BUSINESS NEWS 21/6

Lam Dong hosts Vietnam Economists Annual Meeting

The 12th Vietnam Economists Annual Meeting (VEAM) 2019 took place at Da Lat University in the Central Highlands province of Lam Dong from June 17-18.

The event attracted 130 delegates from domestic universities, institutes and research centres, and scholars from France, the US, Australia, the UK, Spain and Japan.

During the two-day meeting, delegates heard more than 100 reports related to Vietnams’ economy, shared experience and knowledge, aiming to get more understanding of socio-economic issues that affect Vietnam and the world.

The VEAM is held annually for economists and social researchers worldwide to share their research and experience.

Through the event, a network of international and domestic researchers was established, contributing to promoting active and effective research cooperation between Vietnam’s research centres and international universities.

The 13th VEAM is scheduled to take place at Can Tho University, the Mekong Delta city of Can Tho in 2020.

Over 73 percent of Vietnamese firms unable to access credit

BUSINESS NEWS 21/6

More than 773,000 out of over 1 million firms in the country, or 73.4 percent, are unable to access credit, it was reported at a conference on promoting access to credit held by the National Credit Information Centre (CIC) in Ho Chi Minh City on June 18.

Le Anh Tuan, director of the CIC’s Research Development Division, said in HCM City alone, 44.5 percent of firms do not have access to credit.

He said even though the figure included firms which do not need credit, the fact is a majority of firms are unable to access loans provided by credit institutions or have to borrow at high interest rates.

The CIC’s figure is similar to statistics of the Vietnam Chamber of Commerce and Industry, which estimated about 70 percent of domestic firms cannot access banks’ loan. Deputy Director of VCCI’s Ho Chi Minh branch Tran Ngoc Liem said banks still give preferential treatment to State-owned enterprises compared to small and medium-sized ones.

According to Liem, the main reason is the SMEs do not have assets for mortgage, and their financial situation lacks transparency, leading to banks hesitant to lend.

The situation prompts credit organisations to improve access to their credit, in which the CIC plays in important role in supplying firms with credit information.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh branch, the CIC’s information is important for banks to control risks in lending, because a firm can open accounts in many different banks at the same time.

The CIC’s database is storing more than 40.6 million dossiers of borrowers, including about 1 million enterprises. The database is built with the participation of 122 credit organisations and foreign banks’ branches, nearly 1.200 people’s credit funds and 4 official micro-financial organisations.

To improve access to credit, the CIC is working to provide more products and flexible services in line with current trends on the financial market, diversify channels for information provision and reduce fees for using credit information.

Recently, the centre has put into operation a portal for borrowers, allowing them to study and select credit packages as well as to submit borrowing requests to suitable credit organisations. The portal also allows participating credit organisation to connect with customers, thus cutting time and cost in searching for and selecting customers while ensuring the transparency in the relationship between credit organisations and borrowers.

Japanese locality seeks partners in Binh Phuoc in wood making

Officials of the southeast province of Binh Phuoc had a working session on June 18 with a visiting delegation from Yoshino town in Japan’s Nara Prefecture on a cooperation project on training furniture making workers.

The Japanese side said they want to set up partnerships with firms in Binh Phuoc to produce wood products for both the Vietnamese and global markets.

Representatives from Yoshino, a small town with wood making tradition, said they want to create a unique line of wood products, using a type of “hybrid” wood made from a mixture of wood materials from Japan and Binh Phuoc’s rubber tree wood.

The Japanese town also hopes to cooperate with Binh Phuoc to ease the town’s shortage of workers. Yoshino’s representatives said they will organize training courses for Vietnamese workers at the Binh Phuoc vocational training school.

Vice Chairwoman of Binh Phuoc’s People’s Committee Huynh Thi Hang appreciated the idea, which she said is in line with the province’s policy to develop its strength in wood processing.

She instructed local firms to select specific types of products for the cooperation plan, which will be implemented through a project funded by the Japan International Cooperation Agency (JICA).

Vietnam, China discuss ways to promote agricultural product trading

Officials of the Vietnamese Ministry of Agriculture and Rural Development (MARD) had a working session with representatives of the Chinese General Administration of Customs in Hanoi on June 18, discussing measures to boost bilateral trade of farm produce.

