VIETNAM BUSINESS NEWS JULY 15
The State Bank of Vietnam set the daily reference exchange rate at 23,203 VND per USD on July 15, down 1 VND from the previous day.
Top 10 prestigious commercial banks 2021 announced
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) again tops the list of ten most prestigious commercial banks in Vietnam this year, according to the latest ranking announced by Vietnam Report.
The bank is followed by the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank) in the second and third places, respectively.
The list also includes the Military Commercial Joint Stock Bank (MBBank), Asia Commercial Joint Stock Bank (ACB), Vietnam Prosperity Joint Stock Commercial Bank (VPBank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Tien Phong Commercial Joint Stock Bank (TPBank), Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) and Vietnam Bank for Agriculture and Rural Development (Agribank).
The ranking was based on the banks’ financial capacity, media reputation and customers’ perception and satisfaction.
Data from the General Statistics Office shows that Vietnam’s credit growth reached 5.47 percent in the first half of 2021, doubling the same period last year’s figure. Despite impacts caused by COVID-19, the banking sector has enjoyed high growth in profit during the period, with bad debts under good control.
Vietnam Report Director Vu Dang Vinh said the firm’s survey of experts and banks indicates that the top three macro-economic factors influencing the banking sector’s performance in 2021 are likely to be the widespread outbreak of the COVID-19, the macro-economic recovery, and the State’s relevant policies and regulations.
Meanwhile, the three micro-economic factors that may have the biggest impact on the industry include fintech, risk management and internal control system, service and product quality.
Some 52.94 percent of surveyed experts and banks said that the banking industry will see better growth and performance this year. It is believed this year’s credit growth is likely to be equal to or higher than 2020’s figure./.
Manufacturing firms see improvements ahead
More than a third of manufacturing and processing enterprises believe business will pick up in the third quarter of this year.
A survey carried out by the General Statistics Office (GSO) found 39.2 per cent of firms questioned expect better performance in their production and business in the third quarter of 2021, and 38.6 per cent believe production and business will stabilise.
Meanwhile, 22.2 per cent of enterprises predict they may face more difficulties than the previous quarter.
The GSO said that industrial production in the second quarter reported positive growth as production and business activities were maintained and gradually recovered, with the added value up 11.45 per cent year-on-year.
In the first half of this year, the industrial sector’s added value is estimated to increase by 8.91 per cent year-on-year, of which the manufacturing and processing industries grew by 11.42 per cent.
At present, major groups are planning to invest in Viet Nam, mainly in electronic production and component manufacturing.
As of June 30, the inventory rate of the manufacturing and processing industries increased by 24.3 per cent year-on-year.
To address inventory and boost production, the Ministry of Planning and Investment proposed localities continue stepping up administrative procedure reform and simplifying specialised inspection procedures.
On June 1, the number of labourers working in industrial firms decreased by 1.4 per cent month-on-month, and 1 per cent year-on-year.
Hanoi to promote consumption of husbandry products
Ha Noi is working to promote the consumption of husbandry products alongside improving product quality amid the goods circulation problems the COVID-19 pandemic has brought.
According to Nguyen Ngoc Son, Director of the municipal Animal Husbandry and Health Department, the capital city has one of the largest livestock and poultry herds in the country with about 38 million chickens, 1.57 million pigs and 164,000 buffaloes and cows.
Son said the COVID-19 pandemic has pushed animal husbandry into a lot of difficulties, including problems in transportation and rising feed prices.
The trading of livestock and poultry between Ha Noi and other provinces has also struggled with the consumption seeing sharp decline, he pointed out, adding that the pandemic also caused disruptions to supply chains.
To overcome the difficult time, the capital city urged citizens to strictly follow the Government’s directives in the prevention and fight again the COVID-19 pandemic, which would help ensure the circulation of husbandry products.
The prevention against diseases among livestock and poultry had also been enhanced, he said.
He added that the city had created the most favourable conditions for existing supply chains to operate smoothly, such as the pork chain of Hoang Long Cooperative and the chicken chains of Tien Vien, Soc Son and Ba Vi districts. The consumption of these products would be promoted at restaurants, tourism areas and schools when the virus is put under control.
The focus would also be placed on enhancing product quality to promote the sustainable development of the husbandry industry, he said.
At the same time, the capital city plans to enhance cooperation with other provinces and cities to increase the trading of husbandry products.
According to Nguyen Huy Dang, Deputy Director of the municipal Department of Agriculture and Rural Development, the capital city hopes to form bio-livestock cooperatives to create closed chains.
Dang said it was necessary to offer policies to encourage enterprises to develop husbandry on a large scale and build concentrated and modern slaughterhouses.
Previously, Deputy Miniter of Agriculture and Rural Development Phung Duc Tien said household farming still played an important role in the economy, stressing it was important to improve the efficiency of livestock production and focus on improving product quality and competitiveness.
Nguyen Manh Quyen, Deputy Chairman of Ha Noi People’s Committee, said the city would focus on developing husbandry products with high added value in association with the development of high-tech slaughterhouses and food processing plants.
Seaport development on the horizon
The development of seaports is to be prioritised over the next three decades to meet increasing demand in shipping services, according to Nguyen Xuan Sang, director of Vietnam Maritime Administration under the Ministry of Transport.
Infrastructure feeding into the seaport was also being planned, including inland waterways and road and railway systems, which would also play a role in collecting and delivering goods into the seaport system, according to Sang.
Plans were compiled to provide a comprehensive picture of the transportation industry in the next 10 years.
Sang said that this would help ensure the connectivity of different modes of transport while fully utilising the advantages afforded to each region.
The plan will be the first time that inland container depots and ports serving inland waterway vehicles would be included in the planning.
Temporary ports will also be considered in areas with favourable natural conditions such as Quang Ninh, the Southeast region, and the Mekong River Delta.
The seaport planning would also incorporate industry 4.0 technology in the seaport construction and management and be applied to develop green seaports and promote energy savings and the efficient use of coastal resources.
During the past 10 years, the volume of cargo transported through seaports in Viet Nam grew more than 11 per cent per year.
Viet Nam is targeting economic growth of seven per cent per year in the 2021-30 period.
It has been forecast that the volume of cargo transported through the seaport system would increase by 1.6-2.1 times by 2030 and 4.1-4.8 times by 2050.
It was estimated that Viet Nam would need around VND300-320 trillion to develop the seaport system by 2030, he said, adding that developing the seaport system would help Viet Nam become an important link in the global value chain.
Sang also said that the investment from the State budget would focus on developing major seaport infrastructure but policies to attract private investment would also be on the agenda.
In the 2011-20 period, about VND202 trillion was invested in seaports, accounting for 20.6 per cent of the total investment in transportation infrastructure. Private investment accounted for 86 per cent of that total.
Viet Nam’s seaport system has seen significant development in the past decade. Wharf length has increased from 20 km in 2020 to 96 km currently and the handling capacity from 82.4 million tonnes to 665 million tonnes.
In the first five months of this year, the seaport system handled more than 209 million tonnes of cargo, representing a rise of nine per cent compared to the same period last year.
HCM City strives to increase vegetable, fruit supply
Businesses and authorities in HCM City are working to ensure supply and prices of vegetables and fruits remain steady despite a panicked populace buying them in bulk to stockpile following the closure of the city’s three wholesale markets and nearly two-thirds of traditional markets.
Supply of vegetables and fruits are now being affected by the closing of the city's wholesale markets and many traditional markets, where most of such products are sold and bought.
Demand began spiking before July 9 amid fears of the more intense lockdown under Directive 16 and people were rushing to stock up.
Some market traders began to jack up prices amidst the falling supply initially when the wholesale markets closed, but prices and supply began to stabilise after July 9.
Demand at supermarkets and food stores jumped again on Sunday, July 11, as people who had been unable to shop earlier made use of the weekend to buy in bulk and many other markets were closed, leading to some stores running out of stocks.
Dao Van Duc, deputy director of the Phuoc An Co-operative group in HCM City’s Binh Chanh District, said his group was making an effort to keep supplying vegetables and fruits to the market through Co.opMart and Big C retail chains and at quarantine zones.
It also had to pay for COVID-19 testing fees for delivery staff, which were expensive, but it tried to keep vegetable prices steady, he said.
Bui Ta Hoang Vu, director of the city Department of Industry and Trade, said vegetable prices at supermarkets were steady but there was a shortage.
Many large retailers had been increasing supply by up to five times to make up for the closure of many traditional markets, but they were still not enough, he said.
Noticing prices and demand for vegetables are rising, individuals and businesses are trying to help by buying vegetables from other provinces and selling them at below market prices.
Trinh Thi Ngoc Hien, head of Anfoods Joint Stock Company in Ben Tre Province, said her company was offering to supply non-leafy vegetables and fruits to seafood buyers at cost prices.
The city Department of Industry and Trade is seeking ways to increase the supply of vegetables and fruits.
Nguyen Nguyen Phuong, its deputy director, said districts were expected to work with closed markets on COVID-19 regulations so that they could reopen.
