BUSINESS NEWS 11/8

Concerns arise as Chinese P2P companies flee to Vietnam

BUSINESS NEWS 11/8

A large number of Chinese P2P companies in Vietnam have created unfair competition and caused confusion among customers, as some recruited Vietnamese as representatives.

A recent survey revealed at least 60 – 70 Chinese peer to peer lending (P2P) companies have fled to Vietnam, following the collapse of such model in China, according to Nguyen Hoa Binh, chairman of NextTech.

The figure is much higher than the number previously provided by the State Bank of Vietnam which indicated that 40 P2P lenders are operating in Vietnam, including 10 from China, and others from Indonesia and Singapore.

Binh said the P2P lending platform in China reached its peak with 4,000 enterprises, but later collapsed and caused serious consequences to the society, citing the lack of regulatory framework as one of the main reasons.

According to Binh, the P2P model, under which lenders and borrowers connect via apps, has been exploited by platform providers for raising money from depositors before lending back to corporate borrowers for high returns.

However, as the Chinese government moved in to tighten credit environment, borrowers failed to raise money and were unable to generate sufficient cash flows to repay lenders, Binh said.

Binh added a large number of Chinese P2P companies in Vietnam have created unfair competition and caused confusion among customers as some recruited Vietnamese as representatives.
Additionally, customers are being charged with extortionate interest rates of 60 – 70% per month.

Binh stated Chinese companies could potentially disrupt Vietnamese market and suffer the same fate as in China, adding that this lending practice requires timely management from state agencies for transparent and fair competition between companies.

Deputy Director of the Monetary Policy Department under the SBV Nguyen Chi Quang said in March if P2P lending is well managed, it would facilitate inclusive finance, especially in remote areas where the banking sector remains undeveloped and customers, household businesses, and small and medium enterprises have limited accessibility to banking – finance services with low costs.

Deputy Prime Minister Vuong Dinh Hue said the government will soon issue a legal framework covering P2P activities, aiming to prevent violations in this new business model.

A research conducted by Transparency Market Research showed that P2P lending would grow by 48.2% annually in the 2016 – 2024 period, while Morgan Stanley forecast the business model is expected to reach growth rate of 53.5% globally by 2020.

Private sector considered key to lead Industry 4.0 in Vietnam

Vietnam is in need to secure new technologies and achieve innovation for manufacturing, particularly in reinforcing R&D competence of companies and adopt new technologies, said a South Korean expert.

The private sector should be considered a key actor to lead the Fourth Industry Revolution in Vietnam, according to Chang-whan Ma, vice president of the Korea Industrial Technology Association (KOITA).

Ma made the statement in a conference organized by the Central Institute for Economic Management (CIEM) in Hanoi on August 1 discussing South Korea’s experiences in research and development (R&D), innovation and economic growth and lesson for Vietnam.

According to Ma, thanks to science and technologies development, South Korea made a big jump in economic growth with GDP per capita from US$1,870 in 1980 to US$31,370 in 2018.

During the course of economic development, South Korea transformed from a light industry-based economy in 1981 towards that of heavy industry with greater added-value products, such as semiconductors manufacturing, shipbuilding and automobiles, among others.

“The R&D sector, which was once led by the public sector in the 80s, now becomes the playing field of private companies,” Ma said, stressing the importance of the private sector behind South Korea’s economic achievements.

South Korea currently ranks top among OECD countries in terms of R&D investment, while there are currently 40,000 corporate R&D centers run by local small and medium enterprises (SMEs), accounting for 79.4% of South Korea’s R&D expenditures.

Notably, the SMEs, with only 46 R&D centers in 1981, or 1% of the total in South Korea, has now accounted for 95.9% of total centers in the country in 2019.

By promoting greater investments in R&D in the private sector, Vietnam would be able to address its shortcomings of low competitiveness in industrial technology, as well as the lack of financial-tech infrastructure, Ma said.

Meanwhile, Ma expected Vietnam to maintain its status as an ideal investment destination in the region, thanks to high economic growth, huge domestic market and the ongoing US – China trade dispute.
With regard to the latter, China’s manufacturing companies are relocating their production plants to Vietnam to export their products as “made in Vietnam”.

“This can serve as an opportunity, but it can also be a threat as the US is seeking measures to impose duties on such products,” he asserted.

“South Korea, with rich experiences in fostering industries and improving national competitiveness through R&D, could support Vietnam in R&D and industrial cultivation at government level,” Ma stated.

This is increasingly important for Vietnam, as the country is in need to secure new technologies and achieve innovation for manufacturing, particularly reinforcing R&D competence of companies and adopt new technologies.

Ma suggested Vietnam implement policies promoting the advancement of high-value-added industries using the manufacturing industry as a growth engine.

