BUSINESS NEWS 8/6

Domestic coffee prices bounce back

BUSINESS NEWS 8/6

The price of coffee has undergone another surge during the past week after prices fell to below VND30,000 per kilo in mid-May.

The past week saw the price of coffee beans in central highland provinces rise from VND33,200 to VND33,900 per kilo. Notably, the price of coffee beans in Dak Lak province bounced back to VND34,000 early in the week.

Nguyen Quang Binh, an expert in the coffee industry, said the buying price of coffee beans was between VND34,000 and VND34,200 per kilo early in the week, noting that the price of coffee beans in the central highlands is likely to increase further to between VND34,500 and VND35,000 per kilo later in the week.

The soaring prices of coffee beans can be attributed to the increase in the prices of Arabica and Robusta coffee in the New York and London markets, respectively.

This rise in demand is occurring simultaneously with Brazil, the world’s largest coffee exporter, encountering difficulties in harvest activities due to suffering from a period of heavy rain in coffee cultivation areas.

However, the main reason for the escalation of prices is attributable to the trade war between the world’s largest economies.

According to the Ministry of Industry and Trade, the country’s coffee exports in May reached 135,000 tons, earning US$220 million.

These figures represent a drop of 13.1 per cent in volume and 27.8 per cent in value in comparison with the same period last year.

During the first five months of the year, the nation’s coffee exports hit 767,000 tons, fetching more than US$1.3 billion, down 13.1 per cent in volume and 23 per cent in value against last year’s corresponding period.

Central bank advocates digital banking development

The State Bank of Vietnam is encouraging credit institutions to forge closer ties with fintech firms in order to develop Industry 4.0-based applications and subsequently offer more benefits to individual users and enterprises.

As an unavoidable development trend for commercial banks, digital banking utilizes a combination of cutting-edge technologies in order to create better experiences for customers.

Amid the widespread adoption of digital technologies, banks are seeking to grasp new opportunities to spread their wings within the domestic market. Digital banking allows all financial transactions to be conducted via the internet, providing users with seamless access on electronic devices such as smart phones, tablets, and laptops.

Le Anh Dung, deputy head of the Department for Payment under the State Bank of Vietnam (SBV), said that digital banking applications helps banks cut down transaction costs, increases their revenues, and improves overall service quality. It is also aimed at leveraging the diversification of banking products and services, realizing the country’s policy on increasing the sharing and use of open data, and easing security risks for customers.

Nguyen Kim Anh, SBV Deputy Governor, said a wide range of challenges are set to arise from the development of digital banking, particularly relating to the completion of a legal framework and the control of payments to ensure rapid yet efficient growth of the sector.

Many economic experts believe that difficulties exist for the expansion of digital banking services as the diversification of banking services remain at low levels, primarily centred on traditional services dedicated to capital mobilization, lending, and payment. The digital banking trend could trigger fierce competition between commercial banks and fintech firms.

As such, the SBV has pledged that it is looking to apply new technologies into developing payment services, based on mobile platforms, fingerprint and face authentication, and QR code.

The central bank advocates the building of a proper legal framework to nurture fruitful operations with fintech firms as well as the issuance of standardized connections among credit institutions and those between these entities and fintech companies.

Exports rise thanks to trade war: VNDS

Viet Nam’s exports and industrial output have increased in recent months as the country is considered a beneficiary of the US-China trade war, according to a VNDrect Securities Corporation (VNDS) report.

The report showed that export growth rebounded sharply in April, up 10.4 per cent year-on-year, while May’s industrial production index increased by 10 per cent year-on-year.

“Despite the step-up in trade tensions, we maintain our 2019 and 2020 GDP growth forecasts at 6.6 per cent and 6.5 per cent,” the VNDS said.

In the first four months of this year, Viet Nam’s export growth remained positive at 6.5 year-on-year compared with negative growth for other Asian countries, thanks to strong domestic exports, particularly textile, wooden products and solid growth in exports of tech products.

“In addition, FDI from China into Viet Nam nearly doubled from the same period last year. We see resilient export growth and robust FDI inflows providing the country with a buffer against further escalation in the US-China trade war,” according the report.

