VIETNAM'S BUSINESS NEWS HEADLINES OCTOBER 11
Vietnam tourism lacks quality human resources
55% of Vietnam’s tourism sector lack training according to a conference about quality of human resources in Vietnam tourism held on October 6.
Reports at the conference showed that from 2015 to 2019, only 45% of the human resources in the tourism sector were trained. The rest didn't meet their workplace requirements. The sector lacks highly-skilled human resources, especially senior managers.
Foreign language and computer skills as well as other skills such as communication are very limited. 60% can only complete simple functions on computer.
Luu Duc Ke, deputy director of Viet Media Travel Corporation, said that existing programmes were unable to match the growth rate of the sector. "Not only does our company have to teach more skills to new employees, but we also have to face tough competition from other companies," he said.
Nguyen Anh Tuan, head of the Institute for Tourism Development Research, said there were many shortcomings that led to such results. Current training programmes do not get as much attention as needed. They also lack skilled lecturers and standards for developing skilled human resources.
Nguyen Van Luu, a former employee at Vietnam National Administration of Tourism, proposed a stronger link between the state, schools and universities and firms.
"The state completes and issues policies to create favourable conditions to boost vocational training in tourism," he said. "The schools and universities invest in equipment and renew the curriculum. Firms should be involved in the training process from providing scholarships, setting up requirements for new recruits or making places for students to practice."
Many delegates at the conference agreed that technology should be used to improve the quality of the human resources in the sector including e-learning and building a database about tourism human resources.
Passenger traffic at Vietnamese airlines to rebound fastest in Southeast Asia
Passenger traffic at Vietnamese airlines should rebound faster than in other Southeast Asian markets due to the country's low incidence of COVID-19 cases, according to Fitch Ratings.
Fitch Ratings forecasts that Vietnam's average revenue passenger kilometres (RPKs) is expected to reach around 55 per cent of the 2019 baseline level in 2020 and 90 per cent in 2021.
Singapore Airlines, on the other hand, could witness the sharpest 2020 RPK fall, at 70 per cent, due to its complete dependence on international routes, with 2021's RPKs staying at around 50 per cent below 2019 levels.
Meanwhile, Indonesia and the Philippines, where further COVID-19 spread remains a high risk, are expected to see average RPK levels at 35 per cent of the baseline in 2020 and 60 per cent in 2021. Airlines in Thailand and Malaysia are also likely to report similar levels, as they would be affected by weak international traffic volume despite the countries' success in controlling the pandemic.
Fitch Ratings' forecasts are based on the assumption that a vaccine or treatment will not become available at scale in 2021, but that progress is made in controlling the pandemic. Airline passenger volume could improve faster than forecasted if an effective vaccine is distributed sooner than believed or if there is more success in containing the pandemic. However, the agency foresees flat demand in 2021 that will be well below the 2019 base should there be limited progress on this measure.
After the resurgence of COVID-19, Vietnamese carriers have resumed most of their domestic routes to serve the market demand.
National flag carrier Vietnam Airlines has announced to reopen international flights to Japan from September 18. Specifically, Vietnam Airlines' flights from Hanoi-based Noi Bai Airport to Tokyo-based Narita Airport have departed in September. Meanwhile, flights from Ho Chi Minh City-based Tan Son Nhat Airport to Narita Airport was on September 30 on Boeing 787.
Vietnam Airlines also operated a flight from South Korea's Seoul to Hanoi on September 25. Moving forward, the airline is hoping to resume more routes to China, Taiwan, Laos, and Cambodia.
Vietjet also resumed international flights to Tokyo (Japan), Seoul (South Korea), and Taipei (Taiwan) from September 29. Meanhwile, Bamboo Airways resumes flights to Taiwan and South Korea and plans to open routes to Japan, Singapore, and Australia later this year.
VSD issues accounts for more than 780 foreign investors
The Viet Nam Securities Depository (VSD) in the third quarter certified trading accounts for 782 foreign investors.
Sixty-six investors of the total were institutions and 716 were individuals.
In the past quarter, the agency removed accounts for seven foreign investors, including four institutional investors and three individuals.
In September alone, VSD issued account numbers for 270 foreign investors, including 29 institutional ones and 241 individuals.
Twenty-four foreign investors changed their account information while two investors quit the Vietnamese market.
After nine months, the total of active trading accounts was more than 35,000, including nearly 4,750 institutional investors and more than 30,300 individuals.
Foreign investors in September net-sold total VND3.45 trillion (US$148.46 million) worth of local assets in September.
The benchmark VN-Index on the Ho Chi Minh Stock Exchange gained total 2.67 per cent in September and the HNX-Index on the Ha Noi Stock Exchange was up total 6.57 per cent.
Vietnam's ride-hailing market witnesses faster growth with local and regional players
Vietnam witnessed significant growth in the ride-hailing market as many domestic startups and ASEAN companies have entered the country. The country's ride-hailing market is anticipated to register a compound annual growth rate (CAGR) of 28.12 per cent during 2020-2025.
The report says that the increasing economic impact of the internet and the implementation of the new Decree No.10/2020 in the transportation industry in Vietnam are the two primary factors that are likely to propel the growth of the ride-hailing market.
