BUSINESS NEWS 4/8

Hanoi Gift Show 2019 to feature handicraft products

Hanoi Gift Show 2019 will feature 650 booths of handicraft products, the municipal Department of Industry and Trade announced at a recent press conference.

The event is expected to welcome 10,000 visitors as well as hundreds of importers from many countries and territories.

Vuong Dinh Thanh, Deputy Director of the Hanoi Industrial Promotion and Development Consultancy Centre, said the organising board will continue holding the Match and Meet programme to support business connections.

This year’s programme will see the participation of 1,000 importers and businesses operating in the handicraft industry, he added.

Nguyen Thanh Hai, Deputy Director of the municipal Department of Industry and Trade, said apart from selling handicraft products of export firms and traditional craft villages, the Hanoi Gift Show 2019 will offer new designed products and unique ones with high economic, technical and artistic values.

The show will create a good opportunity for the Vietnamese and Hanoi traditional handicraft sector to promote exports and sustainable development.

Voluntary students who have an insight into the sphere will be arranged to support local businesses connect with foreign customers.

Seminar discusses developing quality tourism workforce

A seminar was held in Ho Chi Minh City on August 2 to discuss developing high-quality tourism workforce amid global integration.

Speaking at the event, Rector of Van Hien University Tran Van Thien described tourism as the top sector in global trade that earns the most foreign currencies and generates the highest number of jobs worldwide. The World Tourism Organisation has forecast that tourism will become the most important economy in the 21st century.

Over the past years, the Vietnamese Government has issued special mechanisms to build a contingent of quality tourism workforce. The domestic tourism sector also used modern technology to improve competitiveness amid the fourth industrial revolution.

Nguyen Anh Tuan, Director of the Institute for Tourism Development Research (ITDR), said the sector has standardised tourism vocational training system to realise the ASEAN Mutual Recognition Arrangement on Tourism Professionals.

Further attention was also paid to data digitalisation, towards improving tourists’ experiences.

Deputy Minister of Culture, Sports and Tourism Ta Quang Dong suggested that the sector develop human resources in adaptation with the fourth industrial revolution.

The Ministry of Culture, Sports and Tourism’s Vietnam National Administration of Tourism reported that the sector needs nearly 40,000 workers each year. However, there are only about 15,000 graduates per year, over 12 percent of them graduates from colleges and universities.

The ITDR has predicted that tourism sector will grow by 7 percent annually during the 2016-2002 period.

Vietnam is now home to over 190 tourism training establishments at different levels.-

WB, Japan help Vietnam improve taxation management

The World Bank (WB) and the State Bank of Vietnam on August 2 signed an agreement worth 4.2 million USD in non-refundable aid provided by the Japanese government to launch a taxation system modernisation project in Vietnam.

The project aims to improve the efficiency of taxation management via a complete risk control and information technology system, and to modernise the tax policy framework.

WB Country Director Ousmane Dione said the project reflects the WB’s greater commitment to partnering with Vietnam to improve the efficiency of State budget expenditure and fiscal reform to propel growth.

It will also help analyse the impact of changes to key taxation policies in line with Vietnam’s tax reform strategy and the best international practices, thus building a legal framework for asset tax imposition.

The aid was funded by the Japanese government via the WB-managed human resources and policy development programme.

Vinamilk continues to lead Forbes Vietnam’s top 50 brands list

Vietnam’s biggest dairy company Vinamilk said on August 2 that it is maintaining the leading position in Forbes Vietnam’s list of top 50 brands in 2019, with its brand value exceeding 2.2 billion USD.

This is the fourth consecutive year Vinamilk has won the top place in the rankings, the company’s leaders said.

The estimated value of Vietnam’s 50 most valuable brands in 2019 rose 1.2 billion USD from last year to over 9.3 billion USD.

Forbes Vietnam said it used the method that its parent magazine in the US uses to calculate a brand’s contribution to business performance.

In June, Vinamilk was the only Asian representative invited to join the 2019 Global Dairy Congress in Lisbon, Spain, to share its experience in developing organic diary products.

According to Kantar Worldpanel’s annual Brand Footprint report in July, the company earned its place as the most chosen beverage brand in both urban and rural Vietnam for seven consecutive years.

Meanwhile, in the fourth annual Asia 300 Power Performers Ranking compiled by the Nikkei Asian Review, it is the only Vietnamese representative included in the top 50.

Int’l East-West Economic Corridor trade fair opens in Da Nang

The International East-West Economic Corridor (EWEC) Trade and Tourism Fair opened in the central city of Da Nang on August 2.

The fair features nearly 500 booths from more than 350 businesses in 18 cities and provinces, along with 11 foreign organisations and enterprises.

On display are electrical and electronic devices, timber products, furniture, handicrafts, jewelry, tourism products, consumer goods, garments-textiles, footwear, pharmaceutical products and cosmetics.

The fair will also include workshops and training sessions.

In his opening remarks, Deputy Minister of Industry and Trade Do Thang Hai said the annual event aims to promote socio-economic achievements and potential for trade, investment and tourism of cities and provinces in central and Central Highlands regions, and Mekong Sub-region countries.

The fair will run until August 7.

Chances of profit from property stocks still ahead

Despite certain difficulties facing the property market, there remain numerous opportunities for investors to earn money from real estate stocks, according to insiders.

At a seminar in Ho Chi Minh City on July 30, Chairman of the HCM City Real Estate Association Le Hoang Chau said it is not a rosy picture in the property market. Since March 7, 2017, when the Prime Minister requested the projects using State-owned land to be reviewed, the market has faced considerable challenges and difficulties.

In 2017, the real estate market grew 4.07 percent from the previous year but began to decline in 2018.

In the first seven months of 2019, the whole market shrank 34 percent in size, including a 29-percent fall in the project number and a 34-percent decrease in the apartment supply. The supply dropped 44 percent in the high-end segment and 34 percent in the pocket-sized segment. Meanwhile, there weren’t any low-end property projects opened for sale in the second quarter.

Between January and July, the Construction Department of HCM City submitted only three new projects to the municipal People’s Committee for consideration, down over 80 percent. State budget revenue from real estate also nosedived more than 60 percent, Chau noted.

