VIETNAM BUSINESS NEWS JANUARY 24
RCEP helps Vietnamese agricultural products reach out to the world
The mammoth trade deal Regional Comprehensive Economic Partnership (RCEP) is expected to unlock more export markets for Vietnamese agricultural products, according to insiders.
At the “RCEP-UKVFTA opportunities to promote value chains of Vietnamese agricultural products” recently held in Ho Chi Minh City, Chairman of the Vietnam Farms and Agricultural Enterprises Association (VFAEA) Le Duy Minh laid stress on the world’s largest trade pact which covers a market of 2.2 billion people, with a combined GDP of 26.2 trillion USD or about 30 percent of global GDP.
RCEP is said to open up ample opportunities for Vietnamese agro-forestry-aquatic products since it forms a large market that includes Vietnam’s key importers such as China, ASEAN, Japan and the Republic of Korea (RoK), he added.
Nguyen Anh Dung, from the Ministry of Agriculture and Rural Development’s Agro Processing and Market Development Authority, said China is the second largest importer of Vietnamese agro-forestry-aquatic products with total imports worth 10.36 billion USD in 2020. Meanwhile, ASEAN came fourth with 3.69 billion USD, Japan fifth with 3.42 billion USD and the RoK seventh with 2.34 billion USD.
According to Secretary of the Vietnam Vegetables Association Tran Le Nguyen, only ten types of Vietnamese fruits are licensed to be exported to China via official channel, and with RCEP, negotiations for other fruits like durian, passion fruit, grape fruit, avocado, star apple, and rose apple will be much easier.
RCEP is also said to create favourable conditions for more Vietnamese products to enter Japanese, RoK, Australian, Thai, Malaysian and New Zealand markets, he added.
However, the Ministry of Industry and Trade said Vietnamese exporters may face fierce competition from their foreign rivals right on the domestic playground as other RCEP members like China and other ASEAN member states have similar fruits with better quality.
In this context, Vietnam needs to build a stable agriculture in which farmers must ensure food safety and improve product quality while businesses should help farmers to form a stable value chain, said Nguyen Dinh Tung, General Director of Vina T&T./
Major economic achievements of the Party's 12th tenure
As the 13th National Party Congress is about to take place we take a look at some major economic achievements of the Communist Party during its 12th tenure. Jobs were created for eight million people in five years (2016-20), GDP increased by 5.9 per cent, and the country became the fourth largest economy in ASEAN.
HCM City, southern provinces step up efforts against fake goods
Officers tasked with preventing fake goods, trade fraud and smuggling in Ho Chi Minh City and southern border provinces have been forced to work hard ahead of Tet (Lunar New Year), which falls on February 12 this year.
Last week, the HCM City customs department discovered 14 steel containers that consignee V.V Steel Company described wrongly to evade tax.
The company, in Long An province’s Duc Hoa district, made a declaration that would have allowed it to enjoy 0 percent tax instead of the 10-15 percent it had to pay, equivalent to 1 billion VND (43,000 USD).
Now, besides the tax it will also have to pay a penalty of 20 percent of the amount.
Smuggling and trade fraud are becoming increasingly sophisticated.
Truong Van Ba, Director of the HCM City Market Surveillance Department, said last year 25,538 violations had been discovered involving loss of tax revenues of 5.8 trillion VND. Competent agencies filed charges in 113 cases.
According to Steering Committee 389 of HCM City, inspections had been reduced due to the Covid-19 pandemic but specifically target warehouses, yards and sites where large volumes of smuggled goods are likely to be concealed, improving the efficiency of prevention efforts.
According to the city police, local militia have been urged to look out for dubious activities and crack down on the trade in prohibited, smuggled and counterfeit goods.
Drugs, weapons, illegal firecrackers, unsafe and violent toys, and cigarettes are in the sights of officials.
The city border guard force, the Southern Border Guard Soldiers' Department of Drug and Crime Prevention, naval squadron No 28 under the Vietnam Border Defence Force, and border forces in Ba Ria - Vung Tau and Tien Giang provinces will look out for possible violations at estuaries, sea ports and sea borders .
