VIETNAM BUSINESS NEWS JULY 30
The US will not take any trade action against Vietnam
The European-American Market Department under the Ministry of Industry and Trade (MoIT) announced that the Office of the United States Trade Representative (USTR) has issued a formal conclusion of the investigation under Section 301 of the 1974 Trade Act into the acts, policies and practices of Vietnam related to the valuation of Vietnam’s currency.
Based on the agreement between the US Department of the Treasury and the State Bank of Vietnam which provides a satisfactory resolution of the matter subject to investigation, the USTR will not take any trade action against Vietnam.
The MoIT welcomes and highly appreciates this decision of the USTR. It has particularly positive implications for bilateral economic-trade relations, business and investment environment in Vietnam, and multifaceted cooperation between the two countries, according to the ministry.
This is also a positive step following the agreement reached on July 19 between the State Bank of Vietnam and the US Department of the Treasury, the ministry said, adding that it is the result of a process of substantive dialogue and goodwill of both sides to solve problems in bilateral economic relations, towards building a stable and sustainable relationship that is beneficial to both countries in the spirit of comprehensive partnership.
As Chairman of the Vietnam Sub-committee of the Vietnam-US Trade and Investment Framework Agreement (TIFA) Council, the MoIT has coordinated with Vietnamese ministries and agencies to promote policy dialogue through the mechanism of the TIFA Council, bringing about substantive results, the ministry said.
Since October 2019, under the direction of the Prime Minister, leaders of Vietnam's ministries and agencies have actively worked with the US side to try to handle many issues with specific results, thereby contributing to strongly promoting bilateral trade activities.
In the coming time, Vietnam will continue to actively cooperate with US partners to comprehensively address the concerns of the US and Vietnam, thus maintaining stable trade relations, towards a harmonious and sustainable trade balance for mutual benefit, the MoIT said./.
2021 Vietnam Annual Economic Report launched
The 2021 Vietnam Annual Economic Report entitled “Repositioning Vietnam in the Global Dynamics” was unveiled on July 29 by the Vietnam National University - University of Economics and Business.
The report analyses Vietnam’s competitive edge based on its advantages and engagement in the global supply chain.
It also touches on the adverse impacts of COVID-19 to the global economy at large and Vietnam in particular.
The report has been released annually by the university in association with its affiliate the Vietnam Institute for Economic and Policy Research (VEPR) for 12 years.
This year, exports and public investment are projected to become a driving force for the Vietnamese economy.
With influxes of foreign investment into Vietnam, exports in the sector will have an important role to play for economic growth in upcoming years.
However, the growth rate of exports may strongly rely on the global economy recovery and shipments of traditional commodities, experts warned.
Based on results obtained in the first six months and the complexities of the pandemic, the VEPR believes that the economic growth in the remaining months will depend on efforts in COVID-19 prevention and control, vaccination speed and scale and efficiency of support packages, among others.
The institute also put forward growth scenarios for the remaining months.
If the pandemic is brought under control in late this third quarter and Vietnam reaches herd immunity in the second quarter of 2022, and the economic growth is projected at 4.5 – 5.1 percent.
In other scenario, the pandemic is controlled in next month and herd immunity is reached by Q1 2022, the national economy may expand between 5.4 percent and 6.1 percent.
If economic activities will not be able to resume by the fourth quarter of this year, Vietnam may see an economic growth rate of 3.5-4 percent./.
July retail sales plunges nearly 20 pct year-on-year due to COVID-19
Total retail sales of goods and services shrank 8.3 percent month-on-month in July to 339.4 trillion VND (14.84 billion USD) as a result of restrictions induced to stem the ongoing COVID-19 outbreak, according to the General Statistics Office (GSO).
The figure was 19.8 percent lower than a year earlier since the fourth coronavirus wave, which forced many southern cities and provinces to impose social distancing, is taking heavy toll on trade, transport and tourism, the GSO said on July 29.
This month, the transport sector carried an estimated 146.3 million passengers and 111.5 million tonnes of cargo, down 50.4 percent and 24.3 percent, respectively, from the same month of last year.
Total retail sales of goods and services in the first seven months of this year exceeded 2.79 quadrillion VND, up 0.7 percent year on year. Close to 1.92 billion passengers were transported during the period, down 9.6 percent, while cargo transport reached 987.4 million tonnes, up 3.1 percent.
The Ministry of Industry and Trade is formulating specific plans to stimulate consumption and sustainably develop the domestic market./.
Seven-month CPI lowest since 2016: GSO
July’s Consumer Price Index (CPI) picked up 0.62 percent month on month and 2.64 percent against the same month last year, the General Statistics Office (GSO) announced on July 29.
The GSO largely attributed the surge to rising food prices caused by buying in localities hit by the fourth COVID-19 resurgence, the global fuel price hikes, and higher demand for electricity during summer.
The index gained 1.64 percent in the first seven months of this year, the lowest since 2016.
Compared to June, an upturn was seen in the prices of seven out of 11 main groups of goods and services, with transport taking the lead (2.36 percent). It was followed by housing and construction materials (0.88 percent), and restaurants and catering services (0.67 percent).
Among those experiencing a month-on-month downturn, prices of cultural, entertainment and tourism services were hit the hardest by COVID-19, dropping 0.1 percent. It was followed by postal and telecom services (0.05 percent), and garment-textile, headwear and footwear (0.03 percent).
The core inflation inched down 0.06 percent in July but edged up 0.89 percent from January to July. These are the lowest levels since 2011.
GSO Director Nguyen Bich Lam said it is likely that the CPI will grow further in the remaining months of the year, particularly the final months. However, it is expected to range around 3.3 – 3.6 percent, lower that the target set by the National Assembly, she added./.
