Vietnam and the US signed a Memorandum of Understanding (MoU) on technical cooperation between the Ministry of Agriculture and Rural Development (MARD) and the US Grains Council (USGC) in Washington on September 22.

MARD Deputy Minister Le Quoc Doanh and President and CEO of USGC Ryan LeGrand witnessed the signing.

Addressing the event, Deputy Minister Doanh affirmed that Vietnam is one of the fastest growing animal feed markets in the world and a major importer of corn and grains.

Vietnam has grown from 16th place to third in the world in terms of corn imports in less than a decade. The country is also a potential customer of ethanol fuel, which is expected to widely use E5 bio-fuel and switch to E10 in the near future, according to Doanh.

According to Nguyen Do Anh Tuan, director of the International Cooperation Department of the MARD, Vietnam and the US have a lot of potential and room for trade cooperation, especially in agricultural products.

Farm produce of the two countries are complementary to each other, he said, adding the two sides could enhance cooperation in science-technology and technology transfer between research units, enterprises towards promoting a green, sustainable and low-emission agriculture.

Ryan LeGrand said the US and Vietnam have developed a plan towards a harmonious and sustainable trade balance with many specific solutions in the field of agriculture.

According to LeGrand, the item that helps to balance bilateral trade is ethanol fuel because Vietnam is a potential customer.

Under the MoU, the MARD and USGC will establish a technical cooperative relationship in the field of agriculture and animal feed, production and use of biofuels in Vietnam as well as enhance mutual understanding on relevant policies and regulations in accordance with Vietnam’s laws, regulations, policies and development goals.

USCG will help improve the capacity of Vietnamese managers, importers, and feed processing businesses in accessing new technologies, commercial forms and skills serving their production management.

It will also provide medical equipment such as COVID-19 test kits and COVID-19 treatment drugs for Vietnamese livestock enterprises./.

Vietnam to facilitate US investment projects, says minister

At the ceremony. (Photo: moit.gov.vn)

Vietnam will work to create an open and transparent business environment and offer favourable conditions for US investment projects in the country, said Minister of Industry and Trade Nguyen Hong Dien.

Dien made the statement at a working session with leaders of the US's AES Corporation in New York on September 21 (local time) to discuss the group's invesment and business activities in Vietnam.

At the meeting, the leaders of AES Corporation informed that a joint venture agreement has been completed for the Son My LNG port warehouse project on the basis of the main terms of the joint venture contract of Son My LNG (liquefied gas) port warehouse project signed in October 2020.

This is an important milestone in the development of the entire project, obtained thanks to the approval and direction of the Government, the Ministry of Industry and Trade, the Commission for the Management of State Capital at Enterprises, the Vietnam National Oil and Gas Group (PetroVietnam) and relevant agencies of Vietnam.

Minister Dien said leading US firms’ success in Vietnam not only holds economic significance but also promotes Vietnam as a trustworthy investment destination for US investors in the future, thus gradually contributing to building bilateral strategic trust.
 
The Vietnamese Ministry of Industry and Trade will continue making efforts to improve the business and investment environment and actively deal with the US’s proposals, he said.

Then the minister and leaders of Petrovietnam, the Petrovietnam Gas Joint Stock Corporation (PV GAS) and the AES witnessed a signing ceremony to establish the firms’ joint venture – the Son My LNG Port Warehouse Co., Ltd.

The establishment, which aims to invest in the construction of the Son My LNG port warehouse, will contribute to ensuring the supply of liquefied gas for power generation demand of the key economic region in the South in particular and Vietnam in general, helping to ensure the national energy security./.

President Nguyen Xuan Phuc receives leaders of US enterprises in New York

Vietnamese President Nguyen Xuan Phuc hosted separate receptions in New York on September 21 (local time) for leaders of major US companies which want to increase investments in Vietnam.

These enterprises included the GE Group, CFM International, AviaWorld LCC, Cantor Fitzgerald, Weidner Asset Management Steelman Partners, DeLong, Valero, AGP, and UPC Group.

President Phuc, who has been in New York to attend the high-level debate of the UN General Assembly's 76th session, said that Vietnam treasures and wants to further develop its comprehensive partnership with the US in a more practical, stable and long-term manner.

Vietnam is determined to accelerate comprehensive and synchronous economic reforms and improve its business environment for foreign enterprises to expand their operations, he said.

The State leader highly evaluated US companies investing in Vietnam and shared their difficulties amid the COVID-19 pandemic. The Vietnamese Government is urgently carrying out a series of measures to put the epidemic under control, sustain supply chains, and recover production, he said.

President Phuc said investment, cooperation, and experience-sharing activities of US companies, particularly AviaWorld LLC and GE, have contributed significantly to Vietnam’s economic growth and development of its aviation sector.

He also welcomed US investors like Cantor Fitzgerald, Weidner Resort/Gaming Asset Management Steelman Partners, DeLong, Valero and AGP Group to study the Vietnamese market.

Representatives of the US firms thanked the Vietnamese Government for its assistance to US companies operating in the nation over the past time and highly evaluated its commitments.

They said Vietnam is a dynamic market with a lot of potential and hoped to expand their business and investment in the Southeast Asian country./.

Reference exchange rate up 7 VND on September 23

The State Bank of Vietnam set the daily reference exchange rate at 23,139 VND/USD on September 23, up 7 VND from the previous day.

With the current trading band of /- 3 percent, the ceiling rate applicable to commercial banks during the day is 23,833 VND/USD and the floor rate 22,444 VND/USD.

The opening hour rates at commercial banks stayed stable.

At 8.25 am, Vietcombank listed the buying rate at 22.630 VND/USD and the selling rate at 22,860 VND/USD, unchanged from September 22.

BIDV also kept both rates unchanged, listing the buying rate at 22,660 VND/USD and the selling rate at 22,860 VND/USD.

Similarly, Vietinbank maintained both rates, listing at 22,640 VND/USD (buying) and 22,860 VND/USD (selling)./. 

Two working groups set up for inspection of maritime service charges

The Ministry of Transport has set up two working groups to inspect and review all types of maritime service charges.

The Minister of Transport has just signed Decision No.1673, 1677/QĐ-GTVT on the establishment of two working groups to inspect and review service charges as well as international and domestic shipping freight rates at seaports in Haiphong, Quang Ninh, Ba Ria-Vung Tau, and Ho Chi Minh City.

Accordingly, the working group in charge of the areas of Haiphong and Quang Ninh are led by Nguyen Hoang, deputy director of the Vietnam Maritime Administration (VMA). Meanwhile, Nguyen Dinh Viet, also deputy director of the VMA, will be responsible for the working group in Ba Ria-Vung Tau and Ho Chi Minh City.

Members of the two working groups consist of the VMA, Department of Finance, Department of Legal Affairs, Ministry of Transport; port authority leaders of Haiphong, Quang Ninh, Ba Ria-Vung Tau, and Ho Chi Minh City.

According to the VMA, in the first eight months, the volume of goods passing through the seaport reached 481.6 million tonnes (excluding transit goods not handled at ports), up 4 per cent on-year. Containerised cargo volume through seaports reached 16,699,000 TEUs, up 18 per cent on-year.

Due to the heavy impact of the COVID-19 pandemic in the south, the freight volume in August experienced the largest drop ever. Specifically, the volume of goods through ports reached nearly 60 million tonnes, down 9 per cent against July.

The number of ships flying foreign flags through the country reached 43,269 turns, an increase of 9 per cent on-year. The number of ships flying the Vietnamese flag reached 43,599, up 2 per cent on-year. The number of passages by inland waterway vessels reached 239,693, down 5 per cent on-year.

Aircraft maintenance joint venture receives US certificate

The Vietnam-Singapore Technologies Engineering Aerospace Co.Ltd (VSTEA) recently received a certificate approving its component maintenance, repair and overhaul (MRO) facilities from the US Federation Aviation Administration (FAA).

VSTEA is a joint venture between the Vietnam Airlines Engineering Company (VAECO), a subsidiary of Vietnam Airlines, and ST Engineering Aerospace Systems Company, a member of the ST Engineering of Singapore.

