vietnam economy,Vietnam business news,business news
The prices of steel in the domestic market increased by up to 45 per cent in recent months.


 
 
 
Soaring raw material prices coupled with delays in shipping due to the COVID-19 pandemic significantly pushed up steel prices recently, according to the Ministry of Industry and Trade.

The price of steel in the domestic market increased by up to 45 per cent in recent months. The ministry’s Industry Agency said that the input costs of the steel industry largely depended on the prices of raw materials in the global market which has seen whopping increases recently.

Viet Nam was reliant on imported raw materials for steel production, including iron ore, scrap steel, fat coal and graphite electrodes.

It was predicted that Viet Nam would have to continue importing many types of raw materials for steel production this year with more than 18 million tonnes of iron ore, 6 - 6.5 million tonnes of scrap steel, 6.5 million tonnes of fat coal and 10,000 tonnes of graphite electrode.

The prices of these raw materials were predicted to remain at high levels, which would directly affect steel production in the domestic market. The steel sector was expected to run a trade deficit this year, after a deficit of more than US$6.4 billion in 2020.

The agency also pointed out that delays in shipping due to the impacts of the COVID-19 pandemic also pushed up steel production costs.

In response, the Ministry of Industry and Trade proposed to the Government policies to stabilise domestic steel supply and demand.

Specifically, the ministry proposed that the import taxes on some steel products which saw huge increases in prices should be put under consideration.

The Ministry of Construction was used to provide forecasts about steel demand this year to ensure a balance with the supply in the domestic market and for exports, which would serve as a basis for steel producers to be active in raising their production plans and increase efficiency.

For the long term, the Ministry of Industry and Trade would increase the application of trade defence instruments to promote the development of domestic steel producers and to meet the steel demand for the domestic market and export.

In an effort to promote domestic steel production, the Ministry of Industry and Trade urged the Government to introduce incentive policies to attract investment in new production or production expansion, especially in the production of hot-rolled steel which was facing a severe shortage.

Regarding the accusation of the Viet Nam Association of Construction Contractors that steel makers were working together to push up steel prices in the domestic market, the Ministry of Industry and Trade said the claim was groundless.

The ministry pointed out that the Vietnamese economy was expected to expand at more than six per cent this year with the demand for steel ingots to increase by six per cent and steel products by 2 - 3 per cent over last year. The steel demand was estimated to total around 27 million tonnes this year.

Regarding construction steel supply, the ministry said that with new projects operational in 2020, including Hoa Phat Dung Quat Iron and Steel Integrated Complex and Nghi Son Steel Complex, the domestic production capacity reached about 14 million tonnes which could fully meet domestic demand and exports.

However, for hot-rolled coil, the domestic capacity was estimated at around 5 - 6 million tonnes. Last year, Viet Nam had to import 10 million tonnes of hot-rolled coil and was forecast to continue importing this product this year to meet domestic demand.

The ministry predicted that steel prices might reach a new level as the pandemic was still developing globally.

However, when the virus was put under control, the steel prices would follow the market supply and demand.

Vietnam’s rice exports in Jan-Apr hit US$1 billion

Vietnam exported nearly 1.9 million tons of rice worth more than VND23 trillion, or some US$1 billion, in the first four months of 2021, falling 11% in volume but increasing 1.2% in value compared with the same period last year.

Data of the Ministry of Industry and Trade showed that in April alone, the country exported 700,000 tons of rice worth US$362 million.

The average price of rice for export in the year’s first four months reached US$534 per ton, rising 13.4% compared with the average rice price for export in 2020.

In the global rice market, Vietnam’s broken rice is currently priced at US$423-427 per ton, while Jasmine rice is priced at US$558-562 per ton.

Last year, Vietnam surpassed Thailand to become the second biggest rice exporter in the world. The country exported 6.25 million tons of rice in 2020, while Thailand exported 5.3 million tons.

The Vietnam Food Association expects that the country’s rice exports will maintain their growth momentum this year thanks to large orders from the Philippines, South Korea and China.

At present, the Philippines, China, Malaysia and Africa are the biggest importers of Vietnamese rice.

The association said rice of higher quality and value is making up a larger portion in Vietnam’s rice exports.

The country expects to produce 43 million tons of rice grains this year. Most of them will be used for domestic consumption and 6-6.5 million tons will be exported.

Firms must find ways to boost exports to Canada: official

Vietnamese firms should find ways to expand into the Canadian market as there is a lot of untapped potential for Vietnamese goods in the North American country, said Do Thi Thu Huong, commercial attache at the Vietnamese Embassy in Canada.

Canada has a population of 36 million and strong demand for imported products, almost double that of American consumers in value per capita. With a steadily growing GDP at an average of 3 per cent annually, Canada is among one of the most lucrative markets for exporters, said Huong.

In addition, large Asian communities including Chinese, Thai and some 250,000 Vietnamese all have high demand for Vietnamese products. The country's rich cultural diversity also allows for products to quickly become popular among all ethnic groups.

