VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 26
Vietnamese exports to US market enjoy vigorous growth
The nation grossed billions of dollars from its export of telephones, textiles, footwear, and wood products to the United States during the first eight months of the year, according to figures released by the General Department of Vietnam Customs.
The country’s trade exchange of goods with the Americas, in particular to the US market, rose by 12% on-year to approximately US$70 billion during the reviewed period, therefore making the US become the continent posting the highest export growth.
The nation’s key export items to the US include textiles and garments, with export revenue reaching more than US$9 billion, mobile phones and accessories, with a value of approximately US$6.2 billion, computers, electronic products and components at US$6.3 billion, in addition to footwear products at roughly US$ 4 billion.
Furthermore, the country also raked in US$6.2 billion from exporting machinery, equipment, and other spare parts to the US market, while simultaneously earning US$4 billion and over US$1 billion from exporting wood and seafood products, respectively to the fastidious market.
The department’s latest data revealed that total Vietnamese import-export turnover during the eight-month period reached over US$337 billion, equivalent to the same period last year, with the trade surplus recording highs of over US$13.5 billion.
Moreover, Vietnamese import and export revenue with Asia continued to make up the highest proportion with 64% during the eight-month period. Indeed, import-export value to this market was recorded at approximately US$216 billion, representing a year-on-year decline of 2%.
Elsewhere, the country's import and export value to other continents such as Europe, Oceania, and Africa suffered decreases of 5.7%, 0.8%, and 6% on-year to US$41 billion, US$ 6.3 billion, and US$4.47 billion, respectively.
Vietnam enjoys US$3.78 billion in exports to EU since bilateral FTA taking effect
Vietnam enjoyed exports worth US$3.78 billion to the European Union (EU) in only one month since the EU - Vietnam Free Trade Agreement (EVFTA) took effect at the beginning of August.
The latest statistics from the General Department of Vietnam Customs showed that by the end of August, total export turnover from Vietnam to the EU had reached US$25.92 billion. In August alone, the figure reached US$3.78 billion.
Compared with the average of the first seven months this year, export value to the EU in August was about US$600 million higher, thanks to the positive effects of the EVFTA.
According to the Ministry of Industry and Trade, the effective EVFTA has created a great opportunity for Vietnam's exports, helping to diversify markets and products for Vietnam export activities, with some of Vietnamese key products enjoying high tax cuts, such as agricultural products, fisheries, furniture, textiles, footwear and electronics. The EU has been the third largest market for Vietnamese exports over the past eight months.
After more than a month since the agreement came into force, a range of Vietnam’s export products have seen positive changes in the EU market, including some that have been exported recently such as brackish shrimp from Ninh Thuan, coffee and passion fruit from Gia Lai and rice from Can Tho.
In addition, cell phones and components are the largest group in Vietnam's exports to the EU and the bloc is also the largest export market for this key sector from Vietnam. In August, export turnover of phones and components to Europe reached more than US$1 billion, thereby increasing total turnover in the first eight months to US$6.96 billion. Although it decreased by 17.2% over the same period in 2019, it still accounted for 22% of Vietnam’s total export turnover of phones and components.
In addition, the EU is also the leading export market for Vietnam's important commodity groups, such as computers, electronic products and components; textiles; agricultural products; and footwear, with turnover worth billions of USD in each group.
In the opposite direction, by the end of August, Vietnam’s total import turnover from the EU had reached US$9.82 billion. In August alone, the figure reached nearly US$1.4 billion, US$200 million higher than the average for the first seven months of the year.
Binh Dinh calls for investment into Hoi Van Hot Spring
Binh Dinh Province is calling for investment of nearly VND2trn (USD86m) to develop a tourism site at Hoi Van Hot Spring.
The provincial authorities are calling for investment in resorts, healthcare and residential areas near Hoi Van Hot Spring. The project will cover nearly 18 ha in Hoi Van Village, Cat Hiep Commune, Phu Cat District. The residential area will be rebuilt with better architecture, landscape and traffic and social infrastructure.
The health care and rehabilitation sector will cover 6.8 ha with resorts and other healthcare services for tourists. The residential sector will cover 10.9 ha with about 420 terraced houses and villas. The project will be carried out from 2020 to 2025.
Hoi Van Hot Spring is about 50 km to the northwest of Quy Nhon City. It is known for beautiful scenery surrounded by mountains, rivers and streams. Moreover, it is also considered to have a high potential as a health destination. The water temperature in Hoi Van is as high as 85 Celsius.
Vietnam the hotspot for Singaporean businesses
More Singaporean manufacturers are seizing the chance to look for investment opportunities as Vietnam is resuming international flights and is step-by-step opening the market again.
While numerous countries are engrossed in the fight against COVID-19, resuming international flight routes and opening the market is good news for not only the country but also overseas investors. The Vietnam-Singapore online investment promotion conference themed “Leveraging on Vietnam for your investments” last week, which was joined by 500 representatives from the Lion Island, indicates how hot Vietnam is.
Douglas Foo, president of the Singapore Manufacturing Federation (SMF) and co-chairman of the Vietnam-Singapore Business Council confirmed, “Thousands of Singaporean manufacturers are interested in Vietnam, which is an ideal destination to invest in manufacturing, particularly in smart cities, energy, and new areas involving Industry 4.0 and startups.”
