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Domestic retail petrol prices rose by more than VND500 per litre on average as of 3pm on September 25 following the latest price adjustments made by both the Ministry of Industry and Trade and the Ministry of Finance.
This latest changes have seen the retail price of E5 RON 92 bio-fuel record a rise of VND573 per to hit VND20,716 per litre, while that of RON 95 increased by VND548 to peak at VND21,945 per litre.
Furthermore, the selling price of diesel 0.05S was capped at VND16,586 per litre, while the prices of kerosene and mazut oil stood at VND15,643 per litre and VND16,580per kilo, respectively.
Retail petrol prices have therefore witnessed an increase for the second consecutive time over the past month, with the price of E5 RON 92 bio-fuel rising to its highest level since October, 2018.
During the latest price adjustments, the two ministries decided to use the Price Stabilization Fund for RON 95 at VND150 per litre, diesel and kerosene at VND200 per litre and mazut oil at VND100 per kilo.
Both ministries meet every 15 days to review fuel prices and make relevant adjustments to keep domestic prices in line with global market fluctuations.
Vietnamese aquatic products, fruits introduced at food exhibition in Russia
A number of Russia businesses displayed Vietnamese foods and agricultural products at the 30th International Food Exhibition (WorldFood 2021) in Moscow from September 21 - 24, which attracted over 600 businesses from 30 other countries worldwide.
The businesses introduce diverse products imported from Vietnam, such as plants and vegetables, seafood, processed poultry, milk and dairy products, confectionery, organic food, and beverage products.
Mariso Moscow Co.,Ltd - the distributor of products by Hai Vuong Co. Ltd of Vietnam’s central Khanh Hoa province, exhibited frozen tuna fillet and canned tuna products of the Vietnamese company at the event.
Before the COVID-19 pandemic, Mariso Moscow sold about 5,000 tonnes of frozen tuna fillet each year in the Russian market. However, it is now facing some difficulties in importing tuna.
Fresh fruits and vegetable products of Vietnam were also introduced by Russian importers at the exhibition.
Russia's MevaFresh Co., Ltd is currently collaborating with a Vietnamese enterprise to import Vietnamese fresh fruit products to serve the demand in the Moscow market.
Currently, this company is working with Vietnamese partners to accelerate the transport of two containers of fresh fruits from Vietnam to Russia.
Aslan Salpaganov, Director of MevaFresh said that his company wants to regularly buy fresh fruits from Vietnam.
However, due to the COVID-19 pandemic, MevaFresh is meeting difficulties in transporting goods by containers from Vietnam to Russia, he added.
Vietnam’s rubber export to US sees sharp surge
Vietnam exported 23,510 tonnes of rubber worth 41.87 million USD to the US in the first 7 months of 2021, up 61 percent in volume and 92.3 percent in value year-on-year.
According to the Ministry of Industry and Trade’s Export -Import Department, Vietnam became the 11th largest rubber supplier of the US in the period, accounting for 2.2 percent of the US’s total imported rubber, up slightly from 1.5 percent in the same period last year.
Notably, Vietnam is the fourth largest supplier of natural rubber to the US with 23,460 tonnes worth 41.65 million USD, up 60.8 percent in volume and 92.9 percent in value over the same period of 2020.
According to statistics of the United States International Trade Commission, the US imported 1.09 million tonnes of rubber with a total value of 2.19 billion USD in the period, a year-on-year increase of 12 percent in volume and 27.6 percent in value. Indonesia, Thailand, Canada, the Republic of Korea and Ivory Coast were the largest suppliers of the product to the US./.
FDI businesses contribute ideas for production restoration in Da Nang
Representatives of foreign invested enterprises and business associations in the central city of Da Nang have made a number of proposals to the city on measures to recover production, one of which is to speed up COVID-19 vaccination for workers, in the hope of quickly resuming full production.
At a meeting with municipal authorities on September 24, they asked for the city's help in regular COVID-19 testing fees for their workers, and favourable conditions for foreign experts to enter the city and the transport of goods. They also hoped to be updated with pandemic control regulations of the city.
Kim Jinmo, Vice Director of the Korea Trade and Investment Promotion Agency (KOTRA) in Da Nang said that Korean businesses support the city's pandemic fight, but the quick change in pandemic response policies makes it hard for them to adjust. He said as the pandemic has basically been contained, the city should build a scenario for safely adapting to the pandemic and maintaining production at the same time.
