VIETNAM'S BUSINESS NEWS HEADLINES OCTOBER 12
Vietnam-UK trade relations will change
Trade and investment relations between the UK and Vietnam will differ post-Brexit. A number of dialogue forums on policies and markets have been organised by the two countries, helping their businesses gain a clearer and more thorough understanding of the opportunities and challenges to come.
Vietnam has been the focus of much attention from British investors and businesses, especially given that a free trade agreement is likely to be signed between the two.
British businesses are interested in Vietnam, but the Vietnamese Embassy in the UK has heard from many Vietnamese businesses looking to expand or export to the UK.
Vietnamese companies exporting to the UK can access incentives under the Generalized System of Preferences and the EU-Vietnam Free Trade Agreement (EVFTA). However, incentives after December 31, 2020 (after Brexit) will depend on the results of free trade agreement negotiations between the two countries.
Vietnam is an important trading partner of the UK in Southeast Asia. The EVFTA, effective from August 1, 2020, will apply to trade between Vietnam and the UK until the end of this year, when the UK ends the Brexit transition period.
The two governments hope to have a free trade agreement from 2021 with zero or very low tariffs on most products./.
Five Vietnamese resorts named among Asia’s best
Several Vietnamese resorts have clinched spots at the Conde Nast Traveler 2020 Readers’ Choice Awards, with The Anam coming in as the highest-ranking Vietnamese resort on the “Top 30 Resorts in Asia” list, closely followed by Banyan Tree Lang Co.
The 12-hectare Anam, an Indochine-era inspired resort with 77 villas and 136 rooms, with suites overlooking Long Beach on the Cam Ranh Peninsula, landed fourth spot with a near-perfect 99.41 out of 100 from the prestigious magazine’s worldwide readership.
Banyan Tree Lang Co, a multi-award-winning all-pool villa resort, was the second-highest placed Vietnamese resort on the list, coming in at 9 and scoring 99.28.
JW Marriott Phu Quoc Emerald Bay Resort & Spa and Salinda Resort Phu Quoc Island also made the cut, securing 24th and 29th positions respectively.
Angsana Lang Co, which features 229 stylish suites, more than 100 of which come with their own private pools overlooking the East Sea, rounded off the list in 30th place with a score of 97.9.
“For The Anam to be acclaimed as Viet Nam’s top resort and among Asia’s best in arguably the world’s most prestigious travel awards is incredible,” said The Anam’s founder and owner Pham Van Hien. “We’re thrilled Conde Nast Traveler's readers have recognised Vietnam’s luxury resort landscape on the world stage.”
“That travellers, particularly those who read one of the world’s preeminent travel magazines, have recognised Banyan Tree Lang Co and Angsana Lang Co among the best in Asia is incredibly exciting and is testament to our efforts to put the overall experience first,” said Adam Calver, Director of Golf and Destination Marketing at Laguna Lang Co.
Since its grand opening in April 2017, The Anam has won a long list of accolades. The resort was named on DestinAsian’s Luxe List and Conde Nast Traveller India’s Hot List during its debut year, and also won the ‘Best Overseas Luxury Resort’ award on Luxury Travel Magazine’s Gold List for 2019.
Banyan Tree Lang Co and Angsana Lang Co, meanwhile, are key components at Laguna Lang Co, one of Viet Nam’s most expansive integrated properties. In addition to the resorts, Laguna Lang Co also encompasses Laguna Golf Lang Co, a signature design by UK legend Sir Nick Faldo that is rated as one of Vietnam’s finest courses.
Conde Nast Traveler readers cast more than 715,000 votes rating their travel experiences across the globe as part of the magazine's 33rd annual readers' choice awards survey.
“The results of this year’s survey, conducted at the start of the COVID-19 pandemic, are a testament to the lasting power of a meaningful travel experience,” said Condé Nast Traveler's US editor Jesse Ashlock. “The winners represent the best of the best for our audience and offer plenty of trip-planning inspiration for all the adventures we can’t wait to have next.”
The results were announced globally online on October 6 and will be featured in the November issue of the Condé Nast Traveler US and UK print editions. Condé Nast Traveler’s Readers’ Choice Awards and Travel Leisure’s World’s Best Awards are widely recognised as the two most significant awards lists for hotels worldwide./.
Annual machine tools, metalworking exhibition to go virtual
METALEX Vietnam, an annual exhibition on machine tools and the metalworking industry, will be virtual this year and feature meetings, business matching events and tech talks among other events.
The Japan External Trade Organization (JETRO) in HCM City, the Investment and Trade Promotion Centre (ITPC), the HCM City Centre for Supporting Industries Development (CSID), and Reed Tradex Vietnam will also organise the Supporting Industry Show on its sidelines to strengthen links between Vietnamese and Japanese supporting industries.
Joint exhibitions will be held on October 23 and 24.
Leading Japanese firms will showcase parts they are seeking to source at the Hotel Nikko Saigon during the two days.
There will be a Vietnamese - Japanese matchmaking event, technology showcases, seminars, business consulting, and other activities.
Speaking at a press conference held to introduce the exhibitions, Vu Trong Tai, general manager of Reed Trade Vietnam, said Vietnam remains an attractive investment destination for foreign enterprises.