VNDS said that barring a full-scale trade war, this round of Chinese yuan depreciation would be no different compared to last year because a sharper depreciation could add more uncertainty to the trade negotiation process and was unlikely to help Chinese authorities.

“We see less depreciation pressure on the Vietnamese dong compared to last year, thanks to better guidance from the State Bank of Viet Nam to the foreign exchange market and less funding pressure from strong US dollar given the Fed’s dovishness,” the VNDS added.

After Viet Nam was added to the US Treasury’s currency watch list for potential currency manipulation, VNDS said Vietnamese policy makers will be more cautious on currency management or intervention going forward.

“The country is becoming more vulnerable to US policy owing to the rising trade surplus with the US because many Chinese businesses have re-routed their goods to the US via Viet Nam to avoid tariffs,” the report read.

VNDS said although it expects muted inflation in 2019, it still see upside risks in the longer term due to a rebound in pork prices if African swine fever is contained and China’s growth stimulus measures are likely to boost demand for oil and raise oil prices amidst tighter global supply.

Chan May-Lang Co EZ gets $15m project

The central province of Thua Thien-Hue on Monday licensed a US$15 million project to enter Chan May-Lang Co Economic Zone.

In the deal, US toy maker Mattel Inc collaborated with Wilson Group Hong Kong to form Billion Max Viet Nam. The firm will build a factory for toy manufacturing in the zone’s tax-free Sai Gon-Chan May area.

The factory is expected to operate next year with the capacity of 20 million items a year, producing items including plastic toys, alarm equipment and outdoor lighting systems.

In the past five months, this province has attracted five FDI projects with total investment of $60 million. It also licensed nine projects invested by domestic investors with the capital of $568 million.

The Chan May-Lang Co economic zone was opened in 2006 by combining the deep seaport of Chan May and the tourism hub of Lang Co. Almost half of the zone’s total area remains empty.

Vietnamese enterprises seek export opportunities in China

Forty Vietnamese enterprises will join a business trip to explore export opportunities in the Chinese cities Nanning and Kunming from June 10-13, the Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade has announced.

The firms include dairy producer Vinamilk, Ba Ria Vung Tau Seafood Processing Import Export Co, Lien Viet Group, Tien Giang Food Co and Friesland Campina Viet Nam.

The trip is part of the National Trade Promotion Programme in 2019 and will include representatives from trade promotion agencies of 11 localities in the north.

The upcoming trip aims to promote shipments of Vietnamese agricultural products, seafood, processed food as well as handicrafts and garments, Vietrade said, adding that it will help domestic firms advertise their trademarks in the cities.

During their stays in China, the enterprise delegation will participate in the Viet Nam and China Business Forum, slated for Nanning (Guangxi Province) on June 10 and visit a farm produce trading centre a day later. They will also attend a trade fair and a large-scale investment conference in Kunming (Yunnan Province) on June 12.

In addition, they will visit the ASEAN Yunnan logistics centre, Asian trading centre and a market on fruit and consumer goods that will help them study the tastes of Chinese, Vietrade added.

Over the years, trade ties between Viet Nam and two Chinese neighbouring provinces have helped bring Vietnamese goods closer to the lucrative Chinese market and brought Chinese products to ASEAN markets.

Currently, two-way trade between Viet Nam's localities and Guangxi Province accounts for more than one-fourth of bilateral commercial ties. In 2018, the trade topped more than US$26.7 billion, up 8 per cent year-on-year.

Last year, trade turnover between Viet Nam and Yunnan Province also saw a yearly rise of 13 per cent to $4.15 billion and has room to grow, according to Vietrade.

Hoa Phat sells 226,000 tonnes of steel in May

Hoa Phat Group has said it sold 226,000 tonnes of construction steel in May with a 3.5-fold increase in southern market, raising the five-month figure to 1.16 million tonnes, up 22.4 percent year-on-year.

Some 149,000 tonnes were sold in the south, marking a 1.65-fold rise from the same period last year.