It specialises in providing aircraft component MRO services for domestic and international airlines, which cater to such current aircraft as the Boeing 787, Airbus A350, A320, A321 and ATR72, as well as technical assistance in avionics, hydraulic, pneumatic, electro-mechanical, wheels, brakes, and emergency equipment.

The FAA standards are widely adopted in the global aviation industry and serve as a gauge of quality and a passport to market expansion, making it easier to offer maintenance services to airlines in different regions, including the US.

To achieve the certificate, the VSTEA said it went through five stages of appraisal under the FAA’s strict standards. After completing the final examinations in late July, its facility in Hanoi was certified on August 31 and another in Ho Chi Minh City on September 16./. 

UOB raises charter capital in Viet Nam

The United Overseas Bank (UOB) has increased its charter capital in Viet Nam from VND3 trillion (US$128.8 million) to VND5 trillion ($214.6 million), following approval from the State Bank of Viet Nam earlier this month.

“This fresh injection of capital demonstrates UOB’s commitment to deepening our presence in Viet Nam, and contributing to the country’s ongoing development," said Wee Ee Cheong, UOB Deputy Chairman and CEO.

"UOB Vietnam has grown from a representative office in 1993 to a wholly-owned subsidiary bank in 2018. Over the last three years, UOB Vietnam has grown steadily and achieved a 53 per cent compounded annual growth rate in assets. This increased capital will allow us to continue supporting both new and existing customers in Viet Nam, through progressive solutions and the connectivity we can offer across UOB Group’s regional network,” he said.

UOB Vietnam is focused on meeting the financial needs of both individuals and corporations, through tailored financial solutions for both individuals and businesses.

The bank has also been promoting foreign investments into Vietnam. In November 2020, the Bank renewed its Memorandum of Understanding with the Foreign Investment Agency, stepping up its efforts to facilitate investment into a range of sectors, including renewable energy, manufacturing, infrastructure, healthcare and technology. To date, the bank has facilitated more than $2 billion (S$3 billion) in investments into Viet Nam, which has created more than 17,000 jobs so far.

Throughout the COVID-19 pandemic, UOB Vietnam has also been helping to support vulnerable communities. Initiatives include canned food donations to families affected by the current lockdowns in HCM City, and contributions to the national COVID Vaccine Fund under UOB's #UnitedForYou COVID-19 Relief Programme.

“The prolonged nature of the pandemic continues to impact lives and livelihoods. While we are not certain when we will overcome the pandemic, one thing that is certain is that UOB Vietnam remains committed to helping our customers, our colleagues and the wider community get through these hard times. Together, we will be resilient, manage risks and navigate changes, to emerge stronger,” Harry Loh, CEO of UOB Vietnam said. 

ADB lowers Vietnam’s 2021 GDP growth to 3.8%

In its outlook update released on September 22, the Asian Development Bank (ADB) has lowered Vietnam’s economic growth rate for 2021 to 3.8% from the 6.7% projection due to the impact of the COVID-19 pandemic.

According to the report, the COVID-19 pandemic is expected to drag down 2021’s growth prospects. The labor shortage caused by the lockdown in the Mekong Delta will disrupt agriculture supply chains. Agriculture exports may also suffer from the monsoon in the third and fourth quarters and the quarantine measures imposed on Vietnam's agriculture exports.

On the bright side, improved market access from free trade agreements and recoveries in the European Union, the People's Republic of China, and the United States will boost agricultural exports. Agriculture growth is expected at 2.7% in 2021, the same level as in 2020.

Extended lockdowns in major cities will continue to disrupt the supply of labour, hurting especially labor-intensive manufacturing and lowering output. The purchasing managers’ index hovered below 50 from June to August, signaling a deceleration in manufacturing. As a result, industry growth is forecast to slow to 5.0% in 2021 from the pre-pandemic level of 8.9% in 2019.

The increasing need for nonphysical transactions and health care will sustain the growth of financial and health services. But closures of tourist areas and limited mobility will continue to hit tourism, lowering growth in the services sector to a forecast 3.3% this year from of 7.3% in 2019.

A prolonged pandemic and an extended lockdown are expected to weaken consumption and investment in 2021. The labor shortage, slow land acquisition and resettlement procedures, increasing costs of construction materials, and the third and fourth quarter monsoon will slow the disbursement of public investment. The disbursement of the state budget in the first 8 months fell by 46.4% compared with the same period last year.

Credit demand has remained subdued so far in 2021 due to the pandemic disrupting production and businesses. Credit growth is expected to slow to 10%–11% this year, below the 12% target. 

The fast recovery of Vietnam’s main overseas markets, particularly the EU, China, and the US, will support exports, especially for textiles, garments and footwear, electronics, and mobile phones. But the lockdown of major industrial hubs in the Mekong Delta will constrain production capacity, triggering a shift of orders to other countries.

According to the ADB, assuming the COVID-19 pandemic is brought under control by the end of 2021 and full vaccination covers 70% of the population by the second quarter of 2022, the GDP growth forecast for next year is revised to 6.5%, which is still lower than the earlier projection. The inflation rate forecast is also revised down, to 2.8% for 2021, as subdued domestic demand has pushed the rate to its lowest level since 2016. The inflation rate is forecast at 3.5% in 2022 as growth accelerates.

Vietnam’s economic outlook in the near term is challenging, the bank says. The main risk to the outlook is a prolonged COVID-19 outbreak if the vaccination rate does not increase substantially. Because vaccines are not reaching Vietnam fast enough, the government’s efforts to start up domestic COVID-19 vaccine manufacturing in 2021, combined with increased procurement from outside sources, will be crucial for the country to avert a health crisis caused by the pandemic.

The growth prospects for this year and next will also depend on the timely and sufficient provision of necessities, such as food and cash, to those affected by the outbreak. Nonperforming loans could become a risk in 2022. Cutting unnecessary administrative burdens and digitalizing government procedures will be critical for improving the efficiency of pandemic containment measures and to support recovery this year and beyond. 

F&B groups breathe sigh of relief after relaxation of social distancing protocols

After extended lockdowns, many food and beverage businesses in Hanoi and Ho Chi Minh City are preparing to reopen.

Since early September, Ho Chi Minh City has allowed food and beverage (F&B) businesses to provide takeaway services from 6am to 6pm. To ensure that pandemic prevention measures are met, the city has requested such businesses to also apply the stay-at-work model, with continuous coronavirus tests for their staff every two days. Despite the green light, many F&B businesses in the city remain careful.

Harry Ang, founder of the Singaporean restaurant chain Lion City told VIR, “It’s a good decision to extend the lockdown and utilise more time for planning the next steps to prevent another outbreak. We have been preparing well, as we know that life will never be the same again. All plans have to be carefully executed according to prevention protocols.”

He added that he agrees with the local authorities on COVID-19 tests as a good way to prevent infections from spreading and to avoid future lockdowns. “We have advanced kits which allow for painless tests with 90 per cent accuracy and results in three minutes. Our plan is to restart operations with a small team to keep the risk low,” he said.

Lion City kept its plan simple, only allowing 6-10 employees back at the workplace to observe every step before going back to its normal daily operation. The chain will start with its flagship store in Ho Chi Minh City in District 1, with deliveries scheduled as the only operation. All food carrier bags will be disinfected before being handed over to the delivery staff.

Some supermarkets and food stores are also adding more goods and hiring more staff to serve customers as shopping activities can be eased more in the coming weeks.

A representative of Saigon Co.op said that the chain is currently preparing to increase the source of goods to serve customers. The chain plans to double its staff to ensure a steady supply of goods to people during the city’s gradual reopening.

Meanwhile, a representative of AEON Vietnam insisted that its supermarkets always ensure goods to serve the shopping needs of people, especially after Ho Chi Minh City was expected to end some social distancing restrictions on September 16.

However, due to the required lockdown extension of two weeks, the two AEON supermarkets in Tan Phu and Binh Tan districts have not yet been allowed to reopen, and are now continuing to focus on online channels.