This is due to the constantly growing economy, various strategic investment promotion policies and the trade agreements signed recently.
According to the newly published Global Economic Outlook report by Oxford Economics, the recovery prospects look brightest for Vietnam and the country is expected to be the only Southeast Asian economy to record positive growth this year.
Its success in controlling the COVID-19 pandemic has also attracted investors.
Hirai Shinji, chief representative of JETRO in HCM City, said the Japanese government has launched a support programme for Japanese firms to diversify their supply chains in Southeast Asia under which 30 received approval, including 15 that want to expand their factories in Vietnam.
Le Thanh Phong, head of the ITPC’s Invesment Promotion Division, said the exhibitions would be an important event for businesses in the manufacturing and supporting industries.
It would give them an opportunity to learn about the latest technologies and explore metalworking solutions that could add value to their products, he said.
The business matchmaking programmes and face-to-face meetings would help businesses find partners, he added./.
Cambodia: Work stars on Aeon Mall 3 in Phnom Penh
Japanese-owned multinational Aeon Mall (Cambodia) Co Ltd has announced that it is breaking ground on the construction of the Aeon Mall 3 project in Phnom Penh with an investment of more than 200 million USD.
The five-storey shopping mall will be located on the outskirts of the city and construction will take 27 months, the Phnom Penh Post reported.
Phnom Penh Governor Khuong Sreng said at a groundbreaking ceremony that based on the 2035 Phnom Penh Land Use Master Plan, the southern part of the city has been designated as a new development area for high-rise construction and luxury satellite city projects to ensure the effective use of existing land in the city.
He appreciated the progress and the decision of the company to invest in the development of shopping malls from the first project to the third project in Phnom Penh.
“On behalf of the Phnom Penh administration, I support, welcome and encourage investment in all service businesses in the city.
“We also support trade cooperation and opening the investment environment to be more attractive and trustworthy to businesses and investors,” he was quoted by the newspaper as saying.
Cambodian Valuers and Estate Agents Association President Chrek Soknim told The Post on October 7 that the southern satellite city – ING City – will become an attractive commercial hub for investment in commercial buildings in the future because the suburbs have large plots of land for real estate development.
The mall will be a retail centre that attracts people from Takhmao town and Dangkor districts residents to shop and it will encourage more people to come and live in the 60m street area.
The Council for the Development of Cambodia (CDC) in December approved AEON Mall to invest 289.6 million USD in the 174,000sqm satellite ING City project, which is scheduled to open in 2023.
Aeon Mall 1 had a capital investment of about 205 million USD and Aeon 2, 120 million USD. It opened in June 2018 with a total area of about 68,000sqm in Sen Sok district./.
PetroVietnam’s oil output reaches 8.64 million tonnes
The Vietnam Oil and Gas Group (PetroVietnam) has reported an oil output of 8.64 million tonnes in the first nine months of this year, 9.4 percent higher than the set target.
Of the total, 1.38 million tonnes were exploited overseas, 5.2 percent in excess of the group’s goal.
PetroVietnam gained 423.2 trillion VND (18.27 billion USD) in revenue in the nine-month period, and contributed 50.2 trillion VND to the State budget.
According to PetroVietnam General Director Le Manh Hung, the group faced formidable challenges in the period due to the COVID-19 pandemic, gloomy financial market, and low credit growth.
However, stable production, coupled with effective measures, helped the group gain better financial indices, he said, adding the group saved some 7.17 trillion VND during January-September.
In the period, its members reaped impressive achievements, including Vietsovpetro that put the BK21 oil rig into operation last month, and PetroVietnam Fertiliser and Chemicals Corporation (PVFCCo) and PetroVietnam Ca Mau Fertiliser Company Limited (PVCFC) that exported 320,000 tonnes of fertilizer - the highest level the group has recorded.
As a pillar of the economy assigned with major responsibilities by the Party, the State, and the people, PetroVietnam and its staff, with a tradition of dedication and trained in hardships, have gradually weathered the difficulties to fulfill their duties.
This year, Fitch Ratings continued to assign PetroVietnam a standalone credit profile at BB , reflecting the company’s high degree of integration, diversification and conservative financial profile. It proves PetroVietnam’s strong financial status and business performance as well as its positive business prospects in the future, which bring confidence to domestic and foreign investors, financial institutions and strategic partners.
The rating also affirmed PetroVietnam’s sound policies to ensure rights and jobs for its employees amidst dual crisis of the coronavirus outbreak and surprised drop in oil prices.
In a bid to complete mission for the whole year, the group will continue stable and safe production, promote consumption to reduce inventories, as well as remove bottlenecks for implementation of oil and gas value chain.
Among the eight groups of solutions it has identified to deal with the current circumstances, two are being implemented in a proactive, concerted, and drastic manner.
The first includes improving the quality of corporate governance, boosting decentralisation, overhauling its document system and internal management regulations, stepping up digitalisation, and promoting risk governance. Meanwhile, the second covers capitalising on technological solutions to lower expenses and improve productivity, and reducing and delaying spending on non-urgent activities to minimise production costs.
PetroVietnam continued to top the Profit500 list, which names the 500 most profitable enterprises in Vietnam, in 2020.