The city is also calling on businesses and consumers to join hands in the fight against smuggling and trade fraud.
Border authorities in the Mekong Delta provinces of An Giang, Kien Giang and Dong Thap are stepping up efforts to keep out smuggled goods, which usually increases during the year-end period.
The contraband is mostly cigarettes and sugar brought in through the Chau Doc city border in An Giang province.
Smugglers transport the goods from Cambodia in boats, motorbikes and trucks at night to evade officers, but if spotted are not averse to attacking them.
Kien Giang province’s Ha Tien city also sees smuggling of goods from across the border, usually late at night.
Smugglers travel in groups and transport large quantities of contraband, mainly foreign-made cigarettes.
Authorities have discovered hundreds of cases of smuggling and confiscated tens of thousands of packs of cigarettes and other goods.
Fishing boats are used to illegally transport and sell oil and petrol at sea.
Hundreds of thousands of litres of oil of unknown origin have been seized by local agencies, who have also collected billions of VND in fines.
An Giang province’s steering committee for anti-smuggling, trade fraud and fake goods said troops were patrolling border gates, trails and crossings to prevent smuggling./.
Quang Ninh eyes becoming dynamic sea-based economic hub
The authorities of Quang Ninh province said the locality has outlined various solutions to expand its sea-based economy, with the focus sharpened on tourism, sea services, and coastal industries that are environmentally friendly.
Billed as a locomotive for the development of the Northern Key Economic Region, Quang Ninh province is turning itself into a strong sea-based economy.
Local officials said with a vision of becoming an international tourism centre, the province has invested heavily in tourism and trade facilities, developing eco-tourism in a sustainable manner, and forming high-end tourism sites.
The province will prioritise building Ha Long into a modern tourism city while developing Van Don-Co To into an international entertainment centre. It is also studying how to develop new tourism products such as yachting, water taxis, seaplanes, ballooning, and scuba diving.
Regarding coastal industries and new economic sectors, Quang Ninh gives top priority to environmentally-friendly industries such as hi-tech shipbuilding and encourages foreign investment in support industries for shipbuilding.
Possessing advantages in maritime resources and biodiversity, the province is interested in developing sea-based economic sectors such as maritime pharmaceuticals and seaweed, and seagrass farming and processing./.
Thirty businesses win HCM City Golden Brand Award
Thirty enterprises have received the Ho Chi Minh City Golden Brand Award from the municipal People’s Committee for their outstanding achievements in building and developing brands for products and services.
The municipal People’s Committee assigned the Department of Industry and Trade and the Saigon Times Group to launch the award.
The award attracted 64 enterprises in different industries within one month after launch. It will be held annually.
The 30 enterprises are leading companies or at the top of their business and production industries.
Their total revenue in 2019 reached nearly 252.8 trillion (11 billion USD), or 21.8 percent of the city’s total revenue of retail sales of consumer goods and services. Their total after-tax profit reached almost 32.7 trillion VND.
According to the evaluation of the Voting Council, most of the products and service brands of the winning enterprises have undergone a long process of establishment and development. They have had a firm position in the marketplace and a good reputation in customers’ minds and made active contributions to the city’s economic development.
Bui Ta Hoang Vu, Director of the Department of Industry and Trade, said the 30 products and service brands are typical ones, representing the three core values of quality prestige, impressive brand, and ahead of trends.
Chairman of the HCM City People’s Committee Nguyen Thanh Phong said building and developing brands has always been the focus of the Party and the State, and it is also an important factor for sustainable development.
“The city pledges to support the promotion and development of corporate product brands, and support innovation and digital transformation to take advantage of the fourth revolution; and prioritize investment in logistics infrastructure, create smart and efficient connections, and reduce costs and improve competitiveness,” Phong said.
HCM City will develop a plan to support businesses winning the award, Phong added.
HCM City is seeking foreign investment over the next five years for seven major projects, including four metro lines.
