Supporting industry strategies voiced
Vietnam has been advised to apply Japanese technical standards and remove some obstructions, including those regarding tax and incentives in order to develop the country’s supporting industries.
Established in 2005, Professional Graphic Packaging JSC in the northern city of Haiphong has been receiving technical support from the Japan International Cooperation Agency (JICA) in Vietnam in applying the 5S system since last October.
The method stands for the five Japanese words of “Seiri, Seiton, Seiso, Seiketsu, and Shitsuke”, which respectively mean “Sort, Set in order, Shine, Standardise, and Sustain”. The 5S system aims to help companies identify factors that impede their productivity and develop solutions to common industry problems.
With the JICA support, Professional Graphic Packaging has been able to become partners of some Japanese firms in Vietnam.
The agency has supported 19 enterprises and now is also supporting another 10 in Haiphong, along with many more in other provinces and cities.
“We are willing to extend our 5S programme all over Vietnam, so that enterprises here can improve their productivity to catch the opportunities of Industry 4.0, and so the economy can improve its growth quality,” Kobayashi Ryutaro, senior representative of JICA Vietnam, told VIR. “They can also provide products to Japanese firms in Vietnam which are suffering from a lack of high-quality suppliers due to the country’s weak supporting industries.”
At the recent mid-term Vietnam Business Forum in Hanoi, Japanese Chamber of Commerce and Industry in Vietnam (JCCI) chairman Nobufumi Miura told the Vietnamese government that thousands of Japanese enterprises currently wish to invest in Vietnam, where they see great potential in industrial development as compared to many regional nations.
However, many of them remain reluctant in cultivating their projects in Vietnam as they are facing some hurdles, including weak supporting industries caused by snags in tax and incentives. If the hurdles are solved, Vietnam can become one of the biggest attracters of Japanese investment in the region, according to Miura.
“In order to develop enterprises whose products meet the global standard quality, we expect the government to discuss the policies on the incentive programme for manufacturing of high quality products,”?Miura said. “Implementation of 5S or ISO is also highly recommended for the management foundation for the future.”
He also highlighted some tax-related hurdles making it difficult for Japanese firms to develop supporting industries in Vietnam.
For example, in May 2018 the government issued Decree No.82/2018/ND-CP on management of industrial parks (IPs) and economic zones, but the decree eliminated the 50 per cent reduction of personal income tax (PIT) in special economic zones (SEZs), taking effect last July. This incentive had been valid since 2008 in Decree No.29/2008/ND-CP on IPs, export processing zones, and EZs.
“The sudden withdrawal of tax incentives made a huge negative impact on the profitability and financial planning of companies located in the SEZs, causing critical confusion among the companies, and the predictability of the laws has not been secured,” Miura said. “Appropriate length of transitional periods should have been established, and a relief programme needs to be provided for the enterprises which can be negatively affected by changes in laws and regulations.”
In fact, irked by the sudden withdrawal of the PIT incentive, many Japanese firms have complained to the departments of taxation in some provinces home to their projects, such as Tay Ninh, Kien Giang, Quang Ngai, and Quang Nam, as well as the General Department of Taxation.
Besides, the JCCI also highlighted a need for application of supporting industrial tax incentives to business expansion before 2015
According to Decree No.111/2015/ND-CP on supporting industries development released in November 2015 and Circular No.55/2015/TT-BTC promulgated the following month on corporate tax law and industrial tax incentives, if business expansion before 2015 met the conditions of current regulations, it is reasonable for the enterprises to enjoy the corporate tax incentives for the supporting industries, as Ministry of Justice and the Ministry of Industry and Trade agreed. It is also understood that Article 13(1) of the Law on Investment can support the interpretation.
“However, there have been cases where the Ministry of Finance refused to apply tax incentives,” Miura added. “The interpretation by Vietnamese authorities should be consistent so that enterprises can expect the correct application of the law. The predictability of the laws should be secured.”
“This situation disturbs the investment in supporting industries. The Vietnamese government is supposed to urgently expresses its consistent opinion and should provide clear and detailed evidence and ensure predictability of the laws so that enterprises can rely on the laws.”
As of June 20, 2019, Japan had over 4,200 valid investment projects in Vietnam, registered at $57.5 billion, the Vietnamese Ministry of Planning and Investment reported.