This is the third year that the group has taken the leading position among the top 500 enterprises.
The list, announced by the Vietnam Report JSC and online newspaper Vietnamnet, also contains many enterprises in the oil and gas sector, such as PV Gas (7th place), Vietsovpetro, PV Powers, PetroVietnam Technical Services Corporation (PTSC), PetroVietnam Drilling & Well Service Corporation (PV Drilling), Ca Mau Fertiliser Plant (PVCFC), to name just a few.
Vietnam Report said this year the ROA (Return on Assets) of companies on the list averaged 11.4 percent, slightly down from the 11.9 percent recorded last year. However, the ROE (Return on Equity) ratio improved to 21.7 percent from 20.9 percent in 2019.
It also took note of changes in top priority strategies of enterprises from now to the end of year, with 71.7 percent of them paying attention to sales, 58.3 percent focusing on seeking new markets and expanding existing ones, 49.2 percent looking to researching and developing new products and 42.6 percent planning to cut costs.
Hanoi Gift Show 2020 to feature 400 pavilions
Up to 400 pavilions will be set up at Hanoi Gift Show 2020, scheduled for October 15-18, heard a press conference held by the Ministry of Industry and Trade on October 8.
The annual event is set to create a playground for handicraft businesses and makers, and promote connectivity between domestic and foreign firms in the industry.
Over the past eight years, the fair has attracted more than 1,950 enterprises and production facilities in Hanoi and 40 other cities and provinces, along with 5,200 importers and visitors from 45 countries and territories worldwide.
Notably, over 600 contracts, memoranda of understanding and cooperation agreements worth some 50 million USD have been reached during the show.
Hanoi Gift Show 2020 is expected to welcome more than 10,000 visitors./.
Ca Mau conference seeks way to optimise EVFTA, EVIPA
The EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) will generate many opportunities for firms in Ca Mau, especially those operating in the areas of the Mekong Delta province’s strength like agro-forestry-fishery, heard a conference held in the locality on October 8.
Nguyen Thi Phuong Linh, Deputy Director of the Vietnam Chamber of Commerce and Industry in Can Tho city, said the EVFTA would help to increase Vietnam’s export revenue by 20 percent this year and 42.75 percent in 2025.
Such sectors as rice, sugar, pork, poultry meat, forestry products and garments are expected to benefit most from the deal, she added.
With the EVFTA, the EU will offer great opportunities to Vietnam to restore its exports after COVID-19, she said, suggesting goods and market restructuring in anticipation of these opportunities.
Pham Binh An, deputy head of the Ho Chi Minh City Institute for Development Studies, pointed out bottlenecks in the implementation of the agreement, regarding the businesses’ awareness of the deal.
In fact, many small- and medium-sized enterprises have yet to pay due attention to the EVFTA, he continued.
Experts at the event asked local leaders to step up the communication work, strengthen competitiveness, promote cooperation between localities in the country and the region, and improve the capacity of officials in charge of international integration affairs.
Nguyen Van Do, Director of Ca Mau’s Department of Industry and Trade, said the province has adopted a plan that sets forth major tasks during the implementation of the EVFTA./.
Agricultural projects create stable employment for Vietnamese-Cambodians
Vietnamese agricultural projects in Cambodia continued to serve as a driving force for local economies in the last five months and create stable jobs for Cambodians of Vietnamese origin living near Tonle Sap.
In an interview with the Vietnam News Agency, Le Thanh Hoang, head of the Snuol agricultural complex in Kratie province owned by the Thadi company, said that, since June, more than 500 Vietnamese-Cambodian workers and thousands of Cambodians in surrounding localities have been hired at its agricultural projects.
Thadi’s agricultural production has been sustained throughout the COVID-19 pandemic and workers are paid a monthly salary of around 250-350 USD.
The company is building dormitories for its workers, in particular 12 housing complexes for about 19,000 residents in Koun Mom district of Ratanakiri province and five others for 10,000 people in Kratie’s Snoul district. It is also set to build more support facilities for its workers in the time to come.
During working trips to the four provinces of Kampong Thom, Kratie, Ratanakiri, and Moldukiri, Vietnamese Ambassador to Cambodia Vu Quang Minh said agricultural projects can help improve the lives of Vietnamese-Cambodians who are subject to a relocation plan of the Cambodian Government.
Positive signs in the first batches of Thadi’s agricultural exports will contribute to the development of agriculture, which is viewed as a spearhead economic sector by the Cambodian Government at the moment, Minh added.
Established in August 2018 under a collaborative effort between the Thaco Group and the Hoang Anh Gia Lai Group, Thadi has rolled out projects to build orchards in Kratie and Ratanakiri provinces.
It currently has more than 13,000 workhands, including 1,000 experts and consultants from the Philippines, China, and Thailand.
It plans to recruit over 8,000 workers this year to launch its sustainable agricultural strategy in Cambodia./.
Can Tho has more than 1,000 new enterprises in nine months
More than 1,000 new enterprises were established in the Mekong Delta city of Can Tho in the first nine months of 2020, accounting for 12 percent of a total 8,600 operational ones in the city at present.
