VIETNAM BUSINESS NEWS SEPTEMBER 10
VN-Index bounces back on blue chip recovery
Viet Nam's benchmark VN-Index bounced back yesterday after a two-day drop as blue chips recovered, especially aviation shares.
On the Ho Chi Minh Stock Exchange, the VN-Index increased 0.78 per cent to close at 1,343.98 points. The southern market's index lost nearly 1 per cent in the two previous sessions.
There was no surge in money flow in the market as nearly 643 million shares worth VND19.6 trillion (US$852 million shares), a low level since the beginning of September.
Blue chips rebounded yesterday. Twenty-one of the top 30 shares by market value and liquidity gained value, of which Mobile World Investment (MWG) was the most influential share on the VN-Index.
MWG climbed 6.7 per cent to VND118,900 ($5.17) per share.
Aviation enterprises also moved positively. The national flag carrier Vietnam Airlines (HVN) leapt 6.9 per cent while Vietjet (VJC) increased 3.5 per cent. They were also two of the top 10 shares pulling the VN-Index most.
Many banks also bounced back with popular names such as BIDV (BID), Vietinbank (CTG), VPBank (VPB), Techcombank (TCB), Military Bank (MBB) and Asia Commercial Bank (ACB) gaining between 0.4 per cent and 2.3 per cent.
On the other side, heavyweights such as Vingroup (VIC), Vinhomes (VHM), Vinamilk (VNM) and Sabeco (SAB) still sank into the red.
According to Maybank Kim Eng (MBKE), the market will face challenges in September when COVID-19 has brought the economy to a halt, thus the general sentiment of investors has now turned to be defensive.
"However, with better vaccination roll-out in the fourth quarter and 2022, Viet Nam is expected to be able to reopen from October and the economy can rebound strongly from the third quarter decline," it said in a September report.
MBKE's analysts expect the VN-Index to consolidate in the longer term which will offer opportunities to buy good stocks at very reasonable valuations.
On the Ha Noi Stock Exchange, the HNX-Index extended its rallying streak to 10 consecutive sessions, rising 0.91 per cent to end at 350.44 points.
Liquidity continued to decline, however, to just 124 million shares worth nearly VND2.6 trillion.
Vietnam holds upbeat growth potential despite COVID-19: VEIL
Vietnam’s first half growth demonstrates the underlying strength of the economy, which will provide a platform for the country's growth once its new COVID-19 outbreaks are contained, said Stanley Chou, Chair of the Vietnam Enterprise Investments Limited (VEIL).
Chou said in his statement issued on September 8 that the economy remained resilient in the first half of 2021, posting GDP growth of 5.6 percent, despite being negatively affected by two new waves of the virus.
The statement said the key driver in Vietnam's economic performance for the first six months was manufacturing, which expanded by 8.4 percent on-year. This was reflected in robust trade numbers, in which exports increased by 28.5 percent to 158 billion USD and imports increased by 36.3 percent to 159 billion USD. Increased imports supported production and much of the surge came from inventory restocking. The resulting trade deficit was 1.5 billion USD and is widely expected to be reversed in the second half of 2021.
According to VEIL, the Vietnamese stock market was among the top performing indices in the world in the first half of 2021 and hit an all-time record high of above 1,400 points in June 2021.
Against such backdrop, VEIL rose strongly by 42.1 percent in the period and is ahead of its reference index, VN-Index, by 13.3 percent.
Chou stated VEIL believes that in the long-term, Vietnam still offers one of the strongest structural growth outlooks among developing markets, led by industrialisation and urbanisation./.
Action urged to lighten the load for seafood groups
The seafood sector is clamouring for further governmental support as production costs skyrocket in the face of extra testing and safety measures.
On August 28, the government issued Resolution No.97/NQ-CP to support power tariff and electricity bills reduction for seafood processing enterprises, vegetable processing enterprises, and export manufacturing enterprises with a 2020 export turnover of more than $1 billion each.
The conditions to receive the reductions involve operational production facilities located in cities and provinces which are implementing social distancing. Accordingly, eligible businesses will enjoy a 10 per cent power tariff discount before tax on bills within three months in invoicing time from September to the end of November.
“The pandemic has caused heavy damage to the aquaculture sector. Therefore, we need supporting to maintain production and reinvest,” said Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP). “Reduction of electricity bills will support the recovery of the chain of production and export.”
Previously, the Ministry of Planning and Investment also proposed that the government should support a maximum of VND15 billion ($660,500) for an aquaculture project to build infrastructure; and a maximum of the same amount for enterprises with ships providing fishing logistics services.
Commenting on the aid, a representative of Sao Ta Foods JSC appreciated the government’s concern. However, he told VIR, enterprises need even more help to keep up with the pace of operations.
Sao Ta Foods is amongst a modest number of seafood producers that still maintain operation. The representative said that although its factories in the Mekong Delta province of Soc Trang are running, workers in affected areas are not allowed to go to work, so Sao Ta cannot reach its normal capacity.
“Our factory is located in a safe zone in the province so we are allowed to continue production. But our capacity will only be 80 per cent of the usual because we lack workers. Moreover, to ensure safety, the factory has to carry out medical tests for at least 20 per cent of its workers every three days, which adds more costs,” he said.
Meanwhile, Thuan Phuoc Seafoods and Trading Corporation based in the central city of Danang is struggling with high testing costs while its factories’ operation only works at 30 per cent capacity.
“If the factories are not working at full capacity, production costs will be much higher than usual. Our desire is to ensure all of our workers get vaccinated to keep up with production and reduce costs,” Le Thi Minh Thao, deputy general director of Thuan Phuoc Seafoods and Trading Corporation said.
She said that seafood producers need more support such as on bank interest rates and union dues. “It is good if social insurance agencies can help us pay wages to underemployed workers in lockdown areas. Furthermore, we are bearing a high social insurance fee, so it is useful to spend accumulated insurance funds to support us,” she added.
Statistics from VASEP showed that, in August, only about 30-40 per cent of seafood producers in the southern provinces were operating with less than half staff, causing the average production capacity reduced to 40-50 per cent compared to previous months.
Also, VASEP forecast that seafood exports in September will continue to decrease by at least 20 per cent to about $660 million in value. After September, if enough workers are vaccinated and producers can return to normal production, exports in the last three months of the year will recover slightly and could achieve $8.5-8.6 billion.
Phung Duc Tien, Deputy Minister of the Ministry of Agriculture and Rural Development, highlighted that if current burdens are not solved, seafood producers will have to deal with human resources issues when they return to close-to-normal production.
He said that the ministry is closely coordinating with related parties in order to grasp the difficult situation of these enterprises and help them maintain operations, while avoiding production chain disruptions. It has also proposed that the government coordinates in clearing obstacles as well as creating more favourable conditions for the production, processing, circulation, import, and also export of aquatic products.
Financial wellness & digital money management apps are the key to igniting Vietnam’s digital banking boom
New data published this week in a Backbase commissioned study, conducted by Forrester Consulting, reveals a potential future spark for igniting Vietnam’s race for digital dominance in the retail banking sector. Like other areas of the world, smartphones and digital-only services have changed how people live in Vietnam. However, compared with other developing countries, the uptake of digital banking has been slower.
One reason for this, as highlighted in the research, was a lower level of confidence in digital-only banks, with only 16% of consumers saying they currently trust them. However, looking at other more mature markets in the research, it’s proven that the implementation of free financial wellness and digital money management tools – full of features and benefits – greatly improves this sentiment.
Talking about the results of the research and how empowerment and knowledge improve trust in the banking system, Regional Vice President for the Asia Pacific region, Iman Ghodosi, said: “Vietnamese banks and their customers are only at the start of their digitization journey. The more information and control we can put in the hands of Vietnamese to make their own informed financial choices, the more they will trust the organizations providing them with this opportunity. Technology now enables us to do this. This is happening around the world, and our research shows it will work here in Vietnam too. This could be the catalyst for Vietnam’s digital banking to really take off.”
“Now more than ever, it is important to own the relationship with your customer. We’ve entered the Engagement Banking Era, an evolution that stresses a one unified platform approach for banking. The number one priority in this new era is to completely re-architect the bank around the customer, moving away from siloed technology investments,” Mr. Ghodosi added.
Through advancements in A.I, behavioural analytics from the spending habits of users, better user experience, and mobile-first technology such apps can provide customers with a huge range of financial literacy tools such as: spending analysis, creating savings goals, transaction categorization, personalized recommendations, and the scheduling of bill payments, to name a few. “One can see how this level of insight and assistance would empower and build trust for users,” Mr. Ghodosi adds.
The research shows that 50% of Vietnamese are not achieving their financial goals, 62% feel overwhelmed by debt and 71% don't know where to go for reliable financial advice. “Through digital money management tools, banks can address all of this and more. They could make a big difference to the financial lives of their customers”, Mr Iman Ghodosi emphasized.
Banks in Vietnam are moving forward into digital, but for some it’s a slow paced journey. Of the Vietnamese retail-banking business decision-makers interviewed as part of the report, 58% said their company was implementing or expanding their digital banking offering, while 28% said their company had ‘no interest in’ or was ‘removing’ its digital banking offering.
