BUSINESS NEWS 6/7

CPTPP opens up opportunities for agricultural products

BUSINESS NEWS 6/7

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is opening up many opportunities for Vietnam’s agricultural products to reach global markets. However, agricultural products are the most vulnerable commodity when it comes to trade disputes.

Therefore, it was necessary to disseminate information on commitments in the CPTPP and implement a comprehensive and timely action plan to ensure long-term benefits for people, businesses and consumers, Minister of Industry and Trade Tran Tuan Anh said at a conference held in Hanoi on July 2.

As a new generation free trade agreement, the CPTPP is expected to have a comprehensive impact on Vietnam's economic and social activities. In particular, it will create opportunities to expand the market for many sectors (including agricultural products), especially the markets where Vietnam has no bilateral free trade agreements (FTA) such as Canada, Mexico, Peru and Australia thanks to preferential tariffs.

However, when the tariff barriers are removed, the technical barriers will be more stringent. The CPTPP is recognised as the agreement with the highest standards, most comprehensive and balanced in the agricultural sector, so the requirement is to improve agricultural cultivation and goods in line with international standards.

Therefore, the CPTPP poses many challenges to the consumption and distribution of Vietnamese agricultural products.

According to Thao Xuan Sung, Chairman of the Vietnam Farmers' Association, despite a number of achievements in Vietnam’s agriculture sector, the quality of agricultural production in general and the consumption and distribution of farm produce in particular are still limited and even weak.

In fact, the ratio of raw agricultural exports is still high; the quality and the number of agricultural value chains remain low; the way to organise agricultural production in the value chain is still sketchy and there is a lot of barriers between the domestic market and the world market. These are obstacles faced by Vietnamese agricultural products exported to the world market, especially large markets, requiring high quality.

Under the impact of FTAs, Sung said that the domestic agricultural market was witnessing increasing competitive pressure due to the increase in the number of agricultural products imported from foreign countries.

Among many agricultural products that Vietnam is still able to produce with good quality and quantity, it is difficult to compete with imported goods in terms of price and brand reputation.

Under the CPTPP, Vietnam’s agricultural business community is putting a lot of faith, as well as hope for large export markets, but there are many businesses wondering about competitive pressure when the production capacity of enterprises is still very limited.
In order to make good use of opportunities offered by the CPTPP, Pham Quynh Mai, Deputy Director of the MoIT’s Multilateral Trade Policy Department, recommended Vietnamese enterprises actively explore information about the CPTPP, especially information on tariff preferences on those products which Vietnam has strong export potential.

Enterprises should change their business thinking in the new context, putting pressure on competition as a driving force for innovation and development, she said.

In addition, enterprises also needed to actively co-operate with the partner markets of the agreement to strongly attract direct investment in Vietnam in order to make full use of capital and technology transfer from large corporations. This was also a good opportunity for businesses to participate more deeply in the regional and global supply chains, Mai added.

Vietnam’s six-month industrial production up 9.13 percent

Vietnam’s index of industrial production (IIP) recorded a year-on-year rise of 9.13 percent in the first six months of this year, according to the General Statistics Office (GSO)’s latest report.

The index was lower than 10.3 percent seen in the same period last year but higher than 7 percent and 5.4 percent in the corresponding periods of 2016 and 2017, respectively.

The processing and manufacturing sector, which accounts for nearly 80 percent of domestic industrial production, reported the strong IIP increase of 11.2 percent – a highlight that led the growth of not only the sector but also the whole economy in the period, according to GSO Director Nguyen Bich Lam.

Meanwhile, the IIP growth of electricity production and distribution stood at 10.6 percent and that of water supply and waste-sewage treatment sector and mining sector reached 7.8 percent and 1.8 percent, respectively.

Some industries achieved high production growth in the first half of this year, such as coke coal and refined mining products (70 percent), metal (40 percent), ore exploitation (18 percent), motor vehicles (12 percent) and textile and garment (11 percent).

Among key industrial products with strong IIP increases included crude iron and steel (60 percent), petroleum (58 percent), paint (15 percent), feed for aquaculture (14 percent) and handsets (14 percent), according to the GSO.