Steel export also rose by 21.4 percent to about 106.400 tonnes, mostly to Japan, the US, Canada, ASEAN member states such as Cambodia, Malaysia and Laos.

In late May, the group shipped the first batch of 6,000 tonnes of quality rolled steel to Japan. Another 18,000 tonnes are waiting for delivery abroad in June.

Also during the month, it exported the first two containers of steel wires to Malaysia.

Domestic consumption further grows in five months

Domestic consumption continued to grow in five months of this year thanks to abundant supply, said the Ministry of Industry and Trade (MoIT)’s Domestic Market Department.

The total retail of goods and services reached over 403.8 trillion VND (17.5 billion USD) in May, up 1.9 percent month-on-month and 11.4 percent annually. On a five-month calculation, the figure hit more than 1.98 quadrillion VND, up 11.6 percent year-on-year.

Due to the long April 30 and May 5 holiday, revenue from accommodation and dining services stood at 236 trillion VND, accounting for 11.9 percent of the total and up 9.2 percent from the same period last year.

Trade experts forecast that political factors and trade tension between major countries will continue affecting key commodity market, apart from fluctuation in petrol prices and slight increase in several farm produce.

In the near future, the MoIT will step up domestic trade promotion programmes to boost consumption, especially in remote and mountainous areas, and bring goods to rural, border and island areas.

It will also closely track domestic supply and demand, especially key commodities.

Fine art and handicraft exports surge in five months

Vietnam’s fine art and handicraft exports experienced a significant increase of 50 percent to reach 45 million USD in May, according to statistics from the General Department of Customs.

The latest addition has brought the export turnover of these products to 190 million USD in the first five months of 2019, up 43 percent year-on-year, the data shows.

These positive figures were attributable to a booming demand of handicraft products, especially those made from bamboo, rattan and leaves, in the global market, according to the Handicraft and Wood Industry Association of HCM City (Hawa) as saying.

For example, more and more retirees in European countries are decorating their houses, resulting in high demand for handicraft products, Hawa said, adding that the proportion of people who bought handicrafts as gifts has also increased.

According to Hawa, there remains huge potential for Vietnamese fine art and handicraft producers to accelerate their exports to overseas markets including major outlets such as the US, the EU and Japan and emerging ones like India, Thailand, Taiwan, Russia, Norway and Chile.

The association also forecast that the nation’s exports of fine art and handicraft would likely reach 500 million USD by the end of this year.

Despite great potential to grow, the domestic fine arts and handicraft industry faces several challenges including the lack of creativity in Vietnamese designs and the shortage of professionally trained designers, trade experts have said.

According to the Vietnam Handicrafts Association (Vietcraft), around 90 percent of Vietnamese handicraft products were made to suit the technical designs of importers and were not made under Vietnamese labels.

Dang Quoc Hung, director of a handicraft company in the southern province of Dong Nai, said most Vietnamese handicraft manufacturers only focused on outsourcing to foreign clients. Though receiving abundant orders, local handicraft makers made modest profits due to increasing input costs.

According to the Ministry of Industry and Trade's Trade Promotion Agency, handicraft producers should pay attention to design and branding. The practicality of craft products along with their decoration should also be a focus.

As studying the tastes of customers, especially foreign ones, required great effort and funding, the firms should participate in prestigious fairs and exhibitions both domestically and overseas.

They could also learn about foreign customers' tastes in Vietnam by using surveys on which products international customers preferred to purchase at the country's famous tourist destinations such as Hanoi, Sa Pa, Da Nang, Hoi An, Hue and HCM City, the agency said.

Furthermore, businesses should utilise e-commerce to better introduce their products to importers and individual customers and boost their revenues, it added.

HCM City calls on investment capital in waste treatment projects

According to the Ho Chi Minh City Department of Natural Resources and Environment, the city People’s Committee and relevant departments launched bid invitations to tender consultancy price for waste treatment projects via electricity generation technologies.

More than 90 percent of the city waste has still been treated by the burial method, and the rest has being recycled into compost and incineration without generate electricity.

However, the disposal method has caused many consequences for the city's environmental quality such as increasing unpleasant nasty smell at landfills and a risk of secondary pollution from leachate.