Promoting renewable energy an urgent requirement: experts
Along with its rapid economic growth, Vietnam’s electricity demand is also increasing strongly, at around 10 percent a year, causing huge pressure on the energy sector, according to the Ministry of Industry and Trade.
Truong Thanh Hoai, director general of the ministry’s industry department, said the country’s total electricity capacity reached nearly 50,000 MW last year to more or less meet demand.
Vietnam’s power capacity is the second highest among Southeast Asian countries and 30th in the world, he said.
Speaking at a conference on Vietnam’s strategy for developing green energy and energy saving until 2020 in Ho Chi Minh City last week, Nguyen Phuong Dong, Deputy Director of the city’s Department of Industry and Trade, said the growth in energy demand in the country is much higher than in places like Japan and Europe.
“This requires Vietnam to have efficient solutions for energy saving and develop new sources of energy and renewable.”
Hoai said: “The Government has issued policies to encourage the development of renewable energy such as wind, solar and biomass to reduce adverse impacts on the environment and encourage production of energy-efficient devices.”
Nguyen Anh Tuan of the Institute of Energy said: “Vietnam has diverse fossil energy resources like oil, gas and coal as well as renewable energy sources such as biomass, solar and wind.”
Currently hydropower and coal are the largest sources and would remain so in the short term, he told the conference.
Tuan said the Government revised the Power Development Plan for a seventh time in 2016 to increase the share of renewables like biomass, solar and wind to reduce the gap between demand and supply, and is now preparing for an eighth revision.
“The power generation structure has changed with greater reliance on renewable energy.”
As a country with a tropical monsoon, and sun and wind all year round, Vietnam has great potential for developing renewable energy.
Talking about the advantages and challenges related to solar energy generation in HCM City, Nguyen Ngoc Tuong Vi, acting director of the HCM City Power Corporation’s sales department, said the city has great potential for solar power, especially rooftop solar while the Government and the city have policies in place to develop rooftop solar and strong support from the public and businesses.
But the high cost of installing solar rooftop panels discourages people and there are a range of products in terms of origin, quality and warranty, confusing them, she said.
There are no national technical standards or standard specifications related to rooftop solar systems, and no guidelines on dealing with used solar panels and other issues, she said, adding that the Government should soon announce prices for solar power.
To encourage solar power generation, the Government announced that projects connected to the national grid by June 30, 2019, could sell electricity to EVN at 9.35 US cents per kWh, but no information on how much had been revealed, she said.
The Government should also promulgate regulations for recycling used solar panels and national technical standards for rooftop solar, she said.
The conference was held on the sidelines of the International Exhibition on Electrical Technology and Equipment and the International Exhibition on Products, Technologies for Energy Saving and Green Power, which were held in HCM City from July 17 to 20.-VNS/VNA
Leather and footwear sector takes steps to fulfill US$21.5 bil export target
The leather and footwear industry is expected to maintain the positive signs of growth seen throughout 2019 as local businesses continue to make great strides in capitalizing on opportunities brought about by the international economic integration to fulfill this year’s export turnover target of US$21.5 billion.
The sector is predicted to see bright prospects as the consumer demand for footwear products in the nation’s main export markets continue to rise.
In addition to this positive sign, the industry will enjoy further growth opportunities with China choosing to continue its policy of shrinking investment in textile, garment, leather and footwear sectors while instead preferring to focus on hi-tech industries.
As a result, footwear and handbag processing orders will continue to shift from China to other nations, including Vietnam.
Despite facing a number of difficulties in recent years, the country’s export earnings from leather and footwear industry have seen consistent increases. For example, the sector’s turnover made close to US$15 billion in 2015, over US$16 billion in 2016, whilst 2017 saw a number of breakthroughs with nearly US$18 billion.
Last year, the industry maintained its growth momentum with a total export turnover of US$19.63 billion, an increase of 9.3 per cent compared to the same period in 2017.
At its 7th Congress for the 2019-1024 tenure held recently in HCM City, the Vietnam Leather, Footwear and Handbag Association (LEFASO) announced that the sector earned more than US$10.33 billion in export turnover during the first half of the year. This figure includes US$8.53 billion made from footwear and US$1.8 billion made from handbags. It is hoped that export earnings from the sector will hit US$21.5 billion this year, a rise of 10 per cent compared to last year.
Currently, the US is Vietnam’s largest export market, followed by the EU, China, Japan, and the Republic of Korea.