From January to June, a number of localities that posted significant growth in IIP like the northern port city of Hai Phong with 25 percent and three other provinces of Quang Ninh, Vinh Phuc and Hai Duong in the north with 14 percent, 13 percent and 10 percent, respectively.

Others were the southern province of Dong Nai with 9 percent while the two largest economic hubs of Hanoi and Ho Chi Minh City lagged behind, recording IIP rises of nearly 8 percent.

According to GSO statisticians, in addition to accelerating production, the industrial sector needs to speed up local consumption of goods in the latter half of this year as the inventory index of the processing and manufacturing sector remained at 75 percent in the first six months, much higher than the safe inventory index at about 65 percent.

June completed a solid second quarter for the Vietnamese manufacturing sector, with business conditions improving amid the ongoing growth of new orders.

A survey by Nikkei and IHS Markit released on July 1 showed the Vietnam Manufacturing Purchasing Managers’ Index (PMI) was 52.5 in June, up from 52.0 in May and in line with the reading from April. The average PMI reading for the second quarter of 2019 was above that seen in the opening three months of the year, albeit remaining short of the 2018 average.

According to the survey, Vietnamese manufacturers continued to record solid growth of new orders in June, with the rate of expansion ticking up to a six-month high. Panellists linked the latest rise to the launch of new products and increased customer numbers. Less positive data was seen with regards to new export orders, which rose at the slowest pace since February. There were some reports that US-China trade tensions had negatively impacted export orders.

The higher number of new orders was the key factor leading to a nineteenth successive monthly rise in manufacturing production in Vietnam. The rise in output was solid, and broadly in line with those seen during the rest of the second quarter.

The continued new order growth led to a rise in backlogs of work in June, the first in 2019 so far. Firms responded to higher workloads by taking on extra staff, reversing the decline seen in May.

“The Vietnamese manufacturing sector continues to bob along nicely midway through 2019. The second quarter of the year saw solid growth that was broadly stable across the period and an improvement on the first quarter,” said Andrew Harker, Associate Director at IHS Markit, adding that ongoing strength in demand encouraged firms to fill positions that had been vacated by resigning staff in May, leading to a return to job creation.

Can Tho city to start construction on key projects

The Mekong Delta city of Can Tho will begin or complete construction of many key infrastructure projects from now until the end of 2019, according to the city’s ODA project management unit.

The projects are a part of a city development plan and a Mekong Delta development project.

In July, the city will start construction on the Can Tho River embankment project, which is part of the city's development plan.

Tran Hoang Na Bridge project will take bids before the end of July and construction is expected to start at the end of the year.

The bridge project has a total investment of 700 billion VND (30 million USD). Nearly 90 percent of site clearance on Tran Hoang Na street in Ninh Kieu district, where the bridge will be located, has been completed.

The city will also start construction on An Binh resettlement area in Ninh Kieu district in October.

After 22 months of construction, the Quang Trung Bridge will be put into use in November.

Huynh Thanh Su, director of the city's ODA project management unit, said the unit has been working with other units to relocate existing technical infrastructure facilities such as electricity and water works.

First solar power plant inaugurated in Ha Tinh province

The Hoanh Son Joint Stock Co has inaugurated its solar power plant, worth more than 1.45 trillion VND (62.7 million USD), in the central province of Ha Tinh.

The opening ceremony of the plant – the first of its kind in the province – saw the presence of Deputy Prime Minister Vuong Dinh Hue.

Spanning 50ha in Cam Xuyen district, the Cam Hoa solar power plant has a designed production capacity of 50 MWp.

According to local authorities, the plant’s launch marked a good beginning for Ha Tinh’s renewable energy industry and is expected to contribute to accelerating the province’s socio-economic development in the future.

They added that the province was also seeking foreign and domestic investment in two other solar power plants.

Renewable energy like solar and wind will play an essential role in helping Vietnam complete its long-term goal of connecting the whole country to the national grid, experts have said.

According to them, Vietnam’s solar system had the potential to reach 35,000MW by 2030.

The Government has applied tariff incentives or renewable energy payments for solar power since 2017 in an attempt to accelerate investment in renewable energy.

Binh Thuan – bright spot on Vietnam’s tourism map

Over the past two years, the south central province of Binh Thuan has made use of its strengths to become a bright spot on Vietnam’s tourism map.