The projects include the second phase of the Metro Line No. 2, which connects Ben Thanh market with Thu Duc district’s Thu Thiem ward and Tham Luong to Tay Ninh bus station in Cu Chi district.
The second construction phase will be 9.1 kilometres in length and cost around 1.4 billion USD. It will help connect the city’s northwestern regions to its centre, as well as connect the Thu Thiem railway line to the future Long Thanh Airport in Dong Nai province.
The second project, Metro Line No. 3A (Ben Thanh – Tan Kien), is 19.5 kilometres long and costs 1.8 billion USD. It will connect to metro lines at the upcoming Ben Thanh Station in District 1 to transport travelers from the city centre to southwest provinces.
The third is Metro Line No.4 (Thanh Xuan – Hiep Phuoc Industrial Park), which is 36.2 kilometres long and costs over 4.5 billion USD. It will run across the city’s urban areas and Ben Thanh.
The last line is the first phase of Metro Line No. 5 (Bay Hien intersection – Sai Gon Bridge), which is nearly 9 kilometres and will cost over 1.7 billion USD. This line was among the metro lines prioritised for investment in 2012 – 2015 and 2016 – 2020, but was unsuccessful in attracting investment.
For this metro line, the city wants to work with governmental organisations with official development assistance funds, large corporations, and traffic infrastructure investors that are financially and technologically capable.
Three other projects include Thu Thiem financial centre, a centre for conferences, exhibitions, hotel and commercial services, and a Rach Chiec Sport Complex, all of which are to be built in Thu Duc district.
The project proposal is part of a report on national projects to call for FDI, which the city People’s Committee has recently submitted to the Ministry of Planning and Investment.
The city has been facing challenges finding investment in such traffic projects because investors do not see the benefits of investing in the projects or are hesitant to invest because they are all done on a massive scale and require a vast amount of capital.
Regulations on private – public partnership investment in traffic and railway projects still contain some weaknesses, according to the city.
Buyers warned over inaccurate info regarding Long Thanh land
Concerns have been raised on the land fever in surrounding areas of the future Long Thanh International Airport in the southern province of Dong Nai after construction started last week.
According to Tran Hien Phuong, general director of Sea Holdings JSC, some local real estate centres are using false information regarding land ownership to push up prices of land around the airport. “Land brokers have been approaching buyers via social networks and directly consulting land plot owners. Many buyers have been reported to have been caught in this trap,” Phuong said. “Buyers must be more careful because there are many false reports on projects around Long Thanh Airport.”
Phuong also claimed that the lack of official information on planning and zoning of the area was one of the reasons buyers are falling victim to false information. “Local authorities must be more active in leading and instructing buyers on land usage by setting up public offices, used to check on targeted projects,” she suggested.
Local resident Nguyen Khoa told VIR that buyers must pay much more attention to the land plots which were previously agricultural land.
“Many local landlords are dividing their agricultural land into smaller plots to sell them. However, those plots will not be used for housing, only for planting crops,” Khoa said.
Phan Cong Chanh, a private real estate consultant, said that even if the land around Long Thanh Airport in increasing in value, it could take many years for purchases to be worthwhile. “Therefore, investments in the land here do not amount to much for short-term investors. Meanwhile, brokers must also be more cautious with dossiers of the land plots,” Chanh said.
At present, most of the area around Long Thanh Airport is meant for planting crops and dairy farming.
“Land funds around Long Thanh Airport are very large but investors need to carefully consider the status of the land and its market potential to avoid risks,” Chanh said.
With the decision from the government to set up Long Thanh Airport, the land’s attraction in the area has been skyrocketing on a daily basis.
Figures from the Vietnam National Real Estate Association show that a 100-square-metre land plot in the area is advertised for over VND1.5 billion ($65,000), double the price compared to six months ago. Some plots in the southern part of the region, which can used for services development in Bau Can and Tan Hiep district, are even more expensive.
However, the increase of the land prices in Dong Nai was not only caused by the construction of Long Thanh Airport, as many buyers have been rushing to neighbouring provinces amid a limited supply of new projects in Ho Chi Minh City.