Dealing with this problem, Ho Chi Minh City has advocated the disposal of the municipal waste treatment technology from burial method to incineration to create generate electricity since 2018.

Currently, many investors keen on these projects and sent documents to participate in the bidding.

According to the city’s program to reduce pollution by 2020, there are 60 percent of city waste must be treated by incineration to create electricity generation. 

Imported car number seven times higher than last year

According to preliminary statistics by the General Department of Vietnam Customs, the number of completely-built-unit cars imported into the country by the first half of May reached 58,295 units, worth more than US$1.28 billion, seven times higher than the same period last year.

Of which, cars with less than 9 seats remained the key import products with 42,574 units worth more than $830 million. The rest was trucks and cars with more than 9 seaters.

Therefore, each less-than-9-seater car imported into Vietnam from January 1 to May 15 has an average price at around $19,500 per unit or VND456 million whereas it was $21,900 per unit or VND512 million in the same period last year.

The amount of imported automobile spare parts and accessories by May 15 valued at around $1.46 billion whereas it was more than $1.07 billion over the same period last year. In comparison with the same period last year, the value of these products did not post high growth.

As the number of imported cars was high, along with plentiful domestic supply, in the last three months, several auto-makers have continued to run promotional campaigns to boost consumption.

Ben Tre hosts 18th safe fruit festival

A wide range of fruits are on placed on display at the 18th safe and fresh fruit festival, which kicked off in Cho Lach district, the Mekong Delta province of Ben Tre, on June 5.

The 5-day festival features 15 fruit booths and five food stalls. The highlight of the event is a fruit buffet area.

Many key products of Hung Khanh Trung B, Binh Thanh, Long Thoi, Hoa Nghia, Son Dinh, Vinh Binh and Phu Phung communes and Cho Lach town are also brought at the festival.

Contests of fruit and farm products, and a workshop on tourism development potential in Cho Lach and Ben Tre in general will be arranged in the framework of the festival.

Vice Chairman of the provincial People’s Committee Nguyen Huu Lap said the festival helps promote exchange and experience sharing, and enhance supply-demand chains among enterprises, traders and farmers in and outside the province.

The event aims to find and select precious varieties of fruits and farm products, thus building orientations for economic development and production in the locality, he added.

High-quality dragon fruit varieties crucial to boosting exports

Vietnam should develop quality varieties and improve cultivation techniques if the country wishes to bolster shipments of dragon fruits, experts said at a seminar held by the Ministry of Agriculture and Rural Development (MARD) and the Embassy of New Zealand in Vietnam on June 5.

According to PhD Tran Thi Oanh Yen, Deputy Head of Southern Horticultural Research Institute, Vietnam holds huge potential for dragon fruit production; however, poor varieties and planting techniques have put economic efficiency from the fruit at bay.

Yen also said that improper investment in post-harvest technology has resulted in high losses and low food safety and hygiene.

Thanks to a project funded by the New Zealand Government for 2013-2020, Vietnam has gradually developed high-quality dragon fruit varieties.

PhD Michael Lay-Yee from the New Zealand Institute for Plant & Food Research said that the project aims to develop the economy sustainably via branching out new varieties, applying advanced production models, and upgrading post-harvest treatment system.

Several varieties are being piloted and they will be chosen for commercialisation to improve economic efficiency, he said.

New Zealand experts suggested Vietnam invests in new varieties to sustainably develop the fruit sector in the context of fierce competition in the global market.

Tran Kim Long, Deputy Head of MARD’s international cooperation department, said that dragon fruits are among the 12 important fruits in Vietnam and have competitive edge in the global market.

 

Dragon fruit has been cultivated on 54,000 hectares in Binh Thuan, Long An and Tien Giang provinces. It has made up more than 36 percent of the total fruit shipments, with a total export value of 1.1 billion USD in 2018.

As Vietnam targets to gain 3.6 billion USD from fruit exports by 2020, the country has worked out many programmes and measures to rearrange production and branch out large markets.