The CIEM’s Director Nguyen Dinh Cung said the Industry 4.0, digital economy and IT advancement are presenting both opportunities and challenges to Vietnam.

“Vietnam has to take advantage from new opportunities and stand ready to apply exclusive technologies emerged from the Industry 4.0 to overcome challenges,” Cung stated.

Park Seung Chang, president of Korean IT-Ethics Leaders’ Association (KITELA), said Vietnam should focus on investing in human resources, infrastructure and smart technologies in order to grasp opportunities from the Industry 4.0.

Vietnam’s T&T Group to import record large amount of raw cashews from Tanzania

T&T Group’s deal has provided much needed amount of cashew nuts for Vietnam’s cashew sector and cements the country’s status as one of the largest cashew vendor in the world, accounting for 60% of global production.

Vietnam’s T&T Group has signed a contract to purchase a world record number of 176,000 tons of raw cashew nuts with the Cereals and Other Produce Board of Tanzania (CPB).

The first shipment of cashew nuts from Tanzania is scheduled to deliver to Vietnam in September. The purchasing contract is part of a long-term cashew production project of T&T Group in Tanzania, following two other traditional markets of the Vietnamese company in Ivory Coasts and Guinea Bissau in West Africa.

Vietnam currently is one of the largest importer of raw cashew nuts and also exporter of cashew globally, serving as a bridge to establish a global supply chain for the world cashew market between raw cashew nuts exporters such as Ivory Coasts, Nigeria, Mozambique, Benin, and processing countries (Vietnam, India) and final markets.

Every year, Vietnam imports 1.6 million tons of raw cashew nuts, mainly from African countries, as local supply only meets 25% of the actual processing capacity.

In this regard, T&T Group’s deal has provided much needed amount of cashew nuts for Vietnam’s cashew sector and cement the country’s status as one of the largest cashew vendors in the world, accounting for 60% of global production, according to statistics from Vietnam Cashew Association (Vinacas).

On March 20, in Abidjan, T&T Group signed the first agreement to purchase 50,000 cashew nuts with group of exporters from Ivory Coasts and Ivory Coast's Cotton and Cashew Council (CCA).

Last August, T&T Group also signed a memorandum of understanding (MoU) with Guinea Bissau to import raw cashew nuts with an annual volume of 150,000-200,000 tons per year.

As of August 2018, T&T Group had imported 20,000 tons of raw cashew nuts from Ivory Coasts and 24,000 tons from Guinea Bissau to the Vietnamese market.

Taking into account 176,000 tons from this contract, total supply of cashew nuts by T&T would reach 220,000 tons, or 15% of total cashew nuts imported to Vietnam.

Vietnam becomes a winner in growing global electronics supply chain

PM Nguyen Xuan Phuc admitted although Vietnam has gained initial success in global supply chains, Vietnamese businesses have mainly joined these chains in fields such as assembling or product packaging, which are lower in value and lack sustainability in supply chains. 

Vietnam has been a long-term beneficiary given its rising integration with the global electronics supply chain, experts said.

Samsung procured components from 29 local companies for its production needs.

According to analysts from financial information services provider Fitch Group, Vietnam is an important production base for major international electronics vendors, such as Samsung, Microsoft and LG.

amsung alone has invested more than US$17.3 billion in the Southeast Asian nation since 2007, and accounted for a quarter of the country’s total export revenue in 2018.

Samsung’s entrance into Vietnam also preceded considerable technology transfers to local suppliers. Last year, the group procured components from 29 Vietnamese companies for its production needs, up from four in 2014.

Besides, data from the Ministry of Industry and Trade also showed that Vietnam currently has about 1,800 supporting firms, of which about 300 participate in multinational companies' supply chains.

“The new know-how obtained by these local companies has allowed them to supply components to other local original equipment manufacturers,” Fitch analysts said, citing local conglomerate Vingroup as an example.

Vingroup announced plans to begin production of handsets in December 2018 through the establishment of domestic manufacturing facilities, further boosting the local electronics sector.

“Matching trends in electronics and machinery exports and import growth reject Vietnam’s intermediate position in the global electronics supply chain; electronics and machinery accounted for 40 percent of both Vietnam’s imports and exports in 2018, suggesting the importance of manufacturing to Vietnam’s economy,” the analysts said.

However, experts said, the country’s high economic openness, representing as much as 195 percent of GDP, means that possible tariffs levied by the US on Vietnamese exports would weigh excessively on the economy. The US government has already sought to implement tariffs of over 400 percent on South Korean and Taiwanese steel re-exported through Vietnam, and tariffs impacting Vietnamese goods such as electronics would have detrimental effects on the domestic manufacturing sector.