“We have a strategy to retain the workforce during the pandemic to ensure business continuity,” said an AEON representative. “AEON Vietnam has given priority to vaccinated employees and arranged shifts to ensure the operation of our supermarkets. During the pandemic, up to now, AEON Vietnam has still guaranteed jobs for about 4,000 employees, without cutting the number of employees or reducing wages or working hours,” he said.

Although a gradual reopening is necessary for F&B businesses, many of them seem cautious in following through with these plans.

The leaders of Morico, a Japanese-style restaurant chain, were puzzled when they heard about the requirements of the city. Managing director Hang Tran said that the stay-at-work model is the biggest difficulty for the chain, simply because most of the restaurant’s employees are not willing to stay at work. Morico’s restaurants are located within shopping centres, which are largely incapable of accommodating staff.

“Therefore, we will only reopen very slowly as we lack the staff numbers. We have good relationships with our suppliers, so most of our supply chain will be back on track quickly, except for fresh vegetables. Our solution is a reduced menu, heavily focused on deliveries,” Tran said.

Likewise, the Phuc Long coffee and tea chain has resumed its operation but it does not open many stores at due to supply chain issues. Other big coffee chains like Highlands Coffee, Starbucks, and The Coffee House have yet to make any announcement on their reopening. These chains remain focused on selling online products such as coffee packages, mooncakes, and ready-made coffee.

Luxury restaurants located in high-end hotels are apparently not in a hurry to reopen immediately, but instead take their time to research new business models and develop home delivery services. Before being forced to temporarily close, most of these restaurants have turned to serving domestic customers and selling takeouts as a solution to maintain operations after the international tourist market was temporarily shut down.

“We could not predict the pandemic in the beginning, so we are very cautious now,” said Scott Hodgetts, general manager of Sheraton Saigon Hotels and Towers. “Takeaway services are not just temporary. We have set these as the key to keep serving guests, especially during the ongoing pandemic. With these services and more, we can build a solid operational foundation and create a sustainable offering to contribute to the revenue stream in the long term. We have strictly followed all government regulations to ensure that we could protect our guests, our associates, and our business.”

At the moment, Sheraton Saigon is promoting a wide range of dishes available at affordable prices, including Vietnamese, South Korean, and Western cuisine.

“We advocate Marriott Bonvoy on Wheels – a regional campaign of Marriott International to promote restaurant quality cuisine to people’s homes. We follow the protocols of Global Food Safety for safe food deliveries and thorough hygiene procedures,” Hodgetts added.

In Hanoi, 19 districts have not recorded any cases of community infections for more than 10 days as of last week, which led the city to allow for basic operations of many businesses from the noon of September 16. However, F&B businesses remain restricted to takeout services and have to close before 9pm.

Many restaurants cleaned up overnight before September 16 to prepare for their business resumption after more than 50 days of lockdown. Businesses selling stationery, books, equipment, school supplies, vehicle repairs, electronics, and home appliances also allowed to resume operations since September 16.

Trung Bac, a restaurant owner in Ba Dinh district shared, “After hearing the news, I was very happy. I cleaned and prepared ingredients myself to serve customers because my employees are currently in the countryside and cannot go to Hanoi.”

To ensure safety, many stores have prepared antiseptic water, masks, and QR code leaflets for medical declarations.

Quang Ninh, Phuket discuss post-pandemic tourism recovery

A teleconference was held on September 22 to discuss post-pandemic cooperation between Vietnam’s the northern province of Quang Ninh and Thailand’s Phuket, especially in re-opening tourism markets.

Speaking at the event, Director of the Representative Office of the Tourism Authority of Thailand in Vietnam Ratiwan Boonprakong introduced the “Phuket Sandbox” programme which aims to prevent COVID-19 transmission between tourists and local residents.

From July 1 to August 29, the programme welcomed over 25,800 visitors spending 450,806 nights and travelling to Phuket on 283 chartered flights, mostly from the US, UK, Israel, France, Germany, United Arab Emirates and Switzerland.  

Director of the Quang Ninh provincial Tourism Department Pham Ngoc Thuy suggested Thailand continue creating favourable conditions for Udon Thani province to effectively carry out an action plan within the framework of tourism cooperation in the heritage triangle of Vietnam’s Ha Long Bay, Thailand’s Ban Chiang and Laos’ Luang Prabang, as well as help Quang Ninh’s tourism sector explore opportunities and promote destinations.

He also proposed the two local tourism sectors establish an information sharing mechanism and study building a suitable tourism cooperation model.

Quang Ninh officially resumed its intra-provincial tourism from September 21 and plans to welcome back visitors from other localities without local transmissions within 14 days, in the last two months of this year. They are required to be fully vaccinated and take Realtime-PCR tests within 48 hours./.  

Sales of Vietnamese cement products rise amid COVID-19 pandemic

The sale of Vietnamese cement products reached 70.7 million tonnes over the past eight months of 2021, up 4 percent year-on-year amid the COVID-19 pandemic which had negative impacts on many other industries.

Of the total, export volume was 27.23 million tonnes, up 12 percent thanks to buying rebound seen in many large export outlets such as the US, Canada and China, Luong Duc Long, General Secretary of the Vietnam Cement Association (VNCA), said.

Long said demand for cement products in these markets had increased and cement prices there had a tendency to go up.

Meanwhile, domestic consumption saw a modest decline of 5 percent to about 43.54 million tonnes in the period, according to the association.

Chairman of VNCA Nguyen Quang Cung said the fourth wave of COVID-19 which broke out from the end of April, had suspended construction projects in Hanoi and HCM City and 19 southern localities, resulting in a decline in demand for cement in recent months.

The southern region had the strongest increase in consumption in the country with a year-on-year increase rate of 12.2 percent. Therefore, the prolonged social distancing in this region affected domestic cement consumption significantly, Cung explained.

However, Long said, the vaccination rollout was being accelerated in many localities in order to effectively control the pandemic and gradually relax social distancing to bring daily life back to a new normal.

Therefore, domestic cement consumption was expected to flourish again in later months as the peak construction season began, Long forecast.

According to experts, exports continued to be the growth engine of the cement industry in recent years. They attributed the strong increase in the country's cement exports to the fact that China has gradually closed cement factories, mainly for environmental purposes and increased imports from other countries, especially Vietnam.

In the second quarter alone, China was the largest importer of Vietnam’s cement and clinker with nearly 10.3 million tonnes, worth 368.6 million USD, accounting for 49.4 percent of total export volume and 45.6 percent of total turnover. It was followed by the Philippines with 3.85 million tonnes, worth 176 million USD, and Bangladesh with 1.93 million tonnes, valued at 65.4 million USD.

Experts said the advantage of sea routes had facilitated Vietnam's exports of cement and clinker to China.

Vietnam is currently the fifth biggest cement manufacturer in the world, after China, India, the US, and Russia. Its cement output has doubled within 10 years, from 45.5 million tonnes in 2009 to about 100 million tonnes, turning the country from a cement and clinker importer to the world’s largest exporter of these commodities.

Last year, the country shipped 101.5 million tonnes of these products to overseas markets, representing a rise of 1.5 percent over 2019.

However, in order to maintain exports, cement producers should apply advanced technologies in production to enhance quality and added value while reducing environmental harm, which would significantly help boost competitiveness, experts suggested.

They should also monitor the cement market and adjust their production plans accordingly to keep prices from falling. In addition, cement firms should also work out long-term development strategies./. 

Banks continue bond issuance to meet capital adequacy ratio

Banks have been promoting the mobilisation of medium- and long-term capital through bond issuance to meet the State Bank of Vietnam (SBV)’s requirements on capital adequacy ratio (CAR).

According to statistics of the Bond Market Association, banks issued bonds worth up to 10.85 trillion VND last month, accounting for nearly 42 percent of the total issued value.

Notably, many banks such as BIDV, VietinBank, VIB, Military Bank and VietCapitalBank aggressively issued bonds to increase Tier 2 capital (additional capital) with floating interest rates ranging from 6.1-7.6 percent per year based on the average reference interest rates for savings of four big banks – Vietcombank, BIDV, VietinBank and Agribank.

