GDP scale raised by 25.4% after reassessment
Vietnam’s average gross domestic product (GDP) for the 2010-2017 period has been reassessed, taking into account all regular economic activities, placing the country’s GDP 25.4% higher than previously announced.
The General Statistics Office (GSO) said that a change in the GSO scale would lead to changes in other relevant economic indicators, such as asset accumulation, final consumption, gross national income, GDP per capita, the incremental capital-output ratio and total-factor productivity.
The reevaluation result has significantly hiked the total GDP value and GDP per capita, which will affect the orientation of further socioeconomic development, noted the GSO.
Also, the increase in the GDP per capita could lead to changes in household consumption patterns since living standards are poised to improve, or will soon be on a par with the levels of high middle-income countries.
The GSO stated that the reassessment would not have any impact on the GDP growth targets or the country’s strategy for socioeconomic development as economic growth rates in recent years have seen relatively minor changes.
However, it will result in changes to the structure of the economy, including hikes in the proportions of the industry, construction and services sectors and reductions in those of agriculture, forestry and fisheries.
Moreover, growth quality indicators will see improvements, but the changes will be insignificant. These include the proportions of State budget revenue, expenditure and deficit; taxes; and public, government and foreign debts – all compared with the GDP.
The change may result in the expansion of State budget revenues and tax collection as well as government spending and borrowing. However, their impact possibility is low since they are reliant on the collection of taxes, fees and more, in line with prevailing regulations.
Hikes in the GDP scale and the GDP per capita may raise Vietnam’s contributions to international organizations that the country has joined.
Evaluating public debt increases falls under the purview of the Government, ministries and economists, whereas statistics only provide a view of the economy, according to GSO General Director Nguyen Bich Lam at a recent press briefing in Hanoi.
Lam remarked that the reevaluation of the GDP’s scale is a regular task for statistics agencies worldwide.
The GSO’s reassessment follows the production approach, which is not a new method, he stressed.
This approach is also called the output approach; it measures GDP as the difference between the value of output less the value of goods and services used in producing the output during an accounting period.
The GSO head pointed out that the review and reevaluation of the GDP scale is based on the method recommended by the United Nations Statistics Division, which comes from sources that fully reflect the manufacturing and business performance of the economy, without changes in the calculation method.
The current calculation of Vietnam’s GDP is aligned with international practices, he added.
The Southeast Asian country has one of the region’s fastest-growing economies, with robust exports and foreign investment delivering average economic growth of 6.55% over the past five years.
Vietnam has been targeting an annual GDP growth rate of 6.5%-7% for the 2016-2020 period, and it grew by 7.08% last year, according to the International Monetary Fund, which had pegged the GDP at more than US$240 billion in 2018.
If the 2018 total is raised by 25.4%, the value of Vietnam’s economy would be over US$300 billion, significantly narrowing the gap between the country and the Philippines, Southeast Asia’s fifth-largest economy.
“The revision might be positive for foreign investment as Vietnam might become more attractive,” Vo Tri Thanh, a government economic advisor and director of the Hanoi-based Institute for Brand and Competitiveness Strategy, was quoted by Reuters as saying.
Thanh stated that Vietnam should proceed with caution as the GDP revision will lead to changes to many important indicators, such as the public debt ratio to GDP and the budget deficit ratio to GDP.
“A lower ratio of public debt to GDP doesn’t automatically mean that Vietnam can immediately borrow more now,” he said.
In its statement last month, the GSO claimed recent strong private sector growth had not been fully reflected in its statistical data and that experts at the International Monetary Fund and the United Nations were helping with the revision.
MBBank to offer online tools for customers’ daily operations
MBBank has signed a cooperation agreement valued at VND50 billion with Workway JSC to support corporate customers who wish to use Workway’s general enterprise management platform 1Office.
Customers converting to 1Office would gain an online working environment that digitizes their firm’s activities related to manpower, customers and communications. It would also allow 1Office members to communicate with each other to simplify their business practices.
Participating firms can use the 1Office Professional package free of charge, which also includes an automated salary payment service.
1Office is an enterprise governance solution based on cloud computing. The platform can be deployed, repaired and upgraded easily and quickly.
In addition, 1Office was designed to apply artificial intelligence technology to recruitment and manpower management.
Jan-Aug sees trade surplus of US$3.4 billion
Vietnam exported nearly US$170 billion worth of products and spent US$166.58 billion on imports in the January-August period, resulting in a trade surplus of US$3.4 billion so far this year.