According to Riddhi Dutta, Regional Director for Backbase ASEAN & South Asia, “There seems to be a wide disparity between some banks who are progressing and others who are yet to start; this could be a huge opportunity for those disruptors who want to put their ‘pedal to the metal’ and gain first-mover advantage.”
“From our research, 42% of the interviewed Vietnamese retail banking business decision-makers said they are going to increase spending on financial wellness initiatives over the next 12 months. 74% said they were ‘planning to’ or ‘actively expanding’ digital financial wellness initiatives, so there are some positive signs there too,” Mr. Dutta added.
With banks well aware of the challenges their consumers face, and with the knowledge that digital financial wellness apps are an ideal solution for these challenges, all thoughts go to why some Vietnamese banks are slower in getting started.
The research revealed that in Vietnam, 72% of the banking sector sees a ‘lack of understanding of customer needs and outcomes’ as an obstacle in further developing digital tools for its customers, and 74% said they are ‘unsure of how to work with or partner with a fintech company’ to implement the activity. 70% said it was due to ‘outdated or legacy technology’ and 68% said it was due to ‘competing priorities.’
Talking about the points raised, Mr. Ghodosi said: “It seems there is a lack of understanding; we can empathize with these challenges because at one time every bank in the world faced them. Change is not easy. However, for those institutions who want to take the lead, the slowness of some of the sectors is definitely an opportunity.”
“There is no doubt that financial wellness apps aimed at consumers can play a large part in improving trust in digital banking and adding value to the lives of Vietnamese. 12 months from now, adoption will be much further advanced, and 24 months from now Vietnamese will have a whole different digital relationship with their banks. It all comes down with who wants to be first”, Mr. Ghodosi concluded.
Room remains for Vietnamese exports to Russia
There remains huge room for Vietnam to boost exports of farm produce, seafood, foodstuffs and beverages to Russia, which has great demand for these goods, experts have said.
Currently many Vietnamese products are unpopular in Russia despite the huge market demand, online newspaper dangcongsan.vn cited Vice Chairwoman of the Russia – Vietnam Friendship Association (RVFA) Regina Budarina as saying.
For example, fresh Thai mangoes are available in Russia, but lack of consumption channels has led to the rare presence of Vietnamese mangoes in this market thus customers who have demand for this fruit have to go to markets or cafes operated by the Vietnamese.
Also, Russian customers prefer Indian rice to that of Vietnam due to more competitive prices.
In order to effectively penetrate the Russian market, she suggested Vietnamese businesses follow the shortest path which is to promote market research. Although initially, market research might cost businesses a lot of money, but in the future, it would facilitate their exports to Russia, she said.
Frequent seminars and exhibitions would be also needed to bring Vietnamese products closer to the Russian market, she said, adding that Vietnamese firms should consider shipping their goods to Russia by rail through China to reduce transportation costs.
According to the Vietnamese Trade Office in Russia, farm produce, food and consumer goods are mainly sold at retail chains. Besides product quality and design, businesses also needed to ensure sufficient supply of goods.
In order to bring goods into these chains, in addition to product quality and design; businesses need to meet the important requirement of constantly having stock at the warehouse to supply regularly to stores.
The good news is that at present, a number of agricultural products and processed agricultural products from Vietnam have gradually accessed Russian retail systems, such as mango, chili sauce, dipping sauce, pomelo and dragon fruit, the office said.
However, the quantity of items was still modest, it noted.
Over the past years, the office has connected many Vietnamese enterprises with suppliers who provided Vietnamese agricultural products such as ginger, grapefruit, and vegetables to the Russian supermarket chains.
However, Vietnamese firms have still encountered several difficulties due to their failure in ensuring stable and long-term supply of goods in large quantities. Therefore, in order to export to Russian stably, the firms needed to draw up a suitable strategy and build a supply system in the host country to supply supermarket chains there, the office said.
Along with the efforts of trade promotion organisations and domestic industry associations in connecting the two countries' businesses amid the complicated development of the COVID-19 pandemic, the office said it would continue to facilitate trade promotion activities in order to support businesses in the new context while organising seminars and business matching events on specific industries and fields in order to create opportunities for Vietnamese goods to enter the Russian market.
Meanwhile, in order to maintain growth and improve the market share of Vietnamese agricultural and seafood products in Russia, economists advised businesses to focus on ensuring the prestige and quality of export products, boost processed farm produce exports, and diversify the range of products made from fresh fruits to improve their competitiveness in Russia.
Relevant authorities needed to strengthen assistance for trade promotion and market forecasting, and provide specific information to help businesses prepare for approaching and expanding trade with Russia, they said.
Over the past six months of 2021, two-way trade reached 2.62 billion USD, up 16 percent percent year-on-year, with Vietnamese exports worth 1.66 billion USD, up 31 percent year-on-year, according to the General Department of Customs.
Among staples recording a significant turnover increase were textile and garment with 195 million USD, up 54 percent; seafood with 87.5 million USD, up 64 percent; fruit and vegetables with 42 million USD, up 50 percent; cashew nuts with 25.3 million USD, up 48 percent; electronics, computers and parts with 253 million USD, up 46 percent, handsets and component with over 500 million USD, up 6.4 percent.
From January to June, Vietnam's imports from Russia saw a modest decline of 3.3 percent to over 967 million USD with main goods including chemical products; paper, pharmaceuticals, plastic materials and automobiles./.
Vietnamese farm produce introduced in Italy
Vietnam has introduced its fruit, vegetables, and other farm produce at Macfrut 2021: the Fruit & Veg Professional Show, which opened on September 7 in Rimini city, the Emilia Romagna region of Italy.
Macfrut 2021 is the first major event for the fruit sector to be held in the European region after a nearly two-year hiatus due to the COVID-19 pandemic.
It offers a good chance for Vietnam to set up partnership and seek export markets for its agricultural products in Italy and other EU member nations.
The fair also serves as a bridge helping Vietnamese businesses access and connect with Italian partners who possess advanced technologies for producing, processing and preserving fruits.
The two-day event features 800 booths, and is expected to attract about 500 fruit importers worldwide./.
Seafood producers hard to resume as normal
Only a modest number of seafood producers have the capacity to resume production immediately after social distancing while the rest will need quite a long time to pick up pace.
According to a survey conducted by the Vietnam Association of Seafood Exporters and Producers (VASEP), by the end of August, only about 30-40 per cent of seafood enterprises in the southern provinces and cities could maintain operation while about 30-40 per cent had to stop production and the rest are preparing to resume operations.
With operational factories, only 30-50 per cent of employees could work on site, the rest had to leave work or take unpaid leave. As a result, processing capacity has reduced by 50-60 per cent. It is estimated that the overall capacity of the whole region has decreased by 60-70 per cent.
Tien Giang, Can Tho, Hau Giang, and Dong Thap are the provinces with the largest number of seafood producers that have stopped operating either completely or temporarily.
The operational seafood enterprises try to maintain a key labour force to continue production while temporarily laying off other workers or pay themminimum wages. Other businesses stopped working but still try to maintain wages for workers to retain them for the bounce back.
Recovery in production is greatly affected by a broken supply chain of raw materials, difficulties in transportation, and customer loss. Especially, it is difficult to keep the labour force unchanged as many workers have not been vaccinated or have returned to their hometown, are in quarantine, or are undergoing COVID-19 treatment.
Although workers in industrial zones and export processing zones are prioritised for vaccination, only 30-40 per cent have received their first jab by the end of August and no workers have received the second injection.
Different localities implement vaccination at different paces. While businesses in Ca Mau province are vaccinated the fastest (90-95 per cent of workers have already received the first injection) other localities like Long An, Can Tho, and Hau Giang are far slower.
As of July, the number of orders placed at seafood enterprises increased 10-20 per cent compared to 2020 due to global market recovery. However, from August 23, all southern provinces and cities implemented strict social distancing, affecting production and delivery.
At the end of August, 40-50 per cent of orders were delivered late and about 10-15 per cent of orders were cancelled. In addition, many importers have considered finding alternative sources.
Efforts made to turn Vietnam into world’s spice supplier
Vietnam’s agriculture sector along with the spices and seasonings industry have enjoyed a remarkable transition which turns the country into a supplier of those products for the global market.
Le Hoang Tai, Vice Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, unveiled the information during a virtual conference on Vietnamese spices and seasonings hosted by Vietrade on September 8.
Trade promotions and technical support have helped firms in the sector to surmount difficulties and develop sustainably by moving to produce more value added items, he stated.
Among Vietnamese spices, peppercorn has gained a foothold on the international market and holds a lion’s share in export revenues.
At present, demand for peppercorn and others has been on the rise while global exports of such products decline due to difficulties caused by the ongoing COVID-19 pandemic.
Vietnamese firms have worked to gradually meet more stringent requirements of foreign trade partners and are able to provide added value products with high quality and food safety.
Tai advised localities and firms to devise production recovery plans, apply advanced technologies, diversify products and capitalise on recent new-generation free trade agreements that Vietnam is a signatory to bolster exports once COVID-19 is brought under control.
Speaking at the event, First Secretary and Head of the Vietnamese Trade Office in Saudi Arabia Tran Trong Kim, said the Middle East nation consumes many kinds of spices, mainly imports from foreign countries, including Vietnam, adding that the country is having a high demand for organic food and spices.