He said every cloud has its own silver lining, elaborating that more positive signs will appear in the city’s property market from now to the end of this year, including the implementation of projects in the eastern and southern areas.

Lai Duc Duong, head of the real estate analysis division at the Rong Viet Securities Corporation, said property companies posted relatively good profits last year. In 2019, most of them have recorded lower profit growth while those with faster growth are small-cap firms.

Regarding real estate stocks, short-term investment chances currently focus on businesses with good performance so far this year. In the long term, investors should pay attention to companies with big land reserves, he said, adding that there are five to six firms with very big land reserves for business purposes in the time ahead.

Meanwhile, Director of the KIS Vietnam Securities Corporation Truong Hien Phuong suggested investors pay attention to the companies with flexible switch to developing segments and stable growth. They should also choose appropriate points of time to buy property stocks since the time of purchase is can ensure 50 percent of investors’ success.

RoK shares experience with Vietnam in mobilising private capital

The Republic of Korea (RoK) has agreed to cooperate with Vietnam in sharing experience in mobilising private investments for infrastructure development.

The two sides reached the agreement in a meeting between RoK Deputy Minister of Finance Koo Yun-Cheol and Vietnamese Deputy Minister of Planning and Investment Nguyen Duc Trung in Seoul on July 31.

Koo said private capital mobilisation is necessary for Vietnam to increase industrial production efficiency and improve people’s quality of life.

Trung said the RoK’s experience in the field is useful for Vietnam’s plan in luring more investments from the private sector for the construction of roads, railways and other infrastructure.

In 1995, the RoK allowed infrastructure projects to get capital sources from the private sector. Private investors have so far financed 719 projects worth 114,500 billion won (96.7 billion USD) across the country.

AEON Vietnam promotes local products to help them enter supply chain

Japanese retailer AEON Vietnam Co.,Ltd is seeking to increase the number of local businesses in its supply chain system in Vietnam.

It is holding an exhibition, which opened on July 29, at AEON Mall in Ho Chi Minh City’s Tan Phu district, and worked with 61 businesses who are potential suppliers.

The week-long exhibition showcases products distributed by 24 businesses, including tea, coffee, chocolate, cashew, and dried fruits.

The businesses at the exhibition and meetings can become AEON Vietnam's suppliers if their products are found suitable.

The events are being organised with the help of the Investment and Trade Promotion Centre of HCM City (ITPC).

Pham Thiet Hoa, its director, said the ITPC had informed interested businesses about the technical specifications demanded by AEON and its Top Valu brand, and advised them on packaging and pricing.

"Products good enough for AEON Vietnam means they are good for AEON’s outlets around the world," he added.

Nguyen Anh Ngoc, deputy head of wholesale at DannyGreen Co. Ltd, which distributes Japanese cantaloupe, said if Vietnamese businesses could become a part of major retail chains, they could take their products to more foreign markets and consumers.

"Vietnamese consumers still have a preference for imported goods and perceive them automatically as better than Vietnamese goods.

“However, Vietnamese businesses are striving to export, and the quality of their products has improved greatly.

“The appearance of domestic products on the store shelves of foreign distribution systems is a testament to their high standards."

To improve their competitiveness, especially with foreign goods, it was important to promote them and raise awareness of high-quality local products amongst Vietnamese consumers, she added.

Seo Fumio, chief merchandising officer of AEON Vietnam, said while consumers regard safety as a high priority, many have limited incomes and thus prefer affordable prices.

He commended the ability of Vietnamese businesses to produce high-quality goods, but said many did not know how to improve, something at which they needed to take a look.

ITPC has been organising a number of networking events and exhibitions to help Vietnamese businesses enter big, modern distribution channels.

In early July Thailand’s Central Group, the owner of supermarket chain Big C, notified its 200 textile and garment suppliers about the termination of their contracts, leading to protests from them.

It took a meeting with the Ministry of Industry and Trade for Big C to resume purchases from around 150 of them.

Analysts have expressed worries that foreign brands sold by large foreign retailers are taking market share away from domestic goods.

Vu Kim Hanh, chairwoman of the High Quality Vietnamese Product Business Association, said the situation highlighted the lack of competitiveness of domestic goods.

VPBank posts 44 percent increase in pre-tax profit

VPBank posted pre-tax profit of more than 2.56 trillion VND (110.3 million USD) in the second quarter of the year, a 44 percent year-on-year increase.

VPBank on Tuesday announced its business results in the first half of the year with strong growth in both profit and total operating income, thanks in part to its efforts to improve process and organisation structure as well as labour performance.

Figures released from the bank showed its revenue in the second quarter rose by 11 percent to 8.86 trillion VND.

Credit and deposit growth in January-June increased by 11 percent and 14 percent, respectively, compared to the end of 2018.

Its total operating income in the first six months reached 16.8 trillion VND while pre-tax profit was more than 4.3 trillion VND. These represented 23.3 percent and 23.4 percent year-on-year increases, respectively.

Net interest income was still the main revenue source of the bank in the period, reaching 14.4 trillion VND, with positive contributions from retail, consumer finance and small and medium enterprises.

Notably, net profit from service activities in the second quarter helped maintain strong growth momentum from the beginning of the year, exceeding 1.2 trillion VND, up 104 percent over the same period in 2018 and up 36.8 percent compared to the previous quarter.

As of June 30, VPBank’s consolidated cost-to-income (CIR) ratio reached 35.8 percent, down 2 percent from the previous quarter and at the low level in the banking system. Its revenue-on-total-asset ratio reached 9.7 percent – a competitive level in the market.

In addition, other indexes such as net interest margin (NIM), return on equity (ROE) and return on asset (ROA) were at relatively high levels at 9.4 percent, 19 percent and 2.1 percent, respectively. The bank’s capital adequacy ratio (CAR) according to Basel II’s standard was 11.2 percent – well above the State Bank of Vietnam’s requirement.

VPBank has accelerated efforts to resolve its bad debts at the Vietnam Asset Management Company (VAMC) and expects to resolve all of them by the end of this year. In addition, the rate of bad debts at the bank reduced from 2.6 percent in March to 2.4 percent in June thank to improvements in risk management and application of automatic credit handling.

