-apple in Hanoi
The northern province of Lang Son is promoting its specialities, especially Chi Lang custard-apple, at an event at the Trade Promotion Centre of Agriculture in Hanoi.
Custard-apple is a fruit of high economic value in the province, helping people in Chi Lang district earn billions of VND every year. In 2011, the fruit was officially awarded the certificate of product registration.
Director of the Trade Promotion Centre of Agriculture Dao Van Ho said the promotion programme was designed to connect help consumers in Hanoi identify the brand and distinguish Chi Lang custard-apple from similar products on the market.
“This is also an opportunity for cooperatives and production facilities in Lang Son to access markets in other localities, conduct direct transactions and set up links with purchasing, wholesale and export enterprises,” Ho said.
Vice Chairman of Lang Son provincial People’s Committee Ho Tien Thieu said many products of the province have been sold in supermarkets and major cities across the country. To achieve this result, local farmers have paid attention to the production chain including seedlings, production process, harvest and processing with the participation of cooperatives and businesses.
“Vietnam’s agricultural products are mainly exported to China. However, there are still many types of fruits not yet in the list exported to China, such as Chi Lang custard-apple,” Thieu said.
He added that Lang Son province hopes the ministries of Agriculture and Rural Development and Industry and Trade will speed up negotiations with authorised agencies of China to accept Lang Son specialties such as custard-apple and black agar, contributing to raising the agricultural products’ value and increasing farmers’ income.
With the scale of 100 booths, the event has gathered many representatives of co-operatives and gardeners of Lang Son province.
Alongside the promotion week for Chi Lang custard apple, a fair of safe farm produce is being held to market other specialties from other localities, including Hung Yen longan, Van Yen cinnamon, Hai Hau rice, Tan Cuong tea, vegetable and fruits of Moc Chau in the northern mountain province of Hoa Binh and Phu Quoc fish sauce.
Conference seeks measures to attract more foreign visitors
Experts gathered at a conference held in the central city of Da Nang by the Vietnam National Administration of Tourism (VNAT) and the municipal People’s Committee on August 16, discussing measures to lure more foreign visitors to the Southeast Asian country.
Discussions at the event channeled focus on tourism promotion in key markets, and developing tourism stimulus packages based on support of airlines and service providers.
The participants laid stress on the necessity to boost collaboration with the country’s tourism source markets, and enhance regional connectivity through working closely with tourism authorities of regional nations. They also spoke highly the role of cooperation with domestic and foreign organisations and individuals to popularise Vietnamese tourism.
In the meantime, local authorities must pay heed to ensuring security, food hygiene and safety, clean environment at tourist spots, they highlighted.
Since the outset of the year, Vietnam welcomed nearly 10 million foreign tourists, up 8 percent from the same time last year. However, the growth of foreign tourist arrivals has shown stagnant signs as the number of tourists from traditional markets like China and the Republic of Korea went down due to economic situation.
Vietnam has set target to host 17.7-18 million foreigners this year.
On the occasion, the VNAT launched a campaign to protect the tourism environment with the theme of “Go Green”.
Investors pledge billions of USD at conference in Vinh Long
Investors both domestic and foreign pledged to pour nearly 47 trillion VND (over 2 billion USD) and 117 million USD in the Mekong Delta province of Vinh Long at the province’s investment promotion conference on August 15.
Speaking at the event, Deputy Minister of Investment and Planning Vo Thanh Thong said Vinh Long has favourable geographical and natural conditions and a stable business climate. The province has the second largest area of fruit farms in the delta and the fourth biggest nationwide, which provides great potential for gardening tourism.
He recommended the province focus on developing manufacturing industry and processing in connection with agriculture, thus luring quality investments in the local high-tech, logistics, tourism, services, finance, and energy, among others.
He advised the provincial authorities to build a local trademark, seek strategic investors, create clean land fund, and work with related ministries and agencies to facilitate enterprises in following administrative procedures.
