Second Fintech Challenge Vietnam launched
Technology solutions in the fields of big data, artificial intelligence, financial outreach and cyber security are the focus of the second Fintech Challenge Vietnam (FCV), which was launched in Hanoi on August 13.
The programme is held by the State Bank of Vietnam (SBV) with support of the Mekong Business Initiative - a programme funded by the Australian Government and the Asian Development Bank. It will run until November this year.
According to SBV Deputy Governor Nguyen Kim Anh, the proramme’s corporate partners include several commercial banks like TP Bank, Vietcombank, Vietinbank and United Overseas Bank, and telecommunications companies with licences for payment intermediary services such as ViettelPay, and organisations who are seeking technology solutions to improve business efficiency as well as promote financial inclusion.
Fintech firms can apply to join the FCV 2019 until September 25 at fintech.mekongbiz.org. Applicants with the best solutions will have an opportunity to demo their products and services at the Demo Day scheduled for November 7.
Besides, Mastercard, a leading global payment and technology company, will help the two most excellent firms to present their solutions at the Singapore Fintech Festival to be organised the following week.
VinaCapital and ADB Ventures said they will make pilot investment worth up to 500,000 USD in any solution which has positive impact on financial inclusion in Vietnam.
Anh, who is also head of the organising board, expressed his hope that through the programme, domestic and foreign fintech companies will have chances to incubate and develop their breakthrough solutions and creative ideas, while promoting innovation, competitive edge and stronger collaboration in the finance-banking market.
Meanwhile, ADB Country Director for Vietnam Eric Sidgwick described the FCV, which draws the participation of State management agencies, commercial banks and fintech firms, as a unique mechanism to boost sustainable technology solutions so as to enhance finance and banking accessibility, and promote the effectiveness and safety of finance in the nation.
The SBV launched the first FCV in 2017 to spur innovation in financial services for greater financial inclusion in the country.
Major beauty expos slated for late August
Vietnam’s largest beauty trade event will be held at the Saigon Exhibition & Convention Centre in Ho Chi Minh City from August 22 to 24.
The event, the combination of the Mekong Beauty Show and Vietbeauty, has to date attracted more than 450 firms from 22 countries and territories, said the organising board at a press conference on the events on August 13.
A highlight at the shows will be a special pavilion “Beauty Made in Vietnam”, which presents Vietnamese cosmetics to foreign visitors and buyers. There will also be a zone introducing organic and natural brands to Vietnamese consumers.
The upcoming beauty expos are expected to help business update trends and business knowledge in the beauty industry.
A number of global brands wish to expand in the Vietnamese market through the events, including those from the US, France, Israel, Japan, the Republic of Korea, Malaysia, Poland, Russia, and Singapore, among others.
Notably, a contest will be arranged at the event to honour outstanding Vietnamese beauticians and foster the country’s beauty industry.
Seafood exports to China on the mend
Vietnam’s seafood exports to China are expected to rise in the second half of this year to reach the 1.2 billion USD target for the whole of this year as China’s seafood demand is on the rise, and the escalating US-China trade tension is likely to create as an opportunity for Vietnamese exporters to increase their market share in China.
The Southeast Asian country saw the value of its seafood exports to China fall during January-June, owing to tightened inspections by Chinese authorities. In the six-month period, shipments dwindled 2.3 percent to 572 million USD, of which value gained from shrimp exports decreased nearly 5 percent. Meanwhile, the export revenue of tra fish and tuna rose 2 percent and 183 percent, respectively.
According to General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe, Chinese customs has tighten the trading of seafood products via unofficial channels, and enhanced inspections for those passing through official channels since May 1 when it took the charge of food safety management for imported products.
In the meantime, many small businesses were lacking the information, and were not well-prepared for the ban on exports via unofficial channels.
Authorities of both nations have already agreed that seafood exported to China must be produced by companies that are certified by Vietnam’s National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad). Besides, Vietnamese exporters must present a letter of certification on food safety granted by the Nafiqad for their batches.
The Nafiqad and the Chinese General Administration of Customs update and inform each other about qualified producers and exporters. The Chinese customs also demands that Vietnamese seafood must be in the list of 120 species which are allowed to be exported to China.