Competent agencies race to build Long Binh port to replace existing Truong Tho
Competent agencies have been racing to build a new inland container depot (ICD) project in District 9’s Long Binh Ward to replace the existing Truong Tho port complex in Thu Duc District.
ICD Long Binh covering approximately 670,871 square meters will receive goods from the southern provinces of Dong Nai and Binh Duong. This port cluster is also a center for receiving, storing, preliminary processing of raw materials, packaging, labeling, and distribution of goods for ports in Ho Chi Minh City, Dong Nai, Ba Ria - Vung Tau, and industrial parks and industrial clusters in the Southeast and Central Highlands regions.
ICD Truong Tho port cluster includes five ICD such as ICD Tracomexco - Truong Tho, ICD Transimex, ICD Sotrans, ICD Southwest - Tanamexco, and ICD Phuc Long. This cluster of ports covers 49.2 ha; more than 1,100m of wharf and a warehouse of 6.6ha.
According to the orientation to 2030 approved by the Ministry of Transport, ICD Long Binh port must meet the capacity at Truong Tho port after relocation and meet the demand for goods through the port in the future.
Despite the complicated development of the Covid-19 epidemic, many trucks and container trucks were still queuing in long lines every day in and out of the Truong Tho port area to deliver and receive goods. According to the Department of Transport in Ho Chi Minh City, the volume of goods passing through Truong Tho ICD port in recent years is very high about 15 million tons yearly, many times higher than the planned capacity by 2020.
The large volume of goods leads to an increase in the means of transport in and out. Traffic congestion often occurs on the Hanoi Highway section in Thu Duc District, the only road leading to the port complex. Therefore, people in this area have always been worried because they have regularly witnessed accidents between motorbikes, container trucks, and trucks.
Bui Hoa An, Deputy Director of Ho Chi Minh City Department of Transport, added that due to the epidemic, fewer vehicles are seen in the port. However, traffic is still congested during rush hours. Currently, around 2,000-2,500 vehicles entering and leaving the port a single day exceeding the plan for many years.
According to the orientation of urban planning in the East of Ho Chi Minh City, Truong Tho ward will be the center of Thu Duc city; hence, it is not appropriate for such a large cargo port to exist. The People's Committee of Ho Chi Minh City has requested Thu Duc City to urgently promote investment procedures to build Truong Tho urban area. This area will become the center and highlight of Thu Duc City in the future.
According to the municipal Department of Planning and Economics, the Truong Tho area will be built into a new urban area located along the Hanoi Highway and metro line 1- the Ben Thanh - Suoi Tien line. Also according to the Department of Planning and Economics, the People's Committee of Ho Chi Minh City has just chosen the first prize for the contest "Highly interactive creative urban planning ideas in the East". The first-prize winning project proposes to build a highly interactive and innovative urban area in the East with a focus on 6 main subdivisions. One of them is the Truong Tho ICD area.
The People's Committee of Ho Chi Minh City has directed the People's Committee of Thu Duc City to urgently submit a 1/2000 scale zoning plan in the area related to the investment project to build a port cluster transshipment - New ICD in Long Binh ward to the competent authorities for approval. Once the 1/2000 scale zoning planning project is approved, the Department of Planning and Investment will carry out procedures to select investors to implement the new ICD construction investment project in Long Binh ward along with the construction project of Truong Tho urban area.
Being an expert, Prof. Pham Sanh said that Ho Chi Minh City authorities have made a good decision while Bui Van Quan, Chairman of Ho Chi Minh City Cargo Transport Association, said the investment in Long Binh port is extremely necessary. However, to facilitate freight transport, Ho Chi Minh City needs to focus on concurrently investing in a complete transport infrastructure system connecting Cat Lai seaport on Dong Nai river with the Long Binh port area.
Businesses and localities need better coordination
The Covid-19 pandemic is now continuing relentlessly for a second year, with the fourth wave causing immense stress and strain to the entire population as well as the government apparatus at all levels.
The greatest damage is now being felt in the economy, with almost all business communities reeling under the drastic effect of the ongoing pandemic. A survey of nearly 12,000 domestic and foreign invested enterprises in 63 provinces and cities by the Vietnam Chamber of Commerce and Industry (VCCI) at the end of 2020, showed that nine out of ten enterprises believe their business activities are negatively impacted, in particular businesses and households in the services and tourism industries. As per official figures announced by the Ministry of Planning and Investment, upto 70,000 businesses have already left the market in the first six months of this year alone.
Strain on system
The rapidly increasing number of infections every single day is affecting the medical teams and the whole government apparatus at all levels, which is now extremely strained in its effort to fight off the pandemic. The government apparatus at all levels is now operating above its normal capacity, and the stress and strain is clearly becoming more and more evident as they struggle to save the general population from being infected.
Many businesses that are still running are also suffering as they have had to suspend their operations because some of their workers have been infected with the Covid-19 variant. Businesses are worried that prolonged closure could possibly lead to loss of their customer base. When Vietnamese enterprises cannot maintain production to meet supply orders, customers and business partners in the world will not wait for Vietnam to recover, but will simply move on to the next manufacturer. If Vietnamese suppliers stop production now, the suppliers in China or other countries will readily replace them immediately. This is a fear that is plaguing all manufacturing companies in Vietnam, who will see years of hard work and effort gone in just a few months.
There is a current new plan for production to continue with a three-way method to keep production running smoothly. This plan ensures continuous production if workers continue to live on site during the pandemic, which requires they manufacture, and eat and sleep on site. This new creative method of planning in many localities in Vietnam will allow workers to adapt to the virulent spread of the pandemic. However, not all businesses will be able to apply this solution if the number of workers are too large and the facilities of enterprises is too small.