Statistics showed that Vietnam shipped products worth 225 million USD to Saudi Arabia in the first seven months of this year. The country rakes in an average of 10 million USD from exports of spices to Saudi Arabia each year./.
Seminar seeks way to boost sustainable Vietnam-Africa farming cooperation
A webinar on Vietnam – Africa agricultural cooperation for sustainable development took place on September 9 in search of a dynamic and creative collaboration model for the two sides.
The event was co-organised by the Ministry of Foreign Affairs, Ministry of Agriculture and Rural Development and the International Organisation of La Francophonie (OIF).
Speaking at the seminar, Foreign Minister Bui Thanh Son underscored that Vietnam values its traditional ties with African nations and that the Vietnam-Africa engagements are continuously being consolidated and expanded.
He stated room for the sides’ cooperation in agriculture remains extensive.
Deputy Minister of Agriculture and Rural Development Le Quoc Doanh recommended the sides promote their South-South cooperation models, technological transfer, and farming encouragement measures, adding that Vietnam is willing to send experts and technicians to support Africa.
Doanh noted there is a need for the building of a pilot public-private partnership (PPP) model regarding investment in the production and processing of farm produce in some African nations, prioritising sectors of Vietnam’s strengths and demand for consumption.
Abu Bakarr Karim, Minister of Agriculture & Forestry of Sierra Leone, said his country’s agricultural sector will follow the successful development path of its Vietnamese counterpart.
Participants reviewed opportunities and challenges facing farming cooperation between Vietnam and Africa and discussed measures to bolster and expand the trade of the sides’ key farm produce.
Major orientations for joint agricultural production collaboration and financial solutions in aid of the ties were also tabled for discussion./.
Platforms pushing digital adoption
Fundraising attention is shifting to Vietnam’s tech companies that could support other businesses to move online.
KiotViet and KKR last week announced the signing of agreements under which the latter would participate as the lead investor in the former’s $45-million Series B fundraising round. Other investors partaking in this funding round include Jungle Ventures, Thailand’s Kasikorn Bank, and Cao Viet My.
KiotViet is a leading merchant platform for micro-, small-, and medium-sized enterprises (MSMEs) in Vietnam. The company aims to drive the digital transformation of such enterprises.
Tri Kim Cao, deputy general director of KiotViet, told VIR, “COVID-19 has created many challenges for MSMEs. To support our merchants, KiotViet has developed solutions to help them manage their businesses seamlessly offline and online.
For example, MyKiot gives KiotViet merchants the ability to create their own e-commerce website in just five minutes, and omnichannel management allows merchants to effectively manage sales from multiple channels, including their e-commerce websites, Tiki, Shopee, Lazada, Facebook, and some others.”
With the new funds, KiotViet plans to continue to upgrade the quality of its products and services to transform MSMEs, hire key executives for new services in fintech (KiotFinance, KPay) and business-to-business (B2B) e-commerce (KiotPro), and expand to regional and international markets.
Likewise, SoBanHang, a Vietnamese bookkeeping software for small businesses, has raised $1.5 million in a seed round led by FEBE Ventures, a US-based venture capital firm, and individuals like Kevin P. Ryan, founder of Business Insider. SoBanHang will use the fresh funds to further invest in technology. The company wants to help small businesses thrive on digital platforms with the power of technology and smart data analytics.
Bui Hai Nam, CEO of SoBanHang shared, “During social distancing, small retailers and traders can no longer meet their customers face-to-face, hence going online is the only way to ensure business continuity. It’s a great opportunity for them to expedite digitalisation, expand to modern channels, increase revenues, and gain more operational efficiency.”
However, Nam also added that “the digital transformation is costly and complex – even for large corporations. SoBanHang makes it fast, easy, and effortless for smaller businesses to adopt more modern e-commerce.”
According to Nam, small retailers now understand the vitality of digitalisation and are becoming more open to new technology. As a result, SoBanHang saw a huge wave of newcomers on its platform in the last two months. SoBanHang earlier had spent eight months researching the market build its app the final solution for retailers.
Likewise, Sapo Technology JSC, a multichannel management and sales platform, is also looking to raise about $10-15 million to fund its expansion. Tran Trong Tuyen, CEO of Sapo said, “COVID-19 has changed the way we buy, and therefore, it changes the way businesses operate. The digital transformation is definitely a top priority to meet the urgent needs of both suppliers and consumers.”
Sapo has witnessed stronger investment by SMEs in digital transformation. Especially amid the latest wave of infections, the negative impact on businesses was huge. However, there has been an increase in investment in sale management software on e-commerce platforms, online sale channels, inter- and intra-regional shipping channels, and cashless payment methods, which could be an indicator for SMEs trying to search a long-term orientation to survive the pandemic.
“The demand for digital services has been huge, and the usage of technology has also been increased. We have seen market assisting services, online orders via mobile apps, super-fast shippers, and many more things. This is an opportunity for those who know how to take advantage of it,” Tuyen said.
The shift to online has attracted the attention of overseas investors and funds. Ashish Shastry, co-head of Asia- Pacific Private Equity and head of Southeast Asia at KKR said, “We are excited to invest in KiotViet, an innovative business with terrific growth potential. Our investment marks our sixth in Vietnam and is the first made within KKR’s growth technology strategy in Southeast Asia. This milestone reflects our commitment to providing high-growth technology companies – including those at an earlier stage – with long-term capital and value-added support.”
Meanwhile Olivier Raussin, co-founder and managing partner at FEBE Ventures, told VIR, “Vietnam is a key market for FEBE Ventures. We invest in technology and SMEs are the key segment that we like to address. We are considering more investment in the space. Furthermore, we truly believe in the digitalisation of customer services in the emerging middle class and B2B in the SME segment.”
According to Raussin, SMEs need to sell both online and offline. They could meet the needs of customers with a proper digital strategy and execution, backed by fundamental tools like customer relationship management solutions and customer databases. With this, SMEs could boost their new products and promotions.
Tech startups like KiotViet, SoBanHang, and Sapo could be the ones helping SMEs to address the challenges of the digital transformation. “Businesses must be ready to invest in a methodical, enthusiastic, and carefully calculated manner. It’s not just about bringing all products and services to a digital presence. They must prepare a full presale, sale, and after-sale system that is synchronous and compatible with digital products,” said Tuyen of Sapo.
“It is also worth mentioning that tools such as Sapo’s sales management software are to completely reduce errors, connect sales processes smoothly and professionally, and create a good experience for customers and stable revenues for sellers,” he claimed.
Global forum to discuss United Nations Centennial Initiative
A number of ideas and strategies on the United Nations Centennial Initiatives are explored at the three-day high-level online Policy Lab which opened on Tuesday.
Titled Fundamental Rights in AI and Digital Socities: Towards an International Accord, it is sponsored by the Club de Madrid and Boston Global Forum.
The digital revolution is shaking the foundations of our societies and the immediate rollout of AI technologies promises even greater societal disruption. These technologies bring new opportunities for the enjoyment of human rights, but also new threats to their protection.
Policymakers around the world and at all levels of government are becoming more convinced of the need to ensure that digital technologies and AI serve people and not the other way around.
The event seeks to find methods to narrow this gap between the digital and policy worlds, and to build consensus around a rights-based agenda for the global governance of AI and digital societies.
The topics discussed at the forum are the UN Contennial Initiative launched in 2019 by the United Nations Academic Impact in partnership with The Boston Global Forum.
The initiative hosts roundtable discussions, conferences, new concepts, solutions, think pieces, and reflections to look ahead to the global landscape in 2045, the United Nations’s centennial year.
The core concepts of the UN Centennial Initiative include the idea of a social contract for the artificial intelligence (AI) age, a framework for an AI international accord, an ecosystem for the AI World Society (AIWS), and a community innovation economy.
Some of these ideas have already begun to be put into practice, including the evolution of an AIWS City being developed by NovaWorld in Phan Thiet, Viet Nam, on a pilot basis.
AIWS City is a virtual digital city dedicated to promoting the values associated with AIWS. It looks to bring together a global enlightenment community of scholars, innovators, leaders, and citizens dedicated to fostering thought, creativity, and ethical behavior.
Professor Dr Tran Dinh Thien, senior advisor to the Vietnamese Prime Minister, expressed excitement at NovaWorld Phan Thiet City being built into a leading healthcare and wellness tourism destination: “NovaWorld Phan Thiet and AIWS City will become a model, representative of the standards and ambitions of the United Nations Centennial Initiative and the World Leadership Alliance-Club de Madrid.
“Viet Nam invites world leaders, ideologists and innovators to Phan Thiet to support the plan to build NovaWorld Phan Thiet City… We look forward to receiving unique ideas and suggestions to help Phan Thiet develop and become a leading ecosystem for a new economy, one for those looking to pioneer in the Age of Global Enlightenment, celebrating the 100th anniversary of the United Nations.”
Ramu Damodaran, co-chair of the United Nations Centennial Initiative, will be the lead speaker at the Plenary V session which will discuss the United Nation’s Centennial Initiatives.