The SMF champions the Singaporean manufacturing sector. With over 3,000 corporate members ranging from multinational corporations to small- and medium-sized enterprises (SMEs), such as Absotech, Daishin Engineering, Equiptest Engineering, Flexspeed Technology, and Hydratech Industries, the federation, which has successfully carried out a myriad of mutually beneficial investment and trade promotion activities with regional countries, will bring billion-dollar investment projects to Vietnam in the time coming.
Taking note of the free trade agreements that Vietnam has signed with partners, as well as the agreements that both countries are party to, Foo highlighted the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as a powerful driver of cooperation.
He said the agreement will enable tariff eliminations for many products and offer businesses from the two countries greater opportunities to pool their respective capabilities and partner up to bid for government projects.
Meanwhile the upcoming Regional Comprehensive Economic Partnership will also lower trade barriers and improve market access for goods and services, enhance transparency in trade and investment, as well as facilitate ASEAN SMEs to join global and regional supply chains.
“Singaporean manufacturers desire to collaborate with Vietnamese counterparts and work together to expand business across new frontiers made by existing and upcoming agreements, as well as the reopening of markets,” he added.
Last week, some international flights connecting Vietnam to Japan, South Korea, and Taiwan have been resumed for non-recreational visitors (such as students, employees, and business visitors), in addition to simplified immigration procedures and quarantine requirements. These moves made it easier for foreign investors to directly explore the market and make investments.
Deputy Minister of Planning and Investment Tran Quoc Phuong said that opening the market will accelerate economic recovery and development in the new normal. “Vietnam encourages Singaporean companies to invest in high-technology sectors, innovation centres, research and development facilities, infrastructure in industrial zones (IZs), as well as the processing and manufacturing industries, supporting industries, and the equitisation of state-owned enterprises,” he said.
Singaporean investors have found success in infrastructure and IZ development in Vietnam. Vietnam-Singapore Industrial Park, a joint venture between a Singaporean consortium led by Sembcorp Development Ltd. and local group Becamex Corporation, is developing nine projects covering 8,600 hectares in total and has grown into a symbol of the two countries’ friendship. Besides this, Singaporean names like Ascendas, Boustead Projects Ltd., and Mapletree also operate large-scale industrial property projects in Vietnam.
Utilising the strengths of Singaporean investors, Vietnamese authorities can access valuable expertise as well as advanced technologies for infrastructure development, industrial clusters, and smart cities.
“While Singapore has advantages in financial resources and science-technology knowhow, Vietnam has market potential, land, and human resources. There are great opportunities for cooperation and investment to capture the gains of these synergies,” stated Tao Thi Thanh Huong, Vietnamese Ambassador to Singapore.
She also called on Singaporean SMEs to explore investment opportunities in many cities and provinces in Vietnam, besides big cities like Hanoi, Ho Chi Minh City, and the central city of Danang, where there is little vacant land left and competition is quite fierce. “Vietnam welcomes all Singaporean investors and corporations to invest in its cities and provinces that offer great development potential and ample land, along with strong support from the local government to ensure the good performance of investment projects,” Huong added.
Singapore is now the third-largest foreign investor in Vietnam with more than $55 billion in the total investment capital and 2,554 projects. Especially, in the first eight months of the year, Singapore was the largest investor with $6.54 billion in registered investment, making up 33.5 per cent of the country’s total foreign investment inflows. Singapore is also a country through which other foreign investors invest in Vietnam, with $5.75 billion in the total investment by almost 100 projects from South Korean, the United States, and Taiwan.
South Korea and Vietnam move to buck pandemic
Vietnam and South Korea are expected to resume an increase in trade and investment thanks to an agreement to facilitate entry for the movement of persons into their respective territories, which have been deterred by the health crisis.
During her official visit to Vietnam last week – which was also the first by a South Korean senior official to the country since the spread of COVID-19 – South Korea’s Minister of Foreign Affairs Kang Kyung-wha and Vietnamese Prime Minister Nguyen Xuan Phuc agreed that the two nations will create the best conditions for experts, investors, and people from both sides to enter their own territories in order to increase the cooperation in tourism, investment, and trade.
Both nations are expecting to see bilateral trade turnover to rise to $100 billion in the near future following the normalisation of flights between them.
Minister Kyung-wha stated that many South Korean people wish to enter Vietnam to conduct business and investment, and also, many Vietnamese people want to enter South Korea for studies and doing business. Currently Vietnam is home to over 9,000 South Korean businesses operating in many sectors.
She hoped that the two countries will soon agree on a special entry process in order to facilitate experts, managers, and businesspeople from South Korea to enter Vietnam, with simplified procedures.
PM Phuc reaffirmed that Vietnam is creating favourable conditions for people coming from its partner country for those purposes as this is “necessary and beneficial to the two countries.”
Vietnam began resuming four routes to Guangzhou, Taiwan, Seoul, and Tokyo from September 15, and will do the same with Laos and Cambodia from September 22. The reopening of routes is expected to welcome 20,000 foreign visitors in the first month.
Currently Vietnam has facilitated over 6,000 South Korean experts to enter its territory amid complicated COVID-19 developments.