According to the Ministry of Industry and Trade, exports in the eight-month period rose 7.3%, while imports were up 8.5% over the same period last year, news site Vietnamplus reported.
In the period, 26 kinds of merchandise reported export revenue of over US$1 billion each, accounting for 89.5% of the country’s total export turnover.
In August alone, the country recorded a trade surplus of US$1.7 billion, equivalent to the trade surplus in the January-July period.
Specifically, Vietnam exported goods worth US$24.5 billion in August, up 6.6% month-on-month, while imports reached US$22.8 billion, down 0.6%.
In the eight-month period, the United States remained Vietnam’s largest import market, with revenue of US$38.6 billion, up more than a quarter over the same period last year.
The European Union came in second with nearly US$28 billion, followed by China with US$24 billion and the ASEAN with US$17 billion.
According to experts, the country will continue seeing positive results in trade during the rest of the year.
However, the export revenues of some traditional commodities, such as rice, coal and crude oil, fell in the period. Therefore, local enterprises should take advantage of incentives from free trade agreements that Vietnam has signed, focusing on ensuring the clear origin of their products.
The Ministry of Industry and Trade has asked the Import and Export Department to work out solutions to boost exports.
In addition, the department should coordinate with the Trade Remedies Authority of Vietnam to review products prone to trade disputes to proactively take steps to avoid disputes.
The department was also assigned to cooperate with associations to review markets that have reported a decline in export revenues to find the causes and solutions to address it.
It must especially enhance control over imports, such as automobiles and sugar.
Vietnam’s PMI continues growth despite slower pace
Growth softened in the Vietnamese manufacturing sector as slower client demand and the impact of U.S.-China trade tensions restricted new orders and production, prompting the country's Manufacturing Purchasing Managers’ Index (PMI) growth to slow down last month.
According to a report released by HIS Markit today, September 3, the PMI posted 51.4 in August, remaining above the 50 no-change mark but falling from 52.6 in July to signal a weaker overall improvement in business conditions. In fact, the growth rate is the lowest in the past six months since February.
Business confidence though still positive posted a six-month low on the growth chart and was below the series average. Companies are still confident that output will rise over the coming year, however, with optimism reflecting expectations of improving customer demand, it noted.
Weakness in August was centered on investment goods producers, where operating conditions worsened. This contrasted with further improvements in the consumer and intermediate goods sectors. This pattern was repeated with regard to output, new orders and employment.
The rate of growth in manufacturing output was the weakest in the current 21-month sequence of expansion during August. While rising new orders supported increased production at some firms, others reported softer client demand and reductions caused by trade tensions.
These factors were also linked to a slowdown in new order growth. New business increased at a solid pace, but one that was the weakest since January. Meanwhile, new export orders rose modestly for the second month running.
Andrew Harker, associate director at IHS Markit, stated in the report that the slowdown in growth in August, due to lower demand arising from U.S.-China trade tensions, shows that the Vietnamese manufacturing sector is not immune to the impact of global trade issues.
While Vietnam is one of the countries seen as being able to benefit from trade diversion and companies setting up new operations there, the reduction in trade flows resulting from current tensions can still make work harder to come by.
“However, the resilience of the Vietnamese manufacturing sector should not be underestimated. We have seen slowdowns such as that recorded in August before, during the current sequence of growth, and rates of expansion have always rebounded in the following months. This could be the case again as 2019 draws to a close,” Harker added.
Manufacturers supported ongoing increases in production by raising their purchasing activity and employment levels. Job creation was recorded for the fourth time in the past five months.
Apart from supporting current output requirements, some respondents indicated that input buying had been raised to help build inventories. Consequently, stocks of purchases were also up.
Improved operating capacity and slower new order growth enabled firms to work through outstanding business in August. Backlogs decreased for the first time in three months.
The rate of input cost inflation eased for the fourth consecutive month, with input prices up only marginally midway through the third quarter. Firms were therefore able to lower their selling prices without greatly affecting profit margins. Charges fell for the ninth successive month, albeit fractionally.
Long An seeks to convert power station from coal input to LNG
As part of its ongoing development efforts and concern for the environment, the government of the Mekong Delta province of Long An is seeking the Government’s approval to convert its coal-fired power center to one that uses liquefied natural gas (LNG), with help from foreign investors, stated Le Minh Duc, director of the provincial Department of Industry and Trade.
