Forestry product exports fetch $4.25 billion in five months
The export value of forestry products in the first five months of 2019 hit 4.25 billion USD, up nearly 20 percent year-on-year, according to the Vietnam Administration of Forestry under the Ministry of Agriculture and Rural Development (MARD).
In May alone, the country raked in 959 million USD from forestry product exports, reported the administration.
The US, Japan, the European Union (EU), China and the Republic of Korea remained the largest importers of Vietnamese forestry products, accounting for some 87 percent of the industry’s total export value.
Meanwhile, its total import turnover of wood and wooden products in the reviewed period reached 1.01 billion USD, 16 percent higher than that of the same period last year.
Hence, Vietnam’s forestry export enjoyed a trade surplus of 3.24 billion USD in the first five months of 2019.
To ensure its growth target in the first half of 2019 in the context of widespread effects of African swine fever, the agricultural sector aims to increase forestry production value from 6-8percent, focusing on increasing the volume of exploited timber to meet the processing needs of the wood industry.
The sector planted 75,200 ha of forest in the first five months, equivalent to the same period last year. The volume of exploited wood is estimated at 7.86 million cu.m, up 5.2 percent over the same period in 2018.
The Voluntary Partnership Agreement on Forest Law Enforcement, Governance, and Trade (VPA/FLEGT) between Vietnam and the EU officially took effect on June 1, 2019. It shows the commitment of Vietnam and the EU to promoting the implementation of the "Trade and Sustainable Development" programme in the framework of the EU-Vietnam Free Trade Agreement.
To promote export of forestry products to the EU as well as other markets, the MARD has established the Vietnam Forest Certification Office (VFCS), which will serve as a bridge to promote cooperation with international forest certification organizations and relevant organisations to operate the national forest certification system, and implement forest certification activities in Vietnam.
Last year, the country raked in some 9.3 billion USD from shipping forestry products to foreign nations.
Vietnam is now home to 4,500 enterprises specializing in processing and exporting wood and forestry products. They include more than 700 foreign-invested businesses with a large production scale and application of advanced technology for production.
Vietnam earns 662 million USD from rubber exports
Vietnam earned 662 million USD from rubber exports in the first five months of the year, a year-on-year increase of 2.4 percent, according to the Ministry of Agriculture and Rural Development.
China, India and the Republic of Korea were three biggest buyers, it said.
Exports to these markets all increased sharply in the first four months with exports to India enjoying the highest rise of 29 percent.
Overall exports in the first four months went up 13.7 percent to 556.9 million USD.
But they plunged in May to just 105 million USD.
China is by far the biggest importer of Vietnam’s natural rubber, accounting for some 60 percent of volume, most of it used to produce tyres, analysts said.
Therefore, the US’s imposition of high taxes on automotive components imported from China has impacted Vietnam's rubber exports to China, they said.
The Ministry of Agriculture and Rural Development has urged rubber producers and exporters to diversify their products and look for other export markets to reduce the reliance on China.
They should focus on the Indian market, whose tyre industry has developed rapidly but lacks local rubber supply, it said.
The Vietnam Rubber Group (VRG) will work to have Forest Stewardship Council (FSC) certifications for all of its rubber forests as part of the sustainable development programme for 2019-2024 tenure.
The VRG plans to zone off 5,000 ha of forest land in its rubber project area for regeneration, and encourage its members to apply clean production and sustainable management measures to further develop the VRG brand.
In the last seven months of 2019, the group will update its regulations on social and environmental responsibility and recruitment policies, and approach the FSC standards.
According to VRG Chairman Tran Ngoc Thuan, the sustainable development programme is a must in the context of global integration as most of the importers require products to have clear origins and FSC certification, which ensures products come from responsibly managed forests that provide environmental, social, and economic benefits.
The country has one million hectares under rubber.
Vietnam is the third biggest natural rubber exporter, shipping over 1.5 million tonnes annually to more than 70 countries and territories.
In 2018, exports fetched 2.1 billion USD, a 6.6 percent decline from 2017.