According to Vietnamese Deputy Minister of Agriculture and Rural Development Tran Thanh Nam, since the beginning of this year, China has changed some regulations in goods imports such as traceability of products and food safety.

The MARD has actively worked with Chinese ministries, departments and customs to update information on regulations in agro-forestry-fishery imports, Nam said.

As businesses of both countries have great demand for import and export of agricultural products, the ministry and the Chinese side will co-organise a workshop to exchange information on food safety, animal and plant quarantine, and regulations on management and control of agro-forestry-fishery imports and exports in Ho Chi Minh City on June 20.

Nam revealed that more than 300 businesses have registered to participate in the event which is expected to help enterprises change their mindset in production to create high-quality and competitive products.

Long Yushan from the Nanning Customs Bureau under the General Administration of Customs of China said, at the upcoming workshop, Chinese relevant agencies will provide information on regulations on animal and plant management and quarantine, especially for dairy, aquatic products and fruits.

She hoped the two sides will help local businesses to access the Chinese market and understand its requirements to sustainably promote bilateral trade.

In 2018, Vietnam exported 8.6 billion USD worth of agro-forestry-fishery products to China. Three groups of goods - fruits and vegetables, rubber, wood and wooden products – saw their export turnovers surpassing the 1 billion USD benchmark.

The Southeast Asian country spent 2.47 billion USD importing farm produce from China last year.

By the end of April 2019, Vietnam earned 2.64 billion USD from exporting agro-forestry-fishery products to China, a year-on-year decline of 8.3 percent.

At present, nine fresh fruits from Vietnam are shipped through official channels to China, namely dragon fruit, watermelon, lychee, longan, banana, mango, jackfruit, rambutan, and mangosteen.

On April 26, 2019, the two countries signed a protocol on opening the market for mangosteen and another on exporting Vietnamese dairy products to China.

The MARD is proposing China open the market for other Vietnamese fruits such as durian, passion fruit, avocado, grapefruit, coconut, custard apple, and rose apple.

China has announced the exemption of tariffs for 33 aquatic products under the ASEAN-China Free Trade Agreement, including lobster, tiger shrimp, marine shrimp, frozen pangasius, basa fish, and ocean tuna.

Currently, 701 Vietnamese aquatic firms are allowed to export products to China.

Vietnam, RoK boost cooperation in biotechnology

The Republic of Korea (RoK)’s Chuncheon Bioindustry Foundation (CBF) signed a number of cooperation agreements with Vietnamese localities and companies in the field of biotechnology on the sidelines of a workshop on the application of technology for primary healthcare products in Ho Chi Minh City on June 18.

The event was jointly held by the Saigon Innovation Hub (Sihub) and the CBF.

The CBF inked a deal with the Departments of Science and Technology of the Mekong Delta city of Can Tho and provinces of Soc Trang and Ben Tre to promote research and extraction of local medicinal plants for the creation of healthcare products.

Can Tho and Ben Tre placed an order for the CBF to create a set of quick testing tools for toxicants in agricultural and food samples.

The CBF also signed cooperation agreements with Vietnamese companies to boost science-technology research and development between the two countries.

The two sides will coordinate to provide personnel, experts and advisors to participate in activities and programmes on start-up ecosystem development, transfer of technology, global trade promotion, and information exchanges in biotechnology.

As of May 2019, Sihub transferred over 13 technologies from Japan and the RoK such as waste treatment technology, 3D freezing technology, and Internet of Things (IoT) application in agriculture.

European enterprises back early signing of EVFTA

Minister of Industry and Trade Tran Tuan Anh on June 18 met with representatives from several European business associations to discuss measures to speed up the signing of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Promotion Agreement (EVIPA) as part of his working visit to the EU and Belgium.

Anh updated participants on information related to EVFTA and EVIPA, and told them that his ministry is seriously making specific action programmes and holding regular dialogues with European business associations and other organisations of the EU.

He asked the European business associations to maintain efforts to help accelerate the European Parliament’s approval of the agreements after they are signed.

At the meeting, representatives of the European business associations made proposals to help boost the signing and ratification of the two deals, and expand EU-Vietnam trade relations.

Talking to the Vietnam News Agency on the sidelines of the meeting, Secretary General of the European Automobile Manufacturers' Association Erik Jonnaert expressed his hope that the two sides will sign the agreements later this month, and the EP will ratify them in late 2019 or early 2020.