South Korean Ambassador to Vietnam Park Noh-wan said at the first ROK-Vietnam strategic dialogue titled “ROK-Vietnam relations: deepening the strategic cooperative partnership” recently organised in Hanoi that the two nations have succeeded in reining in COVID-19, and a new co-operation framework needs to be worked out, so that they can further enhance their existing strategic partnership forged in 2009.
During PM Phuc’s official visit to South Korea last November, President Moon Jae-in stressed that Vietnam is a key partner in South Korea’s New Southern Policy, and that his country “wishes that both nations continue boosting the bilateral ties to a new height.”
However, the Vietnamese side has yet to reveal any plan to reach such a comprehensive strategic partnership, in which bilateral cooperation will cover all sectors, especially economic, trade, and investment.
If it comes true, both nations’ investment and trade ties will have a more solid foundation to further flourish because more favourable conditions will be created for the trade and investment flows from South Korea into Vietnam and vice versa.
Figures from the Vietnamese General Statistics Office (GSO) showed that as of August 20, South Korea was Vietnam’s biggest foreign investor, with nearly 8,900 valid investment projects registered at $70.16 billion. In the first eight months of 2020, the total newly registered capital of South Korean investors in Vietnam was $2.96 billion.
Samsung is now the biggest foreign investor in Vietnam, with its total registered investment capital of over $17 billion for various projects and jobs for more than 160,000 local employees. The group is building a $220 million research and development centre in Hanoi, which is expected to become operational in 2022, employing another 2,200-3,000 people.
“Samsung Electronics’ exports account for 25 per cent of Vietnam’s total export turnover and 28 per cent of the country’s GDP,” said a statement from the South Korean Embassy in Vietnam.
The GSO also reported that eight-month bilateral trade sat at $41.3 billion, with Vietnam earning $12,6 billion from exports, down 1.5 per cent on-year, and the country spending $28.7 billion on imports, down 8.3 per cent on-year.
Phu Yen to rise as high-tech agriculture hub
Phu Yen province is sparing no effort on infrastructure investment and developing a high-tech agricultural zone with the ambition to turn the locality into a top agri-hub in the south-central coastal and Central Highlands regions through vigorously restructuring the local agricultural sector.
To date, Phu Yen has succeeded in shaping a raft of high-quality agricultural production areas aligned with associated supply chains. Most eminent of them is Phu Yen High-tech Agriculture Zone, which was established in 2013 and is one of 10 high-tech agriculture zones inserted in Vietnam’s master planning to 2020, with a vision towards 2030.
According to the Phu Yen High-tech Agriculture Zone Management Authority, the zone has engaged in deploying six components in the first-phase infrastructure development project over 460 hectares with total investment reaching VND520 billion ($22.6 million).
The work was kick-started in 2016 and thus far has completed and put into operation four components that are all essential to bring the high-tech zone into official operation.
Nguyen Van Hung, director of the authority, said that the infrastructure project components are in the finishing stages, ensuring conditions to attract new investment into the zone’s development in parallel to bringing improvements to local agricultural production practices.
In recent months, the authority has been joining investors to push up technology transfer for local people, helping farmers gradually alter mindsets and production methods, from there establishing diverse high-tech agricultural production areas in the locality for the creation of quality and competitive products in the market.
These altogether aim to lift Phu Yen’s agriculture to new heights with a raft of competitive products such as pear-shaped melons; Japanese cucumbers, authentic banana varieties of local and foreign origins; orchids like Ho Diep and Dendro; and local valued herbal plants, particularly Dang Sam, known popularly as Vietnamese ginseng.
The province has also completed growing and preserving four kinds of starch separation microorganisms, and succeeded in producing bio-products made of rice bran and cassava starch, and more.
Hung noted that as of now the authority has secured investment for nine projects worth VND670.5 billion ($29.15 million) in capital value and covering 184.4ha. The projects are on growing kaoliang, herbal plants, flowers, vegetables, and mushrooms; along with raising and propagating Japanese Koi fish and producing bio-organic fertilisers.
In light of a recent report by Phu Yen People’s Committee, after more than five years of implementing the project on agricultural sector restructuring following the prime minister’s Decision No.899/QD-TTg issued in 2013 approving the project “Agricultural restructuring towards raising added values and sustainable development”, and the plan on agricultural sector restructuring for the 2017-2020 period under the prime minister’s Decision No.1819/QD-TTg released in 2017, the provincial agricultural sector has been pushing up the application of science and technology progresses, and bolstering production efficiency attached to processing, agricultural, and rural services development.
Although it has faced numerous difficulties recently, the sector has still managed a stable growth averaging 4 per cent in the added value annually during 2016-2020. The production value grew an average 4.5 per cent per year, ensuring successful implementation of the project’s targets and contributing 23.94 per cent total productivity value in the province’s economic structure.
Tran Huu The, Deputy Chairman of Phu Yen People’s Committee, however noted that albeit after restructuring the agricultural sector and reached set targets, both quality and efficiency are still limited with a slow pace of restructuring across the board. The proportion of animal husbandry and seafood in the total economic structure remains modest while the value produced on a unit of cultivated land stands low.
Phu Yen, therefore, has set forth several tasks and measures to promote agricultural sector restructuring in the upcoming time. They include further enhancing consciousness and creating high consensus in society to ensure an effective reshuffle of the agricultural sector in particular to avail of the advantages of the province and each area.