The entry of app-based motorbike taxi services have predominantly captured the market share of the traditional motorbike taxi, popularly called “xe om” in the country. Grab is the first company in Vietnam to launch GrabBike, an app-based motorbike taxi initially promoted in Ho Chi Minh City in November 2014, which spread throughout the country in 2015. Following the footprints of Grab, many other app-based motorbike services like Go-Jek, Aber, FastGo, VATO, MyGo, and be Group JSC had launched in the Vietnamese motorbike ride-hailing market during 2018-2019.
FastGo began its FastBike Pro service in Hanoi in January 2019. It tested FastBike Pro since August 2018 with the difference being a greater focus on professional two-wheeler services, as drivers must undergo a rigorous recruitment process, assessing their ethics and attitudes, as well as ability to ride a high-end motorbike. FastGo also provides health insurance packages worth up to VND20 million ($870) and insurance related to theft or new vehicle purchases of VND 20 million ($870) to attract drivers, especially students.
The other companies like bE Group JSC and Gojek entered the app-based motorbike service business in Vietnam in 2018. Gojek officially launched GoViet in Ho Chi Minh City in 2018. The GoViet app was offering services like GOoBike and GoSend on a trial period in some districts of Ho Chi Minh City in July 2018. After testing, GoViet expanded to Hanoi and other provinces of Vietnam.
Traditional xe om drivers are still present, especially in tourist areas. However, the app-based motorbike services dominate with more than 60 per cent of the country’s motorbike taxi market. The increasing entry of both local and international companies into the app-based motorbike services with unique promotional programmes in the Vietnamese taxi market, is likely to propel demand for app-based motorcycle ride-hailing market during the forecast period.
The ride-hailing market is a highly consolidated market with dominant players like Grab, be Group JSC, Gojek (GoViet), and FastGo in Vietnam. Grab captured more than 70 per cent of the ride-hailing market in the country during 2019.
The biggest threat to Grab in the future may come from be, the latest local player in the Vietnamese ride-hailing market. The company asserted that it was able to drum up hundreds of millions of dollars in local investment. Be has another ace up its sleeve – it is registered as a transportation service, not just as a tech company. This may make all the difference with the implementation of the new decree in the future.
GoViet partnered up with local firms and focused on the two-wheel bike-hailing market – which are the two factors that drove the company to gain around 20 per cent of the two-wheel ride-sharing market in centres like Ho Chi Minh City. Additionally, the company is yet to foray into the four-wheel ride-sharing segment in Vietnam.
VPS Securities tops three markets in Q3
VPS Securities JSC (VPS) in the third quarter had the largest bite of market share for stock broking on the Ha Noi Stock Exchange (HNX).
VPS topped the northern market with an 8.2 per cent market share. The company was followed by HDBank Securities (HDBS), SSI Securities (SSI) and VNDirect Securities (VNDS), which had 6.8-7.0 per cent market shares in the past quarter.
VPS ranked fourth in the second quarter with a market share of nearly 6.8 per cent while HDBS ranked sixth with a 5 per cent market share.
The top three securities companies in the second quarter were SSI, VNDS and Sai Gon-Ha Noi Securities (SHS). SHS fell to sixth place in the third quarter as its market share was cut to nearly 5 per cent from 7.6 per cent.
UPCoM, derivatives market
On the Unlisted Public Company Market (UPCoM), VPS made a big jump to the top position as its market share rose to 19.9 per cent in July-September from 8.8 per cent in the April-June period.
SSI, VNDS and HCM City Securities (HSC) were the three companies following VPS in the table. Their market shares were 9.6 per cent, 9.57 per cent and 6.2 per cent, respectively.
These three companies’ third-quarter rankings were little changed from the previous three-month period.
On the derivatives market, which is managed by the HNX, VPS held onto its top position with a 52 per cent market share, up 0.87 percentage point from the second quarter.
HSC had the second largest market share (12.5 per cent) and VNDS ranked third with an 8.06 per cent market share.
The top four biggest companies on the derivatives market were unchanged from the second quarter.
VPS and HSC were also the two of five securities firms, each held more than 10 per cent market share on the government bond market in the third quarter.
Foreign investor puts ACB shares up for sale
First Burns Investments Limited has offered 33 million shares of Asian Commercial Bank (ACB) for sale.
The deal is scheduled for one month from October 9 to November 6 and shares will be sold through either order-matching or put-through transactions.
ACB shares, listed on the Ha Noi Stock Exchange as ACB, fell 2.5 per cent to end Wednesday at VND23,400 (US$1.01) apiece.
ACB shares have gained a total of nearly 40 per cent since July 27.
First Burns Investments Limited now owns more than 86.4 million shares at the Ha Noi-based lender, equal to 4 per cent of total outstanding shares.
The investment firm has received nearly 20 million shares when ACB issued bonus shares in late August.
The foreign investor first bought 74.6 million ACB shares on October 17, 2017, for VND32,700 apiece.
The investment fund has since increased its ownership by receiving bonus shares in August 2018, July 2019 and August this year.
Vinamilk completes charter capital hike plan
The largest dairy producer by market value Vinamilk (HoSE: VNM) has completed issuing more than 348 million shares to raise charter capital.