Duc told The Saigon Times that the province will also propose raising the capacity of the center but did not provide further details.
Deputy Prime Minister Vuong Dinh Hue, at a recent meeting with the provincial leaders, has agreed to the province’s proposal, Duc added.
The Long An coal-fired power center covers 260 hectares of land, but if it converts to LNG, the area needed will drop to some 100 hectares. Therefore, the province is proposing an increase in the center’s capacity to make use of the remaining land.
Duc pointed out that multiple investors have expressed interest in the LNG power project, but the province has chosen two investors from the United States. The final decision will be made by the Ministry of Industry and Trade and the Government.
The Long An power center includes Long An 1 and 2 thermal power plants, with a combined capacity of 2,800 megawatts.
The province had earlier asked the Ministry of Industry and Trade to approve the development of LNG power plants instead of coal-fired ones.
However, the ministry rejected the proposal as the province’s coal-fired thermal power projects had been included in the adjusted National Power Development Plan VII, approved by the prime minister on March 18, 2016.
Vietnam Renewables to highlight Govt’s power development plans
Vietnam Renewables Summit, scheduled to kick off on October 17 in HCMC, will feature discussions on the Government’s renewable power development plans, rooftop solar programs, wind power projects and so on.
The two-day event will spotlight the country’s renewable energy goals with a key session, entitled “Vietnam's Renewable Power Development Plan & Supporting Mechanisms,” presented by Nguyen Ninh Hai, head of the Electricity and Renewable Energy Authority’s Renewable Energy Division, under the Ministry of Industry and Trade (MOIT).
Besides this, representatives from MOIT will deliver speeches on direct power purchase agreements, development processes for renewable energy in the years to come and integrated rooftop and co-generation in industrial facilities.
In addition, representatives from Bank for Investment and Development of Vietnam, or BIDV, will share with participants the macroeconomic outlook and growth of the local renewable power sector.
Senior representatives from Indefol Engineering Solution, Vina Capital Group and Deutsche Gesellschaft fur Internationale Zusammenarbeit are set to share further insights on solar rooftop power development.
Meanwhile, Vietnam Electricity will be in charge of convening a session on solar rooftop development planning and a demand-side management program. Participants can learn more about the country’s targets to generate solar output of one gigawatt-peak by 2020 at this session.
Further, successful solar projects in the country will be analyzed at the upcoming energy summit, particularly the Hong Phong 1 solar project in the south-central province of Binh Thuan, which was executed by Ha Do Group, and the Sao Mai solar PV1 project by Sao Mai Group in the Mekong Delta province of An Giang.
The second edition of the Vietnam Renewables Summit, organized by global conference organizer Centre for Management Technology, will also include other sessions, such as “New Regulatory Developments for Vietnam Renewables” by Baker & McKenzie and “Recent Trends in Renewable Energy Project Financing in Vietnam” by Societe Generale Corporate and Investment Banking.
Ministries urged to provide inspection results on Asanzo
National Steering Committee 389 has sent an urgent dispatch to the relevant ministries and agencies, calling for the release of inspection results related to allegations that Asanzo committed product origin fraud, as the case has dragged on for two and a half months.
The National Steering Committee 389, whose full name is the National Steering Committee against Smuggling, Trade Fraud and Counterfeit Goods, said in the dispatch that the Ministry of Public Security’s (MPS’) investigators on August 26 had asked it to urge the relevant ministries to release their conclusions on the Asanzo case.
In response, the committee said that it had asked the ministries of Industry and Trade and of Science and Technology as well as the general departments of Vietnam Customs and Taxation on July 24 to jointly provide the report to the MPS investigators.
However, the investigators have not received anything related to the case from the ministries and agencies to date.
Accordingly, to apply the Prime Minister’s directive effectively, the committee once again urged these ministries and agencies to fulfill the request.
In related news, Asanzo on August 30 issued a press release, announcing its temporary business suspension pending the final inspection results of the competent agencies. Meanwhile, it still offers warranty and maintenance services to ensure customers’ interests are met.
Tech group CMC to run BIDV’s Trade Finance software
CMC Technology Corporation announced today, September 4, that it will operate and provide first-line support for the Trade Finance software recently installed at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) once it is put into service.
Earlier, BIDV and Surecomp, global leading providers of trade finance solutions for banks and corporate clients, signed a contract and kicked off plans to procure and apply Trade Finance software at the bank on September 3 in Hanoi.