Although the interest rates are significantly lower than corporate bonds of other sectors (bonds of real estate companies, for example, often have high interest rates up to 12-13 per cent per year), but bonds of banks have still attracted investors.

Banking and finance expert Nguyen Tri Hieu attributed the rise of two- and four-year bank bonds to a temporary shortage of medium- and long-term capital at banks.

Hiếu explained the rescheduling and postponement of debt repayment to support COVID-19-affected borrowers according to Circular 01/2020/TT-NHNN and Circular 03/2021/TT-NHNN had been causing a large amount of debts not to be able to return to banks. Therefore, banks would need to strongly increase bond issuance to compensate for the capital shortage.

Besides, Hieu said, the bond issuance had also aimed to increase additional capital of banks to strengthen the CAR to meet the SBV’s requirements when the credit growth rate had been tending to increase much faster than that of banks’ equity.

However, information about the issuance from banks showed the bonds’ buyers were other banks and securities companies.

Previously, data from the Saigon Securities Corporation (SSI) also showed up to 82 percent of bank bonds issued in the first half of this year were sold to other credit institutions and securities companies.

In the latest issuance on September 10, PG Bank successfully issued 500 billion VND of bonds with a term of three years and the buyer was another bank.

Previously, in mid-August, BIDV also successfully issued eight-year bonds as a private placement worth 500 billion VND. All the bonds were sold to a domestic credit institution.

According to Hieu, it is easy to understand why bank bonds attracted customers as this kind of bonds has the highest safety rate in the local market thanks to high liquidity while banks operate under the SBV’s strict supervision.

Meanwhile, for bonds of real estate companies, which often have interest rates of 3-4 times higher than those of banks, it will be difficult for investors to control the use of money of the bond issuers.

Experts forecast the demand for issuing bonds of banks in the remaining months of this year would remain high, especially medium- and long-term bonds, to help banks improve the CAR. The bond yields are also predicted to increase as banks often offer higher interest rates to attract depositors in the last quarter of the year when the need for capital is high./. 

Fitch Ratings ranks PetroVietnam's Standalone Credit Profile at 'BB+'

Fitch Ratings has assessed the Vietnam Oil and Gas Group (PetroVietnam)'s Standalone Credit Profile (SCP) at 'BB+', reflecting the company's conservative financial profile, diversification and integration.

Fitch Ratings affirmed the group’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Positive Outlook as well as senior unsecured rating at 'BB'.

The agency expected PetroVietnam’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to double in 2021 to over VND45 trillion (US$1.97 billion) from 2020 due to a recovery in crude oil prices, refining margins and distribution spreads.

It does not expect the current surge in COVID-19 infections in Vietnam to significantly affect PetroVietnam's earnings recovery, as Vietnam is a net importer of fuels, resulting in stable demand for the company's gas distribution, fertiliser and power segments.

In the first eight months of 2021, the group surpassed its production and business targets, with crude oil exploitation exceeding the plan by 12.7% and the production of nitrogen, petrol and LPG surpassing the plan by between 2-11%. 

Aircraft maintenance joint venture receives US certificate

The Vietnam-Singapore Technologies Engineering Aerospace Co.Ltd (VSTEA) recently received a certificate approving its component maintenance, repair and overhaul (MRO) facilities from the US Federation Aviation Administration (FAA).

VSTEA is a joint venture between the Vietnam Airlines Engineering Company (VAECO), a subsidiary of Vietnam Airlines, and ST Engineering Aerospace Systems Company, a member of the ST Engineering of Singapore.

It specialises in providing aircraft component MRO services for domestic and international airlines, which cater to such current aircraft as the Boeing 787, Airbus A350, A320, A321 and ATR72, as well as technical assistance in avionics, hydraulic, pneumatic, electro-mechanical, wheels, brakes, and emergency equipment.

The FAA standards are widely adopted in the global aviation industry and serve as a gauge of quality and a passport to market expansion, making it easier to offer maintenance services to airlines in different regions, including the US.

To achieve the certificate, the VSTEA said it went through five stages of appraisal under the FAA’s strict standards. After completing the final examinations in late July, its facility in Hanoi was certified on August 31 and another in Ho Chi Minh City on September 16. 

Economist suggests three focuses to revive Vietnam’s economy

Vietnam needs to shift from “Zero-COVID” strategy to vaccinations as the pandemic and the risk of new outbreaks are still lingering on, according to Dr. Nguyen Duc Kien, head of the Prime Minister’s Economic Advisory Council.

The country should step up COVID-19 vaccine rollouts, and minimise the number of infection and fatality rate, Kien told Sai Gon Giai Phong newspaper.

The global economy is on the mend with recovering demand in foreign markets, he said. Vietnam, however, has seen its production capacity and business resilience weakening immensely following prolonged restrictions induced by COVID-19.

Lessons from vaccine powerhouses show that Vietnam must accelerate the approval of home-grown vaccines and soon put them into use, he noted.

Citing the fact that many studies all around the world indicate that coronavirus vaccines may not provide lifetime immunity so booster shots must be offered annually, he said if the country cannot produce the vaccine itself and must rely on foreign donations, the effectiveness of its virus control efforts will greatly suffer.

The government should procure home-grown vaccine doses for mass vaccination under a proper mechanism to encourage domestic manufacturing, he urged.

He further said as impacts of the pandemic greatly vary among economic sectors, support packages should be delivered to enterprises based on how much they are affected by the pandemic, instead of the same amount of aid provided for all.

The economist recommended three focuses for Vietnam to revive and develop the economy as followed – prioritizing COVID-19 fight and expanding immunization coverage to protect public health and the economy; accumulating resources for economic recovery and offering aid to labour-intensive companies; and reviving the economy in tandem with fostering economic restructuring towards digital and green transformation.

He said it comes as no surprise to him that the Ministry of Planning and Investment has revised down the GDP growth forecast to just about 3.5 – 4% this year, much lower than the initial projection.

The move is necessary as Hanoi, Ho Chi Minh City and other southern cities and provinces have imposed social distancing under the PM’s Directives 16 and 16 Plus to stamp out the spread of the virus for months, according to the economist.

Goods and passenger transport nationwide has been restricted or suspended; business, production and investment have remained stagnant and declined with enterprises struggling with rising costs, he explained. So it is understandable if some economic goals, which were devised without taking into account unexpected damages from the COVID-19, cannot be achieved.

“We must accept it and find ways to adapt,” Kien said.

Referring to the National Assembly’s Standing Committee’s plan to adopt new support measures for affected businesses on October 1 at the latest, he noted that the uncertainties of the pandemic will negatively affect the State budget revenue in the coming months.

The support is clearly important but it must come with both fiscal and monetary policies as well as the State budget’s resilience taken into account, he said. 

Seminar seeks to promote Vietnam-Japan investment co-operation

A seminar was virtually held in both Hanoi and Tokyo on September 22 with the aim of supporting local firms to connect with Japanese counterparts amid the COVID-19 pandemic developing in a complicated manner.

Delegates shared information about Japanese financiers’ investment in Vietnam, along with the promotion of co-operation between enterprises from both sides given the negative impact of the COVID-19 pandemic.

Representatives from major Vietnamese cities such as Da Nang and Ho Chi Minh City introduced the business investment climate in their localities, and COVID-19 prevention measures aimed at realizing the “dual goal” of pandemic control and economic recovery.

The seminar provided an opportunity for both sides to exchange information and answer questions regarding investment, production and solutions to weather the COVID-19 crisis.

It offered Japanese financiers the chance to inquire into accommodation and travel arrangements for employees at industrial parks in pandemic hit localities.

The seminar was jointly organised by the Trade Promotion Agency under the Ministry of Industry and Trade, the Vietnam Trade Office in Japan, the ASEAN-Japan Centre, and the Japan Trade Promotion Organisation (JETRO).

Approximately 500 Japanese businesses and representatives of Vietnamese firms in industrial parks virtually took part in the event.