Land plots in Long Thanh are now traded anywhere from VND18 to VND40 million ($800-1,700) per sq.m, with land plots located along the National Highway No.51, linking Vung Tau city and Dong Nai, offered from VND50-60 million ($2,200-2,600) per sq.m – prices equivalent to those in some areas of Ho Chi Minh City.
Long Thanh International Airport hikes land prices in surroundings
Starting the construction of Long Thanh International Airport doubled land and property prices in the surrounding areas over a year.
In Dong Nai, land prices soared from VND12-14 million ($520-610) per square metre in 2019 to VND22 million ($955) in 2020. In some places in Long Thanh district, prices even went as high as VND100 million ($4,350) per sq.m.
Land plots in Long Thanh are now traded anywhere from VND18 to 40 million ($780-1,740) per sq.m, with land plots located along National Highway 51, linking Vung Tau city and Dong Nai, offered for VND50-60 million ($2,170-2,610) – prices equivalent to some areas of Ho Chi Minh City.
According to Airports Corporation of Vietnam, Long Thanh International Airport covers an area of 5,000 hectares with plans to develop it into an airport city – a city within the fences of a large airport, including the airport facilities (terminals, apron, and runways) and airport-related businesses such as air cargo, logistics, offices, retail, and hotels.
With the airport development, Phu My area is becoming more attractive for real estate traders as it is only 20 minutes away. In addition, this place includes the Cai Mep-Thi Vai seaport, one of 20 largest seaports in the world, along with nine industrial parks.
Speaking at the airport ground-breaking ceremony, Prime Minister Nguyen Xuan Phuc asked Dong Nai, Ho Chi Minh City, and other cities and provinces in the southeastern and western regions to create plans to develop synchronous infrastructure connecting to the airport. They include three expressway projects (Ho Chi Minh City-Long Thanh-Dau Giay, Ben Luc-Long Thanh, and Bien Hoa-Vung Tau), and the North-South and Thu Thiem-Long Thanh International Airport railway projects. The PM also asked these cities and provinces to develop urban and tourism areas.
According to the prime minister, once the airport comes into commercial operation, it will open up opportunities for Dong Nai and surrounding areas, promoting the socioeconomic development of the southeastern and western regions.
Satellite cities becoming new frontier for real estate
Limited land and slow approval procedures are causing a fall in real estate supply in the country’s major cities, with developers instead flocking to satellite cities both north and south.
On January 10, more than 1,000 buyers participated in the launch ceremony of Bien Hoa Universe Complex, located in Bien Hoa city of Dong Nai province. And just a few weeks previously, more than 600 villas and detached houses in the first phase of the Waterpoint project from Nam Long Corporation in Long An province were handed over to customers.
Minh Hoang, an investor in Hanoi, told VIR that profit potential in cities like Hanoi and Ho Chi Minh City is not as high as before, and so other provinces like Dong Nai and Long An are getting in on the real estate action.
“Moving to satellite cities would be a good choice for many private investors. This field of investment is now at the beginning step and the room for growth remains very strong,” Hoang said.
Angus Liew, general director of Gamuda Land in Ho Chi Minh City, expressed that land funds inside the city has been limited, especial for areas large enough to set up townships. “We now have to work with some companies to try and find new land suitable for us to develop a township,” Liew said.
Improvements in the infrastructure system are also helping satellite and neighbouring towns increase their attraction for major property developments.
“We are considering neighbouring and satellite provinces such as Binh Duong, Dong Nai, and Long An in the south; and Hung Yen, Haiphong, and Phu Tho in the north. All of those are offering very good opportunities for large-scale real estate projects,” Liew said.
Domestic developers meanwhile have already jumped into the game. Phu Dong Group is preparing to launch a range of projects. First is Phu Gia Residences located in the heart of Nhon Trach district in Dong Nai. This project will offer more than 260 products to the market in the first quarter of this year.