Funding for the share issuance was taken from the company’s owner equity capital.
The total amount of outstanding shares is now nearly 2.09 billion, the company said in a filing.
Vinamilk has also decided to make the first dividend payment for 2020 in cash at a 20 per cent ratio.
In the third quarter, the dairy giant reported revenue of VND15.5 trillion (US$666.86 million), up 8.8 per cent on-year. Its post-tax profit in the third quarter rose 16 per cent on-year to VND3.1 trillion.
After nine months, the company estimated total revenue has gained 7.4 per cent on-year to VND45.3 trillion and post-tax profit has increased by 7 per cent on-year to nearly VND9 trillion.
With those figures, Vinamilk has fulfilled 84 per cent of its full-year profit projection.
Vinamilk shares, listed on the Ho Chi Minh Stock Exchange as VNM, edged up 0.9 per cent to end Wednesday at VND108,000 ($4.65) apiece.
Vietnam, India see huge export potential ahead for farm produce
There remains plenty of room to further agricultural co-operation between Vietnam and India, especially in terms of fruit exports, according to Ms Shubhra, an official of the Indian Ministry of Agriculture.
Shubhra made the comments during a teleconference on October 7 that was jointly hosted by the Vietnamese embassy in India and the Indian Importers Chambers of Commerce and Industry (IICCI).
She affirmed recent years has seen India emerge as one of the world’s key trading partners in terms of fruit and agricultural products. Indeed, India is capable of providing Vietnam with various kinds of fruit and agricultural items, such as pomegranates, grapes, wheat, and cotton.
She went on to highlight key Vietnamese agricultural products such as dragon fruit, coffee, cocoa, and cashew nuts which also have great potential to penetrate the Indian market.
According to the Indian official, there are currently 255 operational investment projects in Vietnam, showing Indian businesses’ keen interest in the Southeast Asian country’s investment environment.
Vietnam has been working towards an agricultural processing hub by 2030, a target which is expected to provide fresh impetus for stronger trade ties between the two sides, she stressed, adding that India is hopeful of becoming one of Vietnam’s leading trade partners like the US and China.
In response, Vietnamese Ambassador to India Pham Sanh Chau introduced participating delegates to a number of typical Vietnamese agricultural products such as coffee, tea, cocoa, cashew nuts, and coconut water, and proposed that India remove tariff and non-tariff barriers as well as simplify its administrative procedures, making it easier for their commodities to penetrate deep into each other’s markets.
The Vietnamese diplomat also urged the Indian side to open their market for a number of Vietnamese fruits such as longan, grapefruit, durian, and rambutan.
Ambassador Chau affirmed the teleconference has offered a great chance for both sides’ business communities to strengthen connectivity and seek reliable partners.
The embassy will continue to fully tap into all available resources and promote trade facilitation in order to remove difficulties for businesses from both sides, said Chau.
Cassava exports enjoy 12.1% surge over nine months
Vietnam exported 1.94 million tonnes of cassava and cassava-based products, earning US$685 million during the past nine months of the year, according to the Ministry of Agriculture and Rural Development (MARD).
The latest figures represent annual increases of 12.1% in volume and 1.7% in value, with export prices standing at US$352.6 per tonne, a decline of 9.3% against the same period from last year.
Most notably, the export of cassava chips witnessed a sharp rise of 81% in volume and 90% in value, with the export price increasing by 5% to US$226 per tonne compared to US$216 per tonne recorded during the same period last year.
Meanwhile, the export of cassava starch during the reviewed period reached a total of US$573 million, down 1% in volume and 7% in value year on year, with the export price recording a drop of 7% to US$395 per tonne.
China remained Vietnam’s most significant export market, consuming 1.58 million tonnes of cassava and cassava-based products worth US$547 million from its neighbor, up 14.8% in volume and 1.6% in price.
Elsewhere, Taiwan (China) and the Malaysia also recorded strong growth with the export value to these markets increasing by 27% and 11.7%, respectively.
Still, cassava chips and starch exports are anticipated to face challenges as a result of weaker demand from China coupled with low domestic inventories.
Mirae Asset-Naver fund invests $37 million in warehouse in Vietnam
South Korea’s top securities firm Mirae Asset Daewoo Co. and internet giant Naver Corporation have jointly invested $37 million in a warehouse in Vietnam, as reported by Pulse News.
Mirae Asset-Naver Asia Growth Fund, a joint fund launched by Mirae Asset and Naver, bought the warehouse in the Southeast Asian country in partnership with another Korean financial firm Shinhan Investment Corporation in late September, the companies said on Monday.
Located in LogisValley logistics hub in Bac Ninh, northeast of Vietnam’s capital, Hanoi, the warehouse has cold storages used for storing fresh and frozen food products. The warehouse is reserved for cold chain service of Vincommerce, the supermarket chain operator under Vietnamese retail giant Masan Group.
Vietnam has been emerging as the post-China logistics hub in Asia with high growth potential, said Koh Joon-ho, Mirae Asset Daewoo official who has led the latest warehouse acquisition project.
Mirae Asset-Naver Asia Growth Fund was created in 2018 for investments in emerging Asian economies, with a focus on e-commerce, healthcare, logistics, and other promising sectors. The joint growth fund has been actively investing in logistics services in Vietnam. It made its first investment in another warehouse in Vietnam in 2018 and is hunting for more in the Southeast Asian country.