Vicem Hoang Mai plans to build cement factory in Nghe An

Vicem Hoang Mai Cement Joint Stock Company plans to build a cement factory, with the first phase expected to cost more than 6.67 trillion VND (286 million USD), in the central province of Nghe An.

Covering 60ha in the province’s Hoang Mai 2 Industrial Zone, the factory has a designed production capacity of 3 million tonnes of cement per year.

Once completed, the factory will contribute to fostering the province’s socio-economic development, creating 500 local jobs while better meeting domestic and international demands for cement, the investor said.

During a meeting in May, Chairman of the provincial People's Committee Thai Thanh Quy granted approval in principle for the investor to develop the factory, which is part of the development strategy for the cement industry to 2030, approved by the Prime Minister.

The Ministry of Construction predicted that demand for cement and clinker would likely increase marginally to 98-99 million tonnes by the end of this year.

This would include domestic consumption of 70 million tonnes and exports of 28-29 million tonnes, it said.

Demand grew by 19 percent last year to 96.7 million tonnes, with exports accounting for 31.6 million tonnes, up 55 percent year on year.

The Vietnam Cement Association previously estimated that upgrades and new investments would increase the production capacity of the industry to 120-130 million tonnes by 2020.

Vietnam Airlines gets 4-star airline rating for fourth consecutive year

The national flag carrier Vietnam Airlines has been certified with a 4-star airline rating by prestigious international air transport rating organisation Skytrax for the fourth consecutive year.

The UK-based organisation presented the certificate to Vietnam Airlines on June 18 within the framework of the Paris Air Show 2019, one of the world’s largest aviation exhibitions.

Skytrax continued honouring Vietnam Airlines in recognition of its efforts to improve the quality of services to meet the increasing requirements of passengers and markets.

This year, Skytrax rated Vietnam Airlines based on 1,840 ground and air service criteria, up 214 criteria compared to 2018. On a scale of 1-5 stars, Vietnam Airlines met 85 percent of the 4- and 5-star criteria.

The airline’s 4.5-5 star criteria increased by 16 percent against 2016 when it received the 4-star certificate for the first time.

With this outcome, Vietnam Airlines continued affirming its products and services on par with those of leading international airlines such as Air France, British Airways, Emirates, and Korean Air.

Since 2015, Vietnam Airlines has expanded its wide-body fleet of 14 super aircraft Airbus A350-900 XWB and 11 Boeing 787-9 Dreamliner.

This year, it plans to receive first Boeing 787-10 aircraft and upgrade the narrow-body fleet of 20 Airbus A321neo to bring new experiences to passengers.

Regarding the ground services, the airline pioneers in implementing telephone check-in and expanding the scope of in-town check-in, kiosk check-in, online check-in procedures.

The totally new service “Meet and Greet” will provide practical assistance for passengers who need special instructions and priority to use ground services at airports.

The wireless-streaming entertainment programmes will be continuously updated to bring enjoyable experiences for passengers, especially during long-haul flights.

Passenger will have more food choices on both domestic and international air routes.

The years 2018 and 2019 also marked the efforts of Vietnam Airlines in coordinating with businesses and localities to promote Vietnamese products to tourists at home and abroad.

The comprehensive investment from the service system and flight team to the highly specialised human resources is considered an important foundation for Vietnam Airlines to win the 5-star rating after 2020,
becoming one of the most popular airlines in the Asia-Pacific region.

Mekong Delta should shift towards adapting to climate change: PM

Prime Minister Nguyen Xuan Phuc chaired a conference reviewing two-year implementation of the Government’s Resolution 120/NQ-CP on climate resilient and sustainable development of the Mekong Delta region.

Speaking at the conference held in Ho Chi Minh City on June 18, PM Phuc said a large number of locals and businesses are not ready for natural disasters and climate change despite increasing phenomena of climate change. As such, they have yet to take specific actions for green agricultural and industrial development.

He noted climate change not only is a challenge to the growth of a nation but also contains opportunities for changing the direction of development.

The PM cited as an example the case of the Mekong Delta, where saltwater intrusion as a climate change impact poses challenges to rice cultivation in the delta but create favourable conditions to develop shrimp farming and processing, which brings much higher economic benefits and added value compared to rice production.

