VIETNAM'S BUSINESS NEWS HEADLINES OCTOBER 10
Da Nang prepares to welcome visitors
To recover its tourism sector post-COVID-19 and welcome visitors once more, the central coastal city of Da Nang has decided to keep preventive measures in place at tourism destinations.
After a month in the “new normal”, My Khe - one of the world’s most beautiful beaches - is ready to salute visitors with its serene beauty, cleanliness, and safety. All services are now available.
Eleven of 16 tourism sites and half of all accommodation providers in the city have reopened already, after committing to ensuring pandemic preventive measures are followed.
The number of domestic flights to and from Da Nang are gradually increasing and visitors have begun to return to the beach city. Its tourism sector has determined that being “a safe destination” is a key factor in attracting tourists post-COVID-19.
The city’s tourism sector will introduce stimulus programs with attractive offerings to meet demand among tourists in the “new normal”, with safety given top priority./.
Fruit, vegetable exports fetch 2.5 billion USD in nine months
Vietnam earned 2.5 billion USD from exporting fruit and vegetable in the first nine months of 2020, representing a year-on-year drop of 11 percent, according to the Import-Export Department under the Ministry of Industry and Trade.
The department reported that in August, the export revenue of the sector was contributed by exports of various kinds of fruits, including dragon fruit, mango, banana, coconut, jackfruit, durian, passion fruit, and longan.
Despite a fall in processed passion fruit, there is great potential for the export of fresh fruit thanks to Vietnam’s advantages.
The enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) is anticipated to enhance the competitive edge of local firms in comparison to regional rivals such as Thailand, the Philippines, and Malaysia, or South American countries with similar weather conditions such as Peru and Ecuador.
During the reviewed period, Thailand also imported 129,000 tonnes of fresh coconuts worth 50.4 million USD from Vietnam, marking an annual rise of 377.7 percent in volume and 781.3 percent in value.
Vietnam is Asia’s fifth largest producer of fruits and vegetables with its products available in more than 60 countries worldwide.
Data from the Ministry of Industry and Trade revealed that Vietnam’s shipments of fruits and vegetables to the EU stood at 2.26 billion USD in the first eight months of this year, a decrease of 11.3 percent from a year earlier, due to COVID-19./.
Indonesia improves investment climate for economic revival
Indonesia will continue to encourage improvement of the investment environment despite the COVID-19 pandemic to revive its economy that is on the brink of recession, said deputy head of Indonesia’s Investment Coordinating Board (BKPM) Nurul Ichwan said on October 6.
According to Ichwan, the Indonesian economy has not shown any positive signals so far, however, its government is still optimistic about the domestic economic growth.
In the context of a slowing economic growth, investment is expected to be the main driver to boost Indonesia's growth, he said.
Managing director of the Institute for Development of Economics and Finance (INDEF) Tauhid Ahmad said investment activities can actually be used as a measure to promote economic growth.
Facing the current situation, many companies have decided to no longer depend on production sources in China, and tended to redirect their investment./.
Southern region see surge in rooftop solar power: EVN
Rooftop solar power developed in the southern region accounts for 60 percent of the total capacity of power from the resource of the Vietnam Electricity (EVN), the firm has reported.
According to the EVN, many members of the Southern Power Corporation (EVNSPC) have exceeded the plan for the year in the field by 100 percent.
Since the beginning of 2020, the EVNSPC has developed 15,579 customers with total capacity of 572 million kWp, surpassing the yearly goal by 63 percent. In September alone, the firm signed deals on installation of two-way electric meters with 3,231 customers with a total capacity of 157 million kWp.
In September, the 55.3 million kWp of rooftop power was provided to the national power grid, raising the total figure for the first nine months of this year to 250.7 million kWp. The EVNSPC paid over 360 billion VND for rooftop power suppliers for 171.6 million kWp of electricity.
High results surpassing the assigned targets were recorded in many EVNSPC member companies, including those in Binh Phuoc (255 percent), Lam Dong (132 percent), Binh Duong (186 percent), Long An (118 percent), Dong Thap (118 percent), An Giang (117 percent), Ca Mau (101 percent), Bac Lieu (124 percent) and Hau Giang (123 percent).
Nguyen Van Ly, Deputy General Director of the EVNSPC said that as of the end of September, the whole EVNSPC system received 3,426 MWp of solar power, including 54 projects connected with the national power grid with total capacity of 2,674 MWp, a rise of 90 MWp over August.
Meanwhile, 26,192 customers installed rooftop power system with combined capacity of 752 MWp, he added.
He attributed the results to efficiency in communications on the benefits of rooftop solar power, along with the Government’s agreement to supplement the planning of solar and wind power, as well as advantages in solar power development thanks to 1,600-2,700 hours of sunlight each year.
He added that the EVNSPC has given optimal support to customers in the field./.
New website aims to boost supply of Vietnamese goods to Nordic markets
The Vietnam Trade Office in Sweden has recently launched an official website at vietnordic.com with the aim of enhancing connectivity with the markets of Nordic countries based in Northern Europe.
The website provides insights on six markets, including Sweden, Denmark, Finland, Norway, Iceland, and Latvia, with visitors able to gain knowledge about data and information on exports.
It is hoped that the launch of the website will serve as a bridge which connects firms with the Vietnam Trade Office, in addition to forming links between domestic exporting companies and the six Nordic markets.