Vietnam’s manufacturing PMI back in growth territory in September
The Vietnamese manufacturing sector returned to growth in September as concerns around the outbreak of the coronavirus disease 2019 (COVID-19) in the country eased. Both output and new orders increased, while business confidence strengthened, and the rate of job cuts softened.
The Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose back above the 50.0 no-change mark in September, posting 52.2 from 45.7 in August. The reading pointed to the first improvement in business conditions for three months and the most marked since July 2019.
Anecdotal evidence suggested that 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, rising sharply from August to the highest since July 2019. The 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 panellists reported efforts to build reserves.
Stocks of finished goods also rose, with the rate of accumulation among the fastest since the survey began in March 2011. Some panellists attributed higher inventories to increased production volumes but others reported that sales had been lower than expected.
While businesses increased their purchasing activity in response to higher new orders, they continued to see staffing levels decrease at the end of the third quarter. In some cases, lower workforce numbers reflected staff resignations.
Employment has now fallen in each of the past eight months, although the latest reduction was the softest in this sequence. Despite lower staffing levels, firms were still able to keep on top of workloads, as evidenced by a further reduction in outstanding business.
The rate of input cost inflation quickened to a 22-month high and was broadly in line with the series average. Panellists often linked higher input prices to supply shortages for raw materials. This was also a factor behind a lengthening of suppliers’ delivery times.
That said, lead times lengthened to the least degree since January. 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.
Fast-track groups facilitating stronger economic activities
The synergy of private forces, including leading local and foreign-invested groups and international organisations, will play a crucial role in realising opportunities in attracting high-quality foreign direct investment inflows to the country, and improving the business environment.
Private organisations are attempting to support the government in attracting major groups like Samsung
Bechtel Group Inc., the US’ biggest engineering, construction, and project management company, is interested in Vietnam as a part of its global investing expansion plan. The message was relayed by the managing director for Asia Pacific at Bechtel Enterprises at a dialogue on the business environment, private investment, and foreign direct investment (FDI) organised by Vietnam Business and Investment Fast Track (VBI Fast Track) and the National Private Economic Development Research Board on September 24 in Hanoi.
Investment firm VinaCapital is committed to working with VBI Fast Track to connect with global groups to invest in large-scale industrial and infrastructure projects in Vietnam. As a result, both groups will attempt to lure potential foreign investors such as Bechtel into pouring more money into the country.
With the participation of leading local groups, investment funds, and international organisations including URC Vietnam, Novaland, the American and European chambers of commerce (AmCham and EuroCham), and the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), VBI Fast Track will accompany investors to help them to improve business and manufacturing activities.
Moreover, it will work with other investment funds and international organisations to connect with potential investors and call for projects suitable with the Politburo’s Resolution No.50-NQ/TW issued in 2019 on enhancing effectiveness of foreign investment cooperation to 2030; as well as government Resolution No.58/NQ-CP issued in April on fine-tuning mechanisms and policies to improve the efficiency of FDI until 2030.
Pham Phu Truong, CEO of VBI Fast Track, told VIR, “We signed cooperation agreements with VinaCapital and the HAWA to promote effectiveness of private investment and FDI, and have attained initial success. Our parties will continue to take advantage to both attract FDI inflows and help local enterprises join global value chains.”
HAWA chairman Nguyen Quoc Khanh said that the wood processing industry has played an important role in Vietnam’s export turnover in recent years and is currently the 5th in export value globally. The signing between the association and the group is expected to create favourable conditions for its members to establish a network between local and foreign-invested enterprises to create a global supply chain for the local wood industry and wood processing.
The COVID-19 pandemic has impacted economic growth and slowed Vietnam’s growth on an annual level, something the country is frantically trying to rectify. The debut of VBI Fast Track is one attempt to echo and accompany the government to reach this ambition. Thus, along with missions in promoting FDI inflows, the Board of Directors at VBI Fast Track expects to contribute to promoting socioeconomic growth via efforts to disburse registered FDI capital – but investors either have yet to implement development projects.
Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment showed that in the past five years to the first quarter of 2020, the total accumulated registered FDI was $147.75 billion, $76.63 billion of which has been disbursed and leaving $71.12 billion undisbursed. The accumulated undisbursed capital from 1998 to the end of 2019 was $154.2 billion. If foreign investors dispensed 15 per cent of this within the year, more than $23.13 billion would flood into the economy.
“It is a crucial contribution in the context that both the export and tourism sectors are suffering due to the pandemic, and domestic consumption is considered the most important factor in helping Vietnam maintain economic growth,” said Pham Phu Ngoc Trai, founder and chairman of the Board at VBI Fast Track. “A piece of good news is that in only three months since the organisation was established, members of the group have committed to disburse an additional $1 billion in Vietnam,” Trai said.
The opportunities are within reach, but Vietnam still has to continue to implement reforms relating to policy as well as the business and investment environment.
