BUSINESS NEWS HEADLINES MAY 30
Vietnam at advantage in economic recovery post-COVID-19: Former Deputy PM
With success in containing the spread of COVID-19, Vietnam now holds advantages in economic recovery, according to former Deputy Prime Minister Vu Khoan.
He wrote in a recent article that however, there are many unforeseeable factors in the world’s situation that can affect Vietnam.
Vietnam is building and on the verge of adopting socioeconomic development plans for 2021-2025 and 2021-2030 and vision towards 2045 in the “new normal situation”, he said.
He recalled the regional crisis in 1997, when Vietnam was implementing its 1991-2000 socioeconomic development strategy, the global financial crisis in 2008, during its 2001-2010 strategy, and this pandemic, just as the 2011-2020 plan is coming to an end.
The less-than-expected annual GDP growth in the ten-year strategies is mostly attributable to unexpected crises, Khoan said, adding that what will happen over the next five, ten, or 25 years is simply unpredictable.
Citing the five epidemics, including COVID-19, that have appeared in the first two decades of the 21st century, the former Deputy PM suggested adopting flexible mid-and long-term plans.
He also proposed Vietnam include “safe development” in its strategy for the post-COVID-19 period, in addition to sustainable development, with more attention paid to sectors relating to healthcare, such as bio-technology, bacteriology, preventive medicine, and the research, production and reserve of vaccine as well as medicines and medical equipment.
The former Deputy PM reiterated the value of time-honoured guiding viewpoints on the importance of internal strength and the need to develop the domestic market, support industry, along with diversifying foreign markets and international supply chains.
He highlighted a new opportunity for the country when Vietnam is considered among priority destinations as investors move their production to Southeast Asia, adding that the Politburo’s Resolution No. 50/NQ-TQ on foreign investment orientations issued in 2019 is the lodestar for the utilisation of this opportunity.
The former Deputy PM expressed a hope that such sound policies will be implemented promptly and scientifically to optimise the opportunity and help Vietnam post breakthroughs to move ahead.
Khoan presented his view on the world situation that the pandemic is taking place at the same time as fierce competition has erupted between major powers in the spheres of economy, politics, and security, and even the pandemic fight, along with climate change.
Given this, a global economic recovery looks less V-shaped or W-shaped but more U-shaped, he said, warning that the pandemic, if it breaks out again, may spark a new financial-monetary crisis due to high overspending and high bad and public debt.
Khoan forecast that during the post-COVID-19 period, the movement of goods, services, capital, and information will be rebooted but at a rather slow pace, as all countries will prioritise stimulating the domestic market.
He highlighted one trend to be adopted by many industrialised nations - relocating their production from China to other regions, especially Southeast Asia and India.
The Deputy PM pointed to the ongoing competition between unilateralism and multilateralism and expected that there would be adjustments to certain international institutions, including the WTO, and laws regulating international economic relations.
Khoan believes the sustainable development model that combines economic growth with poverty reduction and environmental protection will be maintained after the pandemic passes.
However, the model will include more measures to protect people’s health by “distancing”, he said, citing the decision taken by a number of European countries to close streets to motor cars in order to facilitate bike riding, thus improving the environment and limiting contact in public vehicles.
Khoan also spoke of the domination of the digital economy and more attention being paid to sectors relating to public healthcare.
Regarding international political-strategic relations, he said certain international political and security structures will be changed, and that the situation in some regions, including the East Sea, will become more complex.
Conflicts between major powers that had occurred prior to the outbreak of the pandemic will continue for the long-term, he predicted.
With an open economy, Vietnam is likely to be impacted by developments in the global economy, Khoan explained./.
Vincom Retail forecasts 2020 profit down 12 per cent due to pandemic
Shareholders in Vincom Retail have agreed with the company’s 2020 net profit target of VND2.5 trillion (US$107.3 million), a drop of 12 per cent over 2019 due to the COVID-19 pandemic. Total revenue for the whole year is targeted at VND9.9 trillion, up 7 per cent year-on-year.
Chairwoman Thai Thi Thanh Hai said the disease had affected customers’ spending habits while social distancing had disrupted retail activity at shopping centres.
Ending March, Vincom Retail recorded revenue of nearly VND1.7 trillion and net profit of VND492 billion, down 26 per cent and 19 per cent year-on-year, respectively. It also closed 23 centres in HCM City and Ha Noi out of the 79 centres it has across the country from March 27 and April 22.
The company said it would not reduce rents in the long-term but instead share the difficulty with customers with a support package worth VND600 billion to help tenants that had to close during the lockdown period.
This year, Vincom Retail will try to stimulate consumption while focusing on opening new megamalls with the target of having 158 shopping centres by 2026.
In addition, the company will start leasing and operating a new business model of shopping tourism with the Grand World Phu Quoc complex. With 1,000 shophouses and hotel services, Tran Mai Hoa, general director of Vincom Retail, hopes the combination of tourism, shopping and recreation will offer customers and retailers a new experience and help boost the national economy.
Responding to the company’s plan to issue bonds worth total VND4.3 trillion this year, its finance director said the company had cash and cash equivalent of VND3 trillion to meet all current investment needs. The plan was designed to prepare cash for new opportunities or be used for projects that have already gone into operation.
Vincom Retail reported total revenue of VND9.26 trillion in 2019, most of which came from leasing real estate and related services worth more than VND7 trillion. Profit after tax reached VND2.85 trillion, up 18 per cent year-on-year.