Ciprian Bota, Director for Production of Universal Alloy Corporation urged the city to give priority to giving the second shot of vaccine to workers so that enterprises can resume operation at full capability. About 90 percent of workers in his corporation have received the first shot.
Ikeda Naoatsu, President of the Japanese Chamber of Commerce and Industry in Danang (JCCID) underlined the need to quickly resume trade connectivity with the outside, as many businesses are suffering from the disruption of supply chains, . He also suggested the city loosen regulations on travel permits, especially for workers.
Secretary of the city Party Committee Nguyen Van Quang said that the ideas given by foreign investors will help the city design a plan for pandemic prevention and control and socio-economic development amid COVID-19.
The city will promptly issue support policies to enterprises and workers, he said, affirming that the city will strive to inject the first COVID-19 vaccine shots to all local workers in early October and the second shots by the end of this year, while supporting local firms with 50 percent of COVID-19 testing fees.
He lauded efforts by FDI firms in pandemic prevention and control, expressing his hope that they will continue to strengthen the application of information technology in pandemic control, while increasing communications among workers on the need to strictly implement COVID-19 prevention measures, and providing support to workers to ensure their normal life./.
Vinamilk represents ASEAN in Top Valuable Global Brands in 2021
With a brand value of 2.4 billion USD, Vinamilk is the only representative of Southeast Asia to be listed in four global rankings on the world’s most valuable and strongest brands in 2021.
In Brand Finance’s latest Food & Drink 2021 report, Vinamilk was ranked eighth in the world’s top 10 most valuable dairy brands with a brand value of 2.4 billion USD, up 12 percent compared to 2020.
In addition, Vietnam’s largest dairy firm is listed as one of the three most potential dairy brands with the second-highest score.
Out of the dairy industry, Vinamilk also appeared in the two global rankings of the food industry, including the “Top 5 strongest global food brands” and “Top 30 of the 100 most valuable food brands worldwide”, placing 27th position, up 9 notches over 2020.
According to experts in the food and beverage industry, Vinamilk’s appearance in global rankings has demonstrated its strong sustainable development strategy, especially as the COVID-19 pandemic brought the world economy to a halt, affecting supply chains and making consumers tighten their purse strings.
According to Tran Thanh Hai, deputy director of Import-Export Department under the Ministry of Industry and Trade, dairy products are not Vietnam's advantageous export commodity nor traditional agricultural product, but with active contribution and efforts of Vinamilk, Vietnam increased its export value.
“In addition to ensuring export product quality, building a business brand which also represents the country is very important, showing the development of an enterprise as well as Vietnam’s dairy industry,” Hai said.
Previously, Vinamilk has also appeared in prestigious world rankings with high positions. Most recently, Vinamilk was ranked 36th in the top 50 world dairy producers with the highest turnover and is also the only representative of Southeast Asia in this list.
“From being a milk importer, we are very proud that after 45 years of efforts and development, Vinamilk has stood in high positions in the global rankings in terms of both revenue size and brand value,” said Mai Kieu Lien, Vinamilk’s General Director.
“These results will further motivate Vinamilk's leaders and employees to make more efforts to introduce the best products to consumers, and to bring Vietnamese milk to higher places in the world.”
Vinamilk currently has a system of 13 factories, 13 domestic dairy farms, three factories abroad and one large-scale dairy complex project in Laos. Braving challenges in the past two years due to COVID-19, Vinamilk has maintained stable production and business growth, especially posting impressive export growth.
In 2020, export revenue reached 5.56 trillion VND (242 million USD), up 7.5 percent compared to 2019. In the first six months of 2021, Vinamilk's export activities recorded double-digit growth, reaching 2.8 trillion VND, up 13.1 percent compared to 2020.
The company is continuously expanding its foothold in the world. It is investing in the US, New Zealand, Cambodia, Laos and most recently it has set up a joint venture in the Philippines with Del-Monte which expects to launch products this month./.
Vinamilk represents ASEAN in Top Valuable Global Brands in 2021
With a brand value of 2.4 billion USD, Vinamilk is the only representative of Southeast Asia to be listed in four global rankings on the world’s most valuable and strongest brands in 2021.
In Brand Finance’s latest Food & Drink 2021 report, Vinamilk was ranked eighth in the world’s top 10 most valuable dairy brands with a brand value of 2.4 billion USD, up 12 percent compared to 2020.
In addition, Vietnam’s largest dairy firm is listed as one of the three most potential dairy brands with the second-highest score.
Out of the dairy industry, Vinamilk also appeared in the two global rankings of the food industry, including the “Top 5 strongest global food brands” and “Top 30 of the 100 most valuable food brands worldwide”, placing 27th position, up 9 notches over 2020.