The importance of synergy from private forces was mentioned at the dialogue when Truong Gia Binh of the National Private Economic Development Research Board said that the prime minister assigned the board to complete two reports. The first is on the difficulties for enterprises and their expectations. The second report is about the disbursement process of FDI. However, they do not yet have much resources to carry out a deep study. “We expect to have support from international organisations including Amcham, the International Financial Corporation, and EuroCham. They are bridges between authorised agencies and the business community to study investors’ specific issues. Besides that, their views will be the basis for the National Private Economic Development Research Board to advance recommendations for the government,” Binh said.
According to Trai, via real experiences of the group’s local and foreign members, VBI Fast Track will cooperate with local and international organisations to build a scheme in attracting FDI in the new era as well as study strategies to collect both public and private forces and optimise those forces in the process to improve the business environment and attract more FDI.
Germans ramping up Vietnamese interest
Fostering development cooperation with a focus laid on renewables continues to be one of the prime priorities in the strategic partnership advancement between Vietnam and Germany.
It is expected that in December, Vietnam and Germany will conduct a large-scale meeting on discussing further bilateral ties in many sectors including renewable energy. After that, an inter-governmental agreement will likely be inked and more assistance for Vietnam will be decided on, also covering German financial and technical support for developing solar and wind power projects in the Southeast Asian nation.
“Climate change is a common challenge. Environmental protection and energy supply through increased expansion of renewable energies and increased energy efficiency are priority areas of German development policy commitment in Vietnam,” Sebastian Paust, first counsellor and head of Development Cooperation at the German Embassy to Vietnam, told VIR. “Renewable energy will become a big cooperation focus between Germany and Vietnam in the time to come, and the latest related agreement was reached by both sides in October 2019.”
Over the past few years Germany, which leads the world in renewable energy and especially wind and solar power, has bilaterally provided a sum of about €1 billion ($1.17 billion) in cooperation development for projects in Vietnam. This sum is earmarked both for already implemented projects in Vietnam, and for already committed projects here.
For instance, some €213 million ($249.9 million) was committed last year. The projects include technical and financial support.
In addition, multilaterally, Germany contributes about 30 per cent of the EU’s budget which is also used partly for supporting nations including Vietnam. The EU is also big cooperative partners of Vietnam.
“Thus, Germany is clearly a big development partner of Vietnam, and this will continue being expanded in the time to come,” Paust said.
Over past years, Vietnam and Germany have jointly implemented many energy-related projects. For example, they have since 2015 carried out the “Renewable Energy and Energy Efficiency (4E)” project, with the first phase worth €3 million ($3.5 million) from 2015-2018 and the second phase valued at €12.16 million ($14.24 million) during 2018-2021. The main objective of the 4E project is to further develop legal, regulatory, and institutional preconditions as well as related capacities to channel investment towards renewable energy and energy efficiency.
In another case, Vietnam and Germany have since 2017 been deploying the “Smart Grids for Renewable Energy and Energy Efficiency” project, which will end in June 2021.
This project is aimed to support the government in implementing its smart grid roadmap, which aims to promote the modernisation and automation of the national power transmission and distribution system.
Funded by the Federal Ministry of the Economic Cooperation and Development, the project is working closely with the Electricity Regulatory Authority of Vietnam to support experts of the Vietnamese power sector in developing a smart grid, meaning the digitalisation and flexibility of the power supply system, which allows integration of an increasing share of renewable energies and supports greater energy efficiency.
In addition, through the two countries’ energy development partnership, many German investors have been implementing projects in Vietnam. Recently, Vietnam’s Deputy Prime Minister Trinh Dinh Dung met with a number of German businesses who came to look for investment opportunities in renewable energy.
Anton Milner, managing director of IB Vogt, a German family-owned company providing high-quality turnkey solar power plants, said that his company is considering two solar power plants in the Central Highlands province of Dak Lak. He hoped that the Vietnamese government and related agencies will create favourable conditions for IB Vogt to implement these projects successfully.
DPM Dung noted Vietnam has great demand for energy, especially renewables, to develop its economy, with power needs being 90,000MW by 2025 and 130,000MW by 2030.
Vietnam’s economy has been growing in the last 25 years which has led to a higher energy demand increase, while at the same time, the country is one of those most affected by climate change. In order to mitigate those effects, the government implemented the Vietnam Renewable Energy Development Strategy in 2015, with the goal to promote the use of renewable energy in the country.
Economic relations play an important role in bilateral cooperation and are continuously intensifying. Germany is Vietnam’s most important trading partner in the European Union – in 2019 Vietnamese exports to Germany totalled $10.9 billion, while German exports to Vietnam hit $4.8 billion.
Compared to the first half of 2019, Vietnam’s exports to Germany increased by another 1.6 per cent in the first half of 2020 despite the COVID-19 pandemic. So far, German investors have invested in 372 projects registered at more than $2.1 billion in Vietnam, with a high share of state-of-the-art technology. This represents an increase of 5.8 per cent compared to 2018.
A total of 380 German companies have branches in Vietnam, and the new German House in Ho Chi Minh City is an impressive manifestation of the German presence in Vietnam. The free trade agreement between the EU and Vietnam, which came into force on August 1, will reinforce these developments.
Husbandry giants turn to breeding
Seeing the potential of husbandry in Vietnam, foreign-invested companies are pouring money to strengthen their dominance in the sector, especially by controlling breeding.
