VIETNAM'S BUSINESS NEWS HEADLINES OCTOBER 18
Domestic travellers help boost tourism recovery
Many travel companies said domestic tourists have resumed travelling after the Covid-19 pandemic was brought under control, contributing to the recovery of the tourism industry.
Saigontourist Travel Service Company said in September alone, it organized tours for more than 4,300 guests who travelled in groups. In October and November, the company will serve some 16,000 guests opting for sightseeing, convention and teambuilding tours, including large groups such as 420 guests from Hanoi to Dalat, 720 from Hanoi to Halong, 325 from Haiphong to Halong and 620 from HCMC to Nha Trang.
Fiditour said that it received groups of 100-500 guests for meeting, incentive, conference and event tours to Nha Trang and Phu Quoc, mainly from the food, pharmacy and insurance industries.
According to Tran Thi Bao Thu, marketing and communications director of Fiditour, the company is collaborating with airlines and hotels to reduce tour prices by 10-30%.
Similarly, BenThanh Tourist is serving an increasing number of guests visiting major attractions such as Phu Quoc, Dalat and Nha Trang. “The market is recovering faster than we expected,” Ta Thi Cam Vinh, deputy general director of BenThanh Tourist, said.
Some businesspeople expressed hope that the tourism market would recover faster in the coming months so that their employees can return to work and they will have money to cover operation costs.
During a regular meeting in September, the Government asked the Ministry of Culture, Sports and Tourism to boost tourism activities, enhance the quality of tourism services and ensure safety. The Government also asked tourism management agencies to implement domestic tourism stimulation programs to help the tourism industry recover in the last few months of the year.
New decree allows banks to keep profits
A new decree released by the Government will allow State-owned commercial banks to save cash to increase their strength instead of paying dividends to shareholders.
Decree 121/2020/ND-CP will amend Decree 91/2015 dated October 13, 2015 regulating the State capital invested in State-owned companies and management of State capital and assets in the business.
The new policy allows government agencies to increase the State capital in joint stock companies and limited-liability firms with two or more board members.
Commercial banks with the State holding more than 50 percent of the charter capital are subject to the new decree.
Under the new decree, the three large-cap State-owned banks – the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) – are now able to keep and use their profits to increase capital instead of paying cash dividends to shareholders.
In recent years, the State Bank of Vietnam (SBV) – representing the Government to monitor the State capital in financial-banking firms – asked the three banks to pay cash dividends, but the request was always rejected by other shareholders.
The SBV is holding nearly 81 percent in BIDV, more than 64 percent in Vietinbank, and nearly 75 percent in Vietcombank.
Vietinbank and Vietcombank planned to issue bonus shares using their profits recorded in 2020 to increase capital, meeting BASEL II standards, preparing for any economic shocks caused by the prolonged COVID-19 pandemic and the instability of the global economy.
At its annual shareholders’ meeting on April 23, Vietinbank decided to use the remaining post-tax profits during 2017-19 to issue bonus shares and increase capital. The issuance rate has not been selected.
Vietcombank has planned to issue bonus shares at the rate of 18 percent in the second six-month period of 2020, meaning every shareholder will receive 18 new shares for each 100 shares they have. The time has not been decided yet.
According to Vietinbank Chairman Le Duc Tho, the adjustment of the Decree 91/2015/ND-CP is key to the development of the bank as the plan on using 2017-2018 profits to increase capital has already been approved by the Government.
Medical face mask exports enjoy sharp recovery
Vietnam shipped 989 million medical face masks of various types abroad during the opening nine months of the year, according to statistics compiled by the General Department of Vietnam Customs.
Most notably, September alone witnessed over 70 major local firms ship medical face masks oversea, with total export volume of the items reaching approximately 143 million units, representing a slight increase of 5.5% compared to August.
After the export of the items suffered a decline from their peak of 236 million in June to 154 million and 135 million in July and August, respectively, exports to several major countries have started to enjoy a recovery.
Indeed, exports to markets that have begun to bring the novel coronavirus (COVID-19) epidemic under control look to be picking up once again.
Gov’t sets deadline for groundbreaking of Long Thanh airport
The Government has shown its determination to speed up the legal procedures and conditions for the Long Thanh International Airport project by setting the first quarter of 2021 as the deadline for the groundbreaking of the mammoth project.
In a resolution released after the recent September cabinet meeting, the Government said that the construction of the project is slated for between 2021 and 2025.
Despite the delayed appraisal and approval due to the immensity of the project and the impact of the Covid-19 pandemic, the Airports Corporation of Vietnam (ACV), the investor of the project, has completed a prefeasibility study and has presented it to the State Appraisal Council before submitting it to the Government.
As per the feedback of the State Appraisal Council, the project will cost a total of VND109.2 trillion or U$4.67 billion, down by over VND2.4 trillion (US$109 million) compared with the previous estimation. The difference was caused due to the various calculation methods of the documents.