Moc Chau strives to export up to 500 tonnes of mango to China

Moc Chau district in the northwestern mountainous province of Son La is striving to export 400 – 500 tonnes of mango to China, after its specialty fruit was licenced to enter the market this year.

Moc Chau’s total mango plantation spans 940 hectares, ranking third among fruit plantations of the district. The district produces an annual average of nearly 2,600 tonnes.

According to Tran Xuan Thanh, head of the district’s agriculture and rural development office, authorities last year supported the Thanh Dat fruit cooperative in Chieng Hac commune in obtaining its area code for mango export.

Thanh said the district will continue helping local farmers and cooperatives in terms of technical assistance and market connection for better distribution.

Vietnam earned 193.2 million USD from exporting mango and mango products in 2018, up 24 percent year-on-year and making up 5 percent of the country’s total vegetable and fruit export revenue, according to the Ministry of Industry and Trade.

China is Vietnam’s major mango importer, accounting for more than 84.6 percent of the total export value of the fruit.

Binh Duong recalls 11 stagnant projects

Authorities in the southern province of Binh Duong have decided to stop investments into 11 stagnant real estate projects in the area.

Those projects have been stagnant for years or have weak investors. Some of the projects are apartment buildings for low-income people in Thuan Dao Ward, the dormitory project for workers in Tan Dong Hiep Ward and the S.Home-Binh Duong Project in Binh Chuan Ward.

Three projects in Thuan An and Di An communes were recalled in 2017, four projects in Thua Dau Mot City, Thuan An, Ben Cat and Tan Uyen communes were revoked last year. Since early 2019, Binh Duong authorities have already made plans to revoke four projects.

The Department of Natural Resources and the Environment also published the names of seven companies that violated land-use regulations. Most of their projects have large plots of land. For examples, Lai Hung urban area project of Vinh Quang Company covers 30.74 hectares. A stagnant project of San Miguel Pure Food Company covers over 2.3 million square metres in Lai Hung Commune.

Other companies that have stagnant projects are Vissan Company, Saigon 3 Garment Factory, Long Viet Wooden Technology JSC, Duc Loi Investment and Development JSC, and Tsung Chang Industries.

Those companies have been given an extended deadline to start their projects.

As of now, the Department of Natural Resources and Environment has published the names of 21 violating companies and organisations on its website.

Binh Duong has the most on-going real estate projects in Vietnam with 381 projects. In the first five months of 2019, the local authorities have given approval to 17 projects.

Thieu lychee week to take place in Ha Noi

A week to promote thieu lychee from the northern province of Bac Giang’s Luc Ngan District will kick off at Ha Noi’s Exhibition Fair, Economic Transaction and Commercial Area from June 7-16.

This is the fourth consecutive year the week will be held in the capital, which is expected to boost consumption of the special fruit in domestic and foreign markets.

Deputy Chairman of Luc Ngan District’s People’s Committee Cao Van Hoan said it was forecast to harvest 80,000 tonnes of thieu lychee this year, priced between VND30,000 (US$1.2) and VND60,000 per kilo, based on quality.

Hoan said many businesses from the southern region and China had already ordered the fruit.

Thieu lychee has for many years been exported to foreign countries including the US, Japan, South Korea, Australia and Britain. The US Department of Agriculture has granted codes to 18 lychee growing areas in seven communes in Luc Ngan District, while China has issued codes for 36 growing areas in 30 communes.

On the first day of the week, a forum connecting production and consumption of thieu lychee and other agro-products from Luc Ngan District will be held, with the participation of local leaders, businesses and growers.

HCM City to host VietFood Beverage – ProPack expo

Some 600 enterprises from 22 countries and territories will participate in the 2019 Vietfood and Beverage-ProPack international exhibition, taking place at the Saigon Exhibition and Convention Centre in HCM City from August 7 to 10.

This year's exhibition is expected to attract 18,000 visitors.

On a total area of ​​15,000sq.m, exhibitors will present processed foods, agricultural products, food additives, beverages and packaged confectionery products, as well as food processing machinery, packaging machines, packages and bakery production lines.