Therefore, the goal is not to fight against climate change but to conquer and adapt to it, turning challenges into opportunities for restructuring toward sustainable production, the government leader said.

Reviewing the implementation of Resolution 120 in the past two years, Phuc lauded proactive work by relevant ministries, sectors and localities that have resulted in initial positive outcomes.

He said there is a need for measures to improve public awareness on climate change and spread effective models that are run under the motto of ‘The Government advocates, businesses act, and people respond’.

Accordingly, the Government allocates resources, enterprises invest in specific projects to build valuable trademark, while the people respond by raising their awareness and joining production restructuring activities to adapt to climate change.

The PM requested that ministries and sectors work with Mekong Delta localities to study suitable planning for rice and fruit cultivation and aquatic farming areas that help build a production ecosystem and cut costs for businesses.

The lack of capital in the Mekong Delta is the “bottleneck” in the implementation of infrastructure building and climate change adaptation projects, according to the PM.

He ordered the State Bank to study a mechanism to mobilise capital from various sources and use it effectively for development, prioritising investment in infrastructure to improve business environment, reduce production costs, and facilitate goods circulation.

The PM urged localities in the region to boost cooperation to cope with climate change. Ho Chi Minh City should be the “conductor” in coordinating regional connectivity and pioneer in the implementation of the United Nations (UN) Framework Convention on Climate Change.

He tasked the Ministry of Natural Resources and Environment with collecting solutions and ideas of ministries, departments and experts, then submit them to him for the promulgation of a directive for the implementation of the resolution on climate resilient and sustainable development of the Mekong Delta region.

The Mekong Delta makes up 19 percent of the country’s population and contributes up to 50 percent of the national rice output, 65 percent of aquaculture products, 70 percent of fruits, 95 percent of exported rice, and 60 percent of exported fish.

It has a favourable location in trade with countries in the Association of Southeast Asian Nations (ASEAN) and the Greater Mekong Subregion (GMS).

However, the delta is facing a number of challenges posed by climate change, especially rising sea level.

High-speed economic development in localities has caused environmental pollution, ecological imbalance, land subsidence, groundwater depletion, and coastal erosion.

Minister of Natural Resources and Environment Tran Hong Ha said over the two years of implementing Resolution 120/NQ-CP issued by the Prime Minister in 2017, the delta recorded an impressive GDP growth rate of 7.8 percent in 2018, the highest level in the past four years and higher than the average level of the country (7.08 percent).

The export turnover of the whole region hit 15.7 billion USD for the first time in 2018.

As of June 2019, the delta had 528 communes recognised as new rural areas, fulfilling 41.06 percent of the yearly target.

To push ahead with the implementation of the resolution, Ha stressed the urgent need to study suitable institutions for the Mekong Delta, which will have power to identify development priorities, propose specific mechanisms and policies and build investment projects that generate inter-regional benefits.

The Ministry of Natural Resources and Environment asked the Government to instruct ministries, agencies and localities to focus on some key tasks like building and deploying major projects, and developing multi-purpose infrastructure.

It also suggested building a master plan on land, water resources and maritime space, which will serve as the foundation for ministries, agencies and localities to review and adjust socio-economic development plans and sectors’ development plans, while attracting investments and enhancing inter-regional connectivity.

Besides, the Mekong Delta region needs to step up economic restructuring, improve farm produce quality, devise mechanisms to lure investments in high technologies in aquaculture and agriculture and sea-based eco-tourism, and prevent landslides.

Other tasks include stepping up vocation training, developing high-quality human resources and raising public awareness of sustainable development and climate change adaptation.

 

Luc Ngan lychees to be served on Vietnam Airlines’ flights

BUSINESS NEWS 21/6

Business class passengers on Vietnam Airlines’ domestic and international flights are to be able to enjoy Luc Ngan lychees as desert.

On future Vietnam Airlines’ flights, business class passengers will be able to enjoy the specialty on domestic routes between Hanoi and Ho Chi Minh City as well as on international routes departing from both Hanoi and Ho Chi Minh City.

The move aims to expand co-operation between the airline and local businesses to popularise Vietnamese agricultural products around the world.

The lychees are to be selected after undergoing a strict monitoring and quarantine process. The fruits are to be cultivated in Luc Ngan in Bac Giang province which meets standards according to Vietnamese Good Agricultural Practices (VietGAP).