Korean start-ups seek investment opportunities in Vietnam
An event was held in Ho Chi Minh City on June 3 to help start-ups from the Republic of Korea (RoK) to seek investment opportunities in Vietnam.
The event, entitled “Business Model Demo”, was co-held by the Saigon Innovation Hub (SIHUB) and Shinhan Future’s Lab of the Shinhan Bank. It is among events to kick off the “Runway to the World” in Vietnam this year.
Korean start-ups will meet with potential investors and partners to look for development in the Vietnamese market.
Representatives ofthe Shinhan Future’s Lab said the firms coming to Vietnam this time were chosen from more than 100 start-ups participating in the “Runway to the World” programme in the RoK.
The “Runway to the World” aims to link local start-ups with organisations and start-up ecosystems in North America, Western Europe, North Asia and the Asia-Pacific.
It fosters Vietnamese start-ups while selecting suitable foreign start-ups to explore, research and launch trade activities in Vietnam.
Vinalines buys backs 75 percent stake in central port
State-owned Vietnam National Shipping Lines (Vinalines) has paid 415 billion VND (17.8 million USD) to reacquire a 75 percent stake in Quy Nhon Port JSC, which it had sold illegally to Hop Thanh Investment & Mineral JSC without the Government’s approval.
The Vietnam Depository Centre has recorded the transfer of ownership to Vinalines. The shipping group will take over the port management from this month.
“Vinalines has paid 415 billion VND, equal to the amount that Hop Thanh spent to buy a 75 percent stake in Quy Nhon Port from Vinalines,” Tran Tuan Hai, head of Vinalines’ communication division, told Giao Thong (Transportation) newspaper.
Hai said the money Hop Thanh had invested in the port after the share purchase would be calculated through an independent asset valuation process.
Vinalines has also arranged personnel in Quy Nhon Port’s management board and would take over control of the port in its annual shareholders’ meeting at the end of this month, he added.
Quy Nhon Port, located in Binh Dinh province, is a major port in the central coast with a storage network of nearly 21,000sq.m of warehouses and 48,000sq.m for containers. Last year, a record eight million tonnes of goods passed through the port.
In 2013, the port was transformed into a joint stock company with charter capital of more than 404 billion VND, of which Vinalines owned more than 75 percent stake.
Vinalines was reported to sell these stakes to private company Hop Thanh Investment & Mineral JSC which had no prior experience in operating a port for lower market price during 2013-2015.
Last September, the Government Inspectorate concluded the deal violated the law as the Ministry of Transport authorised the sale without the approval of the Prime Minister. The inspectors requested Vinalines to recover the stakes sold to Hop Thanh.
Vinalines reported net revenue of 2.9 trillion VND (124 million USD) in the first quarter of this year, down 10 percent year on year.
Sichuan, Vietnam to promote tourism
Sichuan is looking for more tourists from Vietnam in the near future, according to Dou Wei Ping, vice director of the Sichuan Department of Culture and Tourism.
He stressed the desire to co-operate with Vietnam to boost the tourism industries of the two countries during a conference hosted by the Chinese Embassy in Hanoi and the Vietnam Administration of Tourism (VNAT).
“There are direct flights from Hanoi and HCM City to Sichuan,” he said. “In the near future, with direct flights connecting Da Nang and Nha Trang to Sichuan, we believe that we can have more tourists from Vietnam and vice versa.”
Dou said Vietnam has many beautiful destinations that attract Sichuan people, for example Ha Long Bay in Quang Ninh Province and Trang An Complex in Ninh Binh Province.
“I had a chance to visit Hanoi and the Old Quarter, I realise that there are many similarities between people in Hanoi and Sichuan,” he said.
“With effort to lure more Vietnamese tourists to Sichuan, we have special offers for travel agents and businesses from Vietnam, we will also organise some familiarisation trips for travel companies and press from Vietnam to visit Sichuan.”
For his part, Ha Van Sieu, vice chairman of the VNAT, said he also had a business trip to Sichuan and acknowledged that there are many big attractions to tourists in general and Vietnamese people in particular.