As a result, the cost for consulting and backup has been cut by VND677.9 billion. The building cost has been slashed by over VND2.2 trillion, while the equipment cost has been revised up by VND443 billion.
Long Thanh will meet the 4F standards of the International Civil Aviation Organization to become an international transit center in the region. Once it commences, the investor will build a runway, a passenger terminal and facilities with a handling capacity of 25 million passengers and 1.2 million tons of cargo annually.
However, ACV only invests in key works such as passenger terminal, air infrastructure, water supply and drainage, cargo terminal and roads leading to metro lines No. 1 and 2.
The Vietnam Air Traffic Management Corporation will be in charge of other components, while the relevant State agencies will build their own offices. The Ministry of Transport will select investors for other service facilities such as a cargo terminal, aviation industrial sections and logistics zones.
Cambodia’s fisheries export slump by over 84 pct
Cambodia’s fisheries export slumped by over 84 percent during January-September, according to the Cambodian Ministry of Agriculture, Forestry and Fisheries.
The country ships fisheries products mainly to Vietnam and Thailand.
In the past nine months, export of freshwater aquatic products fell by 78 percent to 1,498 tonnes from 7,000 tonnes last year, while shipments of processed seafood sank 94 percent year-on-year from 3,980 tonnes to 232 tonnes.
Cambodian Minister of Agriculture, Forestry and Fisheries Veng Sakhon attributed falling export to rising domestic demand along with declining fishing yields and aquaculture output.
He said the ministry is promoting fish farming through the EU-funded CaPFish-Capture and CaPFish Aquaculture projects in a bid to boost the household economy and food security.
Natural fish catches have greatly reduced due to the low water levels of the Tonle Sap Lake, which is the largest nesting site for fish in Cambodia.
From January-September, production of farmed fish and shrimp hit more than 296,500 tonnes, up from 245,578 tonnes./.
Contest supports female entrepreneurs
As many as 68 outstanding projects, including 23 by women with disabilities and 10 by female students, of a start-up contest launched by the Vietnam Women’s Union (VWU) were announced at a ceremony in Hanoi on October 13.
The award ceremony was attended by Deputy Prime Minister Vu Duc Dam, Swedish Ambassador to Vietnam Ann Mawe, and Head of Office for UN Women in Vietnam Elisa Fernandez.
In his remarks, Deputy PM Dam lauded the achievements the VWU has recorded in assisting its members, including disadvantaged women, and expressed his hope that the contest will help to spread the start-up spirit nationwide.
According to VWU President Ha Thi Nga, this year’s event drew more entries than the previous two years, with contestants of different ages and coming from different sectors.
Notably, up to 12 percent of the projects hailed from ethnic minority-inhabited areas, and 3 percent by disabled women, she noted.
The wining projects have reflected connectivity between scientists and farmers, producers and consumers, and between producers, while ensuring green, clean and safe production with technological applications.
During the three-year implementation of the project supporting women in startup for the 2017-2025 period, up to 46,825 ideas and projects have been sent to startup contests, and 38,415 women received assistance in startup.
Quang Nam economy recovering
With the COVID-19 pandemic now largely brought under control, the local government, business community, and people of central Quang Nam province have worked together to bolster business production, agricultural development, and tourism in order to create momentum for growth.
Neighbouring the central coastal city of Da Nang, Dien Ban town was the area in Quang Nam most affected by the recent COVID-19 outbreak. It has made strong efforts in socio-economic recovery since, while ensuring social welfare.
Several infrastructure works connecting urban areas such as Hoi An and Da Nang cities, among others in the region, have also been resumed in a bid to boost socio-economic development in Dien Ban town.
With the Chu Lai Open Economic Zone and several commercial, tourism, and luxury services complexes, the South Hoi An area has become a key economic area of Quang Nam and the local vicinity.
Economic development has put Quang Nam among the country’s top 10 cities and provinces with the highest provincial competitiveness index over the last decade.
Quang Nam will also continue to attract works in a range of different fields.
Quang Nam became an industrial province this year, and over the next five years will deploy its potential and advantages to post growth of 7.5 to 8 percent./.
Agriculture sector targets higher productivity, quality, value
The domestic agriculture sector is in need of solutions to optimise capital and science and technology, thus raising productivity, quality, and value in service of both domestic and foreign markets, the fifth national farmers’ forum held in Hanoi on October 13 heard.
Thao Xuan Sung, Chairman of the Vietnam Farmers’ Union, said in his opening remarks that agriculture and rural areas have proven to be the foundation of the national economy and significantly contributed to the country’s stability, integration, and development.
Some 1,200 businesses have invested in the sector, he said, adding that there are 15,800 agricultural cooperatives, 40,000 farms, and 8 million farming households.
First held in 2016, the forum this year focused on links between farmers, the State, investors, banks, scientists, and distributors in terms of capital and technology.