Many traders at the three wholesale markets are also selling their goods online.
Thu Duc City has set up a transhipment station at the Thu Duc Wholesale Market container parking lot yesterday (July 12) in an effort to increase supply of vegetables and fruits to the city.
A trial run was carried out on July 11, with six businesses receiving goods.
Shipments of produce from other provinces are transferred to smaller trucks to be transported to supermarkets and businesses’ staff kitchens around HCM City.
Up to 2,000 tonnes of vegetables and fruits will be distributed in this manner every night.
Strict measures are in place in the area, with only registered vehicles being allowed to enter and all personnel required to furnish negative COVID test results from within the last 72 hours.
Goods are to be unloaded and loaded quickly so that the container trucks from outside can leave at the earliest.
The Hoc Mon Wholesale Market is planning to set up a similar transhipment station soon.
HCM City has become the COVID epicentre of the country with more than 15,000 cases since the start of the fourth wave on April 27.
It has been under partial or total social distancing since May 31.
COVID-19 surge hits Japanese firms' supply chains in Southeast Asia
Surging coronavirus cases in Southeast Asia, in such countries as Malaysia and Indonesia, have started affecting the supply chains of Japanese companies, with the possibility of regional production disruption becoming more real, the Kyodo news agency reported.
In Malaysia, where lockdown has been in place since June 1, plants belonging to Toyota Motor Corp. and Honda Motor Co. remain closed.
The lockdown has already been extended twice, with more stringent restrictions imposed since July 5 on Malaysia's capital region, where Japanese companies operating in the country are concentrated.
Mitsui Mining & Smelting Co., which makes smartphone materials in Malaysia, announced a production halt on July 5. Even though the government has since allowed the electronics industry to resume work, a press representative of the company says production will not return to earlier levels until sometime between late July and early August.
Kyodo noted Japanese companies have also been hit hard in Indonesia, where daily new infections surpassed 40,000 on July 12. A survey conducted by the Japan External Trade Organisation (JETRO) showed many manufacturers decrying the increase in infections and the impact on their operations. One company reported having 18 percent of its workforce infected.
Also finding it difficult to operate at full capacity due to restrictions imposed on people's movements, many Japanese companies operating in Indonesia are considering sending their Japanese expatriates back home.
An official of a Japanese automaker in Southeast Asia said in the region, where vaccine rollouts remain slow, it is difficult to make a one-year forecast. The difference between the coronavirus pandemic and natural disasters lies in the former having a long-term impact on supply chains and hitting multiple areas simultaneously.
Thailand, considered a linchpin of Japanese companies' production networks in the region, has had a curfew imposed on the Bangkok region since July 12. But that has yet to be accompanied by strong restrictions on corporate operations.
Kyodo cited Kitami, a researcher at JETRO Bangkok, as saying that while Japanese companies are doing their best amid the pandemic, "there is a possibility that if infections continue to spread in other countries, regulations as strong as Malaysia's could be adopted there."
That could sap the appetite for investment, he said./.
Fourth wave of COVID-19 pandemic crushes consumer confidence
Consumer confidence has hit a record low due to the resurgence of COVID-19 cases in Ho Chi Minh City and neighbouring provinces.
According to the latest survey by Infocus Mekong Research, the fourth wave of the COVID-19 pandemic is causing havoc on earning power across Vietnam. 10 per cent of those surveyed have lost their jobs in the past six months or are still unemployed since COVID-19 struck Vietnam. Four out of ten respondents are working part-time or on reduced salary.
Fear of infection has reached an all-time high followed by negative impact on business and fears of unemployment have risen to 50 per cent.
Consumer confidence has plummeted to a 25 year low at 24, even lower than during the first wave. Consumers are addressing their fears by a huge decline in spending.
Every category measured has seen a steep decline in consumption spend, with only utilities spend seeing an increase as consumers lock themselves in at home. Entertainment- dining out, transportation, and home appliance categories will see the biggest negative sales impact.
Any behaviour which costs money is in decline. Being home-bound is the present norm. As a whole, consumer behaviour is being driven by reducing costs, spending less, and weathering the present pandemic storm. Essentially, behaviour is driven by tightening budgets everywhere.
Hardest-hit will be gyms and any paid-for exercise schemes. Any activity that provided entertainment, convenience, and safety in the home should experience a boon.
The stay-at-home trend also leads to retail consumption shifts. Among them, e-commerce will experience significant growth in the next few months, with 44 per cent noting using e-commerce more. Online, seen as safe, cost-friendly, and a convenient channel, will continue to thrive. It is forecasted that new entrants and traditional brick-and-mortar retailers will join the trend and price wars will break-out.
Convenience stores at a growth rate of -1 per cent will continue to do well during the next few months, due to their base offer, convenience, and reach. Look for extended hours and new service offers.
All other retail formats shall experience a decline in both usage and sales. Wet markets and mom and pop stores are less affected due to their lower price points and retailer/customer long term relationships. Supermarkets due to their large size and perceived higher price points will suffer more, as customers tighten their wallets and avoid larger areas with high traffic flow.
In addition, the survey shows that 90 per cent of consumers follow government COVID-19 protocols and 78 per cent acknowledge that Vietnam has done well in COVID-19 protection. 84 per cent of Vietnamese are eager to receive a vaccination, with 12 per cent undecided and 4 per cent unlikely to accept vaccinations.
For those who are undecided, the key rationale is negative symptoms such as blood clotting, lack of trust of manufactures, and lack of knowledge of the source of origin.
Thai energy firm inks a deal with EVN to supply wind power from Laos to Vietnam
BCPG Pcl., a Thailand-based developer and owner of renewable energy projects in the Asia-Pacific region, has entered into a power purchase agreement with Electricity of Vietnam for the development of a 600MW wind power plant in Laos to deliver green energy to Vietnam.
Not only will the Monsoon Wind Project be ASEAN’s largest wind farm, it will also be the region’s first cross-border wind energy project. The wind farm will be located in Sekong and Attapeu provinces in Southern Lao PDR and the wind farm will deliver green energy from Lao PDR to Central Vietnam through the project’s 500kV transmission line. The construction is expected to commence in 2022, with the commercial operation date targeted by 2025.
The Monsoon Wind Project will supply green energy to Vietnam to support the country's growing economy and carbon footprint reduction efforts. ASEAN's largest wind farm is projected to save over 35 million tonnes of greenhouse gas over its lifetime, a meaningful boost to the ambitious global effort to achieve net-zero by the middle of the century. The project also enhances Vietnam's grid stability as the majority of the project's electricity will be generated during the dry season, which is complementary to Vietnam’s existing supply of hydropower electricity that is generated mostly during the wet season.
Impact Energy Asia Development Ltd. (IEAD), an associate of BCPG, signed the PPA with EVN on July 12. IEAD has been developing the Monsoon Wind Project since 2011.
Paradai Suebma, chairwoman of IEAD, commented that, "While many tasks remain to be fulfilled, the signing of ASEAN’s first cross-border PPA marks a symbolic collaboration between Laos, Vietnam, Japan, and Thailand to work towards the global quest of net-zero emissions. We are part of the global fight against climate change and the journey to uplift the well-being and happiness of local communities in which we operate."
She stated further, "We have always known that Lao possessed strong natural resources – this project shows the carbon credentials of Laos as the wind is harnessed to power Vietnam and possibly other ASEAN nations with clean and stable electricity."
IEAD is a partnership between Impact Wind Investment Ltd., which holds 55 per cent, and BPCG which has 45 per cent. Impact Wind Investment Ltd. is backed by Mitsubishi Corporation, a global integrated business enterprise in Japan.
Vietnam’s industrial production index up 9.3% in first half of 2021
The index of industrial production (IIP) in the first six months of 2021 rose by 9.3% compared to the same the period last year, according to the Ministry of Industry and Trade.
The manufacturing sector continued to be the main driver of growth, with its IIP rising by 11.6%.
In other industrial sectors, power generation and distribution increased 8.6% while water supply and waste treatment went up 6.8%.
The mining and quarrying sector declined by 6%, driven by a 10.1% decrease in crude oil and natural gas production, and a 4.4% fall in the mining of hard and brown coal.
Data released by the MOIT showed strong growth in some sectors such as metal production (up 37%), motor vehicle manufacturing (up 33.1%), manufacturing of equipment and machinery (up 17.2%), and leather production (up 12.9%).
Other notable sectors with solid increases in their IIP included computers, electronic and optical devices, and paper and electric devices.
In June alone, industrial production climbed by 0.5% as against the previous month and 6.8% compared to the same month in 2020.
Wood industry overcomes difficulties to achieve impressive growth
In the context of the complicated development of the COVID-19 pandemic, the wood industry still achieved an impressive growth rate in the first six months of the year with an export value reaching 61% of total turnover in the whole of 2020.
If this growth momentum is maintained, the industry’s target of US$14-14.5 billion in export turnover in 2021 is quite achievable.