For many businesses, the pandemic is also not allowing them to control the skyrocketing costs. All expenses for the prevention of the pandemic comes from their business expenses. In addition to the cost of purchasing equipment for pandemic prevention, and offering support and subsidies to workers, there is also the cost of periodic testing. For businesses with thousands of workers, this amount is very large. In the context of skyrocketing input costs, logistics transportation costs are also running sky-high. In this present pandemic situation, business owners are all struggling to survive, and facing a day to day challenge in trying to keep their business running.
Many businesses are now hoping and praying for practical solutions for covering all these extra costs. This support is coming from the state budget for businesses to cover the cost of periodic Covid-19 testing for workers, as well as costs related to pandemic prevention and control. This support is much more helpful than other big-sounding policies, and also very practical and encouraging. The enterprises that are using the most number of workers, are receiving the maximum support from the State, so that they can retain their workers in these difficult times.
Perhaps the most daunting situation for businesses in the context of the pandemic is limited and curtailed circulation. Businesses always need to stay connected and no production or business establishment can survive or flourish in isolation. For production, many types of raw materials are needed, with some being supplied by domestic enterprises, and some being imported from various countries. After manufacturing, products must be transported for sale, and shipped to ports for export.
However, pandemic conditions are becoming increasingly stressful, and many localities have been separated with blockades and lockdowns. In order to travel from one province to another or go to a port in another city, one has to show negative testing results for Covid-19, which is a very laborious and expensive process. There is also no standard procedure either, as validity is some places is for twenty-four hours, some places it is for forty-eight hours, while other places even seventy-two hours.
Some provinces and cities are even asking for a twenty-one-day quarantine period before entering a pandemic affected province, and a driver carrying a shipment to port if quarantined for twenty-one days, will create a heavy back log and delay in shipment delivery. Another menace facing transporters is the recurring traffic jam at the city gateways which is many kilometres long and holds back traffic almost for a whole day, even if the distance can be covered in just a few hours.
Many businesses sincerely wish and hope for a unified and consistent transportation process that is well coordinated among all localities. Transport is the life line for logistics and the moving of goods from one place to another. It is understandable that this new pandemic situation is unfamiliar ground for the State to handle, and causing much serious concerns for all authorities who are struggling to ward off its effects. However, now the pandemic is in its second year, and urgent and decisive measures need to be put in place. The current situation is still rather confusing, and it is time that transport drivers, and all people who need to constantly be in circulation must be considered on a priority for vaccination, so that the whole production machinery starts to operate once again.
Bac Giang takes lead in attracting manufacturing FDI
Bac Giang has received the highest amount of newly registered foreign direct investment (FDI) in the manufacturing sector this year with US$589 million, closely followed by Quang Ninh with US$569 million and Bac Ninh with US$222 million, according to a report of Savills Vietnam.
Despite a new outbreak of Covid-19 in Vietnam, new industrial zones have risen and key industrial projects have kickstarted their operations. Specifically, 2021 has witnessed new merger and acquisition (M&A) deals and improvement in industrial land supply, noted Savills Vietnam, which primarily provides property research and related services.
By June 20, the country attracted US$15.27 billion in total registered FDI. The manufacturing and processing sector attracted a total of US$6.97, accounting for 45% of total inflows, with 273 new projects registering US$3.09 billion and 286 existing projects raising capital by US$3.38 billion.
Observing the FDI breakdown, John Campbell, manager of Industrial Services at Savills Vietnam, noted that the North received the majority of newly registered manufacturing investments with US$1.97 billion, representing a 64% share. The South lured US$728 million (23%), while the Central region attracted US$395 million (13%).
“In terms of investors, the largest manufacturing projects in the first half of 2021 were from Jinko Solar and Fukang Technology from Hong Kong and Singapore investing US$498 million and US$270 million in Quang Ninh and Bac Giang, respectively,” Campbell said.
Regarding M&A activities, 2021 witnessed new deals. Boustead Projects signed an agreement for the proposed acquisition of 49% interest in KTG & Boustead Industrial Logistics Joint Stock Company.
If successful, the partnership will consist of 13 real estate seed assets amounting to US$141 million in gross asset value, covering about 840,000 square meters of land area and some 550,000 square meters of gross leasable area.
ESR Cayman Limited, the largest Asia-Pacific-focused logistics real estate platform, and BW Industrial Development JSC, the leading logistics and industrial real estate developer and operator in Vietnam, have entered into a joint venture to develop 240,000 square meters at the My Phuoc 4 Industrial Park near HCMC.
The partnership marks ESR’s entry into Vietnam, expanding the group’s Asia-Pacific footprint in the high-growth Southeast Asia region.
Regarding new projects, Logos Property’s 81,000-square-meter project in VSIP Bac Ninh 1 Logistics Park is expected to be launched in the fourth quarter of this year.
KCN Vietnam Group JSC, a new player in the market, acquired a significant land bank of 250 hectares with an investment of US$300 million. It aims to develop premium, sustainable factories and warehouses for rent in Vietnam with a national portfolio spanning across Dong Nai, Long An, Bac Giang, Haiphong and Hai Duong.
Binh Phuoc: Seven-month industrial production up 15.63 percent
The index of industrial production (IIP) of southern Binh Phuoc province increased by 15.63 percent year-on-year in the first seven months of this year over the same period in 2020, according to the provincial Department of Statistics.
In July alone, the index rose 12 percent compared with last year’s figure.
Key industries posted growth such as processing and manufacturing (16.8 percent), production and distribution of electricity, gas and air conditioners (3.4 percent), water supply, and waste treatment (4 percent).
Significant growth was seen in certain industries including food production and processing, apparel production, paper production, and motor vehicle production with 30.1 percent, 8.1 percent, 24.7 percent, and 51.6 percent, respectively.
Those with low expansion or decline were beverage production with a year-on-year increase of 1.8 percent and chemicals production with 0.7 percent while production of leather and related products decreased by 6 percent and production of other non-metallic mineral products shrunk by 14.5 percent.