In the first half of the year, VPBank was given approval from the central bank to apply Basel II which would be a foundation for adjustment of its credit growth from 12 to 18 percent this year.

The bank has been focusing on improving labour productivity, re-organising structure, maximise process and operating systems this year.

Proper strategies needed to limit trade remedy cases

Vietnamese businesses have been advised not to create a massive influx of steel export products to the US market and instead devise a proper export strategy in order to limit the number of trade remedy cases in the future.

The country has so far faced nearly 200 trade remedies cases related to export commodities. These cases mostly involve major markets such as India, the US, the EU, in addition to some emerging ASEAN markets.

Previously, only some commodities with high export turnover such as steel and seafood came under investigation. At present, several goods that have a small export turnover have been looked into, putting duties at risk of being levied by foreign markets.

In addition, the threshold in which to investigate a case has become stricter in recent times in terms of gathering information into the origin of products and tax rates.

According to the results of investigations released by the US Department of Commerce (DOC), from February 2015 to April 2019, the export volume of both corrosion-resistant steel and cold-rolled steel from the country to the US surged by 332 per cent and 916 per cent, respectively.

The DOC came to conclusion that ‘made in Vietnam’ steel products have been produced using substrate of Korean or Taiwanese origin in order to circumvent anti-dumping and countervailing duties imposed by the US.

The imposition of these duties has seen a number of domestic businesses come under pressure from export markets, causing significant financial damage to the Vietnamese steel industry.

Nguyen Thanh Trung, Chairman and CEO of Ton Dong A Joint Stock Company, said that in the past, the nation’s steel products had enjoyed boosts in exports to a number of countries, including many in Europe along with the US.

Recently, the US has been taxing Vietnam and continued to draw up policies of restricting the country’s use of materials from China, the Republic of Korea, and Taiwan.

Trung added that the imposition of anti-dumping duties on steel products imported from Vietnam has had an impact on the operations of local steel producers.

A number of domestic steel factories have suffered restrictions on their export activities to EU nations, the US, and Southeast Asia. This is occurring alongside Vietnam being flooded with a huge influx of Chinese imports.

Businesses in general, and Ton Dong A Join Stock Company in particular, have come under pressure due to the duties being levied by foreign markets. As a result, each business should work out a proper strategy in order to cope with the situation which is likely to last for several years, particularly with the escalation of the ongoing US-China trade war.

Amid complicated developments surrounding trade remedies taken by foreign markets, lawyer Nguyen Thanh Ha, Chairman of SBLaw firm, said the decision by the US DOC has resulted from the pressure put by US producers, who saw a sharp rise in the import quantity of steel products from Vietnam to the US.

Ha noted that this followed the application of safeguard measures adopted by countries, adding that the US has the right to launch investigations in order to apply necessary safeguard measures on steel imports from the nation to protect domestic producers according to its law.

Ha pointed out that if the US chooses to slap a high tax on Vietnamese exporters, it will affect the volume of steel imports coming into the US market, causing a rise in the price of products and a fall in the demands of US importers. In turn, this will certainly exert a negative impact on steel producers in Vietnam.

To limit the cases of trade remedies, domestic businesses should meticulously study regulations on anti-dumping duties and US regulations on trade defense before going ahead and exporting their goods to the US market, Ha stated, adding that they should work closely alongside consulting firms from the US in order to gain a better understanding to aid their export activities.

Ha noted that it would be wise if local firms did not create a massive influx of export commodities into the US market and sell their products at low prices. This is because US producers will immediately respond and implement policies that serve to protect their own domestic production.

Ha, therefore, recommends that Vietnamese enterprises acquire information and improve their knowledge of international regulations and laws through associations.

They must formulate appropriate export strategies in order to avoid anti-dumping duties and other trade remedies imposed by the US, he stressed.

Vietnamese firms lack capacity to join global supply chains

Vietnamese firms in the mechanical engineering outsourcing sector have low competitiveness when joining global supply chains largely due to their small scale, technological shortages, and low productivity.

Statistics from the Ministry of Industry and Trade (MoIT) showed Vietnam has some 1,800 part suppliers. However, only 300 firms, or 17 percent of the total, are in the supply chains of multinational groups.

Notably in the automobile industry, as a result of small scale and low localisation rate, manufacturing costs in Vietnam are about 20 percent higher than that of other countries in the region. The local content of cars in Vietnam is just about 7 – 10 percent, compared to the regional average rate of 65 – 70 percent.

The Ministry of Industry and Trade recently proposed a 100 trillion VND (4.31 billion USD) preferential credit package for the development of the country’s supporting industry.

The ministry aims for the Vietnamese supporting industry products to have high competitiveness, meeting 45 percent of essential demand and local consumption, and accounting for 25 percent of total export value by 2020.

The supporting industry plans to meet 70 percent of local demand by 2030 and to have 1,000 firms capable of supplying products to assembly companies and multinational groups in Vietnam.

Japan – one of four largest importers of Vietnam

Japan is one of the four largest importers of Vietnam, only behind China, the Republic of Korea and the US, according to the latest report by the Industry Agency under the Ministry of Industry and Trade.

Over the years, Japan has assisted Vietnam in human resources training, business management and market development to increase revenue and cut manufacturing costs.

The automobile sector and its supporting industry have posted positive growth under Vietnam’s industrialization strategy within the Vietnam – Japan cooperation framework.

Japanese automobiles firms recorded the highest rate of locally-made products in their Vietnamese factories, reaching 37 percent for the Innova Toyota model. Industrial zones for Japanese small and medium-sized enterprises have been formed in several localities such as Ba Ria – Vung Tau and Ha Nam, promoting the development of the supporting industry for the auto sector.

As part of a project to boost Japanese investment in the supporting industry, a Vietnamese delegation along with eight electronic firms visited the Japanese central prefecture of Ishikawa to attend the 57th Kanazawa mechanical manufacturing exhibition, and learn from Takamaz and Shibuya corporations that are providing equipment for Vietnam.

As a result, three Vietnamese companies were asked to send price quotes while the Japanese side also mentioned the possibility of cooperating with Vietnam in the supporting industry as soon as possible.