Currently Luc Ngan lychees are being exported to the United States, the Republic of Korea, Japan, and Singapore.

In order to ensure the quality of the fruits served on flights, the national air carrier has tightened regulations regarding the selection and collection of fruits. Luc Ngan lychees must be picked early in the morning and then dipped into water at between two to four degrees Celsius to ensure their hygiene.

They are also preliminary processed, classified, and then stored in insulated foam containers before being transported to Noi Bai Catering Services Joint Stock Company.

The fruit are then soaked and sterilised before being put on board.

Vietnam Airlines has previously introduced numerous Vietnamese specialties such as longans from Hung Yen, oranges from Cao Phong in Hoa Binh, Tay Ninh honeydew melons, and Binh Thuan dragon fruits.

Fast food chains in the slow lane amid focus on health

International fast food chains fighting to increase their Vietnam market share are challenged by consumers leaning towards healthier options.

South Korea’s Lotteria reported the highest revenues last year of VND1.56 trillion ($66.6 million) followed by American chain KFC with VND1.48 trillion ($63.2 million).
But both fast food chains experienced slower growth. Lotteria’s revenues grew by just 2 percent last year compared to 17 percent in 2017, and KFC’s by 7.5 percent compared to 18.3 percent in 2017.

Market research firm Euromonitor said in a recent report that international players dominate the limited-service restaurant market in Vietnam since local independent chains are mostly small family-based businesses with insufficient resources to take on the big players.

But, as a whole, fast food chains are experiencing slower growth. Market observers said one of the factors could be that the eating habits of Vietnamese are changing, with health being prioritized over convenience.

KFC, Lotteria, Jollibee, Pizza Hut and The Pizza Company reported combined revenues of VND5 trillion ($213.5 million), up 13 percent from 2017 compared to 24 percent growth the previous year, according to research firm Vietnam Industry Research and Consultancy JSC.

Market research firm Nielsen said in a recent report that a large proportion of Vietnamese consumers identify good health as a sign of success over monetary wealth.

The increasing pollution and food scandals have prompted consumers to care more about their health and that of their loved ones, it said.

Meanwhile, industry insiders said Vietnam’s fast food market is a daunting place because local vendors offer food faster and cheaper than fast food chains.

American channel CNBC said last year that McDonald’s and Burger King were failing to find a mass following in Vietnam. McDonald’s only had 17 stores as of last year, while Burger King had 13, a fraction of the number they have in other Asian countries like China and Japan.

KFC, in Vietnam since 1997, took seven years to open 10 stores and has had to update its menu several times to match local tastes.

According to the European Commission's report The Food and Beverage Market Entry Handbook: Vietnam 2018, issued in May 2018, Vietnamese consumers spend 78 percent of their eating out cash on local vendors, and just one percent on fast food chains.

Last year there were 7,000 fast food outlets in Vietnam, a relatively insignificant number considering there are around 540,000 food and beverage businesses comprised of 430,000 street vendors, 80,000 restaurants and 22,000 cafes and bars, according to Dcorp R- Keeper, a global company which provides technological solutions to food and beverage businesses.

Malaysian fund acquires major Vietnam education company

Malaysia’s Navis Capital Partners has announced the acquisition of Thanh Thanh Cong Education, which owns 17 educational institutions in Vietnam.

Navis, which currently manages a $5 billion portfolio, announced the acquisition last week, but did not disclose how much stake it acquired or at what price.

Thanh Thanh Cong Education (TTCE) was established in 2007, and has a registered charter capital of VND350 billion ($14.94 million). Last October 95 percent of its stake was bought by Lam Champion Investment Limited, which is headquartered in the Cayman Islands, from Vietnamese shareholders.

Navis said in a statement that it and its partners will continue to grow TTC Education’s platform by opening new schools in underserved areas and expanding services in both new and existing schools.

TTCE owns and operates 17 schools and English language centers, and has acquired land for four more, which would open by academic year 2020-21, the statement said.

In the financial period from July 1, 2017, to June 30, 2018, the TTCE achieved revenues of over VND460 billion ($19.64 million) with a gross profit margin of about 46 percent. Profit after tax was VND28 billion ($1.2 million), up 50 percent from the previous year.

TTCE said it expects in 2020-21 to provide education to nearly 30,000 students across its system.