Le Van Viet, Chairman of the Board of Directors of the Xuyen Viet Seafood Trade and Production Cooperative in northern Hai Duong province’s Gia Loc district, proposed the State develop large-scale concentrated production areas that will provide materials for processing factories, and roll out preferential credit policies for cooperatives.
Pham Thi Thanh Tung, head of the Department of Credit for Agriculture under the State Bank of Vietnam (SBV), said it regards agriculture and rural areas, including high-tech agriculture and connectivity in the sector, as among its priorities.
Meanwhile, the Vietnam Bank for Agriculture and Rural Development (Agribank) is making efforts to offer loans for agriculture, especially high-tech agriculture, through a 100 trillion VND (4.31 billion USD) credit package, the bank’s Deputy General Director Pham Toan Vuong said./.
Vietnam attends Korea - ASEAN & India Business Week 2020
The Korea - ASEAN & India Business Week 2020 opened in the Republic of Korea (RoK)’s capital Seoul on October 13, giving participants a chance to highlight Asia’s potential in the post-COVID-19 era and promote the sharing of prosperity among Asian nations.
The RoK, ASEAN, and Indian enterprises will have access to a series of business opportunities with Asian partners.
Online meetings between investors will be held as part of the event.
The embassies of ASEAN member states and India joined an exhibition of national specialties on the occasion.
Speaking to the press, third Secretary of the Vietnamese Embassy in the Republic of Korea, Ngo Quang Huy, said that amid the complex developments of COVID-19 in the country and around the world, Vietnam considers the event a good chance to popularise its products among friends in ASEAN in general and in the RoK in particular./.
ASOSAI promotes knowledge sharing, develops SAI members
The Asian Organisation of Supreme Audit Institutions (ASOSAI), founded in 1979, pursues a common mission like other working groups of the International Organisation of Supreme Audit Institutions (INTOSAI), that is “Professional supreme audit institutions promote good State governance” and with the core values of “Professionalism, Cooperation, Equality, Creativity”.
The ASOSAI’s goal is to promote mutual understanding and cooperation among member supreme audit institutions (SAIs) through the exchange of ideas and experience in public auditing, creating favourable conditions for the training of State auditors to improve working quality and efficiency.
The ASOSAI Capacity Development Committee, established by the ASOSAI Executive Committee in 1995, is an important body within the ASOSAI. It is responsible for studying and developing plans and proposing training and the capacity development activities of ASOSAI, while at the same time monitoring and evaluating the quality of ASOSAI’s capacity development activities and reporting to the ASOSAI’s Executive Committee annually. The Board of Audit of Japan has taken the role of Chair of the ASOSAI Capacity Development Committee since 2000.
The ASOSAI’s capacity building activities are divided into three main groups: training for auditors related to basic professional knowledge and audit methods through workshops funded by the ASOSAI; knowledge and experience sharing for management-level auditors; and joint training activities with the INTOSAI Development Initiative and ASOSAI research projects (with 11 completed so far).
To ensure one of the core values outlined in the 2016-2021 strategic plan on strengthening human resources for member SAIs is met, since 2017, the development of the capacity of SAI members has focused on comprehensive activities using a multi-disciplinary training model both online (with remote training courses using modern technology) and offline (meetings and seminars).
Over the past three years, ASOSAI has trained nearly 1,000 auditors through such activities.
The State Audit Office of Vietnam (SAV) became a member of ASOSAI in 1997. In the first period of the membership, the SAV mainly sent auditors to attend training courses and workshops sponsored by ASOSAI to enhance professional capacity. Since 2010, the SAV has undertaken a more active role in professional activities of ASOSAI. For example, the SAV participated in the 11th research project on methods to build plans for risk-based audits and audits of investment projects in public-private partnerships. It was also a member of the 12th ASOSAI Research Project: “Auditing the implementation of Sustainable Development Goals”, the Working Group of the IDI-ASOSAI’s Programme 3i on cooperation in disaster management audit, and the Working Group of the ASOSAI Environmental Auditing.
The Working Groups of the SAV also conducted pilot and joint audits to share experience in various areas with other SAI members, actively offered feedback on draft documents, and devised and answered questionnaires by organisations to which the SAV is a member. The SAV’s participation in these working groups has been increasingly hailed by the international community. Therefore, as an official member of the ASOSAI, the SAV is well-positioned to share and acquire knowledge and international experience, contributing to its development towards international standards and practices in line with Vietnam’s conditions.
For the SAV to successfully fulfil its role as a member of the ASOSAI Executive Committee for three tenures, including ASOSAI Chair for the 2018-2021 tenure, the number and quality of the workforce in terms of professional expertise and English skills is one of the prerequisite factors. The State Auditor General of Vietnam has issued a capacity-strengthening framework and a decision on strengthening its departments and working groups in service of global integration and cooperation. Such key officers will undergo comprehensive training on audit, foreign languages, and organisational skills to meet the requirements of their assigned tasks when the SAV serves as Chair of the ASOSAI Executive Committee. They are also expected to help the SAV gradually apply new audit standards from INTOSAI and ASOSAI in management activities and audit./.