Hanoi aims to lure 38.3 mln USD of investment in first half
Hanoi hopes to attract a total investment of 38.3 million USD in the first half of 2020, equivalent to 64 percent of the figure in the same period last year.
The capital comes from five new projects totaling nearly 15 million USD, and 10 capital-added projects worth a combined 23.3 million USD.
Le Quang Phong, vice head of the Management Board of the Hanoi Industrial and Export Processing Zones said local enterprises have been facing difficulties caused by the COVID-19 pandemic.
They are making every effort to diversify material sources for production and seek new consumption markets, towards fulfiling their production targets for the second half and the whole year.
According to the management board, industrial and export processing zones in Hanoi generate jobs for nearly 160,000 labourers, including 1,219 foreigners.
The capital city led the country in attracting foreign direct investment (FDI) in the first four months of this year, with 4.75 billion USD, or 30.6 percent of the total capital poured into the Vietnamese economy./.
VCCI launches annual programme determining sustainable enterprises
The Vietnam Chamber of Commerce and Industry (VCCI) kicked off its annual programme on evaluating and identifying sustainable enterprises around the country in Hanoi on May 26.
Now in its fifth year, the programme is open for submissions until August 15, with a ceremony to honour selected businesses scheduled for November.
According to Pham Hoang Hai from the Vietnam Business Council for Sustainable Development (VBCSD), enterprises in all sectors and of all sizes can lodge a submission, which is free.
The 2020 version of the Corporate Sustainable Index (CSI), updated by VBCSD and experts across socio-economic fields, has 127 criteria in the four categories of sustainability, leadership, the environment, and employment.
It is in line with FTAs Vietnam has signed recently, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam FTA, as well as with key changes in the country’s management policy regarding labour and the environment. It also includes contents relating to Vietnam’s 17 sustainable development goals and the national action plan to realise the UN’s 2030 Agenda on sustainable growth.
VCCI Chairman Vu Tien Loc said the programme is not only a contest but also focuses on creating changes in doing business that balance economic benefits, social development, and environmental protection in the long term.
The past four editions of the programme attracted the participation of more than 1,500 enterprises, of which 300 were honoured for their contributions to sustainable growth.
ADB approves 400 mln USD loan to support Philippines
The Asian Development Bank (ADB) said on May 26 that it has approved a 400 million USD loan to support the Philippine government's efforts to strengthen domestic capital markets and reach its development goals of high, sustained economic growth and poverty reduction.
The lender said the Support to Capital Market-Generated Infrastructure Financing Programme, Subprogramme 1, aims to address key constraints that have limited the growth of domestic capital markets, especially government and corporate bond markets.
The programme also focuses on building a vibrant domestic institutional investor base.
According to the ADB, the development programme will support higher public infrastructure spending for years to come.
This new loan brings ADB's total lending to the Philippines to 2.1 billion USD so far this year, the bank added./.
Singapore announces fourth stimulus package against COVID-19
Deputy Prime Minister and Finance Minister of Singapore Heng Swee Keat on May 26 announced another 33 billion SGD (23.2 billion USD) supplementary budget, aimed primarily at helping workers and businesses to tide over the COVID-19 crisis and the bleak economic outlook ahead.
Keat said the Fortitude Budget, the fourth in less than four months, sets aside 2.9 billion SGD to extend job protection, including enhancements to the Job Support Scheme that co-pays salaries to help firms retain workers.
It also provides for the 3.8 billion SGD that went towards measures announced on April 21 to tide Singaporeans over the four-week extension to the 'circuit breaker' to control the spread of coronavirus by limiting people's movements.
The Government will also step up public services and recruit more workers to meet long-term demand for preschool education and health care.
Of the total four stimulus packages, the Singaporean Government has so far earmarked 92.9 billion SGD, or 19.2 percent of the country’s gross domestic product, in order to cope with the COVID-19 impact./.
Vietnam, China hold online discussions on farm produce, food trade
Vietnamese and Chinese businesses discussed the trade of farm produce and food during a video conference on May 26.
The event was jointly held by the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, the Vietnam Trade Office in Kunming, and the China Council for the Promotion of International Trade (CCPIT) in Yunnan province.
Head of the Vietnam Trade Promotion Agency Vu Ba Phu said Yunnan shares a border with Vietnam and has traditional friendship with many Vietnamese localities, which is important within overall Vietnam-China trade ties.
Economic and trade cooperation with the Chinese province has seen encouraging outcomes in recent times, he said, adding that in its annual trade promotion plans for China, the agency gives priority to trade fairs, exhibitions, and the exchange of trade delegations in Yunnan.
The agency has also been supporting Vietnamese businesses to further tighten trade relations with their counterparts in Yunnan.
Though COVID-19 has been largely controlled in the two countries, traditional bilateral trade is yet to fully resume.
Online trade exchanges, therefore, offer opportunities for businesses, especially those involved in farm produce and food, to maintain links.
Phu said Vietnam has become a supply centre for farm produce and food in Asia. Many Vietnamese products have improved in quality and price, better meeting the increasing demand of businesses and people in Yunnan.
Hu Suo Jin, Minister Counsellor at the Chinese Embassy in Vietnam, said Vietnam and China in general and Yunnan in particular should work closely together and enhance trade promotion activities, not only by traditional methods but also online methods.
Meanwhile, Liu Guang Xi, Head of the CCPIT in Yunnan, suggested the two sides increase trade exchanges to help bilateral trade thrive in the time to come./.