In Long An province, Thang Loi Group has just open for sale its Sol City in Can Giuoc district, located over a space of 130 hectares. Long An is also the location of many other projects such as Long Cang Riverpark, invested in by Phuc Land Real Estate Company, and West Lakes Golf & Villas, funded by Tran Anh Group.
Along with that, large-scale developers such as Novaland, Van Phuc Group, Dat Xanh Group, and Phat Dat Corporation have already been investing in satellite cities for some time.
In 2020, the real estate market in Ho Chi Minh City and Hanoi experienced a difficult period due to the impact of the COVID-19 pandemic, in addition with increasing land prices and slow approval processes for projects by local authorities.
Based on current conditions, experts said that the real estate market in neighbouring provinces of Ho Chi Minh City will rise, becoming a stronger investment attraction in the coming years.
According to economist Le Ba Chi Nhan, the improvement of infrastructure between Ho Chi Minh City and neighbouring provinces in recent years has greatly helped developers explore new options.
“Setting up real estate projects in satellite cities will create competitive products for a market which is in serious lack of supply and push up the growth of the whole area,” Nhan said.
From the perspective of buyers, living in modern urban areas of satellite cities is also becoming a trend – somewhere they can improve their living standards with much better environments and more agreeable population densities.
Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, acknowledged that the trend of investing in real estate projects in satellite cities and provinces is a given. “Once inner-city land funds become unavailable, it is inevitable that real estate developers move to the surrounding areas. As for end-users, when infrastructure develops and roads are convenient, living in neighbouring urban areas is a very good choice,” Vo said.
According to an expert from domestic property website batdongsan.com.vn, buyers and investors are paying much interest to the six northern cities and provinces of Quang Ninh, Haiphong, Bac Ninh, Hoa Binh, Hung Yen, and Vinh Phuc. In the south, seven provinces are most hunted in particular – Binh Duong, Dong Nai, Ba Ria-Vung Tau, Long An, Binh Phuoc, Can Tho, and Kien Giang.
Among those, Binh Duong is the hottest destination as its population shot up 200 per cent over the last decade, the highest percentage in Vietnam. Figures show that around 44 per cent of local residents in Binh Duong lease homes and do not own a private home.
However, not every market is a safe destination as more and more developers enter. Poorly-planned development could bring oversupply and those destinations could become “death projects” if they cannot attract residences to live in.
According to Nguyen Tran Nam, chairman of the Vietnam Real Estate Association, to make those projects become fruitful, developers must know how to attract residents to come and live in them.
“In order to do that, developers must create enough facilities and a good infrastructure system then residents would come. They must not make many promises to buyers which they later fail to meet,” Nam said.
Moreover, developers are advised to get to grips with the special advantages each province can offer.
“Coastal provinces always have more advantages thanks to natural incentives to develop tourism, while delta provinces with good a infrastructure system would be reserved for the second-home segment. Industrial development hubs meanwhile should be reserved for developing mid- and lower-end houses for workers,” Nam said.
He also warned that buyers should think twice about a new development model known as a “farmstay”, which has appeared in satellite provinces in recent years. “Land for farmstays is all agriculture land, which can be used only for farming. If buyers invest in this model, their capital investment would be kept for long time and they would face difficulties when investments cannot be recycled,” Nam added.
Grade A apartments abandoned during pandemic
Most apartment building projects of developers like Tan Hoang Minh Group, Sunshine Group, Sun Group, and Hateco Group, located in Ba Dinh, Tay Ho, and other districts reported poor take-up rates during the year of the pandemic.
In a talk with VIR, Hang Do Thi Thu, senior director of Advisory Services in Hanoi at Savills Vietnam said that the Grade A segment was completedly vacant during 2020.
In the second half of the year, the new supply of approximately 5,500 units from 10 launches and new phases of eight existing projects was up 79 per cent on-quarter but down 59 per cent on-year. The primary supply of 27,100 units was up 1 per cent on-quarter, but down 19 per cent on-year.
Pent-up demand has supported performance. Total sales of nearly 6,700 units were up 27 per cent on-quarter with an average absorption of 25 per cent. Performance improved in grades B and C.