Indonesia imposes 10-pct VAT on eight more foreign firms
Indonesia has added eight more foreign digital companies to a list of businesses that must pay a 10 percent value-added tax (VAT) on sales.
The companies named were Alibaba Cloud (Singapore) Pte Ltd, GitHub, Inc., Microsoft Corporation, Microsoft Regional Sales Pte. Ltd., UCWeb Singapore Pte. Ltd., To The New Pte. Ltd., Coda Payments Pte. Ltd, and Nexmo Inc.
In a statement, Director-General of the Indonesian Finance Ministry’s Directorate General of Taxes Suryo Utomo said these companies must start charging VAT on digital products and services to advertisers and consumers from November 1.
Last year, Indonesia announced that Google, Facebook, Amazon, Twitter and Netflix, which are not registered in Indonesia but have revenue from consumers in the country, would be liable to VAT.
In April, the Indonesian government issued a digital tax regulation for global technology companies in the framework of a law on financial policies in response to the COVID-19 pandemic.
Accordingly, all foreign companies that made annual sales of 600 million Indonesian rupiahs (40,540 USD) from their digital products and services in Indonesia, or reported at least 12,000 visits per year will have to pay a 10 percent VAT./.
PVEP’s oil and gas output hits 2.88 mln tonnes in nine months
The PetroVietnam Exploration Production Corporation (PVEP) – a subsidiary of the Vietnam Oil and Gas Group (PetroVietnam) - exploited 2.88 million tonnes of oil equivalent in the first three quarters of this year, surpassing the target by 1 percent.
PVEP said its oil and gas exploitation activities in the past nine months were seriously affected by the COVID-19 pandemic and the shock drop in oil prices.
The business has taken a series of measures to maximise its exploitation, reduce production cost, adjust and extend investment progress along with financial solutions to survive, and maintain the operation of projects in the most optimal way amid the health crisis.
However, as the average oil price is much lower than the set plan, the total revenue of PVEP in the reviewed period was estimated at 15.8 trillion VND (nearly 681.7 million USD). This fulfilled 71 percent and 53 percent of the goals set for the reviewed period and the entire year, respectively.
The corporation reported a pre-tax profit of 80 billion VND in the period. It contributed 4.8 trillion VND to the State budget.
In the remaining months of the year, PVEP’s output is expected to reach 0.85 million tonnes of oil equivalent./.
Long An promises best conditions for investors
This month Masan MEATLife, a subsidiary of Masan Group, commissioned the VND1.8 trillion (US$77.6 million) MEATDeli Saigon Meat Processing Complex in Long An Province.
Situated in the Tan Duc Industrial Park in Duc Hoa District, the plant is designed to process 140,000 tonnes of chilled pork and 15,000 tonnes of other products such as braised pork, pork rolls, shredded pork, and others annually in the first phase.
The second phase will expand the capacity to 25,000 tonnes a year and enable production of 14,000 tonnes of pork by-products such as blood flour, plasma, collagen, and meat and bone powder.
Its processing line was supplied by Dutch company Marel, the world leader in meat processing equipment, and includes an automation system with three robots. It is considered the most modern meat processing and slaughter facility in the country.
The province has also seen several other big-ticket projects get under way in recent times.
Dong Tam Group opened the first phase of the Long An International Port in Tan Tap Commune in the province’s Can Giuoc District and at the same time began work on the second phase of the project.
The 147ha port is being developed in three phases at a cost of nearly VND10 trillion ($430.7 million). It will have seven wharves able to receive ships of up to 70,000DWT. More than 400,000sq.m is earmarked for warehouses to store farm produce, steel, fertilisers, and other products from the Mekong Delta.
The port is seen as key to reducing traffic congestion and logistics costs in Long An and the Mekong Delta.
In May TIZCO Joint Stock Company and Viet Nam Innovation Parks Management Corporation broke ground for the 1,800ha Viet Phat Industrial Park, one of the country’s largest IPs.
According to province leaders, the series of large projects that have come to Long An recently, especially amid the Covid-19 pandemic, are expected to greatly contribute to socio-economic development and prove the attractiveness of the province to investors.
Tran Van Can, chairman of the province People’s Committee, said with its location in a prime spot in the Southern Key Economic Region, Long An serves as a bridge between HCM City and the delta.
It achieved annual growth of 9.11 per cent on average in the 2016-20 period, among the highest in the country, he said.
Its economic structure continues to shift quickly towards industrialisation and modernisation and per capita income has topped VND72.6 million ($3,130), among the highest in the delta.
“The provincial government has determined that administrative reform, improving the business environment, enhancing competitiveness, and supporting enterprises are among its key tasks.”
Since 2017 Long An has remained in the top group in the Provincial Competitiveness Index.
It tops the delta in attracting FDI with total registered capital of $6.5 billion so far, and also has 2,000 local companies with combined capital of VND230 trillion ($9.94 billion).