RoK’s Jin Air to resume flights to destinations in Southeast Asia
Low-cost carrier of the Republic of Korea (RoK) Jin Air Co. said it will resume flights on five international routes next month to cater to incoming passengers and meet cargo-carrying demand.
Jin Air plans to restart flight services on routes from Incheon to Bangkok (Thailand), Taipei (China), Narita and Osaka (Japan) and Vietnam from June 1, to bring overseas Koreans, those studying abroad and businessmen to the country, the company said in a statement.
The company said it will operate one to two flights a week to the five cities from June to also meet cargo-carrying orders, it said.
Jin Air has suspended all of its international flights since April, as countries strengthened entry restrictions on incoming passengers to stem the spread of the new coronavirus. But seven domestic routes have been in service despite the virus outbreak.
Apart from Jin Air, other budget carriers of the RoK have also planned to resume international flights. Jeju Air said it will reopen flights to Manila in the Philippines in June, while Air Busan and Air Seoul will restore international routes in July./.
Vietcombank among Forbes’ top 1,000 listed companies worldwide
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) found a place among the 1,000 largest companies in Forbes’ recent “The World’s Largest Public Companies 2020” report, released in its Global 2000 annual rankings.
The bank, the only concern from Vietnam to be ranked among the largest 1,000, was listed 937th, up 159 places from 2019. Its ranking in 2015 was 1,985.
Vietcombank posted strong profit growth last year, with profit before tax reaching 23.16 trillion VND (994 million USD), up 24 percent year-on-year and surpassing the targeted 12 percent. The result put it among the top 200 banking institutions in the world in terms of profit.
Vietcombank is currently the only Vietnamese bank to possess total assets of 50 billion USD and is the most valuable company on the country’s stock market.
Vietnam has three other representatives on Forbes’s top 2,000 largest companies: the Bank for Investment and Development of Vietnam (BIDV), Vingroup, and Vietinbank.
Forbes’s Global 2000 ranks the 2,000 largest publicly-listed companies worldwide. Ratings are based on scores for revenue, profit, assets, and market capitalisation./.
Indonesia: 64 shopping malls in Jakarta to reopen in early June
Sixty-four shopping malls across Jakarta will reopen in early June after having been closed since April because of large-scale social restrictions, reported the Jakarta Post.
According to the Indonesian Shopping Center Association (APPBI)'s Jakarta chapter chairman, Ellen Hidayat, 60 shopping centers will reopen for business on June 5 and the remaining four on June 8.
The move is in accordance with Gubernatorial Decree No. 489/2020 on the PSBB extension in Jakarta, which will end on June 4.
Personnel will be deployed to supervise the observance of COVID-19 prevention and control regulations, such as wearing face masks and maintaining physical distance.
A shopping mall that can accommodate 1,000 people, for instance, will be allowed to hold only 500 people./.
VietinBank plans to increase chartered capital
The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) planned to increase its chartered capital from its accumulated profits or paying dividend by stocks. The plan is being completed by the competent State agencies to complete the legal procedures for implementation.
Chairman of VietinBank’s Board of Directors Le Duc Tho made the statement at its 2020 annual general meeting of shareholders held in Hanoi on May 23.
“The capital raising requirement of VietinBank is extremely urgent. Unlike other commercial banks, VietinBank could not raise capital through additional issuance solutions to investors due to its limitations: State ownership in joint stock commercial banks having State capital must not be less than 65 percent while the foreign investors' ownership percentage is a maximum of 30 percent," he said.
This year, the bank was assigned a credit growth limit of 8.5 percent by the State Bank of Vietnam (SBV). However, if the economy sees a good recovery, Vietinbank would submit to increase the limit.
VietinBank expected outstanding loans to grow by 4-8.5 percent in 2020. The mobilised capital would grow in line with the use of capital, balanced with the growth rate of outstanding loans, expected at 5 to 10 percent. Meanwhile, the non-performing loans (NPL) ratio would be controlled at less than 2 percent.
The bank has not set a specific profit target this year, but affirmed to ensure business effectiveness and improve its operation. It will closely follow changes and impacts of COVID-19 to update its profit plan based on the approval of authorities.
VietinBank clarified tasks in the restructure plan and resolving bad debts in the 2016-2020 period, improving profitability and renewing business structure, customers and managing growth quality.
VietinBank would meet requirements of Basel II as soon as it completes the equity capital increase. Especially, it would complete the development strategy in 2021-30 and middle-term business plan in 2021-2023. It would continue to restructure credit categories, increasing the portion of small-and-medium sized enterprises and retail segments while diversifying revenue structure.
“As the global and domestic economy faces many challenges, the whole system of VietinBank will implement practical and effective solutions to support businesses and people to overcome difficulties, having breakthrough developments after the COVID-19 pandemic,” the chairman said.
Responding to shareholders’ questions about bad debt, he said that it was difficult to predict the impact of COVID-19 because the pandemic had not been controlled. Influence from other countries would greatly affect an open economy like Vietnam.
The bank has implemented necessary support measures to accompany customers to stabilise production and business activities, offering many support programmes.
However, many customers of VietinBank are affected by decreasing incomes, affecting consumer loans, business and production.
VietinBank’s capital adequacy ratio (CAR) has been at 10 percent according to Basel I and 8.6 percent according to Basel II which is under SBV’s stipulated level.
The bank estimated that its profit would reach 6 trillion VND (258 million USD) by the end of the second quarter of the year. The bad debt rate would be controlled at 1.5 percent.