“I feel impressed with destinations of Sichuan, especially the World Heritage Sites such as Giant Panda Breeding Research Base, Jiuzhaigou Valley and Leshan Giant Buddha,” he said.
“It takes only two hours to fly between Sichuan and Việt Nam. With close distance and culture, we have many good conditions to boost tourism of the two sides.”
Early this month, the VNAT hosted a conference to introduce Vietnamese tourism in Sichuan. The VNAT and the Sichuan Department of Culture and Tourism signed an agreement to co-operate to promote tourism on May 17.
In 2018, Sichuan received 700 million tourists totally, according to Bai Shi Tuan from Chinese Embassy to Vietnam.
South Korean startups seek investment opportunities in Vietnam
Five most successful startups were selected from more than 100 South Korean firms to introduce their best projects at the Saigon Innovation Hub (SIHUB) under the Ho Chi Minh City Department of Science and Technology on June 3.
The startups include StyleSeller, a collaborative business model where real product users can earn extra income from introducing trusted product brands; BluePrintLab, which provides an application to improve shopping experiences for fashionable eyeglasses; ABC Studio, which operates the B.Box online trading floor with a goal of bringing cosmetics and household products made in Korea to customers in Southeast Asian region; Choose Your Model (CYM), which connects manufacturers or online shop-owners with the need of owning photos to promote high quality products with a network of famous photographers and models in the world; and Yolo – a real-time object detection system aims to advise global sellers on top trending items for each specific market.
This event aims to connect potential markets and investment opportunities.
Wood exports to EU expected to increase
The Vietnam-European Union Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (VPA/FLEGT) came into force on June 1 and is expected to create easier access for Vietnam’s wood exports to the EU market.
Under the VPA/FLEGT, Vietnam has pledged to develop and employ a timber legality assurance system, in line with the European Union’s requirements.
The system is aimed at tracing the origins of wooden products so that local agencies can issue FLEGT licenses for woodwork shipments to the European Union.
The VPA/FLEGT, after six years of negotiations, will help the local wood sector expand its markets, strengthen forest governance, address illegal logging and promote trade in verified legal timber products, contributing to the sustainable development of the wood processing sector.
At a recent seminar on the wood trade, Nguyen Tuong Van, deputy director of the Department of Science, Technology and International Cooperation, under the Ministry of Agriculture and Rural Development, stated that enterprises planting forests and supplying, processing, trading and exporting wood and wooden products will be divided into two groups: compliance and noncompliance with the law.
Enterprises in the first group do not have to submit export papers to the forest management agencies. The rest must have 20% of their exports checked by forest rangers.
Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said the first wood shipment under the FLEGT license is expected to be exported to the European Union in June next year.
According to the Vietnam Timber and Forest Products Association, the European Union is one of five key import markets of Vietnamese wood and wooden products.
Last year, Vietnam exported US$785 million worth of wood and wooden products to the European Union, up 3% year-on-year and accounting for 9% of the country’s total export revenue. Up to 87% of wooden products shipped to the European Union were processed products with high added value.
Fruit, vegetable exports to China rise
Vietnam's fruit and vegetable exports to China in April rose by a staggering 43.8% month-on-month to more than US$364 million, having stagnated earlier this year, Thanh Nien reports.
Compared to the year-earlier period, Vietnam’s April shipments of fruit and vegetables to China also skyrocketed by 39.2%, the newspaper reported, citing statistics from the Ministry of Industry and Trade.
As such, in the first four months of 2019, Vietnam shipped a total of US$1 billion worth of fruit and vegetables to the northern neighboring market, up 4.3% year-on-year.
Latest data on sales of fruit and vegetables to China in May is not available, but the Ministry of Agriculture and Rural Development said in a report that the country’s outbound sales to China continued its upward trend. In the first five months Vietnam’s earned US$1.8 billion from fruit and vegetable exports in total, up 10.3% year-on-year.
Even though the farm produce shipments to the United States, South Korea, Japan and the Netherlands have performed well, China remains Vietnam’s largest fruit and vegetable buyer, accounting for 75%-80% of the latter’s total fruit and vegetable export revenue over the past few years.