Furthermore, to enter the Chinese market, exporters must show quarantine certificates, certificates of origin, and packaging information in both English and Chinese as well as in line with China’s standards.
Several seafood exporters did not have a deep insight into the requirements, that is why their products failed to break into the market. The VASEP said Vietnamese fishermen have suffered a lot as their dried squid products have not been allowed to be sold to China via official channels.
To break the deadlock, besides understanding China’s import regulations, Vietnamese businesses should improve production facilities, better food safety and hygiene so that their seafood products are eligible to penetrate into the Chinese market, Hoe pointed out, stressing shipments via official channels must be prioritised to avoid risks in payments as well as cargos’ quality.
Even if producers are able to enter the market, they will face tough seas ahead. The higher speed of devaluation of the Chinese yuan than the Vietnamese dong against the US dollar is another challenge for the Vietnamese seafood sector as it will make made-in-Vietnam products become more expensive than those produced in rival nations like India and Ecuador.
Besides, Chinese consumers have preferred high-quality products that meet standards of others choosy markets like the US, the EU and Japan.
Therefore, many experts said it is hard for Vietnamese exporters to reverse their exports to the market in short term.
New policies hoped to facilitate investment in agriculture
The Government has issued a resolution to encourage businesses to invest in agriculture, as part of efforts to bring the Vietnamese agricultural sector into world’s top 15 and processing of farm produce into the global top 10 in 2030.
The resolution defines agricultural firms’ key role in promoting the sector’s production and enhancing the competitiveness of Vietnamese farm produce.
Several solutions were given in the resolution, including balancing credit for agricultural development and strengthening connectivity among banks and businesses.
The Ministry of Finance was asked to coordinate with ministries, sectors, localities and farmers to design favourable mechanisms for farmers and cooperatives to access land resources to form concentrated production and processing areas.
According to Minister of Agriculture and Rural Development Nguyen Xuan Cuong, the new policies will motivate companies to invest in agriculture.
The ministry will build strategies, plans and projects to boost the sustainable growth of the sector, with priority given to expanding major products and the processing of vegetable, aquatic and wooden products, he said.
In the first six months of this year, 1,634 new businesses entered the sector, raising the total agricultural companies to nearly 11,000.
However, agricultural firms have accounted for only about 8 percent of the total enterprises of the country, while agro-forestry-fisheries companies make up a mere 1 percent of the total firms.
Meanwhile, the growth of the firms has yet to match the sector’s potential in land resources, ecosystem and labour resources.
Vice Director of the Institute of Policy and Strategy for Agricultural Development under the Ministry of Agriculture and Rural Development Tran Cong Thang noted that 96 percent of businesses investing in agriculture are small- and macro-sized firms with modest capacity.
At the same time, Vietnamese agricultural production’s scale is small, with poor infrastructure system. The market for farm produce is unstable, while there is still a lack of tools for the prevention of risks for the sector.
Dam Quang Thang, Director of Agricare Vietnam, said localities should design smooth mechanisms and legal corridors in land accumulation to facilitate the application of high technology in agriculture.
They should support businesses to engage in national trade promotion programmes and update them with information on the international market, he stated.
However, experts said businesses must strengthen connectivity to form big economic groups with strong capacity and resources to bring high technology into production, reduce cost, enhance competitiveness and build strong trademarks for Vietnamese farm produce.
Shrimp exports expected to pick up in second half
Shrimp exports are expected to be strong during the rest of this year because countries tend to import more in the latter months of the year, with the free trade agreements Vietnam has signed boosting its exports.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), shrimp exports were worth 1.4 billion USD in the first half of the year, a year-on-year decline of 12 percent.
This was mainly due to a fall in imports by Vietnam’s key markets such as the US, EU and China, it said.
Exports to the EU, the largest buyer of Vietnamese shrimp, fell 25.9 percent to 300.5 million USD.
The UK, Germany and the Netherlands are the three main markets in the bloc, and exports to them fell by 9.5 percent, 12.5 percent and 50.2 percent.
Shrimp exports to China were down 4.9 percent to 233.5 million USD since the neighbouring country tightened its border trade policy and there was fierce competition from India and Ecuador.