Updated information on local value and supply chains, land and human resources conditions, as well as investment attraction policies are key to making the province appeal to investors amid fierce competition for investment among localities, Thong stressed.
At the conference, Vinh Long issued a list of 46 projects in six fields to call for total investment of over 32 trillion VND (1.37 billion USD) during 2019-2020.
Tran Van Ron, Secretary of the provincial Party Committee, said the province drafts the list based on local conditions, project feasibility, and new investment trends.
Forbes business forum confers Vietnam navigating digital age
Business leaders and economic experts discussed how an open economy like Vietnam should deal with risks and impacts in the wake of international economic and technological upheavals at a business forum themed “Navigating the digital age” held by Forbes Vietnam in HCM City on August 15.
For years, Vietnam’s economic growth has been driven by exports and investment. The Asian Development Bank (ADB) estimates the economy will grow 6.8 percent in 2019, the highest growth rate in the region. The first half of the year has seen a good business environment with stable interest and exchange rates, inflation under control while industry and service sectors are steadily growing.
Meanwhile, US-China trade tensions are causing uncertainties for the global economy. The confrontation between the world’s two largest economies, which are also Vietnam’s major economic partners, has great impacted the country’s trade, investment and monetary policies.
It is inevitable for an open economy like Vietnam to suffer from the impacts of current global economic uncertainties, said Dr. Chua Hak Bin, Senior Economist at Maybank Kim Eng. Vietnam’s exports to the US have increased 30 percent over the past several years, bringing the country more opportunities to boost exports and climb the global supply chain, he noted.
Vietnam ranked second among Southeast Asian countries in foreign direct investment (FDI) attraction, after Singapore, and FDI flows into the country were quite diverse, stable and barely dependent on any economy, the economist added.
He advised Vietnam to adopt preferential policies to lure FDI from more countries and in manufacturing and that the country should be prepared to make the most use of FDI shifts from other countries to Vietnam that are making changes in labour costs, taxation and land.
Tran Dinh Thien, member of the National Financial and Monetary Policy Advisory Council, said Vietnam has signed new-generation free trade agreements with major partners, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU – Vietnam Free Trade Agreement (EVFTA); which ensure the country’s reform commitments, and thus making the country a more attractive destination in the global market.
Thien said Vietnam's economy has grown well throughout the last three years, not just the first half of 2019.
He underlined the need for Vietnam to promote a digital economy, saying if the country fails to enter the digital economy, it may be excluded from the global market. Digital transformation is key to lifting Vietnam’s position in the world’s free trade market, he noted.
Vietnam’s per capita income and labour productivity remains relatively low, founder, Chairman and CEO of TBS Group Nguyen Duc Thuan said. To sustainably develop the economy with improved competitiveness, the country should deploy digital-based management, enhance productivity and help firms develop digital databases and apply digital technology, Thuan said.
A recent study by the Institute for Global Leadership under the US-based Tufts University showed Vietnam ranks 48th out of 60 countries globally in terms of rapidly switching to the digital economy. The readiness of the Vietnamese market is fairly high so not only businesses but also consumers will face few barriers to participating in digital transformation. In other words, Vietnam has been accelerating digital transformation not only by increasing awareness but also by adopting new business models.
Most banks in Vietnam now have a mobile banking system that gives customers no choice but giving up their old banking habits and catch up with the digitalisation, Joan Ziegler, CEO of Sequent, Inc said.
The digitalisation has changed the way a business interact with its customers and partners and at the same time, shifted values from producers and suppliers to customers, said Partner of McKinsey & Company Bruce Delteil, adding that to solve challenges to the digital transformation, a business leader need to sit down with his human resources team to create a culture of innovation in his company, and with that culture, the company will select a proper strategy for digital transformation based on existing personnel or outsourcing partners.
Cashew industry seeks way out of current troubles
The Viet Nam Cashew Association (Vinacas) held a conference to review the industry’s performance in the first seven months and identify solutions to the problems plaguing it.
Pham Van Cong, chairman of Vinacas, said the industry has been facing a lot of difficulties since last year.