According to the General Department of Forestry under the Ministry of Agriculture and Rural Development, while many other industries have faced difficulties due to the epidemic, the export value of wood and forestry products was US$8.71 billion in the first six months of this year, including US$1.76 billion from woods of all kinds (up 23.6% over the same period last year), US$6.35 billion from wooden products (up 75.4%) and US$0.6 billion from non-timber forest products (up 72.9%).
The US, Japan, China, EU, and the Republic of Korea (ROK) continued to be the most important export markets for Vietnam’s wood and forestry products, with a total estimated export value of over US$7.68 billion (accounting for around 89% of the country’s total export turnover of wood and forestry products). In particular, exports to the US, China, Japan, EU and the ROK were estimated at over US$5 billion (a year-on-year increase of 99%), US$0.82 billion (up 22.9%), US$0.73 billion (up 11%), US$0.68 billion (up 54%) and US$0.76 billion (up 7%), respectively.
Regarding investment, the wood industry has seen 23 new projects worth a total of US$136.056 million from 9 countries and territories around the country in the first half of the year. The sector also recorded a 10 time capital increase worth US$45.28 million and 26 capital contributions to buy shares with total capital of US$41.14 million. Notably, beds, cabinets and tables saw rises in the three aspects of new investment projects, capital increases and capital contributions.
According to the Association of Vietnam Timber and Forest Products, the majority of wood production and processing enterprises have received export orders until the end of 2021. The demand for wood product exports, especially furniture, is expected to increase sharply as countries conduct social distancing and employees work from home, thereby pushing the need for home and office furniture. On the other hand, this is a time when global consumers have more need to find and purchase furniture and wooden products via websites. Meanwhile, Vietnamese timber products remain very attractive to consumers. In addition, enterprises have strictly complied with regulations on traceability and regarding the transparent origin of raw materials so their products are trusted by customers. The world’s economy is gradually recovering and the main timber import markets of Vietnam have reported rapid economic growth, leading to a sharp increase in demand. Experts also say that Vietnam’s timber and wood product exports will reach their set targets for the remaining months of 2021.
Recently, several forest fires have taken place due to the impacts of the intense heat, droughts lasting many days and the burning season for farming, causing damage to forestry. The prolonged COVID-19 epidemic has affected afforestation and scattered tree planting. Meanwhile, the inspection of afforestation has been limited and many localities have not proactively directed intensive planting and the conversion of large timber plantations. In addition, policies for the development of large timber plantations, such as those related to investment and credit support, land, insurance and investment in forestry infrastructure, have not been sufficient to encourage people and businesses.
Chairman of the Association of Vietnam Timber and Forest Products, Do Xuan lap, affirmed that in order to have a sustainable source of wood materials, the legality of imported wood is a vital issue today. The habit of using natural wood, especially precious wood species, is still relatively common. In fact, this habit has caused harm to the environment and to the wood industry. The US government is investigating Vietnam's wood industry based on allegations that Vietnam illegally imported tropical wood for domestic consumption and for export. This was a warning for wood importing enterprises that they must control the legality of imported wood sources. Director General of the General Department of Forestry Nguyen Quoc Tri also noted that the analysis of data in the first months of the year proved that the import and export of forestry products has witnessed many risks and low sustainability. Therefore, businesses need to strictly comply with regulations on timber imports. Localities should soon make plans to develop a stable source of raw materials in the country, while increasing the plantation of large timber forestry.
Summer-autumn rice production estimated at 8.5 million tons in Mekong Delta
Currently, farmers in the Mekong Delta provinces have entered the peak harvest season of the summer-autumn rice crop. Statistics show that the whole region sowed more than 1.5 million hectares, down 9,000 hectares. Rice yield is estimated at 56.66 quintals per ha, an increase of 1.15 quintals per ha compared to the previous summer-autumn rice crop; total summer-autumn rice production in the Mekong Delta this year is estimated at more than 8.5 million tons, up 124,000 tons.
Many farmers reduced the rice-growing area in this summer-autumn rice crop to switch to vegetables, fruit trees, and aquaculture with higher economic efficiency. However, as the average rice yield increased by 1.14 quintals per ha, it still compensates for the deficiency of rice output due to the reduction in the growing area.
According to calculations by the Departments of Agriculture and Rural Development of Mekong Delta provinces, the production cost of the summer-autumn rice crop this year is about VND3,728 per kilogram, an increase of VND143 per kg compared to the last summer-autumn rice crop. The reason is that fertilizer prices increase by about 40-60 percent over the same period, and other input materials also climbed.
However, by reducing the cost of seeds and the amount of fertilizers and pesticides used, profits are still ensured for farmers. For instance, Tien Giang Province implemented well technical solutions that brought high economic efficiency, when the income reached VND42 million per ha, the production cost was about VND20 million per ha, and the profit reached VND22 million per ha, an increase of about VND5 million per ha compared to last summer-autumn rice crop.
Digitalization, green growth remain key priorities for Vietnam
Digitalization and its transformation into a green economy are top priorities for Vietnam to gain higher labor productivity in the future.
The combination of these two factors would help boost the country’s productivity by one to two percentage points, said World Bank Country Director for Vietnam Carolyn Turk at the Local Development Dialogue 2021 held today [July 13] in virtual format, which aims to find breakthroughs for development at provinces/cities in the 2021-2030 period.
Speaking at the dialogue, themed “Realizing development goals in a new normalcy,” Turk said, during the Covid-19 pandemic, Vietnam has accelerated digital transformation and IT application in various fields, especially in e-government and e-commerce, but she said more efforts are needed to continue the development in these two fields.
She noted Vietnam should look at the digitalization models in neighboring countries while expressing World Bank’s commitment to assisting Vietnam during this process.
On this issue, the Director of the Ho Chi Minh National Academy of Politics Nguyen Xuan Thang identified three factors for the digital transformation, including technological infrastructure, legal framework, and human resources.
“Active participation from each province/city is necessary to obtain all three factors to realize the country’s goal of promoting digital economy, government, and society as planned,” he noted.
Thang said a new normalcy situation would require quick adaptability to growing risks from the development process, including diseases and natural disasters.
“Green growth, therefore, should be pushed forward to create new driving forces for economic development and enhance its resilience against external shocks,” he added.
In addition to digitalization, Professor Tran Ngoc Anh from Indiana University (US) argued amid resource constraints and the Covid-19 pandemic, localities could still achieve their respective development goals by adopting a result-based governance model.
“The purpose of such model is to realize each goal by improving efficiency inside the organization and assessing the capabilities of each public staff to have benefit packages accordingly,” Anh said.
Anh expected this model to create a system with a high level of responsibilities and nurture creativity at the same time.
“Assessing a staff performance would be based on their efficiency in completing a task, therefore, leaders should also assign specific and concrete tasks at the beginning,” he continued.
Anh said provinces/cities should let the people and enterprises evaluate their performance to show the authorities’ determination in pursuing reform.
Director-General of the Administrative Procedures Control Agency under the Government Office Ngo Hai Phan said it is inevitable to set up a mechanism to ensure the efficient implementation of policies.
The Government Office and Ministry of Planning and Investment are developing 200 criteria for efficiency assessment at ministries and provinces/cities, he added.
Mekong Capital invests in fast-growing healthcare firm
Private equity firm Mekong Capital has invested US$8.8 million in LiveSpo Global, a Vietnamese innovative company exporting its consumer health products to more than 20 markets in the world.
LiveSpo Global is established by a group of three founders, specializing in Spores Probiotics Technology. The technology produces spore-based probiotics in liquid form, multi-strains, and high concentration that was developed by Dr. Nguyen Hoa Anh.
Anh returned to Vietnam in 2010 after 15 years of studying and working in molecular biology at Tohoku University in Japan. The healthcare company aims to become a digitalized pharmaceutical company that revolutionizes the way consumers care for health with spore probiotics.
In earlier July, Mekong Enterprise Fund IV (MEF) also completed an investment into HSV Group, the largest cosmetics retailer in Vietnam in terms of the number of stores. The company owns 69 The Face Shop, 11 Beauty Box and seven South Korean-style Club Clio cosmetics outlets, six Adidas and 12 Reebook sportswear stores.
Healthcare is among the most attractive industries for investors according to the latest survey on the Vietnam private equity outlook conducted by Grant Thornton Vietnam, an auditing and consulting firm.
Nguyen Thi Vinh Ha, Head of Advisory at Grant Thornton Vietnam, cited the firm’s survey showing that the growth prospects in healthcare come from the higher healthcare spending per capita with a compound annual growth rate (CAGR) of 9.8% from $194 in 2019 to an expected $309 in 2024.
The shortage of qualified personnel and inadequate healthcare infrastructure results in a huge supply gap and the increasing aging speed of the Vietnamese population will further boost healthcare demand, she noted.
Ho Chi Minh City’s GDP likely to expand 4.9% this year
Ho Chi Minh City’s gross regional domestic product (GRDP) was projected to increase by 5.02% in the first three quarters and by 4.9% for 2021 if the pandemic is brought under control in August.
The growth forecast has been released by the Ho Chi Minh City Institute for Development Studies (HIDS).