Japan now represents Vietnam’s fourth largest trade partner, with two-way trade turnover hitting US$40 billion in 2020. The first seven months of this year saw their trade value reach US$24.5 billion, representing an increase of 11.9% over the same period last year.

Japan makes up the second largest foreign investor in Vietnam with 4,690 projects valued at US$62.9 billion, accounting for about 16% of the total foreign investment capital into the country. In the first eight months of the year, Japanese enterprises poured US$3.2 billion worth of registered investment into Vietnam. 

Vietnamese products impress visitors at Osaka International Gift Show

More than 30 Vietnamese firms participated in the 63rd Osaka International Gift Show, an event which is one of the most prestigious and large-scale gift-making fairs in Japan, according to the Vietnam Trade Office branch in Osaka.

On display at the Vietnamese booths were traditional handicraft and ceramic products, coffee, tea, dried food, confectionery, bottled drinks, spices, and processed food.

Visitors spent time exploring and sampling a range of frozen fruit products, such as canned durian, zip-packed jackfruit, and longans.

Currently, Vietnam is negotiating with Japan regarding introducing fresh Vietnamese longans into its market.

The show served as an ideal venue for Vietnamese firms to explore Japanese consumers’ taste, paving the way for their fruits and other farm produce to penetrate the demanding market.

A number of co-operation proposals were made by Japanese companies during the event, creating fresh business opportunities for Vietnamese firms and importers in the near future.

Several intermediary trading companies and distribution supermarkets also unveiled plans to put local products on sale in the Japanese supermarket system. 

VinaCapital Ventures buys stake in insurtech firm GlobalCare

 VinaCapital Ventures, a technology investment platform belonging to VinaCapital Group, announced it has invested in insurtech company GlobalCare.

But it provided no details.

Global Care is not an insurance company but an aggregator for the insurance industry.

It transforms the process of buying insurance which can often take days into one that takes just minutes.

Founded in 2017, GlobalCare’s platform allows insurance companies and agents to sell policies via a cloud-based and on-premises app that enables end-to-end service management to monitor transaction history and process claims, among other functions.

For consumers, it provides a convenient access point for their non-life insurance needs, and in addition to being able to file claims, they can communicate directly with company staff for customer service.

The company’s distributors and agencies include more than 3000 offline to online stores which provide a wide range of insurance products.

GlobalCare said it provides complete technology solutions to more than 10 major insurance distribution channels and 200,000 agents.

More than 15 types of insurance products can be bought on the platform, including health, business interruption, mobile phone, car, and personal accident policies. Its key insurance partners include Bao Viet, PVI, PTI, Pjico, MIC, and Liberty.

Hoang Duc Trung, partner at VinaCapital Ventures, said: “GlobalCare is exactly the kind of start-up we want to invest in. It offers a product that solves a pain point, a very clear and realistic business plan that has the potential to scale up, and a committed and experienced founder and team.

“The non-life insurance segment in Vietnam was worth about US$2.3 billion in 2019. We are confident that GlobalCare is positioned to capture a significant part of the growth that is expected in Vietnam’s insurance industry.” 

HCM City: Manufacturers yearn to restore production

As the fourth wave of COVID-19 infections has been slowly declining and Ho Chi Minh City has been gradually reopening the economy, workers are being called back to factories in the hope of restoring production to normal level.

Half of employees of Vinh Tien Paper JSC, or about 100, have returned to work since the beginning of this week. The company had been keeping its production running by letting just a dozen of workers eat, work and live on-site since early July.

As demand for notebooks and other school supplies has been on the rise at the start of the new academic year, Vinh Tien was allowed to bring back one third of its workforce through the “one route, two destinations” scheme. And now, with all of its workers have been fully vaccinated against COVID-19 with two jabs, more are back to work.

To get itself prepared for the “new normal,” Vinh Tien continues giving away rapid test kits to its employees, arrange a specified area for quarantine if any of them is detected with the virus, and disinfect its facility once per week.

If HCM City’s reopening plan is on track, Vinh Tien expects to fully resume production from October onward, said Chairman and General Director Lam An Dau.

“I think the city should boldly allow businesses, especially those with a high rate of fully-vaccinated workers, to resume production without the introduction of extra virus control rules,” he said, adding that it will enable the company to provide jobs for the workers and help them earn a living.

With the “three-on-site” scheme adopted, Dony Garment Company has been able to maintain production with around 20 percent of its headcount which increased to 30 percent in early September. However, the company still suffered big losses from rising costs and had to reject orders over the fear of not being able to fulfill them on time.

Dony’s productivity under the “three-on-site” scheme in six months is just equal to that under normal conditions for a month, said General Director Pham Quang Anh.

He suggested the city to abandon the scheme and let firms make commitments to keeping the virus out of their factories. If restrictions last longer, they will greatly affect production, he explained.

Operations at Duc Thanh Wood Processing JSC have been restored with about 200 workers over the last month. They have been inoculated with one jab and tested for the coronavirus on a regular basis.

“We have made ourselves ready (for the reopening) with materials stockpiling for 3 – 6 months,” a company representative said. However, he admitted that his company is struggling to call back workers as a majority of them have returned to their hometowns, lived in locked down areas, or are being under treatment for contracting COVID-19.

Businesses are looking forwards to HCM City’s reopening so they can keep orders and generate earnings to provide income for workers, said Chu Tien Dung, Chairman of the municipal Business Association.

He urged the Ministry of Health to revise a set of indicators for verifying a COVID-19-free zone, given that Prime Minister Pham Minh Chinh has allowed the economy to reopen with COVID-19 rules in place.

Current strict social distancing measures should not go on any longer, he said./. 

Vietnam’s 2021 exports forecast to exceed 315 billion USD

Vietnam’s export turnover is forecast to surpass 315 billion USD this year, which, however, requires more drastic measures.

According to the General Department of Vietnam Customs, in the first eight months of this year, the country’s export revenue stood at 213.52 billion USD, up 21.8 percent year-on-year.

Based on the eight-month performance, together with the latest market situation, economists have drawn up two scenarios for Vietnam’s exports in the remaining months and the whole year.

Under the first scenario when the COVID-19 pandemic is put under control in October, the export value for the remaining four months of the year would reach 108.8 billion USD and 322 billion USD for the entire year, up 14.3 percent from last year.

Meanwhile, under the second scenario when the pandemic is only contained at the end of the year, the revenue is projected to go down 4.4 percent to 102.7 billion USD in the four-month period, and total 316 billion USD for the year, an increase of 11.8 percent.

The projected value of 316 billion USD in the second scenario is still higher than the record 315 billion USD last year, and represents a double-digit rise year-on-year.

The country recorded a trade deficit of over 2.6 billion USD in the past eight months, partially due to the impact of COVID-19 and social distancing imposed in many cities and provinces, including major economic centres, along with shortcomings in domestic support industries and limitations in the control of product origin.

Vietnam ran the largest trade deficit with China, the Republic of Korea (RoK), Taiwan (China), Thailand, Indonesia and Malaysia. Specifically, Vietnam’s trade with Cambodia shifted to a deficit.

To boost exports in the remaining months, it is a must for Vietnam to contain COVID-19 and ensure the circulation of goods, particularly exports.

Vietnam also needs to enhance support industries, assist firms operating in for-export production and business in the form of financial mechanisms and policies to promote startups and reduce the number of suspended and dissolved enterprises, and restructure import markets, experts said./. 

Hanoi focuses on boosting farm produce processing industry

The capital city of Hanoi has defined the development of processing industry as an optimal solution to improve the value of local farm produce and ensure supply of the products to the domestic market as well as for export.

In order to implement the solution, the agricultural sector has focused on promoting the application of high technology in all production activities, while developing material growing areas and forming closed production chains, thus enhancing the locality’s capacity in farm produce processing.

Nguyen Thi Thu Huong, General Director of Huong Son Food JSC in Thanh Tri district said that food and foodstuff products usually have short preservation time, therefore, processing is the best way to deal with this problem. Furthermore, processed products have higher economic values, up to two - three times than raw products, she added.