The recent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) of which Canada and Viet Nam are members also provides a significant advantage for Vietnamese products and services. While Viet Nam remains Canada's largest trade partner among ASEAN countries, Vietnamese products only account for a modest 0.9 per cent of Canada's imports.

According to a recent report by the Ministry of Industry and Trade, textiles, mobile phones, seafood, furniture and cashew nuts are mong Vietnamese products with a competitive advantage in the Canadian market, especially cashew and shrimps which is enjoying an 83 per cent and 43 per cent market share respectively.

Vietnamese textile products account for 9 per cent of Canada's textile import, trailing China (37 per cent) and Bangladesh (12 per cent). Vietnamese wooden furniture leads in market share with 25 per cent, with China in second place with 15 per cent.

"Once the CPTPP comes into effect, Vietnamese firms will have significant advantages to boost exports. Canada has pledged to remove 95 per cent of its current tariffs, which in effect will remove all tariffs on 78 per cent of Vietnamese goods. This is a golden opportunity for Vietnamese products to enter the Canadian market," Huong said.

However, firms should expect rules on product origins to be a lot stricter and thoroughly enforced.

Nguyen Cam Trang, deputy head of MoIT's department of import/export, said firms should also study the CPTPP, existing tariff preferences and employ digital trade platforms to connect with Canadian firms and others within the CPTPP.

How to grab business opportunities in EU: webinar spells it out

Europe offers export opportunities for Vietnamese firms, but it is a market with stringent requirements in terms of quality and other aspects.

To exploit the market, firms need to thoroughly understand its demands and requirements, and have appropriate export strategies, experts said.

Tran Thi Trang, head of the Investment and Trade Promotion Centre of HCM City’s training office, said Europe is one of Viet Nam’s largest trading partners and the country is the second largest Southeast Asian trading partner for the EU.

Speaking at a webinar on ‘How to expand and secure sustainable business opportunities with EU clients’ held by the ITPC and Source of Asia (SOA) on May 5, Zacharie Blondeau, the latter’s sourcing department director, said Viet Nam has sustained its exports to the EU despite the impacts of the Covid-19 pandemic.

The EU-Viet Nam Free Trade Agreement that took effect in August last year has significantly increased bilateral trade, he said.

Viet Nam’s exports to EU account for only 2 per cent of the bloc’s total imports, meaning there is enormous potential for increasing them, he pointed out.

But a change in European consumer behaviour is a growing challenge for businesses, who need to pay closer attention to sustainability in terms of the environment, social benefits, green energy, use of recycled materials, and having short supply chains with traceability, he said.

In that context, Vietnamese exporters should “assess your current positioning towards sustainability, understand your export market, import rules and recommendations, adjust your supply chain to match international standards and rules and invest in ‘continuous improvement’,” he said.

Huynh Thanh Trung, director of LeanWares Industry Co., Ltd, said, “To penetrate a market, we must understand its demands and requirements to set up factories complying with them.”

Markets like the EU set the bar high not only for product quality but also design, product information on the packaging, added value, and so on, and businesses targeting them need to focus on building a factory that conforms from the outset and controlling their entire supply chain, logistics and distribution to ensure product consistency, he said.

Do Van Huy, account manager of Shire Oak International, too said EU consumers care about how a product is made and want factories using renewable energy.

Dinh Thi Tuyet Nhung, head of SOA’s international market expansion department, said the key factors in expanding markets are quality and branding, understanding the markets and having effective sales channels, appropriate resource planning and clear objectives.

Pandemic changes spending habits in Asia Pacific

As a result of the pandemic, 94 per cent of people in the Asia Pacific region (APAC) said they will consider using at least one emerging payment method, such as QR codes, digital or mobile wallets, installment plans, crypto currencies, biometrics and others, in the coming year.

These are the main findings from the Mastercard New Payments Index conducted across 18 markets globally, which reveals that 84 per cent of consumers in APAC already have access to more ways to pay compared to one year ago. Of note for entrepreneurs, 74 per cent of respondents said that they would shop at small businesses with greater frequency if they offered additional payment options.

“Mastercard’s study finds that people in the Asia Pacific region haven’t just adopted new payment technologies — they’ve made deliberate shifts based partly on necessity, but also on considerations around personal safety, security and convenience, at a time when these concerns were paramount,” said Sandeep Malhotra, Executive Vice President, Products & Innovation, Asia Pacific, Mastercard.

“Consumers in Asia Pacific have already gained recognition globally for their openness to new technologies and innovation, and these findings confirm that this trend is only set to continue as more digital payment options rapidly become main stream in this part of the world.”

Looking ahead, the use of a range of payment technologies is trending upwards as people’s comfort with and understanding of them increases - while the use of cash steadily decreases. In fact, in the coming year, 69 per cent of respondents in APAC say they plan to use cash less frequently. Meanwhile, digital or mobile wallets have gained significant popularity amongst consumers in APAC, with 68 per cent of respondents anticipating using this type of payment in the next year, higher than the global average of 62 per cent.