Joint work on the supporting industry has also been incorporated into activities by the Vietnam – Japan Cooperation Committee, the Vietnam – Japan Joint Initiative, industrialisation strategy, cooperation programme with the Japan International Cooperation Agency and the Japan External Trade Organisation and investment promotion programmes in Japan.

20 more projects land in Kien Giang

The Mekong Delta province of Kien Giang has recently granted investment licences to 18 investors in 20 projects, worth a total of over 43.38 trillion VND (1.86 billion USD).

Prominent among these are a limestone and clay mining project and a clinker kiln one, both for cement production, run by Siam City Cement Vietnam – a subsidiary of Thailand-based Siam City Group – in Kien Luong district that have a combined investment of 10.89 trillion VND.

The Sun Phu Quoc Co., Ltd. was approved to build An Thoi Eco Urban Area, Suoi Lon reservoir and a water treatment plant, worth a total of 5.1 trillion VND.

The just-approved projects also include Rach Tram eco-tourism complex and residential zone invested by CityLand Phu Quoc, worth 4.9 trillion VND; and Resident Hill Phu Quoc which costs 2 trillion VND.

Kien Giang pledged to further improve local business climate and legal framework and planning for the investors. It also vowed to remove barriers in public administration scheme and provide the investors with preferential policies.

The province aims to create a dynamic, creative and efficient business environment for the investors as it sees their success as its own, said Secretary of the provincial Party’s Committee Nguyen Thanh Nghi. It has been making all possible efforts to offer a better environment for the investors, he added.

Kien Giang will be consistent in implementing investment policies and ensure local supply of human resources and necessary services for the investors. Additionally, it will increase dialogues between local authorities and businesses to address any problem in a timely manner and help projects run on schedule.

Firms advised to better product quality to boost exports to EU

Vietnamese enterprises should improve the quality of their products and meet all the requirements of the European Union to enjoy tariff-related advantages and increase exports to the region, once the recently-signed EU-Vietnam Free Trade Agreement (EVFTA) becomes effective.

The advice was made by Miriam Garcia Ferrer, Head of the Trade and Economic Section of the Delegation of the European Union to Vietnam, at a Vietnam-EU Trade Forum on the EVFTA, which was jointly held by the Ministry of Industry and Trade and the delegation in Ho Chi Minh City on July 30.

She suggested businesses obtain a thorough grasp of market information, rules of origin and regulations of the EU to carry out long-term strategies so as to gain a firm foothold in the market.

Jean-Jacques Bouflet, Vice Chairman of the European Chamber of Commerce in Vietnam (Eurocham), said that with the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA), investment flows from the EU will shift to Vietnam, with the focus on clean energy, agriculture and food production.

He cited a survey of the German Chamber of Commerce in Vietnam as saying that 55 percent of German enterprises operating in the Southeast Asian nation are planning to expand their operation.

The official stressed that European enterprises want to boost the building of production chains with local ones, thus bringing about more cooperation opportunities for local ones to participate in value chains.

To bring into full play these opportunities, Vietnamese enterprises should actively renew their production and management methods to reach standards and development trends of European partners, he suggested.

Speaking at the forum, Deputy Minister of Industry and Trade Hoang Quoc Vuong said that two-way trade increased by 13folds from 4.1 billion USD in 2000 to 55.8 billion USD in 2018, of which 41.9 billion USD came from Vietnam’s exports.

As of late June 2019, 27 European countries and territories invested in Vietnam with 3,205 projects totaling 53.1 billion USD.

Chinese investors target Vietnam assembling industry

Chinese FDI flows are pouring into Vietnam, especially in low added value and labor-intensive sectors, such as the assembling industry, according to Tran Toan Thang, head of the World Economic Department at the National Center for Socio-Economic Information and Forecast (NCIF).

“They are targeting Vietnam’s comparative advantages and preferential treatments from various free trade deals that Vietnam is currently a member of,” Thang said at a conference discussing the impact of the US – China trade war to Vietnam on July 29.

“Chinese investors expect Vietnam to be an ideal investment destination,” added Thang, following uncertainties surroundings the trade war and opportunities emerged from Vietnam’s participation in the EU – Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Trans – Pacific Partnership (CPTPP).

Thang stressed Vietnam’s push for deeper global economic integration through new trade deals is a decisive factor for a shift of Chinese capital, while evidence is still needed to back up the argument that trade war is behind such trend.

Chinese capital averages US$250 million per project, focusing on solar power projects and tire manufacturing. However, “a thorough research is needed to see which sectors are receiving Chinese funds,” he asserted.

“For the purpose of tariff evasion, assembling is their main focus. Chinese investors expect to ship input materials to Vietnam for later exports, especially in less developed sectors in Vietnam,” Thang said.

Under this context, Thang warned that Vietnam would only gain short-term benefits by exploiting the trade war to import cheap input materials from China, but in the long term, this move could backfire and cause negative effects on the economy.

Pham Sy Thanh, director of China Economic Research Program under the Vietnam Institute for Economic and Policy Research (VEPR), predicted China is unlikely to devalue its currency and sell out government bonds.

 

“Investors would face huge risks for making long-term investments in China, as the trade war could drag on for a foreseeable future,” Thanh stated.

“China’s devaluation of its yuan is projected to put huge pressure on its current debts worth trillions of dollars, not to mention it could trigger an exodus of foreign investors from the country,” Thanh added.
Meanwhile, China would rule out selling bonds due to concern of the appreciation of the Yuan, in turn affecting its advantage in the trade war, Thanh concluded.

Disbursement of FDI projects in Vietnam totaled US$10.55 billion in the seven-month period, representing an increase of 6.63% year-on-year, according to a report of the Foreign Investment Agency (FIA).
FDI commitments in the January – July period totaled US$20.2 billion, down 13.45% year-on-year, of which the figure in July amounted to US$1.75 billion.

The data showed that out of 95 countries and territories investing in Vietnam in the seven-month period, Hong Kong (China) took the lead with US$5.44 billion. South Korea came second with US$3.13 billion, while the third and fourth places belonged to Singapore and mainland China with US$960 million and US$440 million, respectively.