The panel will also feature the former president of Latvia, Vaira Vike-Freiberga, a member of the Club de Madrid; Greek Minister of State and Digital Governance Kyriakos Pierrakakis, who is chair of the Global Strategy Group, OECD; Thomas Patterson, research director of The Michael Dukakis Institute for Leadership and Innovation and professor of government and the press at the Harvard Kennedy School; Sean Cleary, advisor to Club de Madrid, executive vice-chair of the FutureWorldFoundation and member of the Carnegie Council artificial intelligence & equality initiative’s board of advisors; and Thien.
The facilitator for the session will be David Silbersweig, chairman, department of psychiatry, and co-director of the Institute for the Neurosciences, Brigham and Women's Hospital, Harvard University Professor.
Ahead of the meeting, the Boston Global Forum teamed up with United Nations Academic Impact to release a book titled ‘Remaking the World: Toward an Age of Global Enlightenment’.
The book takes a major step towards creating a “rights-based agenda for the global governance of AI and digital societies,” Nguyen Anh Tuan, who edited the book and serves as CEO of the Boston Global Forum, said.
“We’re moving toward a framework, an ecosystem, a social contract for the AI age.”
The book is made up of white papers, speeches, remarks, and other presentations at events held during the pandemic and sponsored or co-sponsored by the Boston Global Forum.
Among the contributors are well known policy makers and innovators such as Ashton Carter, former US Secretary of Defense; Vint Cerf, ‘the father of the Internet’ and chief internet evangelist for Google; former UN Secretary-General Ban Ki-moon; and former Massachusetts Governor Michael Dukakis.
The opening chapter, authored by leading scholars and policy makers affiliated with the Boston-based group, proposes a “social contract,” or an agreement among members of global society to cooperate in the interests of social wellbeing.
Elsewhere in the book, political scientist Nazli Choucri of MIT articulates a framework for artificial intelligence international accords, including “the precautionary principle,” which aims not to impede innovation but to “explore the unknown with care and caution.”
Likewise, Ursula von der Leyen, president of the European Commission, discusses the need for an AI “ecosystem of trust.” This would include regulation “not for regulation’s sake,” but for the purpose of protecting basic rights, encouraging innovation, and spurring technological leadership.
Tuan added that Remaking the World, along with the Policy Lab, represents the first time that prominent international leaders are coming together to lay the groundwork for global AI accords.The book is currently in an electronic edition and will be available in print soon.
Protracted restrictions put main growth drivers at risk
A continued trade deficit over the past few months and an expected drop caused by the global health crisis in inflows of foreign investment are unlikely to weaken Vietnam’s external position this year.
According to the World Bank, it is still expected that a surplus in the current account will be seen this year in Vietnam.
The economy has continuously earned a current account surplus since 2011. Additionally, it hit 2.9 per cent in 2017, 3 per cent in 2018, and 3 per cent in 2019.
On the external front, Vietnam maintained a positive external position with an increase in international reserves, but both merchandise trade and current account balances have deteriorated, according to the World Bank.
The country accumulated $6 billion in international reserves between December 2020 and April this year. Yet, the growth of imports outpaced that of exports while the services account continued to be negatively impacted by the closing of the country’s borders to most international visitors.
After recording its highest ever merchandise trade surplus in 2020 of $19.95 billion, Vietnam’s trade balance turned into a deficit in the first eight months of 2021, worsening since May. Figures from the General Statistics Office (GSO) showed that in the first eight months of 2021, the economy’s total export turnover is estimated to reach $212.55 billion, up 21.2 per cent on-year, while the total estimated import value hit $216.26 billion, up 33.8 per cent on-year.
This period saw a trade deficit of $3.71 billion, following a similar shortfall of $2.41 billion in the first seven months and $1.47 billion in the first half of this year. Such a deficit was also seen in May ($2.07 billion), June ($1 billion), July ($1.25 billion), and August ($1.3 billion).
The GSO also reported that in the first eight months of this year, Vietnam was visited by only 105,000 international arrivals, down 97.2 per cent on-year, with total revenue of merely VND4.5 trillion ($195.65 million), down 61.8 per cent on-year.
The Vietnam National Administration of Tourism reported that in 2019 before the pandemic emerged, Vietnam welcomed over 18 million international tourist arrivals – up 16.2 per cent on-year, and served 85 million domestic tourist arrivals. Total revenues from tourists in 2019 were over VND720 trillion ($31.3 billion), up 16 per cent on-year.
Last year, however, the figure reduced to only VND17.9 trillion ($778.26 million).
“The external sector has lost some of its dynamism, since accumulated foreign direct investment inflows were 11 per cent lower in the first seven months of 2021 than during the same period in 2020, while the merchandise trade balance turned into a deficit after reporting the highest-ever surplus in 2020,” said the World Bank report.
“It appears that exporters are facing disruptions due to the resurgence of the pandemic, forcing them to close factories or delay production, and are increasingly confronted with competition from other countries that are witnessing a stronger rebound in their production activities.”
The Ministry of Planning and Investment reported that in the January-August 20 period, foreign direct investment (FDI) inflows into Vietnam – including newly-licensed, newly-added capital, and capital from stake acquisition and capital contribution – totalled $19.12 billion, down 2.1 per cent on-year.
Of this figure, foreign investors pledged to pour $11.33 billion in newly-licensed 1,135 projects, an on-year expansion of 16.3 per cent in terms of capital volume. Foreign investors also committed to investing an additional $4.98 billion in 639 existing projects, down 11 per cent in the number of projects and up 2.3 per cent in capital over the corresponding period last year.
There were also 2,720 instances of capital contribution and share purchases by foreign investors, with $2.81 billion, down 43.4 per cent in number and 43.4 per cent in capital on-year.
In the first eight months of this year, total disbursed FDI hit $11.58 billion, up 2 per cent on-year.
According to the World Bank, though FDI inflows into Vietnam have been affected by the health crisis, the capital has “proven resilient compared to the rest of the world, suggesting continued confidence in Vietnam’s economic potential.”
Since early May, manufacturing and services activities have been increasingly hamstrung by targeted lockdowns to contain community transmission of the virus. In mid-July, mobility restrictions widened, with the southern part of the country, Ho Chi Minh City, and then Hanoi, placed under strict quarantine, affecting economic activities.
In the meantime, the economy also faces the risk of increased competition in its external markets as competitors who are ahead in vaccinations are restarting their production and could recapture some of the market shares they lost to Vietnam due to pandemic-related production disruptions in 2020.
“Therefore, the economy could be at risk of losing both its domestic and external drivers of growth if the current outbreak is not rapidly contained,” the World Bank warned.
However, one of the reasons behind Vietnam expected to see a surplus in its current account this year is its expanded exports on the back of global economic recovery.
“Going forward, Vietnam’s exports should continue to expand due to the country’s solid competitiveness in international markets and the decision to continue the diversification of trading partners, and therefore economic opportunities, as recently signalled by the signing of the massive Regional Comprehensive Economic Partnership,” said Dorsati Madani, senior economic expert from the World Bank in Vietnam.
“It is also expected that the country will be able to reopen gradually to international visitors in 2022–2023,” Madani added. “With respect to the financial account, FDI inflows are expected to recover to pre-pandemic levels, boosted by the revamping of global value chains and the demand by many governments and multinationals to diversify their sources of production.”
While the near-term outlook is still bright, Vietnam could become a victim of its own success as existing resources are stretched, pushing up costs and eroding the economy’s competitiveness.
Vietnam has a strong need to improve the level of human capital in the country, with skills training being paramount. The government aims to ascend the manufacturing value chain in an environmentally sustainable way according to the release of its 5-year plan for the 2021-2025 period, with a focus on high-tech growth. The country currently is attracting foreign direct investment in low value-added manufacturing segments such as electronics assembly and apparel. This is mainly due to an abundance of low skilled labour but an industry-recognised shortage of suitably skilled labour in Vietnam to undertake higher value-added manufacturing. The government is aware of this problem and has also outlined its intention to undertake reforms to improve education and labour skills in its 5-year plan.
That said, education reform can only deliver results over a decade, which still risks bottlenecks in labour availability and upside wage pressures during the interim, as well as this being a factor hindering the government’s aspirations to move the country up the value chain. Furthermore, Vietnam faces an urgent need to accelerate transport infrastructure development. The influx of foreign investment into Vietnam from China, especially into the export manufacturing sector, has put significant strain on Vietnam’s existing transport and logistical infrastructure. This caused congestion on roads and at the ports during the 2018-2019 period at the height of the US-China trade war, leading to long delays. Similarly, this is an issue the Vietnamese government is cognisant of and has put in place policies such as its Law on Public-Private Partnership Investment which took effect from January in the hopes of stimulating private investment into infrastructure projects to expedite the process. While we hold a cautiously optimistic view on the outlook for transport and logistical infrastructure development over the coming years as a result of this law, we continue to flag a number of risks to project implementation.
Land acquisition continues to face challenges, causing delays to project timelines. Meanwhile, COVID-19 will continue to challenge project progress, given that lockdowns will likely cause work to stop temporarily, while travel restrictions and risk of COVID-19 contagion will hamper access of much-needed foreign experts and key company personnel. Source: Fitch Solutions
COVID-19 forces SMEs to embark on digital transformation
Digital transformation is significant to Vietnamese small-and medium-sized enterprises (SMEs), especially amid the COVID-19 pandemic, heard a workshop on September 9.