For this year, the city set a budget collection of VND364.89 trillion (US$15.86 billion), accounting for 24.79% of Vietnam’s State revenue forecasts.
Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong said the local authorities try to maintain production while imposing partial lockdown that is in line with the government’s twin goal of containing the pandemic and developing the economy.
Accordingly, the municipal People’s Council in June approved economic plans, including allowance to anti-pandemic workforce and welfare to vulnerable groups. The move is regarded as a “factor contributing to recovering the production and stabilizing the labor market.”
In 2021, Ho Chi Minh City (HCMC) will also pay attention to public investment by allocating capital for major projects like Tham Luong – Ben Cat – Nuoc Len channel sanitation, An Phu junction, National Road No.50 expansion, Metro Line No.1, No.2, among others.
To make the goals attainable, the municipal Department of Planning and Investment was asked to speed up the capital disbursement of public projects together with tackling barriers at non-State projects.
Meanwhile, the city’s State Treasury, the Department of Finance, the Customs Department, and the Taxation Department need to facilitate the operation of businesses by extending tax payment deadlines and land rent for 2021.
In the first half of this year, the city posted a growth rate of 5.46% in the GRDP, an increase of 7.3% in the retail sales and services, a rise of 20.7% in the state collection, and the index of industrial production (IIP) growth of 5.9%.
According to Truong Tien Dung, deputy head of the Food and Foodstuff Association of HCMC, local businesses, mostly those working in the tourism and services will face challenges caused by the months-long pandemic.
But manufacturing enterprises still strive to maintain supply chains and the ability to promote exports under free trade agreements (FTAs).
“In order to realize the “dual goal”, the government and the city need to have more realistic support to businesses, mostly by trimming off administrative procedures,” Dung told Vietnam News Agency.
Associate Prof. Tran Hoang Nga, head of the HIDS, said the local authority needs to settle land-related issues and cut administrative procedures as well as boost the capital disbursement for public projects namely Thu Thiem No.2 Bridge, Ring Road No.2, No.3.
In addition, businesses should take advantage of FTAs while restructuring themselves to serve the domestic market, being active in finding raw materials supply, and in connecting with the world.
A number of measures supporting businesses and laborers together with accelerated vaccination would be cited as factors fueling optimism about the future.
Since HCMC has imposed the partial lockdown on July 9, local experts have warned the city’s authorities of the impact on vulnerable groups.
Dr. Nguyen Thu Anh, country director of Australia-based Woolcock Institute of Medical Research, stressed the need to have a specific plan of financial support for residents affected by the lockdown. The municipal government should distribute food to vulnerable groups twice a week to ensure sufficient supply and safety for residents themselves.
“If the Government cannot guarantee the minimum support, it would neither be able to force residents to follow them nor handle this pandemic,” the health professional said.
In reality, HCMC started disbursing the financial package worth VND886 billion (US$38.52 million) from July 12 to vulnerable people who are self-employed laborers, lottery sellers, and street vendors, among others.
Regarding the supply of essential goods, Chairman Nguyen Thanh Phong affirmed sufficient reserves. Accordingly, it has prepared 120,000 tons of food, tripling the demand, which will be distributed through online networks and chains of supermarkets, convenience stores, wet markets, and shops citywide.
Hanoi's enterprises set to use e-invoices for tax declaration in late 2021
Enterprises in Hanoi are expected to use e-invoices for tax declaration purposes in late 2021, a move that would help them save costs and accelerate the digital transformation process.
The Ministry of Finance (MoF) revealed the information while announcing the capital city and other five provinces/cities (along with Ho Chi Minh City, Quang Ninh, Haiphong, Phu tho and Binh Dinh) would be included in the pilot launch of the General Department of Taxation (GDT)’s e-invoice system, developed on the 4.0 Industry platform and capable of processing a mass number of transactions.
According to the MoF, enterprises using e-invoices would enjoy significant benefits in terms of saving time and operational expenses, while preventing possible billing frauds with the use of digital signatures.
“Data from e-invoices are registered by tax authority’s software to determine value-added tax (VAT) amount, so enterprises are not required to declare the VAT,” stated the ministry.
Another key aspect from e-invoice pointed out by the MoF is that such a move would speed up the digital transformation and automation in every step.
“Enterprises’ operation from production, advertisement, distribution, payment to invoice issuance would be automated, in turn helping them optimize their corporate governance model and improve productivity,” the MoF continued.
A report from the GDT noted currently 255 enterprises in Vietnam are using e-invoices with verification codes from tax agencies, while e-invoices of over 550,000 are without such code.
It is estimated that local enterprises use nearly 1.3 billion e-invoices in a year, while around 800 enterprises are providing e-invoice software for customers.
In 2020, the number of e-invoices put into use stood at 2.3 billion, around 50% of total used invoices in the year.
Endless challenges confront banking industry
Although many Commercial Banks have not yet announced their financial statement for the second quarter of 2021, some banks have already declared outstanding growth and profit.
Needless to say, the current ongoing complicated developments of the Covid-19 pandemic will continue to bring about endless challenges for the banking industry in the second half of the year.
In the first six months of the year, profits at VietinBank were estimated to increase by 75% to touch VND 13,000 bn. This information was shared by VietinBank leaders at a business review meeting at the end of June. This is also the highest six month pre-tax profit in the history of VietinBank.
A notice released at the end of June by Vietnam Maritime Commercial Joint Stock Bank (MSB), said that in the first six months of the year, pre-tax profit reached VND 2,800 bn, three times higher than in the same period last year, reaching 85% of the whole year plan. According to the set plan, the bank pre-tax profit target this year is at VND 3,280 bn, up 30% compared to the previous year.
TPBank is also among the group of banks that announced preliminary business results of last six months, with a pre-tax profit of VND 3,007 bn, up 47.8% over the same period last year, equal to 54% of the whole year plan, while the Return on Assets (ROA) reached 2.15%, and Return on Equity (ROE) reached 26%.
By the end of June, total assets of TPBank were estimated at around VND 242,000 bn, within the target of VND 250,000 bn for the whole year. Total assets are forecast to increase far beyond the plan by the end of the year.
LienVietPostBank also recently revealed that profit in the first five months of the year reached around VND 1,700 bn, with an average monthly profit of about VND 370 bn. Currently, profits at LienVietPostBank in the first six months are about VND 2,000 bn, equal to 80% of the whole of 2020.
Last week, SSI Securities Company Analysis Center (SSI Research) announced the second-quarter business results of 33 listed companies.
This report estimates second quarter pre-tax profit at HDBank at VND 2,400 bn, up 45% over the same period, BIDV at VND 3,850 bn, up 51%, Techcombank at VND 5,700 bn, up 57.6%, and ACB with pre-tax growth of 58%.
As noted, the positive business results of banks were mainly due to the credit recovery in the past six months. Data from the General Statistics Office shows that the credit growth of the economy in the first six months of this year reached 5.47% compared to the same period in 2020, only increasing by 2.45%.
At banks, the credit growth rate also had a significant breakthrough over the same period.
VietinBank credit balance in six months reached around VND 1.06 mn bn, up 4.8% compared to the end of 2020. In the same period last year, VietinBank credit balance had increased by only 0.66%.
Some sources said that within the first five months of the year, MSB hit the credit ceiling of 10.5% previously granted by the State Bank of Vietnam, and proposed for extension of credit limit. TPBank also recorded credit growth at 11%, nearly touching the credit limit granted by the State Bank of Vietnam.
Similarly, BIDV profit came from credit growth of 7% compared to the beginning of the year, higher than the growth of 2.35% in the first six months of 2020, and NIM expansion over the same period.
Techcombank also increased credit to 11.9%, while ACB increased 19% to 20%. Credit recovery, low cost of capital raising the Net Interest Income ratio (NIM) were the important factors that pushed the bank profit to increase rapidly in the first half of the year. Other banks have not announced their profits yet, but the data is forecast to be positive.
Optimism about earnings may continue in the second half of this year. Credit demand of businesses recovered in the first months of the year, but the fourth outbreak of the Covid-19 pandemic caused business and production activities to be significantly affected.
By the end of June, 70,200 enterprises had left the market, up 24.9% over the same period. In May, the Ministry of Planning and Investment also said that a number of large-scale enterprises withdrawing from the market had increased, reflecting the reduced resilience of businesses under the ongoing pandemic. In such a situation, lending activities of all banks will certainly be affected.
In a business trend survey report in the third quarter of 2021 by the Department of Forecasting and Statistics (SBV), credit institutions said that at the end of the second quarter, overall customer demand was at a modest level. In this, the demand for loans and payments improved stronger than in the previous quarter, while the demand for deposit continued to improve though the speed slowed down. In general, the business situation has improved but not as expected.
Looking to the second half of the year, credit institutions have revised their forecast of credit balance growth for the whole year compared to the survey period announced at the end of the second quarter. Specifically, it is expected that this year's credit balance will only increase by 13.1% as compared to previous 14.7%.
Credit institutions also reduced their credit growth forecast compared to the previous survey period due to the devastating impact of the pandemic in the second half of 2021. This result showed that credit institutions are worried about the situation in the third and fourth quarters.