Due to strong reliance on the market, Vietnam’s fruit and vegetable exports are affected easily and heavily by changes and uncertainties in China.
China has tightened control over informal imports and switched to formal imports of farm produce, imposing various requirements on origin traceability, import licensing and product quality, according to the Ministry of Industry and Trade.
The new regulation heavily affected Vietnam’s outbound sales of fruit and vegetables in the first three months.
Time to map out a safety mode for husbandry sector
The crisis is deepening day in day out as African swine fever (ASF) has taken a toll on the husbandry sector in the country. On Friday, the Ministry of Agriculture and Rural Development reported the deadly virus had spread to 48 out of the nation’s 63 provinces and cities, and on Saturday, Ca Mau became the 49th ASF-hit province. The rapid-fire spread of the disease throughout the country requires quick measures to ensure safety for the dwindling pig herd.
The ministry noted that over two million infected pigs have been culled, accounting for 6.5% of the national total. Damages are not only confined to the number of pigs culled, but also the free fall of pig prices as consumers are shunning pork products, causing heavy losses for farmers.
At a regular monthly meeting of the Government on the same day, Prime Minister Nguyen Xuan Phuc warned that as husbandry accounts for 10% of gross domestic product from agriculture, the entire sector will see a zero growth rate if ASF outbreaks hit 30% of the total herd. That scary scenario is by no means a distant possibility, given the unstoppable spread of the disease in recent months. And that grim reality requires concerted efforts to create a safety mode for the country’s husbandry sector.
The key reason behind the quick contagion is the loosely-controlled transport of pigs from ASF-affected areas to other places free from the disease, causing outbreaks to multiply. To make matters worse, many households have dumped their dead pigs in public places or simply thrown the carcasses into springs, streams or rivers, polluting the environment and facilitating the spread of the virus.
Those ignorant behaviors were anticipated early on, and from the very beginning, authorities were determined to tighten control over pig transport on one hand, and pledged to financially support affected farmers. However, all those solutions for the most part have turned out to be lip’s service, and infected pigs are still transported from one province to another, while dead pigs are simply thrown away as farmers cannot wait for compensation.
Such loopholes need to be patched up quickly, with financial resources made ready for rescue efforts before damages go beyond control.
The agriculture ministry’s report on ASF outbreaks last Friday also gave a noteworthy insight into the crisis: most, if not all, ASF outbreaks have occurred at household, small-scale herds, while large-scale pig farms have so far remained intact. The reason is that small herds raised at households are more exposed to risks of diseases due to the absence of preventive measures, while owners of large-scale farms attend more to such risks and properly invest in such preventive measures.
Apart from ASF outbreaks, several major epidemics on pigs in the recent past have mainly happened to household, small-scale herds, including foot-and-mouth or blue-ear diseases. Such facts cannot be ignored, and if so, the next measure to take should be to impose new preventive criteria on all small-scale herds. Anyone wanting to engage in husbandry activity should be required to meet facility criteria and hygiene standards on par with those deployed at large-scale farms.
Remedial measures to tighten control over disease outbreaks as well as new criteria for facilities rearing domestic cattle of all scales should be enforced to ensure enduring safety for the sector. Otherwise, ASF and other diseases in the future can develop into pandemics, crippling the entire sector.
Vietnam posts budget surplus of VND66 trillion
State budget revenue was reported at VND553.5 trillion (US$23.80 billion) while budget spending was estimated at VND486.9 trillion (US$20.93 billion) from the beginning of the year to May 15, resulting in a budget surplus of approximately VND66 trillion (US$2.83 billion).
Hanoi was among the localities posting the highest budget revenue thanks to the growth of production and business activities and the effective performance of the Government, said Mai Son, director of Hanoi Tax Department.
According to the General Statistics Office (GSO), the budget surplus was attributed to positive business, production and import-export activities while budget spending still ensures debt payment, national defence and security, social welfare and operation of the state apparatus.
In the first five months of 2019, Vietnam recorded US$100.74 billion worth of export revenue, a year-on-year increase of 6.7%, and US$101.28 billion worth of import revenue, a year-on-year increase of 10.3%. Thanks to increasing import and export revenue, tax collected from import and export activities soared by 23.5% compared to the same period last year.