Ngo Minh Chinh, Director of the provincial Department of Culture, Sports and Tourism, said in the period, Binh Thuan has focused on the planning of coastal areas, accelerated the implementation of tourism projects and reclaimed unfeasible ones.

The province is running 378 valid tourism projects with total registered capital of 59 trillion VND (2.53 billion USD), covering 6,300 hectares of land.

Apart from 490 accommodation establishments with 15,000 rooms, and 860 houses and villas in service of holiday-makers, Binh Thuan boasts stable railway and maritime transport systems.

According to Nguyen Van Khoa, President of the provincial Tourism Association, in 2018, Binh Thuan welcomed more than 5.7 million tourists, up 12.8 percent year-on-year, with foreign arrivals reaching 675,000, up 14.3 percent.

Foreign visitors to Binh Thuan mainly came from Russia, China, the Republic of Korea, the UK, France and Germany.

Last year, the province earned 12.8 trillion VND (550.4 million USD) from tourism services in the year, up 18.9 percent against 2017.

Nguyen Ngoc Hai, Chairman of the provincial People’s Committee, said Binh Thuan has become a key national tourism destination with diverse products.

Tourism spurred local economic development, generating jobs for thousands of labourers, especially those in rural and coastal areas, and preserving the historical and cultural values of the locality.

To turn tourism into a spearhead economic sector, Binh Thuan has stepped up investment attraction, accelerated the implementation of expressway projects and intensified tourism connectivity with the Central Highlands province of Lam Dong, other south central provinces and Ho Chi Minh City.

The locality aims to serve 7 million travellers by 2020 and earn 18.3 trillion VND (786.9 million USD) from the tourism sector, which is expected to contribute about 10 percent of the province’s gross regional domestic product.

Binh Thuan has a coastline of 192km, with various beautiful landscapes such as Mui Yen, Cau isle, Ke Ga lighthouse, Ganh Son, Gieng Tien, and the Hon Cau Marine Protected Area where hundreds of rare species live.

In addition, Binh Thuan boasts Phu Quy island which is known as “the pearl in the middle of the sea” and located about 56 nautical miles off the coast. Meanwhile, Mui Ne beach, with its warm and windy climate, has served as a venue for well-known surfers from the UK, France, Russia, Germany, and Australia.

Kien Giang widens efficient rice farming, aquaculture models

The Mekong Delta province of Kien Giang has expanded its most efficient rice and aquatic species farming models in the last two years.

Mai An Nhin, Vice Chairman of the provincial People’s Committee, said many farmers have switched from growing rice, in case of low yields, to breeding aquatic species.

They have also expanded the model of rotating between rice in the rainy season and shrimp in the dry season on the same fields to enhance their incomes, he said.

The model is particularly suitable for coastal areas since it helps adapt to climate change and rising sea levels.

The province has 92,000ha of rice – shrimp fields, the highest in the delta.

Farmers adopting the model harvest around four tonnes of paddy and 250 kilogrammes of black tiger shrimp per hectare per year.

The province has adopted several efficient shrimp farming models like extensive, intensive, semi-intensive, and two-stage industrial models.

The model of breeding white-legged shrimp in two stages to Vietnamese good agricultural practice (VietGAP) standards adopted in An Minh district for the last two years provides farmers with high incomes and protects the environment.

Juvenile shrimp are first bred in a small pond for a few weeks before being transferred to the main pond at a rate of up to 450 per square metre.

Le Van Khanh, head of An Minh district’s Division of Agriculture and Rural Development, said the success rate of the two-stage shrimp farming model is more than 90 percent and farmers can breed two or three crops a year.

Farmers can earn 150-200 million VND (6,450-8,600 USD) per 500-1,200sq.m pond per crop, he said.

The province, the country’s largest rice producer, has increased the number of rice crops in a year from two to three in areas like Tan Hiep, Giong Rieng and Hon Dat districts where there are flood-prevention embankments.

In the coastal areas of U Minh Thuong and the Long Xuyen Quadrangle, farmers have developed the rice – shrimp model to earn high incomes.

In Giang Thanh, Hoa Dat, Vinh Thuan and Giong Rieng districts, where farmers grew only rice in the past, they now grow one rice and one other crop annually.