According to forecast by securities companies, due to increased credit demand for economic recovery, inflation pressure is higher in the second half of the year than in the first six months.
Therefore, in order to maintain an attractive deposit interest rate in the context of high competition from investment channels such as real estate and securities, bank deposit interest rates are expected to increase by 0.25% to 0.3% in the second half of 2021.
When deposit interest rates increase, the bank NIM will shrink and affect profitability. Capital inflow into real estate and securities is forecast to be more tightly controlled, as these are attractive NIM sectors due to higher lending rates than average.
Currently, there are many opinions that profits on books of banks are not substantial, and not showing insider potential problems. According to Circular 03/2021 of the State Bank of Vietnam, credit institutions are allowed to restructure the repayment term with debts arising from the period from 23 January 2020 till the end of 2021, which means that debts that are likely to become bad debts have been circled.
At the same time, the provisioning for this amount is also extended with a term of three years. Accordingly, the provisioning rate is at least 30% at the end of the year, increasing to at least 60% and 100% at the end of 2022 and 2023, respectively. Many bad debts that should have been set aside were not set up. Therefore, the current profit does not necessarily reflect the realistic health of the bank.
VAMM reports increasing motorcycle sales in Q2
Members of the Vietnam Association of Motorcycle Manufacturers (VAMM) sold a total of 667,360 motorcycles in the second quarter of 2021, a year-on-year rise of 28.65 percent.
Five VAMM members - Honda, Yamaha, Piaggio, Suzuki, and SYM - are producing and distributing nearly 100 models of motorbikes, from middle-end to high-end and luxurious vehicles.
Honda Vietnam, which is manufacturing and distributing 29 types of motorbikes, accounts for about 80 percent of the market share.
It sold 149,853 motorbikes in June, down 16.9 percent month on month and 14.2 percent year on year.
Wave Alpha was the bestseller, with 32,578 units, or 21.7 percent of the total, while Vision was the most popular scooter, with 38,542 units delivered, or 25.7 percent.
Besides domestic sales, some member units of VAMM also export their completed motorcycle products to many countries and territories.
Notably, Honda Vietnam exported 17,151 motorbikes to foreign markets./.
HCM City charities help poor, frontline COVID workers with food, accommodation
Free meals, vegetable, and accommodation have been provided to people especially the poor, social welfare shelters, and frontline volunteers as well as health workers in COVID-19 prevention and control in HCM City during the 15-day social distancing period.
Non-profit Food Bank Việt Nam’s volunteers ride motorbikes with food boxes every day into small alleys where people selling lottery tickets, scavengers and other poor informal-sector workers live.
They have been told to stay off the streets and at home during the 15-day social distancing mandate by the city under Directive No.16.
The motorbikes with the food are parked in the middle of the alleys so that people can keep a safe distance.
Nguyễn Tuấn Khởi, the founder of Food Bank Việt Nam, said each meal comprises eggs, tomato fish stew, fried mustard greens, cabbage soup, and banana so that they “could have nutritious meals.”
Before the social distancing began, the food was mostly handed over to needy people at the charity’s Bếp Yêu Thương (Loved Kitchen) in Bình Thạnh District’s Ung Văn Khiêm Street.
The volunteers have been issued cards that allow them passage around the city to deliver the meals.
Khởi said he had also got in touch with sponsors in many provinces to ask for donations of vegetables and others needed for making food at the city’s social welfare shelters.
On July 9, the first day of social distancing, the Food Bank Việt Nam took vegetable and other requirements by car to Vinh Sơn Nursing Home, Diệu Pháp Shelter, and Hiệp Bình Phước Social Welfare Centre.
Two days later it brought more than 20 tonnes of vegetable from Đà Lạt and delivered to other social welfare shelters.
The HCM City Youth Social Work Centre on July 11 cooked meals for 101,844 poor people and people living in locked-down areas, the highest number following 37 days of charity. Initially it had planned to feed only 28,000 people daily.
Because of the social distancing, volunteers have to stay at the centre to cook, Võ Quốc Bình of the centre, said.
“The city has more and more areas being locked down because of COVID-19 patients there. Lottery ticket sellers and garbage collectors do not earn anything during the social distancing period. Free meals are imperative for them.”
The centre gets orders for food from people’s committees, the Việt Nam Fatherland Front and Hồ Chí Minh Communist Youth Union in districts, its volunteers cook the needed food, and the agencies placing the orders collect and distribute the meals.
The centre has solicited donations to ensure it has enough vegetables, fruits, meat, and others.
Bình said: “Previously, traders in the city’s wholesale markets donated them, but the markets are closed temporarily. We contact vegetable farmers in the city and other provinces to seek donations.”
Many individuals, locals and overseas Vietnamese, and companies have donated vegetables to people in locked-down areas and opened charity places dubbed 0 đồng food stores and mini marts in many places to benefit thousands of needy people.
The so-called rice ATM machines continue to be used during the fourth wave of COVID.
In District 12 for instance there are six 0 đồng food stores and an ATM machine.
Đỗ Kim Ngọc told Tin Tức online newspaper belonging to the Việt Nam News Agency that she has a four-month baby and her family’s income depends on her husband and has been affected by the pandemic.
Vegetables, rice, noodles, and milk being provided by the Việt Nam Fatherland Front Committee of District 10 help her family survive, she added.
Ambassador Hotel in HCM City’s District 1 provides free accommodation for frontline health workers, police officers and volunteers involved in fighting COVID. Photo Courtesy of Nguyễn Tuấn Khởi
The Food Bank Việt Nam is working with Đinh Quốc Huy, who owns the Ambassador Hotel in District, 1 to provide free accommodation for frontline health workers, police officers and volunteers involved in fighting COVID, and even others who have difficulty finding accommodation.
Khởi said, “Many of the health workers, police officers and volunteers taking samples from the community cannot go home late at night.”
Huy said, “They also need temporary accommodation while they wait for test results. Besides, they are afraid they might transmit COVID to their family.
“My hotel does not have many guests and so I provide free accommodation to these people. They feel assured while working.”
Khởi is asking CP Livestock Joint Stock Company to provide food for the volunteers and other workers and seeking other aid for their laundry, electricity and water at the hotel.
At the 12 checkpoints at the city’s gateways, the Department of Transport and the Youth Social Welfare Centre have redesigned 12 old containers for police officers, health workers and volunteers there to rest between work.
The containers are equipped with electricity, air conditioners and exhaust fans.
The Việt Nam Fatherland Front Committee units in districts have called on landlords to reduce rents especially for workers and people affected by the outbreak.
Vietnamese rice export price surges in first half
Vietnam exported approximately 3.03 million tonnes of rice worth US$1.65 billion during the first half of the year with the average rice export price increasing 11.7% to roughly US$544.4 per tonne, according to the General Department of Vietnam Customs.
The figures represented a fall of 14% in volume and 4% in value compared to the same period last year.
The Ministry of Agriculture and Rural Development revealed that the country enjoys several advantages in terms of exporting rice due to the complicated nature of the COVID-19 pandemic making the demand for food in several countries rise sharply.
A representative of Trung An Hi-tech Agriculture Joint Stock Company noted that Vietnamese rice has seen bright prospects in terms of exports to demanding markets, such as the EU market, especially since the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) in August last year.
The representative emphasized that the company has successfully exported several consignments to Germany, the Netherlands, and the UK.
Since the beginning of the year, the Philippines continues to be the biggest consumer of Vietnamese rice, with export volume reaching over 1.09 million tonnes worth US$579.83 million, marking a fall of 20.6% in volume and 8.6% in turnover.
However, the average export price rose 15% to US$530.5 per tonne compared to the first half of 2020, thereby accounting for 36% of the country’s total rice export volume and turnover.
China made up the second largest importer of local rice with 580,942 tonnes worth US$308.68 million, an increase of 26.9% in volume and up 12.5% in turnover, while the average export price decreased by 11.4% to US$531.4 per tonne against the same period from last year.
Moreover, Ghana came third with 327,551 tonnes worth US$191.3 million, up 32% in volume and 51% in value, with the export price increasing by 14.6% to reach US$584 per tonne.
Most notably, rice exports to Malaysia during the first half of the year plummeted compared to the same period from last year.
Elsewhere, Vietnamese rice exports also witnessed significant export growth in the Bangladeshi market with a rise of 11.181% in volume and 14.1% in turnover.
Last year saw the country ship 6.15 million tonnes of rice worth roughly US$3.07 billion, down 3.5% in volume, but up 9.3% in export value compared to 2019.
Outstanding local firms to be honoured with Vietnam Gold Star Awards
As many as 200 outstanding Vietnamese brands and domestic enterprises, which are notable for their quality and operational efficiency will be honoured with the Sao Vang Dat Viet (Vietnam Gold Star) Awards, according to Vietnam Young Entrepreneurs Association.
The prizes will be given out to a number of outstanding members of the business community in cities and provinces across the country, leading brands in specific sectors, and major products, all of which have had an impact on the international competitive capacity.