PV Power quickens work on LNG-fired power projects

PetroVietnam Power Corporation will hasten the implementation of Nhon Trach 3 and Nhon Trach 4 liquefied natural gas - fired power projects by maximizing its effort to finalize the investigation work and feasibility study of these projects within 2019.

Ho Cong Ky, Chairman of PetroVietnam Power Corporation (PV Power), unveiled the goal during a June 17 meeting aimed to review the outstanding feats which the firm achieved in the first half of 2019.

PV Power, a subsidiary of State-run Vietnam Oil and Gas Group, focused on carrying out major works in the preparation phase of the two liquefied natural gas (LNG) - fired power projects in the six-month period.

It plans to hold bidding in order to select contractors capable of executing the investigation work and feasibility study (FS) of these projects.

The power firm is scheduled to submit the FS report to the Shareholders General Meeting for approval, slated for April 2020. The bidding to select the Engineering, Procurement, and Construction (EPC) contractor will be conducted following the FS approval.

Earlier, a pre-FS report on the LNG-fired power projects received the Government approval on February 27.

The total basic construction capital set for the two power projects is estimated at US$1.4 billion, including some US$1 billion in loans. Seven domestic banks have pledged to lend a combined total of VND25 trillion (US$1.1 billion), while some international credit institutions have committed to lending up to US$400 million without government guarantees.

LNG-fired power is an essential trend for the future development of Vietnam’s power sector amid various difficulties in expanding power generation from current sources, Chairman Ho Cong Ky noted.

He elaborated that PV Power and other power firms met a string of difficulties when attempting to increase their power generation during the first half of the year.

Challenges persisted in the domestic power generation as the water flow to nationwide hydropower reservoirs, especially in the southern region, remained low due to El Nino effects. In addition, the reserve of Nam Con Son basin and PM3-CAA gas well has been depleting.

Elsewhere, coal-fired power plants also ran into difficulties caused by the limited supply of coal from Vietnam National Coal - Mineral Industries Holding Corporation Limited (Vinacomin) and military-run Dong Bac Corporation, he said.

PV Power sold a total of 10.561 billion kWh to the national grid between January and June 16, or 101 per cent of the projected figure. The corporation’s combined revenues reached VND14.812 trillion (US$636.91 million) during the first five months of 2019. It also posted after tax profits of VND1.319 trillion (US$56.71 million) in the five-month period, representing 129 per cent of the planned number.

PV Power, with the stock code POW, has enjoyed a strong performance and increased financial capacity in the wake of its initial public offering (IPO) which took place in January 2018.

The PV Power chairman underpinned his view that the average value of POW stocks reached VND14.938 (64.2 US cents) at the IPO. POW listed on the Ho Chi Minh Stock Exchange (HoSE) on January 14 this year stood at VND14.900 (64.07 US cents). POW continued to enjoy a bullish period when it closed at VND15.950 (68.58 US cents) on June 17.

This year, PV Power is striving to complete its yearly power generation plan of 21.6 billion kWh and earn VND33.9 trillion (US$1.45 billion) in gross revenue, and VND2.9 trillion (US$124.7 million) in gross profit.

The firm looks to rack up some VND2.3 trillion (US$98.9 million) in after-tax profits this year, far beyond the yearly plan assigned during the 2019 Annual General Meeting.

Rubber exports plummet

Viet Nam's rubber exports fell in May due to changing Chinese policies and fears over the US-China trade war, a representative of the Viet Nam Rubber Group (VRG) has said.

According to the Ministry of Industry and Trade, in May, rubber exports reached 80,000 tonnes, worth US$116 million, up 6 per cent in volume and 7 per cent in value compared with April. However, those figures were down 26.5 per cent in volume and 26.2 per cent in value year-on-year.

Fortunately, in the first five months of the year, rubber exports reached 495,000 tonnes, worth $673 million, up nearly 12 per cent in volume and 4 per cent in value year on year.

The reduction in May’s export value was due to China’s increase of import tariffs for mixture rubber to 10 per cent, Duong Tuan Anh, deputy head of VRG’s Market Department, told bizlive.vn.

Mixture rubber shipped to China made up half of rubber export volume from Viet Nam in the first four months of this year.

The trade war was also encouraging manufacturers and traders to be cautious over the movements of the global rubber market, especially with the G20 conference in Japan coming at the end of June, Tuan Anh said.