CMC serves as a Surecomp subcontractor in applying trade finance solutions at BIDV.
The software will enable the bank to offer quick responses to meet clients’ demand for trade finance services and improve the bank’s competitive edge in quickly developing modern trade finance products.
The BIDV Trade Finance and corebanking software are the bank’s two largest projects, requiring approval from the State Bank of Vietnam before launch, according to Tran Phuong, vice general director of BIDV and head of the BIDV Trade Finance project management board.
Ho Thanh Tung, vice general director at CMC Technology Corporation, said that CMC plays an important role in the BIDV Trade Finance project as it will be in charge of transferring technology and providing technical support once the software is in operation.
Meanwhile, according to Surecomp Chairman Eyal Hareuveny, CMC’s selection as the technical regulator for the big-ticket software project of the local leading bank proves its technological capacity for supporting enterprises through digital transformation.
CMC is set to become a global tech group in the coming period, taking the lead in offering digital transformation services to companies around the world. It looks to earn US$1 billion in revenue by 2023.
Vietnam, RoK share experiences in goods distribution
A seminar on policy orientations for win-win cooperation in goods distribution between Vietnam and the Republic of Korea (RoK) took place in Hanoi on September 4.
The event was co-organised by the Ministry of Industry and Trade (MoIT)’s Domestic Markets Department and the RoK-based Reshaping Development Institute.
Speaking at the seminar, Tran Duy Dong, head of the department, said as part of a project on comprehensively developing Vietnam’s distribution industry, a group of Vietnamese and Korean researchers have published a report on the win-win cooperation policy and ways to boost competitiveness and growth of the Vietnamese sector.
According to the group, the core issue that challenges the development of the industry is a conflict between the modern and large-scale distribution system and the traditional market model.
Dong said the MoIT will continue working to modernize the distribution industry and create a balance between the modern and traditional systems.
Kang Min Ho, general director of LOTTE Mart Vietnam, said his company has signed an agreement with the Korea International Cooperation Agency to support the project, adding that both sides highly value the growth of the Vietnamese distribution market.
Nguyen Thanh, Director of the Thua Thien – Hue Department of Industry and Trade, said traditional markets face difficulties related to outdated infrastructure as well as food safety and product origin problems.
Consumers, particularly in urban areas, are switching to shopping at malls and buying products online, thus causing the system to become stagnant, he added.
Thanh said there is a need for investment in improving these markets’ infrastructure and developing professional operations and services at wholesale markets. Capacity training for market managers and the promotion of technological application among sellers are also necessary, he said.
BOT format not recommended for An Huu-Cao Lanh Expy
The provincial government of Dong Thap has proposed that the An Huu-Cao Lanh expressway be constructed using public funds, instead of using the build-operate-transfer (BOT) format.
The expressway, which will run parallel to the existing National Highway 30, would need some VND5.38 trillion in public funding.
Meanwhile, over VND5.6 trillion would be needed if the project is executed under the public-private partnership (PPP) format with a BOT contract, said Nguyen Van Duong, chairman of the provincial government, at a working session with a delegation from the National Assembly (NA) on September 4 in Dong Thap.
The PPP format has higher costs due to bank loan interest payments.
Also, under the PPP format, the project will likely take a longer time for completion due to cumbersome legal procedures.
Further, private investors will contribute a mere 29.4% to the total amount of VND5.6 trillion since they are allowed to operate the project for no longer than 18 years, which is deemed not long enough to recoup investment in case the capital contribution is higher than 30%. Thus, the chairman suggested the PPP format would be less cost-effective.
The Project Management Board No.7 is currently studying both investment formats and will report their conclusions to the Ministry of Transport, the chairman added.
However, it is urgent and important to build the expressway to ease the traffic overload on National Highway 30. The road has experienced a surging volume of traffic since the Cao Lanh and Vam Cong bridges and roads connecting them were opened, he said.
Accordingly, the provincial government petitioned central State agencies to approve the public investment format.
Dong Thap and Tien Giang provinces will extract roughly VND2.1 trillion from their budget to invest in the project, which will run through the two Mekong Delta localities, while the remaining VND3.2 trillion will come from the central State budget.
Addressing the meeting, NA Chairwoman Nguyen Thi Kim Ngan said that she and members of the NA Standing Committee supported the province’s proposal.
She added that the NA Standing Committee would report this session’s results to the Government and ask it to consider the proposal.