China has increased its imports from India and Ecuador, who offer more competitive prices than Vietnam.
Vietnamese shrimp exports to China showed signs of increasing in May and June. India’s shrimp harvest season has ended, and Vietnam’s export to that country is expected to increase during the rest of the year, it said.
Exports to the US, the third largest importer of Vietnamese shrimp, dropped 2 percent to 250.4 million USD.
In the US market, Vietnam has encountered strong competition from India, Ecuador and China.
After declining for the first four months of the year, Vietnam’s shrimp exports to the US edged up again in May and June. The association said exports in May and June were still down from the same period last year, but the fall was less steep than in the first four months.
Exports are now expected to gradually recover since many markets usually have high demand in the latter part of the year.
The US has imposed a 25 percent tax on seafood imported from China, including shrimp. This will be an opportunity for other countries, including Vietnam, to boost exports to the market.
Vietnam’s free trade agreements, including the EU-Vietnam FTA, are expected to boost seafood exports in the coming months.
Scheme approved to promote sharing economic model
Prime Minister Nguyen Xuan Phuc recently approved a scheme on promoting the sharing economy.
Accordingly, measure groups will be implemented, focusing on ensuring an equal business environment among businesses operating in both sharing and traditional economic models; legitimate rights, responsibilities and benefits of those participating in the model of sharing economy, including service providers, users and platform providers.
The scheme will also encourage innovation, digital technology application and the development of the digital economy.
Businesses will be supported to adapt to the new development trend of the sharing economic model amid the rapid development of digital technology.
The scheme stresses that State management should ensure legal economic activities are developed, including sharing economic activities,in accordance with the development trend of the digital economy and the 4th industrial revolution.
Enterprises operating in the traditional form will get support to transform their business.
Under a decision issued by the PM on August 12, the Ministry of Planning and Investment will serve as a coordinator among ministries and sectors in amending, completing and supplementing laws and policies to suit requirements related to the management of sharing economic activities.
The Ministry of Finance will implement the application of new technologies in taxation, and issue and guide the implementation of policies on tax and tax management for the shared economy.
The Ministry of Industry and Trade will study and develop policies on developing sharing economic models to promote sustainable production and consumption; and e-commerce development policies.
The Ministry of Information and Communications was told to study contents related to cross-border information technology services to serve negotiations of integration commitments, while the State Bank will formulate regulations on cross-border payment transactions through payment gateways.
The Ministry of Science and Technology will review the legal system and issues related to State management on science - technology and innovation serving economic sharing model.
Meanwhile, the Ministry of Justice will work with other ministries and sectors to clarify the nature of sharing economic activities in terms of civil or specialised fields.
Prime Minister instructs support for shipping firms
The Prime Minister has asked ministries and Government agencies to support maritime shipping firms.
The PM instructed the Ministry of Transport to collaborate with the Ministry of Industry and Trade, the State Capital Management Committee and other Government agencies to work with shipping companies – especially those with high shipping volumes – to improve their performance in accordance with Document 118/VPCP-KTN, issued by the Government Office on January 7, 2014.
At the same time, the Ministry of Transport was told to work with the ministries of Planning and Investment and Finance, the State Capital Management Committee and other agencies to help shipping firms use funding to develop their fleets.
Companies must also hasten their equitisation and strengthen their association with both domestic and foreign partners to raise their productivity and efficiency.
The Prime Minister also assigned the ministries of Transport, Finance, Planning and Investment and Justice, the State Bank of Vietnam, the State Capital Management Committee and relevant agencies to study policies to bolster the quality of the nation's waterway transportation system and report back to the Prime Minister in the first quarter of next year.
Vietnamese shipping firms, most of which are State-owned, have been performing poorly in recent years due to ineffective corporate governance and rising competition on international markets.
The Vietnam National Shipping Lines Corporation (Vinalines), one of the biggest shipping companies in the country, reported that its revenue in the second quarter of 2019 dropped 9 percent year on year to 5.56 trillion VND (239 million USD).
At the end of the quarter, the company posted a loss of 496 billion VND, up 325 percent from the previous year. It attributed the loss to the fact that the company earned less from its dividend payouts and also failed to sell its assets and ships.