GSO said that budget revenue from early this year to May 15 was estimated at VND553.5 trillion, equivalent to 39.2% of the year’s estimate, including VND447.6 trillion worth of domestic tax collection, VND21.8 trillion worth of tax collection from crude oil and VND83.3 trillion in tax collection from import and export activities.
During the period, the total budget spending was reported at VND486.9 trillion, equivalent to 29.8% of the year’s estimate.
AI model development center for inspections established in HCMC
The Ho Chi Minh City-based Vitalify Asia Co., which specializes in artificial intelligence (AI) research and development, launched its AI model development center for inspections on June 3.
The company has built a system that quickly mass-produces AI models as a brain for robot inspections in the manufacturing industry. It has successfully developed many AI models that can be used for inspecting scratches in visual inspection, oil film, irregular color, distortion, imperfect molding, and classification of indications, etc. The purpose of the establishment is to promote automation and introduce AI into the manufacturing process.
The first five companies will receive a half-price discount. The company will confirm the accuracy and indicator of the required AI model and an estimation of economic rationality in automation. After confirming and examining the application, it will conduct a free PoC (proof of concept - a simple trial to show whether AI introduction is feasible in this case or suggest a new idea). It will deliver the AI model and the test results to the customer if the created AI model clears the accuracy target defined by the customer. As a method of introducing the AI model, it can be provided as Windows DLL or server API.
At Vitalify Asia’s “Mobile AI Lab”, Japanese-Vietnamese AI engineers who have are ranked in the top 1 per cent in Google’s AI competition, Kaggle, will collect and process the required data (machine learning) for AI introduction and conduct verification free of charge.
According to an announcement last March from Japan’s Cabinet Office, Japan’s manufacturing industry is shortage of 150,000 workers, which is expected to worsen to 380,000 by 2030, according to a report released by Japan’s Persol Research Institute and Chuo University last October. Small to medium-sized manufacturing enterprises are experiencing serious labor shortages, which leads to growing demand for “automation and labor saving by automatic machines and robots”, according to a report from Japan’s Ministry of Economy, Trade and Industry released last July.
For the manufacturing industry, using automated robots in the inspection process for contamination, detecting defective products, and product classification has strong demand but it is difficult to confirm the accuracy and cost-effectiveness of the AI model before supply.
Experts scrutinise inconsistent accounting standards
Vietnam is well on its way to adopting the International Financial Reporting Standards to promote transparency, but vast differences between these standards and the Vietnam Accounting Standards may pose a challenge to domestic businesses.
One of the biggest changes, for example, is how the International Financial Reporting Standards (IFRS) and the Vietnam Accounting Standards (VAS) differ on calculating the value of assets and account payables.
At last week’s tax and audit seminar organised by consulting firm RSM in Ho Chi Minh City, experts and businesses talked at length about this matter. Specifically, according to the IFRS 13, assets and account payables must be measured by their fair value, determined as the amount paid in a transaction if the asset is sold in the open market. Meanwhile, the VAS tells businesses to record the asset value in their historical cost, or the nominal or original cost of an asset when it was acquired. Historical cost, as its name suggests, does not change over time like fair value and thus does not reflect any ups and downs in the value of an asset.
Critics of the VAS said that this rigidity makes it difficult for foreign investors to understand the correct value of assets and account payables. This is especially concerning when the value of assets goes down over time due to depreciation or other losses. As a result, businesses in Vietnam are strongly encouraged to adopt the fair value system of the IFRS, applicable to their assets, as well as financial and real estate investments.
However, measuring fair value is not an easy task. According to Dang Xuan Canh, managing partner at RSM Vietnam, the calculating system for fair value in Vietnam remains lacking. Circular No.200/2014/TT-BTC from the Ministry of Finance allows businesses to gloss over this part if they do not have the right calculating tools, but the IFRS is strict with using only fair value in financial reports.
“If a company cannot measure the fair value on its own, it will have to outsource. Many accountants in Vietnamese companies are not yet trained to do this, because their undergraduate study does not meet the IFRS level yet,” said Canh.