The figure was released at a seminar on post-pandemic business development directions for enterprises held by the city’s business association on October 8.
Addressing the event, Deputy Chairman of Can Tho People’s Committee Duong Tan Hien said in the same period around 700 enterprises suspended operation.
He stressed that from a positive perspective, the challenges posed by the COVID-19 provided chances for enterprises to shift from the conventional business style to online operation with the application of information technology.
Sharing Hien’s view, Standing Vice Chairwoman of the city’s business association Nguyen My Thuan noted that in order to survive and develop in the current circumstances, enterprises must know how to “renew” themselves and join value chains.
The municipal People’s Committee said it would not adjust down socio-economic targets for this year and the period 2015-2020, calling on the business community to join the common efforts to achieve the set targets.
The city’s economy grew 2.49 percent in the third quarter, resulting in growth of 1.98 percent in the first nine months of 2020.
Can Tho’s gross regional domestic product (GRDP) growth in the fourth quarter of this year has been forecast at 2.91 percent, according to the Director of the municipal Department of Statistics, Le Ngoc Bay.
The agro-forestry-fisheries sector is likely to post growth of 1.83 percent, while the industry - construction and service sectors are thought to rise 3.34 and 2.97 percent, respectively.
The city’s economic growth for the whole year is projected at 2.2 percent./.
Vietnam, RoK eye sustainable manufacturing value chains in phone industry
A seminar discussing policies on the phone components industry was recently held by the Department of Trade Promotion (Vietrade) under the Ministry of Industry and Trade and the Korea Trade-Investment Promotion Agency (KOTRA).
Speaking at the event, Vietrade Director Vu Ba Phu said the event was held by the Korea Desk with the aim of providing a venue for exchanges between Vietnamese agencies and Vietnamese and RoK enterprises operating in the manufacturing of phone components and parts.
He expressed his hope that the seminar would help with the formation of sustainable manufacturing value chains in the phone industry in Vietnam with the effective cooperation of RoK investors.
Participants highlighted Samsung Vietnam as a typical success story in the field. Samsung’s investment surged 26-fold to 17.3 billion USD after 12 years operating in the Southeast Asian nation.
Vietnam is currently Samsung’s largest manufacturing base abroad and the company is also the leading FDI investor in the country.
Cooperation between Vietnam and the RoK has made great strides in various fields since the countries set up diplomatic ties in 1992.
As of August 20, total registered capital of RoK firms in Vietnam hit 70.4 billion USD, accounting for 18.5 percent of foreign direct investment in the country.
At present, about 8,900 RoK companies are investing in Vietnam, creating employment for more than 1 million people and contributing about 33 percent of Vietnam’s total export values./.
Lao Cai to host trade fair for northern OCOP products this month
The northern province of Lao Cai will host an agricultural trade fair on “One Commune, One Product” (OCOP) products from the northern region at the Kim Thanh Exhibition and Convention Centre on October 22-26.
The fair will feature 318 booths run by regional cities and provinces, research institutes, agro-businesses, and cooperatives showcasing star-rated OCOP products and high-quality agricultural, forestry, and fishery products.
It will also exhibit key export items - vegetables, pepper, cashew nuts, coffee, and rice - as well as effective agricultural models, technologies, and agricultural services.
The fair provides an opportunity for northern cities and provinces to introduce the potential and advantages they possess in agriculture and rural tourism services and for regional companies and cooperatives to meet and seek partnerships, said Dao Van Ho, Director of the Ministry of Agriculture and Rural Development’s Trade Promotion Centre for Agriculture.
A forum will be held within the framework of the fair to discuss how to manage the production and distribution of OCOP products for export./.
Thailand encourages use of electric vehicles
The Industry Ministry of Thailand is pushing ahead with its ambitious plan to bring prices of electric vehicles (EVs) closer to those of traditional fuel-powered cars by reducing the import duty on auto parts used to assemble EVs in the country.
The Office of Industrial Economics has been assigned to conduct a feasibility study of tax reduction options and forward its findings to the National Electric Vehicle Policy Committee, known as the EV board, for consideration this month.
Industry Minister Suriya Jungrungreangkit expects the taxation measure to help increase demand in Thailand for EVs, which are still costly, and at the same time support state measures to curb hazardous PM2.5 dust emitted by old car engines.
Tax reductions will make EVs cheaper, he said, adding the current tax rate stands at 80 percent of auto part prices.
The research team will consider tax reductions for auto parts and completely built EVs.
Other factors taken into consideration include the state plan to increase the number of EVs in the country and affordable EV prices for buyers, which may range from 700,000 to 800,000 THB (22,300-25,500 USD), Suriya said.
Under the country’s EV master plan, officials plan to develop the domestic EV industry, making Thailand a major production base in the region. The number of EVs will reach 750,000, or 30 percent of total vehicle production of 2.5 million units in 2030./.
Singapore: Unemployment rate highest in more than a decade
A report released by the Singapore Ministry of Manpower (MOM) on October 7 showed that the resident unemployment rate in the country rose by 0.4 percentage point in August to 4.5 percent, the highest level in more than a decade.
While monthly unemployment rates have so far generally remained lower than past recessionary highs, they have been gradually rising, added the ministry.