The annual performance affected by the pandemic saw sales decreasing 43 per cent on-year to their lowest in five years. Grade B with 64 per cent of sales remained the lead performer.
"Grade A sales has been decreasing consecutively since 2017 and was the worst-hit segment by the pandemic in 2020," said Hang. Of this, a lot of high-end apartment projects of giant developers like Tan Hoang Minh Group, Sunshine Group, Sun Group, and Hateco Group, located in Ba Dinh, Tay Ho, and other districts, which launched in 2020 and earlier, could not sell out during the difficult year.
"The competition in this segment is quite fierce. Investors and buyers usually compare it with options like land plots, which can make more profit easier than Grade A apartments," said Hang.
The segment is forecast to face a lot of difficulties even in 2021, if the pandemic is not controlled and the global economy does not fully recover. "However, local demand remains steady, particularly for affordable units. Developers have started focusing on suburbs and surrounding provinces," senior director of Savills Hanoi said.
Savill Vietnam's spotlight for the second half of 2020 forecast unit prices to benefit further from infrastructure upgrades. Average asking prices have increased 4 per cent per year over the last five years. At the same time, infrastructure development eases living farther out. When complete, the metro and ring roads will see this trend accelerate. The framework for public-private partnerships was simplified in 2020. Political stability and speedier decision-making will see greater spending on key infrastructure projects. The GSO estimates that for every 1 per cent point increase in public investment, GDP will move up 0.06 per cent points.
In 2021, approximately 25,000 units from 25 project launches and two projects rolling out new phases will be rolled out onto the market. Grade B (accounting for 78 per cent of this) will continue to lead while experts see no brightening for the Grade A segment in the coming years.
HBA, E-wallet SmartPay, Era Group offer new 'welfare supermarkets' for workers
The Ho Chi Minh City Export Processing Zone and Industrial Park Authority Business Association (HBA) on January 22 signed a Memorandum of Understanding (MOU) with E-wallet SmartPay and Era Group to develop welfare supermarkets for workers at the city export processing zones and industrial parks.
The cooperation will offer welfare services for 1,600 enterprises with nearly 400,000 workers.
Under the MoU, the Era Group on January 22 opened the first EraMart Welfare Supermarket at Linh Trung 1 Export Processing Zone in the city’s Thu Duc city. All goods at the supermarket are sold at affordable prices, and with many promotions for workers.
It expects to open 18 similar supermarkets at 18 export processing zones and industrial parks in the city.
SmartPay provides preferential offers and promotions to members of HBA, the first of which will be in the Linh Trung 1 Export Processing Zone. It will promote a digital experience when buying goods at the ERA Mart welfare supermarket.
“We will provide a better money value through our incentives and promotions, which will make SmartPay the most convenient, safe and affordable way to pay,” Marek E. Forysiak, chairman of SmartPay, said.
This activity aims to improve the livelihood of the workers and employees at export processing zones and industrial parks in the city and nationwide. It uses technology that will administer social programs in partnership with private industry for the benefit of workers, he said.
Tran Thien Long, vice chairman and general secretary of HBA, said that opening welfare supermarkets to sell goods at affordable prices will help workers facing difficulties during the COVID-19 pandemic./.
Lao Cai aims to welcome 5 mln visitors this year
The northern province of Lao Cai, home to the popular holiday town of Sa Pa, has set a target of welcoming 5 million visitors this year and earning more than 16 trillion VND (696.17 million USD) in tourism revenue.
To realise the target, it will bolster digital transformation in the sector and restructure the market and tourism products in keeping with conserving the local cultural identity.
The province will exert efforts to attract more domestic holidaymakers.
Sa Pa has long been among the country’s leading destinations. Of note, young people accounted for more than 70 percent of tourist arrivals to the town in 2020, according to Vice Chairman of Lao Cai Tourism Association Le Anh Dai.
Lao Cai also aims to devise 130 new tourism products to meet demand from tourists and encourage them to return in the future.