Calculating fair value also means more work for the accounting team, as prices have to be updated frequently.
At the event, an accountant from a foreign-invested enterprise also shared her experience with the VAS and IFRS. According to this accountant, the IFRS includes 19 standards that are absent from the VAS, and she does not know how to find the fair value either. In general, her enterprise already had to invest significant resources in training and IT to keep up with the IFRS requirements. “I believe that we will need more regulatory frameworks to assist the adoption of the IFRS in Vietnam, especially in the area of fair value calculation,” said Canh.
The need to update their IT system and know-how is especially difficult and costly for small- to medium-sized enterprises. Senior executives at some companies might not be interested in switching to the IFRS, which is evident in their hesitance to use the IFRS in their day-to-day management.
However, most businesses agree that in order to draw in foreign investors, the only way to go for Vietnamese businesses is using the IFRS. These standards are widely used in 87 per cent of the countries around the world, creating a streamlined system for investment funds when studying a company. In the ASEAN, Thailand is making its way towards adopting the full IFRS, while Indonesia is at the basic level. In Singapore, the local accounting standards have converged with the IFRS.
Canh advised companies in Vietnam to take a step-by-step approach to adopting the IFRS. In the first year, businesses can start with setting up an IFRS version of their finances and begin with IFRS 1, which provides guidance for first-time adopters.
Besides the main focus on the IFRS, RSM experts and participants also discussed the latest tax updates in Vietnam, ranging from the revised Law on Tax Administration to the adoption of e-invoice rules.
An Quy Hung reports markedly poorer performance in 2018
In 2018, An Quy Hung Limited Company made a profit of VND1.2 billion ($52,200) only, while liabilities were VND12 trillion ($520 million), including VND8 trillion ($347.8 million) of long-term liabilities.
Specifically, the financial statement of An Quy Hung in 2017 reported VND956 billion ($41.57 million) in net revenue and VND62.4 billion ($2.7 million) in after-tax profit. In 2018, these figures reduced to VND653 billion ($28.4 million) and VND1.2 billion ($52,200), respectively.
Accordingly, as of the end of 2018, the total assets of An Quy Hung have soared to VND12.7 trillion ($552.17 million) compared to VND1 trillion ($43.48 million) at the beginning of the year.
As of the end of 2018, the company poured approximately VND7.6 trillion ($330.43 million) intosubsidiary, equivalent to the amount that the company spent to acquire Vinaconex, while this figure was only VND210 billion ($9.13 million) early this year.
Other short-term receivables also soared sharply to VND4.278 trillion ($186 million) from VND265 billion ($11.52 billion) at the beginning of the year, which has made up a large portion of its total assets.
Notably, must-pay liabilities of An Quy Hung have also raised to VND12 trillion ($521.74 million) from VND550 billion ($23.9 million), including VND8 trillion ($347.8 million) of long-term liabilities, which was 110-times as much as the $3 billion in 2017.
Earlier, the deal of acquiring Vinaconex (code: VCG) shares, which was carried out by the shareholders of An Quy Hung, surprised the investor community. Firstly, An Quy Hung paid VND7.4 trillion ($321.74 million) to buy 57.7 per cent of Vinaconex, which was VND2 trillion ($87 million) higher than the offering price. On December 4, 2018, An Quy Hung paid all of this amount and became the biggest shareholder of Vinaconex.
During the deal, the financial capacity of An Quy Hung, which was established in 2001 and has been reporting relatively small revenue and profit, was the big question for other investors.
Recently, An Quy Hung has issued private bonds of 255 million VCG stakes, equivalent to 58 per cent of its holding in Vinaconex, with the collateral value of VND7 trillion ($304.35 million). The term of these bonds is three years and their annual interest is 12 per cent at least. Despite the high interest and collateral value, these bonds have yet to draw interest from investors.
Vinaconex is planning to organise its annual general shareholders' meeting on June 28.
PMI at 52 in May
The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - posted 52.0 in May, down marginally from 52.5 in April but still representing an improvement in business conditions in Vietnam’s manufacturing sector.