The DHN Dak Lak Agricultural High Technology complex, funded by Dutch animal feed giant De Heus and local Hung Nhon Group, last week commenced construction in the Central Highlands province of Dak Lak. The project is expected to form a disease-free zone and provide high productivity pig and chicken breeds to the market.
The $66-million venture is expected to feed 2,500 grandparent and great-grandparent pigs, as well as 25,000 parent and gilt pigs to the market when it is launched. Moreover, in the next 5-10 years, the two companies will develop similar projects in provinces such as Dak Nong, Kon Tum, and Lam Dong.
The Dak Lak initiative raises total capacity of the chain to 10,000-15,000 great-grandparent pigs, and 100,000-200,000 grandparent breeds. The chain aims to enable the highlands to become a leading hub in supplying breeding stock to the whole country, as well as Southeast Asia and beyond.
The African swine fever (ASF) epidemic – which has killed around a quarter of pigs worldwide, around half in China, and nearly a quarter in Vietnam – has revealed many troubles for Vietnam’s low-quality and low-productivity husbandry industry.
The epidemic has also pushed up the price of pigs due to scant supply. The price of live hogs is hovering around VND80,000 ($3.50) per kg at present, hitting a peak of about VND100,000 ($4.30) in summer.
This has significantly enhanced the value of breeding stock. From nearly VND1 million ($43.50) per animal, costs have increased to VND3 million ($130) since the epidemic. In this context, big husbandry companies are strengthening the imports of grandparent and great-grandparent pigs to fill the shortage, as well as seize opportunities to control the market of breeding animals in the country.
In addition to De Heus and its Dak Lak project, movements are mostly being carried out by foreign-invested companies. Japfa Comfeed Vietnam, managed by JapfaComfeed Indonesia TBK, has imported 1,300 great-grandparent and grandparent pigs from Canada for a farm in the northern province of Yen Bai. A similar amount of pigs were also imported by Chinese investor New Hope for the north-central province of Thanh Hoa.
Previously, the country’s largest husbandry company C.P. Vietnam did its utmost to promote and support the government to import live hogs from Thailand, where its parent company is based, to stabilise prices in the country. Accordingly, tens of thousands of breeding animals have been imported or registered to be imported here over the first nine months of the year.
According to husbandry expert Duong Anh Chu, a handful of foreign-invested companies are dominating the breeding market in the same vein as they control the market for pigs, chickens, and animal feed.
“The breeding animals of companies are better than those of household farmers thanks to stronger genes and good vaccines. That is why household farmers have to buy breeding piglets from these companies. The bigger a company, the stronger hold they have on the breeding market,” Chu said.
In fact, the pig breeding market is dominated by husbandry companies, which captured 40 per cent of before the ASF outbreak and now hold as much as 60 per cent. Some 70-80 per cent of these companies are foreign-invested husbandry companies.
“Having control over breeding equals to dominance in the whole market because it is the most important factor in husbandry. In the future, if all husbandry companies like C.P, Japfa, CJ, Emivest, Greenfeed, and De Heus stopped selling their breeding stock and concentrated on closed production chains, farmers would have no breeding animals to get,” Chu asserted.
Therefore, Chu said, investing and expanding factories and projects in Vietnam are necessary to develop a high-tech agricultural sector. However, he advised against increasing dependence on foreign-invested companies in all aspects should not be promoted because it could be liable to kill off domestic production and husbandry at any time.
Haiphong to have billion-dollar LNG projects
The two liquefied natural gas (LNG) power projects in Cat Hai and Tien Lang districts will be added to the National Power Development Planning 2021-2030 with vision to 2045 (PDP VIII).
The first LNG power project is invested by ExxonMobil Corporation with the capacity of 4,500MW. Having a total investment capital of $5.09 billion, the construction will be implemented in two phases. The first phase, which has three 750MW turbines, is expected to start operation in 2026-2027. The second one with the same capacity is expected to go on stream sometime in 2029-2030.
The complex will include a floating dock warehouse and a gas pipe in the first phrase and the floating storage units will be added in the second phase.
The second complex is located at Cai Trap district with the total investment capital of $1.9 billion. The investor’s name has yet to be disclosed. The construction is also divided into two phases and is expected to be completed in 2025 and 2028, respectively. Once completed, the complex will operate with the capacity of 1,600MW and will have a dock warehouse with a capacity of 200,000 cubic metres.
The LNG power projects will contribute to ensuring energy security for the northern region and Haiphong.
Along with them, ExxonMobil also plans to develop a series of LNG-fuelled plants in the Mekong Delta province of Long An with the capacity of 3,000MW. LNG will be sourced from the corporation's operations in the US and other countries.
In addition, ExxonMobil Exploration and Production Vietnam Ltd., an affiliate of Exxon Mobil Corporation, together with partners PetroVietnam and PetroVietnam Exploration Production Corporation, is engaged in development activities in several technically and commercially challenging blocks offshore Central Vietnam in the Ca Voi Xanh field.
Thai company looks to sell two Ho Chi Minh City hotels for $40 million
Thailand-based Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (SHREIT) are looking to sell two hotels, namely the 3-star IBIS Saigon South Hotel and the 4-star Capri by Frasers hotel in District 7, Ho Chi Minh City.