A series of events are to be held with the aim of supporting Vietnamese businesses to develop prestigious brands and improve their competitiveness within the framework of the awards.
According to the organising board, local enterprises must submit their applications to join the awards before August 5. Throughout August and September the jury will spend time to carefully examine all entries in order to select the best 200 trade names.
Moving forward, the awards ceremony is scheduled to take place in early October and will be broadcast live on Vietnam Television.
The accolade was initially launched in 2003 for the purpose of encouraging Vietnamese businesses to develop high-quality products and increase their competiveness as a means of establishing a trademark for their goods, services, and brands. This can ultimately boost their prospects in both the domestic and international markets during the process of international economic integration.
Vietcombank takes out top spot in Vietnam Report annual rankings
Vietcombank has taken out the top slot in Vietnam Report’s Top 10 Vietnamese Commercial Banks of 2021 ending months of speculation. The rankings, announced on Tuesday, saw banks from all over Viet Nam ranked based on surveys, their financial capacity, and media coverage.
Vietnam Report pointed out that despite the COVID-19 pandemic, banks still made good profits in the first half of this year with more than 10 reporting profits of trillions of dong with bad-debt ratios labelled ‘under-good-control’.
Vietcombank was followed by VietinBank, Techcombank, MB, and ACB. Other names in the list included VP Bank, BIDV, TPBank, HDBank and Agribank.
The latest update from the General Statistics Office (GSO) showed that credit growth had expanded by 5.47 per cent by June 21, double the rate of the same period last year.
Vietnam Report also cited data from FiinGroup that showed banking revenue in the first quarter of this year rose by 28.4 per cent.
The banking sector’s growth was supported by lower interest-rates on deposits but lending rates being left unchanged. In addition, many banks issued a large amount of long-term bonds with low yields, helping to improve their net profit margins.
According to Vu Dang Vinh, general director of Vietnam Report, growth prospects for the banking sector remain “positive” but there are still concerns around the unpredictable nature, and subsequent impacts, of the pandemic.
COVID-19 has seen many companies pushed into difficulty. The GSO’s statistics show that more than 70,200 firms have temporarily halted operation, applied to be dissolved, or been dissolved in the first half of this year.
Other challenges to the banking sector were the need to comply with international standards and the growing competition in digital transformation projects. This includes not only the diversification of products and services but also with fintech and big tech companies entering the digital payments and consumer lending markets.
Vietnam Report also pointed out that bottlenecks in policies for new business models were also hindering the development of the banking sector. A number of new business models have also appeared in the financial sector such as digital banking, digital currency and peer-to-peer lending. Banks are also faced with cybersecurity risks.
In this context, banks should hasten the development of digital banking, Vietnam Report says, adding that the pandemic is providing an opportunity for banks to restructure their revenue sources from providing credit to providing services to meet the rising demand for cashless payments.
Vietnam Report said that 2021 would be a boom year in digital transformation, which would draw the participation of not only the private sector but also State-owned banks.
Vietnam Report’s survey findings revealed that 58.33 per cent of banks were implementing digital transformation on a large scale, 16.67 per cent were partially undergoing a digital transformation, and the rest were preparing to consolidate their operating systems.
Green banking was another development trend the report mentioned. It emphasised the importance of providing loans to green economic sectors like renewable energy, environment services, green property development, green traffic projects, food, climate change adaptation and energy efficiency.
New requirements for enterprises to continue operation in Ho Chi Minh City from July 15
To prevent the spread of the COVID-19 pandemic in the community, enterprises in Ho Chi Minh Ctiy have to implement either “three on the spot” or “one road, two places" operations.
The chairman of the People's Committee of Ho Chi Minh City stated that to maintain production, enterprises in the city must belong to one of the following two groups – "three on the spot" or "one road, two places".
Enterprises and employees in the first group must conduct production, have meals, and rest after work at the same spot.
Otherwise, businesses must ensure isolated production and residences in two separate locations, with a single transport route for workers to commute. Enterprises can seek dormitories, hotels, or concentrated accommodations for workers.
At the same time, the chairman of the People's Committee of Ho Chi Minh City assigned the city's Department of Health to assume the prime responsibility for, and coordinate with relevant agencies to urgently organise the appraisal of businesses that ensure the above conditions.
Only when enterprises ensure pandemic prevention and control will they be allowed to continue production. Additionally, they need to have their workers periodically tested every seven days, to be paid out the pocket of businesses.
In case enterprises fail to meet the above requirements, they must stop operating from 0:00 on July 15 until new instructions are issued.
Since the fourth outbreak starting on April 27, the city has had a total of 16,573 confirmed COVID-19 cases.
Through screening and tracing, infections are mainly discovered at workers' accommodations, leading to a very high risk of infection from the worker's residence to the production place and vice versa.
Footwear export shows strong rebound in first half
Vietnam’s footwear sector has posted a strong rebound in the first half, with export turnover touching $10.4 billion, a 27.8 per cent jump on-year.
According to the Vietnam Leather, Footwear and Handbag Association (Lefaso), footwear exports in the year to date have shown strong recovery momentum.
Along with this, handbags, suitcases, and umbrellas, despite reporting a lower increase of only 7.9 per cent, helped bring in nearly $1.7 billion in export value.
Footwear and bags contributed more than $12 billion to $157.63 billion in Vietnam’s total export value in the first half, up 28.4 per cent over the same period last year.
Lefaso said that although the epidemic is still a global complication, holding up Vietnam’s key export markets like the US and the EU, the purchasing power has recovered strongly, boosting order intake for Vietnam.
The global leather and footwear market is forecast to reboot strongly in the second half, helping to brighten the country’s export prospects.
The global leather and footwear market is forecast to reboot strongly in the second half, helping to brighten the country’s export prospects.
An important driving force as pointed by the Ministry of Industry and Trade is that in the first half of 2021 local leather and footwear businesses have actively availed of the advantages brought by new-generation free trade agreements (FTAs), especially the EVFTA to push up export.
By the end of the second quarter of 2021, the order intake to traditional export markets like the US and the EU had surged by more than 10 per cent. According to reports by businesses, until present, major enterprises have had export orders for the whole year.
“Stable production in many areas with manufacturing plants are luring orders into the country's leather and footwear industry. In addition, competitive labour cost, skilled workforce and political stability are the factors that prompt importers to place orders with local firms,” Lefaso said in a recent statement with local media.
Meanwhile, China's labour cost has undergone a sharp jump in the year to date. In Myanmar, the country’s political instability has adversely affected production and order placement.
Cambodia has also been hit hard by the COVID-19 pandemic and social distancing policies have been forcing importers to recalculate orders. In this context, Vietnam’s leather, footwear, and handbag export value is expected to reach $22 billion, equivalent to 2019 levels.
According to recent figures by the General Statistics Office, Vietnam’s total import and export value came to $316.73 billion in the first six months of this year, up 32.2 per cent on-year, of which export brought in $157.63 billion, up 28.4 per cent and import reached $159.1 billion, an excess of 36.1 per cent.
Despite the negative impacts of COVID-19 pandemic causing many factories in large industrial zones in Bac Ninh, Bac Giang, or Danang to face production interruptions, Vietnam’s export value in June still registered double-digit growth compared to the same period in 2020. Accordingly, the total export-import value reached an estimated $54 billion, up 25 per cent on-year.
As for major export markets in the first half of this year, the US is Vietnam's largest export market with $44.9 billion in total export value, showing a 42.6 per cent jump over the same period last year. Next is China with $24.4 billion, up 24 per cent; the EU came third with $19.3 billion, up 17.4 per cent. Vietnam’s export value to ASEAN reached $13.8 billion, up 26 per cent and to South Korea amounted to $10.5 billion, up 14.7 per cent, and to Japan $9.9 billion, up 6.9 per cent.
Samsung refutes news of halting operation at Saigon Hi-tech Park
South Korean giant Samsung has disclaimed rumours that it has halted operations at the manufacturing facility at Saigon Hi-tech Park that went viral a few days ago.
Under the fourth resurgence of COVID-19, plenty of overseas companies in Vietnam, including Samsung have had to temporarily halt operations at Saigon Hi-tech Park (SHTP) as per the requirement of the local management board, reported Bloomberg.
Accordingly, the SHTP Management Board was reported to have compelled establishments to briefly shut down until they can come up with plans about quarantining and providing accommodations for their employees at the park during the health crisis.
However, as soon as the news was published, a representative of Samsung in Vietnam denied the information and asserted that it has had plans prepared to provide accommodations and also quarantine measures for its facility in the hi-tech park. The representative claimed the facility has been operating normally.
Meanwhile, other subsidiaries of US-based Intel, Japan-based Nidec, Japan-based Nipro, which are also located in the park, remain silent about the management board’s decision.
Previously, Nidec Vietnam had halted operations for a week when an infection case was discovered at its factory. The problem also forced the company to let go nearly 65 per cent of employees.
To date, the establishment provided accommodations for nearly 4,000 labourers and is currently waiting for the management board to approve its quarantine plan to resume work.