The prolonged trade war would affect agricultural exports and rubber exports in particular because China is the largest export market of Viet Nam’s rubber, accounting for more than 60 per cent of total rubber exports, he said.

Meanwhile, the US increased taxes from 10 per cent to 25 per cent for some rubber products imported from China, including rubber latex, conveyor belts, pneumatic tires, gloves and gaskets from May 10. The China Automobile Manufacturers Association said the US tax policy could have a big impact on the country's auto parts exports. That could lead to reduction in rubber imports from Viet Nam for production of auto parts.

However, the trade war could attract investment to Viet Nam’s rubber industry as firms moved rubber product factories from China to Viet Nam to avoid the US tariffs, he said.

Besides those factors, the prolonged hot weather in Viet Nam, Thailand and China had slowed rubber output, especially in May - the first month of the new harvest season.

However, according to the Association of Natural Rubber Producing Countries (ANRPC), in 2019, supply of rubber would continue to exceed demand with supply of 14.5 million tonnes, including an inventory of 2.9 million tonnes from 2018, with demand of 14.4 million tonnes, Tuan Anh said.

He noted that the Viet Nam Rubber Group had managed nearly 420,000 hectares of rubber in three countries, Viet Nam, Laos and Cambodia with total annual consumption of about 400,000 tonnes.

Southeast Asia sugar industry discusses strategies as global deficit looms

There will be a global sugar deficit of about 2.5 million tonnes in 2019-20, and prices are expected to harden, the fourth meeting of the ASEAN Sugar Alliance heard in HCM City on Monday.

Sasathorn Sanguandeekul, market analyst, futures trading and risk management at Thailand's MITR Phol Sugar Corp Ltd, said in 2018-19 -- the crop starts annually in September -- there was a surplus of two million tonnes.

A deficit would occur this year mostly due to a reduction in output in major sugar producing countries, including Thailand, he said.

“In 2019-20 with the expectation of reduction in Thailand and India, Asia should have a deficit of around 9.5 million tonnes.”

Output in Brazil, the world's largest sugar producer and exporter, in 2018-19 “decreased to 26.5 million tonnes due to ageing canes, drought and low sugar mix ratio. While sugar production in 2019-20 is forecast to be around 26-28 million tonnes”.

But Brazil was still maximising ethanol production, reducing sugar output, she said.

India had large surpluses in 2017-18 and 2018-19. But the output is expected to reduce this year due to unfavourable weather, according to the analyst.

China's production is expected to be 11.63 million tonnes in 2018-19 and around 11.2 million tonnes in 2019-20, less than its demand.

China has to import around 4.5 million tonnes.

Indonesia is another deficit market. In 2018-19, it is expected to produce around 2.37 million tonnes while consumption is expected to increase to 7.11 million tonnes.

Thailand’s production will be around 14.6 million tonnes in 2018-19 and in 2019-20, due to the drought and farmers switching to other crops, its production is pegged at around 13 million tonnes.

According to Le Xuan Trung, general secretary of the Viet Nam Sugar and Sugarcane Association, Viet Nam has a capacity to process 162,300 tonnes of sugarcane per day.

It produced 1.2 million tonnes of sugar in the 2018-19 crop, 300,000 tonnes down from the previous year.

With a reduction of 15-20 per cent in the area under cane in 2019-20, sugar production is likely to be one million tonnes.

According to experts, after years of surpluses in the world market, the likelihood of a deficit in 2019-20 will be an opportunity for sugar companies, including TTC Sugar.

Sasathorn Sanguandeekul said: “Sugar prices will trade back in the range of 12-13.5 cents per pound in the short run. In the long run, we estimate the range can rise to 12.5-14.5 cent due to the deficit.”

A representative of Malaysia’s Central Sugar Refinery Sdn Bhn spoke about his country’s new sugar development in – “Better Brown” – a low glycemic sugar.

This brown sugar offers many benefits such as helping reduce absorption of sugar into the blood stream, fight obesity and diabetes, improve the taste and flavour of recipes, and absence of chemicals or genetic modification.

Organised by the ASEAN Sugar Alliance and TTC Group, the meeting also discussed regional trade agreements, sugar and health issues, ethanol market development, among other topics.