After growing the winter – spring rice crop, they grow vegetables, water melon or honeydew melon.

Pham Hung Em, who grows one rice crop and one vegetable crop in Vinh Thuan’s Vinh Binh Bac commune, said the income from vegetables is more than 200 million VND per hectare per year.

The province has researched to develop high-quality rice strains and aquatic breeds.

It has created rice varieties like GKG1 and GKG9 that have a short maturity period, are resistant to disease and saltwater, and have high yield and quality.

Farmers in the province grow more high-quality rice varieties, with the rate increasing from 71 percent in 2016 to 75 percent last year.

Last year, the province had 75,000ha of large-scale rice fields which involved more than 20 companies and farmers having tie-ups to ensure each other production and outlets.

The large-scale rice fields apply the “1 must and 5 reductions” method, which requires farmers to use certified seeds and reduce seeding, plant protection chemicals, nitrogen fertilisers, irrigation, and post-harvest losses. Participating farmers can earn profits of 40 percent.

The province has invested in irrigation systems, including building more sluices to keep out saltwater, to benefit rice and shrimp farming.

It dredged thousands of kilometres of irrigation canals and ditches, upgraded irrigation works in rice farming areas and established more than 1,250 pumping stations in the past two years.

Efforts to develop healthier corporate bond market

Vietnam is making concerted efforts to improve the quality of information disclosure and transparency of corporate bond issues and listings to develop a healthy bond market and reduce risks for investors.

The corporate bond market in the country has rocketed in recent years. The Hanoi Stock Exchange (HNX) estimated that close to 89.5 trillion VND (3.85 billion USD) worth of corporate bonds were issued in the first half of 2019, up 34 percent from the same period last year.

According to Nguyen Hoang Duong, Deputy Director of the Ministry of Finance’s Department of Banking and Financial Institutions, a growing number of firms raise capital by issuing bonds, a good sign for the development of the market, given slowing credit growth as commercial banks must reduce short-term funding moiblisation for medium- and long-term loans to comply with the State Bank of Vietnam regulations.

By June 24, corporate bonds outstanding value accounted for 10.22 percent of 2018’s Gross Domestic Product (GDP), more than 3 percent higher than the goal for 2020 set by the Government. However, it is relatively small compared to the scale of the bank credit channel and the level of other countries in the region (20 – 50 percent of GDP). Most firms still look for funding via bank loans.

Today, bond issue rules have been relaxed, said Le Hoang Chau, President of the Ho Chi Minh City Real Estate Association (HoREA). To issue bonds, a company is no longer required to be profitable in the year before the proposed issuance, though this does pose greater risks to secondary investors, he noted.

Some companies even raised their bond yield rates twice as high as bank deposit interest rates to attract investors but it is a risky approach.

To solve the problems, the Government issued a decree on the issuance of corporate bonds which sets higher requirements for pre-trade disclosure to protect the rights and interests of investors.

Draft amendments to the Securities Law have also been submitted to the National Assembly, which contain rules on professional investors. It suggests that the private placement of bonds should only be made to high net-worth individuals or companies with experience in finance.

Additionally, the amended draft law requires issuers to receive credit ratings before issuing bonds to the public to better support investors, especially individuals who are less experienced. The Ministry of Finance has licensed one credit rating provider and is taking moves to invite other foreign providers to Vietnam.

The State Security Commission of Vietnam is also working to standardise requirements and procedures of corporate bond issue and cut the time required for first public offering.

Japanese firm to pour capital into Vietnamese realty projects

The Japanese company Yaegaki, Inc. is expected to invest 50 million USD in the Vietnamese-based TMS Group’s real estate projects under a cooperation memorandum of understanding (MoU) signed between the two in Tokyo on July 1.

Accordingly, TMS Group will provide Yaegaki with information on Vietnam’s property market, while Yaegaki will consider an initial investment of 50 million USD in TMS projects.

Talking to the Vietnam News Agency, Nguyen Viet Trung, Vice Chairman of TMS Group, said his company has over 10 years of experience in working with Japanese partners.

He hoped the MoU will be implemented effectively.