SHTP is home to 85 companies with more than 45,000 workers. Last year, the park’s entire manufacturing value reached $21 billion, up 23 per cent on-year. Of this, about 20 companies submitted quarantine plans to the management board.
Manufacturers clamber for continuity
A growing number of manufacturers in Ho Chi Minh City are struggling to keep manufacturing afloat amidst a severe COVID-19 outbreak among workers.
As over 230 workers have tested positive for the coronavirus, Nidec Sankyo Vietnam had to temporarily halt production in Saigon High-tech Park (SHTP) in Thu Duc city. Meanwhile, the company has turned part of its facility into an on-site quarantine zone for nearly 3,500 workers.
Nidec Sankyo Vietnam is among four subsidiaries of Nidec Group in SHTP. Likewise, its sister company Nidec Vietnam is scrambling to maintain operations.
Luu Kim Hong, chairman of the trade union at Nidec Vietnam, told VIR that the company has more than 6,000 workers, with one-third of them living in Thu Duc city’s ward next to the SHTP, which was recently locked down.
Nidec Vietnam has relied on the rest of its workers to fulfil the large amount of orders and has requested workers to do overtime to hit targets. It is also looking at recruiting more workers but such a thing is scarce during the pandemic.
Even more worrying, if infected cases are detected at the factory, Hong is afraid about the lack of on-site quarantine facilities. Because the factory site has only enough space for production, it is not possible to arrange quarantine area for thousands of workers as per the city’s request.
“Workers will not agree to stay at the factory site because of the living conditions. Indeed, we have prepared space in case of quarantine, but it is not eligible for such a large number of people to stay for a long time. We even rent hotels for workers to stay and pay all the fees for that, but very few people accept the solution due to high risks of infection,” he shared.
The SHTP is home to 85 businesses employing 4,500 employees, including 500 experts. There are three companies with 5,000 employees and 10 companies with 1000 employees. Some big investors in the SHTP include Intel, Samsung, Sanofi, Schneider, Jabil, and others.
As a subsidiary of Nikkiso Group, Nikkiso Vietnam has also felt the pain from the latest wave of coronavirus. Nikkiso Vietnam has its production base in Tan Thuan Industrial Zone in District 7, specialising in manufacturing high-quality medical products, including blood tubes for dialysis treatments.
Cao Tan Dung, general affairs manager of Nikkiso Co., Ltd., told VIR that the situation is getting worse with more and more workers infected in Tan Thuan Industrial Zone. At present the company is striving to tighten the anti-pandemic measures at the factory.
“There is an infected case in my factory as well so we had to put off the production a few days ago. A stay-at-work model seems a good idea now, because of the limited space in the factory,” he said.
Factories in industrial zones, export processing zones, and high-tech zones are suffering from pandemic spread among workers. Furthermore, since workers usually live together in an area, forced isolation numbers can be huge.
With no clear end in sight to Ho Chi Minh City’s pandemic woes, authorities and enterprises are sparing no time in preventing the spread and minimising losses.
In the meeting of the COVID-19 pandemic prevention and control team in the city, Hua Quoc Hung, director of Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA), claimed there were around 800 infected cases in 38 enterprises in such zones as of early last week. Among them, there were four enterprises with 100 or more cases.
For businesses with a large number of infections but currently lacking isolation spaces for F1 and F2 cases, there will be a possibility of cross-contamination. Authorities have asked state-owned enterprises to temporarily use their properties, offices, or factories as quarantine zones or screening test points. Around 38 enterprises have registered to arrange accommodation for their workers to stay at work.
The current outbreak had exerted a severe impact on Vietnam’s manufacturing sector. Containment measures and temporary business closures contributed to the sharpest falls in output and new orders since the first outbreak of the pandemic last year, while also exacerbating supply chain issues and making it more difficult to export products.
Jola Pasku, senior economist at American-British information provider IHS Markit, told VIR that Ho Chi Minh City accounts for approximately 22 per cent of Vietnam’s economic output, so any disruptions of economic activities there will likely have negative spillovers on economic indicators on a macro level.
“Depending on the scope of the current outbreak and the extent of the disruptions in industrial parks, we will likely witness a more pronounced slowdown in export-oriented manufacturing activities and GDP in the third quarter of the year,” she said.
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Vietnam Asia Commercial Joint Stock Bank (VietABank) will list 445 million shares (OTC: VAB) on the Unlisted Public Company Market (UPCoM) with the reference price of VND13,500 (58 US cent).
According to information from the Hanoi Stock Exchange, shares of VietABank will officially be transacted on July 20, 2021.
As of June 25, VietABank had 1,913 shareholders, all of whom are domestic shareholders. Two large shareholders of the bank are Rang Dong JSC and Viet Phuong Investment Group with the ownership of 7.35 and 12.21 per cent. The ratio available (30 per cent) for foreign shareholders will be unchanged.
In the first quarter of this year, the bank reported a pre-tax profit of VND125 billion ($5.43 million), up 53 per cent on-year. As of March 31, VietABank has a total asset value of VND77.02 trillion ($3.35 billion).
This year, the bank set the target to earn VND658 billion ($28.6 million) in pre-tax profit, up 61.7 per cent on-year. It expects to earn VND7.2 trillion ($313 million) in revenue and VND526 billion ($22.87 million) in after-tax profit, signifying increases of 23 and 58 per cent on-year. Besides, it also expects to increase the total asset to VND97.07 trillion ($4.22 billion) by the end of the year.
In the first half of this year, series of banks list their shares on stock exchanges, including OCB, SeABank, and Bac A Bank. These banks mobilised a huge volume of capital and their share value increased between 36 and 150 per cent compared to the reference prices.
Multichannel retail a new trend amidst pandemic in Vietnam
Utilising both online and physical stores has become one of the new trends in the Vietnamese retail market amid the complicated developments of COVID-19.
Shopping channels from apps to social media and supermarket call centres are operating at full capacity, helping drive growth for retailers and suppliers of goods as well as allowing consumers to minimise direct contact with each other and subsequent exposure to the virus.
The COVID-19 pandemic is making consumers more conscious of their health and safety, resulting in significant changes in their shopping habits towards an increase in online shopping via e-commerce platforms.
With the popularity of social networking sites and e-commerce platforms, online shopping is becoming a new trend amongst Vietnamese consumers and in going forward it can could have changed their shopping habits forever. As such, the development of multiple sale channels, both online and physical, is now a necessity for the Vietnamese retail sector.
In fact, the past several years have seen some retailers step up their multichannel model to meet consumers’ demand, helping make their shopping journeys more convenient.
VinCommerce, which manages VinMart and VinMart+ supermarkets, is a success story in shaping the consumer habit of buying essential goods through its VinID app. With diverse offerings from fruit and vegetables to fresh meat and dried foods sourced from its stores, the company affords consumers the convenience of having what they need for their daily lives without having to visit a physical store.
Lotte Mart has also launched a mobile app to allow consumers to choose from up to 3,000 different types of goods on its online supermarket and have them delivered to their homes.
For production companies, many are also starting to pay more attention to multichannel sales though most acknowledge that these online channels have yet to bring in much benefit. The food maker Vissan, for instance, began selling their products on e-commerce platforms and promoting online sales through its hotline and website in early 2020. The company targets 20% growth in its online channels in 2021 and aims to raise its share of revenue through this channel to 30% in the future.
The giant dairy producer Vinamilk has stated it has been investing in e-commerce in recent years but its contribution remains small as most consumers still retain the habit of buying at a store near them. Nevertheless, the company is still pushing for the development of its physical stores to support their online channel as it continues to be an inevitable source demand during the pandemic.
In addition to the growing number of convenience stores and minimarts, online retail is considered a channel with great potential and much room for development thanks to technological developments.
In Ho Chi Minh City, the supermarket chain Co.op Mart recently piloted a new retail model known as “pick and ship”, in which the supermarket will do the shopping for its customers. In this way, consumers visiting the are arranged in well-ventilated areas and wait to receive the products they have selected. This innovative way of operating minimises crowds at cashier counters and shelves, especially during peak hours.
Van Tien Hieu, living in District 9, said in the past when he visited this supermarket, he was asked to wait in line and maintain distance from others, which he said is not practical as consumers may still stand close together or touch others by accident.
But he was quite surprised when going to the supermarket in recent days as he only had to sit and browse the list of products on offer, then write what he needed and the quantities as well as his name and phone number. A supermarket worker then collected the items for him, checked the goods and payment was made.
The whole process took about 15-20 minutes.
Hieu said some may find this inconvenient as they could not choose the goods directly but noted that it can help reduce infections between consumers given the complicated COVID-19 situation in Ho Chi Minh City.
Zero percent loan rate provided for enterprises to pay wages for workers
Deputy Director of Ho Chi Minh City Bank for Social Policies Bui Van Son, on July 13, informed that the Vietnam Bank for Social Policies has started receiving applications for enterprises, who want to borrow money to pay wages for work stoppage and production restoration, according to the support package of VND26 trillion of the Government.