According to the department, a number of major industrial products in the first seven months of this year rose sharply compared to the same period last year such as dried cashew nuts (28.5 percent), treated and preserved timber (74.8 percent), packages and bags made of wrinkled paper and paperboard (24.7 percent), audio equipment (51.6 percent) and wooden cabinets (69 percent).
To realise the dual goals of preventing the COVID-19 pandemic and promoting socio-economic development, Binh Phuoc province will mobilise all resources for infrastructure development, giving priority to inter-regional transport infrastructure.
Due attention will be paid to implementing measures to remove difficulties for local businesses. In addition, the provincial authorities will continue to renovate business environment, strengthen investment promotion and support enterprises to expand the consumption market
Situated in the southern key economic region, Binh Phuoc is the largest of the 19 provinces in Vietnam’s southern region.
It is famous for two crops of high economic value - rubber and cashew nuts - and has 243,000ha of land under the former and 138,000ha under the latter.
It posted economic growth of 7.51 percent last year thanks to outstanding efforts in containing COVID-19 and promoting economic development./.
Firms must try to take advantage of FTAs: experts
Russia is a potential market for Vietnamese exporters of farm produce to tap, experts said, saying enterprises should fully take advantage of the Vietnam- Euroasian Economic Union Free Trade Agreement (VN-EAEU FTA).
Moscow entrepreneurs look for opportunities in Vietnam
Russia is a potential market for Vietnamese exporters of farm produce to tap, experts said, saying enterprises should fully take advantage of the Vietnam- Euroasian Economic Union Free Trade Agreement (VN-EAEU FTA).
Statistics from the General Department of Vietnam Customs showed that in the first five months of this year, Vietnam exported 21,300 tonnes of aquatic products to Russia for 72.2 million USD, representing an increase of 72 percent in volume and 60.4 percent in value compared to the same period last year.
Of these, frozen shrimp of all kinds is the item with the largest export value, with 2,000 tonnes, worth 18.4 million USD, up 69.6 percent in volume and 72.9 percent in value over last year’s figure.
Exports of frozen octopus and pangasius also saw strong growth.
Despite the COVID-19 pandemic, in 2020 the export turnover of vegetables and fruits to Russia still picked up 58.7 percent compared to the previous year to reach 54.4 million USD. It reached 26.2 million USD in the first four months of this year, a year-on-year increase of 32.4 percent.
According to the Export-Import Department under the Ministry of Industry and Trade, Russia has been a traditional export market of Vietnam since the 1990s, especially for agricultural products such as coffee, pepper, tea, and vegetables.
In addition, Vietnam is a signatory of the VN-EAEU FTA which covers more than 90 percent of all tariff lines. Of which 59.3 percent of tariff lines have been reduced to zero percent. This is a golden opportunity for Vietnamese enterprises who engage in exporting farm produce to the Russian market.
Since the agreement took effect in 2016, Vietnam's vegetable and fruit exports to Russia have grown at an average 20 percent a year, which is a very positive sign.
However, according to experts, obstacles remain for the export of Vietnam's agricultural products to the Russian market, reported Cong thuong (Industry and Trade) newspaper.
The average price of shrimp exported to Russia is higher than that of the three largest suppliers, making the product less competitive and its market share still low.
Vietnamese pomelos have to compete with those of other countries, especially Chinese ones, which have maintained their number one position in the Russian market for decades. Requirements for entry of the product to this market are quite strict, ranging from pomelo varieties to technical standards and food safety.
To maintain growth and improve the market share of Vietnam's agricultural and aquatic products to Russia and EAEU countries, experts recommend that businesses regularly update information on the implementation of the VN-EAEU FTA.
The focus should be on ensuring the reputation and quality of exported products.
It is necessary for enterprises to promote the export of processed farm produce to reduce the risk of transportation and preservation costs and improve the competitiveness of products in this market, they said.
Experts also highlighted the need to strengthen support for trade promotion activities, improve market forecasting and provide specific information for enterprises to work out plans and expand their business to Russia.
According to customs data of the EAEU, despite being affected by the COVID-19 pandemic, two-way trade between the bloc and Vietnam still reached about 6.2 billion USD in 2020, up 11.7 percent compared to 2019.
In the first six months of this year, Vietnam's trade turnover with EAEU member countries is estimated at 2.7 billion USD, an increase of 14.9 percent over the same period last year. In which, exports value from Vietnam was 1.66 billion USD, a year-on-year rise of 31.3 percent./.
Digiworld records significant growth in profit, boosted by mobile phone sales
Digiworld Corporation (DGW) has released its financial statement for the second quarter of 2021 with outstanding performance.
Accordingly, the company posted consolidated net revenue of 4.2 trillion VND (183.7 million USD), up 63.3 percent year-on-year, resulting in a jump of 140.6 percent in profit after tax to 116.57 billion VND.
Of which, mobile phone sales continued to grow by 87 percent in revenue to over 2.1 trillion VND thanks to the rising market share of Xiaomi's products and revenue contribution from the iPhone lines.
Meanwhile, laptop and tablet sales slowed down after strong growth in the same period last year. The segment’s revenue rose 23 percent in the second quarter compared to last year to 1.33 trillion VND, boosted by growth of all existing brands and contributions of two new brands including Apple and Huawei.
Office equipment sales reported revenue of 663 billion VND, up 122 percent. The growth was mainly due to the diversity and suitability of IoT products for different customer segments. These products are increasing and becoming the main growth driver of the office equipment segment.
For the consumer goods industry, although healthcare products are strongly affected by social distancing measures, consumer goods products like washing liquid, fabric softener and toothpaste still recorded positive signs with the revenue reaching 79 billion VND, up 34 percent.
In the first six months of the year, Digiworld recorded consolidated net revenue of 9.2 trillion VND, up 88.5 percent. Its profit after tax climbed 140.1 percent over the year to 223 billion VND.