Vinalines now has stakes in 20 companies and associates in 27 other firms. At the end of the second quarter, Vinalines recorded 2.05 trillion VND of cash and cash equivalents and 3.45 trillion VND in short-term assets. The company’s total borrowings were worth 8.1 trillion VND, including 5.36 trillion VND worth of bank loans.
Hau Giang sugarcane farmers struggling with difficulties
Two sugarcane plants in the southern province of Hau Giang have halted their operation, worrying local farmers.
Cao Trung Viet in Long Truong 2 Village, Long Thanh Commune, has 0.4 hectares of sugarcane which need to be harvested, but no traders want to buy them. Meanwhile, a lot of sugarcane has been damaged due to strong winds over recent days.
Viet has invested nearly VND40 million for the sugarcane farm over the past months.
Bui Thi Cuong, another local resident, said that her family’s 0.3 hectares of sugarcane have been harmed by strong winds, causing more difficulties for the sale.
According to Nguyen Long Thanh who has grown sugarcane for many years, sugarcane growers have faced with losses in recent years.
Phan Thanh Lam, deputy head of Phung Hiep District’s Board of Agriculture and Rural Development, the locality has 6,531 hectares of sugarcane. Of this, 574 hectares have been harvested, mostly being sold for making juice.
The province is home to three sugarcane plants. One of them has been closed due to environmental pollution, meanwhile, the other has also halted production.
Around 5,00 hectares of sugarcane has been turned to other kinds of crops. The locality has continued encouraging the locals to grow other crops to reduce losses.
Earlier, the Vietnam Sugar and Sugarcane Association called for help from the government as many of its members are facing bankruptcy. In a document to the Ministry of Agriculture and Rural Development, the association proposed the prime minister to postpone the implementation of the ASEAN Trade in Goods Agreement on Vietnamese sugar products scheduled to take effect from January 1, 2020.
ODA and concessional loan disbursement hits US$1.226 billion
Vietnam’s disbursement of official development assistance (ODA) and concessional loans in the first seven months of 2019 reached US$1.226 billion, official data has shown.
According to the Department of Debt Management and External Finance under the Ministry of Finance, Vietnam signed three lending agreements with the Asian Development Bank worth US$333.4 million in the January-July period.
As of July 20, government debt payments were estimated at VND194.612 trillion (US$8.4 billion), of which VND164.491 trillion (US$7.1) was for domestic loans and the remainder was for foreign loans.
In the last seven months, the government did not provide any guarantee on domestic and foreign loan projects.
As of July 20, capital withdrawals from government-backed domestic projects were estimated at VND67 billion. Loan principal payments were estimated VND22.442 trillion (US$965 million) and interest payment was VND6.846 trillion (US$294.3 million).
For government-backed foreign loans, total withdrawals were VND4.903 trillion (US$210.8 million) while principal and interest payments were estimated at VND18.714 trillion (US$804.7 million).
New decree issued to promote rice exports
More than 40 businesses have been added to the list of rice exporters under the Government’s newly revised decree on rice export, according to the Ministry of Industry and Trade’s Import and Export Department.
The additional businesses are allowed to export rice thanks to the revised decree 107/2018/ND-CP, which came into effect recently, replacing decree 109/2010/ND-CP. The decree aims to solve problems and create the most open environment for rice businesses to develop.
The additions bring the country’s total number of businesses qualified to export rice to 146.
Deputy Head of the Import and Export Department Tran Thanh Hai said the new decree is a real policy breakthrough.
“The most important thing is that the decree creates a major change in export thinking,”Hai said.
Under the new decree, Hai said the conditions to become a wholesale business have been loosened. Businesses now can rent rice milling plants and warehouses, and are not required to own these facilities as they were under the old decree.
“This helps businesses save resources and take advantage of surplus facilities of other businesses, saving costs,” Hai said.
The new decree also allows for a number of businesses focused on organic rice and rice products with added nutrients to export without a specialised export licence.
High-tech FDI shouldn’t be taken for granted
Viet Nam has emerged as a destination for large tech firms as the trade dispute between the US and China continues to intensify with no end in sight. However, whether and how much Viet Nam can take advantage of the shifting FDI flow out of China remains to be seen.