In terms of the level of skill and technique of the workforce in the industry, Vietnam is second to none in the region. Indeed, in recent years, the country's leather and footwear products have been shipped to hundreds of countries worldwide with export earnings raking in dozens of billions USD.
LEFASO noted that Vietnam currently ranks second in the world in terms of leather and footwear exports, and third for their production of these products.
At present, the leather and footwear industry has attracted the participation of over 2,000 businesses whilst simultaneously generating 1.5 million jobs. It is an important sector that has made significant contributions to the country’s overall economic development.
In the near future, the sector is expected to enjoy a wealth of opportunities arising in the context of comprehensive international economic integration. New generation free trade agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) are set to offer huge opportunities to a number of the nation’s industries, including the leather and footwear sector.
LEFASO predicted that during the course of the year, the country’s leather product and footwear production will grow up to between 10- 11 per cent with exports making up 9 per cent of the country’s overall export turnover. This year, the localisation rate of leather and footwear products reached up to 60 per cent.
To facilitate firms' market expansion, LEFASO plans to help enterprises to attend trade fairs abroad under national trade promotional programs, improve the efficiency of solutions for the development of human resources in order to meet the requirements for development set by new generation FTAs such as the CPTPP and the EVFTA.
The association underlined the importance of training in order to improve the management capacity of production among domestic firms.
With greater opportunities in new markets incoming, LEFASO has called on businesses throughout the sector to pay closer attention to branding issue in order to make further inroads in international markets.
TH Group proposes 6 trillion VND milk cow breeding project in Quang Ninh
TH Group has submitted a proposal to the People’s Committee of the northern province of Quang Ninh to invest in a projects breeding 20,000 milk cows with a total investment of nearly 6 trillion VND (258 USD) in Dam Ha district.
Representatives from the firm suggested a factory and a high-tech farm cluster in connection with processing and selling.
The representatives proposed popularising the model of high technology milk cow breeding cooperatives for sustainable development in Dam Ha, Tien Yen and Hai Ha districts.
Besides, a project on planting fruit trees and timber covering an area of 9,560 hectares was proposed.
The TH Group also gave ideas on green tourism in the Eastern part of the locality.
Leaders of the surveyed localities in the province pledged to create optimal conditions for the firm.
Leaders of Quang Ninh’s departments also proposed a number of preferential policies for investors interested in promoting farmers’ production.
Lauding the proposals of TH Group, Quang Ninh asked the firm to make more surveys and a detail planning for each area without changing land use purpose. The province also agreed on the ideal of eco-tourism development.
The province will direct authorised agencies and localities to support the firm during the project designing and surveying process.
Vietnamese firms urged to transform in digital age
The internet and smartphones are having a profound impact on consumers in many areas and offering manufacturers and retailers the opportunity to promote their products while also bringing challenges in understanding new shopping trends and identifying effective methods of communication, a seminar heard in Ho Chi Minh City on July 18.
Nguyen Phuong Nga, market development director at market research company Kantar Worldpanel Vietnam, told the seminar on business strategies in the digital age that Vietnam has the 14th highest number of internet users in the world with 66 percent of its population online.
“Smart phones and the internet are becoming increasingly popular in Vietnam, including rural areas. This creates a good premise for the development of e-commerce.”
E-commerce sites are investing more and more resources to attract consumers, she added.
Fashion products and transport services are among products with the highest online transactions, while fast moving consumers goods (FMCG) are being increasingly bought, she said.
“The FMCG market is witnessing tremendous growth in online shopping in terms of the number of buyers as well as value.”
Online sales of FMCG products rose by 147 percent last year, while e-commerce revenues grew by 30 percent overall, she said
Linh Phan, lead solution engineer at Salesforce Singapore, said Vietnamese businesses should transform from being product-centric to customer-centric.
Many focus on how to make quality products at cheap prices or on international operations, but do not know who the buyers are or what their feedback about their products is since they distribute their products through distributors and think customer relations are for distributors.
Thus they do not pay much attention on customer engagement, he said.
A survey by his company found 80 percent of customers saying the experience a company provides is as important as its products and services, and 71 percent of shoppers use a mobile device in-store to do at least one educational or research activity, up from 59 percent in 2017.
Therefore, businesses must become customer-centric focusing on the customer experience, customer relationships, maximising customer value in sales, customer engagement, and having their always-on connectivity for their products.