 

Lauding the potential of Vietnam’s real estate market, Kei Kuramochi, director of Yaegaki, unveiled that his company is considering collaboration opportunities with the Vietnamese firm to carry out projects in the market.

Earlier, in April, TMS Group held a series of investment promotion events in Japan to seek partners for its property projects and introduce opportunities in the Vietnamese realty, health and high-tech agriculture markets.

Established in 2004, TMS Group operates in various areas and has so far established representative offices nationwide, and a number of countries like Australia and Japan.

EVFTA: opportunity to better Vietnamese agricultural products’ brands

The European Union – Vietnam Free Trade Agreement (EVFTA), once taking effect, will benefit the agricultural sector of Vietnam which is leading the world in pepper exports and ranking second in terms of coffee exports, third in rice, fourth in seafood and fifth in wood and wood products.

Tariff-related incentives will open up opportunities for Vietnamese agricultural products to gain a firm foothold in a wide market with 28 member states. However, it is compulsory for Vietnamese enterprises to work to ensure quality requirements from the EU side.

In the EVFTA, Vietnam commits to protecting 169 geographical indications of the EU, while the latter will do the same with 39 of the former. All the geographical indications of Vietnam are related to food and farm produce.

Under the agreement, 24 percent of tariff lines of Vietnamese agricultural products will be reduced to zero in the first year after it becomes effective, and 99 percent will be cut after 10 years. Meanwhile, the EU nations will decrease taxes for rice products to zero after 3-7 years, 520 out of 556 tariff lines for vegetables and fruits, 85.6 percent for processed vegetables and fruits, and 93 percent for coffee and pepper right after the agreement takes effect.

Do Ha Nam, Vice President of the Vietnam Coffee – Cocoa Association, underlined big challenges facing Vietnamese enterprises in general and those working in the coffee sector in particular, especially in ensuring quality and food safety.

He stressed the need to strictly follow regulations on technical barriers and food safety and hygiene committed in the FTAs in general and the EVFTA in particular.

The official advised coffee firms to intensify deep processing, and farmers to shift from traditional to sustainable cultivation, while emphasizing the importance of close connectivity among the domestic enterprises and between them and European distributors.

Experts agreed that the most difficult barrier facing Vietnamese farm produce is food safety.

Nguyen Thi Thu Trang, Director of the WTO and Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), said that FTA commitments do not remove requirements on technical barriers related to trade, rules of origin, and food safety.

More opportunities mean stricter requirements on quality, Trang stressed.

Sharing the view, Tran Cong Thang, deputy director of the Institute for Agriculture and Rural Development Policy and Strategy, said the EVFTA will make regulations on food safety and rules of origin of importers stricter.

Moreover, Vietnamese firms have to abide by regulations related to social responsibility, labour issues, gender equality, and solve challenges on controlling trade fraud, he stated, suggesting local enterprises to organise distribution channels effectively to be able to compete with imported products.

Thua Thien-Hue taps potential of green power projects

The central province of Thua Thien – Hue is giving priority to green energy projects, especially solar power.

In Phong Dien district, the Phong Dien TTC solar power plant is expected to generate nearly 60 million kWh of electricity this year and reduce carbon dioxide emission by over 20,500 tonnes each year.

Chairman of the district People’s Committee Trinh Duc Hung said those projects are providing power for Phong Dien industrial park on a site of 700ha.

Local authorities are ready to work with the solar power plants to ensure safety during power generation and oversee the treatment of hazardous wastes, towards a green and clean power industry, he said.

According to the Vietnam Meteorological Hydrological Administration, there are more than 1,800 sunshine hours in Thua Thien-Hue each year, alongside relatively high solar radiation of 4.33 kWh per square metre each day. With good natural conditions from April to October, the province is qualified for efficient use of solar panels.

The province is also home to over 120km of coastline and a number of desert areas with flat terraces, which also aid the building of solar power plants.

Apparel sector urged to develop supporting industry to optimise EVFTA

Insiders have recommended Vietnam pay attention to developing weaving and other production activities supporting the textile-garment sector to make best use of the EVFTA, a freshly-inked free trade agreement with the European Union.

In 2018, the textile-garment sector posted year-on-year exports growth of more than 16 percent to surpass 36 billion USD, making Vietnam the world’s third biggest exporter of these products, after China and India.