“I’m afraid it doesn’t look very promising,” said Nguyen Duc Thanh, director of the Vietnam Institute for Economic and Policy Research (VEPR), commenting on a claim by a former Japanese ambassador to Viet Nam that some 20,000 Japanese businesses in China were said to be on the lookout for alternatives.
Whether they go to Viet Nam, India or Indonesia or elsewhere will come down to said country’s business environment and quality of labour force, he said.
Among ASEAN countries, Malaysia, Indonesia and Thailand are countries with better industrial infrastructure. India enjoys a significant advantage of having English as a common language and a massive young labour force. Viet Nam was but one among many options.
Apple supplier Taiwanese Pegatron, for example, signed a letter of intent to invest in a $1 billion factory in Indonesia instead of Viet Nam in May. While it’s safe to assume that FDI from tech firms will continue to flow into the country in the short term, major improvements to Viet Nam’s legal framework and investment environment must take place to sway the odds in its favour.
John Chong, CEO of Maybank Kim Eng said in order to take advantage of the shifting of FDI flow from tech firms Viet Nam must make investments to improve its labour force and infrastructure. In addition, the country’s financial sector must also quickly develop and adapt to make good use of the opportunities for growth.
In early August, Japanese-Taiwanese Sharp announced the construction of a new factory in southern Binh Duong Province. In an earlier development, South Korean LG decided to move its cell phone production to Viet Nam. According to the Nikkei Asian Review, Apple will also begin trialling its AirPods wireless earphones production in the country in a move to reduce reliance on China.
Figures released by the Department of Foreign Investment under the Ministry of Planning and Investment showed a surge in foreign direct investment (FDI) in the processing and manufacturing sector with US$14.46 billion, amounted to 71.5 per cent of total FDI into the country during the first seven months of the year.
FLC Group to build first modern urban area in Kon Tum
Property developer FLC Group has announced that it will begin construction of FLC Legacy Kon Tum, the first modern urban area in the Central Highlands region, on August 15.
The area is located on major routes Truong Chinh and Tran Nhan Tong, easily accessible to National Highway 24 that links Kon Tum with other Central Highlands provinces and the south central coastal region.
Covering 19ha, it will accommodate shop houses, boutiques, hi-end hotels and apartment buildings, schools, parks, an entertainment area and a shopping centre.
Earlier, FLC started construction of FLC Quang Ngai resort complex in Binh Son district, the central province of Quang Ngai on a total area of 1,026ha at an estimated cost of around 11 trillion VND (478.2 million USD) and FLC La Vista Sadec in the Mekong Delta province of Dong Thap.
Ministry proposes import tax hike on heavy trucks
The Ministry of Finance has proposed to increase import tax on complete built-up units (CBUs) of trucks weighing more than 45 tonnes from the current zero to 10 percent.
This tax level is equal to commitments under the World Trade Organisation (WTO).
The proposal was listed in the draft circular on revising import tax on trucks and spare parts.
The ministry said the more than 45-tonne trucks have simple functions and configurations that most domestic enterprises can manufacture and assemble. The zero tax rate does not encourage local producers to make this type of vehicle as well as hinders them from competing with imported ones.
Meanwhile, the demand in Vietnam for the truck was 500 to 700 vehicles a year, mainly from brands of HOWO, BELAZ and VOLVO from China, Sweden and Eastern European countries.
Vietnam now has only assembly companies of the truck including THACO, HINO and TMT with capacity of some 2,000 trucks a year.
Last year, the country imported 117 trucks of more than 45 tonnes worth 19 million USD. In the first four months of the year, the country imported 254 trucks worth 43.8 million USD, double that of the whole of last year.
The ministry said the tax adjustment would contribute 1.9 million USD to the State budget.-VNA
ANZ expert optimistic about Vietnamese economy outlook
The Vietnamese government’s commitment to broad-based economic reforms bodes well for the country’s longer term prospects and look to have it on the path to upper middle-income status, held Khoon Goh, head of Asia Research at Australia and New Zealand Banking Group Limited (ANZ).