“Customer-centricity means putting the individual demand of every customer at the centre of a company’s philosophy, strategy, culture and operational model.”
Many companies understand that and are taking steps to transform their operations, he said.
Executives from businesses, including Dien Quang Lamp JSC and Mitsubishi Chemical Cleansui Vietnam, spoke about their success in transforming their businesses in the digital age.
Organised by the Vietnamese High Quality Product Business Association and CIO Vietnam, the seminar was part of the “Digitalisation for SMEs” programme.
Domestic garment producers face order shortage in H1
Local garment producers have so far received less order than 2018 and the shortage of orders is becoming more common, heard a press conference held by the Vietnam Textile and Apparel Association (VITAS) in Hanoi on July 19.
The number of orders in the first half of 2019 was just equivalent to 70 percent of the figure in the same period last year, said VITAS Vice President Truong Van Cam.
As the apparel industry grew by less than 9 percent by the end of June, it must expand 11 – 12 percent for the remaining months to fulfill the goal of earning 40 billion USD from exports this year.
Other major textile and garment producers like India and Indonesia are facing a similar situation as demands from customers are getting higher while pressure to cut cost and higher trade barriers, such as import duties or quality inspection are also taking a toll on them, he explained, saying that Vietnamese firms are no exception.
Foreign countries have taken several measures to support their domestic exporters, for example, cutting corporate income tax and duties on imported apparel materials, and devaluing their currencies, making it more difficult for Vietnamese enterprises to compete with, Cam added.
He hoped that the situation would improve in the last six months as it is normally the time for high-value orders for products like jackets, suits and winter sportswear.
Nguyen Thi Hong Anh, VITAS Vice Secretary General, said to attract more orders, local producers must strictly comply with requirements of buyers and protect workers’ rights.
According to the VITAS, the textile and garment industry earned approximately 18 billion USD from exports in the first half of 2019, up 8.61 percent year on year. The figure included 14.02 billion USD worth of clothing and 1.02 billion USD worth of fabrics, up 8.71 percent and 29.9 percent, respectively.
The US remained the biggest buyer who imported 7.22 billion USD worth of textile and garment products, up 12.84 percent from a year earlier. It was followed by member states of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (2.57 billion USD, up 11.13 percent), the European Union (2.05 billion USD, up 10.46 percent), and the Republic of Korea (1.37 percent, up 5.59 percent).
Seminar talks boosting exports via online platforms
Boosting export via giant retail platform like Amazon will enable small- and medium-sized enterprises to access world market at the lowest cost, experts said at a seminar held in Ho Chi Minh City on July 19.
Speaking at the event, Director of the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC) Pham Thiet Hoa said the growth of shipping services has turned e-commerce into a popular trade channel of the world’s major enterprises, including those in Vietnam.
He added that 98 percent of Vietnamese firms are micro, small- and medium-sized ones with limited capital and technology, so it is important to tap online trade channels.
Tran Xuan Thuy, Executive Director of the Amazon Global Selling Vietnam, said in the US alone, nearly 70 percent of consumers visit Amazon to seek products while 80 percent compare prices at the site to make final decisions.
Thuy said the use of Amazon as a new advertising channel will become an inevitable trend for firms in various countries, including Vietnam.
Co-founder of the Amazon FBA Freedom Group Tran Quy Hien said the rate of buyers on Amazon amounts to 30 percent on usual days and 60 percent on holiday, while the figure at other sites are only about 1 percent.
According to him, health care products, cosmetics, electronics, household appliances, kitchenware and stationeries are among the bestsellers on Amazon at present. Vietnam’s products such as coconut, momordica and cajeput oil, handicrafts, leather and footwear could compete with foreign brands.
In order to maintain operations on Amazon, he advised firms to study product development and use technology to bring the best experience to clients.
The Ministry of Industry and Trade’s Vietnam E-Commerce and Digital Economy Agency reported that the global e-commerce revenue topped 2.77 trillion USD last year, which is forecast to top 3.3 trillion USD later this year and more than 4.47 trillion USD by 2021.
Firms have high hopes on EVFTA
Vietnamese businesses are having high hopes for bigger market shares in the European Union (EU) thanks to the bilateral free trade agreement (EVFTA) signed recently.
Among the commodities with high export revenue to the EU in the first half of 2019, textile-garment brought home over 15 billion USD, up 9.9 percent year on year, according to the Ministry of Industry and Trade (MoIT).