According to experts in the food and beverage industry, Vinamilk’s appearance in global rankings has demonstrated its strong sustainable development strategy, especially as the COVID-19 pandemic brought the world economy to a halt, affecting supply chains and making consumers tighten their purse strings.
According to Tran Thanh Hai, deputy director of Import-Export Department under the Ministry of Industry and Trade, dairy products are not Vietnam's advantageous export commodity nor traditional agricultural product, but with active contribution and efforts of Vinamilk, Vietnam increased its export value.
“In addition to ensuring export product quality, building a business brand which also represents the country is very important, showing the development of an enterprise as well as Vietnam’s dairy industry,” Hai said.
Previously, Vinamilk has also appeared in prestigious world rankings with high positions. Most recently, Vinamilk was ranked 36th in the top 50 world dairy producers with the highest turnover and is also the only representative of Southeast Asia in this list.
“From being a milk importer, we are very proud that after 45 years of efforts and development, Vinamilk has stood in high positions in the global rankings in terms of both revenue size and brand value,” said Mai Kieu Lien, Vinamilk’s General Director.
“These results will further motivate Vinamilk's leaders and employees to make more efforts to introduce the best products to consumers, and to bring Vietnamese milk to higher places in the world.”
Vinamilk currently has a system of 13 factories, 13 domestic dairy farms, three factories abroad and one large-scale dairy complex project in Laos. Braving challenges in the past two years due to COVID-19, Vinamilk has maintained stable production and business growth, especially posting impressive export growth.
In 2020, export revenue reached 5.56 trillion VND (242 million USD), up 7.5 percent compared to 2019. In the first six months of 2021, Vinamilk's export activities recorded double-digit growth, reaching 2.8 trillion VND, up 13.1 percent compared to 2020.
The company is continuously expanding its foothold in the world. It is investing in the US, New Zealand, Cambodia, Laos and most recently it has set up a joint venture in the Philippines with Del-Monte which expects to launch products this month./.
France increases pepper imports from Vietnam
France imported nearly 2.900 tonnes of pepper worth EUR8.2 million from Vietnam in the first seven months of 2021, up 28.6% in volume and 44.3% in value year on year, according to Eurostat.
France’s average import price of pepper increased from Vietnam and Brazil but decreased from Germany, Indonesia and the Netherlands, says the statistical office of the European Union.
Notably, Vietnam’s pepper market share in total French imports rose to 37.2% in the reviewed period from 30.7% from a year earlier.
The Import-Export Department under the Ministry of Industry and Trade reports that France is one of the important import markets for global pepper exporters. Apart from domestic consumption, France imports pepper for re-export to other European countries.
In Vietnam, the gradual easing of social distancing post COVID-19 has enabled businesses to increase the purchase to ensure a sufficient supply of pepper for export, that fuels pepper prices to rise considerably.
However, to have a competitive advantage in the world spice market, the Import-Export Department recommends that localities and businesses restore production to ensure export supply as soon as the COVID-19 pandemic is brought under control.
Vietnam represents promising market for Polish businesses in SEA
Vietnam is one of the most promising markets for Polish businesses in Southeast Asia, especially following the 2020 enforcement of the EU-Vietnam Free Trade Agreement (EVFTA), according to Piotr Harasimowicz, chief representative of the Polish Trade and Investment Agency in HCM City.
Harasimowicz says Poland is maintaining an economic growth rate of more than 4% which becomes a magnet for new investments from Asia, including China. But the central European nation attaches importance to its partnership with Vietnam represented by a community of approximately 50,000 expatriates in Poland that can help promote trade between the two countries.
The European Parliament's Committee on International Trade (INTA) reports Vietnam’s exports of goods and services to the EU are anticipated to increase by EUR15 billion, while EU exports to the country are set to rise EUR8.3 billion by 2035.
The EVFTA is expected to eliminate roughly 99% of tariff on goods between the bloc and Vietnam. The pharmaceutical, agricultural, machinery, and automobile sectors are all set to benefit the most from the bilateral trade liberalisation.
Most notably, almost half of pharmaceutical products from the EU, including Poland, are anticipated to be exempt from customs duties of 8% following the enforcement of the trade pact.
Statistics released by Poland's trade and investment agency indicate that bilateral trade between Vietnam and the Polish market surpassed the US$3 billion mark in 2019, whilst recording double-digit growth over the past few years.