“This behaviour shift is reinforced by people’s desire for choice – with 85 per cent of consumers in APAC saying that they expect to make purchases when they want and how they want. Businesses that can provide multiple ways to shop and pay will be best positioned to meet the unique needs of this moment that are shaping the future of commerce for years to come,” added Malhotra.

The survey also revealed that 84 per cent of consumers in APAC have seen their access to emerging forms of payments increase in the past year alone. QR codes have gained particularly strong traction in APAC compared to the rest of the world. Of those who used QR codes for payment, 63 per cent said they used them more frequently in the last year than they had in the past.

A recent study on 5,500 major Mastercard merchants showed that between Q1 2020 and Q1 2021, more than a fifth of these merchants globally increased the number of ways they connect with consumers, either by enabling an e-commerce channel or accepting contactless transactions. Mastercard also saw the total number of card-not-present transactions grow by over 30 percent globally while more than 100 markets saw contactless as a share of total in-person transactions grow by at least 50 per cent. 

Hoang Anh Gia Lai to sell 80 million shares of HAGL Agrico

Hoang Anh Gia Lai (HAGL) has just registered to sell 80 million shares of HAGL Agrico (HNG), reducing its owner’s equity from 23.28 per cent to 16.06 per cent.

After the sale, HAGL will hold more than 178 million shares in the agricultural company.

The transaction is expected to be executed under the method of agreement from May 7 to June 5, 2021. With the par value, HAGL can obtain a value of VND800 billion after the deal. The company will use the money to restructure debts at Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank).

Previously, HAG reduced its ownership in HNG from 29.78 per cent, or 330 million shares, to 22.57 per cent, or 250 million shares.

In terms of business activities, in the first quarter of 2021, after the agricultural company HNG was no longer a part of HAGL, the company’s net revenue fell sharply 68.1 per cent over the same period last year to VND265.84 billion, resulting in a plunge of 81.4 per cent in gross profit to VND52.4 billion.

After deducting expenses, the company recorded a net loss of more than VND68.7 billion.

As of March 31 2021, HAGL's total assets also halved to over VND18.4 trillion. Receivables accounted a large proportion of short-term assets with a value of more than VND3.69 trillion. At the moment, the farming company has to make a provision of up to VND2.5 trillion for these assets.

Its long-term assets also halved to nearly VND14.2 trillion. Of which, fixed assets plummeted by 81.2 per cent to VND2.38 trillion, and long-term work in progress also dropped 68.25 per cent to VND3.81 trillion.

HAGL recorded a value of over VND13.67 trillion in debt, of which short-term and long-term liabilities account for VND8.71 trillion, down about VND2 trillion compared to the beginning of the period.

In the next few years, HAGL’s main strategy is to pay off all debts before developing its businesses.

The company shares, traded on the Ho Chi Minh Stock Exchange (HoSE) with ticker symbol HAG, have been on a downward trend since last month.

HAG shares finished Thursday’s trade at VND5,360 per share. The shares hit the session low of VND5,250.

ABBANK plans to hike charter capital

An Binh Commercial Joint Stock Bank plans to increase its charter capital to over VND9.4 trillion (US$408.08 million) from the current VND5.7 trillion ($247.6 million) by the end of this year.

This was approved at its annual general meeting in Ha Noi last week, where shareholders also approved business targets for this year and a number of other important proposals.

The targets include a 44 per cent increase in pre-tax profits to VND1.97 trillion ($85.6 million) and keeping the return on equity at 16.9 per cent, return on assets at 1.3 per cent and non-performing loans ratio at under 3 per cent.

In its five-year business plan for until 2025 ABBANK eyes a place in the top eight private banks with the best ROE, an active customer base of two million, and revenues from services and personal customer segment accounting for at least 20 per cent and 70 per cent.

It has also identified improving service quality and increasing the number of products used per customer as among the key tasks in the coming period, thereby helping increase its earnings from services.

To achieve the goals, it will accelerate digitisation of its products and services and internal operations activities. It has also invested in developing specialised products, and wants to further exploit services related to guarantee, international payments, foreign currency trading, insurance, bonds and traditional customers in the electricity sector.

Dao Manh Khang, the bank’s chairman, said: "2021 will open a new period for ABBANK with greater strides in core competencies as well as digitisation of banking and financial services.” 

More than $1.1 billion spent on car imports in four months

More than US$1.1 billion was spent on importing 49,360 completely built-up (CBU) vehicles in the four months of 2021 in Viet Nam, a surge of 55.2 per cent in volume and 57.2 per cent in value over the same period last year, the General Statistics Office (GSO) has reported.

In April alone, 14,000 automobiles worth $292 million were imported. However, the import turnover of CBU vehicles in April declined against the previous month.

In March, the import of automobiles increased dramatically as more than $347 million worth of CBUs were brought into the country.