VietinBank bought 3.1 trillion VND from Vietnam Asset Management Company (VAMC) while the company still owned over 9 trillion VND, of which over 50 percent has been set aside./.
Many key projects in HCM City near completion
Many key works in HCM City, including a VND10 trillion (USD434.78 million) anti-flooding project, are expected to be finished this year.
At a recent meeting with the municipal People’s Committee Chairman Nguyen Thanh Phong, Nguyen Tam Tien, director of Trung Nam Group which is the anti-flooding project investor, said that to date around 78% of the project has been done to ensure it would be completed as scheduled in October. Pumps will be imported into Vietnam from Germany in the coming four to six weeks.
Tien added that difficulties of the project related to capital and administrative procedures have been settled, except for site clearance issues in some districts, including District 4 and Nha Be District.
The project is aimed to control flooding for around 6.5 million people who live near Saigon River and some of the city inner districts.
Thu Thiem 2 Bridge which is across Saigon River, linking the city centre and Thu Thiem new urban area is also slated for completion in 2020.
The project which has a total investment of VND4.26 trillion (USD185.21 million) was started in 2015 and was planned for completion in April, 2018. But site clearance problems have slowed down the pace.
Another important project which is also close to completion is the new Mien Dong Station in District 9. The VND4-trillion (USD173.91 million) project is designed to serve more than seven million passengers per year, helping to ease traffic pressure for the city centre.
Earlier, Saigon Mechanical Engineering Corporation (Samco) proposed the HCM City authorities to inaugurate the station by late April, however, due to the Covid-19 pandemic, this has been delayed.
Dong Thap farmers lose crops to saline contamination
Farmers in Hong Ngu District, Dong Thap Province, are struggling as the rice fields keep dying from saline contamination.
"After growing normally for a while, the rice started dying en mass once they were given more water," said Le Van Xuong from Thuong Thoi Tien Town, Hong Ngu District.
He went on to say that he still tried to plant the second crop and invested VND60m in it. But the rice still died. He tried the third time on May 20, hoping that he will earn enough just to offset the loss. Nguyen Van Rubi, Xuong's neighbour, said he lost 17,000 square metres of crops twice in a month. Other families who work on the 2,600ha rice paddies in Thuong Thoi Tien and Thuong Phuoc 2 towns also face the same situation.
Ca Huu Tam, a seasoned farmer said hundreds of ha of rice had died. They are mostly grown near Giong Nen, Dia Rung and Suong Lung Tuong channels and the area near pumping station behind Thuong Thoi Tien's old headquarter.
Pham Hong Cuong, deputy head of the Hong Ngu District Department of Agriculture and Rural Development, confirmed that the rice has been dying in their area. According to Cuong, extreme weather is also the cause of the problem. After an initial investigation, it was concluded that because of the drought, the rice fields are left too dry and were contaminated with saline. The solution is to pump water in to clean the fields.
However, many farmers disagreed, saying that the fields were contaminated because fish farmers used industrial feed. Dozens of fish farms discharge wastewater into the channels which provide water to the rice fields.
The farmers also invited a group of agricultural engineers from Can Tho University to survey the fields. The farmers were surprised when they were told that the rice died from saline contamination because Hong Ngu is on the upstream of the Mekong River and 200km away from the west coast. The salinity level recorded on May 15 was 3-6ppt in the fields, 1ppt in the channels and 6ppt in the fish farms.
Nguyen Phuoc Tuyen, an independent agricultural researcher in Dong Thap said Thuong Thoi Tien was 3.5 metres higher than the sea level so it's impossible for a saline intrusion. He said he was not surprised that the salinity in the fish farms was 6ppt because the amount of salt in industrial feed accounts for 1-2%. However, Tuyen thinks that the rapid death of the rice fields was caused by both extreme weather and fish farm activities.
JUTEC seeks investment opportunities in Vietnamese real estate
JUTEC Corporation of Japan is planning to co-operate alongside a Vietnamese partner as they seek to set up a joint venture, with JUTEC set to contribute 50% to expand its business operation in the local real estate market.
The joint venture is expected to offer management and operation services for apartments that fall in line with Japanese standards in order to provide the best possible experience for foreign customers who are currently living and working in Vietnam.
Moreover, the JV will see a wave of imports through the added supply of new Japanese construction materials to be used in the Vietnamese market.
Originally established in 1923, JUTEC is an enterprise that specialises in offering high quality equipment and building materials to be used in civil and housing projects in the Far East country.
The company first entered the Vietnamese market back in 2015 when it established a representative office locally.
Since entering the domestic market, JUTEC has largely focused on studying various markets and seeking new investment opportunities. In anticipation of the increasing demand for serviced apartments among foreign experts and the demand for new construction materials domestically, it has decided to establish a new joint venture in the country.
CSI an effective support tool for businesses after COVID-19 pandemic
The Corporate Sustainability Index (CSI) is anticipated to play an important role in socio-economic development moving forward into the period following the novel coronavirus (COVID-19), helping local firms to enhance their ability to cope with and recover from a variety of scenarios.
The Vietnam Chamber of Commerce and Industry (VCCI) launched a scheme on May 26 regarding an evaluation and announcement of sustainable businesses based in Vietnam this year.
In line with this programme, the Vietnam Business Council for Sustainable Development have joined with leading experts in various socio-economic development fields to update the Corporate Sustainability Index (CSI) with new points to follow the requirements of important free trade agreements that the country has recently signed.
In addition, updates reflect the significant changes which have occurred in influential labour and environmental management policies that have had a major impact on the operations of domestic enterprises.