The province has been one of the pioneering localities in digital transformation in tourism. Local authorities joined hands with Vietnam Post and Telecommunications Group (VNPT) to roll out a customised smart eco-tourism, which is accessible at http://laocaitourism.vn and on a mobile app.
The portal has had more than 1 million visits since its launch.
Lao Cai’s tourism sector bore the brunt of the ill-effects of the pandemic and welcomed just 2.2 million visitors last year, down by more than half against 2019./.
Fruit and vegetable purchasing, distribution centre opens in Tien Giang
A fruit and vegetable purchasing and distribution centre was opened at the My Tho Industrial Park in My Tho city in the Mekong Delta’s Tien Giang province on January 22.
The centre covers 1,000 sq m and is equipped with modern infrastructure that meets Hazard Analysis Critical Control Point (HACCP) and food safety standards.
It will buy about 100 types of fruit and vegetables from 400 farming households belonging to 33 cooperatives, mostly in the Mekong Delta, including dragon fruit, pomelo, coconut, mango, star apple, and melon.
Products will be distributed to Mega Market (MM) outlets nationwide and exported to Singapore; Thailand; Hong Kong and Taiwan (China); Turkey and the Middle East, while being geared towards the European market in the near future.
During the first stage, in 2021, the centre will process 15 tonnes per day, which will rise to around 50 tonnes in the next stage.
MM Vietnam Director of Supply Chain and Logistics, Brian Alan Luck, said the centre is expected to boost the consumption of OCOP (One Commune, One Product) goods and foster stronger ties with local suppliers, farming households, and cooperatives.
MM’s agriculture engineers will work with farmers and cooperatives on selecting varieties, production, harvest, packaging, and transportation to ensure the highest food hygiene and safety standards.
Acting Director of the provincial Department of Industry and Trade Dang Van Tuan said the centre will contribute to boosting domestic farm produce consumption and exports in the Mekong Delta and Tien Giang in particular./.
Banks to make provisions for COVID-19 affected loans this year
Banks will have to set aside money for potentially unrecoverable COVID-19 affected loans from this year, according to an amended circular drafted by the State Bank of Vietnam (SBV).
Last year, the central bank issued Circular 01/2020/TT-NHNN, allowing banks to avoid making the provisions in 2020 to support banks and borrowers affected by the pandemic.
According to SBV Deputy Governor Dao Minh Tu, the amended circular, which is expected to be issued this month, will support businesses and people with loans, creating conditions for businesses to recover quickly.
However, Tu said, the circular would also regulate provisions on COVID-19 loans to ensure the safety of credit institutions and the national financial system. The provision ratio will fit the financial strength of credit institutions.
The ratio of the provisions is drafted to gradually increase, from 30 percent of COVID-19 affected loans by the end of 2021 to 60 percent by the end of 2022 and 100 percent by the end of 2023.
According to Can Van Luc, the profit growth of banks this year might be only about 10 percent against 20-25 percent in recent years mainly due to the requirement to make provisions for COVID-19 affected loans.
Banks restructured loans worth about 350 trillion VND (15.2 billion USD) for COVID-19 affected borrowers by the end of 2020, Luc said, adding if half of the loans became bad loans, the bad debt ratio of the banking system would increase to more than 3 percent by the end of 2021.
To control the risk of bad loans, banking expert Nguyen Tri Hieu recommended besides actively recovering bad loans, banks must set aside provisions for bad loans and risky loans.
Some banks have already increased provisions for their risky loans.
According to Nghiem Xuan Thanh, Chairman of the State-owned Vietcombank’s Board of Directors, Vietcombank’s bad debt ratio is at 0.61 percent of total outstanding loans, the lowest level among credit institutions and also the lowest in the history of the bank.
The bad debt ratio of State-owned VietinBank had also declined from 1.2 percent in 2019 to below 1 percent in 2020, Tran Minh Binh, General Director of VietinBank, said.