Vice Chairman of the Vietnam Textile and Apparel Association Truong Van Cam said right since late 2018 and early 2019, many businesses have received enough orders for export until the end of September and even the whole year. Notably, the recent influx of investment capital has helped the textile-garment sector gradually perfect its domestic supply chains, which will boost products’ competitiveness.
In particular, the EVFTA has opened the door wide for Vietnamese exports to European markets, and textile-garment and footwear are among the big beneficiaries of this deal, he noted.
Pham Thi Thu Huong, CEO of the Minh Tri Co. Ltd, said in 2018 and earlier, her company’s textile-garment exports to the EU accounted for only 10 percent of its total overseas shipments.
As the EU is a demanding market, in the past, the firm only had small orders. Since early 2019, to gear up for the EVFTA, it has increased investment to expand producing items for export to the EU, she noted.
As a result, Minh Tri recorded a year-on-year rise of 18 percent in its exports to this market in the first six months of 2019, and hopes that the figure will reach 25 percent for the whole year.
Huong said the company is having high expectations of the EU because this is a market with high value. Its shipments can further increase in the years ahead.
She added when the EVFTA takes effect, it will open up numerous new opportunities for textile-garment businesses. They will have more chances to enter this giant market, sell their products at higher prices and improve their manufacturing capacity via the application of new production technologies.
According to Director of the MoIT’s European-American Market Department Ta Hoang Linh, aside from preferential tariffs, the EVFTA also includes strict requirements. If Vietnamese firms do not make preparations right from now, it will be hard for their products to benefit from these preferential treatments.
Rules of origin are among the issues that companies must comply with so as to ship goods to the EU since most of materials of Vietnamese exports currently come from China and ASEAN.
To be subject to preferential tariffs, products must be made with certain rates of materials from Vietnam or the EU, the official elaborated.
Huong admitted that the country’s textile-garment sector still depends much on materials from China. To make use of FTAs, including the one with the EU, businesses should build strategies for developing domestic supply chains to satisfy the rules of origin. Additionally, authorised agencies also need to step up administrative and customs procedure reforms to help firms save cost and time.
Echoing the view, Linh said enterprises should be more active in ensuring their material supply so as to meet the EU’s rules of origin, thus helping to expand the market share of Vietnamese textile-garment in this market.
Viettel posts profit of 915 million USD
Viettel Group posted consolidated profit of 21.3 trillion VND (915 million USD) in the first half of the year, representing a 10.2 percent year-on-year increase and surpassing 24.7 percent of set targets.
It announced on July 19 positive business results for the first six months of the year despite fierce competition in the telecom market which is entering a saturation period.
Accordingly, its consolidated revenue reached 110 trillion VND, up 7.4 percent from the same period last year.
Revenue from local telecommunications saw a 2.9 percent rise from the corresponding period last year to reach 70 trillion VND. Its main momentum for growth was revenue for 4G services with data growth of 17.5 percent year-on-year.
In addition, the launch of a new data package with preferentials, double broadband to customers and implementing its largest customer care service Viettel to nearly 70 million users also contributed to the high growth.
Especially, Viettel had the largest number of customers registered for mobile number portability (MNP) services by the end of June this year, accounting for 53 percent of total demand in the market. The MNP service allows users to change networks but retain the same phone number.
On May 10, Viettel was the first telecom company in Vietnam to successfully test a 5G network.
Its total revenue from overseas markets reached 19 trillion VND, up 35.4 percent from the same period last year. Its profit from the markets met 452 percent of the year’s set target at 1.8 trillion VND.
The group’s Myanmar market which recently came into operation saw positive results as its brand – Mytel – became the third largest telecom provider in the country.
In the first half of the year, Viettel established three new corporations focusing on digital technology including Viettel Cyber Security, Viettel High Technology Industries Corporation and Viettel Digital Corporation.
HCM City records growth of 7.86 percent in first half
Ho Chi Minh City posted an economic growth rate of 7.86 percent year-on-year in the first half of the year to 611.5 trillion (26.3 billion USD).
The figure was announced at a meeting of the municipal People’s Committee on July 19 to review the socio-economic performance in the first six months and launch plans for the remaining months.
During the reviewed time, the service sector expanded 8.06 percent, industry and construction at 6.7 percent and agriculture at 6.01 percent.