Jointly held by the Vietnam Chamber of Commerce and Industry (VCCI), Hewlett Packard Enterprise (HPE) Vietnam, and Elite Technology JSC, the online event brought together 300 enterprises nationwide.
It aims to help domestic SMEs draw up digital transformation frameworks, seek suitable solutions and optimise cutting-edge technologies to successfully embark on digital transformation.
The workshop is also expected to raise their competitiveness to join global value chains, adapt to the new situation and develop sustainably.
VCCI Vice Chairman Hoang Quang Phong pointed out barriers to local SMEs in digital transformation regarding digital skills and capacity, IT infrastructure, and digital mindset.
He suggested them speed up digitalisation, focusing on personnel training, develop new products and services to meet market demand, closely cooperate with partners, and work to improve their competitiveness.
According to a survey conducted by the VCCI, more than 87 percent of the 10,000 interviewed firms said they have been affected by the COVID-19 pandemic.
The SMEs that accounted for 98 percent have been hardest hit due to limitations in workforce and market. Most of them have seen their revenue dropped from 50-90 percent, and many have to scale down or suspend their operations.
Therefore, the participants said, to maintain their operations and move forward, they need to seek new ways and speed up digitalisation./.
New changes to push sci-tech funding
While domestic and foreign investors are expected to delve into Vietnam’s sci-tech market driven by ongoing and long-awaited legal amendments, their effectiveness is still a concern as the country is urged to learn successful global lessons.
The Ministry of Science and Technology (MoST) is working on amendments of policies and regulations towards cutting administrative procedures and further facilitating sci-tech businesses, with one of the focuses being superior mechanisms and pilot policies for new business models. Industry insiders said that these are the concerns among businesses and investors in the local sci-tech market that lead to limitations in their perception of risk-taking in investment for technology application, improvement, and innovation.
Hoang Viet Tien, head of Strategic Advisor at Insider – a startup providing marketing technology solutions for big companies in Vietnam, told VIR, “Some tax incentives for investment in technological innovation are still difficult to implement due to a lack of synchronisation in legal regulations. Moreover, policies have not created many incentives for the use of products and services.”
“There is also a lack of support measures from the state to companies offering access to the market for products made by research and development or technological innovation,” he added.
The new amendment, together with the country’s strategy to accelerate digital transformation, is expected to give motivation for domestic and foreign businesses in the field.
Experts, however, said that unenforceability of some incentive policies for investment in technological innovations due to lack of consistency with other rules means businesses still have concerns over the effectiveness of such regulations. For example, the prevailing policy on public procurement is yet to encourage the use of technology products and services made by domestic firms. Also, there are still some shortcomings in the mindset of state management agencies about taking risks in making investments in technology application and innovations.
Economies that have succeeded in the transition from low to high income are based on science, technology, and innovation, with South Korea, Israel, Singapore, Poland, and Taiwan being typical examples.
The story of Israel’s economic miracle is a lesson Vietnam should learn from. According to Tien, in the case of Israel’s science and technology development, the country focuses mainly on its talent development strategy and the establishment of an ecosystem to support startups. A special feature of Israel’s development strategy is that the government is willing to support and invest capital and private venture capital funds. They bear the risk if there is a loss, or let projects and startup businesses use capital actively and flexibly according to the needs of each project or startup. This has pushed the number of projects and startups in the field of science and technology in Israel to increase dramatically in both quality and quantity.
According to statistics, for every 1,844 Israelis, there is one startup company and there are successful startups such as Houzz, Mobileye, Waze, and Wix.
Similarly, Singapore is a country with many attractive policies for setting up businesses. Besides low tax rates and easy business conditions, an important factor that attracts entrepreneurs from all over the world to Singapore is the diversity of financial sources for startups, creating an effective startup ecosystem and a highly competitive environment.
To promote innovation and entrepreneurship, the government introduced a framework of support programmes for diversified and inclusive startups and innovation. Typical are tax incentives – in 2016, Singapore’s total tax rate equalled 18.4 per cent of profits, well below the high-income international average of 41.2 per cent, according to the World Bank.
To evaluate Vietnam’s position in digital transformation, a report by the World Bank uses a framework covering connectivity, ownership, innovation, and protection while comparing the nation to others on the same digital transformation level or those that have more advanced. While Vietnam has performed well against its peers and in several areas, it exhibits important weaknesses in others.
Despite growing interest, domestic and foreign investment in this area remains modest. Ministry of Planning and Investment data showed that foreign investment in such activities reached over $570 million in the first eight months of 2021, of which about $65 million was newly registered, over $200 million was added capital, and over $300 million was worth of stake acquisitions. Vietnam’s technology market is increasingly attractive to technology giants like Ericsson, ABB, and HCL Technologies, among others.
Localities asked to ensure plant, animal varieties supply to farmers amid COVID-19
Deputy Minister of Agriculture and Rural Development Tran Thanh Nam has asked localities to pay special attention to directing production activities and ensuring the supply of plant varieties and breeding stock to farmers amid the COVID-19 pandemic.
Addressing a conference to review operations of the Ministry of Agriculture and Rural Development (MARD)’s Southern Working Group on September 9, Nam, who is also head of the group, underlined the need to design production plans during and after social distancing period to maintain long-term and stable farm produce supply.
The working group will submit a report to the Government's Special Working Group on an overall plan for the whole southern region, thus ensuring the coherence in localities’ directions on agricultural production, thus preventing the pandemic and maintaining production at the same time.
Representatives from the localities suggested that COVID-19 vaccine should be given to people engaging in agricultural production chains, especially in the Mekong Delta region.
They proposed that the Government should subsidise 50 percent of plant varieties and breeding livestock for farmers to help them resume production.
Nam said that the working group will give advice to the Minister of Agriculture and Rural Development, and the Government on the issuance of resolutions on supporting agricultural production.
The group will also work with the Ministry of Health to give guidelines to farmers in ensuring safety during production, while asking the ministry to prioritise COVID-19 vaccination for people involving in agricultural production chains.
Foreign e-commerce platforms surpass local rivals in e-commerce ranking
The ranking of e-commerce businesses in Vietnam is changing during the pademic with Shopee taking the lead, followed by Lazada, Tiki, and Sendo.
According to a study conducted by iPrice Group and SimilarWeb, web visits to the top 50 shopping sites in Vietnam's Map of E-commerce in the first six months of 2021 reached more than 1.3 billion. It is the highest ever and is up by 10 per cent from the first quarter of 2021.
For the past 12 quarters, Shopee Vietnam has ranked first in terms of average website traffic. Shopee Vietnam obtained 73 million visits in Q2/2021, which increased by 9.2 million from Q1.
After being surpassed by competitors for several consecutive quarters, Lazada Vietnam rose to second place in the "four-horse race" in terms of website visits on a multi-vendor e-commerce platform. As a result, Lazada Vietnam's average website traffic increased by 14 per cent compared to the first three months of the year, reaching 20.4 million visits.
Meanwhile, the average visits to the websites of two domestic e-commerce platforms Tiki and Sendo slightly decreased to 17.2 and 7.9 million, respectively. Thus, the ranking of e-commerce businesses has shifted since Q1. Based on the current trend, the game is likely to be dominated once again by foreign e-commerce businesses.
According to Facebook and Bain & Company's annual Southeast Asia report, Vietnam's e-commerce sector is expected to reach $12 billion in 2021. The market ranks second in size in the region after Indonesia, and is estimated to grow 4.5 times to reach $56 billion by 2026.
This shows that Vietnam's e-commerce business has a bright future ahead and will continue to grow rapidly. The pandemic, on the other hand, is still ongoing, and there is a high likelihood that it will continue to cause further changes in the future.
iPrice's study also shows that online grocery is the only category that has maintained steady and consistent growth since the beginning of the pandemic. This partly explains the strong increase in demand for online stores selling essential products during the months of social distancing.
Google searches related to online grocery stores increased by 223 per cent in Q2/2021. The number of searches increased 11 times in July compared to May and 3.6 times compared to June when the social distancing order under Directive 16 was implemented in some provinces and cities.
People pay more attention to fresh food, beverages, pre-packaged items, as well as fruits and vegetables as the searches for these items surged by 99, 51, 30, and 11 per cent, respectively, compared to the previous quarter. Thus, social distancing could be one of the factors driving the surge in demand for online supermarkets. With the growing necessity of purchasing essentials online, retailers are more likely to adapt to the digital platform.
Indian health experts seeking cooperation
Vietnam and India are stepping up their partnership in healthcare with both countries sharing many common interests amid the struggle to recover from the pandemic.
According to Dr. Madan Mohan Sethi, consul general of India in Ho Chi Minh City, the only way forward for India and Vietnam is to make strong partnerships in healthcare and related sectors. “There is a lot of untapped potential in this area,” he said.
The current crisis has given an opportunity to both sides to help each other and revive supply chains for different pharmaceutical products that had been disrupted.
“We all know that vaccines are important to control the pandemic. Due to the mutation of the virus, scientific studies are now more important than ever. We will be happy to arrange meetings for Vietnamese companies with our vaccines manufacturers,” Sethi added.
Nanogen Pharmaceutical Biotechnology JSC has reached a deal with Vekaria Healthcare LLP to transfer technology, manufacture, and distribute Nanocovax vaccines in India. The collaboration between Nanogen and Vekaria is a testament to the stronger partnership between India and Vietnam in the healthcare area.