Based on these figures, the Vietnam Textile and Apparel Association (VITAS) believes the export target of 40 billion USD for 2019 is achievable, thanks in part to FTAs, including the one with the EU – the second biggest market for Vietnamese textile and garment products.

VITAS Chairman Vu Duc Giang said the EVFTA, signed in Hanoi on June 30, promises apparel export potential of more than 100 billion USD annually. Textiles and garments shipped to the EU are currently subject to export tariffs of 9.6 percent, but when the EVFTA takes effect, the rate will be gradually reduced to zero percent in seven years.

He noted most of the countries exporting textiles and garments to the EU don’t have FTAs with the bloc. Therefore, if Vietnamese firms meet origin requirements, the EVFTA will open up enormous opportunities for exports.

[Infographics: EVFTA implementation roadmap]

Managing Director of the Vietnam National Textile and Garment Group Cao Huu Hieu said that to be exempt from tariffs, apparel products must satisfy two conditions: the fabric used to make apparel must hail from Vietnam or the EU, and the production process must be carried out in Vietnam or the EU.

However, the EVFTA is also flexible, he said, elaborating that apparel products can also benefit from preferential tariffs under this deal if the material fabric comes from the countries that have FTAs with both the EU and Vietnam, such as the Republic of Korea.

VITAS Chairman Giang pointed out that although the rules of origin in the EVFTA are not as strict as in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnamese firms still face several challenges because most of them have just engaged in cutting and sewing steps while not producing fabric and yarn. Additionally, most production materials still come from China, which doesn’t have a trade deal with the EU.

To capitalise on the EVFTA, he urged domestic businesses to develop weaving and the supporting industry to provide materials for the sector.

They also need to use more fabric from the Republic of Korea to make use of the trade pact pending the supporting industry’s development. Under the EVFTA, companies can also import materials from Europe to improve their products’ quality and value, he added.

According to Director General of the Garment 10 Corporation Than Duc Viet, his company has high hopes for the EVFTA, and has made preparations to capitalise on this deal.

Exports now account for 80 percent of Garment 10’s total revenue, with 45 percent of export turnover from the US, 35 percent from Europe, and 10 percent from Japan. These figures will change when FTAs come into force as the firm will receive more orders, he noted, adding that the business has made plans to connect its domestic supply chain to satisfy origin requirements.

PM approves master plan on Cao Bang border gate economic zoning

The Prime Minister has approved the zoning of the Cao Bang Border Gate Economic Zone to 2040.

Under Decision No.20/2014/QD-TTg of the PM, the economic zone will be constructed on an area of about 30,130 ha. The population in the area is projected to stand at about 110,000-115,000 in 2030, including 30,000-35,000 urban residents.

It is expected to contribute to the economic growth of the country’s northern region and become a driving force of the north-eastern area in particular.

The plan will assess natural conditions, socio-economic development, infrastructure, living conditions and land use in the border areas, and forecast the changes of the natural environment under the impact of the urbanisation and socio-economic development. It also evaluates investment and implementation of projects which already received approval and those are under consideration.

The plan is to analyse the role of transport and exchange of goods between the economic zone and the Vietnam-China cross-border economic zone and its relations with surrounding regions and economic hubs of China’s Guangxi province.

EVFTA challenges to Vietnamese SMEs

Looking beyond the gains Vietnam expects from the landmark EU-Vietnam Free Trade Agreement (EVFTA), a closer look needs to be taken at the challenges on the horizon for Vietnamese small- and medium-sized enterprises (SMEs).

The Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Industry and Trade (MoIT), together with the Delegation of the European Union to Vietnam organised the dialogue on EVFTA and the EVIPA with the theme “Opportunities for business” on July 1 in Hanoi.

Besides the opportunities and spotlight that the EVFTA brings to Vietnam in general and the country’s enterprises in particular, enterprises should also foresee the challenges to prepare the knowledge and financial resources to take advantage of the open, fair, and rules-based trade.

2019 has witnessed two historic deals, first Vietnam's signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at the beginning of the year, then six months later the EVFTA, opening the doors for Vietnam to conquer the Atlantic and Pacific regions.