This year, it exported nearly 245,000 tonnes, an increase of 10.8 per cent year-on-year, but with global prices down by an average of nearly 22 per cent, revenues were down 14 per cent at US$1.8 billion, he said.
Truong Sy Ba, CEO of Tan Long Group, a large agricultural enterprise, said domestic supply only meets 20 per cent of the industry’s raw cashew demand and the rest has to be imported.
Last month, his company bought 215,000 tonnes from three African countries, including 176,000 tonnes from Tanzania, and this is expected to ease the concern about a shortage of raw materials this year, he said.
According to Vinacas experts, raw cashew prices and demand are expected to increase in the fourth quarter of this year, especially in the US.
Vinacas sought the Ministry of Trade and Industry’s support for companies to acquire machinery, equipment, technologies and facilities to improve productivity and ensure food safety and quality.
It also urged the ministry to continue with its Cashew of Viet Nam programme to provide market information and packaging design.
It wanted the Ministry of Agriculture and Rural Development to support a programme to review and develop cashew-growing areas in neighbouring countries such as Cambodia and Laos to take advantage of their land resources to create a sustainable source of raw materials for the industry.
Viet Nam needs skilled workers for digital transformation
To transition from a natural resources-based labour intensive economy to a knowledge-based economy, VIet Nam should acquire a high-skilled workforce that can navigate the digital transformation, experts have said.
Speaking at an economic forum in the city on Thursday, Dr Tran Dinh Thien, member of the National Monetary and Financial Policy Advisory Council, said Viet Nam as an open economy should prepare to deal with the risks and impacts of the international economic and technological upheaval.
Its economy had been growing based on two pillars, exports and investment, he said.
It had maintained strong growth over the past three years, especially in the first half of this year, due to the Government’s ongoing efforts to reform policies, he said.
Viet Nam was committed to reform and becoming an attractive destination after signing new-generation free trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU- Viet Nam Free Trade Agreement (EVFTA), he said.
“Digital transformation is considered one of the opportunities for a country to integrate.”
The US-China trade war was causing uncertainty in the global economy, with the confrontation between the world’s two largest economies having negative implications for trade, investment and monetary policy, experts said.
Delegates said Viet Nam should prepare for all kinds of risks and impacts from the trade war to capitalise on the opportunity brought about by the digital economy.
Risks and challenges must be identified during the digital transformation era to ensure Viet Nam continues to grow and become prosperous, they said.
Dr Chua Hak Bin, senior economist at Maybank Kim Eng, said impacts were “inevitable” especially since Viet Nam was an open economy.
The country’s exports to the US had increased by more than 30 per cent in recent years, indicating opportunities for participation in global supply chains, he said.
As for FDI inflows, Viet Nam had become the most attractive market in Southeast Asia after only Singapore, he said.
Besides, the FDI coming to the country was diverse, stable and not dependent on any single source, he said.
Viet Nam should continue to offer incentives to promote FDI into production activities, he said.
Nguyen Duc Thuan, founder and general director of TBS Group, said Viet Nam’s average income and labour productivity remained low, forcing the country to enhance digital governance and labour productivity to improve its competitiveness.
The Government should support businesses with building digital databases and adopt digital technologies, he said.
A study by Tufts University in the US ranked Viet Nam 48th out of 60 countries in adoption of digital transformation.
The technological revolution had been disrupting many of the conventional industries, enabling breakthroughs for companies, which promptly switch business strategies and approaches to the market, he said.
Dr Nguyen An Nguyen, CEO and founder of Trusting Social, said the digital economy gave businesses access to large databases, and so how to take advantage of the digital economy held the key to businesses’ success.
“Digital transformation requires businesses to change business models and develop new markets.”
Bruce Delteil, partner, McKinsey& Company, said strategic planning was vital and business leaders needed to work with their human resources teams to usher in a creative culture in the company.
At the event, Forbes Viet Nam honoured the 50 best listed companies for the seventh year.