Retail sales increased by 12.2 percent to 558.5 trillion VND (23.99 billion USD).
Meanwhile, exports grew an estimated 9.2 percent to 19.6 billion USD.
Foreign direct investment was worth 3.21 billion USD, up 20 percent.
Up to 4.25 million international tourists visited the city, an increase of 10.9 percent, with revenues from tourism topping 73 trillion VND (3.13 billion USD).
Speaking at the meeting, Chairman of the People’s Committee Nguyen Thanh Phong said the city must make greater efforts to achieve its target of 8.3-8.5 percent economic growth this year.
The city still faces many challenges such as illegal constructions; shortcomings in resolving cases related to land, site clearance and compensation; problems related to waste management and environmental protection, African swine fever; and rising drug crimes.
He called on the heads of government agencies and district leaders to focus on accomplishing eight major missions this year.
They include administrative reform, investment promotion, equitisation of State-owned enterprises, urban planning and management, clearing obstacles to speed up the progress of key projects, science-technology-innovation development, international cooperation, and ensuring national defence and security and maintaining social order and safety.
The city would continue two projects on developing logistics and e-commerce, he added.
Earlier at a meeting on July 17, the city has committed to develop a detailed plan to turn it into a regional and international financial hub after years of delay.
As an international financial hub, HCM City, which contributes 45 percent of the country’s GDP, would enhance socio-economic growth locally, nationally and regionally.
A feasibility report on the plan would be submitted to the People’s Council in October.
By June 2020, the city is expected to start building a financial centre complex in the Thu Thiem new urban area in district 2.
The city will also report to the Prime Minister by the end of the year on a special incentive policy for the project.
The city accounts for only 9.36 percent of the country's population and 0.6 percent of the country’s total area, but it contributes 14 percent of the country’s export value and 27 percent of State revenue. It also accounts for 14.1 percent of the country’s total foreign investment.
Phu Quoc island lures over 2.2 million visitors so far
The Phu Quoc island district in the Mekong Delta province of Kien Giang welcomed over 2.2 million visitors since the beginning of this year, including nearly 400,000 foreigners, up 35.5 percent year on year.
According to Vice Chairman of the Phu Quoc island district People’s Committee Huynh Quang Hung, ecotourism and entertainment hubs such as Vinpearl Land, Vinpearl Safari, Phu Quoc Casino, as well as high-end resorts have helped lure visitors to the island.
He said that so far, the district has hosted about 300 projects worth over 370 trillion VND, mostly in tourism.
Currently, the island has over 600 accommodation facilities with about 18,000 rooms. Many domestic and international air routes have connected the island and various localities in Vietnam and the world.
Phu Quoc has been a destination for many regional and international events, he said.
In the future, Hung said, along with protecting the environment and social security and order, the district will continue promoting tourism, while mobilising resources to complete infrastructure system, and removing obstacles for investors in the tourism sector to optimise its strength in maritime and cultural tourism.
Located 46km from the mainland, Phu Quoc is famous for pristine beaches, pearl farming, fish sauce, pepper and “ruou sim”, a wine made from wild sim fruit or Rose Myrtle.
A variety of tours are provided for travellers, such as scuba diving, coral reef snorkeling, fishing and tours to traditional fish sauce making establishments, pearl farms, Ham Ninh fishing village, Phu Quoc National Park, pristine beaches and many more.
In 2018, the island welcomed more than 4 million tourists, a year-on-year rise of 36 percent.
Agricultural cooperatives thriving
Collective economy and agricultural cooperatives have developed in both quantity and quality, contributing to the restructuring of agriculture and new rural building, Deputy Prime Minister Vuong Dinh Hue said at a conference in Hanoi on July 20.
The event aims to review the 15-year implementation of the ninth Party Central Committee’s resolution on continuously reforming, developing and improving the economic efficiency of collective economy in agriculture.
According to the Deputy PM, agricultural cooperatives make up 62 percent of the 23,000 cooperatives nationwide.
Statistics from the Ministry of Agriculture and Rural Development showed that as of June 30, 2019, the country had 14,452 agricultural cooperatives, 55 percent of which are operating actively.
The average revenue and profit of a cooperative were estimated at over 1.6 billion VND and 203.5 million USD, up 3.5 times and 4 times respectively against 2003.