According to Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, both domestic businesses and lawmakers have so far become well aware that joining a supply chain needs not only to cut costs but also increase productivity and competitiveness. It’s necessary now to apply a digital shift which naturally means digitization and super-connection which help connect physical production, service, goods, and distribution.

Meanwhile, Prime Minister Nguyen Xuan Phuc admitted although Vietnam has gained initial success in global supply chains, Vietnamese businesses have mainly joined these chains in fields such as assembling or product packaging, which are lower in value and lack sustainability in supply chains.

Facing that fact, Phuc said, Vietnam needs to move to a higher position in global value chains and strengthen the connectivity between Vietnamese and FDI businesses. Vietnam is implementing policies to link domestic and foreign businesses.

The government has so far also pledged to support businesses and development and reduce business conditions and logistical costs.

Vietnamese businesses have improved their management capacity and expertise and pursued long-term visions. They now focus on improving product quality and increasing the application of IT to link production networks and supply chains to enhance their competitiveness.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, said that the chamber will work closely with the government to realize the goal of moving to a higher position in the global chain, adding VCCI has the Business Information Center which supports businesses to digitize their management and trading.

Besides, Vietnam has a stable political environment with high economic potential, an abundant workforce, the best-trained and youngest labor structure in ASEAN, and ever-greater participation in free trade agreements. All of these factors are helping Vietnam participate more deeply in the global supply chain.

Vietnam c.bank predicted to keep VND stable amid CNY devaluation

The USD/VND exchange rate as of late July was almost unchanged from the end of last year, so the central bank still has "room" to manage against the CNY’s fluctuation.

The State Bank of Vietnam (SBV), the country's central bank, is predicted not to devalue the Vietnamese dong (VND) strongly (over 3%) to avoid the risk of being put into the US's currency monitoring list, 

particularly following the unexpected plummet of China’s yuan yesterday against the USD, according to Bao Viet Securities Company (BVSC).

The USD/VND exchange rate as of late July was almost unchanged from the end of last year, so the SBV still has "room" to manage against CNY’s fluctuation, asserted BVSC in its latest report.

Yesterday's plummet marked the first time Chinese currency surpassing the market’s psychological “break point” of 7 CNY/USD since 2009.

Investors have been considering 7 CNY/USD a sensitive psychological resistance zone, which was even maintained stable amid the US-China trade conflict with the first US imposition of import tariff on
Chinese goods in June last year.

Before August 5, yuan lost about 0.5% since the beginning of the year. Washington’s threat to impose a 10% tax on US$300 billion worth of Chinese goods starting early September is the main reason for
CNY’s strong decline.

BVSC expected that China is somehow motivated to let the CNY tumble to support exports, but at the same time does not want a strong depreciation scenario for CNY. China does not want to activate a
stronger wave of foreign capital withdrawals, causing more macroeconomic instability and at the same time undermining the country's foreign exchange reserves as in 2014 – 2015.

In the short term, with CNY’s unexpectedly sharp drop today, it is likely that China will soon take measures to stabilize the sentiment and "soften" CNY movements. However, the USD/CNY exchange rate breaking through 7 will place the currencies of other emerging markets under pressure.

In a latest move, the People’s Bank of China (PBOC) today set the daily currency fixing stronger than analysts expected and announced the planned sale of yuan-denominated bonds in Hong Kong,
Bloomberg reported.

The moves, which came after the US labeled the country a currency manipulator, helped drive the yuan up 0.2% a day after it sank the most since 2015. The China’s central bank also rejected the accusation
it manipulates the yuan.

Workshop on AI effects scheduled for next month

Dale Carnegie Vietnam will organize a workshop on artificial intelligence (AI) on September 12 in HCMC, featuring research reports by international experts on the impact of AI in the workplace.

The event, themed “AI: Lead with Confidence in the AI era,” will be attended by corporate leaders, human resources experts and senior managers.

In particular, Dan Heffernan, chief sales officer of Dale Carnegie Training, will present ways to leverage the benefits of AI as well as to respond to challenges that the AI revolution brings, aiming to create drastic changes for companies.

Participants in the workshop will be briefed on AI developments in the years to come and what the future holds for businesses. They will also learn what companies may gain or lose when they join the AI
sector, which requires a lot of effort in managing finances, personnel and other resources.

Applications of AI can be seen in multiple fields, ranging from robot creation, investment analysis and decision-making to warehouses, logistics and healthcare. The AI revolution has changed the way people communicate in the workplace and created many breakthroughs in terms of productivity and manufacturing scale.

Data from a source indicate that 70% of companies around the world will adopt AI by 2030 and 60% of tasks can be performed using AI technologies.

However, in the local market, AI is still a major challenge for firms since their human resources’ qualifications and technology foundation are limited, while investment in AI technology is costly, so many employees will be unable to catch up with this revolution.