This is deemed a top priority by management bodies from central to local level. It is also deemed important to revise existing policies and mechanisms to improve the quality of project implementation, striving to achieve regional GDP growth of the agriculture-forestry-fishery sector from 3.9-4 per cent annually during 2021-2025.
Efforts are also being geared towards encouraging investors to partake in the quality rice production chain through introducing more incentives; working on intellectual property rights protection for the province’s specialty products such as Phu Yen lobsters and O Loan oysters, and propelling implementation of the ‘One Commune, One Product’ scheme with innovation in production and consumption methods to boost efficiency.
Tech solutions to elevate logistics
As Vietnam is accelerating its e-government development, many technology solutions have been showcased to advance Vietnamese logistics at the 15th conference on e-government development.
tech solutions to elevate logistics
At the national conference on Developing e-Government Contribution to Online Public Services towards Digital Government – Models and Technology Solutions, many technology models and solutions have been introduced to enterprises to encourage digital transformation among logistics companies.
When it comes to port logistics, Nguyen Hong Minh, vice president of Sao Bac Dau Technology Group showcased its Terminal Operating System (VTOS) to assist port logistics operations.
According to statistics from Sao Bac Dau, 75 per cent of ports, ICDs, and depots have yet to apply modern technology into their operations. These places mainly use labour in combination with simple stand-alone software, resulting in the suboptimal organisation of freight traffic.
Vietnamese ride-hailing platform Be Group also exhibited its intergrated ride-hailing application as an effective transport solution for drivers. Be's app gives out 3 technologies consisting of Virtual BOT, DriverBuddy, and beMobility to ease traffic as well as assist drivers on their way.
The representative of Be Group said that Vietnam’s population density is only lower than Singapore and the Philippines in Southeast Asia with 290 people per square kilometre.
In contrast, the number of new roads and corresponding infrastructure have only increased by 0.39 per cent a year. Also, land reserved for traffic is only 8.65 per cent, while as per Decision 11/NQ-CP, it should be 20-25 per cent.
Because of the COVID-19 pandemic, many logistics companies are moving to apply technology in their operations, offering a potential market for logistics investment.
A representative of Hongbang International University said that the logistics market in Vietnam is growing increasingly vibrant, highly competitive, and larger as big logistics companies in the world have been entering.Also, domestic enterprises have merged and innovated according to the trend. Additionally, logistics technology in Vietnam is developing day by day, along with expansion and development of e-commerce logistics.
EU welcomes Decree on Timber Legality Assurance System of Vietnam
The government's Decree on the Timber Legality Assurance System of Vietnam is an important step towards the full implementation of the annex with the same title of the EU-Vietnam Voluntary Partnership Agreement (VPA) on Forest Law Enforcement, Governance, and Trade (FLEGT).
Ambassador of the European Union to Vietnam Aliberti trusts in Vietnam’s continued commitment to the VPA, which entered into force in last June, and its active pursuit of the VPA’s objectives to manage all types of forests sustainably and provide a legal framework to ensure the legality of the production of timber and timber products, irrespective of whether the timber is originally from inside or outside of Vietnam.
The preparation of the Decree on the Timber Legality Assurance System of Vietnam (VNTLAS decree) provided for consultation with VPA stakeholders, including the VPA multi-stakeholder core group in 2019, and the EU is grateful for the opportunities for dialogue, which continued during and beyond the VPA Joint Implementation Committee meeting in June 2020.
The VNTLAS decree addresses important elements of the VPA related to the import and export of timber and timber products. It also provides a basis for an Organisation Classification System, albeit one specific to enterprises engaged in processing and exporting timber, and thus lacking some core elements foreseen in the VPA. Such a system covering importer and domestic producer organisations alike is foreseen in the VPA as a tool to facilitate legality assurance throughout the supply chain in Vietnam and is a core element of the VPA.
The decree appears to reflect the import controls committed to in the VPA. The EU looks forward to seeing how these will be developed in line with the VPA, following the joint coordination steps foreseen therein, and Vietnam then puts these controls into practice, including with the specification of adequate, proportionate, and dissuasive administrative or criminal sanctions to address violations.
The decree also points to the need for establishing a FLEGT licensing scheme. However, such a scheme could only become operational once a fully functioning VNTLAS in line with the VPA has been developed, implemented, and jointly assessed as fulfilling all VPA requirements.
In this context, Ambassador Aliberti said, “The scope of the VPA extends to all operators, involved in all parts of VNTLAS supply chains and for timber destined to all domestic and export markets. As such, the decree is a step towards these commitments, but should its scope not be aligned with the VPA by the time the decree becomes applicable, it might negatively affect Vietnamese exporters.”
The EU looks forward to seeing how Vietnam will in the future extend the scope to address legality, not only at the point of import and export, but importantly for operators involved in the harvesting, trading, and processing of domestic as well as imported timber, and for products destined to all markets.