Meanwhile Dao Thi Luong, Director of Tam Anh safe vegetable production and trading cooperative in Phu Xuyen district, said that amid impacts of COVID-19, the cooperative has made strong investment in processing, and connected with 30 other cooperatives to produce food and vegetable products. It has also applied the model of “mobile food market” to supply agricultural products to consumers in apartment buildings and urban residential areas.

According to Vice Director of the city Department of Agriculture and Rural Development Nguyen Ngoc Son, processing industry is an important link of the production-processing-selling chain of agricultural products.

In recent years, Hanoi’s farm produce processing industry has seen remarkable progress, he said, adding that many firms have invested billions of VND in the building of factories, cold storage facilities, and warehouses, thus continuing to raising the value of farm produce and creating jobs for thousands of labourers.

Currently, Hanoi has more than 400 agro-forestry-fisheries processing facilities, of which 235 are companies and the rest are cooperatives and households. The facilities mostly engage in processing meat (42.6 percent), aquatic products (26.7 percent), and vegetables and fruits (33.7 percent).

Director of the Agro Processing and Market Development Authority - Agrotrade under the Ministry of Agriculture and Rural Development Nguyen Quoc Toan said that the number of farm produce processing facilities of Hanoi has been modest compared to its advantages as a big market with favourable conditions in connectivity and good transport and warehouse system,.

Chairwoman of the Association of Vietnam Retailers (AVR) Vu Thi Hau also shared the view that in the current context of COVID-19 pandemic, it is crucial to boost the growth of processing industry in order to build a modern and digital agriculture.

Over the years, the majority of agricultural products sold on e-commerce platforms have been high quality processed products with known trademarks.

Regarding solutions to further enhance the processing capacity of Hanoi, Director of the Hanoi Department of Agriculture and Rural Development Chu Phu My said that in the time to come, the department will give advice to the city in restructuring the farm produce processing sector in combination with the development of concentrated material regions.

My advised businesses to foster connectivity in the production-processing-selling chain to improve the capacity of supplying materials for processing activities.

Hanoi’s agriculture is projected to grow at least 3 percent in 2021 under a recently-issued plan on agriculture and rural development in the year.

The sector targets 89,500 ha of rice, 1.8 million pigs, and 38 million poultry heads this year.

The Hanoi Department of Agriculture and Rural Development has issued a list of 11 projects that it is inviting investment for between now and 2025. They include hi-tech agriculture projects in An Thuong and Song Phuong communes of Hoai Duc district, and Hien Ninh, Thanh Xuan and Tan Dan communes of Soc Son district./. 

HCM City facilitates development of supporting industry firms

Ho Chi Minh City has set a target of meeting 65 percent of its demand for supporting industry products by 2025. 

To realise the goal, the city will focus on honouring typical supporting industry products and assisting the business that invests in supporting industries.

The nomination and honouring of industrial products and supporting industrial products has been conducted by HCM City every two years since 2016. The number of products and businesses taking part in the event has been increasing. Last year, 65 businesses registered to participate with 110 applications compared to 46 in 2016 and 65 in 2018.

Deputy Director of the Department of Industry and Trade Nguyen Phuong Dong said that the nomination aims to honour typical industrial products and supporting industries, creating motivation for businesses to continue innovation in their production, contributing to the industrial development of the city. 

This was also a promotion activity, calling for investment in the industrial sector to attract large investors, especially in the field of supporting industries, he said.

To facilitate the development of supporting industries, the city authorities have issued the Supporting Industry Development Programme for the 2019 – 2025 period. The overall goal of the programme is to focus on carrying out synchronised solutions to improve the capacity and competitiveness of small and medium-sized enterprises operating in the field of supporting industries.

Dong said the city will develop a database of supporting industries, connecting supporting industry enterprises with those producing finished products in the future. Ten enterprises will be assisted to improve technology, supply capacity, and ability to meet international and standards each year.

In addition, the city also promulgated many policies and solutions to support and create favourable conditions for enterprises engage in supporting industries to develop, improve their competitiveness, and join the global supply chain, he said./. 

T&T Group, US partner reach deal in renewable energy in Vietnam

The T&T Group on September 21 signed several MoUs and contracts with US partners within the framework of President Nguyen Xuan Phuc’s working trip to the US.

The Vietnamese firm inked an MoU with UPC Renewables on working together in offshore and nearshore wind and solar power projects in several provinces in Vietnam with a combined capacity of nearly 1,500 MW and total investment of about 2.5 billion USD.

T&T Group also sealed two deals in buying animal feed materials totalling 525 million USD.

Accordingly, its agricultural arm T&T Agri will import 1.25 million tonnes of materials worth 450 million USD from The Delong Company next year. The other is an agreement in principle valuing at 75 million USD per year also between T&T Agri and US firm Valero.

Meanwhile, the group's pharmaceutical arm, T&T Pharma reached a deal worth 23 million USD to be the sole distributor of Nutraceuticals dba Au Naturel, Inc for five years.

The deal followed numerous contracts that T&T Pharma had earlier reached with European partners in clinical trial, procurement and technology transfer for the production of COVID-19 vaccine and Real Time RT-CPR test kits./. 

Vietnam, Sri Lanka seek to cooperate in tourism

A webinar aiming at introducing Sri Lanka tourism to the Vietnamese was held on September 21 by the Sri Lanka Tourism Promotion Bureau in collaboration with the Sri Lanka Embassy in Vietnam and the Hanoi Travel Association.

Sri Lanka is an island country in South Asia, dubbed the "Pearl of the Indian Ocean", with a maritime route connecting West Asia and South Asia. The country is famous for producing and exporting tea, coffee, rubber, and coconuts. The natural beauty of its tropical forests, beaches and cultural heritage make the country a popular tourist attraction.

Five out of seven sites of Sri Lanka that have been inscribed in the UNESCO World Heritage are temples built more than 2,000 years ago but still retain their ancient architecture and appearance. Among them, the ancient citadel of Anuradhapura, which is 210km from Colombo capital city, is a popular tourist destination.

Madubhani Pereva, Acting Managing Director of the Sri Lanka Tourism Promotion Bureau, said that the country's tourism does not only attractive for the ancient Buddhist relics, but for its beautiful wild nature. Sri Lanka is home to many rare animals and plants as well as many high-end services.

The country is promoting the development of ecotourism to explore nature, adventure tours, and sports tourism, she said, adding that the world-famous windsurfing sport attracted thousands of athletes and tourists each year.

Although the number of Vietnamese visiting Sri Lanka has been on the rise in recent years, it is modest compared with other markets, Pereva said. As many as 3,200 Vietnamese tourists arrived in Sri Lanka in 2018.

According to Vietnamese travel agencies, one of the difficulties when accessing the Sri Lankan tourism market is that little tourism information from Sri Lanka is available. In addition, there is no direct flight between Sri Lanka and Vietnam.

Currently, Sri Lanka has reopened its border to international visitors. According to the Sri Lankan Embassy in Vietnam, information on tourism activities as well as visa policies, activities, and requirements for safe international arrival have been posted on the embassy's website. 

With an effort to connect tourism, Vietnamese travel agencies hope that in the coming time, they will be able to build a new tourism market for Vietnamese tourists to explore after the end of the COVID-19 pandemic./. 

Quang Ninh eyes 2 million tourists in Q4

The northern coastal province of Quang Ninh set a target of welcoming 1.9-2 million tourists and earning 4-4.5 trillion VND (175.6 - 197.5 million USD) from tourism services in the last quarter of 2021.

Accordingly, from now until the end of October, the province will focus on attracting local tourists in association with strict pandemic control.

Meanwhile, in the last two months of the year, it will exert efforts to draw visitors both inside and outside the province.

Quang Ninh plans to give priority to the application of tourism models that do not pose risks of disease infections, and high value-added tourism products, and encourage long-stay tours.

Quang Ninh is endowed with natural advantages for sea and island tourism. It has a coastline of more than 250 kilometres and more than 2,000 islands and islets which account for two-thirds of the total number in Vietnam.

It is home to popular destinations such as Ha Long Bay, Bai Tu Long, Ha Long Bay National Park and some islands.