Also, the effectiveness of investing in AI cannot be seen over the short term, prompting many businesses to hesitate. Another thorny issue is finding ways to maintain human-machine and human-human relationships in the age of AI.

These issues will be discussed at the workshop, which is scheduled to take place from 1:30 p.m. to 5 p.m. at 69-71 Huynh Tinh Cua, Ward 8, District 3.

Kien Giang proposes putting Phu Quoc special economic zone plan on hold

Kien Giang Province has written to the Prime Minister proposing the suspension of a major plan to establish a special administrative and economic zone on Phu Quoc Island off the province until the
National Assembly (NA) passes the law on special administrative and economic zones.

The Mekong Delta province had conducted procedures to put the plan into action after it was approved by the Prime Minister in August last year, the provincial People’s Committee said in the proposal.

However, the NA has yet to set a specific date to pass a draft law on special administrative and economic zones, setting up multiple obstacles for the province’s adoption of the plan due to the lack of a legal
foundation, procedural order, zoning content and appraising board.

Phu Quoc had executed a plan in line with the Prime Minister’s Decision 178, dated October 5, 2004, on approving the master plan to develop Phu Quoc Island until 2010, with a vision toward 2020.
According to the province, this application is no longer appropriate for the growth of the island district.

The provincial government cited the Law on Zoning, noting that district-level zoning would have to be integrated with that of the province, but many socioeconomic targets of Phu Quoc have outpaced figures
stipulated in Decision 178.

However, waiting for the province’s zoning plan to be worked out and approved will create difficulties for Phu Quoc in mapping out further development goals, calling for investors and executing investment
projects.

Instead, the provincial government is seeking approval from the Government to set up an economic zone on the island, with a zoning fund sourced from the local budget and other legal sources.

The province also proposed the Government allow it to select, appoint and oversee foreign consultants for the new plan and to pay them independently.

Earlier, the provincial People’s Committee proposed the master plan to set up a special economic zone on Phu Quoc Island to the Government in late 2012, aiming to develop the island into one of the
nation’s key special economic zones.

Work accelerates on Trung Luong-My Thuan expy project

The construction of the Trung Luong-My Thuan expressway project in the Mekong Delta province of Tien Giang is being sped up following the Prime Minister’s directive on funding.

Ten days earlier, none of the workers arrived for duty at the construction site of the Trung Luong-My Thuan expressway project and the investors announced their intent to suspend the project due to the lack of capital. However, the project is now under construction, thanks to the prime minister’s directive.

At a meeting to discuss ways to resolve bottlenecks in the Trung Luong-My Thuan expressway project on July 24, Luu Xuan Thuy, vice chairman of Deo Ca Group, as a member of the consortium involved in the project, noted that the greatest difficulty being faced by the project was that the Government had yet to provide over VND2.1 trillion from the State budget for the project.

The vice chairman added that one of the requirements of lender banks involving capital disbursement is that the Government must disburse capital for the project. Capital for this project ran out after roughly VND3 trillion from the investor and contractors had already been disbursed.

Therefore, work on the project would be halted if no more capital was allocated, Thuy told the attendees at the meeting.

Due to the difficulty, Prime Minister Nguyen Xuan Phuc chaired a meeting on July 30 to discuss solutions to put the expressway project back on track.

Regarding the amount pledged by the Government to assist with the project, the prime minister pointed out that the Government had assigned the Ministry of Finance to gather feedback from the Government’s members on the solution of using collection increases in 2018 to support the project, as indicated in Resolution 13 issued on July 23.

As for loans, PM Phuc told the Tien Giang government and the project investors to work with banks offering loans to address the shortage of capital to ensure the progress of the project.

He also assigned the central bank to direct commercial banks, mainly VietinBank, to promptly arrange loans for the project in line with the prevailing regulations.

The provincial government, contractors, banks and relevant units will organize a meeting on August 7 to resolve problems related to bank loans.

South Korean companies pour $3.2 billion into Binh Duong

South Korea ranks fifth in the list of countries and territories investing in Binh Duong with 800 projects worth $3.2 billion.

 

According to Nguyen Thanh Truc, director of the provincial Department of Planning and Investment, Binh Duong has attracted nearly $1.45 billionin the first six months of 2019, up 70 per cent compared with the same period last year.

Binh Duong is one of Vietnam’s top three localities in terms of FDI attraction, trailing behind Ho Chi Minh City and Hanoi. The province is home to 3,650 projects from 64 countries and territories with the total registered capital of $33.93 billion. It is worth noting that South Korean companies have been ramping up investment in the locality, making a significant contribution to its socio-economic development. South Korean companies mainly operate in the fields of textile and garment, footwear, automotive auxiliary, healthcare, cosmetics, and food processing.

In 2019, South Korea’s KyungBang Vietnam Co., Ltd. has poured an additional $84 million into its project in Bau Bang Industrial Park, raising the total capital to $179.2 million.