During the severe acute respiratory syndrome (SARS) period in 2003, the rate was 6.2 percent in September. It was 4.9 percent during the global financial crisis in September 2009, noted the report.
Manpower Minister Josephine Teo said at this point in time, it is difficult to predict whether in the coming months, the unemployment rate will uptick at a faster rate, or stay around the same.
In the three months to the end of June, retrenchments more than doubled to 8,130 compared to the first quarter of the year at 3,220.
She said that the Singaporean Government has introduced a new programme called Jobs Growth Incentive, which provides wage subsidies of 25 percent of the first 5,000 SGD of gross monthly wages for each new local hire below 40. This will double to 50 percent for each of those aged 40 and above.
To be eligible for the scheme, firms must increase the headcount of their local workforce between September and next February, compared with August. They must also increase the number of local jobs that pay at least 1,400 SGD in gross monthly wages./.
Thailand’s cross-border trade slides 7.42 percent
Thailand’s cross-border trade, including transit trade, fell by 7.42 percent year-on-year in the first eight months, mainly attributed to the impact of the COVID-19 pandemic and a slowing economy.
The Thai Commerce Ministry's Foreign Trade Department said on October 7 that overall border trade, including transit trade, totalled 853 billion THB (27.3 billion USD), with Malaysia the biggest partner by value.
Of the total figure, exports represented 494 billion THB, down 7.37 percent year-on-year, while imports shrank by 7.49 percent to 358 billion THB, resulting in a trade surplus of 136 billion THB.
Border trade with four neighbouring countries amounted to 497 billion THB, down 11.5 percent year-on-year. Of the total, exports stood at 293 billion THB, down 9.63 percent, and imports were 204 billion THB, a decline of 14 percent. Thailand maintained a trade surplus of 88.5 billion THB.
Two-way trade with Malaysia totalled 152 billion THB (down 21 percent), followed by trade with Laos (123 billion THB, down 6.33 percent), Myanmar (114 billion THB, down 13 percent) and Cambodia (108 billion THB, up 1.09 percent).
Transit trade, mainly with Singapore, Vietnam and southern China, fell 1.05 percent in the first eight months to 355 billion THB. Transit trade with southern China and Singapore gained by 13.6 percent and 12 percent to 153 billion THB and 56.8 billion THB, respectively. Meanwhile, transit trade value with Vietnam and other countries dropped by 20.6 percent and 14.6 percent to 39.7 billion and 105 billion THB, respectively.
Keerati Rushchano, director-general of the Foreign Trade Department, said the border trade volume was affected by the pandemic and closure of border checkpoints to prevent an outbreak.
Only 36 of 97 border checkpoints nationwide are open, he said, adding his department will keep a close watch on COVID-19 situation and lockdown measures in neighbouring countries, as well as look for trading solutions at checkpoints./.
Banks cut interest rates from October
Many banks have cut deposit interest rates after the State Bank of Viet Nam (SBV) lowered the ceiling levels of interest rates from October 1.
At Kienlongbank, rates are now only 3.55 per cent per year on one-month deposits, 3.75 per cent on two-month terms and 3.95 per cent on three- to five-month deposits, down by 0.6 percentage points.
At Nam A Bank, the annual rate for deposits of 14 months is now 7 per cent, down 10 basis points against the previous rate.
Similarly, OCB has lowered its deposit rates for tenors of one month to 3.75 per cent, of three months to 3.9 per cent and of six months to 5.8 per cent, down 0.2 percentage points.
Customers making deposits worth less than VND500 billion (US$21.5 million) for tenors of 12 months at OCB will receive an annual rate of 6.3 per cent. The rate of the 12-month tenor for deposits worth VND500 billion or more is 8.1 per cent.
The SBV reduced a series of key policy rates, with the annual refinancing rate reduced from 4.5 per cent to 4 per cent and the rediscount rate cut from 3 per cent to 2.5 per cent.
The overnight lending rate in the interbank market was also reduced to 5 per cent from 5.5 per cent, while the interest rates for buying valuable papers through the open market were lowered from 3 per cent to 2.5 per cent.
Moreover, the highest rates for non-term deposits and savings of less than one month are now 0.2 per cent per year, while the maximum annual deposit rate for savings of one month to less than six months was cut from 4.5 per cent to 4 per cent.
Apart from this, the highest rates for deposits of one month to less than six months at people’s credit funds and micro credit institutions dropped to 4.5 per cent per year.
According to a report released recently, Saigon Securities Incorporation (SSI) said banks were experiencing abundant liquidity and the Vietnamese dong in the system was excessive due to the weak credit demand.
SSI cited data from the General Statistical Office (GSO) showing that as of September 22, the mobilised capital in the banking system increased by 7.7 per cent, while credit growth was only 5.12 per cent compared to the beginning of the year, much lower than the 8.79 per cent recorded in the same period last year.
According to SSI’s statistics, the dong deposit rates have sharply fallen from May until now by a total of 1.2 - 2.5 percentage points across all terms. The rates for terms from one to less than six months at some banks are particularly low at 2.2 - 2.5 per cent per annum.