The major fields for co-operation include farm produce, pharmaceuticals, cosmetics, green technology, and wastewater treatment. There are also strong prospects ahead for co-operation in several potential areas of information technology, heavy industries such as mining, shipbuilding, machinery and equipment for agricultural production, and food processing.
Moreover, Vietnam mainly exports electronics and equipment, footwear, textiles and agricultural commodities such as coffee, pepper, coconut and cashew nuts to the Polish market.
State Bank of Vietnam draft regulations on social housing lending cause controversy.
The State Bank of Vietnam (SBV) has proposed that commercial banks not be allowed to provide preferential loans to low-income people seeking to purchase, lease and lease-purchase social houses.
The proposal is part of draft amendments to the central bank’s Circular No. 25/2015 on instructions for concessional loans for social housing.
Specifically, people who want to purchase, lease or lease-purchase will only be able to borrow money at low-interest rates from the Vietnam Bank for Social Policies (VBSP).
The rationality for the amendment, according to the central bank, is to make it suitable to the current Housing Law 2014, which stipulates that the VBSP is the only source of funds for social housing seekers.
Currently, some commercial banks are designated by the SBV to provide preferential loans for social housing buyers, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Industry and Trade of Vietnam (Vietinbank), Bank for Agriculture and Rural Development of Vietnam (Agribank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV). Instead of mobilising people’s savings, these banks use funds from the State budget to lend to would-be home buyers.
Le Hoang Chau, chairman of the HCM City Real Estate Association (Ho REA), said that in the 2015-20 period, few low-income earners were able to access preferential lending to buy social houses, due to a shortage of supply and slow allocation of capital from the State budget for commercial banks to disburse.
Therefore, the draft amendment, he said, would negatively affect the State’s policy of offering long-term concessional loans to home buyers at low-interest rates.
Low-income people will therefore be deprived of opportunities to buy, rent or rent-buy social houses. This in turn will mean that the State’s target of ensuring social security might not be met.
From the perspective of project investors, Dinh The Quynh, Deputy General Director of Hai Phat Land, said to BizLive news that many investors had not been keen on social housing projects, due to complicated licensing procedures and low benefits, leading to the short supply of social housing.
Thus the amendments might further discourage investors, as it would be more difficult for people to acquire cheap capital, especially when it had already been difficult to obtain loans from VBSP.
From 2018 to 2020, the funds lent to social housing buyers reached VND1.26 trillion (US$55.7 million), equivalent to only 12 per cent of the State funds allocated to VBSP for the social housing development purpose.
Dang Van Quang, general director of Thai Nam Real Estate Business and Management Joint Stock Company, however, said the draft amendment was quite reasonable because it would be unlikely to affect many people.
Instead of trying to get a loan from many different commercial banks, people would instead go to one place – the VBSP. In nature, the amendment would not change the source of capital as the capital for lending social housing buyers would still be from the State budget, Quang added.
While VBSP would be the only source of funds for the social housing buyers, it would have to operate more actively and openly to make it easier for people to access this cheap capital, he stressed.
According to economic expert Dinh The Hien, policies on social housing change in line with targets of social security and welfare programmes, but are not subject to the financial law. Therefore, it is time to separate the commercial banking system from the policy of social housing development.
It is necessary to continue preferential loan deals for social housing programmes, but commercial banks should be withdrawn from the programme and this responsibility should be assigned to VBSP or Housing Development Fund, Hien said.
Hotel/quarantine model offers a lifeline for many in tourism
Converting hotels and resorts into quarantine centres has offered many hospitality firms a lifeline during the COVID-19 pandemic.
The pandemic has hit Viet Nam's tourism sector hard and among the most affected was the hotel industry. Hotel occupancy rates in Ha Noi, Da Nang and HCM City dipped to the lowest levels in the last ten years, according to a recent survey by the Vietnam National Administration of Tourism.
Occupancy rates among hotels with three stars and more in Ha Noi have dropped to a dismal 30 per cent at US$81 per night on average in 2020, compared to a 74 per cent at $113 per night pre-pandemic. The first half of 2021 saw a further decline to 25 per cent at $72 per night.
Things have been even worse for Da Nang, the country's largest tourism hub. Occupancy rates fell from an average of 61 per cent at $108 per night in 2019 to 17 per cent at $54 per night in 2020. The first half of 2021's figure was reported at 11 per cent at $49 per night.