In an article on bluenotes.anz.com, Goh noted that Vietnam’s gross domestic product growth in the first half of 2019 was solid, particularly considering the downturn in global trade and the impact of African swine fever (ASF) on the agriculture sector.
As a result, ANZ Research maintains its full-year 2019 GDP growth forecast for Vietnam of 6.7 percent. Although this is lower than the 7.1 percent growth rate achieved in 2018, it reinforces Vietnam’s place as one of the fastest-growing economies in Asia, he stated.
As Vietnam continues to reap the benefits of past reforms and commit to further ongoing reforms, the country is on track to double its per capita gross national income from 2,400 USD in 2018 to 4,800 USD by 2028, graduating to upper middle income status.
He held that there is a need for the country to manage the strong FDI inflows to ensure adequate resource allocation while preventing overheating. Meanwhile, the government’s shift towards a focus on attracting new-generation FDI is essential to ensure sustainable economic development, according to Goh.
Growth in Vietnam’s services sector has remained robust at 6.83 percent year on year in the second quarter, as strong wage growth and growing urbanisation helped boost wholesale and retail trade.
Expanding manufacturing and external trade activity has also ensured strong growth for both the transport and warehouse sectors, while the financial services sector continues to benefit from growth in the overall economy, noted the expert.
One area that will require increasing policymaker attention is demographics. Although the working age population is still growing in absolute numbers, it peaked in 2015 as a proportion of the total population.
Vietnam is aging, the number of people over the age of 60 will rise rapidly, resulting in the dependency ratio doubling within 20 years. This is one key reason why ANZ Research expects to see a slowing in Vietnam’s medium-term potential growth rate towards 6 per cent over the next decade.
Managing this structural change requires timely measures in areas such as the retirement age and pension reforms.
If successful, such reforms could be sufficient to move the country into the upper-middle income category, he concluded.
Machinery, packaging increasingly important in F&B sector
The increasing demand for hygienic foods and beverages (F&B) with traceability is putting more pressure on F&B producers, requiring them to continuously invest in modern facilities and packaging to satisfy the market trend.
Nguyen Van Nga, deputy head of the Agency for Southern Affairs, under the Ministry of Industry and Trade, said that the local F&B sector has sharply enhanced the quality and quantity of its products, creating strong potential for growth in the coming years, particularly in cities and towns where the standard of living has improved.
Using modern machinery and packaging is now the primary concern of F&B producers, Nga said at Vietfood & Beverage 2019 and Propack 2019, international expos that kicked off today, August 7, in HCMC.
Ly Kim Chi, chairwoman of the HCMC Food and Foodstuff Association (FFA), said that food processing is one of the four key industries in the city. It not only creates high-quality products for export but also meets the local demand, contributing to the development of the southern key economic zone and neighboring provinces.
She pointed out that the city is home to the largest number of F&B producers in the country, ranging from State-run and private businesses to foreign-invested businesses. Equipment and technology deployed in the city’s sector also top those used in the rest of the country for their modernity, the FFA head added.
However, it is essential for companies in the field to continuously invest heavily in machinery and packaging to create high-quality, eye-catching products to meet the increasingly demanding requirements of local consumers, Chi said.
Accordingly, the FFA for many years has organized trade expos, in collaboration with the Vietnam National Trade Fair and Advertising Company, to promote trade and learning experiences, in terms of new technologies and packaging, with global producers in the industry.
Vietfood & Beverage 2019 and Propack 2019, taking place at the Saigon Exhibition and Convention Center in HCMC, District 7, gathers an astounding 550 exhibitors, a record high, from 20 countries and territories. There are 650 booths showcasing a wide selection of F&B items along with the latest technologies in the food processing and packaging industry.
Multiple sectors expected to see active M&A deals
Opportunities are awash for Vietnam to attract foreign investment inflows through mergers and acquisitions (M&A) in the fields of retail, real estate, banking, education and healthcare, heard a forum on M&A in HCMC on Tuesday.
With a population of nearly 100 million people and a stable economy, Vietnam is expected to woo foreign investors to the local retail, consumer goods, real estate and manufacturing sectors in the years to come, according to speakers, who are investors, experts and corporate representatives, at the Vietnam M&A Forum held on Tuesday in HCMC.