In the first quarter of 2021, 35,367 cars worth $770 million were imported, up 31.1 per cent in volume and 35 per cent in value against the same period last year.

Industry insiders said these figures could be seen as a positive signal as the local car market continues to struggle with the impact of COVID-19.

A report from the Vietnam Automobile Manufacturers’ Association (VAMA) revealed that the total sales figure in the domestic automobile market in the first quarter this year reached 70,925 units, or a year-on-year increase of 36 per cent.

Industry insiders attributed the surge to the increasing demand for transport and private use after the economy stalled due to the COVID-19 pandemic.

The figure comprised 51,126 passenger cars, up 34 per cent, 18,735 commercial vehicles, up 43 per cent, and 1,091 special-use vehicles, up 17 per cent.

In March alone, auto sales by VAMA members grew by 127 per cent against February to 30,935.

Of these, 21,089 were passenger cars, 9,227 commercial vehicles, and 619 special-use vehicles.

Sales of domestically-assembled vehicles rose 99 per cent month-on-month to 70,952, while those of completely-built-up (CBU) vehicles increased 177 per cent against January to 13,795. 

Canada imposes anti-dumping duties of over 101% on upholstered seats from Vietnam

Upholstered seats originating from the nation are set to be subject to an anti-dumping tax rate of 101.5% when being exported to the Canadian market, according to information released by the Canada Border Services Agency (CBSA).

The move comes following the Canadian International Trade Tribunal (CITT) conducting a preliminary investigation into acts of dumping.

According to details posted by the CBSA, numerous products will be subject to anti-dumping and subsidy duties when exported to the Canadian market, including those with HS code 9401.40.00.00, 9401.61.10.10, 9401.61.10.90, 9401.71.10.10, and 9401.71.10.90.

Most notably, upholstered furniture originating from both China and Vietnam will be subject to a tax rate of 295.5% and 101.5%, respectively, when entering the Canadian market.

According to information given by the CITT, the dumping and subsidising of certain upholstered domestic seating which either originates or is exported from both China and Vietnam has served to caused damage to Canada's domestic furniture industry.

The CITT therefore plans to continue conducting an investigation into the matter, with the final results being released before September 2.

In total 28 Chinese manufacturers are anticipated to face anti-dumping tax rates ranging from 20.65% to 226.45%, while seven Vietnamese manufacturers will be subject to duties of between 17.44% and 89.77%.

This follows the CBSA initiating an investigation in December, 2020, based on Palliser Furniture's complaint, with support from other manufacturers such as Canadian Elran Furniture Ltd ., Jaymar Furniture Corp., EQ3 Ltd. and Fornirama Inc.

CBSA has also revealed that the market size of some upholstered seats in Canada stands at an estimated US$675 million per year.

India decides not to impose anti-dumping duties on Vietnamese artificial fiber

India has chosen not to place anti-dumping taxes on some artificial fiber products, including viscose spun yarn imported from countries such as Vietnam, according to details released by the Trade Remedies Authority of Vietnam.

This comes after the Trade Remedies Authority of Vietnam received information on May 6 about the Indian Ministry of Finance's decision to not impose anti-dumping duties on a number of artificial fiber products which originate from China, Indonesia, and Vietnam.

Previously on December 30, 2020, India’s Ministry of Commerce and Trade had issued their final investigation into the case, while the Indian Ministry of Finance subsequently proposed imposing anti-dumping duties of between US$0.25 and US$0.8 per kilo on these products. In line with this suggestion, it was put forward that anti-dumping taxes on Vietnamese items should be at US$0.41 per kilo.

 

According to information released by the Trade Remedies Authority of Vietnam, the date of initiating the investigation began on January 14, 2020, with products subject to an investigation falling under the HS codes 5510.11.10; 5510.12.10; 5510.11.90; 5510.90.10; and 5510.90.90.

The plaintiff is the Indian Manmade Yarn Manufacturers Association, with the investigation period beginning from April 1, 2019, to December 31, 2019.

Data compiled by the General Department of Vietnam Customs indicates that the country’s total export turnover of products subject to an investigation stood at US$9.7 million in 2019, representing a year-on-year increase of 78% compared to 2018.

Fitch Ratings gives PV Power ‘BB’ rating with positive outlook

Fitch Ratings has assigned PetroVietnam Power Corporation-Joint Stock Company (PV Power) a long-term foreign-currency issuer default rating (IDR) of 'BB', with a positive outlook moving forward.

The rating reflects PV Power's Standalone Credit Profile (SCP) of 'BB' which is on par with the IDR of its 80% parent, Vietnam Oil and Gas Group (PVN), which is also rated as ‘BB’ with a positive outlook. PV Power's financial profile appears stronger than a 'BB' level, whilst its business profile is underpinned by stable and long-term power purchase agreements (PPA) due to EVN being the main off-taker. Indeed, PV Power's positive outlook in its rating is in line with that of EVN's rating, meaning EVN's rating is a major constraint on PV Power's SCP.  