Binh Duong has recently held a dialogue with South Korean investors to solve their problems and facilitate their investment in the locality. Tran Thanh Liem, Chairman of the provincial People’s Committee, stated that foreign companies, especially those from South Korea, have made active contributions to Binh Duong’s FDI performance.

At the dialogue, South Korean companies pointed out different issues related to the lack of skilled labour, conditions for mergers and acquisitions, power, infrastructure, and much more. As the province is now a magnet to foreign investors, South Korean firms suggest the province to develop new hospitals, apply medical insurance for foreigners, as well as open Korean language courses at local colleges and universities.

The leaders of the Binh Duong People’s Committee have provided answers to the investors and committed to tackling their problems in a timely manner. In particular, the departments and agencies will join forces to improve the collaboration between universities and businesses to train a skilled workforce that can satisfy the needs of South Korean investors.

The chairman further noted that the province will set up a hotline to learn of arising problems of foreign-invested companies in general and South Korean companies in specific. In addition, Binh Duong will focus resources on completing its socio-economic infrastructure like transport, water supply, power, and environment among others. The province is expanding its industrial parks and creating clean land funds to lure in more FDI projects.

Profit at Hung Vuong Corporation continues to plunge

Hung Vuong Corporation (HVG) has just announced its business results for the third quarter of the 2019 fiscal year (October 1 – September 30) with a huge loss of VND129 billion ($5.61 million).

Hung Vuong Corporation (HVG)'s total accumulated losses until the end of the third quarter of this financial year reached VND650 billion ($28.26 million).

HVG's net revenue in the quarter reached VND527.25 billion ($22.92 million), down 63.7 per cent compared to the corresponding period last year.

The cause of the sudden drop in revenue it that the company has cut down the business of selling animal feed materials and divested Viet Thang Feed JSC, which sharply reduced its revenue to VND1.1 trillion ($47.83 million).

Aquatic firm sets to withdraw from two sub unitsHung Vuong Corporation stock price continue to drop half of value
Besides, the cost of goods sold (COGS) was higher than revenue, so HVG recorded a gross loss of nearly VND32 billion ($1.39 million), while the gross profit in the same period of last year was nearly VND61 billion ($2.65 million).

The price of raw fish of HVG has dropped sharply from VND34,000 ($1.48) to only VND18,000 ($0.78) per kg, a reduction of 47 per cent, so the export price also dropped, leading to a gross fall in profit.

In the third quarter of this year, HVG made no profit from selling its capital at Viet Thang Feed JSC, so its financial revenue was only a little over VND5 billion ($217,390), down VND129 billion ($5.61 million) compared to the same period last year. Meanwhile, financial expenses increased by VND8.7 billion ($378,260) despite interest expenses falling by VND12 billion ($521,740) over the same period.

In the third quarter, HVG recorded a profit of VND22.2 billion ($965,220) from its joint venture companies, while last year it lost more than VND23 billion ($1 million). Besides, thanks to the divestment from Hung Vuong Song Doc JSC and An Lac Real Estate JSC, leading to lower selling and administrative expenses compared to the same period with a total value of VND18.8 billion ($817,400).

The total accumulated losses in the first three quarters of the year amounted to VND256.7 billion ($11.16 million), still VND110 billion ($4.78 million) less than the record loss of VND366 billion ($15.91 million) in the first three quarters of 2018. The total unallocated accumulated losses until the end of the third quarter of the 2019 financial year are VND650 billion ($28.26 million).

Total inventories by the end of the third quarter are VND1.932 trillion ($84 million). Total liabilities are VND7.03 trillion ($305.65 million), an increase of VND590 billion ($25.65 million) compared to the beginning of the year.

Vietnam’s FMCG market poised to heat up: Kantar Worldpanel

Over the long term, the Vietnamese fast-moving consumer goods (FMCG) market is expected to heat up, even doubling the pace of last year in rural areas, said market research consultant Kantar Worldpanel in its latest FMCG Monitor edition.

The firm stated in the report that coupled with the low consumer price index, Vietnam’s economy and domestic demand are at a slightly slower momentum than that seen in the same period last year.

However, more effort is needed to make the most of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the European Union-Vietnam Free Trade Agreement to further boost economic growth and reach the gross domestic product growth target of 6.8% for 2019.

Over the short term, FMCG spending and consumption continued to grow strongly in the second quarter of this year and is likely to keep pace with economic growth of 6%-7% for the full year of 2019, according to the firm.

All sectors except beverages are performing very well, especially personal care with its double-digit growth rate, in Hanoi, the central coastal city of Danang, HCMC and the Mekong Delta city of Can Tho.

In rural areas, dairy products are still enjoying impressive growth and leading the FMCG market growth.