The 30-kilometer expressway plays a pivotal role since it will connect Mekong Delta localities with the HCMC-Can Tho Expressway and Cambodia and will encourage goods transport among these localities, according to Le Minh Hoan, the provincial Party chief of Dong Thap.
Vietjet opens downtown check-in service
Local budget carrier Vietjet has launched its first downtown check-in service to help passengers board more easily.
From September 2, passengers will be able to use the downtown check-in service as well as other outstanding utilities at 60A Truong Son, Ward 2, Tan Binh District, HCMC, at any time.
Passengers can buy add-on services and receive their boarding passes after completing check-in procedures. Checked baggage will be accepted and baggage tags will be issued from November 1.
The new modern ticket office and Vietjet Plaza service complex are equipped with digital boards to provide information on the schedules of all Vietjet flights.
Passengers who use the free downtown check-in service can go directly to the airport security counter to enter the boarding area.
In addition, Vietjet provides a free shuttle bus to Tan Son Nhat Airport from 60A Truong Son every 15 minutes.
On the occasion of the opening, Vietjet is offering free seat selection and 20 kilograms of additional checked baggage to all customers who use any of the services at the new ticket office.
BASF Vietnam has new managing director
BASF has appointed Erick Contreras as managing director of BASF Vietnam to replace Tanachart Ralsiripong upon his resignation.
Contreras began his career with BASF in 2007 as a technical sales manager for the gas treatment business in Australia.
He then moved to BASF Asia Pacific Regional Headquarters in Hong Kong in 2010 and held various management positions in the Intermediates and Performance Chemicals divisions.
Before joining BASF, Contreras spent 10 years with Shell in various roles in Malaysia and the Philippines.
He holds a bachelor’s degree in Chemical Engineering from the University of the Philippines and a master’s degree in Business Administration from the University of Manchester.
BASF is organized into six segments: chemicals, materials, industrial solutions, surface technologies, nutrition and care and agricultural solutions.
In Vietnam, the company offers solutions to key industries, including agriculture, construction, automotives, footwear, paint and coatings and electric and electronics.
Startups discuss competitive edge needed to thrive
Startups in the central region, alongside State officials and enterprises, joined a discussion to evaluate the competitive advantages of innovative startups at a seminar recently to develop the regional startup ecosystem.
Addressing the seminar held in Danang City, Vo Duy Khuong, board chairman at Danang Entrepreneurship Support (DNES), said that startups based in the central city of Danang and across the whole central region had not determined their competitive advantages. Accordingly, the event would offer opportunities for the relevant parties to discuss the issue.
Pham Duc Nam Trung, director of DNES, noted that technology service providers for the tourism industry have been the most successful startups in the central city in recent years.
According to Pham Ngoc Sinh, deputy director at the Department of Science and Technology of Quang Nam Province, agriculture and ecotourism are the strengths of the region.
Quang Nam has encouraged startups to join its “One Commune One Product” (OCOP) program, which provides financial backing of 50% of firms’ investment requirements, up to a maximum value of VND100 million, to stores that sell OCOP products. The maximum value is raised to VND500 million for district-level OCOP centers and VND1 billion for provincial OCOP centers, Sinh stated.
The provincial State official added that startups should not rush to grab profits as it takes time for an innovative startup to achieve success, especially in a demanding market.
Besides this, information technology and quality tourism services are strong fields for startups, said Phan Hai, board chairman of BQ Shoes Company, headquartered in Danang City.
Meanwhile, State management agencies should work out strategies to develop sectors where local startups and small- and medium-sized enterprises have competitive advantages, suggested Nguyen Pham Ha Minh, director of the Saigon Innovation Hub (SIHUB).
The SIHUB head added that startups should quickly adopt effective measures to offer the best products at the most reasonable prices to customers.
AusCham collaborates with Cushman & Wakefield for real estate symposium
The Australian Chamber of Commerce in Vietnam (AusCham) will partner with Cushman & Wakefield to organize the Vietnam Real Estate Symposium 2019, which will take place on September 12 at the Sofitel Saigon Plaza in HCMC.
The organizer said the 7th premier real estate symposium will gather the leading industry players to collaborate and share market insights.
At the event, directors and experts from Vietnam’s real estate industry will provide key observations, analyses and predictions on the future of the market.
Commercial and residential real estate markets in Vietnam’s largest cities and adjacent provinces have boomed in recent years, leading to more domestic and foreign investment in Grade A and luxury properties.