Responding to a question on which sectors will witness significant changes through M&A deals, Andy Ho, investment director at VinaCapital, forecast that the Vietnamese people may be interested in high-quality consumer goods and educational and healthcare systems.
VinaCapital is interested in all sectors, especially those that provide a better life for the locals, and aims to promote Vietnam’s economy.
Meanwhile, according to Andrew D. Kim, director of the Global M&A Center under the Korea Trade Investment Promotion Agency (KOTRA), South Korean firms remain active in M&A activities in Asia. In Malaysia and Singapore, for instance, real estate and finance are the top two preferred sectors among investors.
However, South Korean investors chiefly pump capital into the manufacturing and heavy industry sectors in Vietnam and are expanding their businesses into the property sector, the KOTRA representative said.
Ben Gray, capital market director at Cushman & Wakefield Vietnam, noted that multiple M&A activities in the property sector will take place over the next 20-24 months. Foreign corporations will look for local partners to consider investing in available land funds, said Gray.
Also, the senior director of realty firm Alpha King, Richard Leech, said the firm had mapped out detailed strategies for the local real estate sector years ago when it foresaw the upcoming surge in the number of mid-income people.
Alpha King has worked with CBRE to develop property projects in downtown HCMC. Its strategies have brought positive results and will be expanded in the coming years, he added.
Speaking at the forum, Le Manh Hung, director of Vietcombank Securities company, said banking and finance will be among the hottest sectors. Over the short term, activities to restructure banks and clear up bad debts, which will end in 2020, are expected to attract major M&A deals.
Apart from that, the country will apply new financial standards that require banks to enhance their financial capacities and are expected to attract foreign investment inflows.
Similarly, Nirukt Sapru, general director at Standard Chartered Bank Vietnam, predicted that banking, real estate, healthcare, education and travel will be the hottest sectors in the future, with multiple M&A activities. In addition, the clean energy sector will see strong growth.
Addressing the event, Vu Dai Thang, Deputy Minister of Planning and Investment, announced that the Politburo will issue a resolution on orientation to improve the quality and efficiency of foreign direct investment (FDI) until 2030.
There will be new strategic orientations, shifting the nation’s focus to the quality, rather than the quantity, of FDI projects with high added value. Besides this, the country will attract foreign investors in a proactive and selective manner and prioritize projects that deploy advanced technology and are ecofriendly.
The country will also map out other important orientations to complete laws on foreign investment and increase transparency in investment activities for foreign investors. In particular, it will consider sectors restricting foreign investment, projects that require conditional investment and policies related to investment protection.
Yuan devaluation expected to put Vietnam’s exports at risk
Vietnam’s goods shipments to China will have difficulty earning a profit as China’s currency has been devalued sharply due to the ongoing U.S.-Sino trade dispute, the local media reported.
After U.S. President Donald Trump announced another 10% tax bill on US$300 billion worth of Chinese products, which takes effect on September 1, China’s yuan dipped sharply against the greenback, reaching the lowest level since May 2018.
Pham Tat Thang, former head of the Trade Research Institute, under the Ministry of Industry and Trade, stated that the move will severely affect Vietnam’s exports due to the expected sharp depreciation of the yuan, VietnamPlus news site reported.
The trade war has expanded into a currency war, Thang said, adding that China has devalued its yuan to minimize the impact of the United States’ tax imposition.
The yuan devaluation is expected to lower profits for Vietnam’s high-volume exports to China, with some exports earning no profits at all.
As such, local enterprises were advised to seek other import markets that have signed a free trade agreement with Vietnam.
Although Vietnamese enterprises are allowed to use the yuan to conduct transactions in some border provinces, the yuan’s devaluation will increase the value of the Vietnamese dong, resulting in a drop in profits from goods purchases.
Thang suggested that Vietnam take prompt action to prevent the currency trade from affecting the country’s currency market.
He proposed the Government keep a close eye on the exchange rates between the Vietnamese dong and other currencies in the global market.
Recently, some goods importers in Vietnam have violated regulations on the origins of products, with products fraudulently carrying “Made in Vietnam” labels to evade taxes.