In particular, Ha Long Bay was recognised twice as a World Natural Heritage site by UNESCO, in 1994 and 2000./.

Logistics firms struggle with Covid testing cost

The Vietnam Logistics Business Association (VLA) has suggested that the Government and local authorities adjust regulations on Covid-19 testing for truck drivers as testing costs have become a huge burden for logistics companies.

In a document sent to the prime minister’s special team responsible for helping businesses ride out difficulties, the Ministry of Industry and Trade, the Ministry of Transport and the authorities of Quang Ninh Province and Mong Cai City, VLA said that to go through the Mong Cai Border Gate, each driver of logistics companies is required to take three tests, including one rapid and two PCR tests. 

This regulation has increased the transport cost. Therefore, the testing regulations should be amended to make life easier for truckers and facilitate transport and trade through the border gate.

“According to the prevailing regulations, our drivers have to take a rapid or PCR test every three days and the test certificate is valid for just 72 hours. However, it takes one day for us to get the test result. Therefore, the certificate is valid for just two days,” a representative of the logistics company said. 

With hundreds of drivers, the company has to spend millions of dong a week and hundreds of millions of dong a month on testing. 

Moreover, different provinces have different testing regulations, spelling trouble for logistics firms. Some localities require drivers from other cities and provinces to take two or three tests.

“This has not only sent the operation costs of logistics firms soaring but has also negatively affected the physical and mental health of drivers,” the company said. 

According to Le Duy Hiep, chairman of VLA, some border gates accept rapid tests but others only accept PCR tests. Hiep suggested that border gates and local authorities should accept the results of either rapid or PCR tests. 

Hiep said requiring three tests for each shipment is too much, costly and time consuming. 

According to VLA, the Covid-19 pandemic has severely affected the logistics industry. 

Logistics firms are facing numerous challenges such as delays in infrastructure projects, surging shipping rates, complicated procedures at ports and a shortage of workers. 

VLA said stringent and inconsistent testing regulations have made life even harder for logistics firms. 

Therefore, the association proposed lifting the third test as regulated in official dispatch No. 3577 and the second test as regulated in official dispatch No. 4227 if the truck drivers’ test results of the first test are still valid. 

Besides, there should be more supporting policies and incentives for transport and logistics companies, while the Ministry of Health should prioritize vaccinations for workers active in the logistics industry. 

Manufacturers spread thin trying to reach capacity

Factories are finding it hard to track down enough workers to maintain operations after numerous people left production lines for their hometowns or pivoted into other jobs during the pandemic restrictions.

After almost 70 days of halting production, Trung Son Corporation’s factory in Tan Tao Industrial Zone based in Ho Chi Minh City’s Binh Tan district has resumed production at 10 per cent capacity. Deputy general director Le Minh Tam said that even if the pandemic is managed and the economy runs as usual, the factory’s capacity will be able to reach only about 50 per cent.

“The number of available workers is not as abundant as before the pandemic started,” said Tam. “There were 900 workers in the factory but 300 of them were infected with coronavirus during July and August and the remaining had to be isolated, making them worried and upset.”

After receiving treatment, many of them left the city to go back to their hometowns.

Tam said that the prolonged problems mean the links between the factory and workers is gradually being fragmented, even though the corporation still pays minimum wage and supports people if they contract COVID-19. “Leaving the city for 3-4 months, many former workers have gradually adapted to the life in the countryside and found out a job close to home, so they don’t want to come back to our factory. Some other employees who are still in the city are trying to find new jobs anyway, even in the surrounding factories,” added Tam.

Trung Son Corporation is one among 1,600 enterprises in Ho Chi Minh City’s 17 export processing zones, industrial parks, and high-tech zones facing severe issues in trying to recruit workers to resume production. According to Ho Chi Minh City Export Processing and Industrial Zones Authority’s Business Association, at least 20,000 workers have left these zones for their hometown, while the same number of workers staying in the nearby provinces of Dong Nai, Binh Duong, and Long An cannot get to the factories because of social distancing restrictions. “The bigger enterprises are, the more shortage of employees they are dealing with, unless workers are vaccinated with two shots,” association chairman Nguyen Van Be said.

According to Dong Nai Department of Labour, Invalids, and Social Affairs, there were 38,000 firms with more than 1.2 million employees before the current pandemic outbreak. As of end-July, there were 1,200 businesses maintaining production and staying at work with 130,000 labourers. “These enterprises have a lot of orders but face a lot of trouble in production or shortage of workers,” said department director Nguyen Thi Thu Hien.

Elsewhere, Kieu Thi Thuy from the north-central province of Thanh Hoa used to work in a factory in Quang Chau Industrial Zone in the northern province of Bac Giang. She travelled home to avoid outbreaks earlier this summer. “After conquering the coronavirus, Bac Giang and Bac Ninh have called for employees from other localities to come back to the factories for the last two months. However, I am worried because the health crisis is too complicated and unpredictable in the neighbouring localities, so I don’t want to go back to the factory there,” said Thuy.

Nguyen Minh Tuan, head of Employment Division in Bac Ninh Department of Labour, Invalids, and Social Affairs, said that the number of workers resuming in the provincial industrial zones was around 94 per cent of the total number before COVID-19. “However, recruitment demand in the province is still too large and there is still shortage of workers. Most of them worry about the pandemic re-emerging here, so they stay at home,” said Tuan.

According to Phan Thi Thanh Xuan, vice chairwoman of the Vietnam Leather, Footwear, and Handbag Association, enterprises desire to welcome workers to their factories, but they are passive in this situation. “They are not sure about the time and how the social distancing rules will be broken to negotiate with their partners and call employees back to factories,” said Xuan.

Moreover, they need collaboration among localities and the direction of the government to mobilise labourers back to work. “When the pandemic broke out strongly in Ho Chi Minh City and other southern provinces, the government suggested provinces welcome workers back. So, if the pandemic is under control, the government should ask those provincial authorities to encourage these people back to the factories,” urged Xuan.

As of mid-August, in Ho Chi Minh City’s export processing and industrial zones and high-tech parks, 244,000 people in 827 enterprises had work suspended, according to the city’s People’s Committee. Just over 1,400 firms were hiring 286,000 labourers, including 619 businesses applying the stay-at-work model for nearly 55,200 employees; while 793 enterprises with 230,700 workers were temporarily suspended. More than 2,000 workers have to be quarantined. In the high-tech parks, 34 businesses with over 11,200 employees had to suspend their work. 

Stronger private sector - a key to economic transformation in Vietnam

As Vietnam battles another wave of COVID-19, accelerating the pace of reforms, upgrading workforce skills and infrastructure will strengthen the private sector to help the country recover from the pandemic and unlock its potential, according to a new World Bank Group report.

The Vietnam Country Private Sector Diagnostic (CPSD) report, by the International Finance Corporation (IFC) and the World Bank, says while the private sector has played a frontline role in Vietnam’s outstanding development in recent years, it is now time to fully exploit the potential of the private sector to boost productivity growth so Vietnam can achieve its goal of becoming a high-income country by 2045.

“The private sector has helped propel Vietnam to join the ranks of middle-income economies in just one generation, and the country was preparing for its next economic transformation when the COVID-19 hit,” said Kim-See Lim, IFC regional director for East Asia and the Pacific. “With another wave, it’s all the more imperative for Vietnam to help develop a dynamic, diversified, and innovative private sector for the post-COVID 19 recovery phase, as public resources become scarce.”

The report finds that a shift towards efficient, productive, and green private investment is essential to sustain Vietnam’s rapid and sustainable economic development. This will require bolstering the private sector by reducing constraints on entry and competition, upgrading global value chains, diversifying into knowledge-intensive sectors, addressing skills gaps, and increasing digitalisation across sectors.

“The country’s emerging and dynamic private sector has demonstrated resilience during the COVID-19 pandemic and has contributed to making Vietnam one of few countries attaining positive economic growth in 2020,” said Carolyn Turk, World Bank country director for Vietnam. “Continued bold reforms are needed to create a more robust basis for competition and innovation in the economy, through which a private sector-led low-carbon economic growth model can enable Vietnam’s goal of becoming a high-income country by 2045.”