Most notably, issues relating to the 17 sustainable development goals and the overall national action plan under the 2030 Agenda for Sustainable Development have been simplified and integrated into the CSI set 2020.
During his speech at the launching ceremony, Vu Tien Loc, VCCI Chairman and the Chairman of the Vietnam Business Council for Sustainable Development, shared, “The programme aims to change the mindset and way of doing business for ‘immediate profit’ by running firms in harmony with economic benefits, social development, and environmental protection in the long term.
The CSI set not only reflects 127 indicators, but is a very scientific and effective business management tool built specifically for Vietnamese enterprises, especially small and medium-sized businesses.”
Following this, the VCCI Chairman revealed that the COVID-19 pandemic has shown the gaps that exist in economic management and operation, thereby displaying the importance and urgency of sustainable development. In this context, the scheme regarding the CSI set has played an extremely important role in terms of socio-economic development.
The greater number of businesses that apply the CSI, the more professional and corporate governance activities will be, thereby helping firms to improve their competitiveness and ultimately enhance their ability to cope with and adapt to different scenarios.
Loc suggested the companies put the CSI into the focus of their corporate governance strategies whilst simultaneously preparing a sustainable development report, promptly detecting weaknesses and shortcomings that occur in the process of production and business as a means of seizing potential opportunities for greater investment in the future.
Tiki hard-pressed to whip up new investment
Tiki's merger with Sendo and designs to list on the local stock exchange could be solutions to increasing difficulties in mobilising investment to carry on the war of attrition in e-commerce.
The Vietnamese e-commerce playground was astonished by the merger between Tiki and Sendo, which took place after Tiki declared its plan to stage an initial public offering a few weeks ago. The two news have raised doubts over the e-commerce platform's ability to mobilise new investment to continue the “money burning” race after 10 years.
As of the end of 2018, its accumulated losses were about VND1.4 trillion ($60.87 million). Moreover, Tiki also burned through the entire VND506.3 billion ($22 million) capital of VNG – its largest shareholder with 24.6 per cent.
Otherwise, constantly welcoming new investments has fragmented the e-commerce platform’s shareholder structure. Tiki raised capital in June and December last year. Along with VNG, China-based JD.com is also its main shareholder with 21 per cent. The others include Ubiquitous Traders Pte., Ltd. (nearly 9 per cent), CyberAgent, STIC, and Sumitomo.
Tiki has not issued public communications or responded to queries about the deals.
To conquer the market, e-commerce players have been increasing capital and racking up deficits year after year to keep growing.
According to the latest statistics of security company VNDIRECT, each e-commerce company has to suffer a loss of VND124 billion ($5.4 million) to gain 1 per cent of market share from the competition.
Regarding its merger with Sendo, Nguyen Viet Hung, a key opinion leader with a hand in a number of local technology startups, said that the deal may be a good fit for the two local companies as e-commerce firms as it may not only eliminate one competitor but also create a new partnership with stronger financial potential to compete.
After the failure of WeWork, many investors are now focusing on the profitability of startups, instead of their growth potential. That may be the main reason behind Tiki has not been very attractive to investors. Forming alliances and proposing an IPO could both be meant as remedies for this.
Honda import strategy unable to avail of fee cuts
Japanese carmaker Honda may come to rue its decision to start importing CR-V vehicles, giving up domestic assembly, now that the government has greenlit a 50 per cent cut in registration fees for locally assembled automobiles as part of a new initiative to help the market find its feet amidst the coronavirus pandemic.
Prime Minister Nguyen Xuan Phuc has agreed to slash registration fees for locally-manufactured vehicles, which could represent up to 12 per cent of the vehicle cost, to work up purchasing interest that has been languishing during the COVID-19 outbreak. The registration fee cut, valid until the end of 2020, is not applied for imported vehicles. This will create advantages for domestically produced vehicles as well as help customers save thousands of dollars.
In the list of 154 models subject to registration fee adjustment under Decision No.452/QD-BTC effective from April 3 on adjusting registration fees for automobiles and motorbikes, registration fees for passenger cars or cars with less than nine seats were 12 per cent in eight provinces and cities (Hanoi, Quang Ninh, Haiphong, Lao Cai, Cao Bang, Lang Son, Son La, and Can Tho), while it is 11 per cent in Ha Tinh and 10 per cent in Ho Chi Minh City, Danang, and other cities. The charge is now 7.2 per cent for a pickup truck in the first group of cities/provinces, 6.6 per cent in Ha Tinh, and 6 per cent in other cities.
After years of making stellar profits in the Vietnamese market, in 2018 Honda shifted to import some models instead of assembling them locally to enjoy tax incentives under the ASEAN Free Trade Area.
On account of the registration fee cut, however, many dealers say that the Honda CR-V will lose many of its advantages and even have to join a price war with domestically assembled vehicles. CR-V vehicles are now priced between VND983 million ($42,700) and VND1.1 billion ($47,500), and customers in Hanoi have to pay VND118-131 million ($5,100-5,700) registration fee, while customers only need to pay about VND60 million ($2,600) for a locally built rival Mazda CX-5 or a Hyundai, as registration fees have been cut by 50 per cent for domestically-produced cars. This shows that the future of Honda CR-V in Vietnam is uncertain as price is still a determining factor in sales in the market.
Numerous specialists were of the opinion that imported completely built units would lose their advantage and producers may have to cut costs in order to stay competitive.