Vietnam is among the few countries that have ratified a VPA and are actively developing legislation which will provide the basis for systems and capacities to be developed to assure the legality of the production of timber and thus take the necessary steps to underpin the eventual FLEGT licensing scheme. Operators exporting to the European Economic Area (EU, Iceland, Norway, and Liechtenstein) from countries with an operating FLEGT licensing scheme (so far only Indonesia) will benefit, since FLEGT-licenced shipments will no longer be subject to due diligence requirements of the European Timber Regulation. Several other countries, to which Vietnam is exporting, also already expressed interest in an effective VNTLAS, as it would facilitate imports for their operators, as well.
The EU looks forward to continuing to engage with Vietnam during the development and implementation of this and further regulations as needed to fulfil all requirements of the VPA.
The next joint technical meeting on the next steps for the implementation of the VPA is foreseen to take place on October 2, 2020 at the office of the EU Delegation to Vietnam.
Pegatron to invest additional $1 billion in Vietnam
Pegatron Corporation, which is one of world’s five largest electronic parts and component manufacturers, is proposing to develop a plant in Nam Dinh Vu Economic Zone in the northern city of Haiphong.
The complex of Pegatron would combine four components, including the $19 million Pegatron VN1 project, which was licensed in March. The investor is completing the procedures for the $148 million Pegatron VN2. The third period – the $500 million Pegatron VN3 – is expected to be implemented in 2026-2027.
In addition, Pegatron plans to relocate its research and development (R&D) centre from China to Vietnam.
At present, Pegatron submitted dossiers to the Haiphong Economic Zone Authority for the project’s second phase, which will manufacture household electronic equipment, computers, communications equipment, electronic components, and circuit boards for the likes of Microsoft, Sony, Lenovo, and Apple.
Thus, Pegatron would join two iPhone assemblers – Wistron Corporation and Hon Hai Precision Industry Co. Ltd. – in developing manufacturing facilities or building extra capacity in Vietnam.
None of the three are making iPhones in Vietnam and have no imminent plans to do so. GoerTek is now making AirPods in the country while two other Apple assembly partners – Compal Electronics and Luxshare ICT – are also present in Vietnam.
Along this project, according to Tuoi tre online, the Ministry of Planning and Investment is co-operating with infrastructure developer Nam Dinh Vu to negotiate with and attract Universal Global Technology Group, which is a member of global technology group ASE Holding, to develop a $400 million electronic board manufacturing and assembly plant.
EU investors eye $1 billion logistics hub in Vietnam
EU investors are interested in developing a logistics complex worth nearly $1 billion in Vietnam’s southern province of Ba Ria-Vung Tau to tap into growing trade demands on the back of the EU-Vietnam Free Trade Agreement (EVFTA).
At a recent meeting on September 16 with Prime Minister Nguyen Xuan Phuc, Elsbeth Akkerman, the Netherlands' Ambassador to Vietnam, said that the EVFTA will be a driving force for the development of bilateral ties, creating a foundation for investment cooperation in logistics projects. “The government of the Netherlands supports this project, with the Dutch Development Bank pledging to contribute 10 per cent of the project’s investment capital.”
Also at the meeting, Belgian Ambassador to Vietnam Paul Jansen said that Belgium also supports this project, hoping to strengthen trade between Vietnam and the EU in general, and between Belgium and the Netherlands and Vietnam in particular. The ambassador elaborated that a Belgian investment corporation will contribute capital to the project.
According to potential investors, this project can accommodate big container vessels to convey Vietnamese goods to the world. In addition, investors will also join activities to boost inland waterway transport, thus enabling the transportation of goods and farm produce from the Mekong Delta region to the Cai Mep Ha area and then to the world.
The investors expressed their hope that the project will be soon approved, and confirmed that they will develop it on schedule, ensuring quality and green transportation for sustainable development.
Chairing the meeting, the PM affirmed that the Vietnamese government always creates favourable conditions for foreign investors, especially those from the EU who have strong capacity and high-tech expertise.
The government leader assigned Ba Ria-Vung Tau to work with the Ministry of Planning and Investment on the investment proposal and then reports to him about the related issues.
The leader of the province said that it is ready to provide cleared land for the project.
Vietnam is the EU’s second-largest trade partner in ASEAN after Singapore, with trade in goods worth €45.5 billion ($53.9 billion) in 2019. The FTA is projected to help increase Vietnam’s GDP by 4.6 per cent and its exports to the EU by 42.7 per cent by 2025.
Additionally, the European Commission has forecast the EU’s GDP to increase by $29.5 billion by 2035, thus spurring demand for maritime transportation services.
Special tax incentives for National Innovation Centre from early October
Research and development and investment activities in the National Innovation Centre will enjoy special tax incentives from October 5, 2020.
The government issued Decree No.94/2020/ND-CP dated August 21 governing the incentive policies for the National Innovation Centre (NIC) to create the most conducive environment for research and development (R&D), business, and investment activities.
Accordingly, the incentive policies include an exemption of the import duty on goods and products to develop fixed assets; those directly used for R&D, sci-tech development, technology incubator, incubation of high-tech firms, and technology innovations in line with the related import-export regulations.
For the establishments in Hoa Lac High-tech Park (HHTP), recipients will be able to enjoy a corporate income tax (CIT) of 10 per cent for 30 years from the first year of making a revenue, four years of tax exemption, and a 50 per cent reduction in payable tax in the following nine years from the date of receiving payable income. They will also be exempted from import duty for materials and spare parts used for manufacturing that are not produced domestically, from the date of beginning manufacturing.