With these results, the company has completed 61 percent of this year's plan in terms of revenue and 74 percent of profit after tax.
On the stock market, DGW shares, listed on the Ho Chi Minh Stock Exchange (HoSE), were traded at 142,000 VND per share, down 2.74 percent. For the year, DGW had increased by 73.4 percent./.
Vietnamese overseas investment skyrockets over seven-month period
Vietnamese businesses poured a combined total of US$570.1 million into newly-licensed and capital-added projects abroad during the seven months of the year, representing an annual 2.3-fold rise, according to the Foreign Investment Agency.
In relation to the figure, 28 new projects received investment certificates with a total registered capital worth US$145.3 million, equal to 70.4% compared to the same period from last year.
A further US$424.8 million was poured into capital adjusted and added projects, a 9.1–fold increase from last year.
A major part of the capital outflow of US$270.8 million was pumped into science and technology projects, thereby accounting for 47.5% of total investment capital, trailed by the wholesale and retail sectors with US$148.6 million, along with other fields such as agro-forestry-fisheries, administrative activities, and support services.
Vietnamese investors have also injected money into 18 countries and territories globally, with the United States representing the top destination for Vietnamese capital with US$302.8 million, thereby accounting for 53.1% of total investment capital.
Cambodia ranked second with total investment capital of US$89.2 million, followed by Laos and Canada with US$47.8 million, and US$32.1 million, respectively.
As of July 20 the country became involved in 1,423 valid overseas investment projects, with total investment capital reaching US$21.8 billion.
Online platforms regarded as better way for local businesses to enter Nordic market
Local firms have been advised to step up trade promotion efforts through online platforms in order to make further inroads into the Northern European market amid ongoing COVID-19 challenges, according to industry insiders.
Vietnamese Ambassador to Sweden Phan Dang Duong stated that the Vietnamese Trade Office in Sweden has recently launched an English language website aimed at supporting domestic businesses to boost exports via online platforms to the market.
It is anticipated that the website will serve as a channel which can be used to promote trade exchanges and help Vietnamese goods create a greater presence within the Nordic market, Ambassador Duong noted.
Economists from the International Trade Center (ITC) believe that new-generation free trade agreements (FTAs) will create competitive advantages for Vietnamese enterprises to penetrate the Nordic market. This includes the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU–Vietnam Free Trade Agreement (EVFTA), and the upcoming the Regional Comprehensive Economic Partnership (RCEP).
Most notably, consumer demand for goods is predicted to increase by approximately 5% in the Nordic market and roughly 17% in the Icelandic market.
Le Ba Linh, chairman of the Board of Directors of Pacific Foods JSC, an enterprise which specialises in exporting Vietnamese fruits to the EU market, revealed that there are bright prospects for local agricultural products ahead in the Nordic market. Indeed, tropical fruits such as litchi dragon fruit, jackfruit, mangoe, longan, and pomelo all represent items which could potentially do well when being exported to Scandinavian countries.
Despite these positives, Linh emphasized that Vietnamese agricultural products are required to comply with stringent regulations on product quality.
This includes not using chemical fertilisers whilst ensuring that products are grown in line with Global GAP and VietGAP standards, all of which will serve to make greater inroads into the demanding market.
Farm produce should meet int'l standards for UK market penetration
Farm produce enterprises must strive to meet GlobalGAP or EuroGAP standards in order to expand their market share in the UK, according to the Ministry of Industry and Trade.
Nguyen Canh Cuong, Vietnamese Trade Counselor to the UK, said the enforcement of the UK-Vietnam Free Trade Agreement (UKVFTA) has served to help local agricultural items enjoy advantages within the UK market.
Despite this positive, Cuong noted that these opportunities may not be long lasting due to the UK being poised to join the Comprehensive Trans-Pacific Partnership (CPTPP), whilst it is also actively pursuing bilateral FTAs with other partners in order to enjoy further tax incentives.
Therefore, Vietnamese enterprises can gain entry to the stringent market by fully abiding by GlobalGAP or EuroGAP standards, along with applying international management standards such as ISO, SA, and ILO, whilst goods are required to meet the tastes of British consumer, Cuong stressed.
Moving forward, Vietnamese businesses must also ensure stable supply sources in both quantity to develop sustainable co-operation with British partners, he added.
Along with surpassing strong competitors from Thailand, Malaysia, Indonesia, South Africa, and India, local businesses are advised to come up with a suitable market access strategy through gaining the support of local marketing experts in the host country.
Last year saw the UK import over 5.7 million tonnes of fruit and vegetables, worth approximately US$9 billion, of which fruit and vegetable imports from Vietnam reached only US$11.5 million, accounting for a mere 0.18% of the market share.
Rice imports into the UK last year also increased by 13.5% from 671,601 tonnes, with rice imports from the Vietnamese market reaching 3,396 tonnes worth roughly US$1.3 million, accounting for 0.45% of the market share.
Experts therefore believe that there remains plenty of room for local firms to penetrate the UK market in the future, providing that they have met strict requirements set by the fastidious market.
Trade Ministry proposes Govt regulate products banned from circulation during Covid fight
The Ministry of Industry and Trade on July 27 proposed the Government issue the list of products banned from circulation instead of listing essential products during the execution of the stay-at-home mandate.
According to the ministry, there is confusion among some porovinces while regulating the circulation of essential goods, making life difficult for many truckers, the local media reported.
Although the Government, ministries and agencies have repeatedly issued documents highlighting the types of essential goods and have asked localities not to hinder the circulation of these products, contributing to conducting anti-pandemic regulations, their efforts have failed to bring the expected results.
As different localities have different ways of understanding the term “essential goods” and their deployment of the Government’s requirements, the transport of some products which are the input materials of many producers or serve the essential demands of residents has faced difficulties.