Business leaders shared their insights and strategies on developing human resources to grow sustainable businesses.
The Asian Development Bank estimates Viet Nam’s economy will grow by 6.8 per cent this year, the highest rate in the region.
The first half of the year has seen a favourable business environment with steady interest and exchange rates, low inflation and steady growth of the industrial and service sectors.
In recent years the online platform economy has created disruptions in transportation, accommodation, tourism, and finance.
More than 500 leading business executives and economists took part in the business forum titled “Navigating the Digital Age”, which was organised by Forbes Viet Nam.
Int’l accounting rules pave way for investment
Vietnamese firms should adopt International Financial Reporting Standards (IFRS) instead of current Vietnamese accounting standards (VAS) if they want to enhance transparency and become more attractive to investors.
The statement was made by Trinh Duc Vinh, Deputy Director of the Accounting and Auditing Management Supervision Department of the Ministry of Finance in a seminar held in Ha Noi yesterday.
“Viet Nam's financial market in general and the securities market in particular are changing drastically, attracting more and more foreign investors who seek business opportunities. The switch to international accounting standards is essential to improve companies' transparency, thereby maintaining the competitiveness,” Vinh said.
The application of IFRS would bring benefits to enterprises as the quality of their financial statements would improve, while accountability and comparability would also be enhanced, Vinh said.
Under the draft IFRS roadmap released by the Ministry of Finance in April, IFRS implementation will become compulsory for the consolidated financial statements of all State-owned enterprises, listed companies and large-scale unlisted public companies after 2025.
From 2019 to 2021, the Ministry of Finance will perform preparation work, including translating IFRS from English into Vietnamese and disseminating them so local firms can understand them.
However, according to the ministry, it would be very difficult to translate technical terms accurately, meaning disputes between businesses and the auditing and inspection agencies would be complicated by the language barrier.
During 2022-2025, the ministry will select some firms to implement IFRS. All other businesses that wish to apply IFRS and find the application is possible will be encouraged to do so.
The preparation time for applying IFRS may vary from business to business, depending on many factors such as professional qualification, management system and industry characteristics.
According to auditor PricewaterhouseCoopers (PwC), enterprises need to prepare before the official application of IFRS for at least 2-3 years.
The first phase of transition would become a big challenge for firms if they underestimate the requirements and impacts of the transition, PwC told news website tinnhanhchungkhoan.vn.
IFRS standards require complex techniques and accurate assessments such as making estimates of fair value, real interest and losses.
Netflix partners with WEF to enhance digital creative skills in ASEAN
Netflix on Friday signed a partnership deal with the World Economic Forum’s (WEF) Digital ASEAN working group to help people and governments in Southeast Asia develop creative and digital skills useful in the context of the Fourth Industrial Revolution.
The pledge is part of WEF’s ASEAN Digital Skills Vision 2020 programme, a public-private project involving a coalition of organisations that seeks to train up 20 million workers in digital skills by the end of next year.
“We are partnering with Southeast Asian governments and industry players to support the development of digital creative skills needed in a fast-developing internet entertainment landscape," said Yu-Chuang Kuek, Managing Director of Netflix Asia-Pacific.
"We believe having the necessary skills for the creative industry, being equipped for online safety and digital literacy as well as understanding the principles for an agile governance framework will be integral to the success of initiatives like the ASEAN Connectivity Master Plan."
“Key public-private partnerships like this play a vital role in ensuring societies and governments across the region are equipped with the necessary skills and not left behind in the wake of this technological revolution," said Justin Wood, Head of Asia Pacific and Member of the Executive Committee at the World Economic Forum.
"This programme is delivering a significant impact. In its first eight months, the initiative has already secured commitments to train 8.9 million workers at SMEs, as well as to provide 30,000 internships."
As part of the agreement, Netflix will start rolling out initiatives focused on three broad areas: creative Industry 4.0 Skills Development, Online Safety and Digital Literacy and Agile Governance 4.0.