According to the calculations of Vietnamese experts, if the EVFTA is implemented immediately, it may increase the total GDP by 2.18-3.25 per cent in 2019-2023, 4.57-5.30 per cent in 2024-2028, and 7.07-7.72 per cent in 2029-2033.

In parallel with economic growth, the EVFTA also helps to increase employment by about 146,000 workplaces per year. On the EU side, according to a European Commission (EC) study, the EVFTA will increase the EU's national income in the long term with an increase of up to €29.5 billion ($37.3 billion). In addition, EU exports to Vietnam may increase by an average of 29 per cent.

The agreement may put fresh wind in the sails of Vietnamese enterprises, especially SMEs that make up a large portion of businesses in both Vietnam and the EU. 97 per cent of Vietnamese businesses are SMEs. Thus, Vietnam should provide ample support and create favourable conditions for SMEs to enter the global market, advised Vu Tien Loc, chairman of the VCCI.

SMEs are still limited in their corporate governance capacity, technology level, scale in finances and human resources, as well as their ability to create and manage brands and access the global market.

As Vietnam becomes a partner to one of the leading markets in the world with a total GDP of over $18,000 billion and a population of over 500 million. Increased partnership with world-leading markets and enterprises will provide valuable lessons to Vietnamese firms, pointing them to the direction of growth and development.

In the present context, the penetration of the European market does not depend on simple tariff barriers. Tariff reductions make for a very basic first step for Vietnamese enterprises, but they will need to overcome the high standards of Europe related to hygiene and safety, as well as working conditions.

In addition, domestic businesses will see increased pressure not only from the EU, but from the domestic market as well, taking competition to the next level in every industry, sector, and product category.

Along with the opportunities set forth, the implementation of EVFTA also poses many challenges, especially with Vietnam being the side scaling up and reaching higher economies, as opposed to the other countries holding FTAs with the EU.

Insurer Bao Viet to pay US$30m dividend

Insurance-finance group Bao Viet plans to pay VND700 billion (US$30 million) worth of dividends for the 2018 financial year.

The 10 per cent dividend payout rate was approved by the firm’s shareholders at the annual shareholder meeting on Saturday.

Every shareholder will receive VND1,000 ($0.04) for each share they own.

An equal payout rate of 10 per cent was also set for the 2019 financial year.

Bao Viet has more than 700 million shares listed on the Ho Chi Minh Stock Exchange with code BVH.

The group targeted VND43.6 trillion ($149 million) in total revenue this year, which would represent an increase of 4.2 per cent year-on-year.

Post-tax profit was forecast to rise 5.3 per cent to VND1.22 trillion by the end of 2019.

Bao Viet is preparing to issue more than 41.4 million shares to existing shareholders this year to raise its charter capital to VND7.42 trillion.

In 2018, Bao Viet issued more than 20.4 million ESOP shares for its employees to receive VND733 billion.

The share issuance helped increase the group’s charter capital to VND7 trillion from VND6.8 trillion.

By 2020, the company expects its total assets will be between VND120 and 130 trillion while total revenue and post-tax profit will hit VND45 trillion and VND1.25-1.35 trillion, respectively.

Thailands Centara eyes 20 new hotels in Viet Nam by 2024

Thai hotel operator Centara Hotels & Resorts has unveiled plans to significantly expand its portfolio in Viet Nam by opening at least 20 hotels in the next five years.

Its targeted locations include economic hubs such as HCM City, Ha Noi and Hai Phong, and other high-growth areas like Da Nang, Phu Quoc, Nha Trang, Cam Ranh, and Hoi An.

It is also assessing the potential of southern coastal areas like Vung Tau, Ho Tram and Mui Ne due to new roads connecting them with HCM City and the construction of an international airport in nearby Dong Nai Province.

Centara sees opportunities for all six of its brands.

“Vietnams tourism industry enjoyed a great year in 2018 and we expect this to continue for many years to come,” its CEO Thirayuth Chirathivat said.

Boosted by booming intra-Asian travel, more relaxed visa policies and impressive improvements to transport infrastructure, the country is well on track for another record-breaking tourism year in 2019, he added.

International visitor arrivals reached a record 15.5 million last year, the majority from Asia.

Data from the Vietnam National Administration of Tourism shows that almost six million people visited the country in the first four months of this year, while a buoyant economy is boosting domestic tourism.