When viewing the web page visitors can browse three major parts, including commercial news, import and export data, in addition to the import regulations of each market. The website allows domestic enterprises to stay updated on import and export warnings, opportunities for trade exchanges, expos and fairs, useful addresses, references, and a thorough directory of import enterprises.
According to information provided by the Vietnam Trade Office in Sweden, Nordic nations enjoy developed economies, a stable political situation, and high living standards that are among the top in the world. Indeed, Nordic retail groups operate worldwide across a variety of fields such as food, home appliances, fine arts, and handicrafts.
Most notably, the structure of imports of Nordic countries remains completely consistent with the nation’s export capacity. As such, the import items which enjoy the largest turnover in these countries are the goods that Vietnam has exported over the past five years.
Furthermore, it can be viewed that Northern Europe is a potential market for Vietnamese goods as the nation's export staples are compatible with the import demand of Nordic countries. Therefore, the structure of Vietnamese import and export products with this region is generally complementary.
Moreover, the implementation of the European Union-Vietnam Free Trade Agreement (EVFTA) on August 1 is likely to bring about a positive impact to both sides, along with EU member states in the Nordic region.
As a means of assisting Vietnamese businesses boost their exports to the Nordic market in the near future, the Vietnam Trade Office in Sweden, which is also working in Finland, Denmark, Norway, Iceland, and Latvia, with support from the Economic Diplomatic Fund, has released the book on basic market regulations of the Nordic countries and Latvia. The publication features the fundamental regulations of the six countries along with the main contents of the EVFTA.
RoK’s power group keen to invest in local coal-fired power plant
AJU, a business publication from the Republic of Korea (RoK), has recently published an article revealing that the board of the Korea Electric Power Corporation (KEPCO) has plans to purchase a 40% stake in Vung Ang 2, a 1,200MW coal-fired power plant being constructed in Ha Tinh province.
This comes after KEPCO endorsed investment in a project involving firms from the RoK and Japan to build a coal-fired power plant in the nation, therefore overriding concerns regarding profitability and environmental contamination. Moving ahead with the project, the state power company aims to complete construction by January, 2025.
Investment into the coal-fired plant will see Samsung C&T, a key unit of Samsung Group, and Doosan Heavy Industries & Construction, participate together in design, procurement, and construction efforts.
At first, the US$2.2 billion project involved CLP, an electric company based in Hong Kong, along with the Japanese enterprise Mitsubishi. When CLP indicated their plans to withdraw from the project, KEPCO decided to purchase their 40% stake.
The annual growth rate of electricity demand in the nation is currently at a faster rate in comparison to other Southeast Asian countries.
Indeed, electricity from fossil fuels still play a key role in the nation’s total power capacity. Due to this, environmental activists have expressed concerns about pollution caused by the Vung Ang 1 thermal power plant, which has a designed capacity of 1,200MW and has been built to meet the power demand of an industrial zone.
KEPCO, who have also invested in a coal-fired power station project in Indonesia, said it would use new technology to minimise carbon emissions and install additional eco-friendly facilities for the Vung Ang 2 power station.
Vietnamese shrimp exports to the UK maintains market share
Local shrimp exports to the UK market recorded a surge of 15% by mid-September to reach a figure of US$161.2 million against the same period last year, according to data released by the Vietnam Association of Seafood Exporters and Producers (VASEP).
Recent years has seen the country become the largest shrimp provider to the UK, accounting for 24% of their total shrimp import value.
Since the beginning of the year, shrimp exports to the fastidious market have witnessed a number of positive developments, with June seeing the highest level of export growth at 54% in comparison to June of last year.
At present, the UK is the sixth largest importer of Vietnamese shrimp, making up 6.5% of the country’s total shrimp export value.
Throughout the 2015 to 2019 period, domestic shrimp exports to the UK market enjoyed constant growth, rising from approximately US$130 million in 2015 to US$202.5 million in 2019, representing an increase of 56%.
Most notably, key shrimp exports to the UK market include frozen white-leg shrimp, boiled white-leg shrimp, in addition to breaded tempura white leg shrimp.
Moving forward, Vietnamese shrimp exports to this market during the remainder of the year are expected to benefit from tax incentives, similar to other export items being shipped to the EU.
Furthermore, processed shrimp products from the nation enjoy greater advantages in the UK market with regard to their selling price and quality when compared to those from India and Bangladesh.
Local businesses have been urged to provide high-quality products that come up to environmental standards set by UK importers, while striving to strengthen their capability to supply stable source of goods in an effort to meet the tastes of consumers in this demanding market.
Positive outlook ahead as Vietnam steps up exports to EU
There remains plenty of room to expand the export of Vietnamese goods to the European Union as the COVID-19 pandemic is brought under control between now and the end of the year, according to Nguyen Trung Tien, deputy general director of the General Statistics Office (GSO).
Data released by the GSO indicates that Vietnam recorded a trade surplus of approximately US$17 billion during the past nine months of the year, a notable figure that has made a significant contribution to the country’s economic growth rate amid the adverse impact caused by the COVID-19 pandemic.
Tien attributed the positive sign to the strong export growth of up to 20.2% shown by local enterprises in September alone.