This year, the organizing board will continue its mission to create the country’s go-to event for commercial, industrial and residential real estate in Vietnam.
Vietnam’s property market has steadily recovered since the difficulties of the 2009-2013 period, particularly within the residential sector. The surging demand for residential property has led to a high absorption rate of 70%-80% of new supply (with 30,000-40,000 new apartment units available each year).
Markets in provinces surrounding HCMC, Hanoi and Danang have subsequently prospered as well. Foreign participation and investment continues to grow due to project cooperation, mergers and acquisitions and direct financing, while domestic and foreigner buyers have driven interest in Grade A and luxury apartments and spurred new models for real estate development.
While the outlook for 2019 and beyond is promising, previous years have demonstrated that markets are not definitively predictable. To prevent the risk of a new bubble, it is vital to consider the necessary procedures and policies to avoid market overheating, experts said.
For these reasons, 2019’s Vietnam Real Estate Symposium will focus on “What’s Next.” The exclusive event will be limited to 200-300 attendees, including local and regional developers, domestic and foreign large-scale investors, multinational companies and government representatives.
Vietnam, Indonesia hold strong potential for fishery cooperation
The potential of Vietnam and Indonesia to cooperate in the fishery industry is high since both countries have their own advantages in the sector, said Tran Dinh Luan, head of the Directorate for Fisheries of Vietnam.
At a forum on the potential for cooperation between Vietnam and Indonesia, being held as part of the Vietnam Fisheries International Exhibition 2019 (Vietfish 2019), Luan said this is the first forum on cooperation in the sector between the two countries, which is expected to enhance the strengths of enterprises in both countries and help Vietnamese seafood processors to produce high-quality products for export.
In the coming periods, the two sides will jointly hold additional forums to assist businesses to increase trade and learn from each other’s experiences in developing fishery resources.
At the forum, Jaya Wijaya from the Indonesian Ministry of Maritime Affairs and Fisheries reviewed Indonesia’s policies on promoting investment and tax reductions, as well as opportunities in the fishery sector between the two countries.
Nguyen Thi Thu Sac, vice chairwoman of the Vietnam Association of Seafood Exporters and Producers (VASEP), said Indonesia had advantages in the development of their fishery industry, while Vietnamese businesses in the sector are lacking materials for production.
According to Ibnu Hadi, Indonesian Ambassador to Vietnam, Indonesia’s seafood exports to Vietnam are on the rise. In July, Indonesia shipped more than US$55 million worth of seafood products to Vietnam, while Vietnam’s seafood exports to Indonesia were only some US$1.6 million.
Therefore, VASEP proposed that Indonesia create regulations to ensure easier access for Vietnam's dried seafood exports to its market, and assist Vietnamese firms seeking to import seafood materials.
Introducing Vietnam’s potential to develop the fishery sector, VASEP vice chairwoman Sac said the volume of exploited seafood in Vietnam has been growing at a rate of 5% annually. Last year, the country’s seafood export value reached over US$9 billion.
In addition, the Government has devoted much attention to the industry’s development. Free trade agreements that Vietnam has participated in have also created favorable conditions for local enterprises to improve their products’ quality and offer them multiple incentives.
Novaon launches ecommerce platform
Novaon Corporation last week rolled out ecommerce website Onshop, offering a new online platform for ecommerce operators in Vietnam.
Ecommerce traders who join the platform will receive comprehensive solutions for starting their online businesses, expanding their sales channels, handling promotions and attracting customers. The platform also provides a system for centralized and optimized business management.
In particular, Onshop traders will receive advice on how to build their brands with a domain name, logo and professional website themes.
Besides this, Onshop will help users connect their online platforms with other sales channels, such as shops, social media and ecommerce sites, to set up a multichannel sales platform, which can improve sales efficiency and reduce operating costs.
Further, Onshop helps users connect with Google Shopping, a new form of Google advertising. Users can create a website and synchronize product information on the website with the Google Merchant Center as well as link their Google Ads accounts. They can then use Google Shopping Ads to promote their products.
The Onshop ecommerce platform has collaborated with many app providers, aiming to offer many useful apps to online business owners to promote their products and enhance their sales.
Data from Google and Temasek show that the local ecommerce market’s scale is expected to increase in the next seven years to US$15 billion by 2025 from US$2.8 billion last year.