Ngoc Bich, representative of Liksin Industry – Printing – Packaging Corporation said: “With 10 years of participation in the exhibition, Liksin has always connected to a lot of new customers at home and abroad, of which foreign customers accounted for about 40 per cent."

Through 22 years of success, the exhibition has recorded significant growth. Over the last three years, the number of participating enterprises rose from 425 in 2016 to 500 in 2017 and 550 in 2018. The proportion of foreign businesses also climbed 41 per cent in 2016, equivalent to 178 businesses. In 2018, there were 59 per cent of foreign enterprises, equivalent to 326 enterprises from 20 countries and territories.

The event, which will also be organised in Ha Noi in November, is organised annually by the Viet Nam National Trade Fair and Advertising Company together with the Ministry of Industry and Trade.

Masan Consumer to finalise list of dividend receivers

Masan Consumer JSC (MCH) is finalising a list of shareholders who will receive cash dividends on June 10.

The dividend will be issued at a rate of 45 per cent, meaning that each shareholder will receive VND4,500 per share.

The company will spend about VND2.7 trillion (US$115 million) on the dividend payment.

In 2018, Masan Consumer achieved revenue of VND17 trillion, up 28.7 per cent compared to 2017. Post-tax profit reached VND3.4 trillion, an increase of 51 per cent year-on-year.

The company has also announced its business results for the first quarter of this year with revenue of VND3.8 trillion and post-tax profit of over VND800 billion.

Over VND11.9 trillion raised via G-bonds in May

The State Treasury of Viet Nam raised more than VND11.9 trillion (nearly US$513 million) through Government bond auctions on the Ha Noi Stock Exchange (HNX) in May, down 5 per cent against the previous month.

Successful bidders will enjoy an annual yield of 3.7 per cent for five-year bonds, 4.69-4.72 per cent for 10-year bonds, 5.04-5.06 per cent for 15-year-bonds, 5.68-5.69 per cent for 20-year bonds, and 5.85-5.88 per cent for 30-year bonds.

Compared with April, the coupon rates of 30-year bonds increased 0.03 per cent per annum. Meanwhile, the rates of the remaining bonds fell between 0.01 and 0.03 per cent.

In the G-bond secondary market, the total volume of G-bonds sold by the outright method exceeded 783 million, equivalent to over VND86 trillion ($3.7 billion), up 11.5 per cent in value from the previous month.

The trading volume through repurchase agreements (repos) reached more than 888 million bonds, worth more than VND90 trillion ($3.8 billion), down 8.4 per cent in value month on month.

Foreign investors made outright purchases worth over VND2.4 trillion ($103.2 million), and outright sales of more than VND1.2 trillion ($51.6 million). Their repo sales were estimated at VND365 billion ($15.6 million).

The State Treasury has so far this year raised nearly VND94 trillion ($4 billio) via Government bond auctions at the HNX, fulfilling over 36 per cent of its annual target.

It plans to issue G-bonds worth VND260 trillion ($11.2 billion) via auctions in 2019.

Viet Nam’s credit growth expands by 5.07% in five months

The credit growth of Vietnamese banks in the first five months of this year expanded by 5.07 per cent against the end of 2018, the State Bank of Viet Nam (SBV) reported.

The rise was lower than that of the same period last year, when the credit rose by 6.16 per cent.

Despite the moderation of credit growth, experts are not concerned about the slowdown, saying it was even a good sign for the economy.

Can Van Luc, chief economist of the Bank for Investment and Development of Vietnam (BIDV), said he was not surprised at the moderate credit growth, explaining the SBV had targeted controlling credit growth since the beginning of this year to curb inflation and stabilise the macro-economy.

According to Luc, local firms are no longer too dependent on bank loans as they could raise capital from the securities and bond markets. The domestic market has also witnessed new capital supply channels, such as fintech and peer-to-peer companies.

As a result Luc said moderate credit growth was a good sign for the economy.

In addition, restructuring of bank loans had improved, he said, explaining that bank loans were pouring into the production and business sectors, which were key drivers for the country’s economic growth.