In terms of fresh projects in Vietnam in the first seven months of 2019, China was the largest investor pouring US$1.79 billion into 364 projects, followed by South Korea with 600 projects worth US$1.47 billion and Japan with US$1.12 billion in 257 projects.

Debtwire: Loan volumes up in 1H

USD syndicated and club loans raised by Vietnamese entities rose 182 per cent year-on-year in the first half, according to Debtwire, with deals from foreign manufacturers’ local units more than offsetting a fall in loans taken by domestic financial institutions, the traditional visitors to the offshore market.

Loan volumes totaled $3.86 billion across 12 deals in the first half, compared with $1.37 billion in eight transactions in the first half of last year.

Loans to Taiwanese and South Korean companies with manufacturing businesses in Vietnam accounted for 27.1 per cent of the total volume, compared with 11.4 per cent last year.

Among the major deals, Taiwanese plastics-products maker Formosa Plastics obtained two separate loans totaling $750 million for the capital expenditure of its subsidiaries Formosa Ha Tinh Steel and Formosa Industries, while South Korean steelmaker POSCO borrowed $298 million via POSCO SS Vina for refinancing.

Loans taken by domestic financial institutions fell 20.4 per cent year-on-year to $370 million in the first half from $465 million in the first half of last year. VPBank Finance, the consumer-lending arm of the Vietnam Prosperity Joint Stock Commercial Bank (VPBank), closed a $215 million 364-day facility during the first half; the largest in the sector year-to-date. Earlier this month, VPBank printed its maiden $300 million, 6.25 per cent due-2022 high-yield bonds.

Part of the Acuris family, Debtwire provides high value news, data, and analysis on debt markets worldwide. It is the only intelligence service that reports and researches on debt situations before they break in the market. Its solutions span real-time news, in-depth credit analysis, data, covenant research, and specialist coverage of structured finance and municipal bond markets.

Infrastructure developers in Thu Thiem likely subject to extra land fees

The HCMC government will likely require the developers of build-transfer (BT) infrastructure projects in Thu Thiem New Urban Area in District 2 to pay the difference in land fees, which may amount to trillions of Vietnamese dong, as they had earlier profited from prices being far lower than the market prices.

A source told Tien Phong newspaper on Monday that the municipal People’s Committee is checking the prices of land used as reciprocal payments for these BT projects.

The contracts of the projects, which were mostly awarded without bidding, were signed by private contractors taking on infrastructure construction projects in exchange for the right to use one or more plots of land.

In 2013, several local departments advised the city government to set the land prices in line with those in Districts 1 and 7, at around VND35 million (US$1,500 at the current exchange rate) per square meter. However, the leaders at the time claimed the price was not reasonable.

The authorities instead applied the land prices of nearby projects, at some VND26 million (US$1,120) per square meter.

The source cited the findings of the central Government Inspectorate, noting that the city government has to recalculate the land prices of BT projects in Thu Thiem, which were aligned with the prices recorded at the time of land allocation in 2013.

After these calculations are made and compared with the allocated land area, the city government will collect the difference in land fees for the State budget, the source added.

Also, the city government is seeking permission from the central Government to transform vacant resettlement apartments in the new urban area into commercial houses for sale. The move is intended to recover capital and avoid wastefulness.

According to the findings of the Government Inspectorate, contracts, mainly in the BT format, have been signed with the investors for multiple projects. Some typical projects include the ones to develop four key roads with a combined length of 12 kilometers, Thu Thiem 2 Bridge, infrastructure for the northern residential area and the section of the North-South road from Thu Thiem Bridge to Mai Chi Tho Street.

However, there have been shortcomings and violations on the part of the municipal People’s Committee and other relevant agencies during the investment and development processes, leading to long-standing complaints from affected residents.

The city government issued regulations on construction management for the new urban area in an incomplete and untimely manner.

Further, the local authority had neither set up transport and technical infrastructure projects in order of priority nor submitted or approved them in line with regulations and the prime minister’s instructions.

Instead, the authority only set up, submitted and approved projects with investors, without considering their order of priority.

These violations resulted in plans for and investment in sketchy projects, which were delayed and not managed well.

The city authorities’ proposal to fix the price of land at VND26 million per square meter was “inappropriate,” according to the inspectorate.

Also, the interest for the amount of money advanced by the city government while constructing the new urban area project was not factored into the land price, leading to losses for the city.

The inspectorate stated that the investors in these BT projects had earned large profits owing to the massive gap between the city-approved land price and the market price.

Therefore, the watchdog required the city government to retrieve and return more than VND26 trillion (US$1.1 billion) worth of State funds that it had wrongly channeled into the execution of the Thu Thiem project to the State budget by the end of this year.

Kaizen invests US$10 million in YOLA

Kaizen Private Equity (Kaizen PE), the specialized education fund manager in emerging markets, on July 29 announced a US$10 million investment in YOLA, a leading education company focused on teaching English programs embedded with life skills and knowledge for students in Vietnam.

YOLA is Kaizen PE’s first investment in Vietnam.

“We expect the Vietnamese education sector to continue growing strongly over the next five years and are delighted to have YOLA become our first investment in the country. We look forward to more transactions in the near future,” Sandeep Aneja, founder and managing partner of Kaizen PE, remarked in a statement.

Vietnam spends some 8% of its GDP on education annually, according to the Vietnam Ministry of Education and Training. The government has a strong focus on pursuing educational goals, committing 20% of the State budget to education every year.

“We are impressed by the importance of education in Vietnamese culture, and the outstanding results that Vietnam has obtained in terms of school attendance, completion and student achievement,” Aneja stated.

Kaizen PE’s funding is the second private equity capital round YOLA has received. In 2016, Vietnam-focused fund manager Mekong Capital invested US$4.9 million in the company.

Aneja went on to say that together with the company's online content platform, delivering a blended learning experience to students, the company’s focus on academic English with a well-researched knowledge-based curriculum taught by competent foreign and Vietnamese teachers are aspects that differentiate YOLA strongly from other providers in the market.