All rankings have been evaluated by Fitch Ratings in a thorough and objective manner over a period of time longer than one year. Through the assessment, PV Power has been able to display its potential, its ability, along with its future development orientation.

Despite facing numerous difficulties over the course of last year, along with the first half of this year due to the impact of the novel coronavirus (COVID-19) pandemic, PV Power has made every effort to ensure the stable, safe, and efficient operation of its power plants, thereby fulfilling all set targets.

Last year saw the company's total commercial electricity output reach 19,166 billion kWh, meeting 103% of its plan for last year and earning VND30,246 billion in revenue in the process, fulfilling 107% of its plan.

With corporation's pre-tax profit reaching VND 2,875 billion, it fulfilled 120% of its plan and contributed VND1,687 billion to the State budget, meeting 118% of the scheme.

After being given the international credit rating of "BB" with a positive outlook, PV Power has become the first Vietnamese electric power producer and the first PetroVietnam producer to carry an international credit rating.

The ‘BB’ credit rating with a positive outlook will therefore help PV Power to improve its ability to mobilise capital in international markets, whilst also diversifying capital mobilisation for investment projects.

Furthermore, this credit rating has also affirms PV Power's strong business and financial situation, along with its positive business prospects in the future which will serve as the foundation that ensures the company's financial and business capacity. This will contribute to winning the trust of shareholders, investors, and strategic partners.

Vietnamese rice exports to China skyrocket

China has moved to increase its import of rice from several Asian countries, including Vietnam, during the opening months of the year.

According to data given by the Chinese General Administration of Customs, the Asian giant imported a total of 910,000 tonnes of rice worth US$434.15 million over the first two months of the year, representing a sharp increase of 203.3% in volume and a rise of 180.6% in value compared to the same period from last year.

Of the total, Vietnamese rice exports to China surged by 206.3% against last year’s corresponding period.

Most notably, China's rice imports from Pakistan reached the highest level, with turnover climbing to US$127.61 million, representing an annual rise of 339.7% and accounting for 29.4% of its total rice imports.

China's rice imports from other markets, including Myanmar and Thailand, also increased sharply by 220.4% and 83%, respectively.

During the first quarter of the year, Vietnamese rice exports to China reached 256,516 tonnes worth US$136.17 million, up 58% in volume and 49.7% in turnover compared to the same period from last year, according to the General Department of Vietnam Customs.

Last year saw China consume 752,300 tonnes of Vietnamese rice worth US$431.7 million, up 91.6%.

Developing groups on a global scale

Private conglomerates have been making a splash in recent times, with big names like Vingroup, Masan Group, and Nova Group starting to turn heads outside the country. Van Dong and Minh Tam from Viet Dragon Securities look into the country’s current situation and point out the pros and cons facing Vietnamese groups on the way to reaching regional and global status.

The coronavirus pandemic left huge devastating impacts on the global economy in 2020, yet the growth prospects for 2021 remain uncertain, including that for top global economies. Production, investment, and trade activities on a global scale are forecast to continue in the doldrums amid current complication, rising tension between key economies, geopolitical risks, and natural disasters.

Amid these mounting hardships of the global economy, with early and drastic responses from the government, Vietnam and a few other nations were deemed as fairly successful in containing the pandemic. The country has therefore emerged as a safe and attractive destination to international investors who are targeting new emerging markets. Foreign equity investors from Singapore, Thailand, South Korea, and Japan are keenly on the lookout for promising mergers and acquisitions (M&A) in the Vietnamese market.

Until now, Vietnam has been succeeding in maintaining growth momentum which is forecast to linger in the medium and long term by virtue of the government’s rational management. When many other countries are struggling with the health crisis, Vietnam is showcasing as a nation with stable political standing, constantly improved business environment, well-controlled inflation, increasingly number of major free trade agreements, and growing appeal in the eyes of international investors.

In addition, the country is a stage of golden demographics, with people’s improved standards of living leading to burgeoning demands for investment and consumption.

In this situation, local groups can take some actions to grasp development opportunities and master their fates. Corporate governance always presents new challenges forcing business executives to improve management expertise and change their mindsets about markets, as well as redesign business models for future success.

With core competencies and competitive advantages accumulated after years of operating in the market and thorough understanding of it, scores of local players took initiative in venturing into new fields or acquiring businesses with similar values to create a complete ecosystem with diversified products, reputable brands, and unified and preeminent services in favour of customers.

Some notable cases to date include Masan Group, which has grown into a leading retail and consumer goods conglomerate in Vietnam in the wake of a raft of typical M&A deals in the market; and REE Corporation redefining itself under a group model with four separate segments of operations.

In industrial production, Hoa Phat Group and Truong Hai Auto Corporation have posted impressive business results, while Viettel and FPT are among the top players in ICT and in high-tech agriculture The Pan Group and TTC Group are leaving their mark.

More than that, aside with building sector-based value chains, companies aspire to grow into multi-field groups with the capacity to share their customer resources like in the cases of Nova Group, SonKim Group, and DOJI Group.