Moody’s Investor Services also hailed the moderate credit growth, saying it was positive for banks' asset quality and capitalisation.

According to Moody’s, tighter credit could lead to rising problem loan ratios, reflecting the seasoning of banks’ loan portfolios. However, lower credit growth encouraged banks to focus on borrowers of better quality, which would improve asset quality in the long term.

Moderate credit growth would also lower pressure on capital, especially for State-owned banks, the rating agency said.

In the first five months of the year, lending rates averaged 6 to 9 per cent per year for short-term loans and 9 to 11 per cent per year for medium- and long-term loans.

In the May macroeconomic report released last week, analysts from Bao Viet Securities Company (BVSC) forecast it would be difficult for banks to cut lending rates next month due to risks of high inflation and impacts from the US-China trade conflict.

Inflation was still under the Government’s control, but the risk to high inflation might come due to impacts from pork price hikes, BVSC analysts said, explaining the supply of the commodity was declining due to the spread of African swine fever and it would have a strong impact on the commodity’s price in the next two or three quarters.

In addition, the analysts said, the upward trend of core inflation was also quite clear, not creating favourable conditions for the SBV to loosen monetary policy.

“In the context of increasing inflation and risks to the financial market in the wake of the escalation of the US-China trade conflict, interest rates are forecast to have no chance to decrease in the future,” BVSC analysts noted.

Residential solar power purchase begins in central region

The Central Power Corporation (CPC) under the Vietnam Electricity (EVN) has paid nearly VND1 billion (US$43,000) to buy solar power from 134 residential roof-top systems in the central and Central Highlands regions since 2018.

A representative of the Da Nang-based CPC said the money was paid for surplus solar power after family use in connection with the national grid.

It said 134 households from Da Nang City and Dak Lak and Khanh Hoa provinces had released a ‘green’ power capacity of 465,000kWh to the national grid since 2018.

CPC said it had agreed to buy solar power from local residential solar roof-top systems for a price of VND2,134 (or 9.35 cents) per KWH.

The corporation has inked new solar power contracts with 407 households in the region with designed capacity of 3,864kWh.

According to CPC, the development of roof-top solar systems would help families reduce power payments by releasing surplus power to the national grid.

Da Nang, in co-operation with the European Union, has launched a pilot project to develop solar energy at hospitals, schools and households with total funding of $447,000 from 2017-20.

The coastal city has great renewable energy potential, with a 90km coastline, 2,000 hours of sunlight per year and average wind speed of 3m per second.

About 30 per cent of the city’s population use solar power for water heaters, while about 20 five-star hotels and resorts are using solar powered water heating systems. Projects using energy from ocean waves, tides and biogas from rural areas are planned for 2025.

Nano-lighting technology and power saving solutions can now be found in public areas, while solar power and energy-saving LED have been installed on deep-sea fishing vessels as part of a pilot project that started in 2013.

Da Nang also plans to build a 4.4MW solar farm on the closed Khanh Son Landfill to supply 7.7 million kWh per year to the city’s power grid, while reducing 5,000 tonnes of carbon emissions each year.

Since 2017, with the issuance of Prime Minister Nguyen Xuan Phuc’s Decision 11/2017, solar power projects have been allowed to sell electricity at a fixed price of 9.35 cents per kWh.

Vietnamese SMEs shown how to enter the global supply chain

Viet Nam is among the top countries attracting foreign direct investment in the Asia-Pacific region, but the rate of domestic small- and medium-sized enterprises (SMEs) participating in the value chains of foreign-invested companies is rather low, according to the Investment and Trade Promotion Centre of HCM City.

Speaking at the workshop on “How to become a qualified supplier to foreign firms” in HCM City on Tuesday, ITPC director Pham Thiet Hoa said: “This is a paradox. Currently, SMEs account for 98 per cent of businesses in Viet Nam but only 21 per cent of them are linked to foreign supply chains. This rate is lower than in many countries in the Southeast Asian region such as Thailand at 30 per cent and Malaysia at 46 per cent.”

The application of poor technologies, low labour productivity, financial shortcomings, and lack of experience in working with foreign enterprises and high-quality and experienced workers were the main barriers preventing Vietnamese SMEs from entering the global supply chain, he said.