SSI said the main factor affecting deposit rates in the near future was still credit demand, and it maintained its forecast that the deposit rates would fall further by 0.1 - 0.3 percentage point in the fourth quarter of 2020.
Fresh produce sales spike on e-commerce sites
Sales of fresh produce like meat and fruits continue to see massive growth on e-commerce platforms even after the COVID-19 pandemic has been controlled.
In July Lazada reported 200 per cent growth in the three months since it began selling them in April. The number of suppliers had increased six-fold.
A Lazada spokesperson told Nguoi Lao Dong Newspaper that COVID-19 had helped move customers' shopping from offline to online, and growth in fresh produce sales continued to grow even after the pandemic was controlled.
Tiki too reported positive results since launching fresh produce in HCM City in early May, with premium seafood, meat and fruits being the items most in demand.
Fresh produce accounted for more than 40 per cent of fast delivery orders (within less than three hours), it said.
Vu Thi Nhat Linh, deputy general director of Tiki.vn, said it was a long-term business model and would be expanded to other provinces and cities.
Vo Thanh Loc, CEO of produce supplier Farmers Market, said within one month of starting to sell on the platform, Tiki accounted for more than 20 per cent of online sales.
Many other e-commerce platforms have also seen growth in fresh produce sales, and are considering it part of their long-term business strategy.
They are also seeking to reduce their delivery time, with some promising to make it two hours or even one.
Vietnamese fruit exports to US market expected to grow by year end
Local fruit exports to the US are set to enjoy strong grow in both output and value moving towards the end of the year, according to business insiders, largely due to the novel coronavirus (COVID-19) pandemic being brought under control, coupled with the start of the peak season and efforts made by domestic enterprises.
Despite suffering from the negative impact caused by COVID-19 earlier in the year, fruit exports to the United States still reached more than 5,100 tonnes, representing a decline from the same period last year.
"We expect that from now to the end of the year, the quantity of the item will increase more than last year,” says Hoang Trung, director of Plant Protection Department.
Ngo Tuong Vy, deputy director of Chanh Thu Fruit Import and Export Co., Ltd., states that since the beginning of the year, the company’s output of fruit exports witnessed a surge of approximately 30% from the corresponding period last year, especially in terms of frozen durian exported to the US.
Typically, the peak season for Vietnamese fruit exports starts from October and runs to June of the following year. In addition to having durian in stock, Chanh Thu Company also prepares a number of other items such as mangoes, dragon fruit, and longans for export to the highly lucrative market, she adds.
“In general, market demand has decreased, but businesses still have to diversify products, apply food standards along with ensuring post-harvest preservation. Each factor that makes a little difference is also a competitive advantage for businesses,” Vy shares.
Nguyen Dinh Tung, general director of Vina T&T, says his firm's export volume has decreased by roughly 10% in comparison to the same period last year. Vina T&T leaders are therefore anticipating that the next peak season will be able to make up for the fall in fruit exports.
“The biggest difficulty for the time being is the possibility of a prolonged pandemic that can increase the unemployment rate and reduce purchasing power. But businesses still have to invest in long-term development. A positive sign is that many markets still have a demand for Vietnamese agricultural products due to the nation's high-standard cultivation capability of agricultural products gradually improving," says Tung.
This will also mark a steady step forward in terms of the process of boosting local fruit exports in the future, along with the export of domestic agricultural products in general, he adds.
At present, the nation has six types of fresh fruit that are permitted to be exported to the US market, including dragon fruit, rambutans, longans, litchis, star apples, and mangoes. It is therefore expected that grapefruit will become the seventh fruit added to the list.
Vietnam economy to grow by 7.1 per cent in 2021
Experts projected that the Vietnamese economy would grow by 4 per cent in the last quarter and 2.8 per cent in the whole year of 2020.
The Quarterly Global Gutlook 2020 report of UOB Global Economics and Markets Research just released a few days ago forecasts that the global economy will remain on a recovery path even as COVID-19 cases continue to rise globally with nearly one million deaths. However, this recovery is not even, and instead, it is much like a stylised “K-shaped” recovery that shows the diverging paths of performance between economies, industries/sectors, and individuals.
2020 is still a recession year but judging from the overall better-than-expected economic data versus the trough in March/April, the pessimism a few months ago has given way to a less bad outlook. But the signs of stabilisation in the global economy cannot be taken for granted as the recovery path remains highly uncertain and dependent on risks of any resurgent wave of COVID-19 outbreak while the fiscal stimulus “cliff” in the fourth quarter is another risk unless governments extend their help measures to business and households.
A game-changer for the outlook is the COVID-19 vaccine development where there is good progress and the report's base case is for an effective vaccine by mid-2021, although this is still a possibility of failure.
The world's economy at the end of 2020 will see two familiar events in the spotlight: Brexit transition negotiations between the UK and Europe and the US presidential elections on 3 November. The outlook for the Brexit talks is not favourable but the impact is likely to be mostly limited within the UK and EU. In comparison, the US election is seen to be of greater impact for the US and the global economy.
According to UOB's report, despite the US election results, one thing that will not change post-US elections is the continued deterioration of US-China relations. Even with a change of a president, it will only change the style of negotiation, not the direction as US lawmakers have a unified view on China.