Vietnamese manufacturers recorded another monthly improvement in business conditions during May, with growth in output and new orders picking up from April. Improving customer demand was reportedly central to the latest expansion, with higher output requirements leading to greater purchasing activity and the building up of input inventories.
On a less positive note, employment decreased for the third time in the past four months amid reports of worker resignations and retirements.
“The demand side of Vietnam’s manufacturing sector remained rosy in May, with faster increases in output and new orders recorded,” said Mr. Andrew Harker, Associate Director at IHS Markit, which produces the PMI. “There appear to be issues around the supply of labor, however, with reports of resignations and retirements leading to reduced employment levels in spite of the aforementioned improvements in demand and output requirements. This led the PMI to tick lower; a picture that could be reversed in coming months should the demand side remain strong and firms be able to replace departed workers.”
The softer improvement in the health of the sector was recorded in spite of stronger increases in both output and new orders. The securing of new customers helped firms register new order growth, with the rate of expansion the strongest in 2019 so far. New export orders also increased in May, and at a solid pace.
Rises in new orders, both from domestic and overseas clients, were reportedly behind the latest increase in manufacturing output. Growth has now been registered on a monthly basis throughout the past year and a half.
The investment goods sector was the best performing broad manufacturing category in May, posting the fastest expansions of output, new orders, and new export orders.
The moderation in the headline figure principally reflected a drop in employment - the third in the past four months. Staffing levels fell marginally, with panelists mainly linking this to employee resignations and retirements.
Manufacturers increased their purchasing activity at a solid and accelerated pace in May as they responded to greater output requirements. The rise in input buying fed through to an accumulation of stocks of purchases, the second in as many months. Sufficient stock holdings at suppliers were also reported, helping lead to an improvement in delivery times.
Meanwhile, stocks of finished goods decreased in May, thereby ending a seven-month sequence of accumulation. Where post-production inventories fell, this was linked to the use of stocks to meet new orders.
The rate of input cost inflation ticked down and was slower than the series average. Where higher input prices were recorded, panelists mentioned increased costs of electricity, gasoline and oil. Relatively weak cost inflation and some reports of demand weakness in certain export markets meant that firms lowered their output prices slightly again in May. Charges have now decreased in six successive months.
Business confidence improved for the third month running to the highest since last November. Optimism regarding output growth reflected expected increases in new orders and new product launches.
Tourists flock to Phu Quoc
The number of local and international tourists visiting Phu Quoc Island is on the rise, with two million holidaymakers travelling to the island off Kien Giang Province in the first five months of 2019, up a staggering 48.9% year-on-year.
Between January and May, of the over 1.9 million travelers, some 340,000 international tourists visited the island, surging by 39.5% year-on-year, posting a high growth against the country’s growth rate of 8.8%.
Phu Quoc Island attracted most of the international tourist arrivals in Kien Giang Province, welcoming the lion’s share of the total 365,500 visiting to the province during the five-month period.
Statistics from the Kien Giang Department of Tourism indicate that Phu Quoc Island saw tourism revenue amount to more than VND3.6 trillion in the first five months, up a whopping 60.8% year-on-year.
Some tour operators in HCMC attributed the rising number of tourists on the island to the large room supply and reasonable room prices this summer.
Prices of three-star hotel rooms range from VND1.1 million to VND1.25 million per night, whereas four-star hotel rooms are priced at VND1.5-1.7 million per night, equivalent to room prices in Phan Thiet City and lower than those in Danang City.
“In the past, prices of hotel rooms on Phu Quoc Island were much higher than those in Phan Thiet City, but the prices are now on par with those in the city due to the growing number of rooms being put into service,” a representative of a travel firm in HCMC explained.
Dong Nai’s export growth slows down in five months
The export turnover of enterprises operating in the southern province of Dong Nai in the first five months of 2019 hit 7.7 billion USD, representing a year-on-year rise of 3.41 percent, according to the provincial Department of Industry and Trade.
In May alone, the total export turnover of local firms reached 1.69 billion USD, 9.84 percent higher than that of the previous month, and up 1.56 percent compared to the same period of 2018.