During the process of realising their ambitions, Vietnamese companies are resorting to diverse methods such as hiring outside consulting units to building up plans and transfers, or by acquiring or merging with a well-established corporate entity with a firm market base, business know-how, and operating systems.

The reality shows that a slew of local players are pursuing and materialising the strategy of building multi-field, multi-sector groups. Besides successful businesses that were taking proper steps towards building a complete ecosystem, a few groups have caught failures as their investment strategies lack concentration and preparation of necessary resources for developing under the group model.

Multiple challenges exist in the process companies rising into top of the industry economic groups. In a legal aspect, a group is not a type of business – it is an assemblage of companies in which the parent company injects capital into subsidiaries and member units to take control in strategy, branding, technology, market, or profit.

In a governance aspect, with quick augmentation in capital and personnel, the parent company is mandated to arrange operation and take control of member companies to ensure smooth operation of the whole system. Abiding to diverse operating principles represents mighty challenges to business executives in designing business spearheads and ensures interest balance among member companies in the group.

As for governance reporting mechanisms, with augmentation in scale and human resources, business groups need to build up a professional and inclusive governance system on a digital platform.

Along with the vision that Vietnam seeks to grow into a powerful and prosperous nation by 2045, the government is advocating the development of powerful local private economic groups to reach a global scale. For their part, local groups must craft well-conceived development strategies and cultivate their inner strengths to bridge over challenges in the new decade, avail themselves of valued opportunities in the market, and grow increasingly mighty.

Bolstering pork exports

Despite being a country with great pig farming potential – a total pig herd size of more than 27.1 million, Vietnam is still reporting a modest figure in its pork export value (over US$50 million in 2020), according to the Ministry of Agriculture and Rural Development (MARD).

The MARD’s Department of Animal Health said Vietnam has thus far exported a limited volume of suckling pigs and piglets to just Hong Kong (China) and Malaysia through official channels, while products processed from pork have been shipped to the United States, Australia and Macau (China), among others.

In general, the amount of pork for export is still too small in relation to the country’s total hog production, which is expected to reach 3.87 million tonnes in 2021. On the other hand, some markets in other countries have a large demand for importing Vietnamese pork, but so far Vietnam has yet to meet the requirements set by the partners.

According to husbandry experts, the reason for the aforementioned situation is that the pig farming industry has just done well in the stage of organising production, while the processing and market stages are still unclear. There have not been many safe quarantine areas in accordance with the regulations of the World Organisation for Animal Health (OIE) in Vietnam. Meanwhile, shortcomings remain in the slaughtering process and food hygiene and safety conditions. Currently, there are only more than 1,300 concentrated cattle and poultry slaughterhouses, many of which have not developed the cool storage, filtration, freezing system nor frozen storage warehouses. Not to mention that only about 20% of the total 24,655 small-scale slaughterhouses in the country have been put under control, while some localities do not have veterinarians to control slaughtering activities at concentrated animal slaughterhouses.

In the coming time, in order to step up the exports of pork to other markets in line with the OIE’s regulations, it is necessary to reorganise production within the pig farming industry, develop pork into a national product, and continue the control of diseases, especially African swine fever. In addition, support should be offered to encourage investment in developing husbandry following the value chain with national identification codes and product traceability, alongside the building of large-scale pig farming complexes and applying high technology regarding the enterprises playing a central role in the connection with cooperatives and farming households producing and consuming products. It is also essential to promote circular production while ensuring biosafety and disease safety.

Businesses with great resources should produce pork in a closed chain, featuring all stages of feed and piglet production, pig farming for meat, the slaughter and filtration lines, and the systems of cool storage, frozen storage and warehouses, without residues of chemicals such as antibiotics, plant protection drugs, and heavy metals, at the request of the importing countries. At the same time, trade promotion needs to be accelerated in foreign countries at the ministry and business levels to advertise Vietnamese pork products. The work of market assessment and forecast should be enhanced in association with production development. Meanwhile, the pig industry needs to develop and use crossbreeding formulas suitable for each production region, farming method and market segment to ensure a large enough volume of products and uniformity in terms of quality to serve exports.

By 2025, Vietnam is expected to have 10-12 major linked production chains, creating a lot of clean, high-quality meat to meet the requirements of importing countries. Accelerating exports will work to balance the pork supply and demand, thus generating more benefits for enterprises and farmers, contributing to the sustainable development of Vietnam’s husbandry sector.

BOT contract for North-South expressway section signed

The Ministry of Transport, Son Hai Group--the investor of the Nha Trang-Cam Lam subproject of the North-South Expressway project---and the Nha Trang-Cam Lam Expressway Investment and Construction Co., Ltd on May 6 signed a build-operate-transfer contract for the subproject.

The 50-kilometer section will start in Dien Tho Commune of Dien Khanh District and end in Cam Thinh Tay Commune of Cam Ranh City. It will have four lanes and a design speed of 80 kilometers per hour, the local media reported.