HCM City was a rare exception with its hotel occupancy rate increased by 5 per cent from its lowest to 18 per cent at $69 per night during the second quarter of 2021. It has been largely credited to the conversion of the city's hotels and resorts to quarantine centres for foreign arrivals. Twenty-five hotels in the city with over 3,000 rooms have been converted for said purpose, with most of them being located in downtown districts and areas near the Tan Son Nhat International Airport. Notably, some hotels have reported an occupancy rate of 78 per cent or greater since the city's authority gave the green light.
It has been a welcoming sign for the sector, especially for small and medium-sized businesses. While just about 10 per cent of the city's hotel managed the conversion, more might be able to follow suit in the future to meet demand for quarantine space and COVID-19 prevention, said Troy Griffiths, deputy managing director of Savills Vietnam.
There has been rising demand for quarantine space among foreign diplomats, experts and flight crews, who frequently entered Viet Nam, according to Griffiths.
Ha Noi has been overseeing 20 hotels/quarantine centres with a combined capacity of 1,600 rooms and HCM City 34 hotels/quarantine centres with a combined capacity of 3,000 rooms, respectively.
Griffiths said he was optimistic about the sector's recovery during the last months of the year.
With 80 per cent of the sector's business made up of Vietnamese nationals and foreign residents living in Viet Nam, as soon as the virus can be put under control tourism can be expected to bounce back. The introduction of vaccine passports and promotion packages by hotels and resorts should be able to speed things along.
Binh Phuoc unveils investment incentives as it seeks to revive economy
Phuoc Long Town in Binh Phuoc Province seen from the top of Ba Ra Mountain, a tourist destination that attracts a large number of visitors.
The southern province of Binh Phuoc plans to offer investors incentives and support to revive its economy after the COVID-19 pandemic ends.
Tran Tue Hien, chairwoman of its People’s Committee, said at a recent meeting the province was preparing to implement a recovery plan, which includes incentives to attract investments.
Priority would be given to investment in key sectors such as technology, information technology, supporting industries, agriculture, environmental protection, infrastructure, culture, sports, tourism, and healthcare, she said.
Vo Sa, director of the province Department of Planning and Investment, said the incentives would include waiver and reduction of land and water surface rents, income tax and licensing fees.
New projects in certain fields or located in extremely disadvantaged areas would get a 50 per cent reduction in land rents and have to only pay tax of 10 per cent for 15 years, he said.
Hien said the National Steering Committee for Covid-19 Prevention and Control has classified Binh Phuoc among provinces and cities that had kept the COVID outbreak under control.
The province identified pandemic prevention as a key task together with economic revival, job creation and social security, she said.
“We are determined to live and work safely with the pandemic.”
The resumption of business activities is imperative, but it should be done step by step with a suitable roadmap to achieve the “double goal” of containing the pandemic and reviving the economy, she said.
The province would consider allowing enterprises applying the ‘three-on-site’ (working, eating, resting at the factory or workplace) or 'one route, two destinations' model (workers travelling between their accommodation and the factory on a set route with no stops on the way) to increase the number of workers or get new ones.
But for this they should not have had new COVID-19 cases in the last 14 days, and the workers who come in must be living in a green zone (COVID-free area) or have received at least one dose of a vaccine.
The province is also seeking to support businesses that have been forced to suspend operations due to the pandemic, and speed up vaccination of factory workers.
Binh Phuoc is one of eight provinces and cities in the southern key economic zone along with HCM City and Binh Duong, Ba Ria - Vung Tau, Dong Nai, Tay Ninh, Long An and Tien Giang provinces.
Green finance promotes Vietnam’s sustainable growth
Due to the adverse impacts of climate change, green growth financing projects play a very important role for the sustainable development of Việt Nam, experts have said.
According to the World Bank, Việt Nam is one of the five countries most likely to be affected by climate change because most of the population lives in low-lying coastal areas. It is estimated that climate change will reduce the country's national income by up to 3.5 per cent by 2050, Vietnam News Agency reported.
Meanwhile, an International Finance Corporation (IFC) study shows climate finance in Việt Nam accounts for only about 5 per cent of total bank loans, equivalent to US$10.3 billion, and the value is projected to increase significantly in the coming years.
The IFC said the implementation of the national target of reducing total greenhouse gas emissions by 9 per cent by 2030 to mitigate the effects of climate change will provide a climate investment opportunity worth $753 billion for Việt Nam in the 2016-30 period.
Meanwhile, a survey by international rating agency MSCI found 79 per cent of investors in Asia-Pacific significantly increased their investment in Environmental, Social & Governance (ESG) in 2020 in response to uncertainties of the COVID-19 pandemic and 57 per cent of them planned further study to make investment decisions by the end of 2021.