Netflix will work with various partners to hold workshops and training courses, which will initially be held throughout the next six months in Indonesia, Malaysia, the Philippines, Thailand and Viet Nam, with more under consideration for the future.
The initiative gained further urgency when a recent WEF-commissioned survey of 56,000 ASEAN youths found that 52 per cent believed they needed to constantly upgrade their skills to succeed in a changing job market. On top of that, they ranked “creativity and innovation” as the most important skill for their future.
Vietnam seeks to boost tourism with neighboring countries
The Vietnam National Administration of Tourism (VNAT) on August 14 organized a conference in the Mekong Delta city of Can Tho to discuss cooperation to promote the southern tourism corridor with representatives from Thailand, Myanmar and Cambodia.
The southern tourism corridor plays a key role in the Greater Mekong Subregion (GMS) and is one of eleven major tourist routes in the GMS, Ha Van Sieu, deputy head of VNAT, said while presiding over the conference.
Since 2015, the four countries having 13 provinces located in the southern tourism corridor have joined forces to develop and promote tourism products, as well as propose relevant agencies to facilitate transforming the transport corridor into the tourism corridor, he said.
Addressing the event, Duong Tan Hien, vice chairman of Can Tho City, said that the city is one of the four Vietnamese localities, including Ba Ria-Vung Tau, Kien Giang, HCMC, in the southern key economic region that has taken part in the southern tourism corridor.
Besides this, Can Tho is home to many attractive destinations in the Mekong Delta such as Ninh Kieu Wharf, Cai Rang floating market, and many other historic-cultural sites. Moreover, the city’s tourism infrastructure facilities have been increasingly improved with a wide selection of four-to-five-star hotels and resorts meeting demand of tourists at home and abroad, the vice chairman added.
The representatives of the four countries at the conference also reviewed their cooperation activities, were briefed on new measures to boost the regional tourism growth, and discussed further collaboration plans for the years to come.
In particular, VNAT and the Can Tho Travel Association highlighted the upcoming event, Vietnam International Travel Mart (VITM) Can Tho 2019, due to kick off in the city from November 29 to December 1. Vietnam has invited the three neighboring countries to attend the event to bolster travel cooperation among the four GMS nations.
Nattakorn Asunee Na Ayudhuya, from Mekong Tourism Coordination Office (MTCO) located in Thailand, called on the four countries to promote tourism products on the online platform of MTCO that has gained over 22 million users globally, saying that this will be an effective way to encourage tourism growth.
Data from MTCO show that the four countries of the southern tourism corridor last year generated over US$96 billion in tourism revenues, with the number of international visitors exceeding 60 million arrivals, up 10% against the figure seen in 2017.
Tax exemptions proposed for assemblers of green autos
The Ministry of Finance has proposed exempting taxes for domestic automobile firms that import parts to assemble vehicles running on clean fuels.
These policies, included in draft amendments to the Government's Decree 125/2017/ND-CP, are offered for enterprises producing electric automobiles, cars running on bio-fuels and natural gas and hybrid automobiles, Thanh Nien Online newspaper reported.
According to Decree 125, importers of automobile parts will be entitled to tax exemptions if they meet requirements on the minimum volume.
At present, no local firms have manufactured these kinds of automobiles. Only VinFast has plans to annually assemble 500 electric buses from 2020. However, it cannot meet requirements on volume in the initial stage.
Therefore, the amended decree will not require local manufacturers and assemblers of automobiles running on clean fuels to meet these requirements in the initial stage.
According to the Ministry of Finance, Vietnam has committed to gradually exempting the import tariffs on completely-built-up (CBU) cars for seven to nine years, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The country has also signed the European Union-Vietnam Free Trade Agreement, pledging to gradually cut tariffs on CBU automobiles imported from the European Union over the next nine to 10 years.
CBU automobile imports from other ASEAN markets are now entitled to import tax exemptions in Vietnam. Thus, the local market may be opened to large automobile firms from the ASEAN, Japan, Mexico and the European Union.