Last-mile delivery services battle over market share
Competition in Vietnam’s last-mile delivery sector has heated up further in 2020 with local players stepping up their game against overseas mainstays.
The growth potential of the Vietnamese delivery market is drawing heavy investments, photo Le Toan
Luong Duy Hoai, CEO and founder of last-mile delivery firm Giao Hang Nhanh (GHN), told VIR that Chinese transport corporations have been entering Vietnam, such as J&T and Best Express, creating a fierce competition between local and international e-logistics brands in the market. With the aim to gain market share and with a strong investment background, these international competitors are willing to spend money and offer unbelievable prices, especially for big cities such as Ho Chi Minh City and Hanoi.
Compared with foreign players, Hoai noted that local counterparts boast some advantages such as operating for many years with key insight to the smallest details of customers’ needs. Local last-mile delivery firms can understand their customers’ needs even if they have not spoken out yet, Hoai insisted. Meanwhile, international competitors have operated in many markets so they will bring good key insights from other markets to Vietnam.
“GHN foresees both risks and opportunities in the current Vietnamese market now. Pricing has always been a crucial element. However, the core value of any organisation or corporation is the service quality, especially delivery lead-time,” Hoai said.
On the same note, TikiNOW Smart Logistics CEO Henry Low said that compared to foreign players, Tiki has the prime advantage of being the only e-commerce company in Vietnam with an integrated order management, fulfilment, and in-house delivery capability (aka Tiki Express Delivery). This value chain is supplemented by an in-house engineering team responsible for the home-grown software that the entire company is built upon.
“We believe this advantage can easily be lost and a culture of continuous improvement drives the regular upgrade of both hard- and software. New services are regularly added to support the growing needs of the customers. In the last two months, Tiki launched same-day deliveries and a heavy/bulky delivery and installation service (aka TikiPRO), in one instance. More projects are in the pipeline in the coming months,” he said.
The past few years have witnessed e-logistics developing hand-in-hand with e-commerce. This highlights the change since the early days of the e-commerce market, when warehouse and delivery services were not yet developed to effectively serve e-commerce. Nowadays, there is a growing presence of local and international companies in the field, which has created a tailored, unique solution for the Vietnamese e-logistics sector and paved the way for endless e-commerce growth.
The first group are e-commerce players with their in-house logistics teams such as Tiki, Lazada, Shopee, and Sendo. Secondly, local and foreign logistics companies like Vietnam Post, Viettel Post, GHN, DHL, FedEx, and TNT are also bolstering their last-mile delivery services to catch up with the surging demand. Last but not least, international players also entered the local market to tap into the market’s growth such as GD Express, BEST Inc, J&T Express, and Ninja Van.
Vietnam has become a fertile land for last-mile delivery players to tap into the booming e-commerce demand. The government has recently unveiled a national e-commerce development strategy for the country, which will see the sector growing by 25 per cent each year to reach $35 billion in sales within the next five years. This new strategy aims to have over half of Vietnam’s 98 million population shopping online by 2025.
The 2019 e-Conomy SEA report commissioned by Google and Temasek also lists Vietnam as the second fastest-growing economy in Southeast Asia after Indonesia, with the e-commerce market expected expand 43 per cent between 2015 and 2025.
According to Low from TikiNOW Smart Logistics, Vietnam’s e-commerce market has entered a trajectory of accelerated growth, as played out in the economies that have preceded it down the same digital shopping journey. Typically, the merchandise category of choice ranges from books and household consumer goods, to health and beauty products, fashion, and electronics. In any case, logistical services in support of these product entries have to be built and not far behind, otherwise top-line growth and expansion will be hampered.
“Last-mile delivery of a book is significantly different from a scheduled delivery and installation of an electronic appliance like a refrigerator or a washing machine,” he said. “As more households get accustomed to shopping for daily and weekly household item needs, speed, and reliability of deliveries will be more than an expectation. Vietnam’s key online platforms have directed a load of investments into warehouses and automatic sorting equipment and facilities. Third-party logistics providers are also rushing to secure warehousing space as well.”
As far as fulfilment capacity is concerned, Tiki has recently signed up for a mega-facility warehouse, which is already built and ready to move in.
Over the past year years, GHN has invested in infrastructure, applying state-of-the-art technology to maximise digitalisation of infrastructure. In 2019, GHN started operating the first two 100-per-cent automatic sorting systems in Vietnam with capability to process 30,000 orders per hour and save 600 workers, shorten the sorting time from three hours to only 30 minutes.
In August, GHN added 200 more trucks, bringing the total number to more than 1,000 to continually offer the best service with the fastest delivery lead-time possible.
56 per cent of EU businesses plan to expand in ASEAN
As many as 56 per cent of EU businesses have plans to expand operations in ASEAN, a slight decrease from 61 per cent in 2019, according to the sixth Business Sentiment Survey published on October 8 by the EU-ASEAN Business Council, the primary business body for European businesses in ASEAN.
Donald Kanak, chairman of the EU-ASEAN Business Council said, “This year’s survey confirms that ASEAN is still seen as the region of best economic opportunity, but as would be expected during the COVID-19 crisis, the outlook for increased trade and investment shows signs of softening.”