Meanwhile, some Indian pharmaceutical companies are manufacturing anti-viral drugs like Remdesivir and Molnipuravir. These drugs, manufactured by Indian companies, are cheaper and quite effective. Therefore, Vietnam is looking to import these from India for usage at frontline hospitals.
Further, Vietnam will receive one million doses of Remdesivir for the treatment of COVID-19 from India. A contract was reached between the Vietnamese embassy and major pharmaceutical companies like Hetero, Dr. Reddy, Cipla, Jubilant, Mylan, Zydus, and Cadila.
Another potential segment for cooperation is the medical device industry. The impact of the pandemic increases the demand for several critical care supplies like low-cost ventilators, personal protective equipment, and sanitation supplies – as India happens to emerge as one of the largest producers of these.
“India produces quality and cheap medical devices required for intensive care units and routine use. We are discussing partnerships with Vietnamese companies and also look for further investment in this important sector,” Sethi explained.
According to Tran Phu Lu, deputy director of the Ho Chi Minh City Investment and Trade Promotion Centre, the healthcare sector is considered a potential area for trade and investment cooperation between India and Vietnam.
Vietnam has so far secured over 100 million doses of vaccines in 2021 – not enough to meet the current demand. This will open up opportunities for cooperation in vaccine production and supply for both countries.
Meanwhile, domestic medical equipment production only meets up to 2 per cent of the demand. Most medical equipment is imported from developed countries. India is the fourth-largest market for medical devices in Asia and among the top 20 markets for medical devices in the world. Thus, Vietnam could increase imports of medical devices from India to supply its field hospitals.
Lu noted that India has been Vietnam’s third-largest pharmaceutical supplier in recent years. However, Vietnam has not opened its pharmaceutical market to foreign investors to distribute drugs to end-customers on a retail basis as this remains subject to stringent regulations.
Foreign investors can only import and export pharmaceutical products into Vietnam and sell their imported products to licensed local distributors. Despite these restrictions, Indian enterprises and manufacturers could research and promote mergers and acquisitions within the industry.
India is considered “the pharmacy of the world” but due to the restrictions on travel and interactions, the Pharmaceuticals Export Promotion Council of India could not visit Vietnam as planned. Once the situation improves, the council will plan a business and investment meeting with the participation of companies from the pharmaceutical sector on both sides to explore partnerships and investment opportunities.
To strengthen partnerships in the sector, Sethi said that India has organised webinars and training sessions for healthcare workers. Indraprastha Apollo Hospital in New Delhi has agreed to partner with the General Hospital in Ninh Thuan province for long-term cooperation in on-site training, as well as in India. After the pandemic, the consulate will invite other hospitals in the southern and central provinces, as well as in Ho Chi Minh City for future cooperation.
A joint working group on healthcare cooperation between the ministries of health of India and Vietnam was held virtually on August 27. The meeting provided a valuable opportunity for both sides to share best practices and exchange views in digital healthcare and pandemic management, as well as cooperation for medical devices and the promotion of traditional medicine and public health strategies.
Vietnam advised to promote just energy transition
Vietnam needs to carry out fiscal policies and regulations to promote and improve capacity in renewable energy and energy efficiency, heard the virtual Just Transition Forum in Asia 2021 (JTFA 2021) on September 8.
The conference was jointly held by the Friedrich-Ebert-Stiftung (FES) in Vietnam and the Climate Action Network Southeast Asia (CANSEA).
Claudia Ehing, Director of the FES’s Regional Climate and Energy project in Asia, said that just energy transition refers not only to environmental impacts but also to economic and social changes necessary to promote energy transition on a global scale, and effectively implement the goals set out in the Paris Agreement on climate change.
This forum is an opportunity for leading experts from governments, businesses, think tanks, the labour movement, and national and international organisations to discuss measures to build a socially inclusive and climate-resilient future in Asia powered by renewable energy; and build partnerships for potential collaborative projects and initiatives in the future.
Dr. Nguyen Trinh Hoang Anh, Director of the Vietnam Initiative for Energy Transition (VIET), stated that Vietnam needs to develop a new long-term energy vision to improve energy access and efficiency, reduce greenhouse gas emissions, towards the use of 100 percent of renewable energy.
Anh proposed Vietnam invest in energy reserve capacity and electricity grid, and step up the transition to efficient and renewable energies, especially solar, wind, and biomass.
Vietnam needs to increase the financial transparency and improve techniques of state corporations in the energy sector, Anh said, adding that this will help build trust, enable fairer competition, improve performance, and benefit consumers./.
Leather and footwear exports continue falling in August
In August, the exports of leather and footwear products saw another consecutive drop since June, resulting from enterprises' difficulties amid the COVID-19 pandemic.
According to statistics from the General Statistic Office of Vietnam, in August, the exports of footwear reached $850 million, handbags reached $150 million, respective drops of 38.5 and 37.9 per cent on-year.
This continues the sharp decline since June. In particular, footwear exports decreased from $2 billion to $850 million while handbags decreased from $325 million to $150 million.
Generally, in the first eight months, leather and footwear enterprises have exported $12.6 billion of footwear and $2.1 billion of handbags, up 16.2 and 2.1 per cent on-year.
Total export turnover of leather and footwear to Vietnam's top 5 markets (USA, EU, China, Japan, South Korea) accounted for 81.2 per cent, of which footwear accounted for 80.8 per cent and handbags accounted for 82 .9 per cent.
The US is still Vietnam's largest footwear export market, with footwear accounting for 40.3 per cent and handbags for 44 per cent of Vietnam's total export turnover in the segment. The EU ranks second with 23.4 per cent of footwear and 22.2 per cent of handbag exports. Other markets include China (9.4 and 4.4 per cent), Japan (4.8 and 8.7 per cent), and South Korea (2.9 and 3.7 per cent).
According to the Vietnam Leather, Footwear and Handbag Association (LEFASO), the outbreak of COVID-19 since the beginning of May has affected the production of leather and footwear enterprises in the last months of 2021.
Prolonged social distancing in the southern provinces has forced 80 per cent of leather and footwear factories in Ho Chi Minh City, Dong Nai, Binh Duong, An Giang, and Kien Giang (which are home to many large leather and footwear enterprises) to stop production after they could not comply with authorised operation models. In the central and northern regions, leather and footwear enterprises only operate at 50-70 per cent capacity due to social distancing and labour shortage.
Leather and footwear enterprises suffered great losses due to the cessation and reduction of production, cancellation of export orders, while still having to maintain factories and pay wages to employees.
Operational enterprises must reduce production due to the reduction in employee count. At the same time, these enterprises have to bear lots of costs such as testing, vaccination, food, and accommodation for employees. Moreover, many workers have returned to their hometowns, resulting in a lack of labour force. Additionally, inter-provincial travel and transport is also difficult during the pandemic.
Furthermore, the shortage of containers has raised logistics costs 5-10 times against last year, along with fuel and imported raw material prices, greatly affecting production, causing many difficulties for export enterprises.
In the current situation, businesses need to reduce costs and prepare labour force so that after the pandemic they can immediately restore production and exports, making good use of preferential treatment from free trade agreements, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).
Firms given recommendations to develop sustainably, realise dual goals
A webinar themed “Sustainable Businesses Implement Dual Goals” was held on September 9 as part of the 8th Vietnam Corporate Sustainability Forum (VCSF).
To adapt to and overcome the COVID-19 pandemic, aside from the Government’s support, each enterprise needs to bring into play their internal strengths and change plans and strategies so as to achieve the dual goals of effectively fighting against the pandemic and sustaining and recovering production and business activities, said Nguyen Quang Vinh, Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI) and Vice President of the VCCI’s Vietnam Business Council for Sustainable Development (VBCSD).
He also put forward an initiative to establish a council of enterprise cooperation to respond to COVID-19, adding that this council will gather the strength of the business community by connecting business associations, related organisations, and the VCCI to join hands with the Government to help firms weather this trying time and quickly recover and develop.
At the webinar, Dorsati Madani, Senior Economist at World Bank Vietnam, delivered a speech on global economic prospects and impacts on the country, citing a WB report as saying that the Vietnamese economy is expected to recover in the fourth quarter of 2021 and post a GDP growth rate of about 4.8 percent this year.
Binu Jacob, CEO of Nestle Vietnam and Co-Vice President of the VBCSD, recommended workers and contractors to be fully vaccinated and enterprises be given self-determination in applying anti-COVID-19 models at their factories on the basis of the Health Ministry’s guidance.
Regulations related to COVID-19 prevention and control in localities should be simplified and accord with central agencies’ directions while public administrative procedures should be digitalised, thus creating optimum conditions for businesses, especially during the social distancing period, he suggested./.
Eximbank appoints Tran Van Loc as new CEO
The Board of Directors of Eximbank has just appointed Tran Van Loc as CEO, pending approval by the State Bank of Vietnam.
The appointment officially ends the long period of absence of a CEO and legal representative for Eximbank, two years after his predecessor Le Van Quyet left.
Loc has assumed the position on September 8, 2021 and will hold this position for one year.
Loc has earned a doctoral degree in economics and has filled many important positions at Eximbank.