In addition, though some traditional export items such as mobile phones, garments and textiles, and footwear experienced a downward trajectory, Vietnam enjoyed record growth in terms of new export commodities. These include electronics, computers and spare parts (up 25.9%), machinery and equipment (up 39.8%), interior decorations (up 57.4%), and sports equipment (59.5%).
With regard to the local agricultural sector, despite all export items enduring a drop during the reviewed period, rice exports reached a total of US$2.5 billion, representing a slight decline of 0.6% in volume and an increase of up to 12% in value.
At present, Vietnam has six major export markets including the United States, China, the EU, Japan, the Republic of Korea, and ASEAN, with two of the leading markets - the US and China - maintaining a high growth rate of 22.9% and 12.7%, respectively.
Tien pointed out that domestic firms have devised timely solutions in response to the pandemic which fully utilise input materials for production and export activities, noting that the decline in garment exports can be largely attributed to a sharp fall in export orders to key markets as a consequence of the ongoing COVID-19 pandemic.
Vietnamese enterprises have exported a number of agricultural products the EU market in recent times, including coffee, rice, and fruit. Indeed, there is plenty of room to export items to the EU market with the epidemic poised to be successfully contained between now and the end of the year, Tien said.
The GSO expert noted that securing trade surplus during the remainder of the year will significantly contribute to Vietnamese economic growth in the year overall, with the Government even identifying export growth, investment, and consumption as key drivers to the national economy.
Fruit and vegetable exports plummet over nine months
Fruit and vegetable exports suffered a fall of 11% on-year to US$2.5 billion during the opening nine months of the year, despite the country's market share of fresh coconuts to Thailand enjoying a sharp increase, according to data compiled by the Ministry of Industry and Trade.
September alone witnessed fruit and vegetable exports reach US$250 million, representing a decline of 9.4% from August, and a 7.2% drop in comparison to the same period from last year.
In August, dragon fruits enjoyed the strongest export growth among various types of fruit, with its value accounting for 51.8% of total fruit exports.
Most notably, dragon fruit exports to the Chinese market saw a surge of 7.0% to US$127.4 million from August of last year, representing 95% of the total export value.
According to information released by the Import and Export Department, this sharp increase in dragon fruit to China can largely be attributed to the favourable conditions of customs clearance, coupled with increasing demand within the Chinese market.
Local firms have therefore been urged to promote the export of dragon fruit through official channels as a means of securing entry into traditional markets such as China whilst also expanding into new markets such as Australia, New Zealand, and the EU.
Furthermore, passion fruit exports are expected to see vigorous growth due to the fruit being increasingly favoured by foreign consumers.
Moreover, the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) is anticipated to enhance the competitive edge of local firms in comparison to regional rivals such as Thailand, the Philippines, and Malaysia, in addition to South American countries such as Peru and Ecuador.
According to statistics released by the International Trade Center (ITC), Thailand imported 210,200 tonnes of fresh coconuts worth US$76.4 million during the initial seven months of the year, representing an increase of 299.5% in volume and 592.8% in value against the same period last year.
During the reviewed period, Thailand also imported 129,000 tones of fresh coconuts worth US$50.4 million from the nation, marking an annual rise of 377.7% in volume and 781.3% in value.
JICA to remain active part of Vietnamese economic development
The Japan International Cooperation Agency (JICA) will continue to effectively carry out a range of projects through the Japanese Government’s ODA despite the novel coronavirus (COVID-19) epidemic.
JICA Vienam chief representative Shimizu Akira made the confirmation at a press conference in Hanoi on October 6.
Akira noted the implementation of JICA-funded projects during the COVID-19 epidemic has helped to maintain jobs for Vietnamese engineers, therefore contributing to the nation’s strong economic recovery.
Currently, there are approximately 2,000 workers participating in a project to construct the Ho Chi Minh City Urban Railway Line 1 stretching from Ben Thanh market to Suoi Tien Amusement Park.
According to Akira, new loan projects and the ODA disbursement rate in the fiscal year has tended to decrease in recent years. Despite this, the implementation of Japanese-funded projects served to contribute to boosting Vietnamese economic development.
The Vietnamese Government and Prime Minister Nguyen Xuan Phuc have sought to promote the disbursement of public investment capital, which will help JICA to accelerate its projects in the country, he said.
In relation to the health sector, JICA has supported the country over the course of several years, with total funding for loan projects and technical co-operation projects reaching up to JPY77.4 billion, roughly VND17 trillion.
In the context of the COVID-19 epidemic, JICA will move to strengthen co-operation in the health sector on the basis of taking advantage of its accumulated experiences.
Akira also commented that the trend of shifting global supply chains will present fresh opportunities to Vietnam. However, the country must strive to improve the quality of human resources, and develop high-quality infrastructure in a bid to attract further foreign investment.
At present, JICA is implementing a technical co-operation project to strengthen capacity and enhance equity and transparency in the Vietnamese stock market. These efforts will promote transparent information disclosure in corporate financial accounting towards the application of the International Financial Reporting Standards (IFRS).
JICA will work closely alongside the Vietnamese Government to continue supporting the country’s infrastructural development and technical co-operation, contributing to local development, the JICA expert concluded.
Processing-manufacturing companies optimistic about Q4 business outlook
Some 45.6% of processing-manufacturing enterprises expect a better business outlook in the fourth quarter of this year, according to a recent survey by the General Statistics Office (GSO).