Averagely, one province has 220 cooperatives. The Red River Delta led in the number with 362 cooperatives in a province, while the south-eastern region ranked last with 85 cooperatives in a province.
As of December 31, 2018, the country had 39,354 cooperative groups in the field of agriculture, up 32,759 groups compared to 2003.
Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said the ministry aims to develop 15,000 effective agricultural cooperatives in 2020.
Nearly 8,000 new cooperatives will be established in 2025, including 20,000 efficient agricultural cooperatives and cooperative unions.
Between 2025 and 2030, the ministry strives to set up about 4,000 cooperatives, including 25,000 agricultural cooperatives and cooperative unions operating efficiently.
To realise the aforesaid goals, the official urged ministries and localities to focus on removing difficulties in accessing credit and supporting the certification of land ownership for cooperatives and development of infrastructure, he suggested.
MoMo leads in e-wallet market: poll
MoMo was voted the most popular electronic wallet in Vietnam in 2019 in a poll conducted by Nhip Cau Dau Tu (Investment Bridge) magazine.
The results were based on statistics from 20 e-wallet developers and 1,190 votes from the magazine’s readers in the last five months.
The voting was based on identification and dissemination, most favoured and trusted electronic wallet, ability to connect and expand with the banking system and providers, convenience in transaction and use of apps, and safety.
Dang Nhat Minh, editor-in-chief of Nhip Cau Dau Tu, said: “The growth of information technology has led to the development of e-commerce payments and online shopping. So e-wallets are more popular now. They are safe, convenient and time saving.”
“The poll also aims to boost the development of e-wallets and build a sustainable platform for e-commerce payments in Vietnam,” Minh said.
MoMo, owned by Di Dong Truc Tuyen Services Joint Stock Company, has an estimated 10 million users.
Nguyen Ba Diep, executive vice chairman and founder of MoMo, said mobile payments saw a year-on-year increase of 60-70 percent in the number of users.
Diep said there were around 30 e-wallet service providers in Vietnam, but only four of them have a high number of transactions, including MoMo, ViettelPay, ZaloPay and Moca.
Diep also said e-wallet service providers in Vietnam had worked hard to ensure security to protect themselves and customers.
ZaloPay, developed by VNG Corporation, was cited as a diverse mobile wallet ecosystem that includes different types of services.
ZaloPay enables electronic payment for bills such as electricity, water, internet and TV as well as money transfer via QR code and connections with bank accounts for cash withdrawals or charges.
Viettel Pay, launched by military-run telecom provider Viettel in April, has had strong growth.
Vietnamese enterprises make the most of EVFTA
The Vietnam-EU Free Trade Agreement (EVFTA), a new-generation free trade agreement between Vietnam and 28 EU member countries, and the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) are two FTAs with the broadest scope and the highest level of commitment Vietnam has ever signed.
The deal offers Vietnamese businesses opportunities to increase and boost their growth but poses an urgent need to outline proper business strategies to fully tap the new opportunities.
The EVFTA creates opportunity for Vietnamese enterprises to boost exports to potential markets and import equipment and materials of high quality at low prices. But domestic businesses must meet the regulations on origin and technical barriers, and change production models in order to improve competitiveness.
Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said “Domestic businesses should re-orient their markets based on the new integration map in which we have defined with the most favorable tariffs. Vietnamese businesses must satisfy the standards set by these markets. Based on the market re-orientation plans, they should diversify to avoid potential risks.”
Under the EVFTA, 99% of tariffs will be eliminated. As soon as the trade deal comes into effect, many items will even enjoy a tax rate of zero.
Agricultural products including seafood, rice, sugar, honey, and vegetables, are expected to benefit from the new export opportunities. But the deal will also require Vietnamese enterprises to strictly control the quality from the beginning to ensure the export regulations and standards are being met.
The EU is currently Vietnam’s second largest garment and textile market after the US with an annual growth between 7% and 10%. Last year Vietnam earned 4 billion USD from textiles and garment exports to the EU.
Phi Ngoc Trinh, Director General of the Ho Guom Garment Joint Stock Company, said the industry expects to see an export growth of 40 billion USD when the EVFTA takes effect. But Vietnam will face fiercer competition from foreign and FDI enterprises, and from the domestic market as well.