“We are excited to join forces with YOLA and with Mekong Capital to provide a strong English language foundation for more Vietnamese students, enabling them to reach their full potential and preparing them for global success,” Aneja added.

YOLA was cofounded by Ngo Thuy Ngoc Tu (chairwoman), Pham Anh Khoa (CEO) and a few other Vietnamese overseas alumni.

Khoa noted that within the past 10 years, YOLA has empowered thousands of students in Vietnam to unlock their full potential, allowing them to realize their dreams and positively contribute to society.

“By partnering with Kaizen Private Equity, one of Asia's most active education investors, YOLA gains a partner whose vision of educational and social impact is aligned with ours, and we are excited to work together to continue to deliver on our mission of educating 500,000 students," Khoa stressed.

Kaizen Private Equity invests exclusively in educational institutions and companies in South and Southeast Asia.

The firm manages two equity funds with assets greater than US$150 million across several transformative education companies in the region.

YOLA has a network of 14 campuses in HCMC and Hanoi, with more than 30,000 students.

Bond market proves efficient capital mobilization channel

Local securities exchanges saw liquidity drop, as the trading volume reached only 220 million stocks per session while the average stock value posted VND4,500 (US$19.35 US cents), rising annually by 27 per cent in volume and 44 per cent in value, respectively.

Meanwhile, the corporate bond market thrived during the six-month period. As much as VND89.483 trillion (US$3.84 billion) were raised via corporate bond issuance, equivalent to 134 per cent of the figure seen in the corresponding period last year.

By June 24 2019, the corporate bond outstanding represented 10.22 per cent of the country’s 2018 GDP, higher than the 8.6 per cent ratio seen at the end of 2018.

As many as VND102.373 trillion (US$4.4 billion) were mobilized from the issuance of Government bonds (G-bonds) by June 21, or 33.4 per cent of the figure set for 2019.

According to the Ministry of Finance, the proportion of G-bond holders has improved with non-banking financial institutions occupying 53 per cent of the total G-bonds issued, a slight rise of 0.8 per cent against the end of 2018.

Analysts noted that growing concerns about ongoing trade disputes and subsequent adverse impacts on the global growth had led to the withdrawal of capital from high-risk investments such as securities, thus hampering stock markets worldwide.

Domestically, the State Bank of Vietnam has pursued tight credit growth and closer watch of capital inflows into risky fields such as real estate and securities, thereby raising concerns about relevant risks.

Some analysts voiced their opinions that the slowdown of the domestic securities market was caused by a number of investors seeking higher profits from other investment channels, namely gold bars and bank deposits.

Others noted that investors have been hard-pressed to outline explicit investment strategies as most potential stocks have reached the peak while allegedly profitable stock codes of firms operating in the fields of apparel, aquatic product processing, and export, are posing high risks.

Despite this, experts have placed high hopes on the securities market that would remain the most significant magnet, elaborating that investors are waiting for better chances to purchase more stocks.

Vietnam aims for better pharmaceutical market

After 10-years of a campaign to promote the purchase of domestically-produced products, the local pharmaceutical industry has seen some impressive improvements. Domestically-made drugs have met nearly half the demand of Vietnamese people in the treatment and prevention of diseases. Vietnam also successfully produced 12 out of 13 types of vaccines used nationwide.

According to the Drug Administration of Vietnam, under the Ministry of Health, the usage of domestically-made drugs at medical facilities has improved from 46.62% in 2013 to 63.53% in 2018. Domestic production consists of mostly generic drugs produced for domestic consumption and outsourcing for foreign enterprises. However, the reality in many central-level hospitals in big cities is not very positive.

Thu Hang from Dong Da District, Hanoi, said her prescription cost VND700,000 (USD30) because four out of five drugs were imported. Domestically-made drugs would only cost VND200,000 but Hang said she'd rather pay more money to get better quicker.

Both patients and doctors prefer imported drugs than locally-made drugs. Deputy Minister of Health Truong Quoc Cuong said in central hospitals including Bach Mai and Vietnam-Germany hospitals, the usage of locally-made drugs is below 10%. Moreover, those hospitals often use special drugs for anaesthesia, cardiovascular, and cancer treatment which domestic companies have not been able to make.

Doan Dinh Duy Khuong, director of DHG Pharmaceutical JSC said in order to make it into central hospitals where patients in critical conditions are being treated, locals firms must aim for higher standards, better-quality materials and to ensure that their management system works efficiently.

The campaign to promote greater use of domestic product’s goal is to have a 22% rate of domestically-made drug usage in central hospitals in 2020.

According to Cuong, in order to achieve the goal, they will need co-operation from many agencies and have simultaneous solutions to support firms and encourage people to buy local drugs. The usage of local drugs should be included in the criteria for assessing hospital quality annually.

He went on to say that they must have policies to attract foreign pharmacies to build plants in Vietnam.

However, more importantly, local firms must work harder to improve drug quality at suitable prices.

PM asks for prompt design of middle-term public investment plan

Prime Minister Nguyen Xuan Phuc has asked ministries, ministry-level and central agencies as well as centrally-run localities to make middle-term plans for public investment in 2021-2025.

In a directive issued on July 29, the PM said the objective of the plan is to attract and optimise resources for economic development and infrastructure expansion, thus completing goals set for 2021-2030 as well as the socio-economic development plan for the 2021-2025 period.

Public investment should focus on speeding up national target programmes and major projects significant to socio-economic development of the whole country, as well as supporting ethnic minority group and mountainous regions, and disaster-prone and poor areas, asked the PM.

He stressed that public investment should not be poured into projects in which other economic sectors can invest.

Ministries, sectors and localities should mobilise more resources from other economic sectors, especially the private sector through public-private partnerships.

Under the directive, the designing of public investment plan for 2021-2025 should be suitable to the financial plan for the period. The capital will not be spent in programmes and projects in areas that are not covered by public investment.

Ministries, sectors and localities were requested to define prioritised areas for investment, while focusing on paying pre-paid capital from the State budget as scheduled.

According to the directive, agencies should prepare capital for the investment plan in 2020 and the 2021-2025 period, and to pay debts for capital construction arisen before January 1, 2015.