The firm said dairy growth is partly driven by the robust development of ready-to-drink milk, especially in rural areas, thanks to its convenience.

Also, the category has just reached more than 10% of the total consumer base, with new players jumping in, showing strong potential.

In quarter two, almost all channels showed good performance in urban areas. Consumers continuously purchased FMCG products through multiple shopping channels, reinforcing the notion that the omnichannel strategy is a necessity for brands and retailers.

“Shoppers now prefer to shop across multiple channels, even for staple items. And their choices are different when shopping on different channels. Offering the right portfolio on the right channels will give manufacturers a significant opportunity to grow their shopper base, drive repeat purchases and increase their value spend,” said the consultant.

Vietnam’s infras development plans open up room for foreign investors

BUSINESS NEWS 11/8

All Vietnamese transportation sectors, including airports, seaports, toll roads and railways, would be attractive to foreign investors in a general sense.

Foreign investors have plenty of opportunities to take part in infrastructure projects in Vietnam as the government prioritizes the sector’s development while the state funding remains insufficient.

According to Tran Ngoc Chinh, chairman of the Vietnam Urban Planning and Development Association, Vietnam’s infrastructure development is far below the country’s requirements. To fill up this big gap, the country has numerous projects in the pipeline such as roads, rail routes, urban transportation, public services infrastructure, and ports and airports.

In Ho Chi Minh City alone, authorities have recently called upon investors to participate in 85 transport infrastructure projects, worth a combined US$41.9 billion.

Experts said conventional funding sources, such as the state budget and official development assistance (ODA) from bilateral and multilateral donors, and government bonds, could only cover 50 percent of the total cost of infrastructure projects. Therefore, investors at home and abroad are expected to be involved in infrastructure development through the public-private partnership (PPP) model.

According to Sajal Kishore, head of Asia-Pacific Infrastructure and Project Finance at Fitch Ratings, to meet Vietnam’s capital demand for infrastructure development, the country will need to leverage on domestic and international capital markets and attract foreign direct investment.

Increasingly, the government has also sought privatization and divestment as a means to handle the challenges of infrastructure financing, Sajal said, adding private financing, through PPP schemes, is another channel that is being promoted for infrastructure development in Vietnam.

The government is making efforts to encourage the foreign private sector to not only invest money, but also contribute specialized technical know-how for these projects. Ongoing regulatory reforms and privatization of state-owned enterprises encourage the private sector to maintain and increase their existing level of investment in infrastructure.

According to experts, all Vietnamese transportation sectors, including airports, seaports, toll roads and railways, would be attractive to foreign investors in a general sense. There are favorable drivers at play supporting demand for these assets.

Sajal said Vietnam remains one of the fastest-growing economies in the Asia-Pacific. The country also has the highest share of infrastructure spending relative to GDP in all ASEAN countries.

“Demand for transportation assets benefits from strong GDP growth due to a rapidly growing middle class, increasing urbanization and improving connectivity in Vietnam, with future growth rates expected to outstrip GDP growth. Road and rail network investment will be key to drive infrastructure investment across other sectors in Vietnam. Demand for these assets reflects strong traffic and freight volumes supported by strong and sustained economic growth as well as increasing connectivity and improving logistics,” he said.

With increasing household incomes and the emergence of low-cost carriers, more people in Vietnam can now afford to travel and this is increasing their propensity to fly and will continue to drive air traffic growth. Increasing containerization across developing Asia, including Vietnam, and globalization will drive continued investment in port capacities. Demand for the ports will also rise with continued investment in improving logistics and export-oriented facilities in the country.

According to experts, continued improvement in regulatory, investment and capital market frameworks, which provides visibility and stability in a longer term, will help attract foreign investment inflows into infrastructure.

The development of a bankable and investable PPP project pipeline will also facilitate stronger growth in foreign inflows in infrastructure, the experts said, adding that Vietnam has done well to develop a PPP framework to attract private capital in infrastructure, although the pace of such inflows remains inadequate to meet the financing gap and is also restricted to a few sectors such as electricity infrastructure.

Market Watch tightens control on moon cakes

The Market Watch General Department will take samples of moon cakes sold to the public for tests to ensure the quality and safety of the products during the Mid-autumn Festival, which starts next month.

The Ministry of Industry and Trade will assign relevant units to do the tests.

The department will also keep an eye on homemade moon cakes, which are sold online and via orders. The origin of the products have mostly remained unknown.

In a document sent to market watch departments of cities and provinces nationwide, the department has asked localities to tighten control on the quality of moon cakes and children’s toys during the festival.

The market watch departments in localities will inspect the transport, production and trading of raw materials for the cakes to promptly curb the smuggling of materials without clear origin.

The departments will focus specifically on large-scale moon cake production businesses.