Covering about 6,500 enterprises in the sector, the survey revealed that 35.4% of firms predict a stable business situation into the future and only 19% see more difficulties ahead.
The FDI sector showed more optimism that most, with 82.8% of enterprises believing in a better and more stable situation in the fourth quarter compared to the third. The ratio in the State-owned sector was 81.7% and the non-State sector 80.2%.
Meanwhile, 32.2% of enterprises said production in the third quarter was better than in the second, while 31.9% said business faced difficulties in Q3 and 35.9% reported stable operations.
In terms of production volumes, 36% said they posted increases in the third quarter over the second quarter, while 30% saw losses and 34% were stable. Some 45.9% expected rising production volumes over the remainder of the year, 36.6% predict stability, and 17.5% foresee declines.
Regarding the number of orders, 30.9% of respondents said they received more in the third quarter than in the second quarter, 30.6% saw fewer, and 38.5% reported that orders were stable.
For the fourth quarter, 35.6% of enterprises said that they hoped for more export orders while 20.4% believe orders would be fewer and 44% expect a stable number of orders for export.
Though the results of the survey were optimistic overall, the GSO pointed out that in the first nine months of 2020, the number of businesses temporarily suspending operations stood at 38,600, up 81.8% against the same period last year, while 27,600 businesses ceased business while awaiting dissolution and nearly 12,100 completed dissolution procedures.
Rubber exports endure drop in value despite surge in volume
Vietnam exported a total of 1.14 million tonnes of rubber worth US$1.45 billion during the first nine months of the year, representing an annual increase of 2.4% in volume, despite simultaneously recording a decline of 4% in value, according to statistics compiled by the Ministry of Industry and Trade.
September alone witnessed the country ship 230 thousand tonnes of rubber abroad with a value of US$296 million, representing a rise of 3% in volume and 7.6% in value from August, with the average export price declining by 1.7% to US$1,287 per tonne against the same period from last year.
During the course of the reviewed period, strong growth was recorded in terms of natural and synthetic rubber exports, making up 66% of total Vietnamese rubber export volume, with export turnover reaching US$762.81 million, an increase of 30.4% in volume and 21.4% in value.
Of the figure, exports to China represent 99.3% of the total natural and synthetic rubber export volume throughout the nine-month period.
According to Financial Supervisory Commission of Taiwan (China), Vietnam represents the seventh largest provider to the Taiwanese market during the eight-month period, grossing US$16.94 million from exporting 11,680 tonnes, an on-year decrease of 6.7% in volume and 9.3% in value.
With regard to natural rubber, the country was the third largest natural rubber supplier to the Taiwanese market, with export volume and value dropping by 11% and 12.7%, respectively.
At present, Vietnamese synthetic rubber’s market share accounts for only 0.4% of total imports to Taiwan (China), while the market shares of China and the United State in the Taiwanese market recorded an increase.
Footwear exports suffer decline over nine-month period
Vietnam’s footwear exports endured an annual drop of 8.8% to US$12.08 billion during the opening nine months of the year, according to figures released by the Ministry of Industry and Trade.
The manufacturing index of leather and related products enjoyed a rise of 4.5% in September from the previous month, despite recording a decrease of 0.4% in comparison to the same period last year.
This shrinkage in export turnover can also be attributed to the adverse impacts caused by the novel coronavirus (COVID-19) pandemic worldwide, especially in relation to several of the country’s major export markets.
At present, the leather and footwear industry is projected to encounter numerous difficulties ahead in the remainder of the year and will largely be dependent on the United States’ and Europe’s capability to successfully contain the COVID-19 pandemic.
Furthermore, the sector's growth is anticipated to bounce back due to the enforcement of the EU-Vietnam Free Trade agreement (EVFTA) in early August.
According to experts, as a means of taking full advantage of the opportunities brought about by the EVFTA, local firms have been advised to restructure production activities and invest in cutting-edge machinery in an effort to improve product quality in line with the commitments outlined in the trade deal.
Textile-garment sector urged to embrace digital transformation
Garment and textile companies need to develop a strategy for digital transformation to ensure their survival and future development, a seminar heard in HCM City on Thursday.
Brad Park of Global Dyeing Company said consumers were demanding more and changing quickly.
Production needs to follow consumers’ demand so that production and delivery times are reduced, according to Park.
Besides, consumers also pay closer attention to companies’ corporate social responsibility and environmental protection.
Companies must work to satisfy customers’ demand, reduce the cost, waste and lead time, and improve quality and design, he said.
“Digital transformation would help enterprises respond rapidly to the market,” he said.
"Firms need to identify which processes they need to transform and map out an optimal digital transformation process with the support of technology solution providers.
"But besides improvement in technology, firms also need to improve human resources and pay more attention to environmental protection," he said.
Sam Lee of Inteco, a company that offers consultancy for factory automation, said businesses in many countries were adopting smart manufacturing to replace human workers in a variety of operations.
According to Lee, garment and textile is one of the key industries in Viet Nam with increasing exports in recent years, but manufacturing and exports mainly based on the CMT (cut-make-trim) model, while more advanced business models like Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) remain modest.
Manufacturing based on the CMT model requires a large number of workers, resulting in high production costs, and automation will help reduce them.