Product origin fraud will hurt Vietnam’s exports to other markets. Therefore, the Government, the competent agencies and enterprises should not let Chinese goods bearing “Made in Vietnam” labels be exported to foreign countries, especially the United States.
Mai Huu Tin, chairman of U&I Group, said that the yuan’s devaluation will benefit China’s shipments to other foreign markets, including Vietnam. The shift of factories from China to Vietnam is expected to become faster as a result of the escalating trade war between the two largest economies and the yuan’s devaluation.
The competition between domestic enterprises and Chinese firms will also grow fiercer, Tin said.
Nguyen Lam Vien, chairman of Vinamit JSC, voiced concern over the decline in profits from exports to China, pointing out that even though Vinamit is supplying products to multinational retailer Walmart in China with payments made in U.S. dollars, its partners in China have asked the firm to renegotiate the prices of its products.
Doan Van Sang, director of Cat Tuong Company in Tien Giang Province, stated that the yuan’s devaluation will definitely reduce their products’ export value. However, he noted that exports through formal channels, which are required to pay with U.S. dollars, will suffer less than transactions through informal channels, where the yuan is used for payments.
China is one of Vietnam’s largest tra fish buyers, so the yuan’s devaluation will significantly affect tra fish exports, remarked Nguyen Van Kich, former vice chairman of the Vietnam Pangasius Association.
Vietnamese tra fish farmers and processers will face difficulty in the coming months due to the current oversupply of tra fish and the yuan’s devaluation, Kich said, adding that apart from this, since the beginning of the year, Chinese enterprises have reduced imports of Vietnam’s tra fish due to tightened policies around informal imports.
Pham Sy Thanh, director of the Chinese Economic Studies Program, told Nguoi Lao Dong newspaper that China’s yuan devaluation was aimed at weakening the impact of export duties through exchange rates. The advantages of Chinese goods are mainly from their economies of scale and supply chain rather than low prices.
Meanwhile, financial expert Can Van Luc said Vietnam needs to stay calm and should not devalue its currency, to avoid being accused of manipulating currency by the United States.
Major national highways in Mekong Delta to be upgraded
Some major national highways in the Mekong Delta will be upgraded this year to meet the increasing travel demand in the region.
Specifically, the Quan Lo-Phung Hiep National Highway upgrade project worth VND900 billion is expected to kick off in the last quarter of this year after the Ministry of Transport approved it in March. The project is to be completed in 2020.
Quan Lo-Phung Hiep National Highway is 112 kilometers long and passes through the four Mekong Delta provinces of Hau Giang, Soc Trang, Bac Lieu and Ca Mau. The road was built in 2005 and put into use in 2009, helping reduce the distance from Can Tho City to Ca Mau by 50 kilometers.
However, the road has deteriorated and not been upgraded since then.
In addition, a 52-kilometer section of National Highway 53 in Tra Vinh will be upgraded. A tender will be held for the project next month so that work can begin in October. The project requires an estimated investment of more than VND1.2 trillion (US$51.6 million).
The ministry also plans to improve a section of Naitonal Highway 57, stretching from Dinh Khao ferry station in Vinh Long Province to Mo Cay Town in Ben Tre Province. Work on the project, which needs some VND875 billion, will start next month for completion in late 2020.
The project, once completed, will ease traffic from Ben Tre, Vinh Long and Tra vinh to other Mekong Delta localities.
The ministry has also approved a project to upgrade the Cao Lanh-Hong Ngu section of National Highway 30 in Dong Thap Province with an investment of VND800 billion, including VND276 billion for site clearance. The project is scheduled to kick off next month.
According to the Department of Planning and Investment under the Ministry of Transport, the ministry has approved eight national highway upgrade projects and will pass two others to improve National Highways 24 and 25 this year. The 10 projects will cost an estimated VND8 trillion.
Many national highways in the northern region will also be upgraded, such as the road connecting Hanoi-Haiphong with the Cau Gie-Ninh Binh expressways, a road linking the 4C and 4D national highways and National Highway 3B.
As for the progress of road upgrade projects, Minister of Transport Nguyen Van The, at a recent meeting, asked the investors and management boards of projects to ensure the projects’ progress and complete all 10 of them by 2020.