According to the province People's Committee, Long An has 16 industrial parks and 21 industrial clusters with occupation rates of 87.3 per cent and 89.7 per cent.
To further attract investment in the coming time, especially FDI investment, the province has focused on developing infrastructure at selected industrial zones and clusters and expects to open them this year.
People's Committee vice chairman Nguyen Van Be said the province would continue to solicit investment in infrastructure in industrial parks and elsewhere.
The province wants to attract investment in industrial parks and clusters and has prioritised projects involved in the supporting industries, hi-tech agriculture, seafood processing, and among others.
In recent years the province had focused on improving the quality of education and training to provide the market with a more skilled workforce, he said.
Huynh Van Son, director of the province Department of Planning and Investment, said every year activities were undertaken to promote investment, trade and tourism in key markets such as Japan, South Korea and the US.
In addition, infrastructure developers at industrial parks and clusters also directly sought investors to invest in their facilities, even sending delegations abroad to solicit investment, advertising in the media and participating in conferences to provide information about industrial parks.
Can said, “Long An will create the most favourable conditions for domestic and foreign investors and businesses.”
“The province’s motto is ‘your difficulties are also our difficulties, your success is also our success’.”
VN to be a magnet for foreign investment in 2021: policymakers
Viet Nam will stay among the world's top destinations for foreign direct investment (FDI) in 2021 thanks to the country's successful effort to contain and fight off the COVID-19 pandemic, according to policymakers.
Deputy Minister of Planning and Investment Tran Quoc Phuong said the skilled workforce and political and economical stability are among the country's most important advantages in attracting foreign investors, especially with the global economy struggling to recover from the pandemic.
Initial talks between the Ministry of Planning and Investment (MPI) and investors have produced promising results with firms from Japan, Singapore and the EU showing great interest in setting up in the country. International corporations including Apple, Foxconn and Luxshare have committed billions of dollars in investment to Viet Nam in recent years.
Meanwhile, the country has steadily improved its industrial infrastructure by ramping up the construction of industrial parks and economic zones. By the end of September, there were 366 industrial zones nationwide, home to more than 10,000 projects nearing $200 billion in total investment value.
The MPI's latest report said more than 500 new investment projects worth some US$8.5 billion have been registered since the beginning of the year. The industrial sector's income was reported to reach $136 billion, a 3.5 per cent decline compared to the same period last year, and employed more than 3.8 million workers.
Do Nhat Hoang, head of the MPI's department of foreign investment, said the ministry expected a wave of foreign investment into Viet Nam next year, especially with the Government's recent efforts to reopen the country with foreign investors and experts prioritised.
The recent introduction of 19 coastal economic zones with more than 100,000 hectares of land earmarked for economic development is set to provide ample opportunities and resources for potential investors.
At the same time, Viet Nam plans to invest in the labour force, develop supporting industries and improve business laws and regulations to create the best environment for foreign investors.
Housing prices keep rising in HCM City on lack of supply
The prices of properties with land in HCM City increased by 15 per cent in the third quarter from the same period of last year due to lack of new supply, according to a report by property consultancy JLL.
The luxury segment saw prices rise by 14.7 per cent year-on-year and 3.1 per cent quarter-on-quarter to US$ 5,337 per square metre.
The second wave of Covid-19 played a strong role in the market, eliminating short-term speculators with limited capital from the property market.
Houses with land and costing below $450,000 attracted a lot of interest as people bought them to lease or for appreciation in value in future.
But those costing more than $450,000 did not have much demand.
Licensing issues and credit tightening continued to be the main challenges for the condominium market.
Buyers have difficulty buying units, not because they cannot afford them, but because they cannot find suitable options.
On the other hand, developers are well-positioned to increase profits thanks to the shortage of existing condo projects in the primary market.
Primary prices will continue to increase due to a lack of supply.
The luxury segment is expected to see prices increase by 10 per cent, while the high-end and mid-priced segments will see 5 per cent increases year-on-year.
The affordable segment will rise by a modest 2 per cent.
The secondary market will be more active due to a lack of supply in the primary market and new pricing levels across the market.
End-users may find limited options in the primary market and may turn to the secondary market which offers both completed projects and those with good construction progress.
Around 300-400 units are expected to be launched in the last quarter of 2020, taking the number for the full year to 2,500 units, 40 per cent lower than in previous years as the city tightened control over grant of land-use rights and construction licences.
With limited supply and high demand, prices in the primary market are likely to keep rising.
EVFTA helps boost Vietnam’s agricultural exports to EU
Vietnam earned an estimated 711 million USD from exporting agricultural products to the European Union (EU) in August and September, according to the Ministry of Agriculture and Rural Development.
The export value of farm produce of the country to EU in August and September increased 16.6 percent and 20.3 percent, respectively, against the figure of July.
The ministry said it will accelerate restructuring of the agricultural sector, focusing on raising added value and sustainable development, building planting area codes and geographical indications, and working towards meeting EU standards of origin, quality and food safety.