Lee spoke about the success achieved by South Korea’s Hansae Co Ltd., an OEM manufacturer and exporter of apparel, saying automation had helped the company increase its revenues strongly between 2016 and 2019.
Park said Viet Nam’s textile industry had great potential for development.
With its experience in global operations, his company wants to join hands with the Viet Nam Textile and Apparel Association to “lead innovation for smart, green manufacturing in Viet Nam.”
“Transform digitally or die. We must join hands to develop together.”
The seminar also discussed the online exhibition trend and B2B biz-matching.
Jun Chol, director of the Coex Vietnam representative office, said COVID-19 had greatly impacted the business-to-business exhibition industry across the world.
Virtual exhibitions offered new opportunities for manufacturers, eliminating geographical barriers so that companies could reach a much larger audience, he said.
But physical exhibitions could not be replaced by online ones, and would resume after the pandemic, he said. There would be a rising trend of online-offline models, he said.
Themed Digital transformation in the textile and garment sector to overcome the COVID-19 pandemic, the two-day seminar was organised by VITAS and the Korea Institute of Industrial Technology.
Today the seminar will discuss virtual fashion and 3D design.
The event seeks to share new global technological trends and enhance co-operation between the Korean and Vietnamese garment and textile industries.
Viet Nam has about 99,000 new firms in nine months
Viet Nam had about 99,000 newly-established enterprises in the first nine months of this year, a year-on-year fall of 3.2 per cent, according to the General Statistics Office (GSO).
Those new firms registered to invest total capital of more than VND1.4 quadrillion (US$60.56 billion), up 10.7 per cent compared to the same time last year.
The average registered capital of each new business was VND14.4 billion, a year-on-year surge of 14.4 per cent.
Meanwhile, 29,500 operating enterprises registered to increase capital by VND2.1 quadrillion in total for their business. As a result, the domestic economy received total capital of more than VND3.6 quadrillion from newly established and existing businesses this year, expanding 19.2 per cent year on year.
Of which, the electricity, water, gas production and distribution industry had a strong growth of 269.4 per cent year on year in the number of newly established enterprises to 4,241 units.
The GSO also said that other industries had reductions in the number of newly established enterprises, such as wholesale and retail, repair of cars and motorcycles, construction, manufacturing and processing industry, real estate, transportation and warehouse, and accommodation and catering services.
In the first three quarters, 34,600 companies resumed operations, up 25.5 per cent from the same time in 2019.
Besides that, there were 38,600 businesses temporarily suspending operations, a surge of 81.8 per cent compared to the previous year. About 27,600 enterprises were waiting for dissolution procedures and nearly 12,100 completed dissolution procedures, down 2.4 per cent and up 0.1 per cent, respectively.
A survey on business trends of enterprises in the processing and manufacturing sector in the third quarter showed that 32.2 per cent of businesses had better business performance than the previous quarter. About 32 per cent of surveyed firms had difficulties in production and business, and 36 per cent had stable operation.
Up to 45.6 per cent of enterprises felt upbeat about their business in the quarter, 19 per cent forecast difficulties, and 35.4 per cent believed they would have stable business and operation.
Pham Dinh Thuy, director of the GSO’s Department of Industrial and Construction Statistics, said that to overcome existing difficulties, local businesses needed to find partners to have efficient development for investment capital.
The Government and the National Assembly should consider exempting or reducing further taxes and fees, prolonging payment periods for enterprises and raising credit growth ceilings for commercial lending. Those solutions were expected to support enterprises in having funds for stable production and business, Thuy said.
The General Statistics Office also proposed that the State should have policies to encourage imports of material for production expansion and limit imports of materials local enterprises can produce.
Viet Nam gains manufacturing growth in September
Manufacturing sector returned to growth in September as concerns around the outbreak of the COVID-19 pandemic in the country eased. Both output and new orders increased, while business confidence strengthened, and the rate of job cuts softened.
According to a monthly survey by Nikkei and IHS Markit, the Viet Nam Manufacturing Purchasing Index (PMI) rose back above the 50.0 no-change mark in September, posting 52.2 from 45.7 in August. That pointed to the first improvement in business conditions for three months, and the most marked since July 2019.
Control over the COVID-19 pandemic was a key factor helping to support improvements in operating conditions, after increasing case numbers had been seen in the previous survey period.
Reduced case numbers contributed to stronger client demand, leading to a solid increase in new orders. New business from abroad also increased in September, the first time this has been the case since January.
Solid expansion in production was also registered, helped by higher new orders. In fact, the rise in output was the sharpest in 14 months.
Business confidence also improved at the end of the third quarter of the year, rising sharply from August to the highest since July 2019. Projected growth of new orders is expected to lead to increases in output over the coming year, but a number of firms mentioned that positive expectations were based on assumptions that the pandemic will remain under control in the country.
Rising new orders encouraged manufacturers to expand their purchasing activity for the first time in three months, and at a solid pace. This increase in purchasing contributed to a renewed accumulation of pre-production inventories. Some panelists reported efforts to build reserves.
The rate of input cost inflation quickened to a 22-month high and was broadly in line with the series average. Panelists often linked higher input prices to supply shortages for raw materials. This was also a factor behind a lengthening of suppliers' delivery times.