Tra Vinh applies advanced technology in super-intensive shrimp farming

The Department of Agriculture and Rural Development of the Mekong Delta province of Tra Vinh is running a high-tech project to boost the capacity of the local super-intensive farming model for white-leg shrimps.

The model is called super-intensive farming as the number of shrimps farmed is up to 250 per square metre, compared with 50 in traditional models. Farmers thus harvest 40 tonnes per hectare per crop, seven to eight times higher than in traditional models.

Nguyen Van Phung, deputy head of the department’s Agricultural Extension Centre, said the project is being piloted in two farms in Duyen Hai district, with encouraging initial outcomes.

The project uses an automatic monitoring system with sensors to check the water PH, alkalinity and oxygen levels as well as temperature at shrimp farms. All indexes are then sent to be analysed and stored. Farmers can keep track of their farms via computers and smartphones.

Nguyen Nhat Hoang, who runs one of the two pilot farms, said he is raising 200 white-leg shrimps per square metre across a water surface that spans 1,500 square metres. His shrimps are now 90 days old and will be harvested in about 30 days, with an estimated yield exceeding 5.6 tonnes per hectare.

Hoang said the monitoring system helps farmers remotely manage their farms in terms of weather conditions and water environment.

Last year, the province produced 45,000 tonnes of brackish water, white-leg and black tiger shrimps.

With its 65km coastline, Tra Vinh is looking to increase its brackish water shrimp output to 70,640 tonnes by 2020 and more than 103,300 tonnes by 2030.

VN-Australia venture invests 30 mln USD in marine farming in Kien Giang

A marine farming project worth 30 million USD has been licensed in principle in the southern province of Kien Giang, expected to produce 30,000 tonnes of saltwater fish for export each year.

The seafood farming centre, invested by Mavin Group – a joint venture between Vietnam and Australia, will cover 2,000ha of water surface off the coast of Kien Hai district to farm the fish species with high value like bass, grouper and Trachinotus blochii.

Mavin said the project, scheduled to become operational in 2021, will apply modern marine farming technologies.

Environmental protection and origin traceability will also be ensured to meet the European Commission’s recommendations to Vietnam about fighting illegal, unreported and unregulated fishing, thus facilitating the project’s exports.

Aside from this project, Mavin has also inked memoranda of understanding on several others with Kien Giang province, including a breeding centre for mariculture, a factory producing food for aquaculture, and a seafood processing plant.

The total investment in these projects amounts to US$50 million, the firm said, noting that they will help it complete the production chain to optimise the manufacturing process and minimise cost.

They will also help turn Kien Giang into a major marine fish farming and processing hub in Southeast Asia, Mavin added.

Aside from marine farming, this group is investing in some freshwater fish farming facilities in the Hoa Binh and Tuyen Quang hydropower reservoirs in the northern region. It is also running several animal feed, veterinary medicine and food processing factories in the provinces of Hung Yen, Ha Nam, Nghe An, Binh Dinh, Tien Giang and Dong Thap.

Can Tho city works to foster economic ties with Russia

The Mekong Delta city of Can Tho introduced its advantages and cooperation prospects at a conference in Moscow on August 2 in an effort to boost investment, trade and tourism links with Russian businesses.

Opening the event, Vietnamese Ambassador to Russia Ngo Duc Manh said this was the first time Can Tho had held such conference in the European country to seek cooperation opportunities with local partners.

As the capital of Vietnam’s southwestern region, Can Tho is a production hub of not only rice but also fruits and aquatic products. Its people are also known for their hospitality, he said, voicing his belief that Vietnam-Russia relations, especially locality-to-locality ties, will develop more and more strongly.

With its advantages, Can Tho has sufficient conditions and potential for effective cooperation with Russian localities, the diplomat added.

Vice Chairman of the municipal People’s Committee Nguyen Thanh Dung stressed that his city’s administration and businesses will create the most optimal conditions for partnerships with Russian enterprises to generate the best results.

Since the free trade agreement between Vietnam and the Eurasian Economic Union (EAEU) took effect, bilateral trade has grown considerably, with the Mekong Delta, including Can Tho, supplying a large volume of aquatic products for export.

Dung noted that Can Tho exported 1.6 million USD worth of goods to Russia in the first half of 2019, and the city is not satisfied with this outcome.

Can Tho wishes to attract more investment in high-tech agriculture, electronics manufacturing, tourism and rice and aquatic export with Russian companies, Dung added.

For his part, President of the Russian-Asian Union of Industrialists and Entrepreneurs Vitaly Mankevich highlighted Russian and Vietnamese businesses’ mission of raising bilateral trade to 10 billion USD in 2020 as targeted by the countries’ leaders.

He spoke highly of Can Tho’s strengths and believed that through practical activities like this investment promotion conference, the two sides’ businesses will find out the starting point for their partnerships.

At the event, many Russian firms expressed their attention to cooperation in tourism, aquaculture and seafood processing with the city.

Enterprises from the two sides also inked several memoranda of understanding on cooperation in information sharing, trade promotion, rice bran and rice bran oil trading, logistics, infrastructure building, export of glucozamin extracted from shrimp shell to Russia, aquaculture, and seafood and farm produce trading.

HCM City calls for Singaporean investment in infrastructure, environment

Ho Chi Minh City is keen to bolster cooperation with Singapore in various fields, especially infrastructure and environment, Vice Chairman of the municipal People’s Committee Vo Van Hoan said on August 2.

Hosting a reception for Kow Juan Tiang, Deputy Executive Director of Singapore’s Infrastructure Asia in the city, Hoan further said that the locality is a major urban area with fast development and facing many challenges, notably the slow infrastructure growth.

The city has fostered infrastructure investment in recent years, he added. To date, there have been 210 projects with a combined capital of 53.8 billion USD in the spheres of traffic and agricultural infrastructure, trade, services, urban planning, education, health care, culture-sports and tourism-entertainment.

In addition to infrastructure development, municipal leaders have called for investment to wastewater and solid waste treatment, Hoan noted, stressing that the city also wants to have modern and sustainable technologies in the field.

For his part, Kow Juan Tiang affirmed that Singapore and HCM City have nurtured a sound cooperation over the time. With its experience, financial potential and a global network on infrastructure development, Singapore hopes to join the city’s infrastructure projects.