Meanwhile, early this month, Honda Vietnam said that it may shift from manufacturing to importing vehicles due to the interruption of manufacturing activities and market stagnation caused by the COVID-19 pandemic.
Honda Vietnam proposed measures to continue removing difficulties for motorbike and car manufacturers by extending deadlines for their tax and land leasing payments.
This is not the first time that Honda Vietnam has floated this idea. While a decision is yet to be made on the proposal, the company’s calculations seem to go straight against the flow of other carmakers who are expanding factories in Vietnam as the country seeks to reduce its reliance on imports. Earlier this year, Ford announced plans to invest $82 million to triple the capacity of its plant in the northern province of Hai Duong from 14,000 to 40,000 vehicles a year. Vietnamese manufacturer Thanh Cong Motors reached an agreement with South Korea’s Hyundai to build a second plant in the northeastern province of Quang Ninh after the first in the nearby province of Ninh Binh. Truong Hai Auto has also built a Kia assembly plant since last September, following assembly lines for Peugeot earlier in the same year, and for Mazda in 2018. Other locally-invested giant VinFast completed the first phase of its car manufacturing plant in the northern city of Haiphong last June with a capacity of 250,000 units a year.
According to the Vietnam Automobile Manufacturers Association (VAMA), car sales hit a five-year low, dropping 36 per cent on-year to about 61,000 units in the first four months of this year due to the slump in demand triggered by the COVID-19 pandemic. Thus, the VAMA proposed the government to consider relaxing and reducing taxes for car-makers, both to support maintaining production and to stimulate consumption. The proposed measures include a 50 per cent reduction in VAT and a 50 per cent registration fee for automobiles to stimulate consumption, the latter of which has just been approved.
Japan’s JUTEC Corp. to enter local real estate market
Japanese building product distributor JUTEC Holdings Corporation will team up with a Vietnamese partner to establish a housing services joint venture in Vietnam.
The company, in which JUTEC will hold 50 percent, will offer apartment management and operations services following Japanese standards, to bring the best experience possible to foreigners working and living in Vietnam.
It will also import modern Japanese construction materials for distribution in the Vietnamese market.
The joint venture will cater to demand for apartments for lease, targeting foreign experts, and promote new building materials in Vietnam.
Founded in 1923, JUTEC had 778 employees as of April, with capital of 850 million JPY (7.9 million USD).
It arrived in Vietnam in 2015 via opening a representative office to study the local market./.
Vietnam cuts aviation fees to support coronavirus-hit enterprises
The Ministry of Finance has decided to temporarily slash a number of charges and fees within the aviation sector in order to support those affected by the coronavirus outbreak.
Under a circular issued on May 27, a 10% cut will be offered to individuals and organisations using airport infrastructure and providing flight operation services, airport businesses, and those on foreign flights leaving and arriving at Vietnamese airports.
At the same time, those providing verification for granting certificates and licenses in civil aviation activities and entry permits to restricted areas at airports will have their fees reduced by 20%.
The circular is valid until the end of 2020 and the fees and charges will return to the normal levels in 2021.
VN Government issues decree on ODA management and use
The government has recently issued Decree No. 56/2020/NĐ-CP on management and use of official development assistance (ODA) and concessional loans granted by foreign sponsors to Vietnam.
Accordingly, foreign sponsors can be foreign governments, international organisations, inter-government or international organisations, and governmental organisations authorised by foreign governments.
Methods for the provision of ODA and soft loans include programme, project, non-project and budget assistance.
Regarding the usage of non-refundable ODA, priority will be given to socio-economic infrastructure programmes and projects; capacity building; supporting formulation of policies, institutions and reforms; prevention and mitigation of natural disasters and response to climate change; social security; among others.
ODA loans will be used for execution of programmes and projects in healthcare, education and vocational training, climate change adaption, environment protection, and essential infrastructure that are not able to produce paybacks.
The ODA and concessional loans shall not be used for regular spending, payment of fees, taxes and interests, or purchase of cars (except for those approved by competent authorities) and site clearance, among others.
The decree also outlines rules to prevent and deal with corruption, losses and wastefulness in management and use of ODA and soft loans in accordance with law.
It took effect from May 25.
Singapore’s pharmaceutical exports surge thanks to high stockpiling
Singapore’s exports of pharmaceutical products have surged since the beginning of this year, as the COVID-19 pandemic fosters worldwide stockpiling of drug ingredients.
The country’s pharmaceutical output has increased by 86 percent so far this year, with April’s shipments surging 174 percent year-on-year.
According to Fitch Solutions, Singapore is one of the few countries in the world that exports more pharmaceuticals than it imports. The nation has more than 50 manufacturing facilities, including plants owned by eight of the world’s 10 biggest pharma firms.
The US, Europe and Japan were Singapore’s biggest export destinations for active pharmaceutical ingredients (APIs) in recent months.
How Ti Hwei, President of the Singapore Association of Pharmaceutical Industries, said that companies and governments around the world are building large inventories of APIs and drugs to ensure supplies of medicines remain uninterrupted and can be made close to market.
Singapore’s biomedical industry, which employs more than 24,000 people, accounted for about 20 percent of the manufacturing sector in 2019 which in turn made up about a fifth of GDP.
Petrol prices continue to rise in latest adjustment
Retail petrol prices were adjusted upwards on May 28 in the latest review by the Ministry of Industry and Trade and the Ministry of Finance.