IBIS Saigon South Hotel has 140 rooms with the fair value of $14.7 million while Capri by Frasers hotel has 175 hotel rooms valued at $23.7 million. SHREIT is also selling 5-star Pullman Jakarta Central Park hotel in the Indonesian capital Jakarta for $94.3 million.
Most recently, SHREIT has approved the disposition of 100 per cent share of its member companies Strategic Hospitality Holding Ltd. (SHH) and Strategic Hospitality Holding Ltd. 2 (SHH2), following the revised offer from LT Rubicon Ltd. in the UK to acquire all issued and subscribed share capital with the offering price of $105 million.
According to the minutes of the first extraordinary general shareholders' meeting in 2020, Deepong Sahachartsiri, CFO of SHREIT said that the COVDI-19 pandemic had seriously affected the revenue, financial situation, and the business performance of SHREIT.
The hotels which SHREIT has invested in are trading at significant operating losses and continue to accrue expenses and liabilities at an unsustainable rate. The hotels are operating with limited working capital reserves and may not be able to fund operations in the near term.
In addition, the hospitality market in Indonesia and Vietnam has materially deteriorated. Indonesia has consistently recorded over 2-3,000 COVID-19 cases per day, leads ASEAN in COVID-19 fatalities, and has banned all international flights into the country until 2021. As of September 14, 2020, Jakarta entered a second social distancing lockdown, which would further devastate local businesses, including hospitality. Vietnam recently encountered another outbreak, with international flights also prohibited and locking out foreign visitors.
The sale of hotels may help SHREIT to solve its financial difficulties during the COVID-19 pandemic. The company will use the proceeds to pay off all outstanding debts and expenses.
FIA and EY Vietnam sign MOU on attracting FDI into Viet Nam
Representatives from the Foreign Investment Agency (FIA), Ministry of Planning and Investment and Ernst & Young Vietnam Limited (EY Vietnam) has signed a Memorandum of Understanding (MoU).
The signing ceremony was held at the MPI headquarters this week. The MoU aims to promote investment opportunities towards investors including EY clients across the globe, paving the way for their new and expanded investment in Viet Nam.
Under the MoU, FIA will provide EY Vietnam with updated information on directions and policies to draw investment into Viet Nam.
The agency also assists investors introduced by EY Vietnam to conduct research and implement business-investment procedures in accordance with the law; endorse, resolve or reflect the investors’ recommendations to the relevant authorities.
EY Vietnam will introduce and recommend potential investors who are EY clients globally to invest in Viet Nam.
EY may co-ordinate with FIA to organise seminars, conferences and round-table discussions for investors introduced by EY, depending on the scale and features of each event.
The MoU was signed as the country has favourable conditions to engage international investors. As a result of the negative impacts triggered by COVID-19 and trade tensions among large countries and territories, multinational corporations are accelerating the restructuring of their global value chains while seeking to reduce dependence on a single market.
Viet Nam had 32,658 valid FDI projects with a total registered capital of US$381.5 billion by September 20, reported FIA.
“Supporting industry from Japan and South Korea is one of the fields we would like to attract because the domestic assembling rate of the sector is quite low compared to some countries in the region,” Do Nhat Hoang, FIA general director noted. “To create favourable conditions for businesses who want to invest or expand their footprint in Viet Nam, we established a task force aimed at solving every hurdle they are facing.”
Technological innovations, reforms: key to boost SMEs’ productivity after pandemic
Technological innovations and administrative reforms are key to boosting productivity for small and medium – sized enterprises (SMEs), which is critical to accelerating post-pandemic recovery.
The outbreak of the coronavirus affected socio-economic development and disrupted supply chains and global trade flows.
The pandemic caused a number of firms, especially SMEs, to stop operation, narrow down business scale and slash jobs.
Nguyen Van Than, Chairman of the Viet Nam Association of Small and Medium – Sized Enterprises, said at Wednesday's conference held by the Ministry of Science and Technology and the Advisory Council for Administrative Reform with support from the US Agency for International Development (USAID) that the COVID-19 pandemic was changing the scales, methods and ways firms were operating and doing business.
Than cited statistics that in the first nine months of this year, about 70,000 firms temporarily halted operation with about 18 million job cuts. However, 99,000 new firms were founded in the period, mostly tech-based firms.
He pointed out that the major cause for businesses closing down was delays in renovating their operation models. In comparison, firms which actively applied tech had more chance to survive and gain profits even amid the pandemic.
“SMEs have no other way but to invest in technical innovations to improve operation efficiency and accelerate post-pandemic recovery,” Than said.
Deputy Minister of Science and Technology Le Xuan Dinh said that technological innovations and administrative reforms would be the key for SMEs to survive, develop and create breakthroughs amid the COVID-19 pandemic.
Dinh said that many businesses had shown their innovation in deploying technologies to access customers, renovate their ways of doing business and restructure their products.
“Science and technology and innovations have been and will be a decisive factor for the country’s development in the future,” Dinh stressed.
Dinh urged firms to pay more attention to investing in science and technology, stressing the central role of enterprises in improving national creativity and innovation capacity and rankings.