Accordingly, enterprises are entitled to borrow money to pay wages for work stoppage when in these enterprises, there are contract employees participating in compulsory social insurance until the month preceding the time when the employees stop working or have to stop working for 15 consecutive days or more from May 1, 2021, to the end of March 31, 2022. Enterprises must not have bad debts at the time of loan application.
For enterprises that have to temporarily suspend operations at the request of competent state agencies to prevent and control the Covid-19 pandemic from May 1, 2021, to the end of March 31, 2022, enterprises operating in the field of transportation, aviation, tourism, accommodation services, and service of sending Vietnamese workers to work abroad under contracts, they are entitled to borrow money to pay salaries to employees when they resume production and business activities. The loan interest rate is zero percent with loan term below 12 months.
Vietnam Airlines plans to set up cargo airline
In June, Vietnam Airlines’ revenue from cargo transportation, which normally accounts for 10% of the total, exceeded that of passengers for the first time.
Vietnam Airlines is considering setting up a cargo airline amid its business operation is severely affected by the Covid-19 pandemic.
General Director of Vietnam Airlines Le Hong Ha revealed the move at the annual shareholder meeting held today [July 14].
“We came up with this idea a few years ago but it was not materialized due to different market factors,” Ha said.
The Covid-19 pandemic, however, has changed the situation and caused a sharp drop in the number of air passengers.
According to Ha, the national flag carrier has converted seven passenger planes into freighters, including five Airbus A350 and two A321.
In June, revenue from cargo transportation, which normally accounts for 10% of the total, exceeded that of passengers, noted Ha, saying this is the basis for Vietnam Airlines to consider setting up a cargo airline after the pandemic.
A report from the Ministry of Transport revealed revenue from freight service of airlines in the past year tripled compared to the pre-Covid-19 period.
Since early 2021, the severe Covid-19 situation, especially during the peak season in the Tet (Lunar New Year) holiday and the national holiday from April 30-May 1, continues to put pressure on the airline.
It is estimated that Vietnam Airlines suffered a loss of VND9.82 trillion (US$426.7 million) in the first half of 2021. For this year, the airline forecast consolidated loss to rising up to VND14.5 trillion ($626.8 million), a surge of 30% against last year.
The prediction was based on the assumption that Vietnam Airlines could sell 11 Airbus A321, the government allows tourists to return to Phu Quoc island in the southern province of Kien Giang, the application of vaccine passport, and the airline completes disbursing the full VND12-trillion ($521 million) government’s support package.
Last week, Vietnam Airlines signed a credit contract worth VND4 trillion ($173 million) with three banks of SeABank, SHB, and MSB, with the source from the refinancing fund provided by the State Bank of Vietnam (SBV).
At the meeting, the airline also announced the plan to issue shares for existing stakeholders to raise VND8 trillion ($347.6 million), scheduled to take place in the third quarter.
Chairman of Vietnam Airlines’ Directors of Board Dang Ngoc Hoa said proceeds raised from the move would be used to pay overdue debts and cover the operational expense
Vietnam to keep public debt at 60% of GDP in next 5 years
The government is expected to keep public debt at the maximum of 60% of the GDP, lower than the 65% ratio recorded in the 2016-2020 period, while government and foreign debts should not exceed 50% and 45%, respectively.
The Standing Committee of the National Assembly (NA) revealed such figures in a meeting on July 13, after having reached an agreement with the government on socio-economic targets for the next five years.
Other key targets include state budget revenue would be VND8,300 trillion (US$359 billion), a 1.2-fold higher than in the previous five-year period, in which taxes and fees are set to make up 13.4% of the total.
The government, meanwhile, would spend VND10,260 trillion ($445.7 billion) in the next five years, of which capital expenditure is expected to account for 28% of the total, or VND2,870 trillion ($124 billion) and regular spending at VND6,400 trillion ($276.6 billion), or 60%.
This would result in a budget deficit of $86.7 billion, or 3.7% of the GDP. The NA’s Standing Committee expected the government’s direct debt payment obligation should not be above 25% of the state budget revenue.
For the mid-term public investment plan of the 2021-2025 period, the investment capital is set at VND2,870 trillion ($124.07 billion). Of the total, VND100 trillion ($4.32 billion) would be allocated for three national programs on socio-economic development for ethnic minority groups, new-style rural areas, and poverty reduction.
The government also plans to set aside VND183.25 trillion ($8 billion) for projects of national priority, including the site clearance for the construction of Long Thanh International Airport and Phase 1 of the Eastern North-South expressway and the Ham Thuan Nam reservoir, the three would be allocated VND65.8 trillion ($2.84 billion).
Phase 2 of the North-South express railway project would receive VND38 trillion ($1.64 billion), and an estimated VND78.8 trillion ($3.4 billion) would be earmarked for other expressway projects.
While there has been a detailed list of national projects for budget allocation, NA Chairman Vuong Dinh Hue urged the government to set up an investment plan to avoid possible delays during the implementation process.
Hue also called for the government to pay more attention to support policies for nurturing tax revenue sources, saying this would “create the driving force for growth.”
Ministries join hands in promoting sustainable agriculture
Vietnam’s agricultural exports surged 27.8% year-on-year to US$21.4 billion in the first six months, or 13.7% of the country’s total export turnover.
The Ministry of Industry and Trade (MoIT) and Ministry of Agricultural and Rural Development (MARD) on July 13 signed a cooperation agreement to ensure sustainable agriculture by modernizing the sector and boosting the export of farm produce in international markets.
At the signing ceremony, Vice Minister of Industry and Trade Tran Quoc Khanh called for significant transformation of the agricultural sector, with a stronger linkage between farmers to distributors in both domestic and foreign markets.
Khanh identified a number of fields that should be addressed in the coming time, including the modernization of the agricultural sector; ensuring agricultural production stays in line with market demand; the removal of non-trade barriers and the opening up of markets; and the creation of brands for agro-forestry-fishery products.
“Among those priorities, origin tracing is a key matter for exports,” Khanh added.
Minister of Agricultural and Rural Development Le Minh Hoan noted despite the Covid-19 pandemic, Vietnam’s agricultural exports surged 27.8% year-on-year to US$21.4 billion in the first six months, or 13.7% of the country’s total export turnover.
“Taking farm produce to the global market is not an easy task, and in this process, farmers should be aware of different market factors rather just focusing on production,” Hoan added.
As Vietnam is pushing for global economic integration, Hoan stressed the necessity to move from the mindset of agricultural production to agricultural economics, along with the formation of production chains.
“Market sensitivity is a decisive factor for Vietnam’s farm produce to earn greater global market share,” he continued.
At present, China, Japan, South Korea, and the US are Vietnam’s four largest buyers of agricultural products.
In the first six months of the year, Vietnam’s exports of farm produce to the US expanded by nearly 60% year-on-year to $6.7 billion, or 27.9% of total agricultural exports. China remained the second largest import market for the local agricultural sector spending over $4.75 billion on Vietnamese farm produce, up 32.1% or 19.6% of the total.
According to the MARD, Vietnam’s positive agricultural exports in the first half of 2021 were partly thanks to the country’s effective utilization of free trade agreements (FTAs) that Vietnam is a part of.
Meanwhile, Vietnam has set up communication channels with major markets to better analyze and forecast customer behavior during and after the pandemic, so as to act accordingly.
For the last half of 2021, the MARD expected difficulties as a result of the Covid-19 pandemic, while calling for local firms to continue taking advantage of FTAs, especially the EVFTA and CPTPP to penetrate new markets.
Australia prioritises economic ties with Vietnam: Expert
The Vietnam visit on July 13 by Australian Minister for Trade, Tourism and Investment Dan Tehan showed that Australia is prioritising economic ties with Vietnam as their strategic partnership is growing strongly and practically in various areas, especially in economy, trade and investment, an Australian expert has commented.
Talking with the Vietnam News Agency (VNA)'s reporter in Sydney, Kyle Springer from the Western Australia-based Perth USAsia Centre, said the visit will activate cooperation frameworks to which both countries are members such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP), as well as cooperation deals between their localities.
He said a number of Australian firms are studying import-export activities with Vietnam as well as investment opportunities and formation of joint ventures.
According to the expert, the Australian Government has recently funded 2.5 million AUD (nearly 2 million USD) for tens of projects to increase business opportunities and enhance cooperative ties between firms of the two countries in diverse areas, from agriculture to education, digital technology, and supply chain of small and medium-sized enterprises.
In the first half of this year, two-way trade soared by over 40 percent year-on-year.
During meetings with the minister, Vietnamese leaders wished that Vietnam’s shrimp meatballs and passion fruits would be exported to Australia while Vietnam also wants to import coal, iron and steel, ore and rare earth from the country.
Springer suggested that within the frameworks of the CPTPP and RCEP, the two countries could develop a rare earth supply chain, under which Australia will exploit and process while Vietnam will create end-products.
Western Australia's authorities also expect to launch a direct flight between Perth and Vietnam to facilitate travelling and trade once the COVID-19 pandemic is pushed back, he added./.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes
Proposal to establish cargo airline rejected