From 3pm on May 28, the price of E5 RON92 biofuel rose 882 VND to a maximum of 12,402 VND (0.53 USD) per litre and RON95-III by 890 VND to 13,125 VND (0.56 USD) per litre.
Prices of diesel 0.05S and kerosene, meanwhile, are now 10,749 VND and 8,757 VND per litre, up 892 VND and 875 VND per litre, respectively. Mazut 180CST 3.5S is now selling for 9,492 VND per kg, up 947 VND per kg.
The two ministries review fuel prices every 15 days and make adjustments in accordance with fluctuations in the global market.
As the COVID-19 pandemic is showing signs of easing in the world, many countries have begun to resume production and business activities, pushing up demand for fuel, resulting in rising prices of petrol and oil./.
Auto makers in Indonesia to resume operations in June
Automobile manufacturers in Indonesia are ready to resume production in June following the government’s enforcement of the “new normal” scenario, said Chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo) Yohannes Nangoi.
Toyota Motor Marketing Director Anton Jimmi said the firm is set to resume activities on June 1, adding that it will closely follow the government’s regulations on COVID-19 prevention and control.
PT Toyota Astra Motor also announced to restart production at the same time. Its head office is in Jakarta, so it is waiting for the city’s decision on the Large Scale Social Restriction (PSBB) policy to set the exact time of resumption.
Toyota Motor Manufacturing Indonesia Director of Administration, Corporations and External Relations Bob Azam said that the company had plans to resume operation at the beginning of June.
In the early phase, however, production lines will run at 50 percent of capacity and physical distancing measures will be applied among workers, he added./.
Malaysian economy capable of positive growth in 2020
The Malaysian Islamic Party’s Central Committee on Economic, Real Estate and Entrepreneur Development has predicted that the country’s GDP growth rate can reach 2.5-3 percent in 2020 despite the COVID-19 outbreak.
Although it is a drastic reduction of pre-pandemic forecasts and the lowest since 2009, the projection runs counter to several recent predictions that the Malaysian economy would actually shrink by up to 1.0 percent.
Vice Chairman of the committee Mazli Noor said that the 0.7 percent GDP growth registered in the first quarter is reflective of the country’s resilience in the context of the ongoing pandemic.
The relatively modest performance for the first quarter of 2020 is supported by the services and manufacturing sectors, which grew 3.1 percent and 1.5 percent respectively, with other sectors experiencing varying degrees of deficits.
He said that services, manufacturing and construction will play a major role in the nation’s growth. Supported by the government's Prihatin Economic Stimulus Package that was announced earlier, the committee is projecting a 5.0 percent to 5.5 percent growth in the services sector this year, with manufacturing coming in at around 3.0 percent and construction contributing an estimated 1.0 percent to the nation’s economic growth.
The recently announced conditional movement control order (CMCO), which allows for a more flexible and deliberate reopening of the economic sector, also provides much-needed room for economic activities to resume, he added.
The committee agrees with analyst projections of a full economic and value chain recovery by the second half of 2020, with the construction sector - particularly that involving government public infrastructures - being allowed to return to full speed./
Pork prices continue rocketing
Pork prices in Vietnam have kept on increasing, reaching the record high because of local supply shortages.
According to CP Vietnam Livestock Joint Stock Company, by May 27, pig prices rose to VND81,000 (USD3.52) per kilo, VND10,000 higher than that during mid-May. Meanwhile, many other pig breeding companies raised the product price to VND82,000 per kilo.
On May 28, pig prices in many northern localities surged to between VND97,000-105,000 per kilo, including Hung Yen and Thai Binh provinces.
Pork prices have seen the historical peak of from VND170,000-200,000 per kilo, roughly VND10,000 higher than a kilo of pork just a few days ago.
The prices are higher by between VND10,000-70,000 per kilo at supermarkets. Vissan-branded pork products are the most expensive of being even up to VND280,000 per kilo of ribs.
Thu Cuc from Hoang Mai District said that she was quite shocked to see the sharp rise in pork prices recently. Her family has reduced the pork use to save the daily expenditure and turned into other kinds of foodstuff.
Under the government’s instruction, on April 1, 15 large livestock companies pledged to cut pig prices around VND60,000-65,000 by the end of the second and third quarter of this year. However, the target has failed.
According to the Ministry of Agriculture and Rural Development, since the beginning of the year, African swine fever has resurfaced in 155 communes of 20 cities and provinces, causing nearly 4,000 pigs to be culled.
This has seriously slowed down the livestock to increase which is expected to help ease the domestic market’s pork deficiency by the end of this year.
Buying piglets of unclear origin to raise has been among the major reasons for the reoccurrence of African swine fever.
In the first four months of this year, localities have ensured around 80% of the set population target.
The country witnessed an on-year rise of 300% in pork imports between January and mid-May.
Nation racks up US$1.9 billion trade surplus over five-month period
Vietnam has recorded a trade surplus of US$1.9 billion during the first five months of the year despite the COVID-19 impact, according to the latest statistics released by the General Statistics Office (GSO) on May 29.
The GSO said the total import and export turnover during the reviewed period dropped by 2.8% to US$196.84 billion in comparison to the same period from last year.
Elsewhere the five-month period saw the export turnover of goods in the domestic sector enjoy an increase of 10.4% to US$33.3 billion, while the foreign invested sector grossed approximately US$66.06 billion, representing a decline of 6.9% on-year and accounting for 66.5% of the total export turnover figure.
In total, 17 items witnessed export turnover exceeding US$1 billion, making up 82% of total export turnover. They included phones and components, electronics, computers and components, textiles and garments, machinery, equipment and spare parts, along with footwear and wooden products.