Import and export activities in Dong Nai are mainly from foreign-invested enterprises, accounting for 85 percent of the province's total import and export value.
In the first months of 2019, a number of key exporters of leather, textiles and mechanical products reported slower growth as compared to 2018.
The department attributed the locality’s slowly increased export turnover in the period to impacts from trade protection policies of many countries around the world.
Director of the department Duong Minh Dung said the US-China trade war has caused countries in the region to build tariff barriers to protect their domestic goods, and minimize imports, thus affecting Vietnam's exports.
The provincial Association of Exporters said orders from now to the end of the year of large enterprises operating in the leather and shoe industry in Dong Nai decreased from 10-15 percent, while those in the garment industry dropped by 7 percent.
Meanwhile, local producers of wood and wood products in Dong Nai reported that they received orders until the end of 2019 but their partners are asking for discounts, adding that this causes many difficulties for them as the prices of electricity and gasoline have increased, raising production costs.
Although Dong Nai’s export turnover in the first five months increased slowly, the locality still enjoyed a trade surplus of 1.2 billion USD.
The locality’s export turnover is still expected to reach over 20 billion USD, with a trade surplus of 2.6 billion USD.
Government prioritises capable contractors: Deputy PM
The Vietnamese Government prioritises capable and prestigious contractors for the state’s transport projects, Deputy Prime Minister Trinh Dinh Dung said at the National Assembly’s Q&A session on June 5.
Although the State has poured a huge amount of capital and mobilised resources to branch out transport infrastructure for bolstering the socio-economy and improving local livelihoods, several projects have fallen short of expectation due to their poor quality, slow progress, and soaring capital allotment.
“There are a lot of works to do with the incomprehensive and low-quality transport system. We have developed only 977 km of highway of the 295,000 km of land road while the railway network was constructed century ago and the tracks are outdated and unsafe. Though advancements have been made in the airport system, some large airports like Noi Bai and Tan Son Nhat are suffering overloading,” he said.
Describing connections between waterways, railways and roads unfavourable, Deputy PM Dung stressed that the Government will intensify efforts to remove bottlenecks for the construction of Trung Luong-My Thuan-Can Tho expressway, and Bac Giang-Lang Son highway as well as choose suitable contractors for North-South expressway and Tan Son Nhat airport expansion.
Regarding the Ha Dong-Cat Linh elevated railway which missed the operation deadlines several times, he said that the Government will work to make it begin commercial operation soon. Earlier, the railway missed the schedule of trial run in June 2015, June 2016, December 2016, February 2017, October 2017, 2018’s Q2 and December 2018.
Furthermore, efforts will be made to ease difficulties in BOT projects, ensuring benefits of State, residents and investors.
Pointing out that bottlenecks should be removed to better link the Mekong Delta region and Ho Chi Minh City, he said that more attention must be given to the HCM City- Can Tho road, Cho Gao cannel and HCM City-Can Tho railway, among others.
Vietnam welcomes SK Group’s investment: PM
The Vietnamese Party, State, Government and localities always create favourable conditions and protect legitimate rights for foreign firms, including the Republic of Korea’s SK Group, to land technology investment in the country amid the Fourth Industrial Revolution, Prime Minister Nguyen Xuan Phuc said on June 5.
Hosting a reception for SK Group Chairman Chey Taw-won in Hanoi, PM Phuc said he welcomes SK Group’s non-refundable aid worth 30 million USD for the Ministry of Planning and Investment to develop the National Innovation Centre (NIC).
Chey, for his part, expressed his delight over the strong economic development in Vietnam, and said that SK’s investment expansion in the Southeast Asian country via its collaboration with VinGroup aims to create new value for local people.
As the SK hopes to engage in developing environmental protection technology in Vietnam, Chey said he expects support from the Vietnamese Government as well as coordination from competent ministries and sectors.
The Vietnamese leader said VinGroup and the SK should outline new cooperation programmes, adding that the SK has been on its right track in Vietnam with many projects in smart urban development, and electric motorbike production, contributing to the creation of a qualitative change in the production in the country.