The subproject requires an investment of some VND5.5 trillion, including nearly VND2.6 trillion coming from private resources and some VND2.9 trillion from the State budget. The section is expected to be executed in two years and the capital will be recovered after 16 years and four months.

The investor will have six months to mobilize capital from banks to execute the subproject. If it fails to mobilize capital, the Ministry of Transport will cancel the contract.

At the contract signing ceremony, Son Hai Group Chairman Nguyen Viet Hai committed to executing the subproject with the best quality and progress possible to meet the expectations of the Ministry of Transport and the people.

Deputy Minister of Transport Le Dinh Tho asked the Son Hai Group to complete procedures to borrow loans from banks early and execute the subproject in a transparent manner with its progress and quality being the top priorities.

The North-South Expressway project in the 2017-2020 period has 11 subprojects. Eight of them are under construction.

Nha Trang-Cam Lam is the first subproject of the expressway project executed under the public-private-partnership (PPP) model to have its contract signed.

The Ministry of Transport will complete negotiations and sign contracts with the investors of the Dien Chau-Bai Vot and Cam Lam-Vinh Hao subprojects, two others executed under the PPP format, next week.

Toyota Vietnam to recall nearly 3,300 cars

Toyota Motor Vietnam announced on May 5 that it will recall 3,280 cars to inspect and replace fuel pumps.

Cars subject to the recall include 899 imported Avanza cars and 2,381 imported Rush units that were manufactured between July 16, 2018 and June 28, 2019.

According to Japanese carmaker Toyota Motor Corporation, the affected cars might see warning lights flashing on the dashboard and the engine breaking down. The issue might also cause vehicles to stall when running at both low and high speeds, leading to an increased risk of accidents.

The owners of affected cars can take their vehicles to any Toyota dealer nationwide for a fuel pump check and replacement for free, which takes around 1.8-2.2 hours.

Toyota customers can also check whether their cars are subject to the recall or not by visiting the website toyota.com.vn or contact Toyota dealers nationwide or the Toyota Vietnam’s hotline 18001524/ 0916001524 for further information.

Vietnam’s commercial bank credits on a roll

Credit ratings for Vietnam is on an upward trend at the start of 2021 despite the raging pandemic thanks to the recovery in production, business and exports as well as new preferential loan policies to support domestic companies, experts stated.

Vietnam’s economic credits as of April 16 have reached VND9,490 trillion (about US$411 billion), up 3.34 percent compared to the end of 2020, said the State Bank of Vietnam (SBV).

Plus, the country’s credits increased by 0.41 percentage points in the first 2 weeks of April compared to the end of March 2021, quadrupling the growth rate year-on-year.

Most notably, credit capitals are mostly reserved for manufacturing, especially commodity production and export.

Specifically, Vietbank has given out production loans at 6.5 percent interest rate per year to promote production and business activities. In addition, companies with medium and long-term capital needs can get loans at 8.2 percent per year for the first 12 months until the end of 2021 at this bank.

Meanwhile, SeABank is offering a zero-interest rate policy for businesses needing urgent working capital without having to carry out loan procedures. Vietcombank also recently signed a credit contract worth VND1,200 billion (about US$52 million) for a high-tech, environmentally friendly industrial park in Hai Duong Province.

Experts believe credit growth will continue to flourish in the remaining months of the second quarter of 2021, especially for manufacturing, export, trade and tourism.

On the other hand, commercial banks also set a rather high credit growth target for 2021. For example, OCB aims to increase loan rate by 5 percent in the first quarter of 2021 year-on-year, 25 percent of which is reserved for retail and manufacturing. Sacombank at the end of the first quarter also reached the 5.8 percent credit limit set by SBV.

Considering the situation, many experts believe the low credit score for stocks and real estate is due to strict limits set by SBV and not the lack of demand for loans.

Statistics showed that in reality, real estate credit is at some VND600,000 - 650,000 billion (US$26 – 28.2 billion), accounting for only 7 percent of Vietnam’s outstanding loans.

Plus, the Credit Department for Economic Sectors stated that 65 percent of the outstanding loans in the first quarter of 2021 is for buying housing and home repairs, which should be promoted for welfare purposes.
For instance, although property-related loans at the commercial bank OCB account for 30 percent of the bank’s outstanding loans, but only 1 percent is bad debts, said OCB’s general director.

From the perspective of real estate businesses, in order to control cash flows into the real estate sector, the government should monitor resources with unknown origin, while commercial banks should beware of real estate dealers looking to inflate land and house prices, said Chairman of the HCMC Real Estate Association.

Vietnam has potential to boost exports to US

Vietnam and the US have huge potential to boost cooperation in trade and supply chains after COVID-19 is brought under control, which opens up many opportunities for Vietnamese firms to increase exports to this major market.

Director of the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC) Nguyen Huu Tin said Vietnam and the US have enjoyed impressive strides forward in economic cooperative ties, with the US being Vietnam’s largest export market and Vietnam being the US’s 6th-largest importer.