Last year, the volume of imported CBU automobiles declined due to the strict requirements in Government Decree 116 on automobile manufacture, assembly, imports, maintenance and warranty services. However, many local automobile firms have met these requirements, so the volume of imported CBU vehicles surged in the first half of this year.
The situation may put local carmakers at risk. Therefore, the Ministry of Finance has proposed incentives to encourage them to produce and assemble green automobiles.
Sandbox needed for developing sharing economy
The sandbox, a testing mechanism for new technologies, plays a vital role in promoting the sharing economy, according to the Prime Minister’s decision approving the sharing economy development scheme.
The decision will contribute to encouraging innovation and digitization, while developing the digital economy.
A notable point of the decision is the implementation of the sandbox, which allows the testing and piloting of new technologies in the process of developing the sharing economy.
The sharing economy development scheme also contains suggestions for sharing economic management on the governmental level to make use of the advantages of the sharing economy and cope with its weaknesses.
According to the Central Institute for Economic Management under the Ministry of Planning and Investment, the scheme will clarify the essence of the sharing economy, identify sharing economic activities, and analyze the sharing economy situation in Vietnam.
There have been several sharing economy platforms in Vietnam, such as ride-hailing services Grab and dichung, and room sharing service Airbnb. Sharing economy services have also appeared in other sectors, such as travel (Triip.me), digital repair (Rada), and finance (huydong.com).
Some experts have noted that to develop and make full use of such services, they must be tested to ensure their efficiency and suitability.
In the case of GrabCar, the service was tested in five provinces for two years, from January 2016 to January 2018, before being officially put into operation.
Additionally, there should be a fair environment for both the sharing economy and traditional business, and regulations that constrain both traditional business and the sharing economy need to be aborted.
Public investment disbursement slow in southern region
The disbursement of public investments in the Mekong Delta and Southeast regions remains slow, whereas the demand for capital in public projects in the two regions by 2020 is huge.
Speaking at a conference in Vinh Long Province today, August 14, Tran Duy Dong, head of the Department for Local and Regional Economy at the Ministry of Planning and Investment, said that more than VND73 trillion, or 99.63% of the total public capital approved by the National Assembly (NA), has been disbursed for the Southeast region.
As for the Mekong Delta, Dong said that the Government has set aside VND46 trillion plus, or 98.08% of the total.
The disbursement rate for public investment projects had been 38.56% in the Mekong Delta region in the year through July 30, higher than the country’s average of 36.11%.
“The Southeast region had the lowest disbursement rate among the country’s six regions, at 25.35%,” Dong said.
The highest disbursement rate in some of the two regions' provinces and cities was reported at only 40%, Dong said, adding, “This pressing problem should be handled as soon as possible.”
Dong attributed such slow disbursements to the fact that some localities have yet to adjust investment decisions, in line with the NA Standing Committee’s Announcement 102.
Additionally, the reason for the slow disbursement was because approval and signing procedures for official development assistance (ODA) capital have yet to be completed.
Despite the slow disbursement, the need for funding in the two regions in 2020 has greatly increased.
The report, made by the Ministry of Planning and Investment, indicated that the Southeast region needs VND91.76 trillion for public investments in 2020, 23.3% higher than the figure approved in 2019.
Of the total, the region’s budget has VND68.5 trillion, up 10.3% against 2019, ODA capital amounts to VND10.7 trillion, a five-fold increase against the 2019 plan, the funding from Government bond sales is over VND7.1 trillion, and capital from supporting programs is VND5 trillion, which is double the 2019 figure.
In its 2020 plan, the Mekong Delta needs a total of VND80.5 trillion for development projects, soaring by 44%, compared with the allocation in 2019.
Addressing the conference, entitled “Building a plan for the socioeconomic development and public investment in 2020 in the Southeast and Mekong Delta regions,” Ben Tre Chairman Cao Van Trong made a proposal related to the budget allocation to localities that the Ministry of Planning and Investment should keep part of the budgets to invest for the development of the entire region.