However, a Novaon representative said that millions of ecommerce businesses in the country are currently facing multiple challenges in creating and designing websites, managing advertising techniques and policies, expanding sales channels and applying sales management strategies.
The average scale of an ecommerce firm in the country remains small, with roughly 10 orders per day, worth VND200,000 per order. Their average monthly turnover fluctuates between VND40 million and VND60 million.
Accordingly, Onshop was launched with an aim to help online business operators increase their sales and bolster business development, said Do Van Giang, sales director at Onshop.
Traceability requirements hinder local shrimp exports to EU
Vietnamese shrimp exporters are having difficulty meeting the requirements on food safety and traceability when shipping their products to the European Union, according to experts at a conference in HCMC on Thursday.
Held by Oxfam and the International Collaborating Centre for Aquaculture and Fisheries Sustainability, the conference was aimed at starting a dialogue between stakeholders in the public and private sectors and discussing the opportunities and challenges arising from the European Union-Vietnam Free Trade Agreement (EVFTA) for Vietnam’s shrimp industry.
The greatest challenge is that most local producers are only able to run small shrimp farms, whereas the European Union demands shrimp exports meet stringent hygiene standards and obtain traceability certificates, creating high costs for these producers, stated Ho Quoc Luc, chairman of Sao Ta Foods JSC.
Other experts noted that expanding shrimp farms requires investment in science, technology and equipment. However, small-scale shrimp farming accounts for a staggering 70%-80% of the total, which makes it more difficult to meet the traceability requirement.
“To achieve this standard, breeding farms must have sufficient financial resources to meet the required investment, and their farming scale must be quite large to share the additional costs,” remarked Luc.
He added that the majority of local shrimp farmers lack capital and have little land. Therefore, the standard farming area only makes up some 5% of the total farming area.
Echoing a similar view, Pham Viet Anh of GlobalG.A.P pointed out that many households farm shrimp on a medium and small scale, and their farming methods are outdated, so they find it difficult to meet the requirements.
He noted that many shrimp breeders are still inclined to use antibiotics, though the amount used is starting to decline.
According to experts, shrimp exporters should form the habit of recording the history of their shrimp’s origins. None of them have any prior experience with this.
Importers will also require shrimp producers to take steps to protect the environment and safeguard the rights and interests of their workers.
Data from the Vietnam Association for Seafood Exporters and Producers (VASEP) show that shrimp, which accounts for nearly 38% of all seafood exports, recovered in July with a year-on-year increase of 13.4% to reach US$334 million after a weak performance since the beginning of the year.
In China, the government is applying trade barriers and increasing food safety control, so crossborder exports are not acceptable. However, official exports by sea are on the rise.
From June, the volume of white-leg shrimp exported by sea to China almost doubled compared with the previous month. VASEP forecast that this trend would continue to bring positive results for the remainder of the year.
By contrast, shrimp exports to the European Union fell by 21%. The main consumption countries, such as the United Kingdom, Germany and the Netherlands, recorded a drop of 5%, 9% and 45%, respectively. The average selling price dipped by US$1 per kilogram against the same period last year.
Standard Chartered Bank completes US$100m capital injection
Standard Chartered Bank Vietnam has announced the completion of a tier-2 capital injection of US$100 million, strengthening its readiness for early adoption of Basel 2 under Circular 41/2016/TT-NHNN issued by the State Bank of Vietnam.
The move further expands the Vietnamese franchise’s capital base, building on the bank’s tier-1 capital increase of some US$49 million in 2018 and bringing its own capital to around US$300 million (some VND6.9 trillion).
Judy Hsu, CEO for ASEAN and South Asia, Standard Chartered Bank, noted that Vietnam is a central part of the bank’s ASEAN footprint and global network.
“We remain fully committed to the country, where we have been present for 115 years, and to our clients operating there. With our in-depth local knowledge, a comprehensive international network and advanced product and advisory capabilities, I'm confident that we will continue to be a strong partner to our clients as they seek to meet their growth ambitions," Hsu said.
Standard Chartered has been investing significantly in Vietnam over the last few years and growing its business across the country.
The bank has expanded its distribution network by launching a new branch in District 7, which is a new central business district in HCMC, and has recruited more people to support its business growth.
To make banking safer and more convenient for clients, the bank has also introduced cutting-edge digital services, from virtual credit cards and biometric safe deposit lockers to retail digital centers that allow clients to conduct transactions such as cash deposits and withdrawals, access online banking services and contact the client care team around the clock.