If the ministry’s proposal is approved, it will be easier for enterprises. Products which are not in the list of banned products will be circulated among localities or between different localities.
Wind developers ask for transitional policy
With world-class resource potential and rapidly growing power demand, Vietnam is facing a crucial crossroads and has the opportunity to accelerate deployment of both onshore and offshore wind, according to a new report – but the ongoing pandemic is causing regulatory challenges and delays to many projects as developers attempt to settle on incentive policies for the next stage.
Having cold feet amid this year’s problems and the delay of a wind power project to reap incentives before the November feed-in tariff (FiT) deadline hits, Bui Van Thinh, chair of Binh Thuan Wind Association and CEO of Thuan Binh Wind Power JSC last week sent a petition to the prime minister. “Although wind project investors are making great efforts to get their projects online in time, due to the complicated developments of COVID-19, there are projects that will seriously struggle to reach completion before October 31, 2021,” the petition noted.
Under Decision No.39/2018/QD-TTg from 2018 adjusting support mechanisms for the development of wind power projects in Vietnam, the rate for onshore wind power is set at 8.5 US cents per kWh, and offshore wind power at 9.8 cents per kWh. These rates are applicable to projects that reach commercial operation date (COD) before October 31.
Thinh called for the government to consider extending the FiT price terms of wind power for another 3-6 months to avoid bankruptcy of a series of wind power initiatives. In turn, related investors pledge to accompany the government and localities in the pandemic battle.
This is not the first time an association and investors have called for extension of FiT incentives. Previously, the Global Wind Energy Council (GWEC) believed a strong political commitment such as FiT extension would be necessary to ensure the steady growth of wind energy in Vietnam’s power system, and to offer the prospect of a more competitive, cleaner, and secure energy pathway.
GWEC’s new report, released last week in conjunction with the Renewables Consulting Group, noted that the first large-scale offshore wind projects in the country are not likely to be connected to the grid until 2026 or later.
For these initial projects, policy clarity and transparency on procurement mechanisms are urgently needed, especially in light of the current FiT mechanism for offshore wind being due to expire in November. According to the latest report from state-run Electricity of Vietnam (EVN) on the progress of construction investment and commercial operation of wind power plant projects up to July 22, it has signed a power purchase agreement with 144 wind power projects with a total capacity of more than 8,144MW. Among that, there are 13 wind power plants with a total capacity of 611.33MW already in commercial operation.
There are 106 wind power plants with a total capacity of 5621MW which are expected to be put into commercial operation before October 31. However, as of July 22, only 61 wind power plants with a total capacity of 3,487MW sent an official letter to register for the programme of energising and connecting to the grid and testing in accordance with regulations 90 days in advance.
Currently, there are 25 wind power plants with a total capacity of 1,912MW that cannot be operated commercially by November.
Liming Qiao, Asia director of GWEC, told VIR that investors are slowing down or halting the issuance of unused monetary closure decisions and this is affecting the industry. “The impact will last for some time and we are going see a plunge in improvement by 2022-2023,” Qiao said. “This will be dodged if policymakers are mindful of the industry’s characteristics and hence can guarantee a more conducive environment for the division within the nation to develop.”
She added a new FiT for offshore wind should be applied from now to support the initial stage of 4-5GW of true offshore wind projects connecting to the grid, prior to an auction mechanism being implemented.
Mai Duy Thien, chairman of the Vietnam Clean Energy Association, explained that the pandemic is disrupting the supply of equipment, transportation, labour, and acceptance of commercial operations.
Therefore, Thien noted, the number of schemes that will not be able to operate commercially before the end of the FiT change will likely be more than forecast.
One wind developer in a southern province told VIR said that each wind power project sees an investment of trillions of VND. “If you borrow up to 80 per cent of the capital, the borrowing costs alone will cost billions,” he said.
Addressing investors’ concerns, a representative of the Ministry of Industry and Trade said, “If there is no official pricing mechanism, EVN will not sign power purchase and sale contracts. However, the ministry will coordinate with relevant agencies and units to assess the impact on each object participating in the development of renewable energy sources to have a suitable treatment mechanism.”
Vietnam’s draft Power Development Plan 8 (PDP8) contains true offshore wind targets of 2GW by 2030. However, GWEC explained in its report that high industry and investor interest indicates that Vietnam could raise its ambition to 10GW by 2030 to meet the rapidly growing power demand and increasing energy security.
“GWEC is calling on the Vietnamese government to urgently adopt a transition stage for offshore wind, and incorporate a systematic and open consultation process on future procurement and auction design,” said Qiao. “With less than 10 years to meet the PDP8 ambitions for 2030, the time is now to begin wider consultation and consider raising ambitions to 10GW by 2030.”
“The policy solution for Vietnam to accelerate offshore wind growth will require more than auctions on their own, but they could be a piece of the puzzle,” explained Michael Stephenson, associate director at the Renewables Consulting Group. “Overall, a more coordinated approach is critical, considering the interaction of auction policy with other factors such as investor confidence and supply chain maturity.”
Developing a green bond market is crucial to Vietnam's sustainable development efforts
Vietnam was urged by GGGI to develop a robust domestic green bond market as part of the transition to a green economy and addressing the challenges of climate change.
A green bond market could supply crucial capital to underpin Vietnam's economic recovery
The Global Green Growth Institute (GGGI) today launched its report “Green Bonds Make More Cents?” which analyses trends of green bond markets globally and the experience that Vietnam can consider in order to develop its own domestic green bond market.
The report indicates that Vietnam has been building up substantial momentum to kick-off its green finance journey. The updated Nationally-Determined Contribution declared by the government reinforce its focus and commitment on a low-carbon pathway.
The recently passed Law of Environmental Protection (2020) lists out green sectors and a roadmap for potentially defining a national taxonomy of green which could give the investors much needed clarity on what defines "green" in Vietnam.