A survey by the Viet Nam National Productivity Institute found that 43 per cent of firms showed interest in technological innovations. However, technological innovations remained a problem for a majority of SMEs as they were still confused when, where and how to start.
Many SMEs were now focusing on financial and job recovery rather than innovations amid the pandemic.
Cao Hoang Long from the institute said that SMEs needed to develop a detailed roadmap for technological innovations.
According to USAID/Vietnam Acting Deputy Mission Director Cristina Fentross, many SMEs in Viet Nam had not been well equipped with skills and knowledge to be able to take the opportunities arising from digital transformation and applying science and technology in production and business.
The USAID Linkages for SMEs project aimed to provide support to SMEs to enhance their competitiveness and proactiveness so that they could take the opportunities.
According to Dinh, the Ministry of Science and Technology would raise policies to support firms in promoting technological innovations and increasing productivity.
Enterprises would be the centre in the country’s innovation orientation, he said, adding that firms, universities and research institutes must enhance cooperation to promote the application of science and technologies.
Workshop seeks ways to promote tuna exports to EU
A workshop was held in the south-central province of Khanh Hoa on October 10 to promote tuna supply chain, and tuna exports to the EU under the EU-Vietnam Free Trade Agreement (EVFTA).
The event was co-held by the Ministry of Agriculture and Rural Development (MARD) and the provincial People’s Committee.
According to the MARD, two months after the EVFTA entered into force, Vietnam’s fishery exports to EU markets have seen positive signs. Tuna export value rose by 8.6 percent month-on-month to 11.4 million USD in August and 13.3 percent to 11.9 million USD in September, adding hope for a rebound in Vietnamese exports to the EU in the remaining months of this year.
Addressing the workshop, Deputy Minister of Agriculture and Rural Development Phung Duc Tien said to sustain fishery production, localities must continue instructing fishermen to comply with international commitments on fishing and stepping up the fight against IUU fishing while encouraging seafood producers to apply advanced technology and diversify their products to match the EU markets’ taste and demand. They must also strictly adhere to regulations related to food safety and intellectual property, he said.
Tuna is among three Vietnamese seafood products favoured by the EU markets, said Nguyen Thi Thu Sac, Vice Chairwoman of the Vietnam Association of Seafood Exporters and Producers (VASEP). Under the EVFTA, tariff will gradually reduce to 0 percent, providing a competitive edge for Vietnamese fishermen and businesses. However, they have to invest in improving technology, production lines and fishing practices in accordance to current regulations in order to remove the EU Commission (EC)’s yellow card warning and further develop the fishery sector, she noted.
Data from Khanh Hoa’s authority shows that as of the end of September, the province’s total sea catches were estimated at 69,760 tonnes, including over 20,380 tonnes of tuna. Its shipments of seafood exceeded 2,890 tonnes, including more than 2,284 tonnes of tuna, a drop of about 20 percent from the same period last year.
The province has set up three local tuna supply chains between seafood producers and fishing cooperatives, which own a total of more than 150 fishing ships./.
US - Vietnam Business Summit held in Hanoi
The US – Vietnam Business Summit took place in Hanoi on October 9, on the occasion of the 25th anniversary of bilateral diplomatic ties.
The event was co-hosted by the American Chamber of Commerce in Vietnam (AmCham), the US Chamber of Commerce (USCC) and the Vietnam Chamber of Commerce and Industry (VCCI).
Speaking at the event, VCCI President Vu Tien Loc spoke highly of the two Governments’ efforts to establish bilateral cooperation in various areas, pushing two-way trade to nearly 76 billion USD in 2019 from 450 million USD in 1994.
The recent shift of global supply chain has lifted Vietnam to the ninth place out of the biggest exporters to the US, from the 12th place. The two economies are increasingly supplementary, he said.
While Vietnam is strong in shipping aquatic products, cashew nuts, apparel, leather and footwear to the US, the American country is a major supplier of hi-tech machinery, aviation equipment, telecommunication services, energy, liquefied gas and raw farm produce.
Vietnam has become the 27th largest importer and the 16th biggest trade partner of the US.
With a 90 million population, young workforce, open and transparent economic policy, Vietnam is seen as an attractive destination for foreign investors. Over 130 countries and territories are investing in the country. As of June, the US was the 11th largest investor in Vietnam with 988 projects capitalised at more than 9.3 billion USD, covering 42 out of 63 localities in the nation.
The US now ranks second among countries and territories receiving Vietnam's investment in 2019, with a total value of 93.4 million USD, or 18.4 percent of Vietnam’s outbound investment. In the first quarter of 2020, the US took the lead in receiving investment from Vietnam with 20.1 million USD, equal to 40.8 percent.
Loc affirmed that the US’s multinational groups not only contributed to economic growth, technological transfer but also social development such as improving working environment, raising workers’ income and actively joining social activities in Vietnam.
On the occasion, Amcham and VCCI announced the establishment of the Vietnam – US Joint Business Council to collect the two business communities’ initiatives and build a transparent business environment in the two nations, towards signing a bilateral free trade agreement.
US Ambassador to Vietnam Daniel J. Kritenbrink described Vietnam as one of the fastest-growing export markets and a comprehensive strategic partner of the US.
He also wished that bilateral ties will further flourish in the fields of trade, aviation and energy./.