Measures will also be intensified towards removing the European Commission (EC)’s yellow card warning regarding illegal, unreported, and unregulated fishing (IUU) for Vietnamese aquatic products.
The ministry has encouraged export enterprises to expand their investment in intensive processing to fully tap opportunities and incentives brought by the EU – Vietnam Free Trade Agreement (EVFTA), especially for processed products, it said.
It is also building a programme to attract foreign direct investment (FDI) capital from EU to Vietnam’s agriculture sector, assisting with the country’s joining in the global agriculture chain./.
Vietnamese exporters stand to gain $633 million by increasing trade with India
Vietnamese businesses could increase exports to India by $633 million annually, the Standard Chartered Trade Opportunity Report has revealed. The study also found that Indian exporters could boost trade with Vietnam by an estimated $475 million, bringing the bilateral trade opportunity to $1.1 billion.
The ASEAN markets in the study (Indonesia, Malaysia, Singapore, Thailand, and Vietnam) have a combined opportunity of $10.7 billion to increase exports to India.
The research tracks high potential exports, defined as goods or services where businesses have added value with the borders of their home market. As markets look to recover from the impact of COVID-19, the study champions global trade as a key lever of prosperity, highlighting the sectors with the greatest opportunities for growth.
Vietnam’s wholesale and retail trade services sector has the most to gain, with a $87 million opportunity.
India is now one of Vietnam’s top 10 trading partners and Vietnam ranks as India’s fourth-largest ASEAN trading partner. With the shifts in supply chains post-COVID-19, the India-Vietnam trade route could become increasingly important for international businesses.
Other Vietnamese sectors with significant opportunities in India are transportation and storage services; cotton (including sewing thread, yarn ,and fabric); office admin and other business support services, and knitted clothing.
“Vietnamese and Indian efforts to grow trade between the two markets have clearly been working, with bilateral trade growing at the steepest rate ever recorded. As Vietnam plays an increasingly important role in global supply chains, its relationship with India is likely to strengthen further – especially with India investing close to $2 billion in over 200 projects in Vietnam. As this study shows, India presents many opportunities for Vietnamese companies seeking new and fruitful avenues for growth,” said Nirukt Sapru, CEO, Vietnam, ASEAN, and South Asia Cluster Markets, Standard Chartered.
The study estimates that India could increase high-potential exports to Vietnam by $475 million, or 12 per cent, annually.
The Standard Chartered Trade Opportunity Report identifies opportunities at a sectoral level, across both goods and services, between India and 10 of its key trading partners. The study contrasts actual export and potential export values – calculated by an economic model – to uncover medium-term opportunities, looking to a post-COVID-19 world as economies begin to reopen.
Overall, the study reveals opportunities totalling an estimated $38 billion annually: a $21 billion opportunity for the 10 markets to increase exports to India, and a $17 billion opportunity for India to increase exports in the other direction.
E-commerce growth burdens logistics across Southeast Asia
The outstanding growth of e-commerce has set a great burden on the logistics sector in Southeast Asia, as reflected by the marked slowdown in the delivery speed of e-commerce companies.
A survey from iPrice Group – a Malaysia-based online shopping aggregator – revealed that over the social distancing in April and May, good delivery times increased by 52 per cent to 2.8 days per order, nearly one day more than before the pandemic.
Regarding the issue, Lai Chang, co-founder cum managing director of delivery company Ninja Van said that consumer demand for online shopping has skyrocketed, resulting in the rising number of parcels to be shipped. In April and May, traffic on Lazada, Shopee, and Zalora grew by 60 per cent.
Moreover, most packages are bulkier due to the shift from purchasing clothes to a large number of canned foods due to the need for food storage over the pandemic.
On the other hand, since COVID-19 broke out, the working hours of shippers have been cut to assure their safety, affecting consumers’ online shopping experience over the past time.
According to Parcel Monitor, also in April and May, complaints about lost goods increased significantly against the time before the health crisis.
A survey from Google and Temasek showed that the scale of e-commerce in Southeast Asia reached $38 billion last year, up 600 per cent within four years. The value is even forecast to extend to $150 billion in 2025.
Meanwhile, logistics in the region seems to be inferior. According to the World Bank, while developed countries only spend several per cent of their GDP on logistics, the figure in Southeast Asia is up to dozens of per cent, including Indonesia’s 24 per cent – the highest rate.
China-based yarn producers setting sights on Vietnam
Chinese yarn behemoth Texhong is shifting its production line to Vietnam, partly fuelled by the US boycott on cotton items originating from Xinjiang province in China.
Texhong has since last week begun recruiting thousands of labourers for its latest project – Texhong Knitting Vietnam Ltd., in the northeastern province of Quang Ninh. The Quang Ninh Economic Zones Management Authority granted investment certificates for establishment in May, with the estimated capacity of 82,500 tonnes per year.