Thanks to the bad debt decrease, the bank increased its provisions from 120 percent to 130 percent of loans. In 2021, VietinBank aimed to keep the bad debt ratio below 2 percent while credit was set to grow at 8-11 percent and profit at 10-20 percent, Bình said.
Leaders of private commercial banks also said the bad debt situation was being improved. Nguyen Dinh Tung, General Director of OCB, said bad debt tended to decrease compared to the mid-2020 period. Enterprises were recovering quite quickly with the pandemic controlled.
It was positive as enterprises were recovering earlier than expected thanks to the central bank’s supporting policies for debt restructuring, helping them overcome the crisis./.
India-Vietnam Investment Forum held in HCM City
Garment, food processing, pharmaceuticals, information technology (IT), construction materials, and renewable energy are fields of potential where businesses from Vietnam and India can bolster investment in the time to come.
This view was shared at the India-Vietnam Investment Forum, held jointly by the Indian Consulate General in Ho Chi Minh City, the Private Economic Development Research Board, the Investment & Trade Promotion Centre of HCM City, and VinaCapital Group on January 22 in HCM City.
Don Lam, deputy head of the Private Economic Development Research Board and CEO of VinaCapital, said Vietnam’s private sector continues to expand despite the COVID-19 pandemic. Nearly 135,000 new enterprises with combined capital of 2.2 quadrillion VND (95 billion USD) were set up last year, a 29 percent increase in registered capital compared to 2019.
Vietnamese businesses, both large and small, are ready for economic recovery and development, he said, adding that trading with India is of interest to many of them.
Vietnam’s imports from India rose from 2.7 billion USD in 2016 to over 4.5 billion USD in 2019, while the former’s exports to the latter increased from 2.6 billion USD to 6.7 billion USD in the period.
“The strategic relationship between the two countries does not stop at trade,” Lam said. “Indian companies consider Vietnam an attractive destination for their investments in the fields of oil and gas, steel, minerals, tea, sugar, and IT training, as well as a place for the transhipment of goods in Southeast Asia.”
According to Indian Ambassador to Vietnam Pranay Verma, Vietnam’s investment in India now stands at 30 million USD, while Indian companies are investing 900 million USD in Vietnam.
He suggested further cooperation in food processing, IT, and tourism.
Vietnamese Ambassador to India Pham Sanh Chau said that with a population of over 1.4 billion, India is a market of great potential for Vietnamese enterprises. He also proposed the two countries’ businesses invest in garments, food processing, IT, and high-quality human resources training.
Deputy Minister of Planning and Investment Tran Duy Dong stressed the need for both sides to step up investment promotion and connectivity, both online and in-person.
The ministry commits to working together with Vietnamese ministries, sectors, and localities to support Indian enterprises for win-win cooperation, thus helping to lift the Vietnam-India comprehensive strategic partnership to new heights, he added./.
Pork price not expected to spike during Lunar New Year
Demand for pork rises in the run up to Lunar New Year (Tet), prices are expected to increase, but not rise to the levels seen last year.
The Ministry of Agriculture and Rural Development said out of 5.37 million tonnes of meat consumed during this period last year, 3.8 million tonnes were pork.
Pig production remains healthy, and across 16 provinces the reproduction rate has topped 100 per cent, with more than 27 million animals available.
However, Nguyen Van Trong, deputy director of the Livestock Breeding General Department under the Ministry of Agriculture and Rural Development, said prices would rise as demand grows.
Currently, live pigs are priced at VND83,000-85,000 (US$3.5) per kilo but Trong said although prices would rise, they would not reach levels seen last year.
He also said there would not be any expected shortages of the meat, but they were stepping up measures to preventing illegal exports to China.
According to the Department of Animal Health, Ministry of Agriculture and Rural Development, the country imported nearly 226,000 tonnes of pork last year, a year-on-year increase of 260 per cent.
The main import markets are from Russia, Poland, Brazil, Canada, the US, Germany and Spain.
This year, 600 tonnes of pork have been imported to supplement supplies for the Tet market.
More than half a million pigs were imported from Thailand for slaughter from mid-June last year to January 13 this year.