Eximbank has been notorious for a string of embezzlements and internal conflict. The bank has been postponing its annual general meeting for years and has received a great deal of negative publicity due to its human resources reshuffles.
Japan’s Sumitomo Mitsui Banking Corporation (SMBC) holds 15 per cent stake in Eximbank.
Noi Bai airport’s upgraded runway put into operation
Runway 1B at Noi Bai International Airport in Hanoi, which has been upgraded, is put into operation on September 9, according to the Ministry of Transport (MoT).
On September 9 morning, flight VN611 (Boeing 787-9) of Vietnam Airlines took off safely on runway 1B. Seven minutes later, a Boeing 747 8F of Cargolux Airlines (Austria) also landed safely on the runway.
Duong Viet Roan, Director of Thang Long Project Management Board, said all workload of the runway 1B upgrade has been completed.
Nguyen Bach Tung, Deputy Director of the MoT's Department of Construction Management and Quality of Traffic Works, said although the COVID-19 pandemic has seriously affected the construction, contractors have tried their best and followed the approved plan.
The quality of the project met the strict requirements of the aviation industry and the standards of the International Civil Aviation Organisation (ICAO), he said.
A day earlier, the Civil Aviation Authority of Vietnam (CAAV) decided to put the runway into operation based on the operation of the Noi Bai Airport.
The CAAV asked the airport to coordinate with Vietnam Flight Management Corporation to notify domestic and international airlines in line with current regulations and direct the Northern Flight Management Company to organise operations to ensure that the flights are safe.
Noi Bai is one of the two biggest airports of Vietnam which play an important role in boosting socio-economic development and ensuring defence-security.
Works to upgrade the 1B runway is part of the two-phase project to repair the Noi Bai runways started on June 29 last year with an estimated cost of about 2.03 trillion VND (over 88 million USD). The upgrade of runway 1A is scheduled to start on October 1 and complete before Tet (Lunar New Year) holiday./.
Banks on the road of digital transformation
Banks are taking advantage of Vietnam's potential environment to conduct digital transformation to meet increasingly technology-driven consumer demands.
In a talk show about trends and strategic initiatives to build a digital banking ecosystem held on September 8, Vo Tan Long, deputy general director of PwC Vietnam stated that Vietnam – a country in the Asia Pacific region, which has the fastest growing and most diverse form of digital banking today compared to markets such as the Americas and Europe – also has great potential to develop its digital banking system.
Vietnam is home to a growing middle class. According to a report on the digital economy in Southeast Asia in 2020 by Google, Temasek and Bain & Company, Southeast Asia's digital economy is expected to gain $300 billion in 2025, of which Vietnam is worth $52 billion.
In addition, Vietnam has a young population, which plays a major role in the financial service system and will boost the diversity of financial services in the near future. With a young population, Vietnam has the highest percentage of digital consumers in Southeast Asia, with 41 per cent of customers across sectors.
Moreover, the increase of super apps has created a value-added chain of goods and services on a single platform and the government and management agencies are opening up and encouraging digital banking systems to develop.
Tran Diem Chi, representative of Backbase in Vietnam highlighted that banks in Vietnam have been more proactive in catching up with customers' needs, paying more attention to competitors' activities and learning from success stories.
“Banks are moving towards a customer-centric rather than product-based approach, which is why they see an increase in partnerships in their ecosystem. In the past 12 months, more and more banks invest in digital platforms not only for retail customers but for small- and medium-sized enterprises, large enterprises, and wealth management services. Vietnamese banks have invested a lot but focused on fragmented and discrete solutions. However, banks have also realised that to scale and to understand customers better, it is important to aggregate data not only from their key solutions but from partnerships with fintech and data across several sectors,” she revealed.
Nguyen Thi Quynh Giao, deputy general director in charge of the Retail and Banking Division of BIDV said that banks have different digital transformation strategies.
“Digital transformation is extremely challenging to large banks such as BIDV. Building a digital ecosystem is also a challenge. Banks are not only concerned about digital transformation, they also need to look at business conditions, market development, and customer needs. It is imperative to participate in the ecosystem of partners to get the best value for both the bank and the public.
As for Dinh Van Chien, deputy general director cum director of the Science and Technology Division of TPBank, in order to build a digital ecosystem, banks must build technology capacity and adopt new operating models with different processes for providing and deploying products than the traditional model.
Moreover, banks should cooperate and connect with technology companies which provide technology and capabilities that banks do not invest in and develop themselves.
Last but not least, connecting with different fintech companies and partners such as e-wallets and e-commerce platforms which have a large customer base, and customer data, will help banks better understand customers.
Vietnam still important link in global supply chain: experts
Vietnam is becoming a more important piece of the global supply chain, despite the supply chain and shutdown problems facing the country at present, Executive Director of the American Chamber of Commerce in Vietnam (AmCham Vietnam) Adam Sitkoff has told Bloomberg Television.
Acknowledging the pandemic is hindering Vietnam from increasing its role in the supply chain, Sitkoff said he still sees Vietnam attracting investment. He pointed to Vietnam’s best-in-Asia growth performance of 2.9 percent last year.
AmCham hopes anti-COVID-19 policies are the least disruptive to business as possible as firms look for ways to smooth deliveries leading into the critical year-end holiday season, he added.
Though several international organisations have lower their forecast for Vietnam’s growth, they retain a positive outlook on its recovery prospects.
"Beyond the near-term challenges, Vietnam’s medium-term economic prospects remain favourable," analysts at Australia & New Zealand Banking Group Ltd (ANZ) said in a recent note.
ANZ analysts said in the ANZ Vietnam Activity Tracker said the structural factors that made Vietnam an attractive investment destination as a manufacturing hub remain intact.
There is also ample room for policy support to nurture economic recovery further, they stressed.
However, they warned about downside risks to the bank’s 5.2 percent full-year 2021 growth forecast for the country.
Andreas Stoffers, country director of the Friedrich Naumann Foundation (FNF) in Vietnam, said that Vietnam's economic figures for the first half of 2021 are not too bad, with its consumer price index (CPI) of 1.46 percent still under control.
He expressed his belief that Vietnam will overcome the crisis as it did in 2020./.
Vietnam accelerates the development of regulatory sandbox for fintech
The Vietnamese government is pushing forward a regulatory sandbox for fintech banking and cashless payments with a view to support the development of the local fintech scene.
The government has approved Resolution No.100/NQ-CP on September 6, approving the draft of a decree on controlled testing mechanisms for fintech in the banking sector. Accordingly, the government has delegated the responsibility to the State Bank of Vietnam (SBV), which will collaborate with ministries and agencies to gather input from state members and provide a report to the government in the fourth quarter of 2021.
Payments, peer-to-peer lending, client identity support, and other banking support services are the fintech categories that are expected to participate in the sandbox. Fintechs will be able to test novel products and services in a controlled environment and reach the end market faster.
Amid the Fourth Industrial Revolution, creating a regulatory sandbox for fintech is seen as critical, especially in the short term, while the government is developing a broad legal framework to meet market demands and avoid potential dangers, tax losses, and illegal activities.
Meanwhile, financial innovators in Vietnam might profit greatly from a regulatory sandbox because it would allow them to create and market innovative financial products without fully complying with all regulatory rules. Financial innovators would also be able to collect real market data on new financial products and use it to improve their products and services.
Scott Krivokopich, managing partner from Singapore-based 1982 Ventures told VIR, “The opportunities in Vietnam have an incredible potential. The support and promotion of digital payments by the government is going to unlock additional opportunities to build more fintech businesses that not only help to address financial inclusion issues but also build a new layer of infrastructure to strengthen the finance system.”
Quang Ninh targets highest possible growth rate this year
The northern province of Quang Ninh is striving to achieve the highest possible growth in the fourth quarter and the whole year although the COVID-19 pandemic was forecast to remain complex.
Authorities of Quang Ninh held that in the remaining months of 2021, the pandemic will keep developing complicatedly and greatly affecting production, business, services, tourism, and budget collection activities.
To obtain a double-digit growth rate, the provincial People’s Committee has built three growth scenarios for Q4 and the entire year, with advantages, difficulties, and growth in each sector taken into account.
The Standing Board of the provincial Party Committee agreed that Quang Ninh will exert efforts to achieve this year’s targets, set in the provincial Party Committee’s Resolution 02-NQ/TU, at the highest possible level. Accordingly, the gross regional domestic product (GRDP) growth is expected at over 10 percent and budget revenue to match the economic expansion.
To that end, the Standing Board emphasised the need to resolutely and persistently keep “green zones” safe, push ahead with measures that have proved effective, and take flexible solutions based on the reality.
The province looks to complete vaccination for 100 percent of eligible residents against COVID-19 this year, combined with boosting the adherence to the 5K principle (“khau trang” - wearing facemasks, “khu khuan” - disinfection, “khoang cach” - keeping distance, “khong tu tap” - no gathering, and “khai bao y te” - making health declarations) and technology application.
It will also step up administrative reforms, further improve the local business and investment climate, and enhance discipline at grassroots public service agencies, aiming to stay among the top provinces and cities in terms of the Provincial Competitiveness Index (PCI), the Public Administration Reform (PAR) Index, the Satisfaction Index of Public Administration Services (SIPAS), and the Provincial Governance and Public Administration Performance Index (PAPI).