According to a representative of Texhong Vietnam Industrial Zone (IZ), the area demands a great number of labourers because the IZ is in the first phase of investment. The company has implemented land clearance, infrastructure development, and investment attraction at the same time.
The $214-million project is part of Texhong’s $500 million investment plan in Vietnam this year. The first phase will be put into operation in late 2021, and the second phase will be constructed 20 months after that.
A source from Quang Ninh Invesment Promotion Agency told VIR, “Texhong has been operating well, with big revenues and major contributions to the provincial budget and employment generation.”
“The company is expanding operations in some locations in Quang Ninh. For example, it is cooperating with a Hong Kong company to open a garment factory in the province’s Cam Pha city,” the source said. “Texhong is also deploying a number of similar projects with some other partners.”
Texhong’s fresh moves are ascribed to various reasons, with one of which being said to result from the temporary US halt in importing products stemming from Xinjiang province over accusations of forced labour. This issue has been swirling for over a year, with the US prohibiting the import of items made by one firm in the province last October. As a result, the potential risk of boycotting products originating from the area may be the main reason behind Texhong’s enhanced investment in Vietnam, as the country’s textile and garment sector is submerged in adversity over the health crisis.
In Xinjiang, the yarn producer has been running a subsidiary named Xinjiang Texhong Foundation Textile Co., Ltd. Moreover, according to apparel sector website Textile Focus, most of Texhong’s Chinese cotton supplies come from Xinjiang. Hence, under the US prohibition, cancelled orders for Texhong are likely to take place.
According to Nguyen Van Tuan, chairman of the Vietnam Cotton and Spinning Association (VCOSA), Xinjiang held more than 80 per cent of China’s cotton materials. “Therefore, if the US officially embargoes cotton products originated from there, garment and textile producers will not be able to avoid the impacts,” Tuan said.
The Vietnamese garment sector annually demands 10 billion cubic metres of cloth, including 3.5 billion cu.m produced in the local market, and 6.5 billion cu.m imported from overseas in which Chinese cloth occupies 65 per cent, according to data published by the VCOSA.
Texhong is also operating a garment company named Texhong Thai Binh Garment Co., Ltd. A VIR source revealed that since the Xinjiang-based cotton boycott heated up last month, the company has received many order cancellationsits.
“In the past month, the company has temporarily laid off labourers to deal with the operations cost issue,” said the source.
Current capacity of Texhong Thai Binh Garment is equal to 35 per cent against last year. In September alone, the company manufactured about 400,000 items, far less than the previous average of 900,000. Since the health crisis broke out, its earnings have dropped by 30 per cent compared to previous years.
The establishment of Texhong’s new garment manufacturing hub in Vietnam could aim to solve the origin issue of its garment products, for easier export to other markets. Vietnam, whose cotton supplies are mostly imported from the US (65 per cent), India (15 per cent), and the African continent (10 per cent), could be a strong option. Additionally, according to the VCOSA, the US and EU account for more than 60 per cent of Vietnam’s garment exports. Thus, manufacturing in Vietnam would make exports to these markets easier.
Elsewhere, Brotex (Vietnam) Co., Ltd., under the China-based yarn manufacturer Bros Eastern earlier this year started construction of a project in Phuoc Dong IZ of the southeastern province of Tay Ninh. In 2018, Brotex developed another yarn producing facility, worth $400 million, also at Phuoc Dong IZ, including a $100-million first phase of 15,000 tonnes of yarn a year.
Dong Thap makes leaps and bounds ahead across board
The Mekong Delta province of Dong Thap has been faring well in all economic fronts over the past five years, attested through constant on-year growth in major growth metrics. The province raked in more than VND87.3 trillion ($3.79 billion) in annual regional GDP value, 1.53-fold against 2015, whereas per capita regional GDP averaged VND54.5 million ($2,370), up 1.55-fold correspondingly. The local economy grew an average 6.44 per cent per year during the period.
Notably, despite continuing complications due to COVID-19, the province has still scored stable growth among the top players in the delta region, according to Dong Thap People’s Committee Chairman Nguyen Van Duong. The economic structure has been gearing in a positive direction, he said, and along with that, the agricultural sector has been developing rapidly and in an inclusive manner leveraging the efficiency of agricultural economic restructuring plan.
The sector grew an average 3.57 per cent per year and has witnessed remarkable improvements aligned with targets set in the agricultural sector restructuring plan attached to the implementation of the national target programme on building a new countryside model and reforming the production method promoting alliances between farmers and producers as well as market links to boost competitiveness.
As a result, the sector has succeeded in luring nearly 50 investment projects with value surpassing VND5.3 trillion ($230 million) into agricultural and rural area development.
The cities of Sa Dec, Cao Lanh, and Hong Ngu were recognised to have accomplished the task of building a new countryside model, whereas Thap Muoi and Cao Lanh districts were honoured to reach new countryside standards.