Establishments outside HHTP can enjoy a CIT of 10 per cent for 30 years from the first year of having revenue, an exemption of tax for four years, and a reduction of 50 per cent of payable tax in the following nine years dating, counted from the date of getting payable income.
The decree will take effect from October 5, 2020.
Vietnam’s credit growth estimated at 4.81%: central bank
Vietnam’s outstanding loans as of mid-September grew by 4.81% compared with the end of 2019 while M2 money supply rose by 7.58%, as announced by the State Bank of Vietnam (SBV) at a press conference on September 22.
Since the start of the year, the central bank has cut interest rates by 1 to 1.5 percentage points in order to support banks’ liquidity and make loans cheaper for businesses.
The short-term lending rate for priority sectors currently stands at around 5%, which is low compared with other countries with similar conditions to Vietnam, said Pham Chi Quang, deputy head of the SBV’s monetary policy department.
With regards to exchange rate regulation, despite some periods of volatility due to the coronavirus pandemic, stability in the foreign exchange market has been maintained.
As of September 21, the exchange rate had risen by 0.16% compared with the end of 2019.
At the press conference, the SBV also stated that Vietnam’s bad debt ratio continues to be kept at under 2%.
Nguyen Thi Hong, the central bank’s deputy governor, said that the SBV will continue to pursue a proactive and flexible monetary policy in combination with fiscal and other macroeconomic policies in order to maintain stability and support a rapid economic recovery.
Vietnam Airlines to resume domestic flights in October
National flag carrier Vietnam Airlines will reopen its domestic flights to several safe destinations to meet thetravel demands of passengers and maintain its business operations amid the effective control of the COVID-19 outbreak in Vietnam.
A representative from Vietnam Airlines said that the carrier will resume six domestic routes from October 1this year, including Hai Phong - Da Lat, Hai Phong - Nha Trang, Hai Phong - Buon Ma Thuot, Da Nang - Da Lat, Da Nang - Buon Ma Thuat, and Hai Phong - Da Nang.
The carrier plans to operate three return flights per week for the Hai Phong - Da Lat, Hai Phong - Buon Ma Thuat, and Da Nang - Buon Ma Thuat routes and four return flights per week for the Hai Phong - Nha Trang, Da Nang - Da Lat, and Hai Phong - Da Nang routes.
On the occasion, Vietnam Airlines will offer preferential airfares from VND99,000 per flight on the abovementioned routes for departures from October 1 to December 31, 2020.
The carrier said that as the second wave of COVID-19 pandemic has gradually been put under control, the number of passengers travelling by air has quickly recovered. Vietnam Airlines reported the transport of nearly 550,000 passengers in August alone.
Vietnam Airlines plans to recommence more domestic flights in the near future to restore its business activities and contribute to implementing the goals set by the Government.
EVFTA and opportunities for maritime transport
The Vietnam - EU Free Trade Agreement (EVFTA) opens many opportunities for Vietnam's economic sectors, including maritime transportation.
Commitments in the EVFTA were assessed to help enterprises that provide maritime shipping services to expand their market scale as well as create favourable conditions for them to effectively implement services. The EU is currently one of Vietnam’s leading trade partners with two-way export and import turnover of US$56.45 billion in 2019, including US$30.31 billion for export and import turnover by sea (accounting for 54%).
The EVFTA is also expected to increase Vietnam’s exports to the EU by over 40% and imports from the EU by 35% in 2025. With exports and imports seeing higher growth, the logistics market has been expanding further, especially in maritime shipping.
On the other hand, the EU is also a market that provides high-quality means of transport, machinery, equipment and technology for logistics activities. Vietnam's commitments one liminating tariffs on vehicles and equipment imported from the EU will offer opportunities for maritime transportation businesses to save investment costs in infrastructure and improve their technological capacity.
In addition, the opening of the maritime shipping service market under the EVFTA will promote EU logistics companies to invest in Vietnam while helping domestic enterprises to develop further in the near future.
However, according to experts, the EVFTA also puts Vietnamese maritime businesses in the face of significant challenges. EU service providers are very strong in the logistics sector, with many multinational companies and large modern fleets accounting for a significant market share in the world. Meanwhile, the gap in development between EU and Vietnamese logistics enterprises will create even fiercer competition.
On the other hand, the EU market always requires high service quality while also having indirect legal constraints (on entry and nationality of workers); therefore, it is not easy for Vietnamese businesses to meet the standards set by this market.
Experts recommended that in order to take full advantage of EVFTA’s opportunities and overcome existing challenges, Vietnamese maritime enterprises need to actively improve their competitiveness through the building of long-term and methodical plans. They should also raise their capacity through the application of science and technology as well as study and apply successful models in preparation for facing competitive pressure and food service providers
It is crucial to proactively enhance cooperation and connection to improve their strength; and create a service supply chain from business linkages. In particular, the maritime transportation enterprises should fully understand the commitments on opening logistics services under the EVFTA to identify new risks in competition with those from the EU while clearly and correctly understanding the contents of the EVFTA's commitments to access the market and the tool for development.
Hanoi strives for 8% growth in handicraft export turnover
Hanoi is striving to expand handicraft export markets for an annual growth of 8% in export turnover under a programme on promoting the city’s industrial development for the 2021-25 period.