Although the growth rate of foreign direct investment (FDI) in Việt Nam is slowing down due to the negative impact of the pandemic, capital flows into green growth projects are still quite positive.
Especially, through domestic credit institutions, international financial institutions are playing an important role in financing green economic development in Việt Nam.
Recently, French development finance organisation Proparco granted a US$50 million loan to HDBank to lend green projects to promote sustainable development.
The IFC last month also provided a $100 million long-term loan to the Orient Commercial Joint Stock Bank (OCB) to further promote the contribution of the private sector in green and sustainable growth in Việt Nam.
The green growth trend of international investment organisations is opening up many opportunities to raise capital for Vietnamese firms, however, in order to receive the international capital funding, local firms also need to make more efforts and be consistent with their planned development goals.
According to HSBC Vietnam, as Việt Nam's economy has developed rapidly over the past decade, the country is fertile land for investors looking for growth. However, to sustain the growth, the country will need to develop capital markets, and foreign capital will play an important role.
HSBC assessed anti-climate change initiatives and green finance programmes in Việt Nam are still in their infancy, but this frontier market is gradually catching up with governance and social factors.
Many investors were surprised to learn that Việt Nam has a detailed set of corporate governance rules and is on the right track with meeting a significant number of the 17 sustainable development goals of the United Nations.
For example, in the renewable energy sector, Việt Nam is recording the highest level of investment in renewable energy in the ASEAN region. To attract more FDI and provide foreign companies with a more sustainable energy source, the country has demonstrated a strong commitment to renewable energy.
However, with the increasing importance of investing in ESG, HSBC experts believe Vietnamese firms will be under greater pressure to comply with ESG standards so they will focus more on sustainable growth and further make public on ESG issues.
Investors will demand more from firms. Therefore, firms operating in the high-carbon emission sector need to rethink their business models and strategies, Vietnam News Agency quoted Wai-Shin Chan, Head of HSBC’s Climate Change Centre of Excellence and also Head of Environmental Social Governance (ESG) Research, as saying.
More room for insurance stocks to grow post pandemic
Unlike other financial services like banks and securities, insurance stocks haven’t recorded significant gains despite positive business results and a bright growth outlook.
The draft amended Law on Insurance Business is carried out with the aim to apply international experiences and boost the development of the Vietnamese market.
Viet Nam has high potential for insurance services, but the development pace is still low compared to the region and world. The amended Law on Insurance Business is expected to take effect from 2023.
In the first eight months of the year, the insurance market still recorded positive growth despite the pandemic. By the end of August, total assets in the insurance market were estimated at nearly VND643.6 trillion (US$28.3 billion), up 22.1 per cent year-on-year, with total premium revenue during the period also rising nearly 17 per cent to more than VND133 trillion.
Different from other industries that were affected by the COVID-19 pandemic, the insurance industry's profit growth in the first half of the year was quite strong.
Data of nine listed insurance companies compiled by nhadautu.vn showed that in the first six months of the year, there were five to nine insurance companies with profit growth of 40 - 55 per cent compared to the same period last year.
Of which, Bao Minh Corporation (BMI) posted the highest profit growth of 55.4 per cent, followed by Vietnam National Reinsurance Corporation (VNR) with profit growth of 54.6 per cent, Petrolimex Insurance Corporation (PGI), up 49.9 per cent, Military Insurance Corporation (MIG), up 44.3 per cent, and Bao Viet Group (BVH), up 41.2 per cent.
During 2019-2020, some insurers recorded impressive performance, such as Post - Telecommunication Joint - Stock Insurance Corporation (PTI)’s profit jumped 475 per cent and 113 per cent in 2019 and 2020, respectively. BIDV Insurance Corporation (BIC) also witnessed a growth of 25 per cent and 39 per cent, respectively, while MIG’s profit surged 30 per cent and 37 per cent, respectively.
On the stock market, the share prices of these listed insurers also grew well in the first months of the year. Accordingly, the market prices of five to nine insurance companies jumped 40 - 145 per cent, with VNR shares climbing 145 per cent, MIG shares up 66 per cent and PTI shares up 57 per cent.
Notably, all insurance stocks reported good performance in the past two months. Some stocks have started gaining since the end of June or the beginning of July like MIG, BMI, PVI and PGI shares, or from August like BIC shares.
BVH was the only stock that posted losses compared to the beginning of the year, but has recovered from the bottom since mid-July.