Dong Thap has also succeeded in shaping high-tech, green, and smart agricultural models, laying the basic fundamentals to adapt to climate change implications. The value chain of major product lines has also been constantly enhanced. Significantly, the club model has come into being and has increasingly proliferated, creating a new trend in production cooperation. About 100 clubs have been set up across 12 cities and districts, helping to strengthen links among members and create products suitable to market taste. A total of 22 co-operatives were established based on the club model, promoting partnerships between members to boost production value.
Industrial production has managed stable growth with increasing high-tech value. Due regard has been given to building and upgrading industrial zones (IZ), clusters, and border economic zone (EZ) infrastructure.
The occupancy rate of three major IZs reached 98 per cent, whereas that of 12 clusters surpassed 76 per cent. Craft production and occupation village development has received due regard too.
Local trade, services, and tourism activities have been fairly robust. Many products in Dong Thap have made them into retail distribution systems of leading businesses nationwide. Accordingly, the province posted an annual growth of 11.6 per cent in the total retail sales revenue of products and services. Meanwhile, the export value of major products in the province surpassed $1 billion annually.
The local business and environment climate has been improved vigorously, with the provincial competitiveness index ranking remaining high in the national tally, helping Dong Thap to lure 178 investment projects registered at more than VND18 trillion ($782.6 million). Of them, there are eight foreign investment projects valued at VND1.9 trillion ($82 million).
Dong Thap Chairman Duong noted that from now towards 2025, the province aims to realise the major tasks of efficiently implementing socioeconomic development planning to 2030 with vision towards 2050; focusing on developing agriculture, industry, construction and trade, and services; and increasing links to other localities in urban development, industry, trade, and services to serve the agricultural sector’s sustainable development.
It will also be important to push up vocational training and encourage labourers to work abroad, Duong explained, while stepping up investment into infrastructure, particularly in transport, and maintaining local advantages and strongly developing the food-processing industry.
Finally, to create breakthroughs in development, Duong spelled out the need for efficient implementation of digital transformation in the facets of building a digital government, economy, and society, thus helping to elevate the local economy in both integration and development.
Indonesia among 10 countries with largest foreign debt: WB
Indonesia has been included in the list of 10 small-medium income countries with the largest foreign debt in the world, revealed a report of the World Bank (WB).
Data from the WB showed that the country’s foreign debt saw an upward trend through the year.
Indonesia's external debt rose to 402.08 billion USD in 2019, from 179.4 billion USD recorded 10 years earlier.
Last year, long-term debt reached 354.54 billion USD while short-term one only stood at 44.79 billion USD.
The WB noted that the foreign debt of low- and middle-income countries across the globe hit 8 trillion USD in 2019. The figure increased by 5.4 percent from the previous year./.
Indonesia, Japan launch e-commerce website
Indonesia and Japan have launched an e-commerce website in service of storing trade data and better supporting the two countries’ investors.
The site will be developed into a common economic data centre to ensure economic benefits for the two nations.
Speaking at the launching ceremony, Indonesian Ambassador to Japan Heri Akhmadi said the pandemic hugely affects Indonesian and Japanese economies. Therefore, Indonesia needs to reconsider its strategy and open up a space for new opportunities, not only in trade and investment.
Akhmadi also confirmed that new Japanese Prime Minister Yoshihide Suga will pay an official visit to Indonesia this month, giving both sides a chance to further boost coordination in various areas, particularly in economy and trade.
Before the visit, the two leaders held a phone talks to reach consensus on specific programmes./.
ASEAN startups forum debates new opportunities in digital age
An ASEAN 2020 startups forum focusing on new opportunities in the digital age was jointly organised by the Vietnam Chamber of Commerce and Industry (VCCI) and the ASEAN Business Advisory Council (ASEAN-BAC) in Hanoi on October 16.
In his opening speech, VCCI Chairman Vu Tien Loc, who is also Head of the National Start-up Programme Steering Committee, said the forum aims to form an ASEAN startup network, towards building ASEAN into a creative startup hub of Asia and the world.
It is the time to share experience and enhance cooperation in building a startup ecosystem of ASEAN, and an ASEAN brand of innovative startups, he noted, adding the forum targets discussing ways to promote transparent and sustainable development, and share good practices and digital transformation platforms.
Caitlin Wiesen, Resident Representative of the UN Development Programme (UNDP) in Vietnam, emphasised the important role of ASEAN startup enterprises for inclusive and sustainable development.
The region is one of the areas having the highest youth startup rates globally, and 40 percent of these startups are creating jobs, she said.
Pham Dung Nam, director of the project on supporting the national startup and innovation ecosystem until 2025 implemented by the Ministry of Science and Technology, said that it is necessary to consider the possibility of establishing and operating a digital online platform with high interaction to connect national startup ecosystems of the 10 ASEAN member economies, thus making startups a motivation to boost economic growth .
He also emphasised the importance to enhance cooperation and information sharing, and set up partnership among relevant parties in the ASEAN startup ecosystem, as well as the possibility of mobilising resources to form venture capital funds or financial assistance programmes for startups enterprises from the ASEAN member countries.