The programme also aims to create over 3,500 products of handicraft and fine arts for domestic and foreign markets.
In the coming time, Hanoi will invite foreign importers and international friends to its annual handicraft fair to seek partners.
Through the programme, the city also aims to support more than 10,000 businesses and industrial establishments in rural areas and help up to 70,000 rural labourers find stable jobs.
To fulfil the target, Hanoi will hold 300 vocational training courses for rural workers in the period and work to develop high quality human resources and raise management capacity in the sector.
It will also assist firms and industrial establishments in rural areas in investing in new equipment and applying advanced technology in a bid to increase productivity and quality products and save costs.
Hanoi is leading the country in handicraft products. In 2018, the export turnover of this sector reached US$192 million. The sector generated jobs for nearly 1 million workers with an average annual income of about VND55 million (US$2,365) each.
The capital has 1,350 craft villages, accounting for 60% of the total nationwide.
These craft villages are diversified and cover different trade groups including processing forest and agricultural products, lacquer, bamboo, embroidery, mechanics, sculptures and garments.
Many handicraft products associated with rural culture are almost intact and have developed into a profession, such as the carpentry village of Chang Son in Thach That district.
Bat Trang commune, which has thousands of households engaged in pottery production, is another typical example.
Hanoi recently announced 275 products meeting standards of the “One Commune – One Product” (OCOP) programme at the municipal level in 2019, raising the total number of such products here to 301.
According to the local coordinating office for new-style countryside building, Hanoi classified 301 products last year, including six rated five stars, 207 others four stars, and 88 three stars. The city also stepped up promoting OCOP products, thus helping to improve consumers’ recognition of and trust in local goods.
During the first half of 2020, it has continued to enhance communication about the OCOP programme and issued temporary guidance on the management and use of OCOP marks and star ratings on labels and packages of products with at least three stars in the programme.
Meanwhile, local districts and towns have also selected products for classification at the district level.
Hanoi aims to rate about 800 – 1,000 OCOP products by the end of this year.
In 2019, Hanoi announced it would spend VND265 billion (US$11.4 million) on implementing the local OCOP programme for the 2019 – 2020 period.
According to the plan, 100% of OCOP programme managers at commune-, district, and municipal level public agencies as well as at organizations, businesses and cooperatives registering for the programme will have to undergo training to improve their building capacity.
The capital city has set a goal of developing at least two eco-craft village models. It will look to improve the local origin tracing system for agro-forestry-fishery goods (https://hn.check.net.vn) and website serving State management and demand-supply connectivity related to Hanoi’s OCOP products (http://nongthonmoihanoi.gov.vn/).
The OCOP was initiated by the Ministry of Agriculture and Rural Development in 2008, following the model of Japan’s “One Village, One Product” and Thailand’s “One Town, One Product”. It is an economic development programme for rural areas focusing on increasing internal power and values, which is also meant to help with the national target programme on new-style rural area building.
Fitch Solutions predicts stable support for local pharmaceutical industry
The Vietnamese Government's continued support of the local pharmaceutical industry will remain steadfast, according to a report released by Fitch Solutions, a macro research unit of Fitch Group.
This comes after the UK-based financial information group said in a report released last week that this is in part driven by efforts by the authorities to meet domestic healthcare needs. In addition, the economic potential of the pharmaceutical sector will serve to incentivise continued Government support for the domestic industry.
Despite the Government aiming to increase the share of locally produced pharmaceuticals to 80%, an average of 55% of medicines in the nation are imported each year.
One of the major factors in the country’s reliance on imports is that most domestic companies lack research and development capabilities, and therefore do not meet the European Union Good Manufacturing Practice (EU-GMP) or Pharmaceutical Inspection Co-operation Scheme Good Manufacturing Practice (PIC/S-GMP) standards that are required to manufacture high-quality generic drugs. As such, the nation imports more than 90% of drug inputs, half of which come from China.
According to the report published by Fitch, partnerships with local firms are an integral part of the industry. Due to Government initiatives, local pharmaceutical firms will therefore play an increasingly dominant role in the domestic sector.
“This accentuates the need for multinational pharmaceutical companies to partner with local drug makers to adapt to this trend. Finding a local company to start such a joint venture is an important first step to enter the market in Vietnam,” Fitch said.
Furthermore, foreign companies often work alongside domestic companies, such as Diethelm Vietnam, Zuellig Pharma Vietnam, and Mega Lifesciences, in an effort to fill in various needs in the supply chain.
In line with this, Fitch believe a shift from pharmaceutical production to a more research-based industry to be a likely development moving forward. The boost in attractiveness of the Vietnamese market comes simultaneously as the business environment for drug makers in neighbouring countries appears to be unfavourable. This can be seen as in December, 2018, Indonesia enacted a regulation regarding the compulsory licensing of every medical product that is not made locally.
“This is expected to have significant negative consequences for foreign direct investment in the country, with Vietnam being the one of the beneficiaries of pharmaceutical companies shying away from Indonesia. This, combined with the geopolitical position of Vietnam, places the country in a favourable position to become a regional pharmaceutical research and export hub,” the report by Fitch outlines.