Regarding the environment sector, Singapore is also willing to cooperate with, share experience and support HCM City in ability assessment and investment attraction in the coming time, he said.

Denmark’s pump products on display in Hanoi

An exhibition of pumps and pumping solutions of Danish manufacturer Grundfos was opened in Hanoi on August 2.

The event, first of its kind in Hanoi, is designed to introduce durable, energy saving products for high-rise trade buildings and water plants, as well as industrial and civil pump products.

Speaking at the exhibition, General Manager of Grundfos Vietnam Nguyen Xuan Thang said the Danish manufacturer will continue its efforts to create smarter products and solutions for consumers.

Meanwhile, Deputy Head of Mission at the Embassy of Denmark in Vietnam Louise Holmsgaard underlined that Denmark is among leading countries in technology and green and sustainable development.

The diplomat further said climate change and its impact, including floods, drought and increasing energy prices, have become a global concern.

Current challenges require governments and the private economic sector to closely cooperate and bring forward modern and sustainable solutions and technologies, she added.

Visitors of the exhibition will be able to join discussion with Grundfos experts about water drainage, treatment and supply for trade buildings.

10-year campaign promotes development of made-in-Vietnam products

Politburo member and permanent member of the Party Central Committee’s Secretariat Tran Quoc Vuong has asked for more efforts to make made-in-Vietnam products dominate the domestic market and gain a firm foothold overseas.

Addressing a conference in Hanoi on August 2 to review the 10-year implementation of the “Vietnamese people prioritise using made-in-Vietnam goods” campaign, Vuong acknowledged the efforts of the entire political system to engage people from all walks of life.

He noted that more challenges lie ahead such as growing competition on the domestic market, especially when the country implements bilateral and multilateral agreements it has signed.

The strong development of science-technology also has huge impacts on production, business and consumption, and consumers have more choices and stricter requirements for products, he stated.

Therefore, it is necessary for enterprises and producers to continuously renew themselves and apply advanced technology in production to increase the quality of products, he stressed.

Sharing the same view, Deputy Prime Minister Trinh Dinh Dung voiced his hope that Vietnamese businesses should seek ways to improve the quality and competitiveness of their products and services, build their brands, and deliver on their commitments to ensuring consumers’ interests.

He suggested ministries, sectors and enterprises focus on domestic trade promotion, better the distribution network, and issue goods standards in accordance with international commitments to gradually control imported products and market order.

It is also important to strengthen market management and strictly handle the trading of counterfeit products, violations of intellectual property, and illegally-imported commodities, he added.

Speaking at the conference, President of the Vietnam Fatherland Front Central Committee Tran Thanh Man said that the Political Bureau launched the campaign 10 years ago to promote patriotism and foster the production of made-in-Vietnam commodities which have high quality and competitiveness, helping to meet demand for domestic consumption and export.

The campaign has produced positive results, contributing to curbing inflation, stabilizing the macro-economy and ensuring supply-demand balance.

Statistics of the Ministry of Industry and Trade show that the proportion of made-in-Vietnam products reaches at least 90 percent at supermarkets, and over 60 percent at traditional markets and convenience stores.

Total goods retails and services revenue has grown by 10 percent each year since 2009, while inflation has reduced from 19.8 percent in 2008 to below 5 percent in recent years. The economy has shifted from trade deficit to trade surplus. If the country reported a trade deficit of 12.5 billion USD in 2010, it enjoyed a trade surplus of 7.2 billion USD last year. The localization rate has also increased significantly in several major industries, such as garment and textiles and footwear over the past years.

Ba Ria-Vung Tau keen to bolster trade, investment ties with Europe

Opportunities to enhance trade and investment ties between the southern province of Ba Ria-Vung Tau and Europe offered by the EU-Vietnam Free Trade Agreement (EVFTA) were discussed at a seminar on August 2.

The event in Vung Tau city attracted more than 100 delegates from the Ministry of Foreign Affairs, Ba Ria-Vung Tau province, the European Chamber of Commerce in Vietnam (EuroCham), along with Vietnamese and European businesses.

Deputy Foreign Minister Bui Thanh Son said the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA), both signed on June 30, open a “new horizon” for stronger, extensive and comprehensive cooperation between Vietnam and the EU, meeting the demand of their localities, businesses and people.

To effectively implement the two deals, the Vietnamese Prime Minister has requested ministries, sectors, localities and enterprises to make thorough preparations and stay active to optimise the benefits generated by the two agreements, especially the EVFTA – one of the first new-generation FTAs to be carried out in Vietnam, he noted.

EuroCham Vice Chairman Jean-Jacques Bouflet said the EVFTA is the result of unceasing efforts by both Vietnam and the EU, affirming that it is an important milestone on the path to a broader trade agreement with the Southeast Asian region.

European businesses consider Ba Ria-Vung Tau a key locality for cooperation activities once the EVFTA is ratified and takes effect, he said, noting the evidence that nearly 40 European firms attended the seminar.

Introducing local advantages, Secretary of the Ba Ria-Vung Tau provincial Party Committee Nguyen Hong Linh said the province has enough confidence to welcome investors from Europe as it owns good infrastructure, including a system of modern deep-water ports able to handle vessels of 200,000 DWT.

It also boasts many comparative advantages compared to other localities in the southern key economic region. Some of the world’s leading businesses have invested in many big projects in the province, which also holds considerable tourism potential.

Linh said Ba Ria-Vung Tau pledges to enhance cooperation with foreign agencies and organisations, continue improving the local investment climate to create the best possible conditions for foreign firms, and accompany businesses and investors on the path of development and integration.

At the seminar, participants looked into issues related to seaports, seaport logistics, industry, hi-tech agriculture and high-quality tourism, which are also the fields in which Ba Ria-Vung Tau can make use of chances under the EVFTA. They also discussed the province’s attraction of and support for investors.

By the end of June this year, Ba Ria-Vung Tau had attracted more than 300 FDI projects whose registered capital approximates to 30 billion USD, including 68 projects worth 3.5 billion USD invested by European enterprises.

 
 
 
 
 
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