The tourism boom is driving demand for new hotels and resorts.

Recent data from industry analyst STR shows that over 23,000 new hotel rooms are being built, a reflection of the countrys continued rise as a global tourism hotspot.

Centara, part of the Central Group, has 71 hotels and resorts, either operating or in the pipeline, around the world.

Promo-girls provider’s sales keeps falling after losing Heineken contract

Saigon Petroleum Services JSC, which lost its biggest customer Heineken in 2016, has reported falling revenues for the 3rd straight year.

Heineken Vietnamterminated its personnel supply contract withSPSC in mid-2016 to implement its parent company’s new global recruitment policy. Photo by Reuters/Eric Gaillard.

SPSC generated around VND46 billion ($1.96 million) in revenue last year, down over 16 percent from VND55 billion ($2.35 million) the previous year. The company’s revenue had dropped nearly four times compared to 2015, when it was still providing promotion personnel to Heineken.

However, there has not been much change in profit after tax for the company in this period. The company recorded around VND7 billion ($298,900) in after-tax profits in 2018. This figure has been consistently hovering in the VND 6-8 billion ($256,200 - $341,600) range since 2013.

Although its main registered business is the provision of beer marketing services, SPSC has reported no revenue from this activity. It now deals in leasing real estate and tourism services, which made up roughly half of the company’s revenue each in 2018.

Profit from these segments, mainly from fees for undertaking legal procedures and making capital contributions in joint real estate development contracts with partners, has allowed SPSC to consistently earn profits over the years.

Four years ago, Saigon Petroleum Services JSC was one of theVietnam’s leading providers of beer marketing services. The company had more than 2,000 employees; and continuously growing sales that peaked at over VND200 billion ($8.54 million) in 2015.

However, Heineken Vietnam, SPSC’s main customer, terminated its personnel supply contract with the company in mid-2016 to implement its parent company’s new global recruitment policy.

SPSC immediately fell into a crisis. The company had to cut down its staff, and has less than 40 people left at the end of 2018.

Heineken had a 25 percent share of the Vietnamese beer market at the end of 2018, second only to Sabeco, Vietnam's biggest brewer, who had 43 percent, figures from the Vietnam Association of Liquor, Beer and Beverage and securities firm Viet Capital Securities showed.

Despite Vietnam’s promising beer market continuing to grow by a stable 5 percent a year, SPSC shows no indication that the company plans to re-develop its former business and look for other clients.

Instead, the company plans to focus on developing apartments and office leasing, travel and other services, and will add additional services in overseas study consultation and selling airline tickets.

It has set a revenue target of VND68 billion ($2.9 million) and after-tax profit of VND10 billion ($460,980) this year.

Telecom giant Viettel launches ride-hailing service and e-commerce platform

Vietnam's military-run Viettel has launched ride-hailing service MyGo and e-commerce site Voso.vn after piloting them for two weeks.

Viettel’s MyGo app, available for iOS and Android devices, offers motorbike, car, truck and delivery services. The app is owned and operated by Viettel Post service, Viettel’s subsidiary and one of the biggest logistics companies in the country with a large number of drivers.

According to Tran Trung Hung, general director of Viettel Post, MyGo now has more than 105,000 vehicles registered, which includes nearly 98,000 motorcycles, approximately 7,300 cars and more than 600 trucks.

Hung said MyGo will charge competitive fares compared to existing players in the market, but did not disclose specific numbers. Moreover, Viettel will offer free 3G and 4G data for both drivers and customers of the ride-hailing app.

The company also has plans to move into the vehicle repair service market, he said.

Viettel’s Voso.vn, an e-commerce website that offers B2C trade, connecting businesses to customers, as well as C2C trade where it connects individual buyers and sellers (similar to the eBay model), primarily in the agricultural sector.

Voso.vn will take advantage of Viettel’s inherent strengths in delivery and payment. For farmers new to this form of business, the company will organize free online training courses on how to use the website as well as how to market their items.

Viettel is a leading tech firm in the country. It has 111 patents and manufactures 78 technology products. Its revenues from technology last year topped $1 billion. The group aims to become a global top 10 telecom company by 2030.

 
 
 
 
 
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