However, the insurance group's profit growth still lags behind that of other financial sectors like banks or securities. The strongest growth of the groups’ share prices since the beginning of the year was only 145 per cent, while there were many bank and securities stocks that climbed by even 4-5 times.
In general, the total capitalisation of the insurance industry has only increased by 2.8 per cent since the beginning of the year, largely due to the losses of nearly 20 per cent of BVH shares.
The capitalisation of the insurance group on the stock market occupies a very small proportion, just over 1 per cent of the total market capitalisation, meaning there is more room for growth among insurance stocks in the future.
Financial indicators of insurance stocks show that the industry has more potential to grow as more than half of these nine firms have price per earning ratio (P/E) of less than 15x and average price to book value ratio (P/B) of 1.5-1.7x.
The complicated developments of the COVID-19 pandemic are creating short-term risks for insurance companies as they are faced with falls in customer income, the risk of inflation and an increase in compensation.
However, Bao Viet Securities Company (BVSC) said that in the short term, insurance stock prices would still receive momentum from the state capital disinvestment plan. In 2021, a number of businesses plan to divest part of their capital such as BMI, PTI, BVH, and MIG.
Moreover, Viet Nam is always in the top countries with the highest growth rate of premium revenue in the world, with an average annual growth of over 9.3 per cent.
BVSC believes that once the COVID-19 pandemic is over, the non-life insurance industry will quickly return to the previous average growth of 15 per cent, while life insurance will still maintain high growth of 25-30 per cent/year.
SSC to strictly crack down on stock manipulation cases
The State Securities Commission of Viet Nam (SSC) said that it is implementing strict supervision and inspection measures to clarify abnormal signs in the market, especially stock manipulation cases.
The move comes after some stocks’ prices recently showed signs of rising unusually.
The development of information technology to facilitate online trading activities and the quick adaptation of securities companies have helped the stock market boom in terms of liquidity. Of which, cash flows from new investors have contributed a large part.
Meanwhile the number of groups and topics related to stocks have also surged for more than a year. Many organisations and individuals consider these channels a useful solution to approach new investors, communicate and support their existing customers.
Many online forums and groups provide objective and multi-dimensional information, exchange policy information, market developments, business results, or corporate information.
This is a positive point, helping the stock market come closer to people, improve knowledge and skills for investors, especially new investors.
However, there are still some forums and online groups suggesting buying or selling stocks subjectively. These stocks showed signs of abnormal rises and falls. There is also the phenomena of many stocks consecutively hitting celling prices despite losses in business activities.
Based on regular observation and reports from the press, public opinion about suspicious phenomena on social networks, as well as the movements of some related stocks, the SSC’s supervisory and inspection units have been closely coordinating with relevant authorities to learn about and collect information on the above-mentioned issues, the SSC said.
Despite the impact of the COVID-19 pandemic, monitoring and handling of violations is still conducted regularly and continuously. Inspection activities are adjusted more flexibly to meet actual conditions.
After the pandemic is more effectively controlled, and provinces and cities ease social distancing measures, management agencies will speed up the implementation of direct inspections, while ensuring strict compliance with COVID-19 prevention measures.
Through monitoring and inspection, if any violation is detected, it will be strictly handled in accordance with the law, and even be transferred to the investigating agency if there are criminal elements. Currently, stocks with unusual movements are closely monitored by many agencies.
“If there is a violation, it will be punished according to the provisions of the law. In particular, market and stock price manipulation cases will be a priority and strictly handled to ensure deterrence and discipline for the market,” said a leader of the SSC.
In first eight months of the year, the SSC has deployed seven teams to inspect investors' transactions.
Based on the results of regular monitoring and inspection activities, the SSC has issued a total of 252 administrative sanctioning decisions with fines totalling VND9.6 billion (US$420,870).
More and more cases of manipulating the market and stock prices have been discovered, severely punished, and even criminally handled.
In early August, Ha Noi Department of Information and Communications also issued a decision to impose an administrative penalty of VND15 million on an individual in Hai Ba Trung District for using social media accounts to provide fake dispatches of the Ho Chi Minh Stock Exchange (HoSE) and to provide false information.
This is the first time an individual has been fined for providing fake information about Viet Nam's stock market on social media.
During July - August, SSC also fined three individuals for violating disclosure norms in bank stock trading.
Buyers seek loan help
The pandemic as a force majeure event has crippled people’s ability to meet loan repayment requirements, but while the real estate sector also appears susceptible to the crisis, the State Bank of Vietnam and commercial lenders have taken measures to deal with worrisome property assets.