According to experts, manufacturers come to Viet Nam for low wages, but productivity in Viet Nam is also low at 1/18th of Singapore's, 1/16th of Malaysia's and 1/3rd of Thailand and China's.

Frank Weiand, FF linkage director, USAID LinkSME project in Viet Nam, said: “Global firms look for total cost to market.”

Low labour cost is only one factor of production whereas the total cost to market includes all costs including labour, materials, cost of capital (both investment and working capital), transport and logistics, duties, taxes and fees (both formal and informal), and others, according to the director.

“The inadequate local supply chain raises all costs other than labour, and also minimises local labour participation.

“Locating for low labour cost is the wrong reason for Viet Nam’s economy – a race to the bottom,” he said.

Domestic enterprises must make efforts to find ways to access and supply raw materials and equipment to foreign-invested firms, according to experts.

They could participate in the global value chain because many foreign investors have invested in the country and the country has free trade agreements with many countries.

The most important thing is that they need to actively seize opportunities.

To deeply participate in the global value chain, Vietnamese enterprises must innovate, analyse their strengths, weaknesses, what buyers need, and ability to supply, among others.

Tran Quang Vu, customer advisory of KPMG Viet Nam and Cambodia, spoke about what SMEs should know while working with FDI firms, including how to prepare an effective meeting, how to introduce their businesses professionally and convincingly, principles to build a sustainable customer relationship, and others.

Participants also acquired information about the journey a supplier has to make to become part of an international organisation’s supply chain.

Hoa said the workshop, which sought to share experiences of experts to help local enterprises find solutions to improve their competitiveness and gradually enter the global value chain, was the first in a series of co-operative events between the ITPC and USAID.

Made-in-Vietnam factor strikes a chord in domestic market

National campaign has succeeded in boosting awareness and acceptance of local products and brands, the VCCI says.

The dominance of Vietnamese goods in domestic market is evident, the Vietnam Chamber of Commerce and Industry (VCCI) stated at a recent conference reviewing 10 years of the "Vietnamese people prioritize Vietnamese goods" campaign it organized in Hanoi.

Locally made products account for 80-90 percent in modern distribution channels and more than 60 percent in traditional retail (traditional markets and groceries), according to the chamber.

VCCI vice chairman Hoang Quang Phong said that the campaign has significantly contributed to increasing customers' trust in domestic goods.

"Many local brands have won consumers' confidence and become a matter of national pride, like Vinamilk, TH true MILK, Traphaco, Vinatex and Trung Thanh," he said.

The campaign also affected key manufacturing industries with an increase in localization rate and hi-tech application. For instance, he noted, the localization rate has reached 50 percent in the textile and garment industry and 40-50 percent in the leather and footwear industry.

Nong Thi Ty, chairwoman of the garment company Ho Guom Group, said that her company's business strategy has shifted to catering to the local market in response to the campaign. From then on, her domestic revenues have increased.

Ty said her company’s products not only cater to the mid-end market segment, but also overseas markets with strict requirements.

Garment brands from Ho Guom Group are sold in the U.S through Amazon. Perilla, another Ho Guom Group brand, is exported to Japan.

Phi Ngoc Trung, general director of Trung Thanh Food, a Vietnamese spice company, said Vietnamese companies are taking steps to perform well in both domestic and foreign markets. "The quality, technology and image of products have improved a lot," he said.

However, the campaign has also experienced some hurdles.

Trung of Trung Thanh Foods shared his experience of spending 5 to 10 years on a complaint to protect his firm's brand. "The extensive procedures and policies make it more difficult for enterprises to tackle business fraud and copyright violation."

"Locally-made products account for 90 percent in some Vietnamese supermarkets. However, most of them are foreign-owned," he said.

Phong of VCCI noted that Vietnamese enterprises should take the initiative to promote international integration in context of the country signing, implementing and negotiating a total of 16 free trade agreements. "Modern management and manufacturing process should be adopted to boost quality of goods and services."

 
 
 
 
 
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