In addition, the department will strengthen inspection on the prices of the cakes and the recovery of expired products after the festival.

The department has also asked its subordinate units to inspect and handle violating organisations and individuals who sells toxic, smuggled and dangerous children's toys.

The units will check on the certificates of origin of the toys as well as other legal papers of the products sold at the market.

Violators, including toy manufacturers and sellers, will be publicised on mass media.

Moon cakes with many flavours are ready to be sold although the full-moon season starts in one month.

Many kiosks have been set up along crowded routes such as Pham Hung, Tran Duy Hung and Chua Boc streets. The cost of the cakes ranges between VND29,000-480,000 (US$1.16-19.2) each.

The future of manufacturing through smart factories

The largest international machine tools and metal technology exhibition in ­Southeast Asia will this year shine a ­spotlight on smart factories.

Themed “Rising with Innovations”, METALEX Vietnam 2019 will take place on October 10-12 at the Saigon Exhibition & Convention Center in Ho Chi Minh City. The expo will showcase innovative machine tools, precision engineering, and metalworking technologies with an emphasis on the smart factory concept.

According to the latest report from Global Market Insights, Inc., the smart factory market is anticipated to rise from $75 billion in 2018 to over $155 billion by 2025. The concept plays a vital role in the future of manufacturing and metalworking owing to the growing demand for industrial solutions which optimise output and save on both labour and operational costs.

Vu Trong Tai, general manager of Reed Tradex Vietnam said, “Those factories that are digitally advanced and have connected facilities will sharpen the manufacturing performance in a host of operations. Several technologies, namely the Internet of Things, AI, Big Data, and analytics in the smart factory market, can operate autonomously and correct by itself.”

Various planning and management software can detect probable errors and alert managers to eliminate losses, and there is a high demand for these solutions, said Tai.

“In addition, government initiatives and policies in the European and Asian countries to promote the utilisation of intelligent factory techniques are also major factors attributing to smart factory expansion. Due to the popularity of cost-efficient and automated benefits, the industry is witnessing a high demand from areas like manufacturing, metalworking, automotives, and processing,” Tai added.

Commenting on the smart factory trend in Vietnam, Huynh Phong Phu, local business manager of Robotics and Discrete Automation at ABB Vietnam, said that large-scale global manufacturers have flocked to Vietnam, such as Samsung, LG, Toyota, Honda, Canon, and Brother, with some of these production facilities in the heart of the worldwide supply chain.

Meanwhile, Vietnamese manufacturers and assemblers have also developed to a large scale and complied with global production regulations and standards. These conditions have promoted the development of ­auxiliary manufacturing enterprises, thereby raising product requirements and productivity.

According to Phu, ABB has recently installed and commissioned over a thousand robots in sectors like automotives, electronics, animal feed, food and beverages, chemicals, metal, and brick fabrication in order to drive efficiency and quality.

ABB will be opening their second robotics centre later this year in Ho Chi Minh City to enable faster nationwide responses, support its customers, and to meet the manufacturing goals of today and tomorrow.

At METALEX Vietnam this year, ABB will show a fully automated production demo, in which the robots are synchronously controlled by ABB’s Ability Connected Services, a sophisticated suite of digital services.

Being delivered via ABB’s ­MyRobot, a single, intuitive interface, ABB Ability Connected Services make actionable data available anywhere and at any time to enhance robots’ uptime and optimise the performance of their systems.

Customers will also experience the concept of future smart manufacturing, which ensures quality, productivity, price, stability, and safety. In addition, ABB will also simulate a metal process from workpieces, welding, product bearing, and finishing.

This year, over 500 brands from 25 countries will gather at METALEX Vietnam. WELDING Vietnam 2019, the only international exhibition specialising in welding and cutting materials, equipment, and technologies in Vietnam, will also be co-located with the METALEX event. This show promises to be an all-in-one platform for both Vietnamese and overseas ­industrialists to discover the most up-to-date technologies and solutions within the welding industry.

Singaporean and Malaysian businesses seek investment opportunities in Can Tho

Singaporean and Malaysian firms are seeking investment opportunities in the southern city of Can Tho.

In a meeting with local authorities on Tuesday, Managing Director of Business Media International and head of the Malaysian delegation Dato William Ng praised the city for its investment policies in education, healthcare, tourism, biotechnology, information technology and logistics services.

Dato said Can Tho was the most promising locality in the southwest with the best and most abundant workforce, convenient transportation infrastructure, a gateway to the Lower Mekong River basin and an important inter-regional and international transportation hub.

He said this meeting affords both sides a chance to share experience and facilitate technological transfer.

Managing Director of Malaysia’s Koay Kah Seng Enterprise expressed interest in expanding investment in real estate, energy and trade in Can Tho, including building wind, thermal and solar power plants to turn Can Tho into the first locality in the region to use clean and renewable energies.