Despite this large sum, the export turnover of a number of agricultural products suffered a downward trajectory in comparison with last year. As a result, the export value of fruit and vegetables fell by 10.3% to US$1.6 billion, while the export of rubber and pepper dropped by 29.6% and 17.9% to US$470 million and US$309 million, respectively.
By contrast, a range of agricultural products enjoyed an increase in export turnover, including rice with US$1.4 billion, coffee with US$1.4 billion, and cashew nuts with US$1.2 billion.
With regard to the export commodity market, the United States remained as Vietnam’s largest export market during the five-month period, with turnover enjoying an annual surge of 8.2% to US$24.6 billion, followed by China with US$16.3 billion, representing an increase of 20.1%.
Export revenue from the EU, ASEAN, and the Republic of Korean (RoK) markets suffered falls of 12%, 13.4%, and 0.5%, respectively, while the Japanese market saw an increase of 2.2% to US$8.1 billion in export turnover.
Elsewhere, Vietnam imported goods with a total value of US$97.48 billion, representing a decline of 3.8% on-year.
At present, China remains the country’s largest importer with an estimated turnover of US$28.9 billion, a fall of 3% from the same period last year, trailed by the RoK, ASEAN, Japan, the US, and the EU.
Nearly 6,500 tonnes of fresh lychee exported via Kim Thanh Border Gate
Since the beginning of the season, nearly 6,500 tonnes of fresh lychees, worth more than US$3.6 million in total, have been exported to China through Kim Thanh Border Gate in Lao Cai Province, up 37% in volume and 39% in value compared to the same period last year.
This was announced by the border gate’s customs sub-department on May 28.
At the border gate, trucks loaded with fresh lychee for the Chinese market have been given priority for customs clearance to ensure the highest quality of the fruit.
Beside lychee, Kim Thanh Border Gate has also processed customs clearance for other fruits including dragon fruit (around 178,300 tonnes worth nearly US$118 million), banana (17,700 tonnes, US$2.5 million), mango (42,100 tonnes, US$54.2 million), and watermelon (12,00 tonnes, US$12 million).
The Management Board of Lao Cai Economic Zone has closely co-ordinated with the provincial border guards to create the most favourable conditions for the export of fruits and agricultural products while strictly observing preventative measures against COVID-19 epidemic.
An average of 400 trucks pass through Lao Cai’s border gates each day, with more than half of them carrying Vietnamese agricultural products for export to China.
Adjusting growth targets
During the ninth session of the 14th National Assembly, the Government officially proposed that legislature consider to adjust some growth targets for 2020, including GDP growth, State budget revenue and public debt.
In addition, the Government cautiously recommended the NA consider and adopt the guideline on several specific mechanisms and policies to revive the economy in the new situation. Accordingly, the Government asked for the NA’s permission to proactively adjust the 2020 public investment plans among ministries, sectors and localities within the expenditure estimate on development investment; convert the investment mode for important transport projects from that of a public-private partnership to the use of the state budget; exempt and reduce a number of tax obligations concerning the areas and subjects suffering heavy losses due to COVID-19; postpone the increase of basic salary for civil servants, public employees and the armed forces and pensions from July 1, 2020; and consider launching new economic stimulus packages if the pandemic continues to be prolonged on a global scale.
According to the NA-assigned targets, Vietnam’s GDP growth rate in 2020 will be 6.8% while inflation will be kept below 4%. However, the unexpected outbreak of COVID-19 in more than 200 countries around the world has made this goal a major challenge which, as assessed by the Government, is difficult to be achieved. Given that fact, the proposal to adjust the growth targets is necessary and consistent with objective reality, looking directly at the socio-economic situation and forecasting the international and domestic situation in the near future. Under the Government’s updated scenario, the country’s GDP will grow by about 4.5% in 2020. The Government has also set a higher growth target of 5.4% in the event of a favourable global situation, with the disease being put under control and the global market recovering. Meanwhile, the consumer price index (CPI) for the whole year will rise by 4% on average; total state budget revenue will see a reduction of VND163 trillion (US$7.04 billion) compared to the assigned estimate; state budget deficit will be equal to about 4.75% of GDP; and public debt will equal 55.5% of GDP. The two targets for state budget deficit and the debt-to-GDP ratio will increase by 1.31% and 3.2%, respectively, compared to the initial targets. In the context that the global economy is predicted to fall into a more serious recession than previous crises, the Government’s growth target of over 5% holds great significance. It is not only a sufficient threshold to deal with employment for workers, maintain people’s quality of life and ensure social security, but is also a needed level to fulfil the average growth target of 6.5. % set for the period of 2016-2020. However, the enclosed risk is that adjusting up the budget deficit will lead the nation to borrow more, thus influencing public debt and, furthermore, this may affect the maintenance of macroeconomic stability – a very important foundation that Vietnam has achieved in the past ten years. This is the most disturbing problem.
The adjustment of socio-economic targets is a big and unprecedented issue, because the targets set in the NA’s Resolution are concretised from the Resolution of the Party Central Committee. On the basis of the Government’s proposal, the decision on the adjustment of growth targets will be made by the competent levels, with the current political and legal bases taken into account. According to economic experts, the adjustment of GDP growth target and relevant macro targets in accordance with the new developments in the domestic and international socio-economic situations will create favourable conditions for the Government in its management work, towards realising the dual goal of successfully combating the pandemic and reviving the economy after the disease.