In response to higher input costs, firms raised their selling prices for the first time in eight months. The rate of inflation was only slight, however, amid ongoing competitive pressures.
Commenting on the latest survey results, Andrew Harker, Economics Director at IHS Markit, said: “After a rise in COVID-19 cases in late-July and early August briefly threw the sector's recovery off track in August, the September PMI results were much more positive.
"With control of the pandemic regained, firms saw an influx of new orders, ramped up production and were at their most optimistic for over a year. As ever though, sustaining these positive trends is dependent on virus cases not picking up again."
One new development in the latest survey was a return to growth of new export orders for the first time since the pandemic began, a welcome signal that international demand is becoming more supportive of the sector's recovery, he said.
IIP in 9 months
In a monthly report on the industry and trade sector in the first nine months of this year, the Ministry of Industry and Trade (MoIT) said that the domestic industrial production had prospered in September and is expected to grow again in the last months of the year because the pandemic is basically under control.
According to its statistics, the index of industrial production (IIP) of Viet Nam in September increased by 2.3 per cent against August and by 3.8 per cent over the same period last year.
The IIP in the first nine months of 2020 rose by 2.4 per cent over the same period last year. This rate was lower than the growth rate of 9.6 per cent in the first nine months of 2019.
The ministry said this was the lowest growth rate in many years.
The industry saw a reduction or low growth rates in IIP of some key industrial products during the first nine months. Of which, the index decreased by 16.7 per cent for the liquefied gas (LPG); 14.6 per cent for beer; 13.7 per cent for crude oil exploitation; 11.8 per cent for cars; and 9.1 per cent for natural gas.
However, there were also a number of industries with a high growth rate in IIP over the past nine months, creating a great contribution to the overall growth of the industry. They included metal ore mining (up by 14.8 per cent); manufacturing electronic products, computers and optical products (up by 8.6 per cent); and tobacco product production (up by 8.2 per cent).
Bac Ninh targets 2,500 new enterprises a year
The northern province of Bac Ninh has set a target of registering 2,500 new enterprises each year from 2020 to 2025 as part of a scheme to support small and medium-sized enterprises (SMEs).
Under the scheme, provincial authorities will provide land for roughly 175 investment projects in the form of leases or industrial parks and industrial clusters when infrastructure is completed.
The province will also organise management training courses for 1,800 managerial positions, and vocational training for 15,000 workers.
Enterprises established from 2020-25 will be provided with free accounting and taxation software.
Relevant agencies will help local enterprises access fairs, exhibitions and workshops to seek business opportunities and new markets. They will also hold more events and programmes to provide local enterprises with accurate and up-to-date information on both the domestic and international markets to help them decide on a direction for production and business activities.
In particular, the province will build an innovate start-up centre tasked with connecting domestic and foreign resources to support local start-ups and develop the innovative start-up ecology in the province.
The scheme also aims to assist the development of the support industry, including enterprises that supply products and services for the Samsung complex and other foreign-invested enterprises in the province.
In the first eight months of 2020, Bac Ninh had 1,598 newly-established enterprises with total registered capital of nearly VND15.6 trillion, representing increases of 4.3 per cent and 1.94 per cent from 2019, respectively.
HCM City transport firms demand support to recover from Covid woes
The HCM City Department of Transport held a meeting with related departments on October 2 to discuss support measures for transport companies affected by Covid-19.
The Department of Planning and Investment suggested that the State Bank of Vietnam should instruct banks to waive loan interest for transport companies that have suspended operations for four months instead of just rescheduling.
Pham Minh Suong, general director of Mai Linh Taxi Group, said the pandemic situation has improved and taxis operate normally, but there are few passengers going to or coming from places like airports, restaurants and hotels.
Banks have cut loan interest rates by a paltry 0.1-0.5 percentage points, but to enable transport firms to overcome their difficulties, the cut should be 3-5 percentage points, he said.
According to the HCMC Taxi Association, in the first half of this year taxi firms’ revenues were down 40 per cent year-on-year.
Its member companies hope for loan interest subsidies, debt rescheduling and more support policies, it said.
Tran Quang Lam, director of the transport department, called on related agencies to simplify procedures to support businesses, including quickly resolving licensing procedures for vehicles carrying goods into and out of ports.
To aid businesses hit hard by the pandemic, the Ministry of Finance issued a circular cutting road maintenance fees by 30 per cent for passenger transport vehicles and 10 per cent for trucks, tractors and other special vehicles.
The reductions apply from August 10 to year-end.
The ministry said thousands of companies, co-operatives and household businesses in the transportation sector are facing difficulties due to the pandemic with more than 310,000 of their vehicles not operating normally and hundreds of thousands of workers suffering from lower incomes.
When social distancing was in place in the country, passenger transportation saw a 75 per cent drop in revenues, the transport ministry said.
Thailand’s GDP to fall 7-9 percent in 2020
Thailand's Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) predicted that the country’seconomy will contract by 7-9 percent this year, although exports could shrink less than previously projected, because the coronavirus pandemic remains a risk.
The committee said it stood by its projection of an economic contraction of 7-9 percent and inflation to fall 1-1.5 percent this year.
However, exports were expected to drop 8-10 percent, instead of the 10-12 percent forecast earlier, after recent improved shipments.