This year’s survey asked which regions in the post-COVID-19 era would be the candidates to attract more investment in supply chains. While ASEAN received the most votes, others such as Europe and China also received many. Kanak continued: “Almost half expect supply chains to be reorganised following COVID-19. That makes the unfinished business on the ASEAN economic integration and progress on trade facilitation crucial to ASEAN’s sustainable recovery from the economic downturn.”
Executive director of the EU-ASEAN Business Council, Chris Humphrey, added: “The message from the survey is clear: ASEAN economic integration appears to be at a standstill. ASEAN and its constituents need to pick up the pace to meet the AEC Blueprint 2025 goals. European businesses are now adjusting their business strategy to local environments, rather than waiting for substantial progress in regional economic integration.
European businesses are also very concerned about the lack of progress on further free trade agreements (FTAs) with the ASEAN region, and in particular the long talked about region-to-region FTA which 8 out of 10 see as potentially delivering more benefits than a series of bilateral FTAs. European businesses clearly want the European Commission to step up the pace of negotiations and engagement with Southeast Asia.”
Other key highlights of this year’s survey include:
• 72 per cent of respondents in Vietnam has plans to expand;
• 63 per cent of respondents in Vietnam are satisfied with the government’s COVID-19 response;
• 53 per cent of respondents see ASEAN as the region with the best economic opportunity (2019 – 63 per cent);
• 47 per cent of respondents are considering reorganising supply chains post-COVID-19, with ASEAN, Europe, and China as the top destinations;
• 73 per cent of respondents expect to expand current levels of trade and investment in ASEAN in the next five years (2019 – 84 per cent);
• Only 2 per cent of respondents feel that ASEAN economic integration is progressing fast enough (2019 – 6 per cent);
• Only 4 per cent of respondents find ASEAN customs procedures speedy and efficient (2019 – 8 per cent);
• 62 per cent of respondents that use supply chains reported facing many barriers to the efficient use of supply chains in ASEAN (2019 – 78 per cent);
• 98 per cent of respondents would like the EU to accelerate FTA negotiations with ASEAN and its members (2019 – 96 per cent).
2020 Key Findings
Current Business Environment and Outlook
• 73 per cent of respondents expect to expand current levels of trade and investment in ASEAN in the next five years (2019 – 84 per cent);
• 39 per cent of respondents project an increase in ASEAN profits in 2020 (2019 –60 per cent);
• 53 per cent of respondents see ASEAN as the region with the best economic opportunity (2019– 63 per cent);
• COVID-19 Impact: ASEAN is not the only location being considered for supply chain relocations;
• 47 per cent of respondents are considering reorganising supply chains moving forward;
• Regions/countries receiving the most votes as possible future sources of more supply: ASEAN (34 per cent), Europe (20 per cent), and China (17 per cent).
• 98 per cent of respondents would like the EU to accelerate FTA negotiations with ASEAN and its members (2019 – 96 per cent);
• 81 per cent of respondents believe that an EU-ASEAN FTA would deliver more advantages than a series of bilateral FTAs (2019 – 78 per cent);
• 71 per cent of respondents believe the EU should pursue an EU-ASEAN FTA now before bilateral FTAs are concluded (2019 – 67 per cent).
ASEAN Regional and Domestic Policy Frameworks
• Only 2 per cent of respondents feel that ASEAN Economic Integration is progressing fast enough (2019 – 6 per cent);
• Only 14 per cent of respondents found that the number of NTBs to trade in ASEAN have decreased (2019 – 17 per cent);
• Only 4 per cent of respondents find ASEAN customs procedures speedy and efficient (2019 – 8 per cent);
• 62 per cent of respondents that use supply chains reported facing many barriers to the efficient use of supply chains in ASEAN (2019 – 78 per cent).
Government Consultation and Competition Issues
• 50 per cent of respondents feel they are often or sometimes consulted by national governments in ASEAN (2019 – 74 per cent);
• 36 per cent of respondents believe they face unfair competition in the local/regional environment at least occasionally (2019 – 70 per cent);
• 25 per cent of respondents feel that there is adequate EU engagement (2019 – 39 per cent);
• The EU-ASEAN Business Council (EU-ABC) is the primary and sole voice for European business covering all of the ASEAN region.
It is recognised by the European Commission and the ASEAN Secretariat and is an accredited entity under Annex 2 of the ASEAN Charter. Independent of both bodies, the Council has been established to help promote the interests of European businesses operating within ASEAN and to advocate for changes in policies and regulations which would help promote trade and investment between Europe and the ASEAN region. The Council works on a sectorial and cross-industry basis to help improve the investment and trading conditions for European businesses in the ASEAN region through influencing policy and decision-makers throughout the region and in the EU, as well as acting as a platform for the exchange of information and ideas amongst its members and regional players within the ASEAN region.
The EU-ABC’s membership consists of large European Multi-National Corporations and the nine European Chambers of Commerce from around Southeast Asia. The EU-ABC represents a diverse range of European industries cutting across almost every commercial sphere from car manufacturing through to financial services and including fast-moving consumer goods and high-end electronics and communications. Members all have a common interest in enhancing trade, commerce, and investment between Europe and ASEAN.