Besides, local authorities will promote the efficiency and effectiveness of state management over land and natural resources. They will also make detailed planning schemes for Ha Long city, the Quang Yen coastal economic zone, and others.
The apparatus of State agencies will be streamlined in tandem with bettering their performance efficiency and effectiveness.
Legal bottlenecks will be removed while poor-performing rice cultivation and forest land areas are converted, and site clearance for projects is accelerated. The coordination between state agencies and localities in Quang Ninh will be strengthened to boost the disbursement of all capital sources, thereby creating an impulse for growth.
In addition, provincial authorities are requesting investors to quickly complete infrastructure at Song Khoai, Nam Tien Phong, Bac Tien Phong, and Viet Hung industrial parks. They are also encouraging secondary investors to speed up manufacturing projects.
Despite the complex COVID-19 situation, which has substantially impacted all socio-economic aspects, Quang Ninh has still managed to achieve the “twin targets” of curbing the pandemic and boosting socio-economic development.
The GRDP growth rate in the first nine months of 2021 is estimated at 8.2 percent.
In particular, the processing and manufacturing industry has increased 36.2 percent year on year, serving as the main driving force for the industrial sector. It has made up for the pandemic-caused downturn in services, tourism, coal, and electricity sectors.
Meanwhile, nearly 34.38 trillion VND (over 1.5 billion USD) has been collected for the State budget, equivalent to 67 percent of this year’s target. Administrative reforms and the business environment have continued to be improved.
Quang Ninh is one of the three nuclei of the northern key economic region and viewed as a strategic destination in northern Vietnam.
It looks to raise its GRDP by 10 percent on an annual average during 2020 - 2025, and the per capita GRDP to over 10,000 USD by 2025. The urbanisation rate is expected to surpass 75 percent, while the rate of poor households to go down to below 1 percent.
The province plans to complete new-style rural area building by the end of 2030./.
Container cost chaos adds to baulking domestic limitations
The container crisis is causing headaches among exporters who are trying to ensure their delivery schedules in the year-end shopping season. However, the global demand vastly outruns supply, with plans of local steelmakers to support the market with more empty containers representing merely a feeble silver lining.
The reopening of the Meishan Wharf at Ningbo-Zhoushan Port in China on August 25 has raised optimism among Vietnamese exporters, who are now hoping that the shortage of containers will soon end thanks to shortened turnaround times.
Vietnamese manufacturers have spent more money on their deliveries to foreign buyers amid the aftermath of the cargo ship stranded in the Suez Canal in March – the effects of which are still being felt today. Moreover, the previous closure of the Meishan Wharf had exacerbated the shortage of containers and thus affected Vietnamese exporters.
A few months earlier, Minh Hai Seafood JSC had reduced its shrimp exports to the United States due to the high transport costs. Last November, Minh Hai only had to pay about $3,600 per container to the US, but in March this fee increased to $7,000 and has now reached $11,500. Prices for refrigerated containers increased even more. While in April one container would cost about $7,500 to the US, the first week of July saw rates as high as $14,000 per container.
The goods flow mainly from Asia to the US and Europe, while the reverse direction sees significantly lower shipping, which is one reason for the slowdown and shortage of containers.
Nguyen Van Sang, CEO of Home Furnist JSC said, “The shipping prices to the German market are now almost at the value of the goods, which renders the situation more difficult. In addition, businesses often have to make several appointments before even receiving a container.”
The imbalance of supply and demand in the market causes the fees for shipping containers to increase. Le Kim Cuong, deputy director of Tan Cang Logistics JSC, found that the capacity of deepwater ports to receive empty containers remains limited. Ho Chi Minh City, Dong Nai, and Binh Duong have about 50 empty container depots, but only about a fifth of them is capable of directly receiving empty containers from deepwater ports.
According to statistics from the Vietnam Maritime Administration, the transport fleet under Vietnamese flag has currently 1,049 ships at a total of about 9.3 million deadweight tonnage, of which only 38 are container ships.
“The lack of containers may be prolonged because the pandemic has not been controlled in many parts of the world,” said Tran Thanh Hai, deputy director of the Foreign Trade Agency under the Ministry of Industry and Trade.
Hai said that container rental prices have increased due to two factors. Firstly, because of the pandemic and social distancing, the cargo handling capacity at EU and North American ports decreased, causing shipping lines to cut routes and shortages with empty containers. The turnaround time for a container has increased to more than 100 days, from previously 60 days, due to quarantine policies in countries around the world.
Secondly, while the pandemic has caused production capacity in Latin America, Eastern Europe, and South Asia to decrease, the US and EU have increased their imports from East Asia, including China and Vietnam.
In addition, Vietnam has one major weakness in international forwarding as “there is not a single large enough empty container depot, only small-scale and scattered facilities,” said Hai. “These small depots cannot meet the demand for exports, and thus the capacity to receive and manage empty containers of Vietnamese enterprises remains limited.”
Meanwhile, Vietnam also has very few businesses that build and repair containers, especially specialised containers, so they have to depend on foreign shipping lines. The country has made efforts to partially improve the shortage of containers, but has not been able to meet the demand for the year-end shopping season.
According to Cuong of Tan Cang Logistics, many regions need to actively use new facilities to avoid congestion and shortages when concentrating demand on one port. At the moment, SNPL is active in shipping lines between Cai Mep Port and the Tan Cang Long Binh depot, as well as at other depots such as Song Than, Nhon Trach, and Hiep Phuoc.
The world’s major container manufacturers, including the three Chinese manufacturers that supply about 80 per cent of the global shipping containers – CIMC, DFIC, and CXIC – are at maxed-out capacity. However, the supply of containers is still not enough to immediately reduce disruptions.
UK-based Drewry Shipping Consultants estimates that global container throughput in 2021 will reach a record high of more than 4.7 million twenty-foot equivalent units (TEU), much higher than the 4.42 million TEU in 2018 and up to 52 per cent higher than the 3.1 million TEU delivered in 2020.
According to Drewry, prices for new containers are increasing sharply at $6,160 per 40-foot container, up 90 per cent on-year. Usually, carriers will lease containers for up to 10 years. However, the current shortage of empty containers has made carriers tend to prolong their rental period.
A part of the missing containers could be added in the second quarter of 2022, when Hoa Phat Container JSC puts its first products on the market. Vu Duc Sinh, director of the company, said that the advantage of scale and its initiative in acquiring raw materials could ensure more affordable empty containers, able to compete with Chinese producers.
Hoa Phat had detailed plans for container production in 2020, when the first price hikes amid the pandemic occurred. Hoa Phat’s factory has a capacity of 500,000 TEU per year, focusing on popular containers with a length of 20-40 feet.
However, the current shortage of empty containers will only be resolved when the container turnover cycle returns to normal, and this can likely only be achieved by late 2022, according to forecasts of transportation experts.
In the first six months of 2021, the volume of goods through Vietnam’s seaports was estimated at more than 425 million tonnes, up 6 per cent over the same period in 2020. In which, exports reached more than 106 million tonnes, up 9 per cent, and imported goods reached over 133 million tonnes, up 2 per cent over the same period last year, marking a stable growth during the pandemic.
For container cargo alone, the throughput of seaports was estimated at 14.7 million tonnes, up 21 per cent over the same period in 2020, in which export containers hit a volume of more than 4.8 million tonnes, up 20 per cent. Meanwhile, imported container cargo reached more than 4.7 million tonnes, up 21 per cent.
Some seaports have increased their throughput volume, such as Thai Binh (up 65 per cent), Dong Thap (up 56 per cent), and Quang Ngai (up 38 per cent), among others.
Vinh Phuc adopts solutions to promote the development of supporting industries
The northern province of Vinh Phuc has set the goal of having 70 enterprises eligible to become first-tier and second-tier suppliers for manufacturers of automobile, motorcycle, electronic products and partially supply for large enterprises or corporations or exports by 2030.
This is a part of a plan issued by the People’s Committee of Vinh Phuc Province on the implementation of the Government Resolution on solutions to promote the development of supporting industries in Vietnam.
The development of supporting industries is considered as one of the important solutions to attract investment, helping the province soon fulfill its goal of becoming a major centre of the automobile and motorcycle manufacturing industry.
To realise the above goals, the provincial People's Committee worked out solutions such as carrying out synchronously projects to boost the development of supporting industries, continuing administrative reform to create favourable business environment for enterprises, and effective operation of the provincial Industrial development supporting the technical centre.
Regarding taxes, finance and credit, the province planned to offer preferential interest rates for corporate income tax with investment projects on products on the list of supporting industrial products prioritised for development. Incentive policies on interest rates for enterprises when borrowing short-term capital at credit institutions and compensate for the difference in interest rates for medium and long-term loans would also be included.
Businesses in the province were encouraged to expand cooperation with domestic and foreign partners to participate in the global value chain. They were also advised to step up promotion to attract investment from large corporations.
More support would be given to enterprises that engaged in innovation, research development, and technology transfer.
It was necessary to ensure the scale of the domestic market, promote the foreign market and take advantage of the FTAs that Vietnam has signed with other partners, according to provincial authorities./.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
Wood exports plummet as amid virus outbreak