In July, 2019, Pharma Group, the Pharmaceutical Sector Committee of the European Chamber of Commerce in Vietnam, highlighted that the country has the ability to reach a higher position in relation to the value chain of the science and life sector in comparison with other ASEAN countries. Despite this, it was noted that further deliberation is required before positive steps taken by the nation can eventually materialise.
Although there is plenty of potential for further development, Fitch note that the Vietnamese pharmaceutical industry is also facing challenges in terms of foreign investment.
“We note that despite our positive outlook on the pharmaceutical market, significant risks remain. There are a number of shortcomings, including underdeveloped infrastructure, lack of staff and finance, and low healthcare access among people in rural and remote areas. Access to medicines will remain a key challenge for pharmaceutical companies seeking to capture the commercial prospects in Vietnam as the population is highly ruralised. Patients will continue to face challenges over medical access and rising out-of-pocket healthcare costs,” Fitch states.
Moreover, there exists large regional variations with regards to the number of healthcare facilities, doctors, and beds when comparing rural and urban regions nationwide, which therefore further exacerbates these access issues.
Vietnam exports approximately 1 billion face masks over eight-month period
Vietnamese businesses shipped over 846 million medical masks abroad during the first eight months of the year, according to data compiled by the General Department of Vietnam Customs.
August alone saw more than 70 local firms involved in exporting 135 million medical masks of all types, while June witnessed the highest number of mask exports, with over 236 million units being shipped abroad.
The majority of face masks for export were fabric masks, fine dust masks, 100% cotton fabric masks, double-layered cotton masks, and medical masks.
The largest export markets for Vietnamese face masks are Japan, the Republic of Korea, Germany, and the United States, while face masks were also exported to Hong Kong, Singapore, Poland, Australia, China, Laos, and South Africa.
This exponential rise in demand for face masks has proved to be one of the highlights of the novel coronavirus (COVID-19) epidemic, with several textile and garment enterprises shifting their production by importing machinery and raw materials. This was done as a means of exporting antibacterial fabric masks, medical masks, and protective clothing in order to compensate for export orders that were delayed due to the impact of COVID-19.
Furthermore, the demand for importing face masks from the nation is anticipated to increase in the near future as a result of the complicated nature of developments regarding the COVID-19 epidemic globally.
The Ministry of Industry and Trade have therefore advised local firms to research information about obtaining relevant CE and the US Food and Drug Administration (FDA) certificates when exporting goods to the EU and US markets, respectively.
Malaysia unveils new COVID-19 economic stimulus package
The Malaysian government has unveiled another economic stimulus package worth 10 billion RM (2.4 billion USD) to bolster the country's economy and weather the impact of COVID-19.
In a special televised address on September 23, 2020, Prime Minister Tan Sri Muhyiddin Yassin announced that the government is rolling out the Kita Prihatin Programme which is a special initiative aimed at helping micro entrepreneurs, the country's workforce and those from the B40 as well as the M40 income group.
Under the Kita Prihatin Programme, Muhyiddin said the government has set aside 600 million RM for the Special Prihatin Grant that is expected to benefit 200,000 micro entrepreneurs, according to the New Strait Times.
Those eligible for the grant must be registered micro entrepreneurs as well as those holding license with the Companies Commission of Malaysia or local authorities before August 31.
Muhyiddin said the government has also decided to extend the wage subsidy programme that was first introduced under the Prihatin Rakyat economic stimulus package.
For the Kita Prihatin Programme, Muhyiddin said the government has allocated 2.4 billion RM to carry out the Wage Subsidy Programme 2.0 that is expected to benefit 1.3 million workers from October until the end of the year.
The subsidy will be given to affected employers who had suffered at least a 30 percent loss since the Recovery Movement Control Order period, compared to last year.
The wage subsidy is granted up to three months at a rate of 600 RM per month for each employee at a maximum of 200 people.
Applications will be open from October 1 to December 31, 2020, he said.
This programme will also be open to companies that have registered with the Social Security Organisation (Socso) as of August 31 this year.
New applications that have never received the subsidy would also be eligible for this programme, and would receive the subsidy for up to six months.
ADB approves over 29 mln USD loan for Cambodia to improve public services
The Asian Development Bank (ADB) has approved over 29 million USD in loan for Cambodia to help the country improve service delivery through key reforms in public financial management and decentralization, said a press statement on September 23.
The Second Decentralised Public Service and Financial Management Sector Development Programme includes a 20-million-USD policy-based loan that will support a programmatic approach to strengthening local governments' fiscal planning and management, as well as public administration, the statement said.
It also includes a 9.35-million-USD project loan to help build the National School of Local Administration, a dedicated training center for local government officials, it added.
"The project aims to help local governments across Cambodia provide sustainable, effective, and efficient delivery of basic public services, while also bridging the urban-rural divide," said ADB senior public management specialist Jhelum Thomas.
"The project is much needed, as the coronavirus disease (COVID-19) pandemic has seen significant numbers of people move from urban to rural areas," she said. "This will put more pressure on local governments to provide social assistance and basic services such as roads, water supply, and sanitation to support inclusive and equitable growth."
According to the statement, more than 70 percent of Cambodians lived on less than three USD a day and access to basic services has been uneven. Poor and vulnerable households are especially at risk amid the COVID-19 pandemic, which has led to a significant decline in key sectors of Cambodia's economy and losses in livelihoods.