Southeast Asia's second-largest economy posted its deepest fall in over two decades in the second quarter as the outbreak hammered the tourism and export sectors, which accounted for about 60 percent of GDP last year.
Local media quoted Kalin Sarasin, Chairman of the Thai Chamber of Commerce and JSCCIB, as saying that the Thai economy should recover later this year thanks to the government’s COVID-19 control and stimulus measures.
But the fourth quarter is a challenge as there are new outbreaks in several countries and that could be a problem for exports in future, he said.
Thailand’s Ministry of Commerce reported in late September that the country’s export value improved in August, reaching over 20 billion USD for the first time in five months./.
SSI named biggest securities brokerage firm on HCM City exchange
SSI Securities Corporation topped the list of 10 largest securities companies in the third quarter of this year recently announced by the Ho Chi Minh Stock Exchange, with a 11.8 percent market share.
The second and third places were held by the HCM City Securities Corporation and VPS Securities JSC, at 8.43 percent and 7.65 percent respectively.
The others are VNDirect Securities Corporation (7.12 percent), Viet Capital Securities JSC (6.65 percent), MB Securities (5.11 percent), Mirae Asset (Vietnam) (4.49 percent), KIS Vietnam Securities (3.78 percent), FPT Securities (3.75 percent), and BIDV Securities Company (3.58 percent).
Techcom Securities JSC was the largest bond broker with a 63.97 percent market share, followed by KB Vietnam Securities (6.83 percent), Vietcombank Securities (6.42 percent), and HCM City Securities Corporation (6.17 percent).
The securities market experienced volatility in the third quarter.
The VN-Index closed on September 30 at 905.21 points, an increase of 9.71 percent for the quarter, one of the world’s highest gains.
Liquidity was also up significantly with the average trading value being 4.535 trillion VND (195.67 million USD) per session, up 4.2 percent from the previous quarter and 56 percent higher than in the same period last year.
The market capitalisation as of September 30 was nearly 3,210 trillion VND (138.5 billion USD), accounting for 44.47 percent of the country’s GDP in 2019.
There are 383 stocks, three mutual funds, six exchange-traded funds, 103 covered warrants, and 41 bonds listed on the exchange.
Logistics SMEs urged to speed up digital transformation
Vietnamese logistics firms, especially small and medium-sized ones, need to get up to speed on digital transformation to enhance their competitiveness if they want to enter global markets after the pandemic ends, experts have said.
Nguyen Ngoc Dung, Vice Chairman of the Vietnam E-commerce Association, said it is high time that SMEs realised the advantages of and the urgent need for digital transformation, pointing out that most of them have remained slow in embracing it.
“Successful digital transformation will bring many benefits to businesses such as reducing costs and enabling them to access all markets.”
A shipper in Vietnam delivers two parcels a day on average since it takes time to locate addresses and wait for recipients to collect the order, whereas a shipper in a developed market could deliver 200 a day with map data to optimise routes, he said.
“High logistics costs not only affect the competitiveness of goods, but also pose an obstacle for businesses when entering new markets.”
He was speaking at a seminar on “Logistics industry before the turning point of digital transformation” last week.
Nguyen Tuong, Deputy General Secretary of the Vietnam Logistics Business Association, said the COVID-19 pandemic has affected global investment and trade, and supply chains have been disrupted.
Enterprises, especially logistics firms, must apply hi-tech solutions to reduce costs, he added.
Tuong listed three challenges that prevent logistics companies from adopting digital transformation: financial capacity, human resources and identifying suitable technologies.
There are only a few international standard software offerings in Vietnam, making it difficult for firms to identify optimal ones, he said.
Besides, logistics companies’ managements are not confident about data and payment security when implementing digital transformation, he said.
“Both executives and staff remain hesitant about changing their habits for the digital environment. Thus, we need to change the perceptions held by logistics companies.”
According to the Vietnam Logistics Business Association, not many logistics firms adopt integrated solutions in their logistics and supply chains.
Around 40 percent of software applications remain very basic such as international forwarding management, warehouse management, transport management, electronic data exchange, and customs declaration, he added.
Tuong said the Government should prioritise development of infrastructure and logistics service centres, and offer income and other tax breaks.
Policies are needed to ease business conditions, simplify inspection procedures and mobilise resources for investment in logistics, especially regional and international logistics centres, he added.
Ngo Khac Le, a lawyer and arbitrator at the Vietnam International Arbitration Centre and an expert in logistics and transport, said SMEs can learn from the experience of large logistics enterprises that have applied digital transformation at a rather high level.
Experts said to capitalise on the EU-Vietnam Free Trade Agreement, Vietnamese firms need to meet three main criteria: product origin, quality and digital capability.
EU businesses are 10-15 years ahead of their Vietnamese counterparts in terms of digital capacity, and so the latter must strive to achieve comparable levels to be able do business with them, they said.
Thus, digital transformation is an inevitable process and Vietnam would be left behind if it does not do it, they warned.
Enterprises should start to get acquainted with e-contracts, pay digital taxes and digitise all business activities, they said.
Digital transformation refers to creating a new operating method based on digital technologies like IoT, cloud, big data, AI, and blockchain to create new production and business models.
Vietnam’s logistics costs are 6 percent higher than Thailand’s, 7 percent higher than China’s and 12 percent higher than Malaysia’s.