Trinh said “Once the EVFTA is approved, Vietnamese enterprises and the garment and textile industry in particular will have new opportunities to increase export to the European market. At that time, Vietnam’s garment and textile products will enjoy a tax rate of almost 0% against the current average rate of 9.6%. During the approval period, Vietnamese textile and apparel enterprises need to raise their competitiveness, attract workers, and improve standards to meet the EU’s quality control.”
Nguyen Hai Minh, Vice Chairman of Eurocham Vietnam, said “The textile, leather and footwear industries will benefit most from the EVFTA. But Vietnamese enterprises must pay special attention to the principles regarding origin of materials which include favorable provisions for Vietnamese enterprises.
These include the principle which states that if Vietnamese garment and textile enterprises use the fabrics made in Vietnam or in countries that sign trade deals with the EU such as the Republic of Korea, Vietnamese products can enjoy the tax incentives. This will help Vietnamese enterprises change their production model and become more attentive to the origin of materials.”
Vietnamese enterprises should study the agreement thoroughly to take advantages of opportunities created by new trade deals and keep updated as to the information on the tariff reduction schedule set by the EU and Vietnam.
Through professional associations, domestic enterprises should strengthen cooperation with industrial clusters to make the most of the socio-technical infrastructure, save on logistics costs, improve product quality, and lower product costs to increase competitiveness in demanding markets like the EU.
Vietnam develops Mekong Delta to maintain sustainable development ranking
A government report shows that Vietnam’s Sustainable Development Goal Index rose three places compared to last year, and 34 places compared to 2016. The rise in ranking is the result of greater efforts by all provinces and cities, particularly the Mekong Delta provinces.
Prime Minister Nguyen Xuan Phuc addresses a meeting of the Socio-Economic Sub-Committee of the 13th National Party Congress with 13 Mekong Delta localities and Ho Chi Minh city.
Vietnam is currently ranked 54th among 162 countries and territories on the UN’s SDG Index.
The Socio-Economic Sub-Committee of the 13th National Party Congress has recently held a meeting with 13 Mekong Delta localities and Ho Chi Minh city to discuss measures for the Mekong Delta to attain fast growth and contribute to Vietnam’s sustainable development.
In the 2019 Sustainable Development Goals Index, Vietnam ranks second among ASEAN nations, after Thailand. The indicators on poverty reduction was 95, climate change response 94, education 91, and energy access 82. Vietnam has been successful in poverty reduction. In the future Vietnam will be known for its successful response to climate change.
A new vision for the Mekong Delta
Prime Minister Nguyen Xuan Phuc told the meeting that the government’s climate change response will ensure sustainability, safety, and prosperity in the Mekong Delta, a fertile region and Vietnam’s biggest rice hub.
He said that over the past five years the Mekong Delta economy grew rapidly, its business environment improved and its poverty rate was lower than the national average.
Prime Minister Phuc pointed out the need for the Mekong Delta to envision its development future.
“The Mekong Delta has to identify its own vision in line with the national vision to 2045. All localities in the region should collaborate to make breakthrough changes in mindset and actions, especially amidst severe climate change impacts, so that it could attain fast and sustainable development and be on a par with other Vietnamese regions in all aspects”, said PM Phuc.
Prime Minister Phuc asked the Ministry of Planning and Investment to coordinate with relevant localities, ministries, sectors and experts to build a development plan for the Mekong Delta, which will be connected with HCM City, for mutual benefits and addressing regional issues.
Government pays attention to the Mekong Delta
The government has reserved resources for developing the Mekong Delta. Prime Minister Nguyen Xuan Phuc approved a proposal of the Ministry of Planning and Investment to allocate 2 billion USD in the next five years to push forward urgent projects on inter-regional infrastructure development, climate change response, fresh water supply, and other pending matters in the Mekong Delta. State budget will invest 8.3 billion USD in the region until 2020.
Prime Minister Nguyen Xuan Phuc emphasized the tasks to be accomplished. “The government will build a strong, effective regional coordinating mechanism for the Mekong Delta. We have not fully tapped the potential of a region of 13 provinces and cities and a population of 20 million people. Agriculture will be restructured on the basis of technology and focusing on processing and consumption market. Production chains and trademarks should be strengthened. Agricultural production should take in to consideration climate change with the spirit of turning challenges into opportunities.”
Prime Minister Nguyen Xuan Phuc agreed with ministries and localities to mobilize various resources to rapidly develop transport infrastructure between the Mekong Delta and Ho Chi Minh city.