He also proposed developing public facilities using modern technology in waste and wastewater treatment.

Director of Malaysia’s EZ Flex Consulting Company Leong Yi Whye suggested assisting local companies in market access, capital mobilisation, and listing on foreign stock bourses. He also wished to connect with domestic law consultancy offices to facilitate Malaysian investment in Can Tho.

Speaking at the meeting, Deputy Chairman of the municipal People’s Committee Truong Quang Hoai Nam committed all possible support to Singaporean and Malaysian investors.

Vietnam takes measures to prevent trade frauds

Vietnam resolutely prevents and strictly handles trade and origin frauds in the domestic market as well as export-import activities in a bid to protect legitimate interests of local businesses and consumers, Foreign Ministry spokesperson Le Thi Thu Hang said on August 8.

Answering reporters’ queries on Vietnam’s measures to prevent foreign goods disguised as “made-in-Vietnam” products for exports to the US, Hang said the Vietnamese Prime Minister has ratified a project on strengthening State management over the prevention of trade remedies evasion and origin frauds.

The leader has instructed relevant ministries and agencies to drastically and synchronously implement many measures to raise the awareness and intensify the State management over export-import activities and foreign investment, seriously observe legal regulations on trade remedies, origins and customs, the prevention of trade remedies evasion and mete out strict punishment to any violation.

The spokesperson said Vietnam’s relevant ministries and agencies have seriously materialised the project, adding that the Ministry of Industry and Trade is promptly building specific regulations and criteria, which will serve as the foundation to identify made-in-Vietnam products.

Customs agencies have also coordinated with competent agencies to step up inspection and supervision over export-import activities, especially goods prone to trade frauds, investigate and strictly handle trade frauds.

Besides, competent Vietnamese agencies have enhanced cooperation and information exchange with competent agencies of foreign countries in order to prevent, detect and promptly handle trade frauds in export-import activities, Hang said.

Vietnam Digital Transformation Alliance makes debut

The Vietnam Digital Transformation Alliance was launched by the Vietnam Software & IT Services Association (VINASA) within the framework of the Vietnam ICT Summit 2019 in Hanoi on August 8.

The alliance comprises leading technological firms in Vietnam such as Viettel, FPT, CMC, VNG, and MobiFone.

It aims to call on large ICT enterprises, leading experts and institutes to shake hands with the Government, ministries, organisations and enterprises to speed up the progress of digital transformation in Vietnam.

Addressing the event, Chairman of Viettel Le Dang Dung, who is also chairman of the alliance, stressed that the alliance comprises Vietnam’s biggest telecom and IT enterprises with a mission to inspire the society on digital transformation and forge infrastructure and service foundations for Vietnamese enterprises and society to go digital. In the next phase, the alliance will invite competent enterprises to join.

Trade ministry, Thai wholesaler to bring Vietnamese goods to foreign chains

The Ministry of Industry and Trade (MoIT) and wholesaler MM Mega Market Vietnam, a subsidiary of Thailand-based TCC Group, on August 8 agreed to strengthen cooperation that will allow more Vietnamese goods to enter the firm’s retail chains, both at home and overseas.

The agreement came following the signing of a Memorandum of Understanding (MoU) between the two sides in Hanoi in an effort to develop the domestic market, campaign Vietnamese people to prioritise Vietnamese goods, and facilitate Vietnamese producers to participate in foreign distribution channels.

In his remarks at the event, Deputy Minister Do Thang Hai said the MoU aims to promote the distribution of Vietnamese products in MM Mega Market’s retail chains in Vietnam and facilitate them to access retail stores of TCC Land International (Singapore) Pte, Ltd and other firms of the TTC Group outside Vietnam.

Under the deal, the ministry will support MM Mega Market to seek partnership with reputable Vietnamese producers, raising the rate of Vietnamese goods in the Thai-owned retail chains to 90 percent.

The two sides will also work closely together in organising Vietnamese goods weeks, seminars and training courses to popularise and promote the Vietnamese products to TCC Group’s foreign distribution channels. At the same time, they will help Vietnamese businesses and producers improve their product quality to the standards and requirements of the distributors.

The agreement follows the success of cooperation between the MoIT and other major foreign retailers in Vietnam, such as AEON from Japan, Central Group from Thailand and Lotte from the Republic of Korea, in supporting Vietnamese manufacturers develop the domestic market and enter foreign ones.

The MM Mega Market exported Vietnamese agricultural products to Thailand for the first time last year. The products include frozen tra fish, squid, star apple, pink flesh grapefruit and dragon fruit.

The firm will join hands with the HCM City Department of Industry and Trade to hold a Vietnamese goods week in Thailand this October.

 
 
 
 
 
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