Meanwhile, Vietnam is still in the early stages of its bond market. However, reforms introduced in 2018 on easing private placement of bonds and improving disclosures are bound to propel the bond market which would attract quality investors to invest in Vietnam’s growing economy.
In addition, ASEAN Green Bond Standards (GBS) present a viable framework for the issuance of green bonds. With Vietnam’s increasing leadership in the ASEAN economy, it is well poised to adopt the ASEAN GBS.
As short-term as it may seem, the pandemic has put the brakes on climate action across the world. Vietnam’s inter-linkages with the global economy may also slow down Vietmam’s economic recovery. The country is highly vulnerable to climate change and at the same time it may also be subjected to the impacts of global carbon pricing that may be put in place to combat climate change. This could be a potential dual threat to Vietnam’s economy.
Meanwhile, climate finance requirements are considerably diverse given the country’s need. These would have to vary across energy, buildings, industry, and new infrastructure. A focus on only one sector may risk the other sectors falling behind.
Considering the nascent state of green bond market in Vietnam, the report argues that the country would focus on defining eligible green investments, introducing a regulatory framework needed to establish a green bond market as well strengthening the investor base for the green bond market.
Piloting green bond issuance through different issuer types (corporate, sovereign, municipal) is one of the steps to accelerate the development of Vietnam’s green bond market. Meanwhile, the country should sustain the long-term development of the green bond market with a strong pipeline of well-educated talents and the adoption of advanced technolgoies.
According to Hanh Le, GGGI's Vietnam country representative, in the context of post-COVID-19 recovery, countries are urged to "build back better"’ to create a more inclusive and sustainable economy that is climate resilient. Green bonds will open a new capital mobilisation channel for long-term investment projects in the infrastructure and renewable energy sectors which are not fully satisfied by traditional financial products.
"In Vietnam, it is evident that sustaining an impressive growth rate while enhancing climate resilience and addressing environmental degradation is a challenging task. It is estimated that Vietnam needs at least $35 billion by 2030 to address climate impacts and achieve its Nationally Determined Contribution target. As such, investments in clean technologies and sustainable infrastructure need to be enabled and scaled up rapidly," she said, noting that green bonds are one of the innovative financial instruments to address the challenges.
ICD shortfall may lead to fresh funding
As inland container depots are failing to meet growing demands placed on the seaport system, Vietnam is planning to develop more facilities in order to lower logistics costs and entice private investors.
One businessman in the town of Phu My in the southern province of Ba Ria-Vung Tau said that he often has to go back up to Ho Chi Minh City or the neighbouring province of Dong Nai to get empty containers to pack goods, even though he exports commodities via the Cai Mep-Thi Vai port area of Ba Ria-Vung Tau.
“The journey causes extra cost for businesses. The extra cost for a container is at least VND800,000 ($35). This is the reason why over 80 per cent of container cargo for this business is exported via Cat Lai in Ho Chi Minh City,” said the businessman.
Along with this company, many other shippers are facing a similar situation due to a lack of inland container depots (ICDs).
A leader of the Maritime Administration of the northeastern province of Quang Ninh said that before 2015, shippers of containers in temporary import for re-export to China had to use the cargo port in the northern city of Haiphong, while their headquarters were located in Mong Cai city in Quang Ninh. Procedures were long, cumbersome, and expensive.
“Since 2015, with the process of customs procedure completion moving in line with prevailing standards, re-export of commodities became more favourable,” he explained.
In spite of this advantage, many regions are still in a shortfall of depots. The Cai Mep-Thi Vai port area is yet to see any ICDs, leading to less capacity to attract commodities. Worse still, the shortfall of ICDs also occurs in the Mekong Delta region, forcing import-export businesses to pay extra costs for goods.
One expert said that in the Mekong Delta, besides the ICD of Saigon Newport operating efficiently, others in Can Tho city and Chau Thoi area in the region’s An Giang province are still less attractive due to underdeveloped infrastructure.
As a result, import-export businesses in the region have to go to Ho Chi Minh City for empty containers and then send them back to Cat Lai Port for export. According to estimations, the process causes an extra cost of VND4 million ($175) for a 20-feet container of rice and VND8 million ($350) for a refrigerated container.
A lack of connection methods is the other barrier in the existing system. According to Nguyen Anh Vu, director of the Maritime Administration of Haiphong, the city has three ICDs approved by the Ministry of Transport, in Dinh Vu-Quang Binh, Tan Cang Haiphong, and Hoang Thanh.
“Location adjacent to a seaport makes ICDs less competitive than others as goods from industrial zones are exported and imported directly via ports without using intermediate depots. Moreover, insufficient and undiversified connection methods make local ones less efficient,” Vu noted.
According to Le Do Muoi, director of the Transport Development and Strategy Institute (TDSI), to increase the efficiency of ICDs more plans should be made to develop them along with economic corridors in each region and area. For instance, in the north, they should be developed along the Lao Cai-Hanoi corridor linking with railways. On the corridor of Hanoi-Haiphong, it is necessary to invest in ICDs linking with inland waterways along Phu Dong and Giang Bien.
“For the Hanoi-Lang Son corridor, more ICDs in Lang Son, Bac Giang, and Bac Ninh provinces should be studied and developed,” Muoi added.
He elaborated that the development of such depots and their links will be carried out in line with the master planning on ICD development during 2021-2030 with a vision towards 2050, which is being jointly built by the Vietnam Maritime Administration, TDSI, and external consultants. “The development will be carried out and private investment will be called for,” Muoi said, noting that the moves are expected to open fresh opportunities for potential investors in the months to come.