Dang Van Thanh, chairman of TTC, said: “Facing challenges in supply and demand and global climate change, the governments of Southeast Asian countries have taken early supportive action including drastic measures to help their sugar industry retain a competitive advantage.”

The fourth meeting was an opportunity for members to exchange information and make strategic decisions to benefit the future of the Southeast Asian sugar industry, he said.

The ASEAN Sugar Alliance, established in 2016, is a platform for sugar industries in the region to exchange views and co-operate in areas of mutual interest, fostering the development of the industry and make it more competitive globally.

An Phat Group accelerates investment in the US

The An Phat Holdings Group is accelerating its construction of an environmentally-friendly packaging factory with 300 production lines in the US.

The information was released by the group’s General Director Dinh Xuan Cuong at the Select USA 2019 expo held in the US last week. This annual event was organised by the US Department of Commerce, attracting the participation of more than 3,000 investors worldwide.

Cuong said the factory was expected to become operational in the first quarter of 2020 and provide products to the North American market the same year.

The plant will produce fully biodegradable plastic bags, polyethylene (PE) bag and other environmentally-friendly plastic products.

The US has become a key export market for An Phat in recent years, accounting for around 20 percent of its total export revenue annually.

He said the environmentally-friendly products had advantages in the US due to tax breaks.

The An Phat Plastic and Green Environment JSC (An Phat Bioplastics) already has a factory providing fully biodegradable plastic bags, PE bags and other environmentally-friendly plastic products to the US market.

Its packaging products are available in more than 100 countries and territories worldwide.

In the first quarter of the year, An Phat Bioplastics’ profit reached 214 billion VND (9.16 million USD), four times higher than the same period last year. The positive results were partly contributed by industrial real estate at its An Phat Complex. The rental rate at the industrial zone stands at nearly 60 percent of its total area.

VASEP seeks review of regulations on residue limits in seafood products

Seafood enterprises have promoted seafood products in the domestic market but are faced with strict residue limits for enrofloxacin and ciprofloxacin, which are restricted for use in aquatic production and trade.

The Vietnam Association of Seafood Exporters and Producers (VASEP) has asked the Ministry of Agriculture and Rural Development to issue regulations on maximum residue limits allowed for enrofloxacin and ciprofloxacin.

According to department regulations, enrofloxacin and ciprofloxacin are on the list of "chemicals and antibiotics banned for use in aquatic animal production". However, the department has not regulated the minimum required limit for these chemicals.

This has caused problems for enterprises that produce and trade in the domestic market.

According to VASEP, in the first four months of this year, the country’s seafood exports reached US$2.43 billion, a decrease of 1.3 per cent compared to the same period last year. Domestic consumption is very important to ensure stability for the fisheries sector, it said.

European high-end interiors brands flock to Vietnam

Vietnam is attracting Italian and other European interior manufacturers with its strong demand for premium furniture.

Products made by 10 European brands including Baxter, Ceccotti Collezioni and Dimensione Chi Wing Lo were recently on display at a new 2,000-square-meter showroom in Hanoi.

Ly Qui Trung, CEO of Vietnamese company AKA Furniture, said demand for high-end furniture in Vietnam, despite its low GDP per capita, is no less than in Hong Kong or Singapore.

"In Ho Chi Minh City and Hanoi, we have customers who seek premium products just like people in Italy and other developed countries."

Though a Vietnamese spends only $30 on wood and wood products a year, lower than the global average of $72, according to the Ministry of Agriculture and Rural Development, industry insiders said demand is strong in the premium segment.

Research and consulting firm Concetti said the Vietnamese furniture market has been growing strongly in the last three years, especially the high-end segment. Vietnamese consumers spent $15.6 million on luxury furniture from Italy in 2017.

Paolo Lemma, Italy’s trade commissioner to Vietnam, said it is not unusual to see someone buy a penthouse in Hanoi with interiors imported from Europe.

Trung said there is higher demand in the high-end segment in the north than the south. "Northern people are willing to spend on the most expensive and most luxurious items. The more unique a product is, the more they are willing to pay."

Some 80 percent of luxury woodwork and interior decoration items in Vietnam is imported from Europe, with local players accounting for the rest, according to the Vietnam Chamber of Commerce and Industry.

The country’s wood and furniture market is valued at $2.5 billion, it added.

 
 
 
 
 
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