The high costs have hampered the competitiveness of Vietnamese goods, according to experts.
According to a recent report by the World Bank, logistics costs are equivalent to 20 percent of Vietnam’s GDP, while in other countries it is 9-14 percent.
Economists said in the context of the prolonged epidemic, the use of digital transformation for market access and penetration is even more vital.
If Vietnam wants to improve the quality of logistics services it needs to have a clear roadmap./.
Vietnam, India hold great potential in trade of fruits: Indian official
Vietnam and India hold great potential in boosting trade of fruits, Shubhra, Adviser Trade from the Indian Ministry of Agriculture and Farmers’ Welfare, told a virtual workshop held by the Embassy of Vietnam in India and the Indian Importers Chambers of Commerce and Industry (IICCI) on October 7.
The event, themed “Fruits and Food: New trade opportunity for Vietnam and India”, gathered more than 100 importers, exporters and business associations from the two countries.
Shubhra said India has been emerged as one of the world’s leading traders of fruits and agricultural products over recent years. India can supply Vietnam with a number of its key farm produce, such as pomegranate, grape, wheat and cotton, while Vietnam produces high-quality dragon fruit, coffee, cocoa and cashew nut, she said.
She went on to say both countries have major advantages in agriculture so there is still great room for them to further expand cooperation in this area.
Vietnam and India have many things to learn from and supplement each other to foster a win-win partnership, she noted, adding that India wants to become Vietnam’s leading trade partner.
Vietnamese Ambassador to India Pham Sanh Chau, for his part, introduced attendees to Vietnam’s signature agricultural products – coffee, cocoa, cashew nut and coconut. He expected India to remove tariff and non-tariff barriers and streamline public administrative procedures to provide broader market access for Vietnamese exporters.
He also urged India to open market for a number of Vietnamese fruits, including longan, pomelo, durian and rambutan among others.
This workshop is a good chance for connecting Vietnamese and Indian enterprises and business associations in fruits and food, he said, pledging that he will do his utmost to facilitate bilateral trade and promptly help firms from both countries solve problems.
The event formed part of the India – Vietnam Business Forum 2020 held by the Vietnamese Embassy in India to beef up bilateral trade which has been disrupted by COVID-19./.
HCM City honours outstanding businesses, entrepreneurs in 2020
The Ho Chi Minh City Union of Business Associations (HUBA) honoured 200 excellent enterprises and entrepreneurs of the city in 2020 at a ceremony marking the 16th Vietnam Entrepreneurs' Day (October 13) held on October 7.
The outstanding businesses and businessmen were selected from a vote launched by HUBA between June and August that attracted the participation of 215 firms in the southern hub, with 308 nominees registered.
The 100 honoured firms, including large ones like Hung Thinh Corporation, Thien Long Group Corporation, Kinh Do Corporation and Hoa Binh Construction Group, recorded a total charter capital worth over 976.95 trillion VND (42.15 billion USD).
In 2018 and 2019, their revenue surpassed 580 trillion VND, including over 38 trillion VND of profit. As such, the groups contributed more than 25 trillion VND to the state budget and over 800 billion VND to social welfare programmes, while creating approximately 150,000 jobs.
According to HUBA President Chu Tien Dung, a new assessment category on COVID-19 resilience via innovation in business and production was added this year.
In addition to these 200 awardees, HUBA also proposed the local authorities consider granting certificates of merit for exemplary enterprises and entrepreneurs in the fight against the pandemic.
HCM City is home to more than 438,000 companies./.
CPTPP presents new trade opportunities to Vietnam, Mexico: Insiders
Vietnamese and Mexican enterprises should take full advantage of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to promote bilateral trade and investment, according to insiders.
New trade opportunities between the two countries and mechanisms to identify new chances for new products were discussed at a video conference held by the Mexican Business Council for Foreign Trade (COMCE) and the Vietnamese Embassy in Mexico’s trade office on October 7.
Vietnamese Ambassador Nguyen Hoai Duong emphasised the complementary nature of the two economies, affirming that the CPTPP, which provides an array of tariff preferences, will help create a favourable environment for both sides to promote trade, economic, and investment relations.
Meanwhile, President of the Asia-Pacific Directorate at COMCE Sergio Ley said companies should build a joint export platform based on the thriving bilateral relations and geographical strengths of Vietnam in Asia and Mexico in America.
Defining common opportunities, particularly within the framework of the CPTPP, is important to diversify trade partners, he said, affirming that Mexico always sees Vietnam as a prioritised trade peer.
For her part, Undersecretary for Foreign Trade at Mexico’s Ministry of Economy Luz Mara de la Mora hopes that trade will be intensified between private enterprises on both sides.
Mexico is an important market for Vietnamese electronic products and seafood, while in turn having a good chance of selling food, automobiles and spare parts, and mechanical products to the Southeast Asian country.
On the occasion, COMCE, with support from the Vietnamese Embassy, launched the website https://sites.google.cm/comce/org/mx/comce-moit, containing updated policy and market information for both Vietnamese and Mexican enterprises.
Vietnam is currently Mexico’s third-most important partner ASEAN, while Mexico is Vietnam’s second-most significant market in Latin America and the Caribbean. Two-way trade reached over 6 billion USD in 2019, up 97.7 times against 2001.