According to Tin, Vietnam has affirmed its position as an important trade partner of the world’s largest economy.

Thanks to the good control of COVID-19 in Vietnam, Vietnamese firms have a huge advantage over foreign rivals struggling to fight the pandemic, he said, while suggesting that improving business and production capacity and capitalising on the US market will provide opportunities for Vietnam’s economy to develop further in the time to come.

In the first quarter of this year, two-way trade between the two countries topped 25.9 billion USD, up 33.5 percent year-on-year, with Vietnam’s exports estimated at 22.2 billion USD.

The two governments and business communities have made efforts in the past to bolster cooperation in a practical fashion and based on the complementary nature of the two economies.

Experts said the US’s demand for high-quality Vietnamese products has been increasing due to changes in the global supply chain, and US firms sees Vietnam as a potential, safe investment destination post-pandemic.

They noted the complementary nature of the two economies, with Vietnam having good production capacity in the fields of agriculture, seafood, and wood processing, among others, while the US is the world’s leading materials supplier and has the strongest purchasing power.

However, they advised Vietnamese firms to select suitable measures to effectively access the US market, and strictly follow quality requirements of the US./.

First unlisted Vietnamese enterprise issues green bonds on int’l market 

Bonds issuance on the international market not only help firms diversify their capital mobilization channels, but also expand markets and further attract investment.

BIM Land Real Estate, a member of BIM Corporation, has become Vietnam’s first unlisted firm completing the issuance of US$200-million green bonds without guarantee assets on the Singapore Exchange (SGX).

The firm’s bonds, given a B2 rating by Moody’s and B by Fitch, were issued with a maturity period of five year and an interest rate of 7.375% per year, with Credit Suisse, UBS and Standard Chartered Bank involving in arranging the deal.

General Director Doan Quoc Huy said BIM Land’s successful deal shows Vietnamese firms are capable of raising funds from international bond market, referring to demand for bonds from foreign investors were more than triple the amount on offer.

“I hope our success would open up the door for more Vietnamese enterprises turning to this channel for fund raising,” Huy said.

Among those showing interests for BIM Land’s bond, 58% came from Asia, 41% from Europe, Middle East and Africa, and the rest from US, of which 92% were investment and asset management funds, and 8% were private banks.

BIM Land plans to use proceeds from this issuance for its real estate projects, including those of green and environmentally-friendly.

Before BIM Land, a number of local public firms successfully issued bonds on international markets, including Vingroup (HOSE:VIC) with bonds worth US$200 million for fixed rate of 11.625% per year in 2013; Novaland (HOSE:NVL) issuing convertible bond of US$240 million in 2018; and VPBank (HOSE: VPB) in 2019 with bonds worth US$300 million.

According to experts, bonds issuance on the international market not only help firms diversify their capital mobilization channels, but also to expand markets and further attract investment.

Overseas Vietnamese urged to promote Vietnamese products abroad  

Vietnamese producers are required to apply high technology and organic agriculture, ensuring food quality and safety and meeting export standards.

Hanoi will promote the sale of Vietnamese goods in trade centers, traditional markets and supermarkets abroad, especially the living areas of overseas Vietnamese people, according to the municipal People’s Committee.

Under the Plan No. 11 issued recently by Deputy Chairman of Hanoi People’s Committee Nguyen Manh Quyen, trade promotion activities will be strengthened with the participation of Vietnamese businesses at home and abroad.

“Overseas Vietnamese people are expected to develop distribution channels abroad as well as increasing the purchase of Made-in-Vietnam products this year,” Quyen noted.

The plan aims to promote the implementation of the “Vietnamese people prioritize using Vietnamese goods” campaign in the Vietnamese community abroad through various forms, in which communications activities among overseas Vietnamese community and international friends will be enhanced. 

Vietnamese producers are required to apply high technology and organic agriculture, ensuring food quality and safety and meeting export standards.

The city’s relevant departments and branches will have to build a database of Hanoi enterprises that are eligible to export to each market.

More than 5.3 million Vietnamese are currently living in 130 countries and territories. The overseas Vietnamese business community includes at least 6,000 entrepreneurs having connection with Vietnam in terms of technology and business fields.

About one-fifth of all Vietnamese living in Europe constitute the potential consumer market. “Many businessmen have participated in selling Vietnamese products as well as developing distribution channel abroad,” Ambassador Luong Thanh Nghi, Deputy Chairman of the State Committee for Overseas Vietnamese (Ministry of Foreign Affairs) told a recent meeting in Ho Chi Minh City (HCMC). 

He highly spoke of great contributions of the Vietnamese community abroad in the promotion of Vietnamese goods and brands.

Last year, the HCMC also issued the same plan for the 2020-2024 period.

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes

VIETNAM BUSINESS NEWS MAY 7

VIETNAM BUSINESS NEWS MAY 7

Agro-forestry-fisheries exports up over 24 percent in Jan-Apr