Prolonged social distancing and the sharp decline in incomes are burdening many people with active loans from banks. Nguyen Manh Ha, a marketing officer at a footwear company, said that in the past few months, he only earned 70 per cent of his previous income. Meanwhile, Ha’s wife is a trader in Phuoc Binh market in Thu Duc city, which had been closed, leaving her without an income.
As a result, the couple currently cannot afford to pay their bank debt of $430 a month for an apartment in Thu Duc city. The total loan of $30,000 involves a fixed interest rate of 10.5 per cent in the first year, which will fluctuate to up to 11.5 per cent per year in the following years.
“The sharp decrease in our income forced me to reserve almost all of my salary to pay the loan, and so it is hard for me to cover other expenses,” said Ha.
Ha’s case is not unprecedented. Le Minh Xuan, an employee at a trading company in Ho Chi Minh City, said that she has worked from home since the social distancing began and only receives 70 per cent of her regular salary.
With a loan of $43,000 and a current interest rate of 10.5 per cent a year, Xuan and her husband do not know how to pay back their debts.
“If banks do not reduce their interest rates for homebuyers, many people like me will be unable to pay back their loans. This will set off a domino effect to the banking system, other homebuyers, and the real estate market in general,” Xuan said.
Xuan suggested that if banks cannot lower interest rates right now, they could temporarily allocate loan parts to other borrowers until the disease is bated away. “In that case, my debt would only be about $260 per month, and I would be able to pay normal expenses for the family,” she suggested.
Homebuyers are not the only ones who are wishing for a bank interest rate reduction. Many real estate investors are worried because they are also depending on loans from banks to buy assets with the aim to resell them for profits.
However, due to the current restrictions, property sales will remain low because buyers are maintaining a wait-and-see attitude while they still have to pay bank interests.
Economist Dinh The Hien said that while most businesses were negatively affected, banks still continuously announced high profits. “With these profits, banks should be able to share the difficulties of homebuyers,” said Hien.
He recommended that banks should establish policies to extend loans and reduce interest rates to support borrowers. Moreover, Hien hopes that banks could have more suitable policies for homebuyers for their first house.
Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA) suggests commercial banks could consider reducing lending interest rates by two per cent per year for homebuyers, which could ensure benefits for all parties.
In addition to the interest rate policy, HoREA also suggested that the Ministry of Finance and the General Department of Taxation support land use taxation, and that the ministry considers proposing a delay of land use fees for commercial housing projects until the end of the year.
DKRA statistics revealed that many investors have to cut losses and sell assets due to heightening pressure from interest rates and unforeseeable circumstances, with their incomes particularly hurt.
Last week, the SBV issued a new circular amending and supplementing a number of articles of Circular No.01/2020/TT-NHNN directing foreign credit institutions and bank branches to reschedule debt payments, waive and reduce borrowing interests and fees, and maintain the support for customers affected by the pandemic. The fresh move is envisaged to enable banks to assist vulnerable customers.
However, Nguyen Thi Hong, Governor of the SBV, noted that the central bank would continue to strengthen inspection, supervision, and direction of credit institutions on risky areas, particularly property and securities.
This is not the first time the SBV publicly has cautioned various risks in real estate. In April, the SBV issued Official Dispatch No.3029/NHNN-TTGSNH to credit institutions and foreign bank branches, instructing them to implement strict control measures over the quality of credit in sectors with potential risks such as real estate and securities.
The prime minister has directed relevant ministries to closely coordinate with localities to strengthen supervision on land speculation or unreasonable land pricing.
“Loan-based real estate is making up a sizeable proportion in banks’ balance sheets. Thus, the SBV and ministries are keeping an eye on property speculation to prevent a housing bubble like in the 2007-2012 period, which could lead to a banking crisis,” emphasised Governor Hong at the SBV’s conference last week. “In these challenging times, fragile industries, such as manufacturing, agriculture, tourism, and transportation, are the centre of banks’ critical support.”
The real estate sector is now off the support list for interest rate reductions, with the current interest rates of the sector set at up to 11.5 per cent per year. High lending interest rates and good credit growth explain the enormous profits of the banking industry in the first six months of the year.
Meanwhile, a handful of lenders are rolling out preferential interest rates applicable for all sectors, including property. Vietcombank, VIB, MB, and BIDV, among others, have offered specific incentives for homebuyers or for home repairs.
Hoang Linh, financial director at VIB, said that the bank has optimised the costs of capital mobility by boosting cash growth and increasing current account savings.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
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