ICDs are an attractive segment to domestic and foreign investors in the transport sector. In late 2020, the work on Vinh Phuc Logistics Centre funded by a consortium of T&T Group and YCH-YCH Holdings Singapore was kicked off in the northern province of Vinh Phuc. Costing nearly $200 million, the project has a scale of 83 hectares and a design capacity of through-goods of about 530,000 twenty-foot equivalent units.
Also last year, Hateco Logistics JSC received approval from the MoT to develop the Long Bien ICD project, making it the seventh such scheme in the north.
In early 2021, the market welcomed the Tay Ninh Logistics Centre project worth VND3.6 trillion ($156.5 million) from a consortium consisting of Tat Ninh Logistics JSC, International Services and Trading Investment JSC, and ASG Logistics JSC. Located in the southern province of Tay Ninh, the centre is expected to be put into operation in 2023.
Meanwhile, many others are looking for business and investment opportunities in ICDs. Saigon Newport Corporation is seeking to partner with Vietnam Railways to develop depots and warehouses at Song Than, Dieu Tri, Yen Vien, Dong Anh, and Dong Dang stations, with the plan to develop more to meet the demand.
Vissan continues supplying fresh food in HCMC after suspension proposal
Local meat processor Vissan has announced to continue providing fresh food to residents in HCMC after proposed suspending its production activities as it detected 43 Covid-19 cases at the workplace on July 23.
In a press release, the company stated that other business activities will be resumed after its employees in areas under lockdown return to work, the local media reported.
The company has applied the stay-at-work mode since June 28, regularly conducted tests for its staff and vaccinated them against Covid-19.
However, by July 17, the company detected four Covid-19 cases and sent them to centralized quarantine centers. As of July 23, the company had 43 more Covid-19 cases, mainly in the purchase and supply units.
With the support of the government and the medical center of Binh Thanh District, Vissan has moved all direct contacts of Covid-19 cases to centralized quarantine centers.
The company has traced 357 direct contacts and 351 indirect contacts of these 43 cases.
In a document sent to the HCMC Department of Health, the municipal Center for Disease Control and the relevant agencies earlier, Vissan proposed two plans after detecting Covid-19 cases.
In the first plan, it will send all Covid-19 cases to centralized quarantine facilities, while the remainder will undergo tests. If they test negative for the coronavirus, they will be assigned to separate production lines and will undergo Covid-19 tests every three days.
In the second plan, direct contacts of Covid-19 cases will be sent to their residences if they test negative for Covid-19, while indirect contacts with Covid-19 cases will be quarantined in line with the regulations. Therefore, the company proposed suspending its production until these employees return to work.
In previous years, HCMC consumed some 10,000 pigs per day, including 1,000 slaughtered at Vissan’s plants. Since 2020, due to the pandemic, Vissan’s slaughtering capacity fell to 600-700 pigs a day.
In the current pandemic outbreak, Vissan has increased its daily slaughtering capacity to 1,000-1,500 pigs, accounting for 26.55%-28.6% of HCMC’s demand for pork.
According to the HCMC Department of Industry and Trade, if Vissan’s production is suspended, the prices and volume of meat products in the market will not be affected.
Deputy Director of the department Nguyen Nguyen Phuong said during the stay-at home mandate, the demand for pork fell from 10,000 to 5,000-6,000 pigs per day. In addition, there are many other pork suppliers, such as Sagri, CP, Masan, CJ and Anh Hoang Thy.
IIP merely increases 1.8 percent in July
The General Statistics Office of Vietnam, this morning, announced that the index of industrial production (IIP) in July merely rose by 1.8 percent over the previous month and 2.2 percent year-on-year, the lowest increase in the past seven months, except February with the fewest number of working days.
In general, in the first seven months of this year, the IIP surged by 7.9 percent compared to the first seven months of 2020. This result reflects the negative impact on the economy of the fourth Covid-19 outbreak with a new SARS-CoV-2 virus variant and complicated developments.
Among 19 provinces and municipalities in the South that have implemented social distancing following Directive No.16/CT-TTg to prevent the Covid-19 pandemic, seven localities saw decreases in the IIP in July while 12 posted increases.
Specifically, Ho Chi Minh City dropped by 19.4 percent, Long An 14.6 percent, Ca Mau 13.7 percent, Dong Thap 5.7 percent, Tra Vinh 5.3 percent, Ba Ria - Vung Tau 1.9 percent, and Ben Tre 0.2 percent. However, some localities had an increase in the IIP because some industrial parks determined not to disrupt the supply chain and ensured the disease prevention requirements with the three-on-site production, so they were allowed to operate to continue to fulfill previously contracted production orders. Specifically, Bac Lieu climbed by 13.7 percent due to an increase of 137.6 percent in electricity generation; Binh Phuoc went up by 12.2 percent due to an increase of 29.5 percent in food manufacturing and processing; Hau Giang edged up by 10.1 percent due to an increase of 3.3 percent in food manufacturing and processing, an increase of 27.2 percent in the production of leather and related products, and an increase of 76.4 percent in beverage production.
Despite being heavily affected by the Covid-19 pandemic, the IIP in the first seven months of this year of some localities still grew compared to the same period last year, including Binh Duong with an increase of 7.4 percent, Can Tho with 7.2 percent, Dong Nai with 7.1 percent, Tien Giang with 3.1 percent, and Long An with 3 percent.
In the first seven months of this year, some major industrial products that posted increases compared to the same period last year consisted of rolled steel, cellphone components, automobiles, leather footwear, crude iron and steel, mixed NPK fertilizers, mobile phones with an increase of 14.1 percent, and casual clothes with 9.5 percent.
On the contrary, some products that decreased compared to the same period last year included natural gas with a decrease of 13.4 percent, televisions with 10.3 percent, refined sugar with 9.5 percent, urea fertilizers with 7.4 percent, crude oil exploitation with 6.8 percent, monosodium glutamate with 5.1 percent, and clean coal with 2.8 percent.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
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