Nirukt Sapru, CEO for Vietnam and ASEAN and South Asia Cluster Markets, Standard Chartered Bank, stated that Vietnam continues to offer an exciting business opportunity, thanks to its strong fundamentals and economic prospects.
“We have built a strong business in Vietnam and aspire to take it to greater heights. The additional capital will enable us to further develop our award-winning digital capabilities and ensure we continue to meet and exceed our client’s expectations as their trusted, 21st century banking services provider," Sapru remarked.
In the announcement, the bank confirmed that it is expanding and reinforcing its commitment to Vietnam and continuing to contribute significantly to the country’s development by helping international clients invest in Vietnam and Vietnamese people and companies connect with the world and global supply chains.
The bank also continues to play an active role in the development of the local capital markets, acting as the placement agent for many VND-denominated guaranteed bond issuances for Vietnamese enterprises in recent years.
Firms thirsty for capital despite banks’ spare cash
Many banks have claimed they do not lack funds to meet corporate demand for loans, though enterprises are complaining of difficulties in accessing credits.
Speaking at a conference held in Can Tho City recently, Nguyen Quoc Hung, director of the Credit Department of the State Bank of Vietnam (SBV), noted that in the Mekong Delta region, the credit scale in the first seven months of the year amounted to VND623.9 trillion, up 7.76% against the figure seen in late 2018.
Of the total, the credit for the agricultural and rural sector rose by 14.8%.
Hung noted that over the first two quarters of 2019, credit organizations had disbursed some VND71.3 trillion to 4,400 firms.
“Besides this, banks’ debt restructuring activities such as reducing interest rates for loans and increasing lending caps had supported over 250 firms with outstanding loans totaling VND3.7 trillion,” he said.
However, loans offered to firms operating in value chains and those applying advanced technology to their production processes remained limited due to the ineffectiveness of their businesses. In addition, many firms failed to show sound financial capacity, discouraging banks from providing loans.
“Many small and medium enterprises (SMEs) have yet to meet loan requirements,” Hung explained.
Hung told The Saigon Times on the sidelines of the conference “Connecting Banks and Enterprises in the Mekong Delta” that in principle, banks with abundant capital sources must look for enterprises that boast strong performance to offer them loans. Banks create more favorable conditions for even SMEs to get loans.
“However, some firms with weak financial capacity have still found it hard to access bank loans as they fail to meet banks’ requirements,” he said.
A representative of HCMC Development Joint Stock Commercial Bank (HD Bank) noted that between January and July, its credit growth was recorded at 17% against 2018.
Banks are more cautious about offering loans to agricultural firms as lending is associated with high risks, customers are often unable to make loan payments due to natural disasters and diseases and the outlet of farm produce depends heavily on the Chinese market, the HD Bank representative stated.
The selling prices of agricultural products and their quality are unstable, resulting in reluctance among banks to offer these firms loans.
In addition, a representative of Asia Commercial Bank pointed out that banks prefer to offer loans to firms with collateral.
“However, enterprises’ land and premises are often rented from others for a certain term, so when they use the land and premises as collateral, banks can only appraise their value for the period of the lease, leading to inaccuracy in valuation compared with the market price,” the representative remarked.
Firms’ financial reports are also used by banks to assess their business performance before loans are offered, the representative said.
Addressing the conference, Doan Huynh Dung, chairman of Kien Giang Import & Export JSC, active in the rice field, noted that each year, the firm buys and sells some 270,000 and 300,000 tons of rice, respectively.
It needs over VND1.3 trillion per year on average, with loans reaching VND1 trillion, for its business operations.
The chairman, however, stated that the firm is still facing difficulties in accessing loans due to high interest rates and strict requirements set by banks, so he called for support from the authorities and credit organizations.
Vo Quan Huy, director of Huy Long An Company, suggested it was necessary to change the way property is appraised.
He proposed determining the value of property according to the land price in provinces to make it easy for firms to use property as collateral to get higher loan amounts from banks.
Meanwhile, the chairman of Kien Giang Import & Export JSC proposed that credit institutions be more flexible with their lending requirements.
“Banks should learn about the difficulties and challenges facing firms, as well as their potential for financial capacity and trust in firms’ development,” he remarked.
SBV Deputy Governor Dao Minh Tu stressed that commercial banks should reform administrative procedures and correctly appraise firms’ property, used as collateral.
Tu added that credit institutions should continue removing bottlenecks to help SMEs access loans.