The report says key areas for the reform agenda include leveling the playing field to ensure sound competition among all businesses, expanding access to finance for small and medium enterprises, improving availability of long-term capital, strengthening and greening infrastructure services, and ensuring a skilled labour force for a productive, innovative, and high-value growth model.

“Sustaining and building on Vietnam’s development success story requires further reforms aimed at empowering the private sector to grow and drive the economy into a sophisticated, innovative, and sustainable growth trajectory,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao PDR. “The COVID-19 pandemic has reinforced the urgency to address private sector development challenges to seek public-private solutions to best leverage and incentivise the private sector. This is especially important as the government’s resources, already constrained, have been prioritised for healthcare and livelihood support.”

While power, logistics, education and skills training, agribusiness, and tourism are some of the sectors with strong potential for private sector participation, the report says regulatory constraints remain significant. Demand for sustainable electricity and logistics services has been on the rise, driven by further industrialisation, a growing middle-income population, and urbanisation. Private investment in these sectors could help ease the burden on the state budget and contribute to greening of infrastructure and production through new investments in renewable energy and climate-smart solutions.

As Vietnam aims to move up the global value chain by growing knowledge-intensive exports, services, and higher value-added industries, the demand for skilled labour and sophisticated technologies will increase, requiring an overall strategy to address the skills gap and shortage in the country. Moreover, as agribusiness and tourism continue to be key contributors to economic growth and job creation, improvements in productivity, operating costs, quality and safety, and sustainability will help boost further expansion across sectors.

HCM City facilitates development of supporting industry firms

Ho Chi Minh City has set a target of meeting 65 percent of its demand for supporting industry products by 2025. 

To realise the goal, the city will focus on honouring typical supporting industry products and assisting the business that invests in supporting industries.

The nomination and honouring of industrial products and supporting industrial products has been conducted by HCM City every two years since 2016. The number of products and businesses taking part in the event has been increasing. Last year, 65 businesses registered to participate with 110 applications compared to 46 in 2016 and 65 in 2018.

Deputy Director of the Department of Industry and Trade Nguyen Phuong Dong said that the nomination aims to honour typical industrial products and supporting industries, creating motivation for businesses to continue innovation in their production, contributing to the industrial development of the city. 

This was also a promotion activity, calling for investment in the industrial sector to attract large investors, especially in the field of supporting industries, he said.

To facilitate the development of supporting industries, the city authorities have issued the Supporting Industry Development Programme for the 2019 – 2025 period. The overall goal of the programme is to focus on carrying out synchronised solutions to improve the capacity and competitiveness of small and medium-sized enterprises operating in the field of supporting industries.

Dong said the city will develop a database of supporting industries, connecting supporting industry enterprises with those producing finished products in the future. Ten enterprises will be assisted to improve technology, supply capacity, and ability to meet international and standards each year.

In addition, the city also promulgated many policies and solutions to support and create favourable conditions for enterprises engage in supporting industries to develop, improve their competitiveness, and join the global supply chain, he said./.

Essential projects in need of accelerated disbursement

Numerous projects in infrastructure and urban development will be adjusted to accelerate public investment disbursement, contributing to local and regional socioeconomic development in 2021.

The Long Thanh International Airport project is one of the most important transport projects in southern Vietnam for the local and regional socioeconomic development, promoting tourism, and facilitating trade activities. However, since 2018, only 47 per cent of the VND22.85 trillion ($993.7 million) allocated for the airport’s resettlement project has been disbursed and land clearance work has only reached 50.7 per cent of the plan, with nearly 1,250 hectares remaining for handover within 2021.

At last week’s online conferences on socioeconomic development and public investment in 2022 between the Ministry of Planning and Investment (MPI) and the country’s three regions, the People’s Committee of Dong Nai, where the project is located, proposed several measures for the MPI to accelerate the project.

In particular, Chairman of Dong Nai People’s Committee Cao Tien Dung proposed cutting two sub-projects on building technical infrastructure and public infrastructure for the resettlement area in Binh Son commune. “These two sub-projects are not essential to the project and progress could be sped up by focusing resources on other components,” Dung said.

The province also proposed adjusting the 1/500 planning of the resettlement area. “High-rise blocks should be divided into plots, and subdivision III should not be built to save capital and speed up the project,” Dung added.

The meetings touched on other road and expressway projects as well to boost public investment disbursement. For instance, Ho Chi Minh City-Thu Dau Mot-Chon Thanh Expressway has been confirmed for inclusion in the master plan on expressways, and will be developed by Binh Phuoc People’s Committee under the public-private partnership format, with the state and private investors accounting for half of the capital each.

“The expressway project was authorised to use state funds in Notice No.20/TB-VPCP in January, so we hope to receive the capital allocated as soon as possible, to contribute to the economic recovery of the south-eastern region,” said Tran Tue Hien, Chairwoman of Binh Phuoc People’s Committee.

She added that the almost 70km expressway project will have 4-6 lanes with a total investment capital of VND36 trillion ($1.57 billion) would help complete Vietnam’s expressway network and ease traffic load on the National Highway No.13, contributing to regional socioeconomic development.

Numerous other southern provinces like Tra Vinh, Tien Giang, and Ca Mau also urged the allocation of mid-term public investment funds (2021-2025) to start new projects within this year.

According to the MPI, the total public investment planned for southeast Vietnam and the Mekong River Delta region this year is VND138.87 trillion ($6 billion), including VND109.77 trillion ($4.77 billion) from the local budget and VND29.1 trillion ($1.27 billion) from the central budget. However, only about 34 per cent of this has been disbursed so far, the worst rate reported over the north and central regions and well below the country and localities’ average (40.6 and 42.9 per cent).

Most cities and provinces in southeast Vietnam and the Mekong Delta region may not reach this year’s socioeconomic plans and public investment disbursement targets. Thus, those localities that disbursed less than 60 per cent of the plan by the end of September requested authorisation to carry on undisbursed sums to the following year.

“Over the last two months, most of these cities and provinces have had to halt production, business, and construction activities. Some of them are only just now starting to gradually relax social distancing measures and production is only at 20-50 per cent capacity. It would be impossible for them to disburse more than 60 per cent of the annual public investment plan by September 30 as is requested by the government,” said Tran Duy Quang, Deputy Chairman of Dong Thap People’s Committee, proposing to move the undisbursed capital over to 2022.

Tran Thanh Long, deputy director general of the MPI’s Department for National Economic Issues, said most localities are far from the disbursement target set forth by the government. He added that the proposal to carry undisbursed investment over to 2022 will be decided by the prime minister and provincial people’s councils as stipulated in the Law on Public Investment.

“Article 48 of Decree No. 40/2020/ND-CP released last year detailing a number of articles of the Law on Public Investment stipulates that disbursement could be carried on to next year if implementation was held up by natural disasters, catastrophic events, epidemics or other unforeseeable causes,” he added, suggesting the proposal could be accommodated.

So far this year, Vietnam has disbursed 40.6 per cent of the public investment capital allocated for this year. Meanwhile, provinces have disbursed 42.9 per cent of their targets.

The central region has outperformed the country and provincial averages. It was allocated VND68.1 trillion ($2.96 billion) for disbursement this year, including VND42.86 trillion ($1.86 billion) from the central budget and VND25.25 trillion ($1.1 billion) from local coffers. So far, about VND33.14 trillion ($1.44 billion), about 48.67 per cent, has been disbursed.

Meanwhile, the Central Highlands region has been allocated VND15.47 trillion ($672.7 million), including VND8.84 trillion ($384.2 million) from the central and VND6.63 trillion ($288.43 million) from local budgets. About VND6.49 trillion ($281.96 million – 41.9 per cent) has been disbursed.

The northern midland and mountainous region is to disburse VND41.33 trillion ($1.8 billion) this year, including VND14.61 trillion ($635.5 million) from the central and VND6.36 trillion ($276.4 million) from local budgets. About 42 per cent of this has been disbursed.

Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes